File No. 33-83240
File No. 811-8726
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 5 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 8 [X]
(Check appropriate box or boxes)
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT
LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Exact Name of Registrant)
First Security Benefit Life Insurance and Annuity Company of New York
(Name of Depositor)
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, Including Area Code:
(914) 697-4748
Copies to:
Roger K. Viola, Secretary and Vice President Jeffrey S. Puretz, Esq.
First Security Benefit Life Insurance and Annuity Dechert Price & Rhoads
Company of New York 1500 K Street, N.W.
700 Harrison Street, Topeka, KS 66636-0001 Washington, DC 20005
(Name and address of Agent for Service)
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on April 30, 1998, pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on April 30, 1998, pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] on April 30, 1998, pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of securities being registered: Interests in a separate account under
individual flexible premium deferred variable annuity contracts.
<PAGE>
Cross Reference Sheet
Pursuant to Rule 495(a)
Showing Location in Part A (Prospectus) and Part B
(Statement of Additional Information) of Registration
Statement of Information Required by Form N-4
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PART A
ITEM OF FORM N-4 PROSPECTUS CAPTION
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1. Cover Page............................ Cover Page
2. Definitions........................... Definitions
Summary; Expense Table;
Contractual Expenses; Annual
Separate Account Expenses;
3. Synopsis.............................. Annual Portfolio Expenses
4. Condensed Financial Information
(a)Accumulation Unit Values........... Condensed Financial Information
(b)Performance Data................... Performance Information
(c)Additional Financial Information... Additional Information;
Financial Statements
5. General Description of Registrant,
Depositor, and Portfolio Companies
(a)Depositor.......................... Information about the Company,
the Separate Account, and the
Funds; First Security Benefit
Life Insurance and Annuity
Company of New York; Year 2000
Compliance
(b)Registrant......................... Separate Account; Information
about the Company, the Separate
Account, and the Funds
(c)Portfolio Company.................. Information about the Company,
the Separate Account, and the
Funds; The Funds; The
Investment Advisers
(d)Fund Prospectus.................... The Funds
<PAGE>
(e)Voting Rights...................... Voting of Fund Shares
(f)Administrators..................... First Security Benefit Life
Insurance and Annuity Company of
New York
6. Deductions and Expenses
(a)General............................ Charges and Deductions;
Mortality and Expense Risk
Charge; Premium Tax Charge;Other
Charges; Guarantee of Certain
Charges; Fund Expenses; Contract
Charges
(b)Sales Load %....................... N/A
(c)Special Purchase Plan.............. N/A
(d)Commissions........................ N/A
(e)Fund Expenses...................... Fund Expenses
(f)Organization Expenses.............. N/A
7. General Description of Contracts
(a)Persons with Rights................ The Contract; More About the
Contract; Ownership; Joint
Owners; Contract Benefits;
Fixed Interest Account; Reports
to Owners
(b)
(i)Allocation
of Purchase Payments.......... Purchase Payments; Allocation of
Purchase Payments
(ii)Transfers................ Dollar Cost Averaging Option;
Asset Rebalancing Option
(iii)Exchanges................ Exchanges of Contract Value;
Exchanges and
Withdrawals
(c)Changes............................ Substitution of Investments;
Changes to Comply with Law and
Amendments
(d)Inquiries.......................... Contacting the Company
8. Annuity Period........................ Annuity Period; General; Annuity
Options;
Selection of an Option
<PAGE>
9. Death Benefit......................... Death Benefit
10. Purchases and Contract Value
(a)Purchases.......................... The Contract; General;
Application for a Contract;
Purchase Payments; Dollar Cost
Averaging Option; Asset
Rebalancing Option
Contract Value; Determination of
Contract
(b)Valuation.......................... Value; Exchanges of Contract
Value; Interest
(c)Daily Calculation.................. Determination of Contract Value
(d)Underwriter........................ Distribution of the Contract
11. Redemptions
(a)- By Owners........................ Full and Partial Withdrawals;
Systematic Withdrawals; Payments
from the Separate Account;
Payments from the Fixed Interest
Account
- By Annuitant..................... Annuity Options
(b)Texas ORP.......................... N/A
(c)Check Delay........................ N/A
(d)Lapse.............................. Full and Partial Withdrawals
(e)Free Look.......................... Free-Look Right
12. Taxes................................. Federal Tax Matters;
Introduction; Tax Status of the
Company and the Separate
Account; Income Taxation of
Annuities in General -- Non-
Qualified Plans; Additional
Considerations; Qualified Plans
13. Legal Proceedings..................... Legal Proceedings; Legal Matters
14. Table of Contents for the Statement of
Additional Information................ Statement of Additional
Information
<PAGE>
PART B
ITEM OF FORM N-4 STATEMENT OF ADDITIONAL INFORMATION CAPTION
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15. Cover Page............................ Cover Page
16. Table of Contents..................... Table of Contents
17. General Information and History....... General Information and History
18. Services
(a)Fees and Expenses of Registrant.... N/A
(b)Management Contracts............... N/A
(c)Custodian.......................... N/A
Independent Public Accountant...... Experts
(d)Assets of Registrant............... N/A
(e)Affiliated Persons................. N/A
(f)Principal Underwriter.............. N/A
19. Purchase of Securities Being Offered.. Distribution of the Contract;
Limits on Premiums Paid Under
Tax-Qualified Retirement Plans
20. Underwriters.......................... Distribution of the Contract
21. Calculation of Performance Data....... Performance Information
22. Annuity Payments...................... N/A
23. Financial Statements.................. Financial Statements
<PAGE>
T. ROWE PRICE VARIABLE ANNUITY
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ISSUED BY:
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor
White Plains, New York 10604
1-914-697-4748
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T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
An Individual Flexible Premium
Deferred Variable Annuity Contract
May 1, 1998
INTRODUCTION
o THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
o THIS PROSPECTUS IS ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE T. ROWE
PRICE EQUITY SERIES, INC., THE T. ROWE PRICE FIXED INCOME SERIES, INC.,
AND THE T. ROWE PRICE INTERNATIONAL SERIES, INC. THE PRO SPECTUSES SHOULD
BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
This Prospectus describes the T. Rowe Price No-Load Variable Annuity--an
individual flexible premium deferred variable annuity contract (the
"Contract") issued by FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY
COMPANY OF NEW YORK (the "Company"). The Contract is available for
individuals as a non-tax qualified retirement plan ("Non-Qualified Plan") or
in connection with an individual retirement annuity ("IRA") qualified under
Section 408 of the Internal Revenue Code ("Qualified Plan"). The Contract is
designed to give Contractowners flexibility in planning for retirement and
other financial goals.
During the Accumulation Period, the Contract provides for the accumulation
of a Contractowner's value on either a variable basis, a fixed basis, or
both. The Contract also provides several options for annuity payments on
either a variable basis, a fixed basis, or both to begin on the Annuity
Payout Date. The minimum initial purchase payment is $10,000 ($5,000 if made
pursuant to an Automatic Investment Program) to purchase a Contract in
connection with a Non-Qualified Plan and $2,000 ($25 if made pursuant to an
Automatic Investment Program) to purchase a Contract in connection with a
Qualified Plan. Subsequent purchase payments are flexible, though they must
be for at least $1,000 ($200 if made pursuant to an Automatic Investment
Program) for a Contract funding a Non-Qualified Plan or $500 ($25 if made
pursuant to an Automatic Investment Program) for a Contract funding a
Qualified Plan. Purchase payments may be allocated at the Contractowner's
discretion to one or more of the Subaccounts that comprise a separate
account of the Company called the T. Rowe Price Variable Annuity Account of
First Security Benefit Life Insurance and Annuity Company of New York (the
"Separate Account"), or to the Fixed Interest Account of the Company. Each
Subaccount of the Separate Account invests in a corresponding portfolio
("Portfolio") of the T. Rowe Price Equity Series, Inc., the T. Rowe Price
Fixed Income Series, Inc., or the T. Rowe Price International Series, Inc.
(the "Funds"). Each Portfolio is listed under its respective Fund below.
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price New America Growth Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price Equity Income Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
<PAGE>
Prospective purchasers should be aware that the investments made by the
Funds at any given time are not expected to be the same as the investments
made by other mutual funds T. Rowe Price Associates, Inc. ("T. Rowe Price")
sponsors, including other mutual funds with investment objectives and
policies similar to those of the Funds.
The Contract Value in the Fixed Interest Account will accrue interest at
rates that are paid by the Company as described in "The Fixed Interest
Account" on page 28. Contract Value in the Fixed Interest Account is
guaranteed by the Company.
The Contract Value in the Subaccounts under a Contract will vary based on
investment performance of the Subaccounts to which the Contract Value is
allocated. No minimum amount of Contract Value in the Subaccounts is
guaranteed.
A Contract may be returned according to the terms of its Free-Look Right
(see "Free-Look Right," page 23).
This Prospectus concisely sets forth information about the Contract and the
Separate Account that a prospective investor should know before purchasing
the Contract. Certain additional information is contained in a "Statement of
Additional Information," dated May 1, 1998, which has been filed with the
Securities and Exchange Commission (the "SEC"). The Statement of Additional
Information, as it may be supplemented from time to time, is incorporated by
reference into this Prospectus and is available at no charge, by writing the
Company at 70 West Red Oak Lane, 4th Floor, White Plains, New York 10604.
The table of contents of the Statement of Additional Information is set
forth on page 42 of this Prospectus.
Date: May 1, 1998
<PAGE>
CONTENTS
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o THE CONTRACT IS AVAILABLE ONLY IN NEW YORK. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
BE LAWFULLY MADE. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN AS CONTAINED IN THIS PROSPECTUS
OR THE STATEMENT OF ADDITIONAL INFORMATION, THE FUNDS' PROSPECTUS OR
STATEMENT OF ADDITIONAL INFORMATION, OR ANY SUPPLEMENT THERETO.
DEFINITIONS 7
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SUMMARY 9
Purpose of the Contract.......................... 9
The Separate Account and the Funds............... 9
Fixed Interest Account........................... 9
Purchase Payments................................ 10
Contract Benefits................................ 10
Free-Look Right.................................. 10
Charges and Deductions........................... 10
Mortality and Expense Risk Charge.............. 10
Premium Tax Charge............................. 10
Other Expenses................................. 11
Contacting the Company........................... 11
EXPENSE TABLE 11
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Contractual Expenses............................. 11
Annual Separate Account Expenses................. 11
Annual Portfolio Expenses........................ 11
Example.......................................... 12
CONDENSED FINANCIAL INFORMATION 13
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INFORMATION ABOUT THE COMPANY,
THE SEPARATE ACCOUNT, AND THE FUNDS 14
First Security Benefit Life Insurance and Annuity
Company of New York............................ 14
Year 2000 Compliance............................. 14
Published Ratings................................ 15
Separate Account................................. 15
The Funds........................................ 16
T. Rowe Price New America Growth Portfolio..... 16
T. Rowe Price International Stock Portfolio.... 16
. Rowe Price Mid-Cap Growth Portfolio............ 17
T. Rowe Price Equity Income Portfolio.......... 17
T. Rowe Price Personal Strategy Balanced
Portfolio.................................... 17
T. Rowe Price Limited-Term Bond Portfolio...... 17
T. Rowe Price Prime Reserve Portfolio.......... 17
The Investment Advisers.......................... 17
<PAGE>
THE CONTRACT 17
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General.......................................... 17
Application for a Contract....................... 18
Purchase Payments................................ 18
Allocation of Purchase Payments.................. 19
Dollar Cost Averaging Option..................... 19
Asset Rebalancing Option......................... 20
Exchanges of Contract Value...................... 21
Contract Value................................... 21
Determination of Contract Value.................. 21
Full and Partial Withdrawals..................... 22
Systematic Withdrawals........................... 23
Free-Look Right.................................. 23
Death Benefit.................................... 23
Distribution Requirements...................... 24
Death of the Annuitant......................... 24
CHARGES AND DEDUCTIONS 25
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Mortality and Expense Risk Charge................ 25
Premium Tax Charge............................... 25
Other Charges.................................... 25
Guarantee of Certain Charges..................... 25
Fund Expenses.................................... 26
ANNUITY PERIOD 26
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General.......................................... 26
Annuity Options.................................. 27
Option 1 - Life Income......................... 27
Option 2 - Life Income with Guaranteed
Payments of 5, 10, 15, or 20 Years........... 27
Option 3 - Life with Installment or Unit
Refund Option................................ 27
Option 4 - Joint and Last Survivor............. 27
Option 5 - Payments for Specified Period....... 28
Option 6 - Payments of a Specified Amount...... 28
Option 7 - Age Recalculation................... 28
Selection of an Option........................... 28
THE FIXED INTEREST ACCOUNT 28
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Interest......................................... 29
Death Benefit.................................... 29
Contract Charges................................. 29
Exchanges and Withdrawals........................ 30
Payments from the Fixed Interest Account......... 30
MORE ABOUT THE CONTRACT 31
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Ownership........................................ 31
Designation and Change of Beneficiary............ 31
Non-Participating................................ 31
Payments from the Separate Account............... 31
Proof of Age and Survival........................ 31
Misstatements.................................... 31
FEDERAL TAX MATTERS 32
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Introduction..................................... 32
Tax Status of the Company and the Separate
Account......................................... 32
General........................................ 32
Charge for the Company's Taxes................. 32
Diversification Standards...................... 33
Income Taxation of Annuities in General -
Non-Qualified Plans............................ 33
Surrenders or Withdrawals Prior to the
Annuity Payout Date............................ 33
Surrenders or Withdrawals on or after
the Annuity Payout Date......................... 34
Penalty Tax on Certain Surrenders and
Withdrawals.................................... 34
Additional Considerations........................ 35
Distribution-at-Death Rules.................... 35
Gift of Annuity Contracts...................... 35
Contracts Owned by Non-Natural Persons......... 35
Multiple Contract Rule......................... 35
Possible Tax Changes........................... 36
Transfers, Assignments, or Exchanges of a
Contract....................................... 36
Qualified Plans.................................. 36
Section 408.................................... 36
Tax Penalties.................................. 37
Withholding.................................... 38
OTHER INFORMATION 38
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Voting of Fund Shares............................ 38
Substitution of Investments...................... 39
Changes to Comply with Law and Amendments........ 39
Reports to Owners................................ 40
Telephone Exchange Privileges.................... 40
Distribution of the Contract..................... 40
Legal Proceedings................................ 40
Legal Matters.................................... 40
PERFORMANCE INFORMATION 41
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ADDITIONAL INFORMATION 41
Registration Statement........................... 41
Financial Statements............................. 42
STATEMENT OF ADDITIONAL INFORMATION 42
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ILLUSTRATIONS 42
<PAGE>
DEFINITIONS
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o Various terms commonly used in this Prospectus are defined as follows:
ACCUMULATION PERIOD The period commencing on the Contract Date and ending on
the Annuity Payout Date or, if earlier, when the Contract is terminated
through a full withdrawal, payment of charges, or payment of the death
benefit proceeds.
ACCUMULATION UNIT A unit of measure used to calculate the value of a
Contractowner's interest in a Subaccount during the Accumulation Period.
ANNUITANT The person or persons on whose life annuity payments depend. If
Joint Annuitants are named in the Contract, "Annuitant" means both
Annuitants unless otherwise stated.
ANNUITY A series of periodic income payments made by the Company to an
Annuitant, Joint Annuitant, or Beneficiary during the period specified in
the Annuity Option.
ANNUITY OPTIONS Options under the Contract that prescribe the provisions
under which a series of annuity payments are made.
ANNUITY PERIOD The period during which annuity payments are made.
ANNUITY PAYOUT DATE The date when annuity payments are scheduled to begin.
AUTOMATIC INVESTMENT PROGRAM A program pursuant to which purchase payments
are automatically paid from the owner's checking account on a specified day
of the month, on a monthly, quarterly, semiannual or annual basis, or a
salary reduction arrangement.
CONTRACT DATE The date shown as the Contract Date in a Contract. Annual
Contract anniversaries are measured from the Contract Date. It is usually
the date that the initial purchase payment is credited to the Contract.
CONTRACTOWNER OR OWNER The person entitled to the ownership rights under the
Contract and in whose name the Contract is issued.
CONTRACT VALUE The total value of the amounts in a Contract allocated to the
Subaccounts of the Separate Account and the Fixed Interest Account as of any
Valuation Date.
CONTRACT YEAR Each twelve-month period measured from the Contract Date.
DESIGNATED BENEFICIARY The person having the right to the death benefit, if
any, payable upon the death of the Owner or the Joint Owner during the
Accumulation Period. The Designated Beneficiary is the first person on the
following list who is alive on the date of death of the Owner or the Joint
Owner: the Owner; the Joint Owner; the Primary Beneficiary; the Secondary
Beneficiary; the Annuitant; or if none of the above are alive, the Owner's
Estate.
FIXED INTEREST ACCOUNT An account that is part of the Company's General
Account in which all or a portion of the Contract Value may be held for
accumulation at fixed rates of interest (which may not be less than 3%)
declared by the Company periodically at its discretion.
FUNDS T. Rowe Price Equity Series, Inc., T. Rowe Price Fixed Income Series,
Inc., and T. Rowe Price International Series, Inc. The Funds are
diversified, open-end management investment companies commonly referred to
as mutual funds.
GENERAL ACCOUNT All assets of the Company other than those allocated to the
Separate Account or to any other separate account of the Company.
PURCHASE PAYMENT The amounts paid to the Company as consideration for the
Contract.
SEPARATE ACCOUNT The T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New York is a
separate account of the Company. Contract Value under the Contract may be
allocated to Subaccounts of the Separate Account for variable accumulation.
SUBACCOUNT A division of the Separate Account of the Company which invests
in a separate Portfolio of one of the Funds. Currently, seven Subaccounts
are available under the Contract.
VALUATION DATE Each date on which the Separate Account is valued, which
currently includes each day that the Company and the New York Stock Exchange
are both open for trading. The Company and the New York Stock Exchange are
closed on weekends and on the following holidays: New Year's Day, Martin
Luther King, Jr., Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
VALUATION PERIOD A period used in measuring the investment experience of
each Subaccount of the Separate Account. The Valuation Period begins at the
close of one Valuation Date and ends at the close of the next succeeding
Valuation Date.
WITHDRAWAL VALUE The amount a Contractowner receives upon full withdrawal of
the Contract, which is equal to Contract Value less any premium taxes due
and paid by the Company.
<PAGE>
SUMMARY
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This summary is intended to provide a brief overview of the more significant
aspects of the Contract. Further detail is provided in this Prospectus, the
Statement of Additional Information, and the Contract. Unless the context
indicates otherwise, the discussion in this summary and the remainder of the
Prospectus relates to the portion of the Contract involving the Separate
Account. The Fixed Interest Account is briefly described under "The Fixed
Interest Account" on page 28 and in the Contract.
PURPOSE OF THE CONTRACT
The individual flexible premium deferred variable annuity contract
("Contract") described in this Prospectus is designed to give Contractowners
flexibility in planning for retirement and other financial goals. The
Contract provides for the accumulation of values on a variable basis, a
fixed basis, or both, during the Accumulation Period and provides several
options for annuity payments on a variable basis, a fixed basis, or both.
During the Accumulation Period, an Owner can pursue various allocation
options by allocating purchase payments to the Subaccounts of the Separate
Account or to the Fixed Interest Account. See "The Contract," page 17.
The Contract is eligible for purchase as a non-tax qualified retirement plan
for an individual ("Non-Qualified Plan"). The Contract is also eligible for
purchase as an individual retirement annuity ("IRA") qualified under Section
408 of the Internal Revenue Code of 1986, as amended ("Qualified Plan").
THE SEPARATE ACCOUNT AND THE FUNDS
Purchase payments designated to accumulate on a variable basis are allocated
to the Separate Account. See "Separate Account," page 15. The Separate
Account is currently divided into seven accounts referred to as Subaccounts.
Each Subaccount invests exclusively in shares of a specific Portfolio of one
of the Funds. Each of the Funds' Portfolios has a different investment
objective or objectives. Each Portfolio is listed under its respective Fund
below.
T. ROWE PRICE EQUITY SERIES, INC.
T. Rowe Price New America Growth Portfolio
T. Rowe Price Mid-Cap Growth Portfolio
T. Rowe Price Equity Income Portfolio
T. Rowe Price Personal Strategy Balanced Portfolio
T. ROWE PRICE FIXED INCOME SERIES, INC.
T. Rowe Price Limited-Term Bond Portfolio
T. Rowe Price Prime Reserve Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
Amounts held in a Subaccount will increase or decrease in dollar value
depending on the investment performance of the corresponding Portfolio in
which such Subaccount invests. The Contractowner bears the investment risk
for amounts allocated to a Subaccount of the Separate Account.
FIXED INTEREST ACCOUNT
Purchase payments designated to accumulate on a fixed basis may be allocated
to the Fixed Interest Account, which is part of the Company's General
Account. Amounts allocated to the Fixed Interest Account earn interest at
rates determined at the discretion of the Company and that are guaranteed to
be at least an effective annual rate of 3%. See "The Fixed Interest Account"
on page 28.
PURCHASE PAYMENTS
The minimum initial purchase payment is $10,000 ($5,000 if made pursuant to
an Automatic Investment Program) for a Contract issued in connection with a
Non-Qualified Plan and $2,000 ($25 if made pursuant to an Automatic
Investment Program) for a Contract issued in connection with a Qualified
Plan. Thereafter, the Contractowner may choose the amount and frequency of
purchase payments, except that the minimum subsequent purchase payment is
$1,000 ($200 if made pursuant to an Automatic Investment Program) for a
Contract funding a Non-Qualified Plan or $500 ($25 if made pursuant to an
Automatic Investment Program) for a Contract funding a Qualified Plan. See
"Purchase Payments" on page 18.
CONTRACT BENEFITS
During the Accumulation Period, Contract Value may be exchanged by the
Contractowner among the Subaccounts of the Separate Account and to and from
the Fixed Interest Account, subject to certain restrictions as described in
"Exchanges of Contract Value" on page 21 and "The Fixed Interest Account" on
page 28.
At any time before the Annuity Payout Date, a Contract may be surrendered
for its Withdrawal Value, and partial withdrawals, including systematic
withdrawals, may be taken from the Contract Value, subject to certain
restrictions described in "The Fixed Interest Account" on page 28. See "Full
and Partial Withdrawals," page 22 and "Federal Tax Matters," page 32 for
more information about withdrawals, including the 10% penalty tax that may
be imposed upon full and partial withdrawals (including systematic
withdrawals) made prior to the Owner's attaining age 59 1/2.
The Contract provides for a death benefit upon the death of the Owner during
the Accumulation Period. See "Death Benefit," page 23 for more information.
The Contract provides for several Annuity Options on either a variable
basis, a fixed basis, or both. Payments under the fixed Annuity Options will
be guaranteed by the Company. See "Annuity Period" on page 26.
FREE-LOOK RIGHT
An Owner may return a Contract within the Free-Look Period, which is a
30-day period beginning when the Owner receives the Contract. In this event,
the Company will refund to the Owner purchase payments allocated to the
Fixed Interest Account plus the Contract Value in the Subaccounts increased
by any fees or other charges paid. The Company will refund purchase payments
allocated to the Subaccounts rather than the Contract Value in those
circumstances in which it is required to do so. See "Free-Look Right" on
page 23.
CHARGES AND DEDUCTIONS
The Company does not make any deductions for sales loads from purchase
payments. Certain charges will be deducted in connection with the Contract
as described below.
MORTALITY AND EXPENSE RISK CHARGE
The Company deducts a daily charge from the assets of each Subaccount for
mortality and expense risks equal to an annual rate of .55% of each
Subaccount's average daily net assets. See "Mortality and Expense Risk
Charge" on page 25.
PREMIUM TAX CHARGE
The Company assesses a premium tax charge to reimburse itself for any
premium taxes that it incurs with respect to this Contract. This charge will
usually be deducted on annuitization or upon full withdrawal if a premium
tax was incurred by the Company and is not refundable. Partial withdrawals,
including systematic withdrawals, may be subject to a premium tax charge if
a premium tax is incurred on the withdrawal by the Company and is not
refundable. No premium tax is currently imposed in the State of New York.
However, the Company reserves the right to deduct such taxes, if imposed,
when due or anytime thereafter. See "Premium Tax Charge" on page 25.
OTHER EXPENSES
The operating expenses of the Separate Account are paid by the Company.
Investment management fees and operating expenses of the Funds are paid by
the Funds and are reflected in the net asset value of Fund shares. For a
description of these charges and expenses, see the Prospectus for the Funds.
CONTACTING THE COMPANY
All written requests, notices, and forms required by the Contract, and any
questions or inquiries should be directed to First Security Benefit Life
Insurance and Annuity Company of New York, 70 West Red Oak Lane, 4th Floor,
White Plains, New York 10604.
EXPENSE TABLE
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The purpose of this table is to assist investors in understanding the
various costs and expenses borne directly and indirectly by Owners
allocating Contract Value to the Subaccounts. The table reflects any
contractual charges, expenses of the Separate Account, and charges and
expenses of the Funds. The table does not reflect premium taxes that may be
imposed by various jurisdictions. See "Premium Tax Charge," page 25. The
information contained in the table is not applicable to amounts allocated to
the Fixed Interest Account.
For a complete description of a Contract's costs and expenses, see "Charges
and Deductions," on page 25. For a more complete description of each Fund's
costs and expenses, see the Funds' Prospectus, which accompanies this
Prospectus.
CONTRACTUAL EXPENSES
Sales load on purchase payments None
Annual Maintenance Fee None
ANNUAL SEPARATE ACCOUNT EXPENSES
Annual Mortality and Expense Risk Charge
(as a percentage of each Subaccount's
average daily net assets) 0.55%
Total Annual Separate Account Expenses 0.55%
ANNUAL PORTFOLIO EXPENSES (AS A PERCENTAGE OF EACH PORTFOLIO'S AVERAGE DAILY
NET ASSETS)
TOTAL
MANAGEMENT OTHER PORTFOLIO
FEE* EXPENSES EXPENSES
T. Rowe Price New America Growth Portfolio 0.85% 0% 0.85%
T. Rowe Price International Stock Portfolio 1.05% 0% 1.05%
T. Rowe Price Mid-Cap Growth Portfolio 0.85% 0% 0.85%
T. Rowe Price Equity Income Portfolio 0.85% 0% 0.85%
T. Rowe Price Personal Strategy Balanced
Portfolio 0.90% 0% 0.90%
T. Rowe Price Limited-Term Bond Portfolio 0.70% 0% 0.70%
T. Rowe Price Prime Reserve Portfolio 0.55% 0% 0.55%
*The management fee includes the ordinary expenses of operating the Funds.
EXAMPLE
The example presented below shows expenses that a Contractowner would pay at
the end of one, three, five, or ten years. The information presented applies
if, at the end of those time periods, the Contract is (1) surrendered, (2)
annuitized, or (3) not surrendered or annuitized. The example shows expenses
based upon an allocation of $1,000 to each of the Subaccounts.
The example below should not be considered a representation of past or
future expenses. Actual expenses may be greater or lesser than those shown.
The 5% return assumed in the examples is hypothetical and should not be
considered a representation of past or future actual returns, which may be
greater or lesser than the assumed amount.
EXAMPLE The Owner would pay the expenses shown below on a $1,000 investment,
assuming 5% annual return on assets:
1 Year 3 Years 5 Years 10 Years
New America Growth Subaccount ................ $14 $44 $ 77 $168
International Stock Subaccount ............... $16 $50 $ 87 $190
Mid-Cap Growth Subaccount .................... $14 $44 $ 77 $168
Equity Income Subaccount ..................... $14 $44 $ 77 $168
Personal Strategy Balanced Subaccount ........ $15 $46 $ 79 $174
Limited-Term Bond Subaccount ................. $13 $40 $ 69 $151
Prime Reserve Subaccount...................... $11 $35 $ 61 $134
CONDENSED FINANCIAL INFORMATION
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The following condensed financial information presents accumulation unit
values for the years ended December 31, 1997 and 1996, as well as ending
accumulation units outstanding under each Subaccount.
1996 1997
NEW AMERICA GROWTH SUBACCOUNT
Accumulation unit value:
Beginning of period $10.00 $16.00
End of period $16.00 $19.27
Accumulation units:
Outstanding at the end of period 143,768 170,990
INTERNATIONAL STOCK SUBACCOUNT
Accumulation unit value:
Beginning of period $10.00 $12.77
End of period $12.77 $13.09
Accumulation units:
Outstanding at the end of period 86,235 123,502
EQUITY INCOME SUBACCOUNT
Accumulation unit value:
Beginning of period $10.00 $14.70
End of period $14.70 $18.84
Accumulation units:
Outstanding at the end of period 181,250 320,917
PERSONAL STRATEGY BALANCED SUBACCOUNT
Accumulation unit value:
Beginning of period $10.00 $13.51
End of period $13.51 $15.86
Accumulation units:
Outstanding at the end of period 39,697 76,311
LIMITED-TERM BOND SUBACCOUNT
Accumulation unit value:
Beginning of period $10.00 $10.92
End of period $10.92 $11.60
Accumulation units:
Outstanding at the end of period 33,375 41,943
MID-CAP GROWTH SUBACCOUNT*
Accumulation unit value:
Beginning of period $10.00
End of period $11.82
Accumulation units:
Outstanding at the end of period 91,142
PRIME RESERVE SUBACCOUNT*
Accumulation unit value:
Beginning of period $10.00
End of period $10.47
Accumulation units:
Outstanding at the end of period 75,383
*The Mid-Cap Growth and Prime Reserve Subaccounts commenced operations on
January 2, 1997.
INFORMATION ABOUT THE COMPANY, THE SEPARATE ACCOUNT, AND THE FUNDS
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FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
The Company is a stock life insurance company organized under the laws of
the State of New York on November 8, 1994. On September 8, 1995, the Company
merged with and is the successor corporation of Pioneer National Life
Insurance Company, a stock life insurance company organized under the laws
of the State of Kansas. The Company is a wholly-owned subsidiary of Security
Benefit Group, Inc., a financial services holding company which is wholly
owned by Security Benefit Life Insurance Company, a mutual life insurance
company organized under the laws of the State of Kansas. The Company offers
variable annuity contracts in New York and is admitted to do business in
that state.
The Board of Directors of Security Benefit Life Insurance Company ("SBL"),
the Company's parent company, approved a Plan of Conversion ("Plan") under
which SBL would convert from a mutual life insurance company to a stock life
insurance company ultimately controlled by a newly formed mutual holding
company to be named Security Benefit Mutual Holding Company. Under the Plan,
membership interests of current SBL Contractowners would become membership
interests in Security Benefit Mutual Holding Company upon conversion. After
the conversion, persons who acquire policies from SBL would automatically be
members in the mutual holding company. The Plan is subject to approval by
the Insurance Commissioner of the State of Kansas and SBL's policyholders,
among other approvals and conditions. If the necessary approvals are
obtained and conditions met, the conversion could occur in the second
quarter of 1998.
YEAR 2000 COMPLIANCE
Like other insurance companies, as well as other financial and business
organizations around the world, the Company could be adversely affected if
the computer systems used by the Company in performing its administrative
functions do not properly process and calculate date-related information and
data before, during, and after January 1, 2000. Some computer software and
hardware systems currently cannot distinguish between the year 2000 and the
year 1900 or some other date because of the way date fields were encoded.
This is commonly known as the "Year 2000 Problem." If not addressed, the
Year 2000 Problem could impact (i) the administrative services provided by
the Company with respect to the Contract, and (ii) the management services
provided to the Funds by T. Rowe Price, as well as transfer agency,
accounting, custody, distribution, and other services provided to the Funds.
For more information on T. Rowe Price's Year 2000 compliance efforts, see
the Funds' prospectus, which accompanies this Prospectus.
The Company has adopted a plan to be "Year 2000 Compliant" with respect to
both its internally built systems as well as systems provided by external
vendors. "Year 2000 Compliant" means that systems and programs which require
modification will have the date fields expanded to include the century
information and that for interfaces to external organizations as well as new
systems development the year portion of the date field will be expanded to
four digits using the format YYYYMMDD. The Company's overall approach to
addressing the Year 2000 issue is as follows: (1) to inventory its internal
and external hardware, software, telecommunications, and data transmissions
to customers and conduct a risk assessment with respect to the impact that a
failure on any such system would have on its business operations; (2) to
modify or replace its internal systems and obtain vendor certifications of
Year 2000 compliance for systems provided by vendors or replace such systems
that are not Year 2000 Compliant; and (3) to implement and test its systems
for Year 2000 compliance. The Company has completed the inventory of its
internal and external systems and has made substantial progress toward
completing the modification/replacement of its internal systems as well as
towards obtaining Year 2000 Compliant certifications from its external
vendors. Overall systems testing is scheduled to commence in December 1998
and extend into the first six months of 1999.
Although the Company has taken steps to ensure that its systems will
function properly before, during, and after the Year 2000, its key operating
systems and information sources are provided by or through external vendors
which creates uncertainty to the extent the Company is relying on the
assurance of such vendors as to whether its systems will be Year 2000
Compliant. The costs or consequences of incomplete or untimely resolution of
the Year 2000 issue are unknown to the Company at this time but could have a
material adverse impact on the operations of the Separate Account and
administration of the Contract.
The Year 2000 Problem is also expected to impact companies, which may
include issuers of portfolio securities held by the Funds, to varying
degrees based upon various factors, including, but not limited to, the
company's industry sector and degree of technological sophistication. The
Company is unable to predict what impact, if any, the Year 2000 Problem will
have on issuers of the portfolio securities held by the Funds.
PUBLISHED RATINGS
The Company may from time to time publish in advertisements, sales
literature, and reports to Owners, the ratings and other information
assigned to it by one or more independent rating organizations such as A.M.
Best Company and Standard & Poor's. The purpose of the ratings is to reflect
the financial strength and/or claims-paying ability of the Company and
should not be considered as bearing on the investment performance of assets
held in the Separate Account. Each year the A.M. Best Company reviews the
financial status of thousands of insurers, culminating in the assignment of
Best's Ratings. These ratings reflect their current opinion of the relative
financial strength and operating performance of an insurance company in
comparison to the norms of the life/health insurance industry. In addition,
the claims-paying ability of the Company as measured by Standard & Poor's
Insurance Ratings Services may be referred to in advertisements or sales
literature or in reports to Owners. These ratings are opinions of an
operating insurance company's financial capacity to meet the obligations of
its insurance and annuity policies in accordance with their terms. Such
ratings do not reflect the investment performance of the Separate Account or
the degree of risk associated with an investment in the Separate Account.
SEPARATE ACCOUNT
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK
The Separate Account was established by the Company as a separate account on
November 11, 1994, pursuant to the laws of the State of New York. The
income, gains, and losses of the Separate Account, whether or not realized,
are, in accordance with the Contracts, credited or charged against the
assets of the Separate Account without regard to other income, gains, or
losses of the Company. The Company owns the assets in the Separate Account,
but they are held separately from the other assets of the Company. Section
4240 of the New York Insurance Law provides that the assets of a separate
account are not chargeable with liabilities incurred in any other business
operation of the insurance company (except to the extent that assets in the
separate account exceed the reserves and other liabilities of the separate
account) if and to the extent the applicable agreements so provide, and the
Contract contains such a provision. The Company may transfer to its General
Account assets that exceed anticipated obligations of the Separate Account.
All obligations arising under the Contracts are general corporate
obligations of the Company. The Company may invest its own assets in the
Separate Account for other purposes but not to support contracts other than
variable annuity contracts, and may accumulate in the Separate Account
proceeds from Contract charges and investment results applicable to those
assets.
The Separate Account is currently divided into seven Subaccounts. Income,
gains, and losses, whether or not realized, are, in accordance with the
Contracts, credited to, or charged against, the assets of each Subaccount
without regard to the income, gains, or losses in the other Subaccounts.
Each Subaccount invests exclusively in shares of a specific Portfolio of one
of the Funds. The Company may in the future establish additional Subaccounts
of the Separate Account, which may invest in other Portfolios of the Funds
or in other securities, mutual funds, or investment vehicles. Under current
contractual arrangements with the distributor, T. Rowe Price Investment
Services, Inc. ("Investment Services"), the Company cannot add new
Subaccounts, or substitute shares of another portfolio, without the consent
of Investment Services, unless such change is necessary to comply with
applicable laws, shares of any or all of the Portfolios should no longer be
available for investment, or, if the Company receives an opinion from
counsel acceptable to Investment Services that the substitution is in the
best interests of Contractowners and that further investment in shares of
the Portfolio(s) would cause undue risk to the company. For more information
about the distributor, see "Distribution of the Contract," page 40.
The Separate Account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act"). Registration with
the SEC does not involve supervision by the SEC of the administration or
investment practices of the Separate Account or of the Company.
THE FUNDS
The T. Rowe Price Equity Series, Inc., the T. Rowe Price Fixed Income
Series, Inc., and the T. Rowe Price International Series, Inc. (the
"Funds"), are diversified, open-end management investment companies of the
series type. The Funds are registered with the SEC under the 1940 Act. Such
registration does not involve supervision by the SEC of the investments or
investment policy of the Funds. Together, the Funds currently have seven
separate portfolios ("Portfolios"), each of which pursues different
investment objectives and policies.
In addition to the Separate Account, shares of the Funds are being sold to
variable life insurance and variable annuity separate accounts of other
insurance companies, including insurance companies affiliated with the
Company. In the future, it may be disadvantageous for variable annuity
separate accounts of other life insurance companies, or for both variable
life insurance separate accounts and variable annuity separate accounts, to
invest simultaneously in the Funds, although currently neither the Company
nor the Funds foresees any such disadvantages to either variable annuity
owners or variable life insurance owners. The management of the Funds
intends to monitor events in order to identify any material conflicts
between or among variable annuity owners and variable life insurance owners
and to determine what action, if any, should be taken in response. In
addition, if the Company believes that any Fund's response to any of those
events or conflicts insufficiently protects Owners, it will take appropriate
action on its own. For more information, see the Funds' prospectus.
A summary of the investment objective of each Portfolio of the Funds is
described below. There can be no assurance that any Portfolio will achieve
its objective. More detailed information is contained in the accompanying
prospectus of the Funds, including information on the risks associated with
the investments and investment techniques of each Portfolio.
THE FUNDS' PROSPECTUS ACCOMPANIES THIS PROSPECTUS AND SHOULD BE READ
CAREFULLY BEFORE INVESTING.
T. ROWE PRICE NEW AMERICA GROWTH PORTFOLIO
The investment objective of the New America Growth Portfolio is long-term
growth of capital by investing primarily in the common stocks of U.S. growth
companies which operate in service industries.
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
The investment objective of the International Stock Portfolio is to seek
long-term growth of capital by investing primarily in common stocks of
established, non-U.S. companies.
T. ROWE PRICE MID-CAP GROWTH PORTFOLIO
The investment objective of the Mid-Cap Growth Portfolio is to provide
long-term capital appreciation by investing primarily in companies that
offer proven products or services.
T. ROWE PRICE EQUITY INCOME PORTFOLIO
The investment objective of the Equity Income Portfolio is to provide
substantial dividend income and also capital appreciation by investing
primarily in dividend-paying common stocks of established companies.
T. ROWE PRICE PERSONAL STRATEGY BALANCED PORTFOLIO
The investment objective of the Personal Strategy Balanced Portfolio is to
seek the highest total return over time consistent with an emphasis on both
capital appreciation and income.
T. ROWE PRICE LIMITED-TERM BOND PORTFOLIO
The investment objective of the Limited-Term Bond Portfolio is to seek a
high level of income consistent with modest price fluctuation by investing
primarily in short- and intermediate-term investment grade debt securities.
T. ROWE PRICE PRIME RESERVE PORTFOLIO
The investment objectives of the Prime Reserve Portfolio are preservation of
capital, liquidity, and, consistent with these, the highest possible current
income, by investing primarily in high-quality money market securities.
THE INVESTMENT ADVISERS
T. Rowe Price Associates, Inc. ("T. Rowe Price"), located at 100 East Pratt
Street, Baltimore, Maryland 21202, serves as Investment Adviser to each
Portfolio, except the T. Rowe Price International Stock Portfolio. Rowe
Price-Fleming International, Inc. ("Price-Fleming"), an affiliate of T. Rowe
Price, serves as Investment Adviser to the T. Rowe Price International Stock
Portfolio. Price-Fleming's U.S. office is located at 100 East Pratt Street,
Baltimore, Maryland 21202. As Investment Adviser to each of the Portfolios,
except the T. Rowe Price International Stock Portfolio, T. Rowe Price is
responsible for selection and management of their portfolio investments. As
Investment Adviser to the T. Rowe Price International Stock Portfolio,
Price-Fleming is responsible for selection and management of its portfolio
investments. T. Rowe Price and Price-Fleming are registered with the SEC as
investment advisers.
T. Rowe Price and Price-Fleming are not affiliated with the Company, and the
Company has no responsibility for the management or operations of the
Portfolios.
THE CONTRACT
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GENERAL
The Contract offered by this Prospectus is an individual flexible premium
deferred variable annuity that is issued by the Company. To the extent that
all or a portion of purchase payments are allocated to the Subaccounts, the
Contract is significantly different from a fixed annuity contract in that it
is the Owner under a Contract who assumes the risk of investment gain or
loss rather than the Company. During the Accumulation Period, a
Contractowner's value accumulates on either a variable basis, a fixed basis,
or both, depending on the Owner's allocation of Contract value to the
Subaccounts and the Fixed Interest Account. The Contract also provides
several Annuity Options under which the Company will pay periodic annuity
payments on a variable basis, a fixed basis, or both, beginning on the
Annuity Payout Date. The amount that will be available for annuity payments
will depend on the investment performance of the Subaccounts to which
Contract Value has been allocated and the amount of interest credited on
Contract Value that has been allocated to the Fixed Interest Account.
The Contract is available for purchase as a non-tax qualified retirement
plan ("Non-Qualified Plan") by an individual. The Contract is also eligible
for purchase as an individual retirement annuity ("IRA") qualified under
Section 408 of the Internal Revenue Code ("Qualified Plan"). Joint Owners
are permitted only on a Contract issued pursuant to a Non-Qualified Plan.
APPLICATION FOR A CONTRACT
Any person wishing to purchase a Contract may submit an application and an
initial purchase payment to the Company, as well as any other form or
information that the Company may require. The initial purchase payment may
be made by check or, if an applicant owns shares of one or more mutual funds
distributed by Investment Services ("T. Rowe Price Funds"), by electing on
the application to redeem shares of that fund(s) and forward the redemption
proceeds to the Company. Any such transaction shall be effected by
Investment Services, the distributor of the T. Rowe Price Funds and the
Contract. The redemption of fund shares is a sale of shares for tax
purposes, which may result in a taxable gain or loss. The application may be
obtained by contacting the Company. The Company reserves the right to reject
an application or purchase payment for any reason, subject to the Company's
underwriting standards and guidelines and any applicable state or federal
law relating to nondiscrimination.
The maximum age of an Owner or Annuitant for which a Contract will be issued
is 85. If there are Joint Owners or Annuitants, the maximum issue age will
be determined by reference to the older Owner or Annuitant.
PURCHASE PAYMENTS
The minimum initial purchase payment for the purchase of a Contract is
$10,000 ($5,000 if made pursuant to an Automatic Investment Program) in
connection with a Non-Qualified Plan and $2,000 ($25 if made pursuant to an
Automatic Investment Program) in connection with a Qualified Plan.
Thereafter, the Contractowner may choose the amount and frequency of
purchase payments, except that the minimum subsequent purchase payment is
$1,000 ($200 if made pursuant to an Automatic Investment Program) for
Non-Qualified Plans and $500 ($25 if made pursuant to an Automatic
Investment Program) for Qualified Plans. Cumulative purchase payments
exceeding $1 million will not be accepted under a Contract without prior
approval of the Company.
An initial purchase payment will be applied not later than the end of the
second Valuation Date after the Valuation Date it is received by the Company
at P.O. Box 2788, Topeka, Kansas 66601-9804 if the purchase payment is
preceded or accompanied by an application that contains sufficient
information necessary to establish an account and properly credit such
purchase payment. If the Company does not receive a complete application,
the Company will notify the applicant that it does not have the necessary
information to issue a Contract. If the necessary information is not
provided to the Company within five Valuation Dates after the Valuation Date
on which the Company first receives the initial purchase payment or if the
Company determines it cannot otherwise issue the Contract, the Company will
return the initial purchase payment to the applicant unless the applicant
consents to the Company retaining the purchase payment until the application
is made complete.
Subsequent purchase payments will be credited as of the end of the Valuation
Period in which they are received by the Company. Purchase payments after
the initial purchase payment may be made at any time prior to the Annuity
Payout Date, so long as the Owner is living. Subsequent purchase payments
under a Qualified Plan may be limited by the terms of the plan and
provisions of the Internal Revenue Code. Subsequent purchase payments may be
paid under an Automatic Investment Program or, if an Owner owns shares of
one or more T. Rowe Price Funds, by directing Investment Services to redeem
shares of that fund(s) and forward the redemption proceeds to the Company as
a subsequent purchase payment. The minimum initial purchase payment required
must be paid before the Automatic Investment Program will be accepted by the
Company. The redemption of fund shares is a sale of shares for tax purposes
which may result in a taxable gain or loss.
ALLOCATION OF PURCHASE PAYMENTS
In an application for a Contract, the Contractowner selects the Subaccounts
or the Fixed Interest Account to which purchase payments will be allocated.
Purchase payments will be allocated according to the Contractowner's
instructions contained in the application or more recent instructions
received, if any, except that no purchase payment allocation is permitted
that would result in less than $25 per payment being allocated to any one
Subaccount or the Fixed Interest Account. Available allocation alternatives
include the seven Subaccounts and the Fixed Interest Account.
A Contractowner may change the purchase payment allocation instructions by
submitting a proper written request to the Company. A proper change in
allocation instructions will be effective upon receipt by the Company and
will continue in effect until subsequently changed. Changes in the
allocation of future purchase payments have no effect on existing Contract
Value. Such Contract Value, however, may be exchanged among the Subaccounts
of the Separate Account or the Fixed Interest Account in the manner
described in "Exchanges of Contract Value," page 21.
DOLLAR COST AVERAGING OPTION
The Company currently offers an option under which Contractowners may dollar
cost average their allocations in the Subaccounts under the Contract by
authorizing the Company to make periodic allocations of Contract Value from
any one Subaccount to one or more of the other Subaccounts. Dollar cost
averaging is a systematic method of investing in which securities are
purchased at regular intervals in fixed dollar amounts so that the cost of
the securities gets averaged over time and possibly over various market
cycles. The option will result in the allocation of Contract Value to one or
more Subaccounts, and these amounts will be credited at the Accumulation
Unit value as of the end of the Valuation Dates on which the exchanges are
effected. Since the value of Accumulation Units will vary, the amounts
allocated to a Subaccount will result in the crediting of a greater number
of units when the Accumulation Unit value is low and a lesser number of
units when the Accumulation Unit value is high. Similarly, the amounts
exchanged from a Subaccount will result in a debiting of a greater number of
units when the Subaccount's Accumulation Unit value is low and a lesser
number of units when the Accumulation Unit value is high. Dollar cost
averaging does not guarantee profits, nor does it assure that a
Contractowner will not have losses.
A Dollar Cost Averaging Request form is available from the Company upon
request. On the form, the Contractowner must designate whether Contract
Value is to be exchanged on the basis of a specific dollar amount, a fixed
percentage, or earnings only, the Subaccount or Subaccounts to and from
which the exchanges will be made, the desired frequency of the exchanges,
which may be on a monthly, quarterly, semiannual, or annual basis, and the
length of time during which the exchanges shall continue or the total amount
to be exchanged over time.
To elect the Dollar Cost Averaging Option, the Owner's Contract Value must
be at least $5,000 ($2,000 for a Contract funding a Qualified Plan), and a
Dollar Cost Averaging Request in proper form must be received by the
Company. The Dollar Cost Averaging Request form will not be considered
complete until the Contractowner's Contract Value is at least the required
amount. A Contract owner may not have in effect at the same time Dollar Cost
Averaging and Asset Rebalancing Options.
After the Company has received a Dollar Cost Averaging Request in proper
form, the Company will exchange Contract Value in amounts designated by the
Contractowner from the Subaccount from which exchanges are to be made to the
Subaccount or Subaccounts chosen by the Contractowner.
The minimum amount that may be exchanged is $200, and the minimum amount
that may be allocated to any one Subaccount is $25. Each exchange will be
effected on the date specified by the Owner or, if no date is specified, on
the monthly, quarterly, semiannual, or annual anniversary, whichever
corresponds to the period selected by the Contractowner, of the date of
receipt by the Company of a Dollar Cost Averaging Request in proper form.
Exchanges will be made until the total amount elected has been exchanged,
until the time period chosen has expired, or until Contract Value in the
Subaccount from which exchanges are made has been depleted. Amounts
periodically exchanged under this option are not included in the six
exchanges per Contract Year that are allowed as discussed in "Exchanges of
Contract Value" on page 21.
A Contractowner may instruct the Company at any time to terminate the option
by written request to the Company. In that event, the Contract Value in the
Subaccount from which exchanges were being made that has not been exchanged
will remain in that Subaccount unless the Contractowner instructs otherwise.
If a Contractowner wishes to continue exchanging on a dollar cost averaging
basis after the expiration of the applicable period, the total amount
elected has been exchanged, or the Subaccount has been depleted, or after
the Dollar Cost Averaging Option has been canceled, a new Dollar Cost
Averaging Request must be completed and sent to the Company, and the
Contract must meet the $5,000 ($2,000 for a Contract funding a Qualified
Plan) minimum required amount of Contract Value at that time.
Contract Value may also be dollar cost averaged to or from the Fixed
Interest Account, subject to certain restrictions described under "The Fixed
Interest Account," page 28.
ASSET REBALANCING OPTION
The Company currently offers an option under which Contractowners may
authorize the Company to automatically exchange Contract Value each quarter
to maintain a particular percentage allocation among the Subaccounts as
selected by the Contractowner. The Contract Value allocated to each
Subaccount will grow or decline in value at different rates during the
quarter, and Asset Rebalancing automatically reallocates the Contract Value
in the Subaccounts each quarter to the allocation selected by the
Contractowner. Asset Rebalancing is intended to exchange Contract Value from
those Subaccounts that have increased in value to those Subaccounts that
have declined in value. Over time, this method of investing may help a
Contractowner buy low and sell high, although there can be no assurance of
this. This investment method does not guarantee profits, nor does it assure
that a Contractowner will not have losses.
To elect the Asset Rebalancing Option, the Contract Value in the Contract
must be at least $10,000 ($2,000 for a Contract funding a Qualified Plan)
and an Asset Rebalancing Request in proper form must be received by the
Company. A Contractowner may not have in effect at the same time Dollar Cost
Averaging and Asset Rebalancing Options. An Asset Rebalancing Request form
is available upon request. On the form, the Contractowner must indicate the
applicable Subaccounts and the percentage of Contract Value which should be
allocated to each of the applicable Subaccounts each quarter under the Asset
Rebalancing Option. If the Asset Rebalancing Option is elected, all Contract
Value allocated to the Subaccounts must be included in the Asset Rebalancing
Option.
This option will result in the exchange of Contract Value to one or more of
the Subaccounts on the date specified by the Contractowner or, if no date is
specified, on the date of the Company's receipt of the Asset Rebalancing
Request in proper form and on each quarterly anniversary of the applicable
date thereafter. The amounts exchanged will be credited at the Accumulation
Unit value as of the end of the Valuation Dates on which the exchanges are
effected. Amounts periodically exchanged under this option are not included
in the six exchanges per Contract Year that are allowed, nor are they
subject to the minimum exchange amount, discussed under "Exchanges of
Contract Value" below.
A Contractowner may instruct the Company at any time to terminate this
option by written request to the Company. In that event, the Contract Value
in the Subaccounts that has not been exchanged will remain in those
Subaccounts regardless of the percentage allocation unless the Contractowner
instructs otherwise. If a Contractowner wishes to resume Asset Rebalancing
after it has been canceled, a new Asset Rebalancing Request form must be
completed and sent to the Company and the Contract Value at the time the
request is made must be at least $10,000 ($2,000 for a Contract funding a
Qualified Plan).
Contract Value allocated to the Fixed Interest Account may be included in
the Asset Rebalancing Program, subject to certain restrictions described
under "The Fixed Interest Account," page 28.
EXCHANGES OF CONTRACT VALUE
During the Accumulation Period, Contract Value may be exchanged among the
Subaccounts by the Contractowner upon proper request to the Company. Up to
six exchanges are allowed in any Contract Year. The minimum exchange amount
is $500 ($200 under the Dollar Cost Averaging Option), or the amount
remaining in a given Subaccount.
Contract Value may also be exchanged between the Subaccounts and the Fixed
Interest Account; however, exchanges from the Fixed Interest Account to the
Subaccounts are restricted as described in "The Fixed Interest Account,"
page 28.
CONTRACT VALUE
The Contract Value is the sum of the amounts under the Contract held in each
Subaccount of the Separate Account and in the Fixed Interest Account as of
any Valuation Date.
On each Valuation Date, the portion of the Contract Value allocated to any
particular Subaccount will be adjusted to reflect the investment experience
of that Subaccount for that date. See "Determination of Contract Value,"
below. No minimum amount of Contract Value is guaranteed. A Contractowner
bears the entire investment risk relating to the investment performance of
Contract Value allocated to the Subaccounts.
DETERMINATION OF CONTRACT VALUE
The Contract Value will vary to a degree that depends upon several factors,
including investment performance of the Subaccounts to which Contract Value
has been allocated, payment of subsequent purchase payments, partial
withdrawals, and the charges assessed in connection with the Contract. The
amounts allocated to the Subaccounts will be invested in shares of the
corresponding Portfolios of the Funds. The investment performance of the
Subaccounts will reflect increases or decreases in the net asset value per
share of the corresponding Portfolios and any dividends or distributions
declared by the corresponding Portfolios. Any dividends or distributions
from any Portfolio of the Funds will be automatically reinvested in shares
of the same Portfolio, unless the Company, on behalf of the Separate
Account, elects otherwise.
Assets in the Subaccounts are divided into Accumulation Units, which are
accounting units of measure used to calculate the value of a Contractowner's
interest in a Subaccount. When a Contractowner allocates purchase payments
to a Subaccount, the Contract is credited with Accumulation Units. The
number of Accumulation Units to be credited is determined by dividing the
dollar amount allocated to the particular Subaccount by the Accumulation
Unit value for the particular Subaccount at the end of the Valuation Period
in which the purchase payment is credited. In addition, other transactions
including full or partial withdrawals, exchanges, and assessment of premium
taxes against the Contract affect the number of Accumulation Units credited
to a Contract. The number of units credited or debited in connection with
any such transaction is determined by dividing the dollar amount of such
transaction by the unit value of the affected Subaccount. The Accumulation
Unit value of each Subaccount is determined on each Valuation Date. The
number of Accumulation Units credited to a Contract will not be changed by
any subsequent change in the value of an Accumulation Unit, but the dollar
value of an Accumulation Unit may vary from Valuation Date to Valuation
Date, depending upon the investment experience of the Subaccount and charges
against the Subaccount.
The Accumulation Unit value of each Subaccount's units initially was $10.
The unit value of a Subaccount on any Valuation Date is calculated by
dividing the value of each Subaccount's net assets by the number of
Accumulation Units credited to the Subaccount on that date. Determination of
the value of the net assets of a Subaccount takes into account the
following: (1) the investment performance of the Subaccount, which is based
upon the investment performance of the corresponding Portfolio of the Funds,
(2) any dividends or distributions paid by the corresponding Portfolio, (3)
the charges, if any, that may be assessed by the Company for taxes
attributable to the operation of the Subaccount, and (4) the mortality and
expense risk charge under the Contract.
FULL AND PARTIAL WITHDRAWALS
A Contractowner may obtain proceeds from a Contract by surrendering the
Contract for its Withdrawal Value or by making a partial withdrawal. A full
or partial withdrawal, including a systematic withdrawal, may be taken from
the Contract Value at any time while the Owner is living and before the
Annuity Payout Date, subject to restrictions on partial withdrawals of
Contract Value from the Fixed Interest Account and limitations under
applicable law. A full or partial withdrawal request will be effective as of
the end of the Valuation Period that a proper written request is received by
the Company. A proper written request must include the written consent of
any effective assignee or irrevocable Beneficiary, if applicable.
Contractowner may direct Investment Services to apply the proceeds of a full
or partial withdrawal to the purchase of shares of one or more of the T.
Rowe Price Funds by so indicating in their written withdrawal request.
The proceeds received upon a full withdrawal will be the Contract's
Withdrawal Value. The Withdrawal Value is equal to the Contract Value as of
the end of the Valuation Period during which a proper withdrawal request is
received by the Company, less any premium taxes due and paid by the Company.
A partial withdrawal may be requested for a specified percentage or dollar
amount of Contract Value. Each partial withdrawal request must be for at
least $500 except systematic withdrawals discussed below. A request for a
partial withdrawal will result in a payment by the Company in accordance
with the amount specified in the partial withdrawal request. Upon payment,
the Contract Value will be reduced by an amount equal to the payment and any
applicable premium tax. If a partial withdrawal is requested that would
leave the Withdrawal Value in the Contract less than $2,000, then the
Company reserves the right to treat the partial withdrawal as a request for
a full withdrawal.
The amount of a partial withdrawal will be deducted from the Contract Value
in the Subaccounts and the Fixed Interest Account, according to the
Contractowner's instructions to the Company, subject to the restrictions on
partial withdrawals from the Fixed Interest Account. See "The Fixed Interest
Account" on page 28. If a Contractowner does not specify the allocation, the
Company will contact the Contractowner for instructions, and the withdrawal
will be effected as of the end of the Valuation Period in which such
instructions are obtained. A full or partial withdrawal, including a
systematic withdrawal, may be subject to a premium tax charge to reimburse
the Company for any tax on premiums on a Contract that may be imposed by
various states and municipalities. See "Premium Tax Charge" on page 25.
A full or partial withdrawal, including a systematic withdrawal, may result
in receipt of taxable income to the Owner and, if made prior to the Owner
attaining age 59 1/2, may be subject to the 10% penalty tax. The tax
consequences of a withdrawal under the Contract should be carefully
considered. See "Federal Tax Matters" on page 32.
SYSTEMATIC WITHDRAWALS
The Company currently offers a feature under which systematic withdrawals
may be elected. Under this feature, a Contractowner may elect to receive
systematic withdrawals before the Annuity Payout Date by sending a properly
completed Systematic Withdrawal Request form to the Company. A Contractowner
may direct Investment Services to apply the proceeds of a systematic
withdrawal to the purchase of shares of one or more of the T. Rowe Price
Funds by so indicating on the Systematic Withdrawal Request form. A proper
request must include the written consent of any effective assignee or
irrevocable Beneficiary, if applicable. A Contractowner may designate the
systematic withdrawal amount as a percentage of Contract Value allocated to
the Subaccounts and/or Fixed Interest Account, as a specified dollar amount,
as all earnings in the Contract, or as based upon the life expectancy of the
Owner or the Owner and a beneficiary, and the desired frequency of the
systematic withdrawals, which may be monthly, quarterly, semiannually, or
annually. Systematic withdrawals may be stopped or modified upon proper
written request by the Contractowner received by the Company at least 30
days in advance of the requested date of termination or modification.
Each systematic withdrawal must be at least $100. Upon payment, the
Contractowner's Contract Value will be reduced by an amount equal to the
payment proceeds plus any applicable premium taxes. Any systematic
withdrawal that equals or exceeds the Withdrawal Value will be treated as a
full withdrawal. In no event will payment of a systematic withdrawal exceed
the Withdrawal Value. The Contract will automatically terminate if a
systematic withdrawal causes the Contract's Withdrawal Value to equal zero.
Each systematic withdrawal will be effected as of the end of the Valuation
Period during which the withdrawal is scheduled. The deduction caused by the
systematic withdrawal will be allocated to the Contractowner's Contract
Value in the Subaccounts and the Fixed Interest Account as directed by the
Contractowner.
The Company may, at any time, discontinue, modify, or suspend systematic
withdrawals provided that, as required by its current contractual
arrangements with Investment Services, the Company first obtains the consent
of Investment Services, which consent shall not be unreasonably withheld.
Systematic withdrawals from Contract Value allocated to the Fixed Interest
Account must provide for payments over a period of not less than 36 months
as described under "The Fixed Interest Account" on page 28. The tax
consequences of a systematic withdrawal including the 10% penalty tax
imposed on withdrawals made prior to the Owner's attaining age 591 1/2
should be carefully considered. See "Federal Tax Matters" on page 32.
FREE-LOOK RIGHT
An Owner may return a Contract within the Free-Look Period, which is a
30-day period beginning when the Owner receives the Contract. The returned
Contract will then be deemed void, and the Company will refund any purchase
payments allocated to the Fixed Interest Account plus any Contract Value in
the Subaccounts as of the end of the Valuation Period during which the
returned Contract is received by the Company and any fees or other charges
deducted. The Company will return purchase payments allocated to the
Subaccounts rather than Contract Value in those circumstances in which it is
required to do so.
DEATH BENEFIT
If the Owner dies during the Accumulation Period, the Company will pay the
death benefit proceeds to the Designated Beneficiary upon receipt of due
proof of death and instructions regarding payment to the Designated
Beneficiary. If there are Joint Owners, the death benefit proceeds will be
payable upon receipt of due proof of death of either Owner during the
Accumulation Period and instructions regarding payment. If the surviving
spouse of the deceased Owner is the sole Designated Beneficiary, such spouse
may elect to continue the Contract in force, subject to certain limitations.
See "Distribution Requirements" below. If the Owner is not a natural person,
the death benefit proceeds will be payable upon receipt of due proof of
death of the Annuitant during the Accumulation Period and instructions
regarding payment, and the amount of the death benefit is based on the age
of the oldest Annuitant on the date the Contract was issued. If the death of
an Owner occurs on or after the Annuity Payout Date, no death benefit
proceeds will be payable under the Contract, except that any guaranteed
annuity payments remaining unpaid will continue to be paid to the Annuitant
pursuant to the Annuity Option in force at the date of death.
The death benefit proceeds will be the death benefit reduced by any premium
taxes due or paid by the Company. If an Owner dies during the Accumulation
Period and the age of each Owner was 75 or younger on the date the Contract
was issued, the amount of the death benefit will be the greatest of (1) the
Contract Value as of the end of the Valuation Period in which due proof of
death and instructions regarding payment are received by the Company, (2)
the aggregate purchase payments received less any reductions caused by
previous withdrawals, or (3) the stepped-up death benefit. The stepped-up
death benefit is: (a) the highest death benefit on any annual Contract
anniversary that is both an exact multiple of five and occurs prior to the
oldest Owner attaining age 76, plus (b) any purchase payments made since the
applicable fifth annual Contract anniversary, less (c) any withdrawals since
the applicable anniversary.
If an Owner dies during the Accumulation Period and the Contract was issued
to the Owner after age 75, the amount of the death benefit will be the
Contract Value as of the end of the Valuation Period in which due proof of
death and instructions regarding payment are received by the Company.
The death benefit proceeds will be paid to the Designated Beneficiary in a
single sum or under one of the Annuity Options, as elected by the Designated
Beneficiary. If the Designated Beneficiary is to receive annuity payments
under an Annuity Option, there may be limits under applicable law on the
amount and duration of payments that the Beneficiary may receive, and
requirements respecting timing of payments. A tax adviser should be
consulted in considering Annuity Options. See "Federal Tax Matters," on page
32 for a discussion of the tax consequences in the event of death.
DISTRIBUTION REQUIREMENTS
For Contracts issued in connection with Non-Qualified Plans, if the
surviving spouse of the deceased Owner is the sole Designated Beneficiary,
such spouse may elect to continue the Contract in force until the earlier of
the surviving spouse's death or the Annuity Payout Date or to receive the
death benefit proceeds. For any Designated Beneficiary other than a
surviving spouse, only those options may be chosen that provide for complete
distribution of the Owner's interest in the Contract within five years of
the death of the Owner. If the Designated Beneficiary is a natural person,
that person alternatively can elect to begin receiving annuity payments
within one year of the Owner's death over a period not extending beyond his
or her life or life expectancy. If the Owner of the Contract is not a
natural person, these distribution rules are applicable upon the death of or
a change in the primary Annuitant.
For Contracts issued in connection with Qualified Plans, the terms of any
Qualified Plan and the Internal Revenue Code should be reviewed with respect
to limitations or restrictions on distributions following the death of the
Owner or Annuitant. Because the rules applicable to Qualified Plans are
extremely complex, a competent tax adviser should be consulted.
DEATH OF THE ANNUITANT
If the Annuitant dies prior to the Annuity Payout Date, and the Owner is a
natural person and is not the Annuitant, no death benefit proceeds will be
payable under the Contract. The Owner may name a new Annuitant within 30
days of the Annuitant's death. If a new Annuitant is not named, the Company
will designate the Owner as Annuitant. On the death of the Annuitant on or
after the Annuity Payout Date, any guaranteed annuity payments remaining
unpaid will continue to be paid to the Designated Beneficiary pursuant to
the Annuity Option in force at the date of death.
CHARGES AND DEDUCTIONS
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MORTALITY AND EXPENSE RISK CHARGE
The Company deducts a daily charge from the assets of each Subaccount for
mortality and expense risks assumed by the Company under the Contracts. The
charge is equal to an annual rate of .55% of each Subaccount's average daily
net assets. This amount is intended to compensate the Company for certain
mortality and expense risks the Company assumes in offering and
administering the Contracts and in operating the Subaccounts.
The expense risk borne by the Company is the risk that the Company's actual
expenses in issuing and administering the Contracts and operating the
Subaccounts will be more than the charges assessed for such expenses. The
mortality risk borne by the Company is the risk that Annuitants, as a group,
will live longer than the Company's actuarial tables predict. In this event,
the Company guarantees that annuity payments will not be affected by a
change in mortality experience that results in the payment of greater
annuity income than assumed under the Annuity Options in the Contract. The
Company also assumes a mortality risk in connection with the death benefit
under the Contract.
The Company may ultimately realize a profit from this charge to the extent
it is not needed to cover mortality and administrative expenses, but the
Company may realize a loss to the extent the charge is not sufficient. The
Company may use any profit derived from this charge for any lawful purpose,
including any promotional expenses.
PREMIUM TAX CHARGE
Various states and municipalities impose a tax on premiums on annuity
contracts received by insurance companies. Whether or not a premium tax is
imposed will depend upon, among other things, the Owner's state of
residence, the Annuitant's state of residence, and the insurance tax laws
and the Company's status in a particular state. The Company assesses a
premium tax charge to reimburse itself for premium taxes that it incurs in
connection with a Contract. This charge will be deducted upon annuitization,
upon full or partial withdrawal, or upon payment of the death benefit, if
premium taxes are incurred at that time and are not refundable. No premium
tax is currently imposed in the State of New York. However, the Company
reserves the right to deduct premium taxes, if imposed, when due or any time
thereafter.
OTHER CHARGES
The Company may charge the Separate Account or the Subaccounts for the
federal, state, or local taxes incurred by the Company that are attributable
to the Separate Account or the Subaccounts, or to the operations of the
Company with respect to the Contracts, or that are attributable to payment
of premiums or acquisition costs under the Contracts. No such charge is
currently assessed. See "Tax Status of the Company and the Separate Account"
and "Charge for the Company's Taxes."
GUARANTEE OF CERTAIN CHARGES
The Company guarantees that the charge for mortality and expense risks will
not exceed an annual rate of .55% of each Subaccount's average daily net
assets.
FUND EXPENSES
Each Subaccount of the Separate Account purchases shares at the net asset
value of the corresponding Portfolio of the Funds. Each Portfolio's net
asset value reflects the investment management fee and any other expenses
that are deducted from the assets of the Fund. These fees and expenses are
not deducted from the Subaccount, but are paid from the assets of the
corresponding Portfolio. As a result, the Owner indirectly bears a pro rata
portion of such fees and expenses. The management fees and other expenses,
if any, which are more fully described in the Funds' prospectus, are not
specified or fixed under the terms of the Contract, and the Company bears no
responsibility for such fees and expenses.
ANNUITY PERIOD
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GENERAL
The Contractowner may select the Annuity Payout Date at the time of
application. The Annuity Payout Date may not be deferred beyond the
Annuitant's 90th birthday, although the terms of a Qualified Plan and the
laws of certain states may require annuitization at an earlier age. If the
Contractowner does not select an Annuity Payout Date, the Annuity Payout
Date will be the later of the Annuitant's 70th birthday or the fifth annual
Contract Anniversary. See "Selection of an Option," on page 28. If there are
Joint Annuitants, the birthdate of the older Annuitant will be used to
determine the latest Annuity Payout Date.
On the Annuity Payout Date, the proceeds under the Contract will be applied
to provide an annuity under one of the options described below. Each option
is available in two forms--either as a variable annuity supported by the
Subaccounts or as a fixed annuity supported by the Fixed Interest Account. A
combination variable and fixed annuity is also available. Variable annuity
payments will fluctuate with the investment performance of the applicable
Subaccounts while fixed annuity payments will not. Unless the Owner directs
otherwise, proceeds derived from Contract Value allocated to the Subaccounts
will be applied to purchase a variable annuity, and proceeds derived from
Contract Value allocated to the Fixed Interest Account will be applied to
purchase a fixed annuity. The proceeds under the Contract will be equal to
the Contractowner's Contract Value in the Subaccounts and the Fixed Interest
Account as of the Annuity Payout Date, reduced by any applicable premium
taxes.
The Contract provides for seven Annuity Options. Other Annuity Options may
be available upon request at the discretion of the Company. Annuity payments
under Annuity Options 1 through 4 are based upon annuity rates that vary
with the Annuity Option selected. In the case of Options 1 through 4, the
annuity rates will vary based on the age and sex of the Annuitant, except
that unisex rates are used where required by law. The annuity rates are
based upon an assumed interest rate of 3.5 percent, compounded annually. In
the case of Options 5, 6, and 7 as described below, annuity rates based on
age and sex are not used to calculate annuity payments. If no Annuity Option
has been selected, annuity payments will be made to the Annuitant under
Option 2 which shall be an annuity payable monthly during the lifetime of
the Annuitant with payments guaranteed to be made for 120 months.
Annuity payments can be made on a monthly, quarterly, semiannual, or annual
basis, although no payments will be made for less than $20. A Contractowner
may direct Investment Services to apply the proceeds of an annuity payment
to shares of one or more of the T. Rowe Price Funds by submitting a written
request to the Company. If the frequency of payments selected would result
in payments of less than $20, the Company reserves the right to change the
frequency.
An Owner may designate or change an Annuity Payout Date, Annuity Option, and
Annuitant, provided proper written notice is received by the Company at
least 30 days prior to the Annuity Payout Date set forth in the Contract.
The date selected as the new Annuity Payout Date must be at least 30 days
after the date written notice requesting a change of Annuity Payout Date is
received by the Company.
During the Annuity Period, Contract Value may be exchanged among the
Subaccounts by the Contractowner upon proper written request to the T. Rowe
Price Variable Annuity Service Center. Up to six exchanges are allowed in
any Contract Year. Exchanges are not allowed within 30 days of the Annuity
Payout Date. If one of Annuity Options 5 through 7 is selected, Contract
Value also may be exchanged between the Subaccounts and the Fixed Interest
Account, subject to the restrictions on exchanges from the Fixed Interest
Account described under "The Fixed Interest Account," page 28. The minimum
exchange amount is $500 or, if less, the amount remaining in the Fixed
Interest Account or Subaccount.
Once annuity payments have commenced under Annuity Options 1, 2, 3, or 4, an
Annuitant or Owner cannot change the Annuity Option and cannot surrender his
or her annuity and receive a lump-sum settlement in lieu thereof. The
Contract specifies annuity tables for Annuity Options 1 through 4 described
below which contain the guaranteed minimum dollar amount of periodic annuity
payments for each $1,000 applied to an Annuity Option for a fixed annuity.
ANNUITY OPTIONS
OPTION 1 - LIFE INCOME
Periodic annuity payments will be made during the lifetime of the Annuitant.
It is possible under this Option for any Annuitant to receive only one
annuity payment if the Annuitant's death occurred prior to the due date of
the second annuity payment, two if death occurred prior to the third annuity
payment due date, etc. THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED
UNDER THIS OPTION. PAYMENTS CEASE UPON THE DEATH OF THE ANNUITANT,
REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
OPTION 2 - LIFE INCOME WITH GUARANTEED PAYMENTS OF 5, 10, 15, OR 20 YEARS
Periodic annuity payments will be made during the lifetime of the Annuitant
with the promise that if, at the death of the Annuitant, payments have been
made for less than a stated period, which may be five, ten, fifteen, or
twenty years, as elected, annuity payments will be continued during the
remainder of such period to the Designated Beneficiary.
OPTION 3 - LIFE WITH INSTALLMENT OR UNIT REFUND OPTION
Periodic annuity payments will be made during the lifetime of the Annuitant
with the promise that, if at the death of the Annuitant, the number of
payments that has been made is less than the number determined by dividing
the amount applied under this Option by the amount of the first payment,
annuity payments will be continued to the Designated Beneficiary until that
number of payments has been made.
OPTION 4 - JOINT AND LAST SURVIVOR
Periodic annuity payments will be made during the lifetime of either
Annuitant. It is possible under this Option for only one annuity payment to
be made if both Annuitants died prior to the second annuity payment due
date, two if both died prior to the third annuity payment due date, etc. AS
IN THE CASE OF OPTION 1, THERE IS NO MINIMUM NUMBER OF PAYMENTS GUARANTEED
UNDER THIS OPTION. PAYMENTS CEASE UPON THE DEATH OF THE LAST SURVIVING
ANNUITANT, REGARDLESS OF THE NUMBER OF PAYMENTS RECEIVED.
OPTION 5 - PAYMENTS FOR SPECIFIED PERIOD
Periodic annuity payments will be made for a fixed period, which may be from
five to twenty years, as elected, with the guarantee that, if, at the death
of all Annuitants, payments have been made for less than the selected fixed
period, the remaining unpaid payments will be paid to the Designated
Beneficiary.
OPTION 6 - PAYMENTS OF A SPECIFIED AMOUNT
Periodic payments of the amount elected will be made until the amount
applied and interest thereon are exhausted, with the guarantee that, if, at
the death of all Annuitants, all guaranteed payments have not yet been made,
the remaining unpaid payments will be paid to the Designated Beneficiary.
OPTION 7 - AGE RECALCULATION
Periodic annuity payments will be made based upon the Annuitant's life
expectancy, or the joint life expectancies of the Annuitant and a
beneficiary, at the Annuitant's attained age (and the beneficiary's attained
or adjusted age, if applicable) each year. The payments are computed by
reference to actuarial tables prescribed by the Treasury Secretary, until
the amount applied is exhausted. This Option should be elected only under
Contracts funding Qualified Plans.
SELECTION OF AN OPTION
Contractowners should carefully review the Annuity Options with their
financial or tax advisers, and, for Contracts used in connection with a
Qualified Plan, reference should be made to the terms of the particular plan
and the requirements of the Internal Revenue Code for pertinent limitations
respecting annuity payments and other matters. For instance, Qualified Plans
generally require that annuity payments begin no later than April 1 of the
calendar year following the year in which the Annuitant reaches age 70 1/2
In addition, under Qualified Plans, the period elected for receipt of
annuity payments under Annuity Options (other than life income) generally
may be no longer than the joint life expectancy of the Annuitant and
beneficiary in the year that the Annuitant reaches age 70 1/2, and must be
shorter than such joint life expectancy if the beneficiary is not the
Annuitant's spouse and is more than ten years younger than the Annuitant.
For Non-Qualified Plans, the Company does not allow annuity payments to be
deferred beyond the Annuitant's 90th birthday.
THE FIXED INTEREST ACCOUNT
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Contractowners may allocate all or a portion of their purchase payments and
exchange Contract Value to the Fixed Interest Account. Amounts allocated to
the Fixed Interest Account become part of the Company's General Account,
which supports the Company's insurance and annuity obligations. The
Company's General Account is subject to regulation and supervision by the
New York Department of Insurance. In reliance on certain exemptive and
exclusionary provisions, interests in the Fixed Interest Account have not
been registered as securities under the Securities Act of 1933 (the "1933
Act"), and the Fixed Interest Account has not been registered as an
investment company under the Investment Company Act of 1940 (the "1940
Act"). Accordingly, neither the Fixed Interest Account nor any interests
therein are generally subject to the provisions of the 1933 Act or the 1940
Act. The Company has been advised that the staff of the SEC has not reviewed
the disclosure in this Prospectus relating to the Fixed Interest Account.
This disclosure, however, may be subject to certain generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in the Prospectus. This Prospectus is
generally intended to serve as a disclosure document only for aspects of a
Contract involving the Separate Account and contains only selected
information regarding the Fixed Interest Account. For more information
regarding the Fixed Interest Account, see "The Contract" on page 17.
Amounts allocated to the Fixed Interest Account become part of the General
Account of the Company, which consists of all assets owned by the Company
other than those in the Separate Account and other separate accounts of the
Company. Subject to applicable law, the Company has sole discretion over the
investment of the assets of its General Account.
INTEREST
Amounts allocated to the Fixed Interest Account earn interest at a fixed
rate or rates that are paid by the Company. The Contract Value in the Fixed
Interest Account earns interest at an interest rate that is guaranteed to be
at least an annual effective rate of 3% which will accrue daily ("Guaranteed
Rate"). Such interest will be paid regardless of the actual investment
experience of the Company's General Account. In addition, the Company may in
its discretion pay interest at a rate ("Current Rate") that exceeds the
Guaranteed Rate. The Company will determine the Current Rate, if any, from
time to time.
Contract Value allocated or exchanged to the Fixed Interest Account will
earn interest at the Current Rate, if any, in effect on the date such
portion of Contract Value is allo cated or exchanged to the Fixed Interest
Account. The Current Rate paid on any such portion of Contract Value
allocated or exchanged to the Fixed Interest Account will be guaranteed for
rolling one-year periods (each a "Guarantee Period"). Upon expiration of any
Guarantee Period, a new Guarantee Period of the same duration begins with
respect to that portion of Contract Value, which will earn interest at the
Current Rate, if any, in effect on the first day of the new Guarantee
Period.
Contract Value allocated or exchanged to the Fixed Interest Account at one
point in time may be credited with a different Current Rate than amounts
allocated or exchanged to the Fixed Interest Account at another point in
time. For example, amounts allocated to the Fixed Interest Account in June
may be credited with a different current rate than amounts allocated to the
Fixed Interest Account in July. Therefore, at any time, various portions of
a Contractowner's Contract Value in the Fixed Interest Account may be
earning interest at different Current Rates depending upon the point in time
such portions were allocated or exchanged to the Fixed Interest Account. The
Company bears the investment risk for the Contract Value allocated to the
Fixed Interest Account and for paying interest at the Guaranteed Rate on
amounts allocated to the Fixed Interest Account.
For purposes of determining the interest rates to be credited on Contract
Value in the Fixed Interest Account, withdrawals or exchanges from the Fixed
Interest Account will be deemed to be taken first from any portion of
Contract Value allocated to the Fixed Interest Account for which the
Guarantee Period expires during the calendar month in which the withdrawal
or exchange is effected, then in the order beginning with that portion of
such Contract Value which has the longest amount of time remaining before
the end of its Guarantee Period and ending with that portion which has the
least amount of time remaining before the end of its Guarantee Period. For
more information about exchanges and withdrawals from the Fixed Interest
Account, see "Exchanges and Withdrawals" below.
DEATH BENEFIT
The death benefit under the Contract will be determined in the same fashion
for a Contract that has Contract Value in the Fixed Interest Account as for
a Contract that has Contract Value allocated to the Subaccounts. See "Death
Benefit," page 23.
CONTRACT CHARGES
Premium taxes will be the same for Contractowners who allocate purchase
payments or exchange Contract Value to the Fixed Interest Account as for
those who allocate purchase payments to the Subaccounts. The charge for
mortality and expense risks will not be assessed against the Fixed Interest
Account, and any amounts that the Company pays for income taxes allocable to
the Subaccounts will not be charged against the Fixed Interest Account. In
addition, the investment management fees and any other expenses paid by the
Funds will not be paid directly or indirectly by Contractowners to the
extent the Contract Value is allocated to the Fixed Interest Account;
however, such Contractowners will not participate in the investment
experience of the Subaccounts.
EXCHANGES AND WITHDRAWALS
Amounts may be exchanged from the Subaccounts to the Fixed Interest Account
and from the Fixed Interest Account to the Subaccounts, subject to the
following limitations. Exchanges from the Fixed Interest Account are allowed
only (1) from Contract Value, the Guarantee Period of which expires during
the calendar month in which the exchange is effected, (2) pursuant to the
Dollar Cost Averaging Option, provided that such exchanges are scheduled to
be made over a period of not less than one year, and (3) pursuant to the
Asset Rebalancing Option, provided that upon receipt of the Asset
Rebalancing Request, Contract Value is allocated among the Fixed Interest
Account and the Subaccounts in the percentages selected by the Contractowner
without violating the restrictions on exchanges from the Fixed Interest
Account set forth in (1) above. Accordingly, a Contractowner who desires to
implement the Asset Rebalancing Option should do so at a time when Contract
Value may be exchanged from the Fixed Interest Account to the Subaccounts in
the percentages selected by the Contractowner without violating the
restrictions on exchanges from the Fixed Interest Account. Once an Asset
Rebalancing Option is implemented, the restrictions on exchanges will not
apply to exchanges made pursuant to the Option. Up to six exchanges are
allowed in any Contract Year and exchanges pursuant to the Dollar Cost
Averaging and Asset Reallocation Options are not included in the six
exchanges allowed per Contract Year. The minimum exchange amount is $500
($200 under the Dollar Cost Averaging Option) or the amount remaining in the
Fixed Interest Account.
If Contract Value is being exchanged from the Fixed Interest Account
pursuant to the Dollar Cost Averaging or Asset Rebalancing Option or
withdrawn from the Fixed Interest Account pursuant to systematic
withdrawals, any purchase payment allocated to, or Contract Value exchanged
to or from, the Fixed Interest Account will automatically terminate such
Dollar Cost Averaging or Asset Rebalancing Option or systematic withdrawals,
and any withdrawal from the Fixed Interest Account or the Subaccounts will
automatically terminate the Asset Rebalancing Option. In the event of
automatic termination of any of the foregoing options, the Company shall so
notify the Contractowner, and the Contractowner may reestablish Dollar Cost
Averaging, Asset Rebalancing, or systematic withdrawals by sending a written
request to the Company, provided that the Owner's Contract Value at that
time meets any minimum amount required for the Dollar Cost Averaging or
Asset Rebalancing Option.
The Contractowner may also make full withdrawals to the same extent as a
Contractowner who has allocated Contract Value to the Subaccounts. A
Contractowner may make a partial withdrawal from the Fixed Interest Account
only (1) from Contract Value, the Guarantee Period of which expires during
the calendar month in which the partial withdrawal is effected, (2) pursuant
to systematic withdrawals, and (3) once per Contract Year in an amount up to
the greater of $5,000 or 10% of Contract Value allocated to the Fixed
Interest Account at the time of the partial withdrawal. Systematic
withdrawals from Contract Value allocated to the Fixed Interest Account must
provide for payments over a period of not less than 36 months. See "Full and
Partial Withdrawals," page 22 and "Systematic Withdrawals," page 23.
PAYMENTS FROM THE FIXED INTEREST ACCOUNT
The Company reserves the right to delay for up to six months after a written
request in proper form is received by the Company, full and partial
withdrawals, loans, and exchanges from the Fixed Interest Account. During
the period of deferral, interest at the applicable interest rate or rates
will continue to be credited to the amounts allocated to the Fixed Interest
Account. The Company does not expect to delay payments from the Fixed
Interest Account and will notify the Contractowner if there will be a delay.
MORE ABOUT THE CONTRACT
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OWNERSHIP
The Contractowner is the person named as such in the application or in any
later change shown in the Company's records. While living, the Contractowner
alone has the right to receive all benefits and exercise all rights that the
Contract grants or the Company allows. The Owner may be an entity that is
not a living person, such as a trust or corporation, referred to herein as
"Non-Natural Persons." See "Federal Tax Matters," page 32.
Joint Owners. The Joint Owners will be joint tenants with rights of
survivorship and upon the death of an Owner, the surviving Owner shall be
the sole Owner. Any Contract transaction requires the signature of all
persons named jointly.
DESIGNATION AND CHANGE OF BENEFICIARY
The Beneficiary is the individual named as such in the application or any
later change shown in the Company's records. The Contractowner may change
the Beneficiary at any time while the Contract is in force by written
request on a form provided by the Company and received by the Company. The
change will not be binding on the Company until it is received and recorded
by the Company. The change will be effective as of the date this form is
signed subject to any payments made or other actions taken by the Company
before the change is received and recorded. A Secondary Beneficiary may be
designated. The Owner may designate a permanent Beneficiary whose rights
under the Contract cannot be changed without the Beneficiary's consent.
NON-PARTICIPATING
The Company is a stock life insurance company and, accordingly, no dividends
are paid by the Company on the Contract.
PAYMENTS FROM THE SEPARATE ACCOUNT
The Company will pay any full or partial withdrawal benefit or death benefit
proceeds from Contract Value allocated to the Subaccounts, and will effect
an exchange between Subaccounts or from a Subaccount to the Fixed Interest
Account within seven days from the Valuation Date a proper request is
received by the Company. However, the Company can postpone the calculation
or payment of such a payment or exchange of amounts from the Subaccounts to
the extent permitted under applicable law, for any period: (a) during which
the New York Stock Exchange is closed other than customary weekend and
holiday closings, (b) during which trading on the New York Stock Exchange is
restricted as determined by the SEC, or (c) during which an emergency, as
determined by the SEC, exists as a result of which (i) disposal of
securities held by the Separate Account is not reasonably practicable, or
(ii) it is not reasonably practicable to determine the value of the assets
of the Separate Account.
PROOF OF AGE AND SURVIVAL
The Company may require proof of age or survival of any person on whose life
annuity payments depend.
MISSTATEMENTS
If the age or sex of an Annuitant or age of an Owner has been misstated, the
correct amount paid or payable by the Company under the Contract shall be
such as the Contract Value would have provided for the correct age or sex
(unless unisex rates apply).
FEDERAL TAX MATTERS
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INTRODUCTION
The Contract described in this Prospectus is designed for use by individuals
in retirement plans which may or may not be Qualified Plans under the
provisions of the Internal Revenue Code ("Code"). The ultimate effect of
federal income taxes on the amounts held under a Contract, on annuity
payments, and on the economic benefits to the Owner, the Annuitant, and the
Beneficiary or other payee will depend upon the type of retirement plan for
which the Contract is purchased, the tax and employment status of the
individuals involved, and a number of other factors. The discussion of the
federal income tax considerations relating to a Contract contained herein
and in the Statement of Additional Information is general in nature and is
not intended to be an exhaustive discussion of all questions that might
arise in connection with a Contract. It is based upon the Company's
understanding of the present federal income tax laws as currently
interpreted by the Internal Revenue Service ("IRS"), and is not intended as
tax advice. No representation is made regarding the likelihood of
continuation of the present federal income tax laws or of the current
interpretations by the IRS or the courts. Future legislation may affect
annuity contracts adversely. Moreover, no attempt has been made to consider
any applicable state or other laws. Because of the inherent complexity of
the tax laws and the fact that tax results will vary according to the
particular circumstances of the individual involved and, if applicable, the
Qualified Plan, a person should consult with a qualified tax adviser
regarding the purchase of a Contract, the selection of an Annuity Option
under a Contract, the receipt of annuity payments under a Contract or any
other transaction involving a Contract (including an exchange). THE COMPANY
DOES NOT MAKE ANY GUARANTEE REGARDING THE TAX STATUS OF, OR TAX CONSEQUENCES
ARISING FROM, ANY CONTRACT OR ANY TRANSACTION INVOLVING THE CONTRACT.
TAX STATUS OF THE COMPANY AND THE SEPARATE ACCOUNT
GENERAL
The Company intends to be taxed as a life insurance company under Part I,
Subchapter L of the Code. Because the operations of the Separate Account
form a part of the Company, the Company will be responsible for any federal
income taxes that become payable with respect to the income of the Separate
Account and its Subaccounts.
CHARGE FOR THE COMPANY'S TAXES
A charge may be made against the Separate Account for any federal taxes
incurred by the Company that are attributable to the Separate Account, the
Subaccounts, or to the operations of the Company with respect to the
Contracts or attributable to payments, premiums, or acquisition costs under
the Contracts. The Company will review the question of a charge to the
Separate Account, the Subaccounts, or the Contracts for the Company's
federal taxes periodically. Charges may become necessary if, among other
reasons, the tax treatment of the Company or of income and expenses under
the Contracts is ultimately determined to be other than what the Company
currently believes it to be, if there are changes made in the federal income
tax treatment of variable annuities at the insurance company level, or if
there is a change in the Company's tax status.
Under current laws, the Company may incur state and local taxes (in addition
to premium taxes) in several states. At present, these taxes are not
significant. If there is a material change in applicable state or local tax
laws, the Company reserves the right to charge the Separate Account or the
Subaccounts for such taxes, if any, attributable to the Separate Account or
Subaccounts.
DIVERSIFICATION STANDARDS
Each of the Portfolios will be required to adhere to regulations adopted by
the Treasury Department pursuant to Section 817(h) of the Code prescribing
asset diversification requirements for investment companies whose shares are
sold to insurance company separate accounts funding variable contracts.
Pursuant to these regulations, on the last day of each calendar quarter (or
on any day within 30 days thereafter), no more than 55% of the total assets
of a Portfolio may be represented by any one investment, no more than 70%
may be represented by any two investments, no more than 80% may be
represented by any three investments, and no more than 90% may be
represented by any four investments. For purposes of Section 817(h),
securities of a single issuer generally are treated as one investment, but
obligations of the U.S. Treasury and each U.S. Governmental agency or
instrumentality generally are treated as securities of separate issuers. The
Separate Account, through the Portfolios, intends to comply with the
diversification requirements of Section 817(h).
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate account used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includable in the
variable Contractowner's gross income. The IRS has stated in published
rulings that a variable Contractowner will be considered the owner of
separate account assets if the Contractowner possesses incidents of
ownership in those assets, such as the ability to exercise investment
control over the assets. The Treasury Department also announced, in
connection with the issuance of regulations concerning diversification, that
those regulations "do not provide guidance concerning the circumstances in
which investor control of the investments of a segregated asset account may
cause the investor (i.e., the policyowner), rather than the insurance
company, to be treated as the owner of the assets in the account." This
announcement also stated that guidance would be issued by way of regulations
or rulings on the "extent to which policyholders may direct their
investments to particular subaccounts without being treated as owners of the
underlying assets." As of the date of this Prospectus, no such guidance has
been issued.
The ownership rights under the Contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that policyowners were not owners of separate account assets. For
example, the Contractowner has additional flexibility in allocating purchase
payments and Contract Values. These differences could result in a
Contractowner's being treated as the owner of a pro rata portion of the
assets of the Separate Account. In addition, the Company does not know what
standards will be set forth, if any, in the regulations or rulings which the
Treasury Department has stated it expects to issue. The Company therefore
reserves the right to modify the Contract, as deemed appropriate by the
Company, to attempt to prevent a Contractowner from being considered the
owner of a pro rata share of the assets of the Separate Account. Moreover,
in the event that regulations or rulings are adopted, there can be no
assurance that the Portfolios will be able to operate as currently described
in the Prospectus, or that the Funds will not have to change any Portfolio's
investment objective or investment policies.
INCOME TAXATION OF ANNUITIES IN GENERAL - NON-QUALIFIED PLANS
Section 72 of the Code governs the taxation of annuities. In general, a
Contractowner is not taxed on increases in value under an annuity contract
until some form of distribution is made under the contract. However, the
increase in value may be subject to tax currently under certain
circumstances. See "Contracts Owned by Non-Natural Persons" on page 35 and
"Diversification Standards" on page 33. Withholding of federal income taxes
on all distributions may be required unless a recipient who is eligible
elects not to have any amounts withheld and properly notifies the Company of
that election.
1. SURRENDERS OR WITHDRAWALS PRIOR TO THE ANNUITY PAYOUT DATE
Code Section 72 provides that amounts received upon a total or partial
withdrawal (including systematic withdrawals) from a Contract prior to the
Annuity Payout Date generally will be treated as gross income to the extent
that the cash value of the Contract (determined without regard to any
surrender charge in the case of a partial withdrawal) exceeds the
"investment in the contract." The "investment in the contract" is that
portion, if any, of purchase payments paid under a Contract less any
distributions received previously under the Contract that are excluded from
the recipient's gross income. The taxable portion is taxed at ordinary
income tax rates. For purposes of this rule, a pledge or assignment of a
Contract is treated as a payment received on account of a partial withdrawal
of a Contract. Similarly, loans under a Contract generally are treated as
distributions under the Contract.
2. SURRENDERS OR WITHDRAWALS ON OR AFTER THE ANNUITY PAYOUT DATE
Upon a complete surrender, the receipt is taxable to the extent that
the cash value of the Contract exceeds the investment in the Contract. The
taxable portion of such payments will be taxed at ordinary income tax rates.
For fixed annuity payments, the taxable portion of each payment generally is
determined by using a formula known as the "exclusion ratio," which
establishes the ratio that the investment in the Contract bears to the total
expected amount of annuity payments for the term of the Contract. That ratio
is then applied to each payment to determine the non-taxable portion of the
payment. The remaining portion of each payment is taxed at ordinary income
rates. For variable annuity payments, the taxable portion of each payment is
determined by using a formula known as the "excludable amount," which
establishes the non-taxable portion of each payment. The non-taxable portion
is a fixed dollar amount for each payment, determined by dividing the
investment in the Contract by the number of payments to be made. The
remainder of each variable annuity payment is taxable. Once the excludable
portion of annuity payments to date equals the investment in the Contract,
the balance of the annuity payments will be fully taxable.
3. PENALTY TAX ON CERTAIN SURRENDERS AND WITHDRAWALS
With respect to amounts withdrawn or distributed before the taxpayer reaches
age 59 1/2, a penalty tax is generally imposed equal to 10% of the portion
of such amount which is includable in gross income. However, the penalty tax
is not applicable to withdrawals: (i) made on or after the death of the
owner (or where the owner is not an individual, the death of the "primary
annuitant," who is defined as the individual the events in whose life are of
primary importance in affecting the timing and amount of the payout under
the Contract); (ii) attributable to the taxpayer's becoming totally disabled
within the meaning of Code Section 72(m)(7); (iii) which are part of a
series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the taxpayer, or the
joint lives (or joint life expectancies) of the taxpayer and his or her
beneficiary; (iv) from certain qualified plans; (v) under a so-called
qualified funding asset (as defined in Code Section 130(d)); (vi) under an
immediate annuity contract; or (vii) which are purchased by an employer on
termination of certain types of qualified plans and which are held by the
employer until the employee separates from service.
If the penalty tax does not apply to a surrender or withdrawal as a result
of the application of item (iii) above, and the series of payments are
subsequently modified (other than by reason of death or disability), the tax
for the first year in which the modification occurs will be increased by an
amount (determined by the regulations) equal to the tax that would have been
imposed but for item (iii) above, plus interest for the deferral period, if
the modification takes place (a) before the close of the period which is
five years from the date of the first payment and after the taxpayer attains
age 591 1/2, or (b) before the taxpayer reaches age 591 1/2.
ADDITIONAL CONSIDERATIONS
1. DISTRIBUTION-AT-DEATH RULES
In order to be treated as an annuity contract, a Contract must provide the
following two distribution rules: (a) if any owner dies on or after the
Annuity Payout Date, and before the entire interest in the Contract has been
distributed, the remainder of the owner's interest will be distributed at
least as quickly as the method in effect on the owner's death; and (b) if
any owner dies before the Annuity Payout Date, the entire interest in the
Contract must generally be distributed within five years after the date of
death, or, if payable to a designated beneficiary, must be annuitized over
the life of that designated beneficiary or over a period not extending
beyond the life expectancy of that beneficiary, commencing within one year
after the date of death of the owner. If the sole designated beneficiary is
the spouse of the deceased owner, the Contract (together with the deferral
of tax on the accrued and future income thereunder) may be continued in the
name of the spouse as owner.
Generally, for purposes of determining when distributions must begin under
the foregoing rules, where an owner is not an individual, the primary
annuitant is considered the owner. In that case, a change in the primary
annuitant will be treated as the death of the owner. Finally, in the case of
joint owners, the distribution-at-death rules will be applied by treating
the death of the first owner as the one to be taken into account in
determining generally when distributions must commence, unless the sole
Designated Beneficiary is the deceased owner's spouse.
2. GIFT OF ANNUITY CONTRACTS
Generally, gifts of Non-Qualified Plan Contracts prior to the Annuity Payout
Date will trigger tax on the gain on the Contract, with the donee getting a
stepped-up basis for the amount included in the donor's income. The 10%
penalty tax and gift tax also may be applicable. This provision does not
apply to transfers between spouses or incident to a divorce.
3. CONTRACTS OWNED BY NON-NATURAL PERSONS
If the contract is held by a Non-Natural person (for example, a
corporation), the income on that Contract (generally the increase in net
surrender value less the purchase payments) is includable in taxable income
each year. The rule does not apply where the Contract is acquired by the
estate of a decedent, where the Contract is held by certain types of
retirement plans, where the Contract is a qualified funding asset for
structured settlements, where the Contract is purchased on behalf of an
employee upon termination of a qualified plan, and in the case of a
so-called immediate annuity. An annuity contract held by a trust or other
entity as agent for a natural person is considered held by a natural person.
4. MULTIPLE CONTRACT RULE
For purposes of determining the amount of any distribution under Code
Section 72(e) (amounts not received as annuities) that is includable in
gross income, all Non-Qualified annuity contracts issued by the same insurer
to the same Contractowner during any calendar year are to be aggregated and
treated as one contract. Thus, any amount received under any such contract
prior to the contract's Annuity Payout Date, such as a partial withdrawal,
dividend, or loan, will be taxable (and possibly subject to the 10% penalty
tax) to the extent of the combined income in all such contracts.
In addition, the Treasury Department has broad regulatory authority in
applying this provision to prevent avoidance of the purposes of this rule.
It is possible that, under this authority, the Treasury Department may apply
this rule to amounts that are paid as annuities (on and after the Annuity
Payout Date) under annuity contracts issued by the same company to the same
owner during any calendar year. In this case, annuity payments could be
fully taxable (and possibly subject to the 10% penalty tax) to the extent of
the combined income in all such contracts and regardless of whether any
amount would otherwise have been excluded from income because of the
"exclusion ratio" under the contract.
5. POSSIBLE TAX CHANGES
In recent years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities, and President Clinton's
fiscal-year 1999 Budget proposal includes a provision that, if adopted,
would impose new taxes on the owners of variable annuities. There is always
the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, and
judicial decisions). Moreover, although unlikely, it is also possible that
any legislative change could be retroactive (that is, effective prior to the
date of such change).
6. TRANSFERS, ASSIGNMENTS, OR EXCHANGES OF A CONTRACT
A transfer of ownership of a Contract, the designation of an Annuitant,
Payee, or other Beneficiary who is not also the Owner, the selection of
certain Annuity Payout Dates, or the exchange of a Contract may result in
certain tax consequences to the Owner that are not discussed herein. An
Owner contemplating any such transfer, assignment, selection, or exchange
should contact a competent tax adviser with respect to the potential effects
of such a transaction.
QUALIFIED PLANS
The Contract may be used as a Qualified Plan that meets the requirements of
an individual retirement annuity ("IRA") under Section 408 of the Code. No
attempt is made herein to provide more than general information about the
use of the Contract as a Qualified Plan. Contractowners, Annuitants, and
Beneficiaries are cautioned that the rights of any person to any benefits
under such Qualified Plans may be limited by applicable law, regardless of
the terms and conditions of the Contract issued in connection therewith.
The amount that may be contributed to a Qualified Plan is subject to
limitations under the Code. In addition, early distributions from Qualified
Plans may be subject to penalty taxes. Furthermore, distributions from most
Qualified Plans are subject to certain minimum distribution rules. Failure
to comply with these rules could result in disqualification of the Plan or
subject the Owner or Annuitant, to penalty taxes. As a result, the minimum
distribution rules may limit the availability of certain Annuity Options to
certain Annuitants and their beneficiaries. These rules and requirements may
not be incorporated into our Contract administration procedures. Therefore,
Contractowners, Annuitants, and Beneficiaries are responsible for
determining that contributions, distributions, and other transactions with
respect to the Contracts comply with applicable law.
The following is a brief description of Qualified Plans and the use of the
Contract therewith:
1. SECTION 408
Section 408 of the Code permits eligible individuals to establish individual
retirement programs through the purchase of Individual Retirement Annuities
("traditional IRAs"). The Contract may be purchased as an IRA. The IRAs
described in this paragraph are called "traditional IRAs" to distinguish
them from "Roth IRAs" which became available in 1998.
IRAs are subject to limitations on the amount that may be contributed, the
persons who may be eligible, and on the time when distributions must
commence. Depending upon the circumstances of the individual, contributions
to a traditional IRA may be made on a deductible or non-deductible basis.
IRAs may not be transferred, sold, assigned, discounted, or pledged as
collateral for a loan or other obligation. The annual premium for an IRA may
not be fixed and may not exceed $2,000. Any refund of premium must be
applied to the payment of future premiums or the purchase of additional
benefits.
Sale of the Contracts for use with IRAs may be subject to special
requirements imposed by the Internal Revenue Service. Purchasers of the
Contracts for such purposes will be provided with such supplementary
information as may be required by the Internal Revenue Service and will have
the right to revoke the Contract under certain circumstances. See the IRA
Disclosure Statement which accompanies this Prospectus.
An individual's interest in a traditional IRA must generally be distributed
or begin to be distributed not later than April 1 of the calendar year
following the calendar year in which the individual reaches age 701 1/2
("required beginning date"). The Contractowner's retirement date, if any,
will not affect his or her required beginning date. Periodic distributions
must not extend beyond the life of the individual or the lives of the
individual and a designated beneficiary (or over a period extending beyond
the life expectancy of the individual or the joint life expectancy of the
individual and a designated beneficiary).
If an individual dies before reaching his or her required beginning date,
the individual's entire interest must generally be distributed within five
years of the individual's death. However, the five-year rule will be deemed
satisfied if distributions begin before the close of the calendar year
following the individual's death to a designated beneficiary and are made
over the life of the beneficiary (or over a period not extending beyond the
life expectancy of the beneficiary). If the designated beneficiary is the
individual's surviving spouse, distributions may be delayed until the
individual would have reached age 70 1/2.
If an individual dies after reaching his or her required beginning date, the
individual's interest must generally be distributed at least as rapidly as
under the method of distribution in effect at the time of the individual's
death.
Distributions from IRAs are generally taxed under Code Section 72. Under
these rules, a portion of each distribution may be excludable from income.
The amount excludable from the individual's income is the amount of the
distribution which bears the same ratio as the individual's nondeductible
contributions bear to the expected return under the IRA.
The Internal Revenue Service has not reviewed the Contract for qualification
as an IRA, and has not addressed in a ruling of general applicability
whether a death benefit provision such as the provision in the Contract
comports with IRA qualification requirements.
2. TAX PENALTIES
PREMATURE DISTRIBUTION TAX. Distributions from a Qualified Plan before the
owner reaches age 59 1/2 are generally subject to an additional tax equal
to 10% of the taxable portion of the distribution. The 10% penalty tax does
not apply to distributions: (i) made on or after the death of the Owner;
(ii) attributable to the Owner's disability; (iii) which are part of a
series of substantially equal periodic payments made (at least annually) for
the life (or life expectancy) of the Owner or the joint lives (or joint life
expectancies) of the Owner and a designated beneficiary; (iv) made to pay
for certain medical expenses; (v) that are exempt withdrawals of an excess
contribution; (vi) that are rolled over or transferred in accordance with
Code requirements; or (vii) which, subject to certain restrictions, do not
exceed the health insurance premiums paid by unemployed individuals in
certain cases. Starting January 1, 1998, there are two additional exceptions
to the 10% penalty tax on withdrawals from IRAs before age 59 1/2:
withdrawals made to pay "qualified higher education expenses" and certain
"qualified first-time homebuyer distributions."
MINIMUM DISTRIBUTION TAX. If the amount distributed from a Qualified Plan is
less than the minimum required distribution for the year, the Owner is
subject to a 50% tax on the amount that was not properly distributed.
EXCESS DISTRIBUTION/ACCUMULATION TAX. The penalty tax of 15% which was
imposed (in addition to any ordinary income tax) on large plan distributions
and the "excess retirement accumulations" of an individual has been
repealed, effective January 1, 1997.
3. WITHHOLDING
Periodic distributions (e.g., annuities and installment payments) from a
Qualified Plan that will last for a period of 10 or more years are generally
subject to voluntary income tax withholding. The amount withheld on such
periodic distributions is determined at the rate applicable to wages. The
recipient of a periodic distribution may generally elect not to have
withholding apply.
Nonperiodic distributions (e.g., lump sums and annuities or installment
payments of less than 10 years) from an IRA are subject to income tax
withholding at a flat 10% rate. The recipient of such a distribution may
elect not to have withholding apply.
The above description of the federal income tax consequences applicable to
Qualified Plans which may be funded by the Contract offered by this
Prospectus is only a brief summary and is not intended as tax advice. The
rules governing the provisions of Qualified Plans are extremely complex and
often difficult to comprehend. Anything less than full compliance with the
applicable rules, all of which are subject to change, may have adverse tax
consequences. A prospective Contractowner considering adoption of a
Qualified Plan and purchase of a Contract in connection therewith should
first consult a qualified and competent tax adviser with regard to the
suitability of the Contract as an investment vehicle for the Qualified Plan.
OTHER INFORMATION
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VOTING OF FUND SHARES
The Company is the legal owner of the shares of the Funds held by the
Subaccounts of the Separate Account. The Company will exercise voting rights
attributable to the shares of each Portfolio of the Funds held in the
Subaccounts at any regular and special meetings of the shareholders of the
Funds on matters requiring shareholder voting under the 1940 Act. In
accordance with its view of presently applicable law, the Company will
exercise these voting rights based on instructions received from persons
having the voting interest in corresponding Subaccounts of the Separate
Account. However, if the 1940 Act or any regulations thereunder should be
amended, or if the present interpretation thereof should change, and as a
result the Company determines that it is permitted to vote the shares of the
Funds in its own right, it may elect to do so.
The person having the voting interest under a Contract is the Owner. Unless
otherwise required by applicable law, the number of shares of a particular
Portfolio as to which voting instructions may be given to the Company is
determined by dividing a Contractowner's Contract Value in a Subaccount on a
particular date by the net asset value per share of that Portfolio as of the
same date. Fractional votes will be counted. The number of votes as to which
voting instructions may be given will be determined as of the date
coincident with the date established by the Fund for determining
shareholders eligible to vote at the meeting of the Fund. If required by the
SEC, the Company reserves the right to determine in a different fashion the
voting rights attributable to the shares of the Funds. Voting instructions
may be cast in person or by proxy.
Voting rights attributable to the Contractowner's Contract Value in a
Subaccount for which no timely voting instructions are received will be
voted by the Company in the same proportion as the voting instructions that
are received in a timely manner for all Contracts participating in that
Subaccount. The Company will also exercise the voting rights from assets in
each Subaccount that are not otherwise attributable to Contractowners, if
any, in the same proportion as the voting instructions that are received in
a timely manner for all Contracts participating in that Subaccount.
SUBSTITUTION OF INVESTMENTS
The Company reserves the right, subject to compliance with the law as then
in effect, to make additions to, deletions from, substitutions for, or
combinations of the securities that are held by the Separate Account or any
Subaccount or that the Separate Account or any Subaccount may purchase. If
shares of any or all of the Portfolios of the Funds should no longer be
available for investment, or if the Company receives an opinion from counsel
acceptable to Investment Services that substitution is in the best interest
of Contractowners and that further investment in shares of the Portfolio(s)
would cause undue risk to the Company, the Company may substitute shares of
another Portfolio of the Funds or of a different fund for shares already
purchased, or to be purchased in the future under the Contract. The Company
may also purchase, through the Subaccount, other securities for other
classes or contracts, or permit a conversion between classes of contracts on
the basis of requests made by Owners.
In connection with a substitution of any shares attributable to an Owner's
interest in a Subaccount or the Separate Account, the Company will, to the
extent required under applicable law, provide notice, seek Owner approval,
seek prior approval of the SEC, and comply with the filing or other
procedures established by applicable state insurance regulators.
The Company also reserves the right to establish additional Subaccounts of
the Separate Account that would invest in a new Portfolio of one of the
Funds or in shares of another investment company, a series thereof, or other
suitable investment vehicle. New Subaccounts may be established by the
Company with the written consent of Investment Services, and any new
Subaccount will be made available to existing Owners on a basis to be
determined by the Company and Investment Services. The Company may also
eliminate or combine one or more Subaccounts with the consent of Investment
Services, if, marketing, tax, or investment conditions so warrant.
Subject to compliance with applicable law, the Company may transfer assets
to the General Account with the written consent of Investment Services. The
Company also reserves the right, subject to any required regulatory
approvals, to transfer assets of any Subaccount of the Separate Account to
another separate account or Subaccount with the written consent of
Investment Services.
In the event of any such substitution or change, the Company may, by
appropriate endorsement, make such changes in these and other contracts as
may be necessary or appropriate to reflect such substitution or change. If
deemed by the Company to be in the best interests of persons having voting
rights under the Contracts, the Separate Account may be operated as a
management investment company under the 1940 Act or any other form permitted
by law; it may be deregistered under that Act in the event such registration
is no longer required; or it may be combined with other separate accounts of
the Company or an affiliate thereof. Subject to compliance with applicable
law, the Company also may combine one or more Subaccounts and may establish
a committee, board, or other group to manage one or more aspects of the
operation of the Separate Account.
CHANGES TO COMPLY WITH LAW AND AMENDMENTS
The Company reserves the right, without the consent of Owners, to suspend
sales of the Contract as presently offered and to make any change to the
provisions of the Contracts to comply with, or give Owners the benefit of,
any federal or state statute, rule, or regulation, including but not limited
to requirements for annuity contracts and retirement plans under the
Internal Revenue Code and regulations thereunder or any state statute or
regulation. The Company also reserves the right to limit the amount and
frequency of subsequent purchase payments.
REPORTS TO OWNERS
A statement will be sent annually to each Contractowner setting forth a
summary of the transactions that occurred during the year, and indicating
the Contract Value as of the end of each year. In addition, the statement
will indicate the allocation of Contract Value among the Fixed Interest
Account and the Subaccounts and any other information required by law.
Confirmations will also be sent out upon purchase payments, exchanges,
loans, loan repayments, and full and partial withdrawals. Certain
transactions will be confirmed quarterly. These transactions include
exchanges under the Dollar Cost Averaging and Asset Rebalancing Options,
purchase payments made under an Automatic Investment Program, systematic
withdrawals, and annuity payments.
Each Contractowner will also receive an annual and semiannual report
containing financial statements for the Portfolios, which will include a
list of the portfolio securities of the Portfolios, as required by the 1940
Act, and/or such other reports as may be required by federal securities
laws.
TELEPHONE EXCHANGE PRIVILEGES
A Contractowner may request an exchange of Contract Value by telephone if an
Authorization for Telephone Requests form ("Telephone Authorization") has
been completed, signed, and filed at the T. Rowe Price Variable Annuity
Service Center. The Company has established procedures to confirm that
instructions communicated by telephone are genuine and will not be liable
for any losses due to fraudulent or unauthorized instructions, provided that
it complies with its procedures. The Company's procedures require that any
person requesting an exchange by telephone provide the account number and
the Owner's tax identification number, and such instructions must be
received on a recorded line. The Company reserves the right to deny any
telephone exchange request. If all telephone lines are busy (which might
occur, for example, during periods of substantial market fluctuations),
Contractowners might not be able to request exchanges by telephone and would
have to submit written requests.
By authorizing telephone exchanges, a Contractowner authorizes the Company
to accept and act upon telephonic instructions for exchanges involving the
Contractowner's Contract, and agrees that neither the Company, nor any of
its affiliates, nor the Funds, nor any of their directors, trustees,
officers, employees, or agents, will be liable for any loss, damages, cost,
or expense (including attorney's fees) arising out of any requests effected
in accordance with the Telephone Authorization and believed by the Company
to be genuine, provided that the Company has complied with its procedures.
As a result of this policy on telephone requests, the Contractowner will
bear the risk of loss arising from the telephone exchange privileges. The
Company may discontinue, modify, or suspend telephone exchange privileges at
any time.
DISTRIBUTION OF THE CONTRACT
T. Rowe Price Investment Services, Inc. ("Investment Services"), is the
distributor of the Contracts. Investment Services also acts as the
distributor of certain mutual funds advised by T. Rowe Price and
Price-Fleming. Investment Services is registered with the SEC as a
broker-dealer under the Securities Exchange Act of 1934, and in all 50
states, the District of Columbia, and Puerto Rico. Investment Services is a
member of the National Association of Securities Dealers, Inc. Investment
Services is a wholly owned subsidiary of T. Rowe Price and is an affiliate
of the Funds.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Separate Account is a
party, or which would materially affect the Separate Account.
LEGAL MATTERS
Legal matters relating to New York law have been passed upon by LeBoeuf,
Lamb, Greene & MacRae, New York, New York.
Legal matters relating to the federal securities and federal income tax laws
have been passed upon by Dechert Price & Rhoads, Washington, D.C.
PERFORMANCE INFORMATION
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Performance information for the Subaccounts of the Separate Account,
including the yield and total return of all Subaccounts may appear in
advertisements, reports, and promotional literature to current or
prospective Owners.
Current yield for the Prime Reserve Subaccount will be based on investment
income received by a hypothetical investment over a given seven-day period
(less expenses accrued during the period), and then "annualized" (i.e.,
assuming that the seven-day yield would be received for 52 weeks, stated in
terms of an annual percentage return on the investment). "Effective yield"
for the Prime Reserve Subaccount is calculated in a manner similar to that
used to calculate yield but reflects the compounding effect of earnings.
For the other Subaccounts, quotations of yield will be based on all
investment income per Accumulation Unit earned during a given 30-day period,
less expenses accrued during the period ("net investment income"), and will
be computed by dividing net investment income by the value of an
Accumulation Unit on the last day of the period. Quotations of average
annual total return for any Subaccount will be expressed in terms of the
average annual compounded rate of return on a hypothetical investment in a
Contract over a period of one, five, and ten years (or, if less, up to the
life of the Subaccount), and will reflect the deduction of the mortality and
expense risk charge and may simultaneously be shown for other periods. Where
the Portfolio in which a Subaccount invests was established prior to
inception of the Subaccount, quotations of total return may include
quotations for periods beginning prior to the Subaccount's date of
inception. Such quotations of total return are based upon the performance of
the Subaccount's corresponding Portfolio adjusted to reflect deduction of
the mortality and expense risk charge.
Performance information for any Subaccount reflects only the performance of
a hypothetical Contract under which Contract Value is allocated to a
Subaccount during a particular time period on which the calculations are
based. Performance information should be considered in light of the
investment objectives and policies, characteristics, and quality of the
Portfolio in which the Subaccount invests, and the market conditions during
the given time period, and should not be considered as a representation of
what may be achieved in the future. For a description of the methods used to
determine yield and total return for the Subaccounts and the usage of
performance and other related information, see the Statement of Additional
Information.
ADDITIONAL INFORMATION
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REGISTRATION STATEMENT
A Registration Statement under the 1933 Act has been filed with the SEC
relating to the offering described in this Prospectus. This Prospectus has
been filed as a part of the Registration Statement and does not contain all
of the information set forth in the Registration Statement and exhibits
thereto, and reference is made to such Registration Statement and exhibits
for further information relating to the Company and the Contract. Statements
contained in this Prospectus, as to the content of the Contract and other
legal instruments, are summaries. For a complete statement of the terms
thereof, reference is made to the instruments filed as exhibits to the
Registration Statement. The Registration Statement and the exhibits thereto
may be inspected and copied at the SEC's office, located at 450 Fifth
Street, N.W., Washington, D.C.
FINANCIAL STATEMENTS
Financial statements of the Company at December 31, 1997 and 1996, and for
the years ended December 31, 1997 and 1996, and the period of February 9,
1995, through December 31, 1995, and financial statements of the Separate
Account as of December 31, 1997, and for the years ended December 31, 1997
and 1996, are included in the Statement of Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
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The Statement of Additional Information contains more specific information
and financial statements relating to the Company and the Separate Account.
The Table of Contents of the Statement of Additional Information is set
forth below:
TABLE OF CONTENTS
General Information and History 1
Distribution of the Contract 1
Limits on Premiums Paid under Tax-Qualified Retirement Plans 1
Experts 2
Performance Information 2
Financial Statements 4
ILLUSTRATIONS
The following tables illustrate how the Contract Values and Withdrawal
Values of a hypothetical Contract and systematic withdrawals and annuity
payments from a hypothetical Contract may vary over an extended period of
time assuming hypothetical rates of return equivalent to constant gross
annual rates of return of 0%, 6%, and 12%. The values illustrated would be
different from those shown if the gross annual investment rates of return
averaged 0%, 6%, or 12% over a period of years, but also fluctuated above or
below those averages for individual Contract Years.
The hypothetical illustrations assume purchase of a Contract with an initial
investment of $20,000 by a New York resident, age 50, whose income tax rate
is 31% federal and 7.59% state and whose capital gains tax rate is 20%
federal and 7.59% state. The illustrations further assume an Accumulation
Period of 15 years and distributions beginning upon the Owner's attaining
age 65 and continuing until age 90. Two methods of distribution are
illustrated: (1) systematic withdrawals in equal amounts over a 25-year
distribution period (assuming the owner stops withdrawals after 25 years to
begin annuity payments or to take a lump-sum withdrawal), and (2) life
income with guaranteed payments of 10 years.
The amounts shown for Contract Value, Withdrawal Value, systematic
withdrawals, and life income with 10 years certain annuity payments reflect
the fact that the net investment return on the Subaccounts is lower than the
gross investment return as a result of the mortality and expense risk charge
levied against the Subaccounts and the daily investment management fee
deducted from the Portfolios of the Funds. The management fee is assumed to
be equal to 0.85% which is representative of the average investment
management fee applicable to the seven Portfolios of the Funds. The
management fee includes the ordinary expenses of operating the Funds. For
the year ended December 31, 1997, the total expenses of each Portfolio of
the Funds were the following percentages of the average daily net assets of
the Portfolios: .85% for New America Growth Portfolio; 1.05% for
International Stock Portfolio; .85% for Mid-Cap Growth Portfolio; .85% for
Equity Income Portfolio; .90% for Personal Strategy Balanced Portfolio; .70%
for Limited-Term Bond Portfolio; and .55% for Prime Reserve Portfolio.
After deduction of the mortality and expense risk charge and Portfolio
expenses described above, the illustrated gross annual investment rates of
return of 0%, 6%, and 12% correspond to approximate net annual rates of
-1.4%, 4.6%, and 10.6%. The hypothetical values shown in the tables do not
reflect any charges against the Subaccounts for income taxes that may be
attributable to the Subaccounts in the future since the Company is not
currently making these charges. Similarly, the hypothetical values do not
reflect deduction of a premium tax charge, as no premium tax is currently
imposed in the State of New York. In the event that these charges were to be
made, the gross annual investment rate would have to exceed 0%, 6%, or 12%
by an amount sufficient to cover the charges in order to produce the values
illustrated.
The Withdrawal Values, systematic withdrawals, and life income with 10 years
certain annuity payments shown are net of the assumed tax rates set forth
above. All federal tax calculations assume that state taxes are allowed as a
deduction on the federal tax return. The illustrations further assume that
any investment losses may be applied in full against other ordinary income
or capital gains as applicable.
<PAGE>
ACCUMULATION (12.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
END OF ANNUAL WITHDRAWAL VALUE CONTRACT VALUE
POLICY YEAR AGE INVESTMENT (AFTER TAX) (BEFORE TAX)
1 50 $20,000.00 $21,122 $22,087
2 51 0 22,362 24,393
3 52 0 23,730 26,939
4 53 0 25,242 29,750
5 54 0 26,911 32,855
6 55 0 28,755 36,285
7 56 0 30,791 40,072
8 57 0 33,040 44,254
9 58 0 35,523 48,873
10 59 0 38,265 53,974
11 60 0 45,255 59,607
12 61 0 49,222 65,829
13 62 0 53,603 72,700
14 63 0 58,441 80,287
15 64 0 63,784 88,667
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
BEGINNING OF ANNUAL SYSTEMATIC WITHDRAWALS LIFE WITH 10
POLICY YEAR AGE INVESTMENT (AFTER TAX) (AFTER TAX)
16 65 0 $5,780.69 $3,885.34
17 66 0 5,780.69 4,123.49
18 67 0 5,780.69 4,377.59
19 68 0 5,780.69 4,648.73
20 69 0 5,780.69 4,938.05
21 70 0 5,780.69 5,246.75
22 71 0 5,780.69 5,576.15
23 72 0 5,780.69 5,927.62
24 73 0 5,780.69 6,302.66
25 74 0 5,780.69 6,702.83
26 75 0 5,780.69 7,129.82
27 76 0 5,780.69 7,585.43
28 77 0 5,780.69 8,071.58
29 78 0 5,780.69 8,590.32
30 79 0 5,780.69 9,143.82
31 80 0 5,780.69 9,734.43
32 81 0 5,780.69 10,364.62
33 82 0 5,780.69 11,037.05
34 83 0 5,780.69 11,754.54
35 84 0 5,780.69 12,520.14
36 85 0 5,780.69 13,337.04
37 86 0 5,780.69 14,145.07
38 87 0 5,780.69 14,806.47
39 88 0 7,359.76 15,798.89
40 89 0 8,474.30 16,857.83
41 90 0 8,755.44* 17,987.75**
* Systematic withdrawals must stop at age 90 at which time the Owner must begin
annuity payments or take a lump sum withdrawal.
**Life income annuity payments will continue for the life of the Annuitant or
10 years, whichever is longer. Accordingly, Annuitants cannot predict the
period of time such payments will be made as they will be made over the
Annuitant's lifetime (or a minimum period of 10 years).
Accumulated investment losses are assumed to be applied in full against ordinary
income or capital gains as applicable.
The hypothetical investment results above are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown.
<PAGE>
ACCUMULATION (6.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
END OF ANNUAL WITHDRAWAL VALUE CONTRACT VALUE
POLICY YEAR AGE INVESTMENT (AFTER TAX) (BEFORE TAX)
1 50 $20,000.00 $20,486 $20,904
2 51 0 20,994 21,849
3 52 0 21,525 22,837
4 53 0 22,080 23,870
5 54 0 22,661 24,949
6 55 0 23,267 26,077
7 56 0 23,901 27,255
8 57 0 24,563 28,488
9 58 0 25,256 29,776
10 59 0 25,979 31,122
11 60 0 27,989 32,529
12 61 0 28,926 33,999
13 62 0 29,906 35,536
14 63 0 30,931 37,143
15 64 0 32,002 38,822
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
BEGINNING OF ANNUAL SYSTEMATIC WITHDRAWALS LIFE WITH 10
POLICY YEAR AGE INVESTMENT (AFTER TAX) (AFTER TAX)
16 65 0 $1,567.09 $1,887.98
17 66 0 1,567.09 1,903.33
18 67 0 1,567.09 1,918.82
19 68 0 1,567.09 1,934.47
20 69 0 1,567.09 1,950.28
21 70 0 1,567.09 1,966.24
22 71 0 1,567.09 1,982.36
23 72 0 1,567.09 1,998.63
24 73 0 1,567.09 2,015.07
25 74 0 1,567.09 2,031.67
26 75 0 1,567.09 2,048.43
27 76 0 1,567.09 2,065.36
28 77 0 1,567.09 2,082.45
29 78 0 1,567.09 2,099.72
30 79 0 1,567.09 2,117.15
31 80 0 1,774.75 2,134.76
32 81 0 2,139.42 2,152.54
33 82 0 2,165.29 2,170.49
34 83 0 2,192.34 2,188.63
35 84 0 2,220.60 2,206.94
36 85 0 2,250.15 2,225.43
37 86 0 2,281.03 2,180.47
38 87 0 2,313.31 1,930.64
39 88 0 2,347.04 1,949.69
40 89 0 2,382.31 1,968.92
41 90 0 2,419.16* 1,988.34**
*Systematic withdrawals must stop at age 90 at which time the Owner must begin
annuity payments or take a lump sum withdrawal.
**Life income annuity payments will continue for the life of the Annuitant or 10
years, whichever is longer. Accordingly, Annuitants cannot predict the period
of time such payments will be made as they will be made over the Annuitant's
lifetime (or a minimum period of 10 years).
Accumulated investment losses are assumed to be applied in full against ordinary
income or capital gains as applicable.
The hypothetical investment results above are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown.
ACCUMULATION (0.00% HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN)
END OF ANNUAL WITHDRAWAL VALUE CONTRACT VALUE
POLICY YEAR AGE INVESTMENT (AFTER TAX) (BEFORE TAX)
1 50 $20,000.00 $19,822 $19,721
2 51 0 19,647 19,446
3 52 0 19,474 19,174
4 53 0 19,303 18,907
5 54 0 19,135 18,643
6 55 0 18,969 18,383
7 56 0 18,805 18,126
8 57 0 18,644 17,874
9 58 0 18,485 17,624
10 59 0 18,328 17,378
11 60 0 18,174 17,136
12 61 0 18,021 16,897
13 62 0 17,871 16,661
14 63 0 17,723 16,428
15 64 0 17,576 16,199
DISTRIBUTION (ANNUAL AFTER-TAX PAYMENTS)
BEGINNING OF ANNUAL SYSTEMATIC WITHDRAWALS LIFE WITH 10
POLICY YEAR AGE INVESTMENT (AFTER TAX) (AFTER TAX)
16 65 0 $519.79 $991.86
17 66 0 519.79 961.16
18 67 0 519.79 924.00
19 68 0 519.79 880.30
20 69 0 519.79 838.66
21 70 0 519.79 799.00
22 71 0 519.79 761.21
23 72 0 519.79 725.20
24 73 0 519.79 690.90
25 74 0 519.79 658.22
26 75 0 519.79 627.09
27 76 0 519.79 597.43
28 77 0 519.79 569.17
29 78 0 519.79 542.25
30 79 0 519.79 516.61
31 80 0 519.79 492.17
32 81 0 519.79 468.89
33 82 0 519.79 446.72
34 83 0 519.79 425.59
35 84 0 519.79 405.46
36 85 0 519.79 386.28
37 86 0 519.79 368.01
38 87 0 519.79 350.60
39 88 0 519.79 334.02
40 89 0 519.79 318.22
41 90 0 2,869.92* 1,998.77**
*Systematic withdrawals must stop at age 90 at which time the Owner must begin
annuity payments or take a lump sum withdrawal.
**Life income annuity payments will continue for the life of the Annuitant or 10
years, whichever is longer. Accordingly, Annuitants cannot predict the period
of time such payments will be made as they will be made over the Annuitant's
lifetime (or a minimum period of 10 years).
Accumulated investment losses are assumed to be applied in full against ordinary
income or capital gains as applicable.
The hypothetical investment results above are illustrative only and should not
be deemed a representation of past or future investment results. Actual
investment results may be more or less than those shown.
<PAGE>
IRA DISCLOSURE STATEMENT
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This Disclosure Statement describes the statutory and regulatory provisions
applicable to the operation of Individual Retirement Annuities. Internal
Revenue Service regulations require that this be given to each person
desiring to establish an Individual Retirement Annuity. Further information
can be obtained from any district office of the Internal Revenue Service.
RIGHT TO REVOKE
You may revoke your Individual Retirement Annuity within seven days of the
date your first purchase payment is received by First Security Benefit Life
Insurance and Annuity Company of New York. To revoke your Individual
Retirement Annuity and receive a refund of the entire amount you paid, you
must mail or deliver a written notice of revocation, signed exactly as your
signature appears on your variable annuity application to: First Security
Benefit Life, c/o T. Rowe Price Variable Annuity Service Center, P.O. Box
2788, Topeka, KS 66601-9804, 1-800-888-2461, ext. 5101.
If you send your revocation notice by First Class Mail, we will consider
that you have notified us as of the date of the postmark on the envelope. If
you send it by Certified or Registered Mail, you will have notified us as of
the certification or registration date on the label. In either case, the
revocation notice must be properly addressed and mailed, with postage
prepaid. Upon receipt of a timely revocation notice, the entire amount of
your contribution will be returned to you without adjustment for sales
commissions, administrative fees, or market value fluctuation.
WHAT ARE THE STATUTORY REQUIREMENTS?
An Individual Retirement Annuity contract must meet the following
requirements:
1. The amount in your Individual Retirement Annuity must be fully vested at
all times.
2. The contract must provide that you cannot transfer it to someone else.
3. The contract must have flexible premiums.
4. You must start receiving distributions by April 1 of the year following
the year in which you reach age 701 1/2 (see "Required Minimum
Distributions").
5. The contract must provide that you cannot contribute more than $2,000 for
any year. (This requirement does not apply to rollovers. See "Rollovers
and Direct Transfers.")
6. The contract must provide that any refund of premium will be applied
before the close of the calendar year following the year of refund toward
the payment of future premiums or the purchase of additional benefits.
The Individual Retirement Annuity contract contains the provisions described
above. The contract has not, however, been approved as to form by the
Internal Revenue Service.
ROLLOVERS AND DIRECT TRANSFERS
1. A rollover is a tax-free transfer of cash or other assets from one
retirement program to another. There are two kinds of rollover payments.
In one, you transfer amounts from one Individual Retirement Annuity or
Individual Retirement Account (collectively referred to herein as an
"IRA") to another. With the other, you transfer amounts from a qualified
employee benefit plan or tax-sheltered annuity to an IRA. While you may
make rollover contributions to the Individual Retirement Annuity, you
cannot deduct them on your tax return.
<PAGE>
2. You must complete a tax-free rollover by the 60th day after the date you
receive the distribution from your IRA or other qualified employee
benefit plan.
3. A rollover distribution from an IRA may be made to you only once a year.
The one-year period begins on the date you receive the IRA distribution,
not on the date you roll it over (reinvest it) into another IRA.
4. A direct transfer of funds in an IRA from one trustee or insurance
company to another is not a rollover. It is a transfer that is not
affected by the one-year waiting period.
5. All or part of the premium for the contract may be paid from an IRA
rollover, qualified pension or profit-sharing plan, or tax-sheltered
annuity rollover, or from a direct transfer from another IRA. The
proceeds from this contract may be used as a rollover contribution to
another IRA.
ALLOWANCE OF DEDUCTION
1. In general, the amount you can contribute each year to the Annuity
contract is the lesser of $2,000 or your taxable compensation for the
year. If you have more than one IRA, the limit applies to the total
contributions made to your IRAs for the year. Wages, salaries, tips,
professional fees, bonuses, and other amounts you receive for providing
personal services are compensation. If you own and operate your own
business as a sole proprietor, your net earnings reduced by your
deductible contributions on your behalf to self-employed retirement plans
is compensation. If you are an active partner in a partnership and
provide services to the partnership, your share of partnership income
reduced by deductible contributions made on your behalf to qualified
retirement plans is compensation. All taxable alimony and separate
maintenance payments received under a decree of divorce or separate
maintenance are compensation.
2. Generally, if you are not covered by a qualified retirement plan, the
amount you can deduct in a year for contributions to your IRA is the
lesser of $2,000 or your taxable compensation for the year. However, if
you are not covered by a qualified retirement plan, but your spouse is,
the amount you may deduct for IRA contributions will be phased out if
your joint adjusted gross income ("AGI") is between $150,000 and
$160,000.
3. If you are covered by a qualified retirement plan, the amount of IRA
contributions you may deduct in a year may be reduced or eliminated based
on your AGI for the year. The AGI level at which a single taxpayer's
deduction for 1998 is affected, $30,000, will increase annually to
$50,000 in 2005. The AGI level at which a married taxpayer's deduction
for 1998 is affected, $50,000, will increase annually to $80,000 in 2007.
4. Contributions to your IRA can be made at any time. If you make a
contribution between January 1 and April 15, however, you may elect to
treat the contribution as made either in that year or in the preceding
year. You may file a tax return claiming a deduction for your IRA
contribution before the contribution is actually made. You must, however,
make the contribution by the due date of your return not including
extensions.
5. You cannot make a contribution other than a rollover contribution to your
IRA for the year in which you reach age 701 1/2 or thereafter.
6. If both you and your spouse have compensation, you can each set up your
own IRA. The contribution for each of you is figured separately and
depends on how much each earns. Both of you cannot participate in the
same IRA account or contract.
<PAGE>
7. If you and your spouse file a joint federal income tax return, each of
you may contribute up to $2,000 to your own IRA annually if your joint
income is $4,000 or more. The maximum amount the higher compensated
spouse may contribute for the year is the lesser of $2,000 or 100% of
that spouse's compensation. The maximum the lower-compensated spouse may
contribute is the lesser of (i) $2,000 or (ii) 100% of that spouse's
compensation plus the amount by which the higher compensated spouse's
compensation exceeds the amount the higher compensated spouse contributes
to his or her IRA.
SEP-IRA's
If you are participating in a Simplified Employee Pension Plan (SEP), the
contributions made by your employer into your IRA after 1986 are excluded
from your income. If the SEP contains a salary reduction arrangement, you
may elect to reduce your salary by up to the lesser of 15% of compensation
or $9,500 (indexed annually) and have that amount contributed to your
SEP-IRA. The maximum SEP contributions, including salary reduction amounts
and employer contributions to your account in any year, is generally limited
to the lesser of $30,000 (indexed) or 15% of your total compensation from
such employer for that year. Employers that have established salary
reduction SEPs before 1997 may continue to maintain and contribute to them.
However, no new salary reduction SEPs may be established after 1996.
Instead, eligible employers may establish SIMPLE IRA programs for years
after 1996, which permit salary reduction contributions. This IRA may not be
used in connection with a SIMPLE plan.
If an IRA is being used in connection with a SEP, contributions must bear a
uniform relationship to the total compensation (not in excess of the first
$160,000 indexed) of each employee participating under the SEP. If you are a
participant in a SEP, you will be considered to be an active participant in
an employee pension plan for purposes of your deductible contribution limits
for your IRA (see "Allowance of Deduction" section). For further information
concerning participation and contributions, please refer to IRS Form
5305-SEP (which must be completed and executed by your employer in order to
establish a SEP).
TAX STATUS OF THE CONTRACT AND DISTRIBUTIONS
1. Earnings of your Individual Retirement Annuity contract are not taxed
until they are distributed to you.
2. In general, taxable distributions are included in your gross income in
the year you receive them.
3. Distributions are non-taxable to the extent they represent a return of
non-deductible contributions. The non-taxable percentage of a
distribution is determined by dividing your total undistributed,
non-deductible IRA contributions by the value of all your IRAs (including
SEPs and rollovers).
4. You cannot choose the special 5-year or 10-year averaging that may apply
to lump sum distributions from qualified employer plans.
Amounts held in IRAs are generally subject to the imposition of federal
estate taxes. In addition, if you elect to have all or any part of your
account payable to a beneficiary (or beneficiaries) upon your death, the
election generally will not subject you to any gift tax liability.
REQUIRED MINIMUM DISTRIBUTIONS
You must start receiving minimum distributions from your Individual
Retirement Annuity starting with the year you reach age 701 1/2.
Ordinarily, the required minimum distribution for a particular year must be
received by December 31 of that year. However, you may delay the required
minimum distribution for the year you reach age 701 1/42 until April 1 of
the following year (your "required beginning date").
Figure your required minimum distribution for each year by dividing the
value of your Individual Retirement Annuity on December 31 of the preceding
year by the applicable life expectancy. The applicable life expectancy is
your remaining life expectancy or the remaining joint life and last survivor
expectancy of you and your designated beneficiary. If a designated
beneficiary is more than 10 years younger than you, that beneficiary is
assumed to be exactly 10 years younger. Life expectancies are determined
using the expected return multiple tables shown in IRS Publication 590
"Individual Retirement Arrangements." To obtain a free copy of IRS
Publication 590 and other IRA forms, write the IRS Forms Distribution Center
for your area as shown in your income tax return instructions.
<PAGE>
Annuity payments which begin by April 1 of the year following the year you
reach age 701 1/2 satisfy the minimum distribution requirement if they
provide for non-increasing payments over your life or the lives of you and
your spouse, provided that, if installments are guaranteed, the maximum
guaranty period may be less than the applicable life expectancy.
If you have more than one IRA, you must determine the required minimum
distribution separately for each IRA; however, you can take the actual
distribution of these amounts from any one or more of your IRAs.
If the actual distribution from your IRA is less than the minimum amount
that should be distributed in accordance with the rules set forth above, the
difference is an excess accumulation. There is a 50% excise tax on any
excess accumulations.
If you die after your required beginning date, your entire remaining account
balance must be distributed to your designated beneficiary at least as
rapidly as under the method of distribution in effect on your date of death.
If you die before your required beginning date, the general rule is that
your entire balance must be distributed within five (5) years of your death.
However, if the balance of your IRA account is payable to your designated
beneficiary, your designated beneficiary may elect that the amount be paid
in substantially equal installments over a fixed period not exceeding the
designated beneficiary's life expectancy, beginning no later than December
31 of the year following the year in which you died. If your spouse is your
designated beneficiary, such distribution need not commence until December
31 of the year during which you would have attained 701 1/2 had you
survived. Alternatively, if your designated beneficiary is your spouse, he
or she may elect to treat your IRA as his or her own IRA.
WHAT HAPPENS IF EXCESS CONTRIBUTIONS ARE MADE TO MY INDIVIDUAL RETIREMENT
ANNUITY?
1. You must pay a 6% excise tax each year on excess contributions that
remain in your Individual Retirement Annuity. Generally, an excess
contribution is the amount contributed to your Individual Retirement
Annuity that is above the maximum amount you can contribute for the year.
The excess is taxed in the year contributed and each year after that
until you correct it.
2. You will not have to pay the 6% excise tax if you withdraw the excess
amount by the date your tax return is due, including extensions, for the
year of the contribution. You do not have to include in your gross income
an excess contribution that you withdraw from your Individual Retirement
Annuity before your tax return is due if the income earned on the excess
was also withdrawn and no deduction was allowed for the excess
contribution.
ARE THERE ANY PENALTIES FOR PREMATURE DISTRIBUTIONS?
There is an additional tax on premature distributions equal to 10% of the
amount of the premature distribution that you must include in your gross
income. Premature distributions are generally amounts you withdraw from your
IRA before you are age 591 1/42. However, the tax on premature distributions
does not apply:
<PAGE>
1. To distributions that are rolled over tax free to another IRA, a
qualified employee benefit plan, or a tax-sheltered annuity.
2. To a series of substantially equal periodic payments made over your life
or life expectancy, or the joint life or life expectancy of you and your
beneficiary.
3. To amounts distributed to a beneficiary, or the individual's estate, on
or after the death of the individual.
4. If you are permanently disabled. You are considered disabled if you
cannot do any substantial gainful activity because of your physical or
mental condition. A physician must determine that the condition has
lasted or can be expected to last continuously for 12 months or more or
that the condition can be expected to lead to death.
5. To a distribution which does not exceed the amount of your medical
expenses that could be deducted for the year (generally speaking, medical
expenses paid during a year are deductible to the extent they exceed
7 1/2% of your adjusted gross income for the year).
6. To a distribution (subject to certain restrictions) that does not exceed
the premiums you paid for health insurance coverage for yourself, your
spouse, and dependents if you have been unemployed and received
unemployment compensation for at least 12 weeks.
7. To a "qualified first-time homebuyer distribution," within the meaning of
Code ss.72(t)(8), up to a $10,000 lifetime limit.
8. To a distribution for post-secondary education costs for you, your
spouse, or any child or grandchild of you or your spouse (i.e.,
"qualified higher education expenses").
IRA EXCISE TAX REPORTING
Use Form 5329, Return for Individual Retirement Arrangement Taxes, to report
the excise taxes on excess contributions, premature distributions, and
excess accumulations. If you do not owe any IRA excise taxes, you do not
need Form 5329. Further information can be obtained from any district office
of the Internal Revenue Service.
BORROWING
If you borrow money under your Individual Retirement Annuity contract or use
it as security for a loan, you must include in gross income the fair market
value of the Individual Retirement Annuity contract as of the first day of
your tax year, and the penalty tax on premature distributions may apply.
(Note: This contract does not allow borrowings under it, nor may it be
assigned or pledged as collateral for a loan.)
FINANCIAL INFORMATION
Contributions to your Individual Retirement Annuity contract are not subject
to sales charges. A mortality and expense risk charge of .55% on an annual
basis is deducted as described in the attached variable annuity prospectus.
(This charge is not deducted with respect to contract value allocated to the
fixed interest account option.) See the accompanying prospectus for the
underlying mutual funds for information about the charges associated with
the funds. Contractowners who allocate contract value to the Subaccounts
bear a pro rata share of the fees and expenses of the underlying funds. The
growth in value of the Individual Retirement Annuity contract is neither
guaranteed, nor projected, but is based upon the investment experience of
the underlying mutual fund portfolios that correspond to the Subaccounts to
which you have allocated contract value.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
T. ROWE PRICE VARIABLE ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
DATE: MAY 1, 1998
Individual Flexible Premium Deferred Variable Annuity Contract
ISSUED BY: MAILING ADDRESS:
First Security Benefit Life Insurance First Security Benefit Life Insurance
and Annuity Company of New York and Annuity Company of New York
70 West Red Oak Lane, 4th Floor c/o T. Rowe Price Variable Annuity
White Plains, New York 10604 Service Center
1-800-355-4570 P.O. Box 750106
Topeka, Kansas 66675-0106
1-800-469-6587
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current Prospectus for the T. Rowe Price Variable
Annuity dated May 1, 1998. A copy of the Prospectus may be obtained from the T.
Rowe Price Variable Annuity Service Center by calling 1-800-469-6587 or by
writing P.O. Box 750106, Topeka, Kansas 66675-0106.
<PAGE>
CONTENTS
- -----------------------------------------------------------------------------
General Information and History 1
Distribution of the Contract 1
Limits on Premiums Paid Under Tax-Qualified Retirement Plans 1
Experts 2
Performance Information 2
Financial Statements 4
<PAGE>
GENERAL INFORMATION AND HISTORY
For a description of the Individual Flexible Premium Deferred Variable
Annuity Contract (the "Contract"), First Security Benefit Life Insurance and
Annuity Company of New York (the "Company"), and the T. Rowe Price Variable
Annuity Account of First Security Benefit Life Insurance and Annuity Company
of New York (the "Separate Account"), see the Prospectus. This Statement of
Additional Information contains information that supplements the information
in the Prospectus. Defined terms used in this Statement of Additional
Information have the same meaning as terms defined in the section entitled
"Definitions" in the Prospectus.
SAFEKEEPING OF ASSETS
The Company is responsible for the safekeeping of the assets of the
Subaccounts. These assets, which consist of shares of the Portfolios of the
Funds in non-certificated form, are held separate and apart from the assets
of the Company's General Account and its other separate accounts.
DISTRIBUTION OF THE CONTRACT
T. Rowe Price Investment Services, Inc. ("Investment Services"), a Maryland
corporation formed in 1980 as a wholly-owned subsidiary of T. Rowe Price
Associates, Inc., is Principal Underwriter of the Contract. Investment
Services is registered as a broker/ dealer with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934 and is a member
of the National Association of Securities Dealers, Inc. ("NASD").
The offering of the Contract is continuous.
Investment Services serves as Principal Underwriter under a Distribution
Agreement with the Company. Investment Services' registered representatives
are required to be authorized under applicable state regulations to make the
Contract available to its customers. Investment Services is not compensated
under its Distribution Agreement with the Company.
LIMITS ON PREMIUMS PAID UNDER TAX-QUALIFIED RETIREMENT PLANS
SECTION 408
Premiums (other than rollover contributions) paid under a Contract used in
connection with an individual retirement annuity (IRA) that is described in
Section 408 of the Internal Revenue Code are subject to the limits on
contributions to IRA's under Section 219(b) of the Internal Revenue Code.
Under Section 219(b) of the Code, contributions (other than rollover
contributions) to an IRA are limited to the lesser of $2,000 per year or the
Owner's annual compensation. An additional $2,000 may be contributed if the
Owner has a spouse with little or no compensation for the year, provided
distinct accounts are maintained for the Owner and his or her spouse, and no
more than $2,000 is contributed to either account in any one year. The
extent to which an Owner may deduct contributions to an IRA depends on the
modified adjusted gross income of the Owner and his or her spouse for the
year and whether either participates in another employer-sponsored
retirement plan.
Premiums under a Contract used in connection with a simplified employee
pension plan described in Section 408 of the Internal Revenue Code are
subject to limits under Section 402(h) of the Internal Revenue Code. Section
402(h) currently limits employer contributions and salary reduction
contributions (if permitted) under a simplified employee pension plan to the
lesser of (a) 15% of the compensation of the participant in the Plan, or (b)
$30,000. Salary reduction contributions, if any, are subject to additional
annual limits. Salary reduction simplified employee pensions ("SARSEPs")
have been repealed; however, SARSEPs established prior to January 1, 1997
may continue to receive contributions.
<PAGE>
EXPERTS
Ernst & Young LLP, independent auditors, perform certain auditing services
for the Company and the Separate Account. The financial statements of the
Company at December 31, 1997 and 1996 and for the years ended December 31,
1997, 1996, and the period from February 9, 1995 to December 31, 1995, are
included in this Statement of Additional Information. The financial
statements of the Separate Account as of December 31, 1997, and for the
years ended December 31, 1997 and 1996, are also included in this Statement
of Additional Information. The financial statements have been audited by
Ernst & Young LLP, as set forth in their reports thereon appearing herein
and are included in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.
PERFORMANCE INFORMATION
Performance information for the Subaccounts of the Separate Account,
including the yield and total return of all Subaccounts, may appear in
advertisements, reports, and promotional literature provided to current or
prospective Owners.
Quotations of yield for the Prime Reserve Subaccount will be based on the
change in the value, exclusive of capital changes, of a hypothetical
investment in a Contract over a particular seven day period, less a
hypothetical charge reflecting deductions from the Contract during the
period (the "base period") and stated as a percentage of the investment at
the start of the base period (the "base period return"). The base period
return is then annualized by multiplying by 365/7, with the resulting yield
figure carried to at least the nearest one hundredth of one percent. Any
quotations of effective yield for the Prime Reserve subaccount assume that
all dividends received during an annual period have been reinvested.
Calculation of "effective yield" begins with the same "base period return"
used in the yield calculation, which is then annualized to reflect weekly
compounding pursuant to the following formula:
Effective Yield = [(Base Period Return + 1)^365/7] - 1
For the seven-day period ended December 31, 1997, the yield of the Prime
Reserve Subaccount was 4.87% and the effective yield of the Subaccount was
4.99%.
Quotations of yield for the Subaccounts, other than the Prime Reserve
Subaccount, will be based on all investment income per Accumulation Unit
earned during a particular 30-day period, less expenses accrued during the
period ("net investment income"), and will be computed by dividing net
investment income by the value of the Accumulation Unit on the last day of
the period, according to the following formula:
YIELD = 2[(a - b + 1)^6 - 1]
-----
cd
where a = net investment income earned during the period by the
Portfolio attributable to shares owned by the
Subaccount,
b = expenses accrued for the period (net of any
reimbursements),
c = the average daily number of Accumulation Units
outstanding during the period that were entitled to
receive dividends, and
d = the maximum offering price per Accumulation Unit on the
last day of the period.
<PAGE>
For the 30-day period ended December 31, 1997, the yield of the Limited-Term
Bond Subaccount was 5.91%.
Quotations of average annual total return for any Subaccount will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in a Contract over a period of one, five and ten
years (or, if less, up to the life of the Subaccount), calculated pursuant
to the following formula: P(1 + T)^n = ERV (where P = a hypothetical initial
payment of $1,000, T = the average annual total return, n = the number of
years, and ERV = the ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period). All total return figures
reflect the deduction of the mortality and expense risk charge. Quotations
of total return may simultaneously be shown for other periods.
Where the Portfolio in which a Subaccount invests was established prior to
inception of the Subaccount, quotations of total return will include
quotations for periods beginning prior to the Subaccount's date of
inception. Such quotations of total return are based upon the performance of
the Subaccount's corresponding Portfolio adjusted to reflect deduction of
the mortality and expense risk charge.
For the one-year period ended December 31, 1997, the average annual total
return of New America Growth Subaccount, International Stock Subaccount,
Equity Income Subaccount, Personal Strategy Balanced Subaccount, and
Limited-Term Bond Subaccount was 20.50%, 2.51%, 28.16%, 17.39%, and 6.13%,
respectively. For the period from March 31, 1994 (Portfolio date of
inception) to December 31, 1997, the average annual total return for the New
America Growth Subaccount, International Stock Subaccount, and Equity Income
Subaccount was 22.98%, 7.49%, and 22.26%, respectively. For the period from
December 30, 1994 (Portfolio date of inception) to December 31, 1997, the
average annual total return for the Personal Strategy Balanced Subaccount
was 19.47%. For the period from May 13, 1994 (Portfolio date of inception)
to December 31, 1997, the average annual total return for the Limited-Term
Bond Subaccount was 5.58%. For the period from December 31, 1996 (Portfolio
date of inception) to December 31, 1997, the average annual total return for
the Mid-Cap Growth Subaccount was 18.81%.
Performance information for a Subaccount may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, the Lehman Brothers Government Corporate Index, the
Morgan Stanley Capital International's EAFE Index, or other indices that
measure performance of a pertinent group of securities so that investors may
compare a Subaccount's results with those of a group of securities widely
regarded by investors as representative of the securities markets in general
or representative of a particular type of security; (ii) other variable
annuity separate accounts, insurance product funds, or other investment
products tracked by Lipper Analytical Services, a widely used independent
research firm which ranks mutual funds and other investment companies by
overall performance, investment objectives, and assets, or tracked by The
Variable Annuity Research and Data Service ("VARDS"), an independent service
which monitors and ranks the performance of variable annuity issues by
investment objectives on an industry-wide basis or tracked by other
services, companies, publications, or persons who rank such investment
companies on overall performance or other criteria; and (iii) the Consumer
Price Index (measure for inflation) to assess the real rate of return from
an investment in the Contract. Unmanaged indices may assume the reinvestment
of dividends but generally do not reflect deductions for administrative and
management costs and expenses.
Performance information for any Subaccount reflects only the performance of
a hypothetical Contract under which an Owner's Contract Value is allocated
to a Subaccount during a particular time period on which the calculations
are based. Performance information should be considered in light of the
investment objectives and policies, characteristics, and quality of the
Portfolio of the Funds in which the Subaccount invests, and the market
conditions during the given time period, and should not be considered as a
representation of what may be achieved in the future.
<PAGE>
Reports and promotional literature may also contain other information
including (i) the ranking of any Subaccount derived from rankings of
variable annuity separate accounts, insurance product funds, or other
investment products tracked by Lipper Analytical Services, Inc.,
Morningstar, Inc. or by other rating services, companies, publications, or
other persons who rank separate accounts or other investment products on
overall performance or other criteria, (ii) the effect of a tax-deferred
compounding on a Subaccount's investment returns, or returns in general,
which may be illustrated by graphs, charts, or otherwise, and which may
include a comparison, at various points in time, of the return from an
investment in a Contract (or returns in general) on a tax-deferred basis
(assuming one or more tax rates) with the return on a taxable basis, and
(iii) personal hyopthetical illustrations of accumulation and payout period
Contract Values and annuity payments.
FINANCIAL STATEMENTS
The financial statements of the Company at December 31, 1997 and 1996, and
for the years ended December 31, 1997 and 1996, and the period February 9,
1995 through December 31, 1995, and the financial statements of the Separate
Account as of December 31, 1997 for the years ended December 31, 1997 and
1996, are set forth herein, starting on page 5.
The financial statements of the Company, which are included in this
Statement of Additional Information, should be considered only as bearing on
the ability of the Company to meet its obligations under the Contracts. They
should not be considered as bearing on the investment performance of the
assets held in the Separate Account.
T. Rowe Price Variable Annuity Account
of First Security Benefit Life Insurance
and Annuity Company of New York
Financial Statements
Years ended December 31, 1997 and 1996
CONTENTS
Report of Independent Auditors 5
Audited Financial Statements
Balance Sheet 6
Statements of Operations and Changes in Net Assets 7
Notes to Financial Statements 9
REPORT OF INDEPENDENT AUDITORS
The Contract Owners of T. Rowe Price Variable Annuity
Account of First Security Benefit Life Insurance and
Annuity Company of New York and The Board of
Directors of First Security Benefit Life Insurance and
Annuity Company of New York
We have audited the accompanying balance sheet of T. Rowe Price Variable
Annuity Account of First Security Benefit Life Insurance and Annuity Company
of New York (the Account) as of December 31, 1997, and the related
statements of operations and changes in net assets for each of the two years
in the period then ended. These financial statements are the responsibility
of the Account's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of investments owned as of December 31,
1997 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of T. Rowe Price Variable
Annuity Account of First Security Benefit Life Insurance and Annuity Company
of New York at December 31, 1997, and the results of its operations and
changes in its net assets for each of the two years in the period then ended
in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Kansas City, Missouri
February 6, 1998
<PAGE>
T. Rowe Price Variable Annuity Account of First Security Benefit Life Insurance
and Annuity Company of New York
BALANCE SHEET
DECEMBER 31, 1997
(Dollars in Thousands--
Except per Share and Unit Values)
ASSETS
Investments:
T. Rowe Price Portfolios:
New America Growth Portfolio -- 154,371 shares at
net asset value of $21.35 per share (cost, $2,741)............ $ 3,296
International Stock Portfolio -- 127,152 shares at
net asset value of $12.74 per share (cost, $1,605)............ 1,620
Equity Income Portfolio -- 325,615 shares at net
asset value of $18.59 per share (cost, $5,192)............... 6,053
Personal Strategy Balanced Portfolio -- 80,525
shares at net asset value of $15.13 per share
(cost, $1,104).............................................. 1,218
Limited-Term Bond Portfolio -- 100,929 shares
at net asset value of $4.96 per share (cost, $498).......... 500
Mid-Cap Growth Portfolio -- 90,648 shares at
net asset value of $11.88 per share (cost, $957)............ 1,077
Prime Reserve Portfolio -- 789,543 shares at net
asset value of $1.00 per share (cost, $790)................. 790
-------
Total assets........................................................ $14,554
-------
<TABLE>
<CAPTION>
NUMBER UNIT
OF UNITS VALUE AMOUNT
NET ASSETS
<S> <C> <C> <C>
Net assets are represented by (Note 3):
New America Growth Subaccount:
Accumulation units 170,990 $19.27 $ 3,296
International Stock Subaccount:
Accumulation units 123,502 13.09 $ 1,617
Annuity reserves 265 13.09 3
--------
1,620
Equity Income Subaccount:
Accumulation units 320,917 18.84 6,045
Annuity reserves 454 18.84 8
--------
6,053
Personal Strategy Balanced Subaccount:
Accumulation units 76,311 15.86 1,211
Annuity reserves 494 15.86 7
--------
1,218
Limited-Term Bond Subaccount:
Accumulation units 41,943 11.60 486
Annuity reserves 1,222 11.60 14
--------
500
Mid-Cap Growth Subaccount:
Accumulation units 91,142 11.82 1,077
Prime Reserve Subaccount:
Accumulation units 75,383 10.47 790
--------
Total net assets $14,554
--------
</TABLE>
See accompanying notes.
<PAGE>
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
PERSONAL
NEW AMERICA INTERNATIONAL EQUITY STRATEGY LIMITED- MID-CAP PRIME
GROWTH STOCK INCOME BALANCED TERM BOND GROWTH RESERVE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
Dividend distributions .............. $ -- $ 15 $ 108 $ 30 $ 22 $ $ 25
Expenses (Note 2):
Mortality and expense risk fee ...... (15) (8) (25) (5) (2) (3) (3)
------- ------- ------- ------- ----- ------- -------
Net investment income (loss) ........ (15) 7 83 25 20 (3) 22
Capital gain distributions .......... 8 21 182 18 -- -- --
Realized gain (loss) on investments . 63 48 122 10 (1) 4
Unrealized appreciation
(depreciation) on investments 452 (50) 680 90 3 120 --
------- ------- ------- ------- ----- ------- -------
Net realized and unrealized gain
on investments .............. 523 19 984 118 2 124 --
------- ------- ------- ------- ----- ------- -------
Net increase in net assets
resulting from operations ... 508 26 1,067 143 22 121 22
Net assets at beginning of year ..... 2,301 1,101 2,664 536 365 -- --
Variable annuity deposits
(Notes 2 and 3) ............. 1,004 815 2,969 603 281 1,210 1,714
Terminations and withdrawals
(Notes 2 and 3) ............. (517) (322) (647) (64) (168) (254) (946)
------- ------- ------- ------- ----- ------- -------
Net assets at end of year ........... $ 3,296 $ 1,620 $ 6,053 $ 1,218 $ 500 $ 1,077 $ 790
------- ------- ------- ------- ----- ------- -------
See accompanying notes.
<PAGE>
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
PERSONAL
NEW AMERICA INTERNATIONAL EQUITY STRATEGY LIMITED-
GROWTH STOCK INCOME BALANCED TERM BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
Dividend distributions $ 2 $ 9 $ 45 $ 11 $ 14
Expenses (Note 2):
Mortality and expense risk fee (6) (3) (7) (2) (1)
-------------------------------------------------------------
Net investment income (loss) (4) 6 38 9 13
Capital gain distributions 15 5 11 9 --
Realized gain on investments 24 7 15 4 --
Unrealized appreciation (depreciation)
on investments 103 65 181 24 (1)
-------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 142 77 207 37 (1)
-------------------------------------------------------------
Net increase in net assets resulting
from operations 138 83 245 46 12
Net assets at beginning of year
Variable annuity deposits (Notes 2 and 3) 2,318 1,094 2,526 543 834
Terminations and withdrawals (Notes 2 and 3) (155) (76) (107) (53) (481)
-------------------------------------------------------------
Net assets at end of year $2,301 $1,101 $2,664 $536 $365
-------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
T. Rowe Price Variable Annuity Account (the Account) is a separate account
of First Security Benefit Life Insurance and Annuity Company of New York
(FSBL). The Account is registered as a unit investment trust under the
Investment Company Act of 1940, as amended. The Account currently is
divided into seven subaccounts. Each subaccount invests exclusively in
shares of a single corresponding mutual fund or series thereof. Purchase
payments received by the Account are invested in one of the Portfolios of
either T. Rowe Price Equity Series, Inc., T. Rowe Price Fixed Income
Series, Inc. or T. Rowe Price International Series, Inc., mutual funds not
otherwise available to the public. As directed by the owners, purchase
payments are invested in shares of New America Growth Portfolio _ emphasis
on long-term capital growth through investments in common stocks of domestic
companies, International Stock Portfolio _ emphasis on long-term capital
growth through investments in common stocks of established foreign
companies, Equity Income Portfolio _ emphasis on substantial dividend income
and capital appreciation by investing primarily in dividend-paying common
stocks, Personal Strategy Balanced Portfolio _ emphasis on both capital
appreciation and income, Limited-Term Bond Portfolio _ emphasis on income
with moderate price fluctuation by investing in short- and intermediate-term
investment grade debt securities, Mid-Cap Growth Portfolio emphasis on
long-term capital appreciation through investments in companies with proven
products or services and Prime Reserve Portfolio emphasis on preservation of
capital and liquidity while generating the highest possible current income
by investing primarily in high-quality money market securities.
T. Rowe Price Associates, Inc. (T. Rowe Price) serves as the investment
advisor to each Portfolio except the International Stock Portfolio which is
managed by Rowe Price-Fleming International, Inc., an affiliate of T. Rowe
Price. The investment advisors are responsible for managing the Portfolios
assets in accordance with the terms of the investment advisory contracts.
INVESTMENT VALUATION
Investments in mutual fund shares are carried in the balance sheet at
market value (net asset value of the underlying mutual fund). The first-in,
first-out cost method is used to determine gains and losses. Security
transactions are accounted for on the trade date.
The cost of investments purchased and proceeds from investments sold were
as follows:
1997 1996
COST OF PROCEEDS COST OF PROCEEDS
PURCHASES FROM SALES PURCHASES FROM SALES
(IN THOUSANDS)
New America Growth Portfolio ....... $1,029 $549 $2,498 $324
International Stock Portfolio ...... 861 340 1,151 122
Equity Income Portfolio ............ 3,293 706 2,813 345
Personal Strategy Balanced
Portfolio ......................... 656 74 578 70
Limited-Term Bond Portfolio ........ 293 160 872 506
Mid-Cap Growth Portfolio ........... 1,248 295 -- --
Prime Reserve Portfolio ............ 1,766 976 -- --
<PAGE>
ANNUITY RESERVES
Annuity reserves relate to contracts that have matured and are in the
payout stage. Such reserves are computed on the basis of published
mortality tables using assumed interest rates that will provide reserves as
prescribed by law. In cases where the payout option selected is life
contingent, FSBL periodically recalculates the required annuity reserves,
and any resulting adjustment is either charged or credited to FSBL and not
to the Account.
REINVESTMENT OF DIVIDENDS
Dividend and capital gains distributions paid by the mutual fund to the
Account are reinvested in additional shares of each respective Portfolio.
Dividend income and capital gains distributions are recorded as income on
the ex-dividend date.
FEDERAL INCOME TAXES
Under current law, no federal income taxes are payable with respect to the
Account.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
2. VARIABLE ANNUITY CONTRACT CHARGES
Mortality and expense risks assumed by FSBL are compensated for by a fee
equivalent to an annual rate of .55% of the average daily net assets of
each account.
When applicable, an amount for state premium taxes is deducted as provided
by pertinent state law either from the purchase payments or from the amount
applied to effect an annuity at the time annuity payments commence.
3. SUMMARY OF UNIT TRANSACTIONS
UNITS
YEAR ENDED DECEMBER 31
1997 1996
- --------------------------------------------------------------------------------
(IN THOUSANDS)
- --------------------------------------------------------------------------------
New America Growth Subaccount:
Variable annuity deposits ................... 58 154
Terminations, withdrawals and
annuity payments .......................... 31 11
- --------------------------------------------------------------------------------
International Stock Subaccount:
Variable annuity deposits ................... 61 92
Terminations, withdrawals and
annuity payments .......................... 23 6
- --------------------------------------------------------------------------------
Equity Income Subaccount:
Variable annuity deposits ................... 180 189
Terminations, withdrawals and
annuity payments .......................... 40 8
- --------------------------------------------------------------------------------
Personal Strategy Balanced Subaccount:
Variable annuity deposits ................... 41 44
Terminations, withdrawals and
annuity payments .......................... 4 4
- --------------------------------------------------------------------------------
Limited-Term Bond Subaccount:
Variable annuity deposits ................... 24 77
Terminations, withdrawals and
annuity payments .......................... 14 44
- --------------------------------------------------------------------------------
Mid-Cap Growth Subaccount:
Variable annuity deposits ................... 116 --
Terminations, withdrawals and
annuity payments .......................... 25 --
- --------------------------------------------------------------------------------
Prime Reserve Subaccount:
Variable Annuity deposits ................... 168 --
Terminations, withdrawals and
annuity payments .......................... 92 --
- --------------------------------------------------------------------------------
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
CONTENTS
Report of Independent Auditors............................................1
AUDITED FINANCIAL STATEMENTS
Balance Sheets............................................................2
Statements of Income......................................................3
Statements of Changes in Stockholder's Equity.............................4
Statements of Cash Flows..................................................5
Notes to Financial Statements.............................................6
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
First Security Benefit Life Insurance
and Annuity Company of New York
We have audited the accompanying balance sheets of First Security Benefit Life
Insurance and Annuity Company of New York (the Company) as of December 31, 1997
and 1996, and the related statements of income, changes in stockholder's equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Security Benefit Life
Insurance and Annuity Company of New York at December 31, 1997 and 1996, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
Ernst and Young LLP
Kansas City, Missouri
February 6, 1998
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
BALANCE SHEETS
DECEMBER 31
1997 1996
------------------------------
(IN THOUSANDS)
ASSETS
Fixed maturities available-for-sale $ 6,752 $ 6,970
Cash 508 75
Accrued investment income 95 90
Reinsurance recoverable 219 240
Deferred policy acquisition costs 58 35
Other assets 132 164
Separate account assets 14,554 6,967
==============================
$22,318 $14,541
==============================
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Policy reserves and annuity account values $ 586 $ 599
Deferred income taxes 102 88
Other liabilities 101 26
Separate account liabilities 14,554 6,967
------------------------------
Total liabilities 15,343 7,680
Stockholder's equity:
Common capital stock, par value $10 per
share; 200,000 shares authorized, issued
and outstanding 2,000 2,000
Additional paid-in capital 4,600 4,600
Unrealized gain on securities
available-for-sale, net 118 116
Retained earnings 257 145
------------------------------
Total stockholder's equity 6,975 6,861
==============================
$22,318 $14,541
==============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31
1997 1996
----------------------------------
(IN THOUSANDS)
Revenues:
Net investment income $478 $474
Asset based fees 60 19
----------------------------------
Total revenues 538 493
Benefits and expenses:
Interest credited to annuity account
balances 20 16
Operating expenses 336 357
Amortization of deferred policy
acquisition costs 7 2
----------------------------------
Total benefits and expenses 363 375
----------------------------------
Income before income taxes 175 118
Income taxes 63 48
----------------------------------
Net income $112 $ 70
==================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
UNREALIZED
GAIN
ADDITIONAL OF SECURITIES
COMMON PAID-IN AVAILABLE- RETAINED
STOCK CAPITAL FOR-SALE EARNINGS
------------------------------------------
(IN THOUSANDS)
Balance at December 31, 1995 $2,000 $4,600 $233 $ 75
Net income - - - 70
Change in unrealized gain on
securities available-for-sale, net - - (117) -
------------------------------------------
Balance at December 31, 1996 2,000 4,600 116 145
Net income - - - 112
Change in unrealized gain on
securities available-for-sale, net - - 2 -
==========================================
Balance at December 31, 1997 $2,000 $4,600 $118 $257
==========================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31
1997 1996
--------------------------
(IN THOUSANDS)
OPERATING ACTIVITIES
Net income $112 $ 70
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Decrease in reinsurance recoverable 21 7
Policy acquisition costs deferred (30) (37)
Policy acquisition costs amortized 7 2
Provision for deferred income taxes 9 12
Decrease in policy reserves (20) (7)
Interest credited to annuity account balances 20 16
Increase (decrease) in other liabilities 75 (505)
Other 17 43
--------------------------
Net cash provided by (used in) operating activities 211 (399)
INVESTING ACTIVITIES
Sale, maturity or repayment of fixed maturities
available-for-sale 558 1,022
Acquisition of fixed maturities available-for sale (323) (855)
--------------------------
Net cash provided by investing activities 235 167
FINANCING ACTIVITIES
Deposits credited to annuity account balances 227 470
Withdrawals from annuity account balances (240) (702)
--------------------------
Net cash used in financing activities (13) (232)
--------------------------
Net increase (decrease) in cash 433 (464)
Cash at beginning of year 75 539
--------------------------
Cash at end of year $508 $ 75
==========================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
First Security Benefit Life Insurance and Annuity Company of New York (the
Company) was capitalized as a New York company on February 8, 1995. The Company
is licensed to transact life insurance business in New York and Kansas and was
organized to offer insurance products in New York. The Company's business
activities are concentrated in a variable annuity product with separate account
assets managed by a single investment advisor. The Company is a wholly-owned
subsidiary of Security Benefit Group, Inc. (SBG), a wholly-owned subsidiary of
Security Benefit Life Insurance Company (SBL), a mutual life insurance company.
USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
INVESTMENTS
Fixed maturities are classified as available-for-sale and are stated at fair
value with the unrealized gain or loss, net of deferred income taxes, reported
as a separate component of stockholder's equity. Premiums and discounts are
recognized over the estimated lives of the assets adjusted for prepayment
activity.
DEFERRED POLICY ACQUISITION COSTS
To the extent recoverable from future policy revenues and gross profits,
commissions and other policy-issue, underwriting and marketing costs that are
primarily related to the acquisition or renewal of deferred annuity business
have been deferred.
<PAGE>
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
For deferred annuity business, deferred policy acquisition costs are amortized
in proportion to the present value (discounted at the crediting rate) of
expected gross profits from investment, mortality and expense margins. That
amortization is adjusted retrospectively when estimates of current or future
gross profits to be realized from a group of products are revised.
SEPARATE ACCOUNT
The separate account assets and liabilities reported in the accompanying balance
sheets represent funds that are separately administered for the benefit of
contractholders who bear the investment risk. The separate account is
established in conformity with New York insurance laws and is not chargeable
with liabilities that arise from any other business of the Company. Assets held
in the separate account are carried at quoted market values, or where quoted
market values are not available, at fair market value as determined by the
investment manager. The separate account assets recorded by the Company are
invested in subaccounts which are managed by T. Rowe Price Associates, Inc. (or
an affiliated company). Revenues and expenses related to the separate account
assets and liabilities, to the extent of benefits paid or provided to the
separate account contractholders, are excluded from the amounts reported in the
accompanying statements of income. Investment income and gains or losses arising
from the separate account accrue directly to the contractholders and are,
therefore, not included in investment earnings in the accompanying statements of
income. Revenues to the Company from the separate account consist principally of
mortality and expense risk charges.
POLICY RESERVES AND ANNUITY ACCOUNT VALUES
Liabilities for future policy benefits for deferred annuity products represent
accumulated contract values, without reduction for potential surrender charges
that are amortized over the life of the policy. Interest on accumulated contract
values is credited to contracts as earned. Crediting rates ranged from 4.85% to
5.7% during 1997 and from 4.35% to 5.55% during 1996.
<PAGE>
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Income taxes have been provided using the liability method in accordance with
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." Under that method, deferred tax assets and liabilities are
determined based on differences between the financial reporting and income tax
bases of assets and liabilities and are measured using the enacted tax rates and
laws. Deferred income tax expenses or credits reflected in the Company's
statements of income are based on changes in deferred tax assets or liabilities
from period to period (excluding unrealized gains or losses on
available-for-sale securities).
RECOGNITION OF REVENUES
Revenues from investment-type contracts (deferred annuities) consist of
mortality and expense risk charges assessed against contractholder account
balances during the period.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Cash and short-term investments: The carrying amounts reported in the
balance sheet for these instruments approximate their fair values.
Investment securities: Fair values for fixed maturities are based on quoted
market prices, if available. For fixed maturities not actively traded, fair
values are estimated using values obtained from independent pricing services
or estimated by discounting expected future cash flows using a current
market rate applicable to the yield, credit quality and maturity of the
investments.
Investment-type contracts: Fair values for the Company's liabilities under
investment-type insurance contracts are estimated using the assumption
reinsurance method, whereby the amount of statutory profit the assuming
company would realize from the business is calculated. Those amounts are
then discounted at a rate of return commensurate with the rate presently
offered by the Company on similar contracts.
<PAGE>
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STATUTORY FINANCIAL INFORMATION
The Company prepares statutory-basis financial statements in accordance with
accounting practices prescribed or permitted by the New York insurance
regulatory authorities. Accounting practices used to prepare statutory-basis
financial statements for regulatory filings of stock life insurance companies
differ in certain instances from generally accepted accounting principles
(GAAP). Prescribed statutory accounting practices include a variety of
publications of the National Association of Insurance Commissioners, as well as
state laws, regulations and general administrative rules. Permitted statutory
accounting practices encompass all accounting practices not so prescribed; such
practices may differ from state to state, may differ from company to company
within a state and may change in the future. The New York Insurance Department
recognizes only statutory accounting practices for determining and reporting the
financial condition and results of operations of an insurance company and for
determining its solvency under the New York insurance laws. The following
reconciles the Company's statutory surplus and net income determined in
accordance with accounting practices prescribed or permitted by the New York
Insurance Department with net income and stockholder's equity on a GAAP basis.
NET INCOME STOCKHOLDER'S EQUITY
---------------------------------------
1997 1996 1997 1996
---------------------------------------
Based on statutory accounting practices $ 98 $47 $6,689 $6,549
Investment carrying amounts - - 199 192
Deferred policy acquisition costs 23 35 58 35
Deferred income taxes (9) (12) (102) (88)
Investment reserve - - 8 9
Nonadmitted assets - - 123 164
---------------------------------------
Based on GAAP $112 $70 $6,975 $6,861
=======================================
Under the laws of the state of New York, the Company is required to maintain
minimum capital and surplus of $6,000,000.
<PAGE>
2. INVESTMENTS
Information as to the amortized cost, gross unrealized gains and losses, and
fair values of the Company's portfolio of fixed maturities available-for-sale at
December 31, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
1997
-----------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-----------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Treasury securities $3,987 $149 $ - $4,136
Corporate securities 482 10 - 492
Asset-backed securities 339 2 - 341
Mortgage-backed securities 1,745 38 - 1,783
-----------------------------------------------------------
Total fixed maturities $6,553 $199 $ - $6,752
===========================================================
1996
-----------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-----------------------------------------------------------
(IN THOUSANDS)
U.S. Treasury securities $3,829 $149 $ - $3,978
Corporate securities 310 4 - 314
Asset-backed securities 339 - 2 337
Mortgage-backed securities 2,300 41 - 2,341
===========================================================
Total fixed maturities $6,778 $194 $ 2 $6,970
===========================================================
</TABLE>
The change in the Company's net unrealized gains on fixed maturities was $7,000
and $(186,000) during 1997 and 1996, respectively.
<PAGE>
2. INVESTMENTS (CONTINUED)
The amortized cost and fair value of fixed maturities available-for-sale at
December 31, 1997, by contractual maturity, are shown below. Expected maturities
may differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
AMORTIZED FAIR
COST VALUE
------------------------------
(IN THOUSANDS)
Due in one year or less $ 396 $ 400
Due after one year through five years 3,837 3,967
Due after five years through 10 years 236 260
Due after 10 years - -
Asset-backed securities 339 341
Mortgage-backed securities 1,745 1,784
------------------------------
$6,553 $6,752
==============================
At December 31, 1997, fixed maturities available-for-sale with a carrying amount
of $557,000 were held in joint custody with the New York Insurance Department to
comply with statutory regulations.
Major categories of net investment income for the years ended December 31,
1997 and 1996 are summarized as follows:
1997 1996
------------------------------
(IN THOUSANDS)
Interest on fixed maturities $500 $497
Other 7 7
------------------------------
Total investment income 507 504
Investment expenses 29 30
------------------------------
Net investment income $478 $474
==============================
<PAGE>
2. INVESTMENTS (CONTINUED)
Proceeds from sales of fixed maturities available-for-sale and related realized
gains and losses, including valuation adjustments for the years ending December
31, 1997 and 1996, are as follows:
1997 1996
------------------------------
(IN THOUSANDS)
Proceeds from sales $ - $574
Gross realized gains - 3
Gross realized losses - 5
The composition of the Company's portfolio of fixed maturities by quality rating
at December 31, 1997 is as follows:
QUALITY RATING CARRYING AMOUNT %
- ---------------------------------------------------------------
(IN THOUSANDS)
AAA $6,260 92.7%
AA 110 1.6
A 382 5.7
==================================
$6,752 100.0%
==================================
3. INCOME TAXES
The Company files a life/nonlife consolidated federal income tax return with
SBL. Income taxes are allocated to the Company on the basis of its filing a
separate return. The provision for income taxes includes current federal income
tax expense or benefit and deferred income tax expense or benefit due to
temporary differences between the financial reporting and income tax bases of
assets and liabilities. Such differences relate principally to deferred policy
acquisition costs.
<PAGE>
3. INCOME TAXES (CONTINUED)
Income tax expense consists of the following for the years ended December 31,
1997 and 1996:
1997 1996
-----------------------------
(IN THOUSANDS)
Current $54 $36
Deferred 9 12
=============================
Income tax expense $63 $48
=============================
Income taxes paid by the Company were $89,000 and $32,000 during 1997 and 1996,
respectively.
Net deferred tax liabilities consist of the following:
DECEMBER 31
1997 1996
------------------------------
(IN THOUSANDS)
Total deferred tax assets $ - $ -
Total deferred tax liabilities 102 88
------------------------------
Net deferred tax liabilities $102 $88
==============================
4. RELATED PARTY TRANSACTIONS
SBL provides management and administrative services to the Company. The Company
paid SBL $144,000 during 1997 and 1996 for such services.
<PAGE>
5. REINSURANCE
Principal reinsurance transactions for the years ended December 31, 1997 and
1996 are summarized as follows:
1997 1996
------------------------------
(IN THOUSANDS)
Reinsurance ceded:
Premiums paid $ 2 $4
==============================
Claim recoveries $13 $9
==============================
In the accompanying financial statements, premiums and benefits are reported net
of reinsurance ceded; policy liabilities and accruals are reported gross of
reinsurance ceded. The Company remains liable to policyholders if the reinsurer
is unable to meet its contractual obligations under the applicable reinsurance
agreement. At December 31, 1997 and 1996, the Company had established a
receivable totaling $219,000 and $240,000, respectively, for reinsurance claims
and other receivables from its reinsurer.
6. INVESTMENT-TYPE INSURANCE CONTRACTS
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," excludes
certain insurance liabilities and other nonfinancial instruments from its
disclosure requirements. However, the liabilities under all insurance contracts
are taken into consideration in the Company's overall management of interest
rate risk that minimizes exposure to changing interest rates through the
matching of investment maturities with amounts due under insurance contracts.
The fair value amounts presented herein do not include an amount for the value
associated with customer or agent relationships, the expected interest margin
(interest earnings in excess of interest credited) to be earned in the future on
investment-type products, or other intangible items. Accordingly, the aggregate
fair value amounts presented herein do not necessarily represent the underlying
value of the Company; likewise, care should be exercised in deriving conclusions
about the Company's business or financial condition based on this fair value
information.
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
----------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Investment-type insurance contracts $367 $337 $359 $335
====================================================
</TABLE>
<PAGE>
7. IMPACT OF YEAR 2000 (UNAUDITED)
The year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. SBL has completed an
assessment and identified portions of its software (some of which are used by
the Company) that will have to be modified or replaced so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter. SBL expects to be completed with the modification or replacement of
all its software applications not later than March 31, 1999, which is prior to
any anticipated impact of year 2000 on its operating systems. However, if such
modifications and conversions are not made, or are not completed timely, the
year 2000 issue could have a material impact on the operations of the Company.
SBL has initiated formal communications with significant third parties which
provide the Company with information to determine the extent to which the
Company's interface systems are vulnerable to those third parties' failure to
remediate their own year 2000 issues. There is no guarantee that the systems of
other companies on which the Company's systems rely will be timely converted and
would not have an adverse effect on the Company's systems.
<PAGE>
FINANCIAL STATEMENTS
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT
OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
YEARS ENDED DECEMBER 31, 1997 AND 1996
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
CONTENTS
Report of Independent Auditors............................................1
AUDITED FINANCIAL STATEMENTS
Balance Sheets............................................................2
Statements of Income......................................................3
Statements of Changes in Stockholder's Equity.............................4
Statements of Cash Flows..................................................5
Notes to Financial Statements.............................................6
<PAGE>
Report of Independent Auditors
The Contract Owners of T. Rowe Price Variable Annuity
Account of First Security Benefit Life Insurance and
Annuity Company of New York and The Board of
Directors of First Security Benefit Life Insurance and
Annuity Company of New York
We have audited the accompanying balance sheet of T. Rowe Price Variable Annuity
Account of First Security Benefit Life Insurance and Annuity Company of New York
(the Account) as of December 31, 1997, and the related statements of operations
and changes in net assets for each of the two years in the period then ended.
These financial statements are the responsibility of the Account's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of investments owned as of December 31, 1997 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of T. Rowe Price Variable Annuity
Account of First Security Benefit Life Insurance and Annuity Company of New York
at December 31, 1997, and the results of its operations and changes in its net
assets for each of the two years in the period then ended in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
February 6, 1998
<PAGE>
T. Rowe Price Variable Annuity Account
of First Security Benefit Life Insurance
and Annuity Company of New York
Balance Sheet
December 31, 1997
(DOLLARS IN THOUSANDS - EXCEPT PER SHARE AND UNIT VALUES)
ASSETS
Investments:
T. Rowe Price Portfolios:
New America Growth Portfolio - 154,371 shares at net asset
value of $21.35 per share (cost, $2,741) $ 3,296
International Stock Portfolio - 127,152 shares at net asset
value of $12.74 per share (cost, $1,605) 1,620
Equity Income Portfolio - 325,615 shares at net asset
value of $18.59 per share (cost, $5,192) 6,053
Personal Strategy Balanced Portfolio - 80,525 shares at net
asset value of $15.13 per share (cost, $1,104) 1,218
Limited-Term Bond Portfolio - 100,929 shares at net asset
value of $4.96 per share (cost, $498) 500
Mid-Cap Growth Portfolio - 90,648 shares at net asset value
of $11.88 per share (cost, $957) 1,077
Prime Reserve Portfolio - 789,543 shares at net asset value
of $1.00 per share (cost, $790) 790
----------
Total assets $14,554
==========
<PAGE>
NUMBER UNIT
OF UNITS VALUE AMOUNT
------------------------------------
NET ASSETS
Net assets are represented by (NOTE 3):
New America Growth Subaccount:
Accumulation units 170,990 $19.27 $3,296
International Stock Subaccount:
Accumulation units 123,502 13.09 $1,617
Annuity reserves 265 13.09 3 1,620
----------
Equity Income Subaccount:
Accumulation units 320,917 18.84 6,045
Annuity reserves 454 18.84 8 6,053
----------
Personal Strategy Balanced
Subaccount:
Accumulation units 76,311 15.86 1,211
Annuity reserves 494 15.86 7 1,218
----------
Limited-Term Bond Subaccount:
Accumulation units 41,943 11.60 486
Annuity reserves 1,222 11.60 14 500
----------
Mid-Cap Growth Subaccount:
Accumulation units 91,142 11.82 1,077
Prime Reserve Subaccount:
Accumulation units 75,383 10.47 790
----------
Total net assets $14,554
==========
SEE ACCOMPANYING NOTES.
<PAGE>
T. Rowe Price Variable Annuity Account
of First Security Benefit Life Insurance
and Annuity Company of New York
Statement of Operations and Changes in Net Assets
Year ended December 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
INTER- PERSONAL LIMITED-
NEW AMERICA NATIONAL EQUITY STRATEGY TERM MID-CAP PRIME
GROWTH STOCK INCOME BALANCED BOND GROWTH RESERVE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNTSUBACCOUNT
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dividend distributions ........................$ -- $ 15 $ 108 $ 30 $ 22 $ -- $ 25
Expenses (NOTE 2):
Mortality and expense risk fee .............. (15) (8) (25) (5) (2) (3) (3)
------- ------- ------- ------- ----- ------- -------
Net investment income (loss) .................. (15) 7 83 25 20 (3) 22
Capital gain distributions .................... 8 21 182 18 -- -- --
Realized gain (loss) on investments ........... 63 48 122 10 (1) 4 --
Unrealized appreciation (depreciation) on
investments ................................. 452 (50) 680 90 3 120 --
------- ------- ------- ------- ----- ------- -------
Net realized and unrealized gain on
investments ................................... 523 19 984 118 2 124 --
------- ------- ------- ------- ----- ------- -------
Net increase in net assets resulting from
operations .................................... 508 26 1,067 143 22 121 22
Net assets at beginning of year ............... 2,301 1,101 2,664 536 365 -- --
Variable annuity deposits (NOTES 2 AND 3) ..... 1,004 815 2,969 603 281 1,210 1,714
Terminations and withdrawals (NOTES 2 AND 3)... (517) (322) (647) (64) (168) (254) (946)
------- ------- ------- ------- ----- ------- -------
Net assets at end of year .....................$ 3,296 $ 1,620 $ 6,053 $ 1,218 $ 500 $ 1,077 $ 790
======= ======= ======= ======= ===== ======= =======
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
T. Rowe Price Variable Annuity Account
of First Security Benefit Life Insurance
and Annuity Company of New York
Statement of Operations and Changes in Net Assets
Year ended December 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
INTER- PERSONAL
NEW AMERICA NATIONAL EQUITY STRATEGY LIMITED-TERM
GROWTH STOCK INCOME BALANCED BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend distributions .....................................$ 2 $ 9 $ 45 $ 11 $ 14
Expenses (NOTE 2):
Mortality and expense risk fee ........................... (6) (3) (7) (2) (1)
------------------------------------------------------------------------
Net investment income (loss) ............................... (4) 6 38 9 13
Capital gain distributions ................................. 15 5 11 9 --
Realized gain on investments ............................... 24 7 15 4 --
Unrealized appreciation (depreciation) on investments ...... 103 65 181 24 (1)
------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments ..... 142 77 207 37 (1)
------------------------------------------------------------------------
Net increase in net assets resulting from operations ....... 138 83 245 46 12
Net assets at beginning of year ............................ -- -- -- -- --
Variable annuity deposits (NOTES 2 AND 3) .................. 2,318 1,094 2,526 543 834
Terminations and withdrawals (NOTES 2 AND 3) ............... (155) (76) (107) (53) (481)
------------------------------------------------------------------------
Net assets at end of year ..................................$ 2,301 $ 1,101 $ 2,664 $ 536 $ 365
========================================================================
</TABLE>
SEE ACCOMPANYING NOTES.
<PAGE>
T. Rowe Price Variable Annuity Account
of First Security Benefit Life Insurance
and Annuity Company of New York
Notes to Financial Statements
December 31, 1997
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
T. Rowe Price Variable Annuity Account (the Account) is a separate account of
First Security Benefit Life Insurance and Annuity Company of New York (FSBL).
The Account is registered as a unit investment trust under the Investment
Company Act of 1940, as amended. The Account currently is divided into seven
subaccounts. Each subaccount invests exclusively in shares of a single
corresponding mutual fund or series thereof. Purchase payments received by the
Account are invested in one of the Portfolios of either T. Rowe Price Equity
Series, Inc., T. Rowe Price Fixed Income Series, Inc. or T. Rowe Price
International Series, Inc., mutual funds not otherwise available to the public.
As directed by the owners, purchase payments are invested in shares of New
America Growth Portfolio - emphasis on long-term capital growth through
investments in common stocks of domestic companies, International Stock
Portfolio - emphasis on long-term capital growth through investments in common
stocks of established foreign companies, Equity Income Portfolio - emphasis on
substantial dividend income and capital appreciation by investing primarily in
dividend-paying common stocks, Personal Strategy Balanced Portfolio emphasis on
both capital appreciation and income, Limited-Term Bond Portfolio - emphasis on
income with moderate price fluctuation by investing in short- and
intermediate-term investment grade debt securities, Mid-Cap Growth Portfolio -
emphasis on long-term capital appreciation through investments in companies with
proven products or services and Prime Reserve Portfolio - emphasis on
preservation of capital and liquidity while generating the highest possible
current income by investing primarily in high-quality money market securities.
T. Rowe Price Associates, Inc. (T. Rowe Price) serves as the investment advisor
to each Portfolio except the International Stock Portfolio which is managed by
Rowe Price-Fleming International, Inc., an affiliate of T. Rowe Price. The
investment advisors are responsible for managing the Portfolios' assets in
accordance with the terms of the investment advisory contracts.
<PAGE>
T. Rowe Price Variable Annuity Account
of First Security Benefit Life Insurance
and Annuity Company of New York
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENT VALUATION
Investments in mutual fund shares are carried in the balance sheet at market
value (net asset value of the underlying mutual fund). The first-in, first-out
cost method is used to determine gains and losses. Security transactions are
accounted for on the trade date.
The cost of investments purchased and proceeds from investments sold were as
follows:
<TABLE>
<CAPTION>
1997 1996
----------------------------------------------------
COST OF PROCEEDS COST OF PROCEEDS
PURCHASES FROM SALES PURCHASES FROM SALES
----------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
New America Growth Portfolio $1,029 $549 $2,498 $324
International Stock Portfolio 861 340 1,151 122
Equity Income Portfolio 3,293 706 2,813 345
Personal Strategy Balanced Portfolio 656 74 578 70
Limited-Term Bond Portfolio 293 160 872 506
Mid-Cap Growth Portfolio 1,248 295 - -
Prime Reserve Portfolio 1,766 976 - -
</TABLE>
ANNUITY RESERVES
Annuity reserves relate to contracts that have matured and are in the payout
stage. Such reserves are computed on the basis of published mortality tables
using assumed interest rates that will provide reserves as prescribed by law. In
cases where the payout option selected is life contingent, FSBL periodically
recalculates the required annuity reserves, and any resulting adjustment is
either charged or credited to FSBL and not to the Account.
<PAGE>
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REINVESTMENT OF DIVIDENDS
Dividend and capital gains distributions paid by the mutual fund to the Account
are reinvested in additional shares of each respective Portfolio. Dividend
income and capital gains distributions are recorded as income on the ex-dividend
date.
FEDERAL INCOME TAXES
Under current law, no federal income taxes are payable with respect to the
Account.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
2. VARIABLE ANNUITY CONTRACT CHARGES
Mortality and expense risks assumed by FSBL are compensated for by a fee
equivalent to an annual rate of .55% of the average daily net assets of each
account.
When applicable, an amount for state premium taxes is deducted as provided by
pertinent state law either from the purchase payments or from the amount applied
to effect an annuity at the time annuity payments commence.
<PAGE>
3. SUMMARY OF UNIT TRANSACTIONS
UNITS
-----------------------------
1997 1996
-----------------------------
(IN THOUSANDS)
New America Growth Subaccount:
Variable annuity deposits 58 154
Terminations, withdrawals and annuity payments 31 11
International Stock Subaccount:
Variable annuity deposits 61 92
Terminations, withdrawals and annuity payments 23 6
Equity Income Subaccount:
Variable annuity deposits 180 189
Terminations, withdrawals and annuity payments 40 8
Personal Strategy Balanced Subaccount:
Variable annuity deposits 41 44
Terminations, withdrawals and annuity payments 4 4
Limited-Term Bond Subaccount:
Variable annuity deposits 24 77
Terminations, withdrawals and annuity payments 14 44
Mid-Cap Growth Subaccount:
Variable annuity deposits 116 -
Terminations, withdrawals and annuity payments 25 -
Prime Reserve Subaccount:
Variable Annuity deposits 168 -
Terminations, withdrawals and annuity payments 92 -
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
All required financial statements are included in Part B of
this Registration Statement.
(b) Exhibits
(1) Certified Resolution of the Board of Directors of
First Security Benefit Life Insurance and Annuity
Company of New York authorizing establishment of the
Separate Account(a)
(2) Not Applicable
(3) Distribution Agreement
(4) (a) Individual Contract (Form FSB201 11-96)
(b) Unisex Individual Contract (Form FSB201U R11-96)
(c) TSA Endorsement (Form FSB202 R2-97)
(d) IRA Endorsement (Form FSB203 R2-97)
(e) Dollar Cost Averaging Endorsement (Form FSB211
4-94)
(f) Asset Rebalancing Endorsement (Form FSB212 4-94)
(5) Form of Application
(6) (a) Declaration and Certificate of Incorporation of
First Security Benefit Life Insurance and
Annuity Company of New York
(b) Bylaws of First Security Benefit Life Insurance
and Annuity Company of New York
(7) Not Applicable
(8) (a) Participation Agreement
(b) Master Agreement
(9) Opinion of Counsel
(10) Consent of Independent Auditors
(11) Not Applicable
(12) Not Applicable
(13) Schedule of Computation of Performance
(14) Financial Data Schedules
(15) Powers of Attorney of Howard R. Fricke, Donald J.
Schepker, James R. Schmank, Roger K. Viola, John E.
Hayes, Jr., Kris A. Robbins, Katherine White and
Stephen R. Herbert.
(a) Incorporated herein by reference to the Exhibits filed with the
Registrant's Pre-Effective Amendment No. 2, File No. 33-83240 (March 21,
1995).
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES WITH DEPOSITOR
Howard R. Fricke* President, CEO and Chairman of
the Board
Peggy S. Avey
70 West Red Oak Lane-4th Floor Assistant Secretary and Chief
White Plains, New York 10604 Administrative Officer
Donald J. Schepker* Vice President and Director
James R. Schmank* Director, Vice President and
Treasurer
Roger K. Viola* Secretary, Vice President,
General Counsel and Director
Kris A. Robbins* Director
Jane Boisseau Director
125 W. 55th Street
New York, NY 10019-5389
John E. Hayes, Jr. Director
P.O. Box 889
Topeka, KS 66601
Stephen R. Herbert Director
1100 Summer Street
Stamford, CT 06905
Katherine White Director
32 Avenue of the Americas
125 W. 55th Street
New York, NY 10019-5389
Leland Kling* Assistant Vice President
J. Timothy Gaule* Valuation Actuary
Ken Abitz* Internal Auditor
Mark A. Milton
3520 Broadway
Kansas City, MO 64111-2565 Life Illustration Actuary
*Located at 700 Harrison Street, Topeka, Kansas 66636.
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Depositor, First Security Benefit Life Insurance and Annuity
Company of New York, is wholly owned by Security Benefit Group, Inc.,
which is wholly owned by Security Benefit Life Insurance Company. No
one person holds more than approximately 0.0004% of the voting power
of SBL. The Registrant is a segregated asset account of First
Security Benefit Life Insurance and Annuity Company of New York.
The following chart indicates the persons controlled by or under
common control with T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New York or
First Security Benefit Life Insurance and Annuity Company of New
York:
PERCENT OF
JURISDICTION OF VOTING SECURITIES
NAME INCORPORATION OWNED BY SBL
Security Benefit Life Insurance Company
(Mutual Life Insurance Company) Kansas -----
Security Benefit Group, Inc.
(Holding Company) Kansas 100%
Security Management Company, LLC
(Investment Adviser) Kansas 100%
Security Distributors, Inc.
(Broker/Dealer, Principal Underwriter of
Mutual Funds) Kansas 100%
Security Benefit Academy, Inc.
(Daycare Company) Kansas 100%
Creative Impressions, Inc.
(Advertising Agency) Kansas 100%
Security Benefit Clinic and Hospital
(Nonprofit provider of hospital
benevolences for fraternal certificate
holders) Kansas 100%
First Advantage Insurance Agency, Inc. Kansas 100%
First Security Benefit Life Insurance and Annuity Company of New York is also
the depositor of the following separate accounts: None
<PAGE>
ITEM 27. NUMBER OF CONTRACT OWNERS
As of March 1, 1998, there were 430 owners of T. Rowe Price Variable
Annuity Account of First Security Benefit Life Insurance and Annuity
Company of New York Contracts.
ITEM 28. INDEMNIFICATION
Article IX, Section 1(c) of the By-laws of First Security Benefit
Life Insurance and Annuity Company of New York include the following
provision:
The Corporation may indemnify any person made, or threatened to be
made, a party to an action by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he or she,
his or her testator or intestate, is or was a director or officer of
the Corporation, or is or was serving at the request of the
Corporation as a director or officer of any other corporation of any
type or kind, domestic or foreign, of any partnership, joint venture,
trust, employee benefit plan or any other enterprise, against amounts
paid in settlement and reasonable expenses, including attorneys'
fees, actually and necessarily incurred by him or her in connection
with the defense or settlement of such action, or in connection with
an appeal therein, if such director or officer acted, in good faith,
for a purpose which he or she reasonably believed to be in or in the
case of service for other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise, not
opposed to the best interests of the corporation, except that no
indemnification under this paragraph shall be made in respect of (1)
a threatened action, or a pending action which is settled or
otherwise disposed of, or (2) any claim, issue or matter as to which
such person shall have been adjudged to be liable to the Corporation,
unless and only to the extent that the court in which the action was
brought, or, if no action was brought, any court of competent
jurisdiction, determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such portion of the settlement and expenses
as the court deems proper.
Insofar as indemnification for a liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Depositor has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment of
expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Depositor will, unless in the opinion of its counsel
the matter has been settled by a controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITER
(a) T. Rowe Price Investment Services, Inc. ("Investment
Services"), a Maryland corporation formed in 1980 as a
subsidiary of T. Rowe Price Associates, Inc., serves as
distributor of the T. Rowe Price Variable Annuity Account of
First Security Benefit Life Insurance and Annuity Company of
New York contracts. Investment Services receives no
compensation for distributing the Contracts. Investment
Services also serves as principal underwriter for the following
investment companies:
T. Rowe Price Growth Stock Fund, Inc.; T. Rowe Price New
Horizons Fund, Inc.; T. Rowe Price New Era Fund, Inc.; T. Rowe
Price New Income Fund, Inc.; T. Rowe Price Growth & Income
Fund, Inc.; T. Rowe Price Prime Reserve Fund, Inc.; T. Rowe
Price Tax-Free Income Fund, Inc.; T. Rowe Price Tax-Exempt
Money Fund, Inc.; T. Rowe Price Short-Term Bond Fund, Inc.; T.
Rowe Price Tax-Free Insured Intermediate Bond Fund, Inc.; T.
Rowe Price Tax-Free Short-Intermediate Fund, Inc.; T. Rowe
Price High Yield Fund, Inc.; T. Rowe Price Tax-Free High Yield
Fund, Inc.; T. Rowe Price GNMA Fund; T. Rowe Price Equity
Income Fund; T. Rowe Price New America Growth Fund; T. Rowe
Price Capital Appreciation Fund; T. Rowe Price Capital
Opportunity Fund, Inc.; T. Rowe Price Science & Technology
Fund, Inc.; T. Rowe Price Health Science Fund, Inc. T. Rowe
Price Small-Cap Value Fund, Inc.; T. Rowe Price U.S. Treasury
Funds, Inc. (which includes U.S. Treasury Money Fund, U.S.
Treasury Intermediate Fund and U.S. Treasury Long-Term Fund);
T. Rowe Price State Tax-Free Income Trust (which includes
Maryland Tax-Free Bond Fund, New York Tax-Free Bond Fund, New
York Tax-Free Money Fund, Virginia Short-Term Tax-Free Bond
Fund, Virginia Tax-Free Bond Fund, New Jersey Tax-Free Bond
Fund, Georgia Tax-Free Bond Fund, Florida Insured Intermediate
Tax-Free Fund, and Maryland Short-Term Tax-Free Bond Fund); T.
Rowe Price California Tax-Free Income Trust (which includes
California Tax-Free Bond Fund and California Tax-Free Money
Fund); T. Rowe Price Index Trust, Inc. (which includes the T.
Rowe Price Equity Index 500 Fund, T. Rowe Price Extended Equity
Market Index Fund and T. Rowe Price Total Equity Market Index
Fund); T. Rowe Price Spectrum Fund, Inc. (which includes the
Spectrum Growth Fund, Spectrum International Fund and Spectrum
Income Fund); T. Rowe Price Short-Term U.S. Government Fund,
Inc.; T. Rowe Price Value Fund, Inc.; T. Rowe Price Balanced
Fund, Inc.; T. Rowe Price Mid-Cap Growth Fund, Inc.; T. Rowe
Price Small Cap Stock Fund, Inc., (which includes T. Rowe Price
OTC Fund); T. Rowe Price Blue Chip Growth Fund, Inc.; T. Rowe
Price Dividend Growth Fund, Inc.; T. Rowe Price Summit Funds,
Inc. (which includes Summit Cash Reserves Fund, Summit
Limited-Term Bond Fund and Summit GNMA Fund); T. Rowe Price
Summit Municipal Funds, Inc. (which includes Summit Municipal
Money Market Fund, Summit Municipal Intermediate Fund, Summit
Municipal Income Fund); T. Rowe Price Corporate Income Fund,
Inc.; T. Rowe Price Equity Series, Inc., (which includes T.
Rowe Price Equity Income Portfolio and T. Rowe Price New
America Growth Portfolio, T. Rowe Price Mid-Cap Growth
Portfolio and T. Rowe Price Personal Strategy Balanced
Portfolio); T. Rowe Price Fixed Income Series, Inc. (which
includes T. Rowe Price Limited-Term Bond Portfolio); T. Rowe
Price International Series, Inc. (which includes T. Rowe Price
International Stock Portfolio); Personal Strategy Funds, Inc.
(which includes T. Rowe Price Personal Strategy Income Fund, T.
Rowe Price Personal Strategy Balanced Fund and Personal
Strategy Growth Fund); T. Rowe Price International Funds, Inc.
(which includes the T. Rowe Price International Stock Fund, T.
Rowe Price International Bond Fund, T. Rowe Price International
Discovery Fund, T. Rowe Price European Stock Fund, T. Rowe
Price New Asia Fund, T. Rowe Price Global Government Bond Fund,
T. Rowe Price Japan Fund, T. Rowe Price Short-Term Global Fund,
T. Rowe Price Latin America Fund, T. Rowe Price Emerging
Markets Stock Fund, T. Rowe Price Global Stock Fund, and T.
Rowe Price Emerging Markets Bond Fund); Frank Russell
Investment Securities Fund; the RPF International Bond Fund;
and the Institutional International Funds, Inc. (which includes
the Foreign Equity Fund).
(b)
Name and Principal Position and Offices
BUSINESS ADDRESS* WITH UNDERWRITER
------------------ ------------------
James S. Riepe Chairman of the Board of Directors
Patricia M. Archer Vice President
Edward C. Bernard President and Director
Joseph C. Bonasorte Vice President
Darrell N. Braman Vice President
Ronae M. Brock Vice President
Meredith C. Callanan Vice President
Christine M. Carolan Vice President
Joseph A. Carrier Vice President
Laura H. Chasney Vice President
Renee M. Christoff Vice President
Victoria C. Collins Vice President
Christopher W. Dyer Vice President
Christine Fahlund Vice President
Mark S. Finn Vice President
Forrest R. Foss Vice President
James W. Graves Vice President
Andrea G. Griffin Vice President
Douglas E. Hanson Vice President
David J. Healy Vice President
Joseph P. Healy Vice President
Walter J. Helmlinger Vice President
Eric G. Knauss Vice President
Henry H. Hopkins Vice President and Director
Douglas G. Kremer Vice President
Sharon R. Krieger Vice President
Keith Wayne Lewis Vice President
David L. Lyons Vice President
Sarah McCafferty Vice President
Maurice Albert Minerbi Vice President
Nancy M. Morris Vice President
George A. Murnaghan Vice President
Steven E. Norwitz Vice President
Kathleen M. O'Brien Vice President
David Oestreicher Vice President
Pamela D. Preston Vice President
George D. Riedel Vice President
Lucy Beth Robins Vice President
John Richard Rockwell Vice President
Monica R. Tucker Vice President
Charles E. Vieth Vice President and Director
William F. Wendler, II Vice President
Terrie L. Westren Vice President
Jane F. White Vice President
Thomas R. Woolley Vice President
Alvin M. Younger, Jr. Treasurer and Secretary
Mark S. Finn Controller
*Unless otherwise indicated, the business address of each of
Investment Services' officers and directors is 100 East Pratt
Street, Baltimore, Maryland 21202.
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts and records required to be maintained by Section 31(a)
of the 1940 Act and the rules under it are maintained by First
Security Benefit Life Insurance and Annuity Company of New York at
its administrative offices--70 West Red Oak Lane, 4th Floor, White
Plains, New York 10604.
ITEM 31. MANAGEMENT SERVICES
All management contracts are discussed in Part A or Part B.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes that it will file a post-effective
amendment to this Registration Statement as frequently as
necessary to ensure that the audited financial statements in
the Registration Statement are never more than sixteen (16)
months old for so long as payments under the Variable Annuity
contracts may be accepted.
(b) Registrant undertakes that it will affix to or include a post
card as part of the T. Rowe Price Variable Annuity Account of
First Security Benefit Life Insurance and Annuity Company of
New York Prospectus that an applicant can remove to send for a
Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made
available under this Form promptly upon written or oral request
to First Security Benefit Life Insurance and Annuity Company of
New York at the address or phone number listed in the
prospectus.
(d) Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, the Registrant hereby
undertakes to file with the Securities and Exchange Commission
such supplementary and periodic information, documents, and
reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.
(e) Registrant represents that the fees and charges deducted under
the contract, in the aggregate, are reasonable in relation to
the services rendered, the expenses expected to be incurred,
and the risks assumed by the Registrant.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets the requirements of Securities Act Rule 485(b) for effectiveness of this
Registration Statement and has caused this Registration Statement to be signed
on its behalf, in the City of Topeka, and State of Kansas, on this 20th day of
April, 1998.
SIGNATURES AND TITLES
Howard R. Fricke FIRST SECURITY BENEFIT LIFE INSURANCE AND
President and Director ANNUITY COMPANY OF NEW YORK
(THE DEPOSITOR)
Donald J. Schepker By: ROGER K. VIOLA
President and Director --------------------------------------------
Roger K. Viola, Secretary, Vice President and
Director as Attorney-in-Fact for the Officers
and Directors Whose Names Appear Opposite
James R. Schmank
Director
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY
Roger K. Viola BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
Assistant Secretary, Vice (THE REGISTRANT)
President and Director
By: FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY
John E. Hayes, Jr. COMPANY OF NEW YORK (THE DEPOSITOR)
Director
By: HOWARD R. FRICKE
Kris A. Robbins Howard R. Fricke, President and Director
Director
By: JAMES R. SCHMANK
Stephen R. Herbert James R. Schmank, Vice President and Treasurer
Director
(ATTEST): ROGER K. VIOLA
Katherine White Roger K. Viola, Secretary, Vice President
Director and Director
Date: April 20, 1998
<PAGE>
EXHIBIT INDEX
(1) None
(2) None
(3) Distribution Agreement
(4) (a) Individual Contract (Form FSB201 11-96)
(b) Unisex Individual Contract (Form FSB201U R11-96)
(c) TSA Endorsement (Form FSB202 R2-97)
(d) IRA Endorsement (Form FSB203 R2-97)
(e) Dollar Cost Averaging Endorsement (Form FSB211 4-94)
(f) Asset Rebalancing Endorsement (Form FSB212 4-94)
(5) Form of Application
(6) (a) Declaration and Certificate of Incorporation of First Security
Benefit Life Insurance and Annuity Company of New York
(b) Bylaws of First Security Benefit Life Insurance and Annuity Company
of New York
(7) None
(8) (a) Participation Agreement
(b) Master Agreement
(9) Opinion of Counsel
(10) Consent of Independent Auditors
(11) None
(12) None
(13) Schedule of Computation of Performance
(14) Financial Data Schedules
(15) Powers of Attorney of Howard R. Fricke, Donald J. Schepker, James R.
Schmank, Roger K. Viola, John E. Hayes, Jr., Kris A. Robbins, Katherine
White and Stephen R. Herbert
DISTRIBUTION AGREEMENT
BETWEEN
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
AND
T. ROWE PRICE INVESTMENT SERVICES, INC.
THIS DISTRIBUTION AGREEMENT, made as of the 11th day of October,
1995, by and between FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY
OF NEW YORK ("Insurer"), a life insurance company organized under the laws of
the State of New York, for itself and on behalf of the T. Rowe Price Variable
Annuity Account of First Security Benefit Life Insurance and Annuity Company of
New York (the "Separate Account"), a separate account established and maintained
by Insurer under the laws of the State of New York, and T. ROWE PRICE INVESTMENT
SERVICES, INC., a corporation organized and existing under the laws of the State
of Maryland ("Underwriter").
WITNESSETH:
WHEREAS, the Separate Account has been established by Insurer to
support a certain class of variable annuity contracts issued by Insurer;
WHEREAS, the Separate Account has been registered as a unit
investment trust under the federal Investment Company Act of 1940, as amended
("ICA-40");
WHEREAS, the Separate Account is sub-divided into various
subaccounts (the "subaccounts");
WHEREAS, certain companies registered as open-end management
investment companies under ICA-40 will serve as the underlying investment
vehicles for the Separate Account;
WHEREAS, such investment companies are authorized to issue shares
of capital stock ("Shares") in separate series, with each such series
representing the interests in a separate portfolio of securities and other
assets;
WHEREAS, each subaccount will purchase Shares of a corresponding
investment company;
WHEREAS, Underwriter is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, ("SEA-34") and is a member of the
National Association of Securities Dealers, Inc. ("NASD");
WHEREAS, Underwriter, together with T. Rowe Price Insurance
Agency, Inc. (the "Agency"), an insurance agency that is affiliated with
Underwriter, desire to distribute the variable annuity contracts supported by
the Separate Account and offered by Insurer; and
WHEREAS, Insurer desires to issue such variable annuity contracts
described more fully below to the public through Underwriter acting as the
principal underwriter and the Agency acting as the insurance agency for such
contracts;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. ADDITIONAL DEFINITIONS
(a) AFFILIATE -- With respect to a person, any other person
controlling, controlled by, or under common control with, such
person.
(b) APPLICATION -- An application for a Contract and any other forms
required to be completed before a Contract is issued.
(c) CONTRACTS -- The class or classes of variable annuity contracts
set forth on Schedule 1 to this Agreement as in effect at the
Effective Date, and such other classes of variable insurance
products that may be added to Schedule 1 from time to time in
accordance with Section 18 of this Agreement, and including any
riders to such Contracts and any other contracts offered in
connection therewith. For purposes of Sections 3 and 14 of this
Agreement, Contracts shall include Premiums for the Contracts.
(d) DISTRIBUTOR -- A person registered as a broker-dealer and
licensed as a life insurance agent or affiliated with a person so
licensed, who in the future will be authorized to distribute the
Contracts under arrangements that the parties may subsequently
agree to as described in Section 2.A. of this Agreement.
(e) EFFECTIVE DATE-- The date as of which this Agreement is executed.
(f) FUND -- An investment company established and/or distributed by
Underwriter or an Affiliate, specified on Schedule 2 to this
Agreement as in effect at the Effective Date, and such other
investment companies that may be added to Schedule 2 from time to
time in accordance with Section 18 of this Agreement.
(g) PREMIUM -- A payment made under a Contract by an applicant or
purchaser to purchase benefits under the Contract.
(h) PROSPECTUS -- The prospectus and statement of additional
information, if any, included within a Registration Statement,
except that, if the most recently filed prospectus and statement
of additional information filed pursuant to Rule 497 under SA-33
subsequent to the date on which a Registration Statement became
effective differs from the prospectus and statement of additional
information included within such Registration Statement at the
time it became effective, the term "Prospectus" shall refer to
the most recently filed prospectus and statement of additional
information filed under Rule 497 under SA-33, from and after the
date on which they each shall have been filed. For purposes of
Section 14 of this Agreement, the term "any Prospectus" means any
document which is or at any time was a Prospectus within the
meaning of this definition.
(i) REGISTRATION STATEMENT -- At any time that this Agreement is in
effect, each currently effective registration statement, or
currently effective post-effective amendment thereto, relating to
the Contracts, including financial statements included in, and
all exhibits to, such registration statement or post-effective
amendment. For purposes of Section 14 of this Agreement, the term
"Registration Statement" means any document which is or at any
time was a Registration Statement within the meaning of this
definition.
(j) REGULATIONS -- The rules and regulations promulgated by the SEC
under SA-33, SEA-34 and ICA-40.
(k) REPRESENTATIVE -- When used with reference to Underwriter or a
Distributor, an individual who is an associated person, as that
term is defined in SEA-34, thereof.
(l) SA-33 -- The Securities Act of 1933, as amended.
(m) SEC -- The Securities and Exchange Commission.
2. SALE OF CONTRACTS
(A) PRINCIPAL UNDERWRITER
Insurer, on its behalf and on behalf of the Separate Account,
authorizes Underwriter, on an exclusive basis, and Underwriter
accepts such authority, to be the distributor and principal
underwriter of the Contracts in the State of New York.
Underwriter will use all reasonable efforts to distribute the
Contracts, consistent with its other business, market and
regulatory conditions, and any other restrictions that may become
applicable to its activities. As exclusive distributor and
principal underwriter, Underwriter shall have sole authority to
solicit Applications and Premiums directly from customers and
prospective customers located in the State of New York.
Underwriter reserves the right to authorize third parties as
Distributors to engage in distribution activities involving the
solicitation of Applications and Premiums directly from customers
and prospective customers, in each case as Underwriter may in its
sole discretion so provide or limit, but in all such cases,
subject to such general terms and conditions regarding
arrangements with Distributors as the parties hereto may
subsequently agree upon in writing, provided that Insurer
reserves the right, which shall not be exercised unreasonably, to
require that Underwriter not enter into a sales agreement with a
proposed Distributor. Insurer shall appoint in the State of New
York such Distributors or Distributor Representatives, provided
that Insurer reserves the right, which right shall not be
exercised unreasonably, to refuse to appoint as agent any
Distributor or Distributor Representative, if any, or, once
appointed, to terminate the same at any time with or without
cause. Underwriter shall be an independent contractor and neither
Underwriter, nor any of its officers, directors, employees, or
agents is or shall be an employee of Insurer in the performance
of Underwriter's duties hereunder. Underwriter is not hereby
obligated to register or maintain its registration as a broker or
dealer under the State securities laws of New York if, in the
discretion of Underwriter, such registration is not practical,
necessary for its duties under this Agreement, or feasible, nor
does it restrict Underwriter from entering into distribution
arrangements with other issuers or investment companies, except
as otherwise agreed to in writing by the parties.
(b) INSURANCE AGENCY
It is understood that, pursuant to an insurance agency agreement,
Insurer will appoint the Agency as its insurance agent for the
sale of the Contracts. Underwriter agrees that no Underwriter
Representative shall engage in any solicitation activities on
behalf of Underwriter unless such Representative is associated
with Agency and subject to the supervision of Agency respecting
compliance with New York State insurance law.
(c) NO ALTERATION, DISCHARGE, ETC., OF CONTRACTS
Underwriter shall not have authority, and shall not grant
authority to Underwriter Representatives, Distributors or
Distributor Representatives, on behalf of Insurer: to make,
alter, waive, change or discharge any Contract or other contract
entered into pursuant to a Contract; to waive any Contract
forfeiture provision; to extend the time of paying any Premium;
to endorse checks or money orders payable to Insurer, or to
receive any monies or Premiums (except for the sole purpose of
forwarding monies or Premiums to Insurer). Underwriter shall not
expend, nor contract for the expenditure of, the funds of
Insurer. Underwriter shall not possess or exercise any authority
on behalf of Insurer other than that expressly conferred on
Underwriter by this Agreement. To the extent that Underwriter
receives a check payable to "T. Rowe Price," Underwriter, or an
affiliate thereof, and all or part of such check represents a
Premium, such check shall be processed in accordance with
mutually agreed upon procedures.
(d) OPINION OF INSURER'S COUNSEL
The obligations of Underwriter under this Agreement are subject
to the accuracy of the representations and warranties of Insurer
contained in this Agreement, to the performance by Insurer of its
obligations hereunder, and to the condition that (i) prior to the
time that Underwriter begins offering the Contracts, Underwriter
shall have received an opinion of the general counsel or an
associate general counsel of Insurer, such opinion to be
substantially to the effect set forth in Exhibit A hereto; and
(ii) each time, during the period in which Underwriter is
offering the Contracts, that an amendment to a Registration
Statement becomes effective under Rule 485(a) under SA-33,
Underwriter shall have received an opinion from the general
counsel or associate general counsel to Insurer, that is
reasonably acceptable to Underwriter, such opinion to be
substantially to the effect set forth in Exhibit A hereto.
3. SOLICITATION ACTIVITIES, APPLICATIONS AND PREMIUMS
Underwriter agrees that its solicitation activities with respect to the
Contracts shall be subject to applicable laws and regulations,
procedures provided by Insurer, and the rules set forth herein:
(a) Underwriter shall use Applications and other materials approved
by Insurer for use in the solicitation activities with respect to
the Contracts. Insurer shall notify Underwriter and the Agency in
writing if the State of New York requires delivery of a statement
of additional information for the Contracts with a prospectus to
a prospective purchaser.
(b) All Premiums paid by check or money order that are collected by
Underwriter or any Underwriter Representative shall be remitted
in full promptly, and in any event not later than two business
days (except to the extent of any commissions deducted from
Premiums in accordance with an insurance agency agreement),
together with any Applications, forms and any other required
documentation, to Insurer, P.O. Box 2788, Topeka, Kansas
66601-9804. Checks or money orders in payment of Premiums shall
be drawn to the order of "First Security Benefit Life Insurance
and Annuity Company." Premiums may be transmitted by wire order
from Underwriter or the Agency to Insurer in accordance with the
procedures reasonably agreed upon by the parties. If any Premium
is held at any time by Underwriter, Underwriter shall hold such
Premium in a fiduciary capacity and such Premium shall be
remitted in full promptly, and in any event not later than two
business days, to Insurer. All such Premiums, whether by check,
money order or wire, shall be the property of Insurer.
(c) Underwriter acknowledges that Insurer shall have the right to
reject, in whole or in part, any Application, but only for
reasonable cause and only after giving prior notice to
Underwriter. In the event an Application is rejected, any Premium
submitted therewith shall be returned by Insurer to the
applicant. Insurer shall promptly notify Underwriter and, if
applicable, the Distributor who submitted the Application, of
such action. In the event that a purchaser exercises his or her
free look right under their Contract, any amount to be refunded
as provided in such Contract shall be so refunded to the
purchaser by Insurer. Insurer shall notify Underwriter and, if
applicable, the Distributor who solicited the Contract, of such
action.
(d) Underwriter intends that no recommendations will be made to
prospects for the Contracts. To the extent that Underwriter or
Underwriter Representatives make recommendations, or to the
extent required by applicable securities laws, Underwriter and
Underwriter Representatives will comply with Section 2 of Article
III of the NASD's Rules of Fair Practice.
(e) During the term of this Agreement, neither Underwriter nor any
Underwriter Representative shall intentionally encourage a
Contract owner to exchange his or her Contract for any other
insurance contract except (i) with Insurer's consent or (ii) to
comply with applicable laws, regulations or rules, including but
not limited to the NASD Rules of Fair Practice.
(f) All solicitation and sales activities engaged in by Underwriter
and Underwriter Representatives in regard to the Contracts shall
be in compliance with all applicable federal and New York State
securities laws and regulations, as well as all applicable New
York State insurance laws and regulations. No Underwriter
Representative shall solicit the sale of a Contract unless at the
time of such solicitation such individual is:
(1) Properly licensed by the NASD and New York State insurance
and securities regulatory authorities; and
(2) Appointed as an insurance agent of Insurer, except as may
be otherwise agreed to by Insurer.
(g) Neither Underwriter nor any Underwriter Representative shall give
any written information or make any written or oral
representation in regard to a class of Contracts in connection
with the offer or sale of such class of Contracts that is
inconsistent with the then-currently effective Prospectus for
such class of Contracts, or in the then-currently effective
prospectus or statement of additional information for a Fund, or
in current advertising materials for such class of Contracts
which have been authorized by Insurer.
(h) Neither Underwriter nor any Underwriter Representative shall
offer, attempt to offer, or solicit Applications for the
Contracts or deliver the Contracts, in any State other than New
York.
4. ADMINISTRATION
(a) Insurer shall administer the Contracts in accordance with
their terms and applicable laws and regulations, such
administration to be performed in all respects at a level
commensurate with those standards prevailing in the variable
insurance industry. Neither Insurer nor its officers, directors,
employees or agents (which, for these purposes shall not include
Underwriter Representatives or Distributor Representatives) shall
give any written information or make any written or oral
representation in regard to a class of Contracts in connection
with the offer or sale of such class of Contracts that is
inconsistent with the then currently effective Prospectus for
such class of Contracts, or the then currently effective
prospectus or statement of additional information for a Fund, or
in current advertising materials for such class of Contracts
which have been authorized by Underwriter.
(b) Insurer, as agent for Underwriter, shall confirm to each
applicant for and purchaser of a Contract in accordance with Rule
10b-10 under SEA-34 acceptance of premiums and such other
transactions as are required to be confirmed by Rule 10b-10 or
administrative interpretations thereunder, or any NASD
requirements. Insurer shall not be separately compensated for
these services.
(c) Insurer shall maintain and preserve such books and records with
respect to the Contracts in conformity with the requirements of
Rules 17a-3 and 17a-4 under SEA-34 including, to the extent such
requirements apply, all books and records with respect to
confirmations provided under Rule 10b-10. Insurer shall maintain
all such books and records, which shall be considered the joint
property of Insurer and Underwriter, and Insurer acknowledges
that such books and records are at all times subject to
inspection by the SEC and the NASD in accordance with Section
17(a) of SEA-34 and shall provide copies thereof upon
Underwriter's request. Insurer shall not be separately
compensated for these services.
(d) Insurer shall not sub-contract with another person other than
an affiliate of Insurer to perform any of the functions
contemplated by this Section or maintain any information, books
and records contemplated by this Agreement without first
obtaining such person's undertaking, in writing, to comply with
the provisions of this Agreement to keep confidential all
proprietary information obtained by such person, and to
acknowledge that such information, books and records are at all
times subject to inspection by the SEC, NASD or any state
regulatory body, administrative agency or any other governmental
instrumentality, and further, without obtaining Underwriter's
prior written consent. In addition, such person shall be
required, upon the request of Underwriter, and at the expense of
the Insurer, to furnish such information, books and records to
Underwriter.
5. MARKETING
Underwriter shall have responsibility for and control over the marketing
name, marketing arrangements, marketing materials and marketing
practices, respecting the Contracts and, subject to the effectiveness of
the Registration Statement respecting the Contracts and approval of the
Contracts in the State of New York, the timing and commencement of the
offering of the Contracts. Underwriter shall be responsible for the
design and preparation of all promotional, sales and advertising
material relating to the Contracts. Insurer may propose any additional
or alternative marketing arrangements for the Contracts, including any
proposed marketing name, arrangements, materials and practices, which
shall be subject to Underwriter's prior review and approval. No
promotional, sales or advertising material may be used by any party
without the approval of the other party. Prior to any use with members
of the public, the following procedures shall be observed:
(a) Each party shall provide to the other party copies of all
promotional, sales and advertising material developed by such
party, if any, for such other party's review and written
approval, and each party shall be given a reasonable amount of
time to complete its review.
(b) Each party shall respond on a prompt and timely basis in
approving any such material and shall act reasonably in
connection therewith.
(c) Insurer shall be responsible for filing all promotional, sales or
advertising material, whether developed by Underwriter or
Insurer, as required, with any state insurance regulatory
authorities.
(d) Underwriter shall be responsible for filing all promotional,
sales or advertising material, whether developed by Underwriter
or Insurer, as required, with the NASD, and New York State
securities regulatory authorities.
(e) Each party shall notify the other party expeditiously of any
comments provided by the NASD or any securities or insurance
regulatory authority on such material, and will cooperate
expeditiously in resolving and implementing any comments, as
applicable.
The parties acknowledge that such material, to the extent it identifies
or discusses a Fund, may be subject to review and approval procedures
implemented by that Fund. Each party reserves the right, after having
approved a piece of material, to object to further use of such material
and may require the other party to cease use of such material.
6. COMPENSATION
Insurer may pay marketing allowance expenses, if any, to the Agency with
respect to Contracts sold pursuant to this Agreement in the amounts and
under the rules and procedures set forth in an insurance agency
agreement.
7. EXPENSES
(a) INSURER
With respect to this Agreement, Insurer shall pay (or will enter
into arrangements providing that persons other than Insurer shall
pay) all expenses in connection with:
(1) the preparation and filing of each Registration Statement
for the Contracts (including each pre-effective and
post-effective amendment thereto) and the preparation and
filing of each Prospectus for the Contracts (including any
preliminary and each definitive Prospectus);
(2) the preparation, insurance underwriting, issuance and
administration of the Contracts; provided that Insurer
shall not be responsible for expenses, including the
expense of a leased line, incurred by Underwriter in
connection with the service center operated by
Underwriter;
(3) any registration, qualification or approval of the
Contracts for offer and sale required under the
securities, blue-sky or insurance laws of the State of New
York;
(4) all registration fees for the Contracts payable to the SEC
and the NASD; and
(5) the printing of the Prospectus for the Contracts (or its
pro rata share of expenses in the event the Prospectuses
for the Contracts and the Funds are printed together in
one document) and any supplements thereto for distribution
to existing contract owners and its pro rata share of
expenses of mailing the Prospectuses for the Contracts and
the Funds to existing Contract owners.
(b) Underwriter
With respect to this Agreement, Underwriter shall pay (or will
enter into arrangements providing that persons other than
Underwriter shall pay) the following expenses related to its
distribution of the Contracts:
(1) the compensation of Underwriter Representatives and
employees, and Distributors, if any;
(2) expenses associated with the registration and training of
Underwriter Representatives and other employees involved
in the distribution of the Contracts;
(3) expenses incurred in connection with its registration as a
broker or dealer or the registration or qualification of
its officers, directors or Representatives under federal
and New York State laws;
(4) the costs of any promotional, sales and advertising
material, including Applications and any other materials
included in the fulfillment kit, that Underwriter develops
for its use in connection with the sale of the Contracts;
and
(5) expenses of printing and mailing the Prospectuses for the
Contracts and the Funds (and any supplements thereto) for
distribution to prospective customers.
(c) OTHER EXPENSES
Other than as specifically provided in this Agreement or in an
insurance agency agreement, Insurer shall pay all expenses that
it incurs in connection with this Agreement and Underwriter shall
pay all expenses that it incurs in connection with this
Agreement; it being understood that neither Underwriter nor the
Agency shall be responsible for any expenses relating to the
Contracts or the processing of Contracts, Premiums or
Applications, including without limitation any expenses incurred
in connection with the return of Premiums solicited by
Distributors, if any, for Applications rejected by Insurer, or
relating to any of the matters or acts contemplated by this
Agreement, except to the extent expressly set forth herein.
Except as specifically provided above or as otherwise agreed to
in writing by the parties, it is further understood that Insurer
shall not bear any responsibility for the expenses of the
Underwriter and Underwriter Representatives, nor for printing the
prospectuses and statements of additional information for the
Funds, nor for the preparation of the registration statements for
the Funds nor for providing seed capital for the Funds, nor for
any other expenses relating to the Funds.
8. REPRESENTATIONS AND WARRANTIES OF INSURER
(a) Insurer represents and warrants to Underwriter on the Effective Date
that:
(1) Insurer has been duly organized and is validly existing as
a corporation in good standing under the laws of the State
of New York with full power and authority to own, lease
and operate its properties and conduct its business, is
duly qualified to transact the business of a life
insurance company and to issue variable insurance
products.
(2) The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate action by
Insurer, and when so executed and delivered this Agreement
shall be the valid and binding obligation of Insurer
enforceable in accordance with its terms.
(3) The consummation of the transactions contemplated herein,
and the fulfillment of the terms of this Agreement, shall
not conflict with, result in any breach in any material
respect of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a
default in any material respect under, the articles of
incorporation or bylaws of Insurer, or any indenture,
agreement, mortgage, deed of trust, or other instrument to
which Insurer is a party or by which it is bound, or, to
the best of Insurer's knowledge, violate in any material
respect any law, any order, rule or regulation applicable
to Insurer of any court or of any federal or state
regulatory body, administrative agency or any other
governmental instrumentality having jurisdiction over
Insurer or any of its properties.
(b) Insurer further represents and warrants to Underwriter on the
effective date of the initial Registration Statement for the
Contracts, and undertakes to use its best efforts to ensure as of
the effective date of each subsequent Registration Statement,
that:
(1) Insurer has filed with the SEC all statements, notices and
other documents required for registration of the Contracts
(or the interests therein) and the Separate Account under
the provisions of ICA-40 and SA-33 and the Regulations
thereunder; further, there are no contracts or documents
of Insurer or relating to the Contracts or the Separate
Account which are required to be filed as exhibits to such
Registration Statement by SA-33, ICA-40 or the Regulations
which have not been so filed.
(2) Such Registration Statement has been declared effective by
the SEC or has become effective in accordance with the
Regulations.
(3) Insurer has not received any notice from the SEC with
respect to such Registration Statement pursuant to Section
8(e) of ICA-40 and no stop order under SA-33 has been
issued and no proceeding therefor has been instituted or
threatened by the SEC.
(4) Insurer has obtained, or prior to the commencement of the
offering of the Contracts will obtain, all necessary or
customary orders of exemption or approval from the SEC to
permit the distribution of the Contracts pursuant to this
Agreement and to permit the operation of the Separate
Account supporting such Contracts as contemplated in the
related Prospectus, and such orders apply to Underwriter,
as principal underwriter for the Contracts and the
Separate Account to the extent necessary.
(5) Such Registration Statement and the related Prospectus
comply in all material respects with the provisions of
SA-33 and ICA-40 and the Regulations, and neither the
Registration Statement nor the Prospectus contains an
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary
to make the statements therein not misleading, in light of
the circumstances in which they were made; provided,
however, that none of the representations and warranties
in this Section 8(b)(5) shall apply to statements or
omissions from a Registration Statement or Prospectus made
in reliance upon and in conformity with information
furnished to Insurer in writing by Underwriter expressly
for use in such Registration Statement or Prospectus.
(6) The Separate Account has been duly established by Insurer
and conforms to the description thereof in the
Registration Statement and the Prospectus for the Separate
Account.
(7) The form of the Contracts has been approved to the extent
required by the New York Superintendent of Insurance on
the pertinent date of each Registration Statement.
(8) The Contracts have been duly authorized by Insurer and
conform to the descriptions thereof in the Registration
Statement for the Contracts and the related Prospectus
and, when issued as contemplated by such Registration
Statement, shall constitute legal, validly issued and
binding obligations of Insurer in accordance with their
terms.
(9) No other consent, approval, authorization or order of any
court or governmental authority or agency is required for
the issuance or sale of the Contracts, the establishment
or operation of the Separate Account, or for the
consummation of the transactions contemplated by this
Agreement, that has not been obtained.
9. Undertakings of Insurer
Insurer undertakes as follows:
(a) Insurer shall use its best efforts to maintain the
registration of the Contracts (or interests therein) and the
Separate Account with the SEC and to maintain any registrations
and approvals of the Contracts and the Separate Account with the
securities or insurance regulatory bodies or administrative
agencies of the State of New York, and Insurer shall maintain the
registration of the Contracts (or interests therein) and the
Separate Account with such state securities regulatory bodies and
any other governmental instrumentalities of the State of New York
as Insurer deems appropriate.
(b) Insurer shall take all action necessary to cause the Contracts to
comply, and to continue to comply, as annuity contracts under the
insurance laws of the State of New York and federal tax laws. In
the event of a change in applicable law that renders it
impracticable or impossible to maintain the Contracts as annuity
contracts, Insurer shall consult with Underwriter and shall take
no action respecting the Contracts without the consent of
Underwriter.
(c) Insurer shall take all action necessary to cause the Separate
Account to comply, and to continue to comply, with the provisions
of ICA-40 and the Regulations applicable to the Separate Account
as a registered investment company classified as a unit
investment trust and a separate account, and deemed to be issuing
periodic payment plan certificates.
(d) Insurer shall not deduct any amounts from the assets of the
Separate Account or enter into a transaction or arrangement
involving the Contracts or the Separate Account or cause the
Separate Account to enter into any such transaction or
arrangement without obtaining any necessary or customary
approvals or exemptions from the SEC or any no-action assurance
deemed necessary from the SEC staff and without ensuring that
such approval, exemption or assurance applies to Underwriter as
the principal underwriter for the Contracts, to the extent
necessary or appropriate.
(e) Insurer shall provide Underwriter with preliminary drafts of any
amendments to Registration Statements, supplements to
Prospectuses, exemptive applications or no-action requests to be
filed with the SEC in connection with the Contracts, the Separate
Account, or both. Insurer shall provide Underwriter with a
reasonable opportunity to review and comment on such drafts
before any such materials are filed with the SEC. Insurer shall
furnish Underwriter with copies of any such materials or
amendments thereto, as filed with the SEC, promptly after the
filing thereof, and any SEC communications or orders with respect
thereto, promptly after receipt thereof. Insurer shall maintain
and keep on file in its principal executive office any file
memoranda or any supplemental materials referred to in such
Registration Statements, exemptive applications and no-action
requests and shall maintain and, as necessary, amend such
memoranda or materials and shall provide or otherwise make
available copies of such memoranda and materials to Underwriter.
(f) Insurer shall notify Underwriter immediately upon discovery or in
any event as soon as possible under the following circumstances:
(1) Of any event which makes any material statement made in
the Registration Statement or the Prospectus untrue in any
material respect or results in a material omission in the
Registration Statement or the Prospectus;
(2) Of any request by the SEC for any amendment to the
Registration Statement, or any supplement to the
Prospectus, or statement of additional information;
(3) Of the issuance by the SEC of any notice pursuant to
Section 8(e) of ICA-40, any stop order with respect to the
Registration Statement or any amendment thereto, or the
initiation of any proceedings for that purpose or for any
other purpose relating to the registration and/or offering
of the Contracts;
(4) Of any event of the Contracts' or the Separate Account's
noncompliance with the applicable requirements of the
Internal Revenue Code or regulations, rulings, or
interpretations thereunder that could jeopardize the
Contracts' status as annuity contracts;
(5) Of any change in applicable insurance laws or regulations
of the State of New York materially adversely affecting
the insurance status of the Contracts or Underwriter's
obligations with respect to the distribution of the
Contracts;
(6) Of any loss or suspension of the approval of the Contracts
or distribution thereof by the securities or insurance
regulatory body, administrative agency, or any other
governmental instrumentality of, the State of New York,
any loss or suspension of Insurer's certificate of
authorization to do business or to issue variable
insurance contracts in such State, or of the lapse or
termination of the Contracts' or the Separate Account's
registration, approval or clearance in such State;
(7) Of any termination of the authorization or approval of the
sale of the Contracts in the State of New York;
(8) Of any material adverse change in the condition (financial
or otherwise) of Insurer or the Separate Account that
would cause the information in the Registration Statement
to be materially misleading; and
(9) Of any event which causes a representation or warranty of
Insurer contained in this Agreement to no longer be true.
(g) Insurer shall notify Underwriter in a reasonably timely manner
under the circumstances:
(1) When a Registration Statement has become effective or any
post-effective amendment with respect to a Registration
Statement becomes effective thereafter;
(2) When any registration of the Contracts (or interests
therein) under the securities or blue sky laws of the
States of New York has become effective to the extent not
yet obtained as of the Effective Date; and
(3) When approval of the Contract forms under the applicable
insurance laws of the State of New York has been obtained
to the extent not yet obtained as of the Effective Date.
(h) Insurer shall provide Underwriter access to such records,
officers and employees of Insurer at reasonable times as is
necessary to enable Underwriter to fulfill its obligation, as the
underwriter under SA-33 for the Contracts and as principal
underwriter for the Separate Account under ICA-40, to perform due
diligence and to use reasonable care.
(i) Insurer shall use its best efforts to timely file each
post-effective amendment to a Registration Statement, Prospectus,
annual reports on Form N-SAR, and all other reports, notices,
statements and amendments required to be filed by or for Insurer
and the Separate Account with the SEC under SA-33, SEA-34 and/or
ICA-40 or any applicable Regulations. Insurer shall timely file
Rule 24f-2 notices required to be filed by or for Insurer and the
Separate Account with the SEC under SA-33 and/or ICA-40 or any
applicable Regulations. To the extent there occurs an event or
development (including, without limitation, a change of
applicable law, regulation or administrative interpretation)
warranting an amendment to the Registration Statement or
supplement to the Prospectus, Insurer shall endeavor to promptly
prepare and file such amendment or supplement with the SEC.
(j) To the extent that Insurer is responsible for printing under
Section 7, Insurer shall provide Underwriter with as many copies
of the Prospectus (and any amendments or supplements to the
Prospectus) as Underwriter may reasonably request.
(k) Insurer shall deliver to Underwriter, as soon as practicable
after it becomes available, the annual statement for Insurer and
for the Separate Account in the form filed with the State of New
York.
(l) Insurer shall furnish to Underwriter without charge promptly
after filing ten (10) complete copies of each Registration
Statement and any pre-effective or post-effective amendment
thereto, including financial statements and all exhibits not
incorporated therein by reference.
10. REPRESENTATIONS AND WARRANTIES OF UNDERWRITER
Underwriter represents and warrants to Insurer on the Effective Date as
follows:
(a) Underwriter has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of
Maryland with full power and authority to own, lease and operate
its properties and to conduct its business, and is in good
standing, in each state in which its business so requires.
(b) The execution and delivery of this Agreement and the consummation
of the transactions contemplated herein have been duly authorized
by all necessary corporate action by Underwriter, and when so
executed and delivered this Agreement shall be the valid and
binding obligation of Underwriter enforceable in accordance with
its terms.
(c) The consummation of the transactions contemplated herein, and the
fulfillment of the terms of this Agreement, shall not conflict
with, result in any breach in any material respect of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time) a default in any material respect under, the
articles of incorporation or bylaws of Underwriter, or any
indenture, agreement, mortgage, deed of trust, or other
instrument to which Underwriter is a party or by which it is
bound, or to the best of Underwriter's knowledge violate in any
material respect any law, or, to the best of Underwriter's
knowledge, any order, rule or regulation applicable to
Underwriter of any court or of any federal or state regulatory
body, administrative agency or any other governmental
instrumentality having jurisdiction over Underwriter or any of
its properties.
(d) Underwriter is registered as a broker-dealer under SEA-34, is a
member of the NASD, and is duly registered as a broker-dealer
under the securities laws of the State of New York to the extent
required in connection with its obligations under this Agreement,
and its Representatives, together with Agency, are or shall be
fully licensed in accordance with New York State insurance laws
to the extent necessary to perform their obligations under this
Agreement.
(e) Underwriter is and shall remain during the term of this Agreement
in compliance with Section 9(a) of ICA-40.
11. UNDERTAKINGS OF UNDERWRITER
Underwriter undertakes as follows:
(a) Underwriter shall train, supervise and be solely responsible for
the conduct of its Representatives in their solicitation of
Contracts, and shall supervise their compliance with applicable
rules and regulations of any New York State securities regulatory
agency that has jurisdiction over variable annuity sales
activities.
(b) Underwriter will use its best efforts to maintain its
registration as a broker-dealer under SEA-34 and its membership
with the NASD, and will use its best efforts to maintain its
registration as a broker-dealer with the applicable securities
authorities under the laws of the State of New York where
necessary in connection with its obligations under this
Agreement.
(c) Underwriter shall be responsible for its own conduct and the
employment, control, and conduct of its officers, employees and
agents and for injury to such officers, employees or agents or to
others through its officers, employees or agents. Underwriter
assumes full responsibility for its officers, employees and
agents under applicable laws, rules and regulations and agrees to
pay all employee taxes thereunder.
(d) Underwriter will notify Insurer if its SEC or New York State
broker-dealer registration or NASD membership is terminated or if
it is the subject of any proceeding that, in its reasonable
judgment, is likely to result in such termination.
(e) Underwriter shall notify Insurer immediately upon discovery or in
any event as soon as possible under the following circumstances:
(1) Of any material adverse change in the condition (financial
or otherwise) of Underwriter that would materially affect
Underwriter's obligations with respect to the distribution
of the Contracts; and
(2) Of any event which causes a representation or warranty of
Underwriter contained in this Agreement to no longer be
true.
12. RECORDS
Insurer and Underwriter each shall maintain such accounts, books,
records and other documents as are required to be maintained by each of
them by applicable laws and regulations and shall preserve such
accounts, books, records and other documents for the periods prescribed
by such laws and regulations. The accounts, books, records and other
documents of Insurer, the Separate Account and Underwriter as to all
transactions hereunder shall be maintained so as to clearly and
accurately disclose the nature and details of the transactions,
including such accounting information as necessary to support the
reasonableness of the amounts paid by Insurer hereunder. Each party
shall have the right to inspect and audit such accounts, books, records
and other documents of the other party during normal business hours upon
reasonable written notice to the other party. Each party shall keep
confidential all information obtained pursuant to such an inspection or
audit, and shall disclose such information to third parties only upon
receipt of written authorization from the other party or as otherwise
described in Section 15, below.
13. INVESTIGATIONS AND PROCEEDINGS
(a) COOPERATION
Underwriter and Insurer shall cooperate fully in any insurance or
securities regulatory investigation or proceeding or judicial
proceeding with respect to Insurer, Underwriter, their Affiliates
and their agents, Representatives or employees to the extent that
such investigation or proceeding is in connection with the
offering, sale or distribution of the Contracts distributed under
this Agreement. Without limiting the foregoing, Insurer and
Underwriter shall notify each other promptly of any notice of any
regulatory investigation or proceeding or judicial proceeding,
arising in connection with the offering, sale or distribution of
the Contracts distributed under this Agreement, received by
either party with respect to Insurer, Underwriter or any of their
Affiliates, agents, Representatives or employees or which may
affect Insurer's issuance or Underwriter's distribution of any
Contract marketed under this Agreement.
(b) CUSTOMER COMPLAINT
Insurer and Underwriter shall notify each other promptly in the
case of a substantive customer complaint arising in connection
with the offering, sale or distribution of the Contracts
distributed under this Agreement. In addition, Underwriter and
Insurer shall cooperate in investigating such complaint and any
response by either party to such complaint shall be sent to the
other party for written approval not less than five business days
prior to its being sent to the customer or any regulatory
authority, except that if a more prompt response is required, the
proposed response shall be communicated by telephone or
facsimile. In any event, neither party shall release any such
response without the other party's prior written approval.
14. INDEMNIFICATION
(a) BY UNDERWRITER
Underwriter agrees to indemnify and hold harmless Insurer and
each of its directors and officers and each person, if any, who
controls Insurer within the meaning of Section 15 of SA-33
(collectively, the "Indemnified Parties" for purposes of this
Section 14(a)), against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with
the written consent of Underwriter) or litigation (including
legal and other expenses) to which the Indemnified Parties may
become subject under any statute or regulation, at common law, or
otherwise, insofar as such losses, claims expenses, damages,
liabilities (or actions in respect thereof) or settlements:
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact or omission
or alleged omission to state a material fact required to
be stated therein or necessary in order to make the
statements therein not misleading, in light of the
circumstances in which they were made, contained in any
Registration Statement or in any Prospectus; to the
extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged
omission: (i) was made in reliance upon information
furnished in writing to Insurer by Underwriter
specifically for use in the preparation of any such
Registration Statement or any amendment thereof or
supplement thereto; or (ii) was contained in (A) any
registration statement, or any post-effective amendment
thereto which becomes effective, filed by or on behalf of
a Fund with the SEC relating to Shares, including any
financial statements included in, or any exhibit to, such
registration statement or post-effective amendment, (B)
any prospectus of a Fund relating to the Shares either
contained in any such registration statement or
post-effective amendment or filed pursuant to Rule 497(c)
or Rule 497(e) under SA-33, or (C) in any promotional,
sales or advertising material or written information
relating to the Shares authorized by or on behalf of a
Fund; or
(2) result because of any use by Underwriter or any
Underwriter Representative of promotional, sales or
advertising material not authorized by Insurer or any
written or oral misrepresentations by Underwriter or any
Underwriter Representative or any unlawful sales practices
concerning the Contracts by Underwriter or any Underwriter
Representative under federal securities laws or NASD
regulations or other applicable law, or from the failure
to deliver the Prospectus or prospectuses for the Funds to
the extent required; or
(3) result from any claims by agents or Representatives or
employees of Underwriter for commissions or other
compensation or remuneration of any type; or
(4) arise out of or result from any material breach by
Underwriter or any Underwriter Representative of any
provision of this Agreement.
This indemnification shall be in addition to any liability that
Underwriter may otherwise have; provided, however, that no
Indemnified Party shall be entitled to indemnification pursuant
to this provision if such loss, claim, expense, damage, liability
or litigation is due to the willful misfeasance, bad faith or
gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to
Insurer.
Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified
Underwriter in writing within a reasonable time after the summons
or other first legal process giving information of the nature of
the claim shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify
Underwriter of any such claim shall not relieve Underwriter from
any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought
against the Indemnified Party, Underwriter will be entitled to
participate, at its own expense, in the defense thereof.
Underwriter also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After
notice from Underwriter to such party of Underwriter's election
to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional legal counsel retained by
it, and Underwriter will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
Underwriter agrees to promptly notify Insurer of the commencement
of any litigation or proceedings against it or a Fund or any of
Underwriter's directors, officers, employees or agents in
connection with the sale of any Contracts.
(b) BY INSURER
Insurer agrees to indemnify and hold harmless Underwriter and
each of its directors and officers and each person, if any, who
controls Underwriter within the meaning of Section 15 of SA-33
(collectively, the "Indemnified Parties" for purposes of this
Section 14(b)), against any and all losses, claims expenses,
damages, liabilities (including amounts paid in settlement with
the written consent of Insurer) or litigation (including legal
and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law, or
otherwise, insofar as such losses, claims expenses, damages,
liabilities (or actions in respect thereof) or settlements:
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact or omission
or alleged omission to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading, in light of the circumstances in
which they were made, contained in any Registration
Statement or in any Prospectus; provided that Insurer
shall not be liable in any such case to the extent that
such loss, liability, damage, claim or expense arises out
of, or is based upon, an untrue statement or alleged
untrue statement or omission or alleged omission: (i) was
made in reliance upon information furnished in writing to
Insurer by Underwriter specifically for use in the
preparation of any such Registration Statement or any
amendment thereof or supplement thereto; or (ii) was
contained in (A) any registration statement, or any
post-effective amendment thereto which becomes effective,
filed by or on behalf of a Fund with the SEC relating to
Shares, including any financial statements included in, or
any exhibit to, such registration statement or
post-effective amendment, (B) any prospectus of a Fund
relating to the Shares either contained in any such
registration statement or post-effective amendment or
filed pursuant to Rule 497(c) or Rule 497(e) under SA-33,
or (C) in any promotional, sales or advertising material
or written information relating to the Shares authorized
by or on behalf of a Fund; or
(2) result because of the terms of any Contract or because of
any material breach by Insurer or any of its officers,
directors, employees or agents (which, for these purposes,
shall not include Underwriter Representatives or
Distributor Representatives) of any provision of this
Agreement or of any Contract; or
(3) result because of any use by Underwriter or any
Underwriter Representative of promotional, sales and/or
advertising material prepared by Insurer or any written or
oral misrepresentations by Insurer, its officers,
directors, employees or agents (which, for these purposes,
shall not include Underwriter Representatives or
Distributor Representatives), or any unlawful sales
practices concerning the Contracts by Insurer, its
officers, directors, employees, or agents (which, for
these purposes, shall not include Underwriter
Representatives or Distributor Representatives) under the
federal securities laws or NASD regulations or other
applicable law; or
(4) arise out of or result from any material breach by Insurer
of any provision of this Agreement.
<PAGE>
This indemnification shall be in addition to any liability that
Insurer may otherwise have; provided, however, that no
Indemnified Party shall be entitled to indemnification pursuant
to this provision if such loss, claim, expense, damage, liability
or litigation is due to the willful misfeasance, bad faith or
gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to
Underwriter.
Insurer shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified Insurer in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify Insurer of any such
claim shall not relieve Insurer from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Party,
Insurer will be entitled to participate, at its own expense, in
the defense thereof. Insurer also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in
the action. After notice from Insurer to such party of Insurer's
election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional legal counsel
retained by it, and Insurer will not be liable to such party
under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation.
Insurer agrees to promptly notify Underwriter of the commencement
of any litigation or proceedings against it or any of its
directors, officers, employees or agents in connection with the
sale of any Contracts.
(c) SURVIVAL OF INDEMNIFICATION
The indemnification provisions contained in this Section 14 shall
remain operative in full force and effect, regardless of (1) any
investigation made by or on behalf of Insurer or Underwriter or
by or on behalf of any controlling person thereof, (2) delivery
of any Contracts and Premiums therefor, and (3) any termination
of this Agreement. A successor by law of Underwriter or Insurer,
as the case may be, shall be entitled to the benefits of the
indemnification provisions contained in this Section 14.
15. CONFIDENTIAL AND PROPRIETARY INFORMATION
At all times throughout the term of this Agreement, and following any
termination or expiration of this Agreement, each party and all of its
respective Affiliates, and each officer, director, shareholder, employee
or agent thereof, shall maintain the confidentiality of (i) this
Agreement, (ii) the transactions and other matters contemplated herein,
(iii) any proprietary or other information provided by one party to the
other party to facilitate the transactions contemplated herein, provided
that this obligation of confidentiality shall not apply to: (i)
disclosures required to be made to any regulatory bodies, administrative
agencies or other governmental instrumentalities or disclosures deemed
by such party to be desirable to disclose to any such entity; (ii)
disclosures made to attorneys, accountants and other representatives in
order to assist in the consummation of the transactions and other
matters contemplated herein; (iii) disclosures otherwise required by
applicable law; or (iv) disclosures to which the other party consents;
provided further that, with respect to the immediately foregoing clauses
(i) and (iii), any party that makes such a disclosure shall so notify
the other party prior to or simultaneously with making such disclosure
to the extent reasonably practicable; and provided further that, with
respect to the foregoing clause (ii), a party shall make disclosures
regarding this Agreement and the transactions contemplated herein only
to such party's attorneys, accountants and other third party
representatives who agree to keep such information confidential in
accordance with this Section.
16. DURATION AND TERMINATION OF THIS AGREEMENT
(a) TERM
This Agreement shall become effective upon the Effective Date and
shall remain in effect for five years from the Effective Date and
from year to year thereafter, unless terminated as provided
herein.
(b) TERMINATION
After the initial term, this Agreement may be terminated at any
time, on 60 days written notice, without the payment of any
penalty, by Underwriter or Insurer.
(c) ASSIGNMENT
This Agreement will automatically terminate in the event of its
assignment, as such term is defined in ICA-40, without the prior
written consent of the other party.
(d) TERMINATION UPON MATERIAL BREACH
This Agreement may be terminated at the option of either party to
this Agreement upon the other party's material breach of any
provision of this Agreement or of any representation made in this
Agreement, unless such breach has been cured within 10 days after
receipt of notice of breach from the non-breaching party.
(e) TERMINATION OF FUND PARTICIPATION AGREEMENT
Either party has the right to terminate this Agreement in the
event of termination of the Fund Participation Agreement between
Underwriter, Insurer, and the Funds.
(f) EFFECT OF TERMINATION
Upon termination of this Agreement all authorizations, rights and
obligations shall cease except: (1) the obligation to settle
accounts hereunder, including commissions, if any, on Premiums
subsequently received for Contracts in effect at the time of
termination or issued pursuant to Applications received by
Insurer prior to termination; and (2) the obligations contained
in Sections 2(d), 6, 7, 8(b), 9 (but not clause (h) thereof), 12,
13, 14, and 15 hereof.
17. AMENDMENT OF THIS AGREEMENT
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.
18. AMENDMENT OF SCHEDULES
The parties to this Agreement may amend Schedules 1 and 2 to this
Agreement from time to time to reflect additions of or changes in any
class of Contracts, Separate Accounts, subaccounts and Funds that have
been agreed upon. The provisions of this Agreement shall be equally
applicable to each such class of Contracts, Separate Accounts,
subaccounts and Funds that may be added to the Schedules, unless the
context otherwise requires.
19. MISCELLANEOUS
(a) 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.
(b) COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(c) 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
either 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.
(d) INTERPRETATION; JURISDICTION
This Agreement 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. No prior writings by or between the parties with respect
to the subject matter hereof shall be used by either party in
connection with the interpretation of any provision of this
Agreement. This Agreement shall be construed and its provisions
interpreted under and in accordance with the internal laws of the
state of Maryland without giving effect to principles of conflict
of laws.
(e) 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 to the extent permitted under the law, and, in any
event, that all other provisions of this Agreement shall remain
valid and duly enforceable as if the provision at issue had never
been a part hereof.
(f) REGULATION
This Agreement shall be subject to the provisions of SA-33,
SEA-34 and ICA-40 and the Regulations and the rules and
regulations of the NASD, from time to time in effect, including
such exemptions from ICA-40 as the SEC may grant, and the terms
hereof shall be interpreted and construed in accordance
therewith. Without limiting the generality of the foregoing, the
term "assigned" shall not include any transaction exempted from
Section 15(b)(2) of ICA-40.
20. NOTICE, CONSENT AND REQUEST
Any notice, consent or request required or permitted to be given by
either party to the other 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 the other party at the following
address (or at such other address for a party as shall be specified by
like notice):
if to Insurer:
First Security Benefit Life Insurance and Annuity Company of New York
Attn: Anita Larson
70 West Red Oak Lane, Fourth Floor
White Plains, New York 10604
Copy to:
Security Benefit Life Insurance Company
Attn: Amy J. Lee, Esq.
700 Harrison Street
Topeka, Kansas 66636
and if to Underwriter:
T. Rowe Price Investment Services, Inc.
Attn: Henry Hopkins, Esq.
100 East Pratt Street
Baltimore, Maryland 21202.
IN WITNESS WHEREOF, Insurer and Underwriter have each duly executed this
Agreement as of the day and year first above written.
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
By Its Authorized Officer
By:__________________________________
Anita Larson
Title: Chief Administrative Officer
Date: October 11, 1995
T. ROWE PRICE INVESTMENT SERVICES, INC.
By Its Authorized Officer
By:__________________________________
Nancy M. Morris
Title: Vice President
Date: October 11, 1995
<PAGE>
EXHIBIT A
Form of Opinion Pursuant to Section 2
T. Rowe Price Investment Services, Inc.
Dear Sirs:
You have requested our opinion with respect to certain matters in connection
with the execution of the distribution agreement dated as of October 11, 1995
(the "Agreement") entered into between you ("Underwriter) and First Security
Benefit Life Insurance and Annuity Company of New York ("Insurer"). The
Agreement relates to your distribution of certain variable insurance contracts,
described more specifically in a registration statement, as amended, on Form N-4
filed with the Securities and Exchange Commission ("SEC"), File No. 33-83240,
which are to be issued by Insurer and supported by the T. Rowe Price Variable
Annuity Account of Insurer. All capitalized terms contained herein not otherwise
defined shall have the meaning assigned to them in the Agreement.
We are of the following opinion:
(1) Insurer has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of New
York with full power and authority to own, lease and operate its
properties and conduct its business, is duly qualified to
transact the business of a life insurance company and to issue
variable insurance products.
(2) The execution and delivery of the Agreement and the consummation
of the transactions contemplated therein have been duly
authorized by all necessary corporate action by Insurer, and when
so executed and delivered the Agreement shall be the valid and
binding obligation of Insurer enforceable in accordance with its
terms.
(3) The consummation of the transactions contemplated by the
Agreement, and the fulfillment of its terms, 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 Insurer, or to
the best of our knowledge, any indenture, agreement, mortgage,
deed of trust, or other instrument to which Insurer is a party or
by which it is bound, or violate any law, or, to the best of our
knowledge, any order, rule or regulation applicable to Insurer of
any court or of any federal or state regulatory body,
administrative agency or any other governmental instrumentality
having jurisdiction over Insurer or any of its properties.
(4) Insurer has filed with the SEC all statements, notices and other
documents required for registration of the Contracts and the
Separate Account under the provisions of ICA-40 and SA-33 and the
Regulations thereunder; further, there are no contracts or
documents of Insurer or relating to the Contracts or the Separate
Account which are required to be filed as exhibits to the
Registration Statement by SA-33, ICA-40 or the Regulations which
have not been so filed.
(5) The Registration Statement has been declared effective by the SEC
or has become effective in accordance with the Regulations.
(6) Insurer has not received any notice from the SEC with respect to
the Registration Statement pursuant to Section 8(e) of ICA-40 and
no stop order under SA-33 has been issued and no proceeding
therefor has been instituted or threatened by the SEC.
(7) Insurer has obtained all necessary or customary orders of
exemption or approval from the SEC to permit the distribution of
the Contracts pursuant to the Agreement and to permit the
operation of the Separate Account as contemplated in the related
Prospectus, and such orders apply to Underwriter, as principal
underwriter for the Contracts and the Separate Account.
(8) The Registration Statement and the related Prospectus comply in
all material respects with the provisions of SA-33 and ICA-40 and
the Regulations.
(9) We have no reason to believe that the Registration Statement
(other than any financial statements included therein and any
statements or omissions made in reliance upon information
furnished to the Company by the Distributor or a Fund (and
confirmed in writing) specifically for use in the preparation of
the Registration Statement, as to which no opinion is rendered),
at the time it became effective, contained an untrue statement of
a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, in light of the circumstances under which they were
made, nor do we have any reason to believe that the Prospectus
(other than any financial statements included therein and any
statements or omissions made in reliance upon information
furnished to the Company by the Distributor or a Fund (and
confirmed in writing) specifically for use in the preparation of
the Registration Statement or Prospectus, as to which no opinion
is rendered), as amended or supplemented as of the date hereof,
contains an untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements therein
not misleading, in light of the circumstances under which they
were made.
(10) We have no reason to believe that the statements made in the
Prospectus under the caption "Tax Status," to the extent that
they constitute matters of law or legal conclusions with respect
thereto, are not correct in any material respect.
(11) The Separate Account has been duly established by Insurer and
conforms to the description thereof in the Registration Statement
and the Prospectus for the Separate Account.
(12) The form of the Contracts has been approved to the extent
required by the New York Superintendent of Insurance.
(13) The Contracts have been duly authorized by Insurer and conform to
the descriptions thereof in the Registration Statement for the
Contracts and the related Prospectus and, when issued as
contemplated by the Registration Statement, shall constitute
legal, validly issued and binding obligations of Insurer in
accordance with their terms.
(14) The Contracts and the Separate Account have been duly registered
with the state securities regulatory bodies, administrative
agencies, or any other governmental instrumentality with which
the Contracts or Separate Account must be registered of the State
of New York, to the extent such registration requirements apply.
(15) To the best of our knowledge, no other consent, approval,
authorization or order of any court or governmental authority or
agency is required for the issuance or sale of the Contracts, the
establishment or operation of the Separate Account, or for the
consummation of the transactions contemplated by the Agreement,
that has not been obtained.
Very truly yours,
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
By:______________________________
Name:
Title:
<PAGE>
October 11, 1995
First Security Benefit Life Insurance
and Annuity Company of New York
Re: Registration Statement No. 33-83240 for
T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New York
Dear Sirs:
This letter is delivered to you in connection with (a) the Distribution
Agreement dated as of October 11, 1995 between you and T. Rowe Price Investment
Services, Inc. ("Underwriter") relating to its distribution of certain variable
annuity contracts (the "Contracts"), interests in which have been registered
with the Securities and Exchange Commission (the "SEC") pursuant to the
Registration Statement identified above, and (b) the Participation Agreement
dated as of October 11, 1995, between you and the undersigned relating to the
Separate Account's investment in the undersigned. For purposes of such
agreements, this letter identifies information we have provided to you for
inclusion in the Registration Statement, as amended on Form N-4, filed with the
SEC, and the definitive versions of the related prospectus and statement of
additional information for the Contracts (the "Prospectus" and "SAI,"
respectively), as filed with the SEC on _________ in accordance with Rule 497 of
the Securities Act of 1933.
References herein to pages, paragraphs, or sentences are references to
such in the definitive versions of the Prospectus and SAI. Capitalized terms
used herein and not defined herein have the same meaning as in the Prospectus
and SAI.
The Fund hereby confirms that it has furnished the following information
to you specifically for use in the preparation of the Registration Statement,
the Amendment, the Prospectus, and SAI (to the extent that the following applies
to or describes the Fund and not with respect to information regarding any other
mutual fund):
o The names of the portfolios of the Fund, as they appear on page
2 of the prospectus and page 7 of the prospectus.
o The definition of the Fund on page 6 of the prospectus.
o The "Management Fee," "Other Expenses," and "Total Portfolio
Expenses" shown for the portfolios of the Fund in the Expense
Table on page 10, and accompanying note.
o The section entitled "The Funds" beginning on page 12 and ending
on page 14, except for the sentence to the effect that ". . . if
the Company believes that any Fund's response to any of these
events or conflicts insufficiently protects Owners, it will take
appropriate action on its own."
o The section entitled "The Investment Advisers," on page 14.
o The section entitled "Fund Expenses," on page 25.
* * *
Very truly yours,
T. ROWE PRICE EQUITY SERIES, INC.
By: _________________________
Name:
Title: Vice President
<PAGE>
October 11, 1995
First Security Benefit Life Insurance
and Annuity Company of New York
Re: Registration Statement No. 33-83240 for
T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New York
Dear Sirs:
This letter is delivered to you in connection with (a) the Distribution
Agreement dated as of October 11, 1995 between you and T. Rowe Price Investment
Services, Inc. ("Underwriter") relating to its distribution of certain variable
annuity contracts (the "Contracts"), interests in which have been registered
with the Securities and Exchange Commission (the "SEC") pursuant to the
Registration Statement identified above, and (b) the Participation Agreement
dated as of October 11, 1995, between you and the undersigned relating to the
Separate Account's investment in the undersigned. For purposes of such
agreements, this letter identifies information we have provided to you for
inclusion in the Registration Statement, as amended, on Form N-4, filed with the
SEC, and the definitive versions of the related prospectus and statement of
additional information for the Contracts (the "Prospectus" and "SAI,"
respectively), as filed with the SEC on _________ in accordance with Rule 497 of
the Securities Act of 1933.
References herein to pages, paragraphs, or sentences are references to
such in the definitive versions of the Prospectus and SAI. Capitalized terms
used herein and not defined herein have the same meaning as in the Prospectus
and SAI.
The Fund hereby confirms that it has furnished the following information
to you specifically for use in the preparation of the Registration Statement,
the Amendment, the Prospectus, and SAI (to the extent that the following applies
to or describes the Fund and not with respect to information regarding any other
mutual fund):
o The names of the portfolios of the Fund, as they appear on page
2 of the prospectus and page 7 of the prospectus.
o The definition of the Fund on page 6 of the prospectus.
o The "Management Fee," "Other Expenses," and "Total Portfolio
Expenses" shown for the portfolios of the Fund in the Expense
Table on page 10, and accompanying note.
o The section entitled "The Funds" beginning on page 12 and ending
on page 14, except for the sentence to the effect that ". . . if
the Company believes that any Fund's response to any of these
events or conflicts insufficiently protects Owners, it will take
appropriate action on its own."
o The section entitled "The Investment Advisers," on page 14.
o The section entitled "Fund Expenses," on page 25.
* * *
Very truly yours,
T. ROWE PRICE FIXED INCOME SERIES, INC.
By: _________________________
Name:
Title: Vice President
<PAGE>
October 11, 1995
First Security Benefit Life Insurance
and Annuity Company of New York
Re: Registration Statement No. 33-83240 for
T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New York
Dear Sirs:
This letter is delivered to you in connection with (a) the Distribution
Agreement dated as of October 11, 1995 between you and T. Rowe Price Investment
Services, Inc. ("Underwriter") relating to its distribution of certain variable
annuity contracts (the "Contracts"), interests in which have been registered
with the Securities and Exchange Commission (the "SEC") pursuant to the
Registration Statement identified above, and (b) the Participation Agreement
dated as of October 11, 1995 between you and the undersigned relating to the
Separate Account's investment in the undersigned. For purposes of such
agreements, this letter identifies information we have provided to you for
inclusion in the Registration Statement, as amended, on Form N-4, filed with the
SEC, and the definitive versions of the related prospectus and statement of
additional information for the Contracts (the "Prospectus" and "SAI,"
respectively), as filed with the SEC on _________ in accordance with Rule 497 of
the Securities Act of 1933.
References herein to pages, paragraphs, or sentences are references to
such in the definitive versions of the Prospectus and SAI. Capitalized terms
used herein and not defined herein have the same meaning as in the Prospectus
and SAI.
The Fund hereby confirms that it has furnished the following information
to you specifically for use in the preparation of the Registration Statement,
the Amendment, the Prospectus, and SAI (to the extent that the following applies
to or describes the Fund and not with respect to information regarding any other
mutual fund):
o The names of the portfolios of the Fund, as they appear on page
2 of the prospectus and page 7 of the prospectus.
o The definition of the Fund on page 6 of the prospectus.
o The "Management Fee," "Other Expenses," and "Total Portfolio
Expenses" shown for the portfolios of the Fund in the Expense
Table on page 10, and accompanying note.
o The section entitled "The Funds" beginning on page 12 and ending
on page 14, except for the sentence to the effect that ". . . if
the Company believes that any Fund's response to any of these
events or conflicts insufficiently protects Owners, it will take
appropriate action on its own."
o The section entitled "The Investment Advisers," on page 14.
o The section entitled "Fund Expenses," on page 25.
* * *
Very truly yours,
T. ROWE PRICE INTERNATIONAL SERIES, INC.
By: _________________________
Name:
Title: Vice President
<PAGE>
October 11, 1995
First Security Benefit Life Insurance
and Annuity Company of New York
Re: Registration Statement No. 33-83240 for
T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New York
Dear Sirs:
This letter is delivered to you in connection with the Distribution
Agreement (the "Agreement") dated as of October 11, 1995 between you and the
undersigned relating to our distribution of certain variable annuity contracts,
interests in which have been registered with the Securities and Exchange
Commission (the "SEC") pursuant to the Registration Statement identified above.
This letter identifies information we have provided to you for inclusion in the
Registration Statement, as amended, on Form N-4, filed with the SEC, and the
definitive versions of the related prospectus and statement of additional
information for the Contracts (the "Prospectus" and "SAI," respectively), as
filed with the SEC on _________ in accordance with Rule 497 of the Securities
Act of 1933.
References herein to pages, paragraphs, or sentences are references to
the definitive versions of the Prospectus and SAI. Capitalized terms used herein
and not defined herein have the same meaning as in the Prospectus and SAI.
We have provided the following information to you specifically for use
in the preparation of the Registration Statement, the Amendment, the Prospectus,
and the SAI:
o The second and third sentences under the caption, "Application
for a Contract," on page 15 to the extent of references to the
Underwriter'seffectuation of redemptions from the T.Rowe Price
mutual funds.
o The fourth sentence under the heading "Purchase Payments," on
page 16, to the extent of references to redemption of Fund
shares.
o The paragraph captioned "Distribution of the Contracts," on page
42.
o Item 29 of Part C of the Amendment, which lists officers of
Underwriter.
Further, to the extent Investment Services has agreed to perform an
administrative or operational service specifically described in the Prospectus
and not referred to in the preceding paragraph, you may rely upon the fact that
Investment Services shall perform such service.
* * *
It is understood that the opinion of counsel to First Security Benefit
Life Insurance and Annuity Company of New York to be furnished to us in
accordance with section 2 of the Distribution Agreement will not cover (i.e.,
will specifically exclude) all of the information referred to above, as well as
all information confirmed in writing by or on behalf of the Funds as being
provided by the Funds, and any omissions relating to, arising out of, or
pertaining to such provided information.
Very truly yours,
T. ROWE PRICE INVESTMENT SERVICES, INC.
By: _________________________
Name: Nancy M. Morris
Title: Vice President
<PAGE>
SCHEDULE 1
Contracts Subject to Agreement
Contract Marketing Name Policy Form Nos. SEC Registration No.
- ---------------------------- --------------------------- -----------------------
T. Rowe Price No-Load FSB 200; FSB 201 (4-94); File No. 33-83240
- ---------------------------- --------------------------- -----------------------
Variable Annuity FSB 201 (4-94)U; File No. 811-8726
- ---------------------------- --------------------------- -----------------------
FSB 202 (4-94);
- ---------------------------- --------------------------- -----------------------
FSB 203 (4-94);
- ---------------------------- --------------------------- -----------------------
FSB 211 (4-94);
- ---------------------------- --------------------------- -----------------------
FSB 212 (4-94)
- ---------------------------- --------------------------- -----------------------
<PAGE>
SCHEDULE 2
----------
Separate Accounts, Subaccounts and Funds
Available Under the Contracts
<TABLE>
<CAPTION>
- -------------------------------- ---------------------------------- -----------------------------------
Separate Account Subaccount Funds
- -------------------------------- ---------------------------------- -----------------------------------
<S> <C> <C>
T. Rowe Price Variable Annuity T. Rowe Price Equity Series, Inc.
Account of First Security Benefit
Life Insurance and Annuity Company o New America Growth Subaccount o T. Rowe Price New America
of New York Growth Portfolio
o Equity Income Subaccount
o T. Rowe Price Equity Income
o Personal Strategy Balanced Portfolio
Subaccount
o Personal Strategy
Balanced Portfolio
----------------------------- -----------------------------------
T. Rowe Price International
Series, Inc.
o International o T. Rowe Price
Stock Subaccount International Stock
Portfolio
----------------------------- -----------------------------------
T. Rowe Price Fixed Income
Series, Inc.
o Limited-Term Bond o T. Rowe Price Limited-Term
Subaccount Bond Portfolio
============================= ===================================
</TABLE>
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
THE COMPANY'S PROMISE
In consideration for the Purchase Payments and the attached application, First
Security Benefit Life Insurance and Annuity Company of New York (the "Company")
will pay the benefits of this Contract according to its provisions.
LEGAL CONTRACT
PLEASE READ YOUR CONTRACT CAREFULLY. It is a legal Contract between the Owner
and the Company. The Contract's table of contents is on page 2.
FREE LOOK PERIOD-RIGHT TO CANCEL
IF FOR ANY REASON THE OWNER IS NOT SATISFIED WITH THIS CONTRACT, HE OR SHE MAY
RETURN IT TO THE COMPANY WITHIN 30 DAYS FROM THE DATE OF RECEIPT. IT MAY BE
RETURNED BY DELIVERING OR MAILING IT TO THE COMPANY. IF RETURNED, THIS CONTRACT
SHALL BE DEEMED VOID FROM THE CONTRACT DATE. THE COMPANY WILL REFUND (I) ANY
PURCHASE PAYMENTS MADE AND ALLOCATED TO THE FIXED ACCOUNT; AND (II) SEPARATE
ACCOUNT CONTRACT VALUE AS OF THE DATE THE RETURNED POLICY IS POSTMARKED FOR
RETURN TO THE COMPANY, INCREASED BY ANY FEES OR OTHER CHARGES PAID.
Signed for First Security Benefit Life Insurance and Annuity Company of New York
on the Contract Date.
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
*Purchase Payments may be made until the earlier of the Annuity Payout Date or
termination of the Contract.
*A Death Benefit may be paid prior to the Annuity Payout Date according to the
Contract provisions.
*Annuity Payments begin on the Annuity Payout Date using the method specified
in this Contract.
*The smallest annual rate of investment return that would have to be earned on
the assets of the Separate Account so that the dollar amount of Variable
Annuity Payments will not decrease is 3 1/2%. A daily charge corresponding to
an annual charge of .55% is applied to the assets of the Separate Account by
the Company. Please refer to the "Contract Value and Expense Provisions"
beginning on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
Form FSB201 (R11-96) BP 2010P1
<PAGE>
TABLE OF CONTENTS
PAGE
CONTRACT SPECIFICATIONS ................................................ 3
DEFINITIONS ............................................................ 4-6
GENERAL PROVISIONS ..................................................... 7, 8
The Contract ......................................................... 7
Compliance ........................................................... 7
Misstatement of Age or Sex ........................................... 7
Evidence of Survival ................................................. 7
Incontestability ..................................................... 7
Assignment ........................................................... 7
Exchanges ............................................................ 8
Claims of Creditors .................................................. 8
Nonforfeiture Values ................................................. 8
Non-Participating .................................................... 8
Statements ........................................................... 8
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS ........................ 9
Ownership ............................................................ 9
Joint Ownership ...................................................... 9
Annuitant ............................................................ 9
Primary and Secondary Beneficiaries .................................. 9
Ownership and Beneficiary Changes .................................... 9
PURCHASE PAYMENT PROVISIONS ............................................ 10
Flexible Purchase Payments ........................................... 10
Purchase Payment Limitations ......................................... 10
Purchase Payment Allocation .......................................... 10
Place of Payment ..................................................... 10
CONTRACT VALUE AND EXPENSE PROVISIONS .................................. 10-12
Contract Value ....................................................... 10
Fixed Account Contract Value ......................................... 10
Fixed Account Interest Crediting ..................................... 11
Separate Account Contract Value ...................................... 11
Accumulation Unit Value .............................................. 11
Determining Accumulation Units ....................................... 11
Mortality and Expense Risk Charge .................................... 12
Premium Tax Expense .................................................. 12
Mutual Fund Expenses ................................................. 12
WITHDRAWAL PROVISIONS .................................................. 12, 13
Withdrawals .......................................................... 12
Withdrawal Value ..................................................... 13
Systematic Withdrawals ............................................... 13
Date of Request ...................................................... 13
Payment of Withdrawal Benefits ....................................... 13
DEATH BENEFIT PROVISIONS ............................................... 14, 15
Death Benefit ........................................................ 14
Proof of Death ....................................................... 14
Distribution Rules ................................................... 14, 15
ANNUITY PAYMENT PROVISIONS ............................................. 15-19
Annuity Payout Date .................................................. 15
Change of Annuity Payout Date ........................................ 15
Annuity Payout Amount ................................................ 15
Annuity Tables ....................................................... 16
Annuity Payments ..................................................... 16
Change of Annuity Option ............................................. 16
Fixed Annuity Payments ............................................... 16
Variable Annuity Payments ............................................ 16
Annuity Units ........................................................ 16, 17
Net Investment Factor ................................................ 17
Alternate Annuity Option Rates ....................................... 17
Annuity Options ...................................................... 18, 19
ANNUITY TABLES ......................................................... 20
AMENDMENTS OR ENDORSEMENTS, IF ANY
-2- BP 2010P1
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT SPECIFICATIONS
- --------------------------------------------------------------------------------
OWNER NAME: CONTRACT NUMBER:
OWNER DATE OF BIRTH: CONTRACT DATE:
JOINT OWNER NAME: ISSUE DATE:
JOINT OWNER DATE OF BIRTH: ANNUITY PAYOUT DATE:
ANNUITANT NAME: PLAN:
ANNUITANT DATE OF BIRTH: ASSIGNMENT:
ANNUITANT GENDER:
PRIMARY BENEFICIARY NAME: SECONDARY BENEFICIARY:
NAME: See Application or subsequent change from
- --------------------------------------------------------------------------------
INITIAL PURCHASE PAYMENT ..............
MINIMUM SUBSEQUENT PURCHASE PAYMENTS .. investment program
MINIMUM SYSTEMATIC WITHDRAWAL ......... $100
MORTALITY AND EXPENSE RISK CHARGE ..... .55% Annually
GUARANTEED RATE ....................... 3%
ANNUITY OPTION ........................
SUBACCOUNTS:
New America Growth Subaccount
International Stock Subaccount
Mid-Cap Growth Subaccount
Equity Income Subaccount
Personal Strategy Balanced Subaccount
Limited-Term Bond Subaccount
Prime Reserve Subaccount
METHOD FOR DEDUCTIONS:
Deductions for any Premium Taxes will be allocated proportionately to the
Owner's Contract Value in the Subaccounts and the Fixed Account.
*The Annuity Payout Date and Annuity Option may be changed by the Owner prior
to the Annuity Payout Date. See "Change of Annuity Payout Date" and "Change of
Annuity Option."
FSB201 A (R9-96) -3- SBL90
<PAGE>
- --------------------------------------------------------------------------------
DEFINTIONS
- --------------------------------------------------------------------------------
ACCOUNT
An Account is one of the Subaccounts or the Fixed Account.
ACCUMULATION UNIT
The Accumulation Unit is a unit of measure. It is used to compute the Separate
Account Contract Value prior to the Annuity Payout Date. It is also used to
compute the Variable Annuity Payments for Annuity Options 5 through 7.
ANNUITANT
The Annuitant is the person named by the Owner on whose life the Annuity
Payments depend for Annuity Options 1 through 4. The Annuitant receives Annuity
Payments under this Contract. Please see "Annuitant" provisions on page 9.
ANNUITY OPTION
An Annuity Option is a set of provisions that form the basis for making Annuity
Payments. The Annuity Option is set prior to the Annuity Payout Date. Please see
"Annuity Options" on pages 18 and 19.
ANNUITY PAYOUT DATE
The Annuity Payout Date is the date on which Annuity Payments are scheduled to
begin. This date may be changed by the Owner. The Annuity Payout date is shown
on page 3. Please see "Annuity Payout Date" on page 15.
ANNUITY UNIT
The Annuity Unit is a unit of measure used to compute Variable Annuity Payments
for Annuity Options 1 through 4.
AUTOMATIC EXCHANGES
Automatic Exchanges are Exchanges among the Subaccounts and the Fixed Account.
Such exchanges are made automatically on a periodic basis by the Company at the
written request of the Owner.
COMPANY
The Company is First Security Benefit Life Insurance and Annuity Company of New
York.
CONTRACT ANNIVERSARY
A Contract Anniversary is a 12-month anniversary of the Contract Date.
CONTRACT DATE
The Contract Date is the date the Contract begins. The Contract Date is shown on
page 3.
CONTRACT YEAR
Contract Years are measured from the Contract Date.
CURRENT INTEREST
The Company may in its discretion pay Current Interest on the Fixed Account at a
rate that exceeds the Guaranteed Rate shown on page 3. The Company will declare
the rate of Current Interest, if any, from time to time.
DESIGNATED BENEFICIARY
Upon the death of the Owner or Joint Owner, the Designated Beneficiary will be
the first person on the following list who is alive on the date of death:
1. Owner;
2. Joint Owner;
3. Primary Beneficiary;
4. Secondary Beneficiary;
5. Annuitant; and
6. the Owner's estate if no one listed above is alive.
55-02010-01
FSB201 B (4-94) -4- BP 2010A1
<PAGE>
- --------------------------------------------------------------------------------
DEFINITIONS (Continued)
- --------------------------------------------------------------------------------
DESIGNATED BENEFICIARY (Cont'd)
The Designated Beneficiary receives a death benefit upon the death of the Owner.
Please see "Ownership, Annuitant, and Beneficiary Provisions" on page 9 and
"Death Benefit Provisions" on pages 14 and 15.
FIXED ACCOUNT
The Fixed Account is part of the Company's general account. The Company manages
the general account and guarantees that it will credit interest on Fixed Account
Contract Value at an annual rate at least equal to the Guaranteed Rate. This
Rate is shown on page 3.
GUARANTEE PERIOD
Current Interest, if declared, is fixed for rolling periods of one year,
referred to as Guarantee Periods. The Guarantee Period that applies to any Fixed
Account Contract Value: (1) starts on the date that such Contract Value is
allocated to the Fixed Account pursuant to: (a) a Purchase Payment Received by
the Company; or (b) an Exchange to the Fixed Account; and (2) ends on the last
day of the same month in the year in which the Guarantee Period expires. When
any Guarantee Period expires, a new Guarantee Period shall start for such
Contract Value on the date that follows such expiration date. Such period shall
end on the immediately preceding date in the year in which the Guarantee Period
expires. For example, Contract Value exchanged to the Fixed Account on June 1
would have a Guarantee Period starting on that date and ending on June 30 of the
following year. A new Guarantee Period for such Contract Value would start on
July 1 of that year and end on June 30 of the following year.
HOME OFFICE
The address of the Company's Home Office is First Security Benefit Life
Insurance and Annuity Company of New York, 70 West Red Oak Lane, 4th Floor,
White Plains, New York 10604.
ISSUE DATE
The Issue Date is the date the Company uses to determine the date the Contract
becomes incontestable. The Issue Date is shown on page 3. Please see
"Incontestability" on page 7.
JOINT OWNER
The Joint Owner, if any, shares an undivided interest in the entire Contract
with the Owner. The Joint Owner, if any, is named on page 3. Please see "Joint
Ownership" provisions on page 9.
NONNATURAL PERSON
Any group or entity that is not a living person, such as a trust or corporation.
OWNER
The Owner is the person who has all rights under the Contract. The Owner is
named on page 3. Please see "Ownership" provisions on page 9.
PREMIUM TAX
Any Premium Taxes levied by a state or other governmental entity will be charged
against this Contract. When Premium Tax is assessed after the Purchase Payment
is applied, it will be deducted as described on page 3.
PURCHASE PAYMENT
A Purchase Payment is money Received by the Company and applied to the Contract.
RECEIVED BY THE COMPANY
The phrase "Received by the Company" means receipt by the Company in good order
at its Home Office at the address indicated above or such other address
designated in writing by the Company.
55-02010-01
-5- BP 2010A1
<PAGE>
- --------------------------------------------------------------------------------
DEFINITIONS (Continued)
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT
The T. Rowe Price Variable Annuity Account of First Security Benefit Life
Insurance and Annuity Company of New York is a Separate Account established and
maintained by the Company under New York law. The Separate Account is registered
with the Securities and Exchange Commission under the Investment Company Act of
1940 as Unit Investment Trust. It was established by the Company to support
variable annuity contracts. The Company owns the assets of the Separate Account
and maintains them apart from the assets of its general account and its other
separate accounts. The assets held in the Separate Account equal to the reserves
and other Contract liabilities with respect to the Separate Account shall not be
chargeable with liabilities arising out of any other business of the Company.
Income and realized and unrealized gains and losses from assets in the Separate
Account are credited to, or charged against, the Separate Account without regard
to the income, gains or losses from the Company's general account or its other
separate accounts. The Separate Account is divided into Subaccounts shown on
page 3. Income and realized and unrealized gains and losses from assets in each
Subaccount are credited to, or charged against, the Subaccount without regard to
income, gains or losses in the other Subaccounts. The Company has the right to
transfer to its general account any assets of the Separate Account that are in
excess of the reserves and other Contract liabilities with respect to the
Separate Account. The value of the assets in the Separate Account on each
Valuation Date is determined at the end of each Valuation Date.
SUBACCOUNT NET ASSET VALUE
The Subaccount Net Asset Value is equal to: (1) the net asset value of all
shares of the underlying mutual fund held by the Subaccount; plus (2) any cash
or other assets; less (3) all liabilities of the Subaccount.
SUBACCOUNTS
The Separate Account is divided into Subaccounts which invest in shares of
open-end management investment companies, commonly known as mutual funds. Each
Subaccount may invest its assets in a separate class or series of a designated
mutual fund or funds. The Subaccounts are shown on page 3. Subject to the
regulatory requirements then in force, the Company reserves the right to:
1. change or add designated mutual funds or other investment vehicles;
2. add, remove or combine Subaccounts;
3. add, delete or make substitutions for securities that are held or
purchased by the Separate Account or any Subaccount;
4. operate the Separate Account as a management investment company;
5. combine the assets of the Separate Account with other Separate Accounts
of the Company or an affiliate thereof;
6. restrict or eliminate any voting rights of the Owner with respect to the
Separate Account or other persons who have voting rights as to the
Separate Account; and
7. terminate and liquidate any Subaccount.
If any of these changes result in a material change to the Separate Account or a
Subaccount, the Company will notify the Owner of the change. The Company will
not change the investment policy of any Subaccount in any material respect
without complying with the filing and other procedures of the insurance
regulators of the state of issue.
VALUATION DATE
A Valuation Date is each day the New York Stock Exchange and the Company are
open for business.
VALUATION PERIOD
A Valuation Period is the interval of time from one Valuation Date to the next
Valuation Date.
55-02010-02
FSB201 C (4-94) -6- BP 2010B1
<PAGE>
- --------------------------------------------------------------------------------
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
THE CONTRACT
The entire Contract between the Owner and the Company consists of this Contract,
the attached Application, and any Amendments, Endorsements or Riders to the
Contract. All statements made in the Application will, as ruled by a court of
competent jurisdiction, be deemed representations and not warranties. The
Company will use no statement made by or on behalf of the Owner or the Annuitant
to void this Contract unless it is in the written Application. Any change in the
Contract can be made only with the written consent of the President, a Vice
President, or the Secretary of the Company.
The Purchase Payment(s) and the Application must be acceptable to the Company
under its rules and practices. If they are not, the Company's liability shall be
limited to a return of the Purchase Payment(s).
COMPLIANCE
The Company reserves the right to make any change to the provisions of this
Contract to comply with or give the Owner the benefit of any federal or state
statute, rule or regulation. This includes, but is not limited to, requirements
for annuity contracts under the Internal Revenue Code or the laws of any state.
The Company will provide the Owner with a copy of any such change and will
obtain approval for such a change with the insurance regulatory officials of the
state in which the Contract is delivered.
MISSTATEMENT OF AGE AND SEX
If the age or sex of the Annuitant has been misstated, payments shall be
adjusted, when allowed by law, to the amount which would have been provided for
the correct age or sex. Proof of the age of an Annuitant may be required at any
time, in a form suitable to the Company. If payments have already commenced and
the misstatement has caused an underpayment, the full amount due with interest
at a rate of 3% will be paid with the next scheduled payment. If the
misstatement has caused an overpayment, the amount due with interest at the rate
of 3% will be deducted from one or more future payments.
EVIDENCE OF SURVIVAL
When any payments under this Contract depend on the payee being alive on a given
date, proof that the payee is living may be required by the Company. Such proof
must be in a form accepted by the Company, and may be required prior to making
the payments.
INCONTESTABILITY
This Contract will not be contested after it has been in force for two years
from the Issue Date during the life of the Owner.
ASSIGNMENT
Please refer to page 3 to see if this Contract may be assigned. If it may be
assigned, no Assignment under this Contract is binding unless Received by the
Company in writing. The Company assumes no responsibility for the validity,
legality, or tax status of any Assignment. The Assignment will be subject to any
payment made or other action taken by the Company before the Assignment is
Received by the Company. Once filed, the rights of the Owner, Annuitant and
Beneficiary are subject to the Assignment. Any claim is subject to proof of
interest of the assignee.
55-02010-02
-7- BP 2010B1
<PAGE>
- --------------------------------------------------------------------------------
GENERAL PROVISIONS (Continued)
- --------------------------------------------------------------------------------
EXCHANGES
The Owner may Exchange Contract Value among the Fixed Account and Subaccounts
subject to the following.
Exchanges are not allowed within 30 days of the Annuity Payout Date. After the
Annuity Payout Date, for Annuity Options 1 through 4, the Owner may Exchange
Contract Value only among Subaccounts. The Company reserves the right to: (1)
prohibit exchanges that would reduce an account to less than $500; (2) limit the
number of Exchanges allowed each Contract Year to six; and (3) subject to New
York Insurance Department approval, waive the limit on Exchanges allowed each
Contract Year. Exchanges must be at least $500 or, if less, the remaining
balance in the Fixed Account or a Subaccount.
Contract Value may be exchanged from the Fixed Account only: (1) during the
calendar month in which the applicable Guarantee Period expires; and (2)
pursuant to an Automatic Exchange. Exchanges of Fixed Account Value will be
made: (1) first from Fixed Account Contract Value for which the Guarantee Period
expires during the calendar month in which the Exchange is effected; (2) then in
the order that starts with Fixed Account Contract Value which has the longest
amount of time before its Guarantee Period expires; and (3) ends with that which
has the least amount of time before its Guarantee Period expires.
The Company will effect an Exchange to or from a Subaccount on the basis of
Accumulation Unit Value (or, when appropriate, Annuity Unit Value) determined at
the end of the Valuation Period in which the Exchange is effected. The Company
will effect an Exchange from the Fixed Account on the basis of Fixed Account
Contract Value at the end of the Valuation Period in which the Exchange is
effected.
The Company reserves the right to delay Exchanges from the Fixed Account for up
to 6 months. The Company will inform you if there will be a delay.
CLAIMS OF CREDITORS
The Contract Value and other benefits under this Contract are exempt from the
claims of creditors of the Owner to the extent allowed by law.
NONFORFEITURE VALUES
The Death Benefits, Withdrawal Values and Annuity Payout Values will at least
equal the minimum required by law.
NON-PARTICIPATING
This Contract is not participating and will pay no dividend.
STATEMENTS
At least once each Contract Year the Owner will be sent a statement including
the current Contract Value and any other information required by law. The Owner
may send a written request for a statement at other intervals. The Company may
charge a reasonable fee for such statements.
FSB201 D (R9-96) -8- BP 2010N1
<PAGE>
- --------------------------------------------------------------------------------
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS
- --------------------------------------------------------------------------------
OWNERSHIP
During the Owner's lifetime, all rights and privileges under the Contract may be
exercised only by the Owner. If the purchaser names someone other than himself
or herself as Owner, the purchaser has no rights in the Contract. No Owner may
be older than age 85 on the Contract Date.
JOINT OWNERSHIP
If a Joint Owner is named in the application, then the Owner and Joint Owner
share an undivided interest in the entire Contract as joint tenants with rights
of survivorship. When an Owner and Joint Owner have been named, the Company will
honor only requests for changes and the exercise of other Ownership rights made
by both the Owner and Joint Owner. When a Joint Owner is named, all references
to "Owner" throughout this Contract should be construed to mean both the Owner
and Joint Owner, except for the final sentence of the "Annuitant" provision
below, the "Statements" provision on page 8 and the "Death Benefit Provisions"
on pages 14 and 15.
ANNUITANT
The Annuitant is named on page 3. The Owner may change the Annuitant prior to
the Annuity Payout Date. The request for this change must be made in writing and
Received by the Company at least 30 days prior to the Annuity Payout Date. No
Annuitant may be named who is more than 85 years old on the Contract Date. When
the Annuitant dies prior to the Annuity Payout Date, the Owner must name a new
Annuitant within 30 days or, if sooner, by the Annuity Payout Date, except where
the Owner is a Nonnatural Person. If a new Annuitant is not named, the Owner
becomes the Annuitant.
PRIMARY AND SECONDARY BENEFICIARIES
The Primary Beneficiary and any Secondary Beneficiary are named on page 3. The
Owner may change any Beneficiary as described in "Ownership and Beneficiary
Changes" below. If the Primary Beneficiary dies prior to the Owner, the
Secondary Beneficiary becomes the Primary Beneficiary. Unless the Owner directs
otherwise, when there are two or more Primary Beneficiaries, they will receive
equal shares.
OWNERSHIP AND BENEFICIARY CHANGES
Subject to the terms of any existing Assignment, the Owner may name a new Owner,
a new Primary Beneficiary or a new Secondary Beneficiary. Any new choice of
Owner, Primary Beneficiary or Secondary Beneficiary will revoke any prior
choice. Any change must be made in writing and recorded at the Home Office. The
change will become effective as of the date the written request is signed,
whether or not the Owner is living at the time the change is recorded. A new
choice of Primary Beneficiary or Secondary Beneficiary will not apply to any
payment made or action taken by the Company prior to the time it was recorded.
The Company may require the Contract be returned so these changes may be made.
-9- BP 2010N1
<PAGE>
- --------------------------------------------------------------------------------
PURCHASE PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
FLEXIBLE PURCHASE PAYMENTS
The Contract becomes in force when the initial Purchase Payment is applied. The
Owner is not required to continue Purchase Payments in the amount or frequency
originally planned. The Owner may: (1) increase or decrease the amount of
Purchase Payments; or (2) change the frequency of Purchase Payments. A change in
frequency or amount of Purchase Payments does not require a written request.
PURCHASE PAYMENT LIMITATIONS
Total Purchase Payments to the Contract may not be greater than $1,000,000
without prior approval by the Company. The Minimum Subsequent Purchase Payment
amount is shown on page 3.
PURCHASE PAYMENT ALLOCATION
Purchase Payments may be allocated among the Fixed Account and the Subaccounts.
The allocations may be a whole dollar amount or whole percentage. However, no
less than $25 per Purchase Payment may be allocated to any Account. The Owner
may change the allocations by written notice to the Company.
PLACE OF PAYMENT
All Purchase Payments under this Contract are to be paid to the Company.
Purchase Payments after the first Purchase Payment are applied as of the end of
the Valuation Period during which they are Received by the Company.
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS
- --------------------------------------------------------------------------------
CONTRACT VALUE
On any Valuation Date, the Contract Value is the sum of: (1) the Separate
Account Contract Value; and (2) the Fixed Account Contract Value. At any time
after the first Contract Year and before the Annuity Payout Date, the Company
reserves the right to pay to the Owner the Contract Value as a lump sum if it is
below $2,000 and no Purchase Payments have been paid for three years.
FIXED ACCOUNT CONTRACT VALUE
On any Valuation Date, the Fixed Account Contract Value is equal to the first
Purchase Payment allocated under the Contract to the Fixed Account:
PLUS:
1. any other Purchase Payments allocated under the Contract to the Fixed
Account;
2. any Exchanges from the Separate Account to the Fixed Account; and
3. any interest credited to the Fixed Account.
LESS:
1. any Withdrawals deducted from the Fixed Account;
2. any Exchanges from the Fixed Account to the Separate Account;
3. any applicable Premium Taxes;
4. any Fixed Account Contract Value which is applied to any of Annuity
Options 1 through 4; and
5. any Annuity Payments made under Annuity Options 5 and 7.
55-02010-04
FSB201 E (4-94) -10- BP 2010D1
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
- --------------------------------------------------------------------------------
FIXED ACCOUNT INTEREST CREDITING
The Company will credit interest on Fixed Account Contract Value at an annual
rate at least equal to the Guaranteed Rate shown on page 3. Also, the Company
may in its sole judgment credit Current Interest at a rate in excess of the
Guaranteed Rate. The rate of Current Interest, if declared, will be fixed during
the Guarantee Period. Fixed Account Contract Value will earn Current Interest
during each Guarantee Period at the rate, if any, declared by the Company on the
first day of the Guarantee Period.
The Company may credit Current Interest on Contract Value that was allocated or
exchanged to the Fixed Account during one period at a different rate than
amounts allocated or exchanged to the Fixed Account in another period.
Therefore, at any time, portions of Fixed Account Contract Value may be earning
Current Interest at different rates based upon the period during which such
portions were allocated or exchanged to the Fixed Account.
SEPARATE ACCOUNT CONTRACT VALUE
On any Valuation Date, the Separate Account Contract Value is the sum of the
then current value of the Accumulation Units allocated to each Subaccount for
this Contract.
ACCUMULATION UNIT VALUE
The initial Accumulation Unit Value for each Subaccount was set at $10. Other
Accumulation Unit Values are found on each Valuation Date by dividing (1) by (2)
where:
1. is equal to:
a. the Subaccount Net Asset Value determined at the end of the current
Valuation Period; plus
b. any dividends declared by the Subaccount's underlying mutual fund that
are not part of the Subaccount Net Asset Value; less
c. the accrued Mortality and Expense Risk Charge; and
d. any taxes for which the Company has reserved which the Company deems
to have resulted from the operation of the Subaccount.
2. is the number of Accumulation Units at the start of the Valuation Period.
The Accumulation Unit Value may increase or decrease from one Valuation Period
to the next.
DETERMINING ACCUMULATION UNITS
The number of Accumulation Units allocated to a Subaccount under this Contract
is found by dividing: (1) the amount allocated to a Subaccount; by (2) the
Accumulation Unit Value for the Subaccount at the end of the Valuation Period
during which the amount is applied under the Contract. The number of
Accumulation Units allocated to a Subaccount under the Contract will not change
as a result of investment experience. Events that change the number of
Accumulation Units are:
1. Purchase Payments that are applied to the Subaccount;
2. Contract Value that is Exchanged into or out of the Subaccount;
3. Withdrawals that are deducted from the Subaccount; and
4. Premium Taxes that are deducted from the Subaccount.
55-02010-04
-11- BP 2010D1
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
- --------------------------------------------------------------------------------
MORTALITY AND EXPENSE RISK CHARGE
The Company will deduct the Mortality and Expense Risk Charge shown on page 3.
This charge will be computed and deducted from each Subaccount on each Valuation
Date. This charge is factored into the Accumulation Unit and Annuity Unit Value
on each Valuation Date.
PREMIUM TAX EXPENSE
The Company reserves the right to deduct Premium Tax when due or any time
thereafter. Any applicable Premium Taxes will be allocated as described on page
3.
MUTUAL FUND EXPENSES
Each Subaccount invests in shares of a mutual fund. The net asset value per
share of each underlying fund reflects the deduction of any investment advisory
and administration fees and other expenses of the fund. These fees and expenses
are not deducted from the assets of a Subaccount, but are paid by the underlying
funds. The Owner indirectly bears a pro rata share of such fees and expenses. An
underlying fund's fees and expenses are not specified or fixed under the terms
of this Contract.
- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
WITHDRAWALS
A full Withdrawal of the Contract Value or partial Withdrawal of Separate
Account Contract Value is allowed at any time. Partial Withdrawals of Fixed
Account Contract Value are, however, restricted as described below. This
provision is subject to any federal or state Withdrawal restrictions.
A partial Withdrawal of Fixed Account Contract Value may be made only: (1)
pursuant to Systematic Withdrawals; (2) during the calendar month in which the
applicable Guarantee Period expires; and (3) once per Contract Year in an amount
up to the greater of $5,000 or 10 percent of the Fixed Account Contract Value at
the time of the partial Withdrawal.
Upon the Owner's request for a full Withdrawal, the Company will pay the
Withdrawal Value in a lump sum.
All Withdrawals must meet the following conditions.
1. The request for Withdrawal must be Received by the Company in writing or
under other methods allowed by the Company.
2. The Owner must apply: (a) while this Contract is in force; and (b) prior
to the Annuity Payout Date.
3. The amount Withdrawn must be at least $500.00 except for Systematic
Withdrawals, as discussed below, or when terminating the Contract.
A partial Withdrawal request must state the allocations for deducting the
Withdrawal from each Account. If the Owner does not specify the allocation, the
Company will contact the Owner for instructions. The Withdrawal will be effected
as of the end of the Valuation Period in which such instructions are Received by
the Company. Withdrawals of Fixed Account Contract Value will be made: (1) first
from Fixed Account Contract Value for which the Guarantee Period expires during
the calendar month in which the Withdrawal is effected; (2) then in the order
that starts with Fixed Account Contract Value which has the longest amount of
time before its Guarantee Period expires; and (3) ends with that which has the
least amount of time before its Guarantee Period expires.
55-02010-05
FSB201 F (4-94) -12- BP 2010E1
<PAGE>
- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS (Continued)
- --------------------------------------------------------------------------------
WITHDRAWAL VALUE
The Withdrawal Value at any time will be: (1) the Contract Value; less (2) any
Premium Taxes due or paid by the Company.
SYSTEMATIC WITHDRAWALS
Systematic Withdrawals are automatic periodic distributions from the Contract in
substantially equal amounts prior to the Annuity Payout Date. In order to start
Systematic Withdrawals, the Owner must make the request in writing. The Minimum
Systematic Withdrawal is shown on page 3. The Owner must choose the type of
payment, and its frequency. The payment type may be: (1) a percentage of
Contract Value; (2) a specified dollar amount; (3) all earnings in the Contract;
or (4) based upon the life expectancy of the Owner or the Owner and a
Beneficiary. The payment frequency may be: (1) monthly; (2) quarterly; (3)
semiannually; or (4) annually. Systematic Withdrawals of Fixed Account Contract
Value must provide for payments over a period of not less than 36 months.
Systematic Withdrawals may be stopped by the Owner upon proper written request
Received by the Company at least 30 days in advance. The Company reserves the
right to stop, modify or suspend Systematic Withdrawals.
Withdrawals, including systematic withdrawals, may: (1) subject the Owner to a
penalty tax if taken before age 59 1/2; and (2) may be restricted or limited if
made from an Individual Retirement Annuity qualified under Internal Revenue Code
(IRC) Section 408 or a Tax Sheltered Annuity qualified under IRC Section 403(b).
DATE OF REQUEST
The Company will effect a Withdrawal of Separate Account Contract Value on the
basis of Accumulation Unit Value determined at the end of the Valuation Period
in which all the required information is Received by the Company.
PAYMENT OF WITHDRAWAL BENEFITS
The Company reserves the right to suspend an Exchange or delay payment of a
Withdrawal from the Separate Account for any period:
1. when the New York Stock Exchange is closed; or
2. when trading on the New York Stock Exchange is restricted; or
3. when an emergency exists as a result of which: (a) disposal of securities
held in the Separate Account is not reasonably practicable; or (b) it is
not reasonably practicable to fairly value the net assets of the Separate
Account.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth above exist.
The Company further reserves the right to delay payment of a Withdrawal from the
Fixed Account for up to six months as required by most states. The Company will
notify you if there will be a delay.
55-02010-05
-13- BP 2010E1
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS
- --------------------------------------------------------------------------------
DEATH BENEFIT
If any Owner dies prior to the Annuity Payout Date, a Death Benefit will be paid
to the Designated Beneficiary when due Proof of Death and instructions regarding
payment are Received by the Company. If an Owner is a Nonnatural Person, then
the Death Benefit will be paid in the event of the death of the Annuitant or any
Joint Owner that is a natural person prior to the Annuity Payout Date. Further,
if an Owner is a Nonnatural Person, the amount of the death benefit is based on
the age of the Annuitant or any joint Owner that is a natural person on the
Issue Date.
If the age of each Owner was 75 or younger on the Issue Date, the Death Benefit
will be the greatest of: (1) the sum of all Purchase Payments, less any Premium
Taxes due or paid by the Company and less the sum of all partial Withdrawals;
(2) the Contract Value on the date due Proof of Death and instructions regarding
payment are Received by the Company, less any Premium Taxes due or paid by the
Company; or (3) the Stepped-Up Death Benefit below.
The Stepped-Up Death Benefit is:
1. the largest Death Benefit on any Contract Anniversary that is both an
exact multiple of five and occurs prior to the oldest Owner reaching age
76; plus
2. any Purchase Payments received since the applicable fifth Contract
Anniversary; less
3. any reductions caused by Withdrawals since the applicable fifth Contract
Anniversary; less
4. any Premium Taxes due or paid by the Company.
If the age of any Owner on the Issue Date was 76 or older, the Death Benefit
will be: (1) the Contract Value on the date due Proof of Death and instructions
regarding payment are Received by the Company; less (2) any Premium Taxes due or
paid by the Company.
If a lump sum payment is requested, the payment will be made in accordance with
any laws and regulations that govern the payment of Death Benefits.
The value of the Death Benefit is determined as of the date that both Proof of
Death and instructions regarding payment are Received by the Company in good
order.
PROOF OF DEATH
Any of the following will serve as Proof of Death:
1. certified copy of the death certificate;
2. certified decree of a court of competent jurisdiction as to the finding
of death;
3. written statement by a medical doctor who attended the deceased Owner; or
4. any proof accepted by the Company.
DISTRIBUTION RULES
The entire Death Benefit with any interest shall be paid within 5 years after
the death of any Owner, except as provided below. In the event that the
Designated Beneficiary elects an Annuity Option, the length of time for the
payment period may be longer than 5 years if: (1) the Designated Beneficiary is
a natural person; (2) the Death Benefit is paid out under Annuity Options 1
through 7; (3) payments are made over a period that does not exceed the life or
life expectancy of the Designated Beneficiary; and (4) Annuity Payments begin
within one year of the death of the Owner. If the deceased Owner's spouse is the
sole Designated Beneficiary, the spouse shall become the sole Owner of the
Contract. He or she may elect to: (1) keep the Contract in force until the
sooner of the spouse's death or the Annuity Payout Date; or (2) receive the
Death Benefit.
FSB201 G (R9-96) -14- BP 2010O1
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
DISTRIBUTION RULES (cont'd)
If any Owner dies after the Annuity Payout Date, Annuity Payments will continue
to be paid at least as rapidly as under the method of payment being used as of
the date of the Owner's death.
If the Owner is a Nonnatural Person, the distribution rules set forth above
apply in the event of the death of, or a change in, the Annuitant. This Contract
is deemed to incorporate any provision of Section 72(s) of the Internal Revenue
Code of 1986, as amended (the "Code"), or any successor provision. This Contract
is also deemed to incorporate any other provision of the Code deemed necessary
by the Company, in its sole judgment, to qualify this Contract as an annuity.
The application of the distribution rules will be made in accordance with Code
section 72(s), or any successor provision, as interpreted by the Company in its
sole judgment.
The foregoing distribution rules do not apply to a Contract which is: (1)
provided under a plan described in Code section 401(a); (2) described in Code
section 403(b); (3) an individual retirement annuity or provided under an
individual retirement account or annuity; or (4) otherwise exempt from the Code
section 72(s) distribution rules.
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
ANNUITY PAYOUT DATE
The Owner may choose the Annuity Payout Date at the time of application. If no
Annuity Payout Date is chosen, the Company will use the later of: (1) the oldest
Annuitant's seventieth birthday; or (2) the fifth Contract Anniversary. The
Annuity Payout Date must be prior to the oldest Annuitant's ninetieth birthday.
The Annuity Payout Date is the date the first payment will be made to the
Annuitant under any of the Annuity Options.
CHANGE OF ANNUITY PAYOUT DATE
The Owner may change the Annuity Payout Date. A request for the change must be
made in writing. The written request must be Received by the Company at least 30
days prior to the new Annuity Payout Date as well as 30 days prior to the
previous Annuity Payout Date.
ANNUITY PAYOUT AMOUNT
The Annuity Payout Amount is applied to one or more of the Annuity Options
listed on pages 18 and 19. The Annuity Payout Amount is: (1) the Contract Value
on the Annuity Payout Date; less (2) any Premium Taxes due or paid by the
Company. Unless otherwise directed by the Owner, Annuity Payout Amount derived
from Fixed Account Contract Value will be applied to purchase a Fixed Annuity
Option; that derived from Separate Account Contract Value will be applied to
purchase a Variable Annuity Option.
-15- BP 2010O1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY TABLES
The Annuity Tables show the guaranteed minimum amount of monthly Annuity Payment
that applies to the first payment for Variable Annuity Payments and to each
payment for Fixed Annuity Payments for each $1,000 of Annuity Payout Amount for
each of Annuity Options 1 through 4. The amount of each Annuity Payment for
Annuity Options 1 through 4 will depend on the Annuitant's sex and age on the
Annuity Payout Date. The Annuity Tables state values for the exact ages shown.
The values will be interpolated based on the Annuitant's exact age on the
Annuity Payout Date. On request the Company will furnish the amount of monthly
Annuity Payment per $1,000 applied for any ages not shown.
The Company bases the Tables for Annuity Options 1 through 4 on: (1) the 1983
Table "A" Mortality Table projected for mortality improvement for 45 years using
Projection Scale G; and (2) an interest rate of 3 1/2% a year.
For Annuity Options 5 through 7, age and sex are not considered. Annuity
Payments for these options are computed without reference to the Annuity Tables.
ANNUITY PAYMENTS
The Annuity Option is shown on page 3. The Owner may choose any form of Annuity
Option that is allowed by the Company. The Owner may choose an Annuity Option by
written request. This request must be Received by the Company at least 30 days
prior to the Annuity Payout Date. Several Annuity Options are listed on pages 18
and 19. No Annuity Option can be selected that requires the Company to make
periodic payments of less than $20.00. If no Annuity Option is chosen prior to
the Annuity Payout Date, the Company will use the Life with 10-Year Fixed Period
Option. Each Annuity Option allows for making Annuity Payments annually,
semiannually, quarterly or monthly.
CHANGE OF ANNUITY OPTION
Prior to the Annuity Payout Date, the Owner may change the Annuity Option
chosen. The Owner must request the change in writing. This request must be
Received by the Company at least 30 days prior to the Annuity Payout Date.
FIXED ANNUITY PAYMENTS
With respect to Fixed Annuity Payments, the amounts shown on the Tables are the
guaranteed minimum for each Annuity Payment for Annuity Options 1 through 4.
VARIABLE ANNUITY PAYMENTS
With respect to Fixed Annuity Payments, the amounts shown on the Tables are the
first Annuity Payment, based on the assumed interest rate of 3 1/2% for Annuity
Options 1 through 4. The amount of each Annuity Payment after the first for
these options is computed by means of Annuity Units. Neither expense actually
incurred (other than tax on investment return), nor mortality actually
experienced, shall adversely affect the dollar amount of annuity income already
commenced.
ANNUITY UNITS
The number of Annuity Units is found by dividing the first Annuity Payment by
the Annuity Unit Value for the selected Subaccount on the Annuity Payout Date.
The number of Annuity Units for the Subaccount then remains constant, unless an
Exchange of Annuity Units is made. After the first Annuity Payment, the dollar
amount of each subsequent Annuity Payment is equal to the number of Annuity
Units times the Annuity Unit Value for the Subaccount on the due date of the
Annuity Payment.
55-02010-07
FSB201 H (4-94) -16- BP 2010G1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY UNITS (Cont'd)
The Annuity Unit Value for each Subaccount was first set at $1.00. The Annuity
Unit Value for any subsequent Valuation Date is equal to (a) times (b) times
(c), where:
(a) is the Annuity Unit Value on the immediately preceding Valuation Date;
(b) is the Net Investment Factor for the Valuation Date;
(c) is a factor used to adjust for an assumed interest rate of 3 1/2% per
year used to determine the Annuity Payment amounts. The assumed interest
rate is reflected in the Annuity Tables.
NET INVESTMENT FACTOR
The Net Investment Factor for any Subaccount at the end of any Valuation Period
is found by dividing (1) by (2) and subtracting (3) from the result, where:
1. is equal to:
a. the net asset value per share of the mutual fund held in the
Subaccount, found at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions
paid by the Subaccount's underlying mutual fund that is not included
in the net asset value per share; plus or minus
c. a per share charge or credit for any taxes reserved for, which the
Company deems to have resulted from the operation of the Subaccount.
2. is the net asset value per share of the Subaccount's underlying mutual
fund as found at the end of the prior Valuation Period.
3. is a factor representing the Mortality and Expense Risk Charge deducted
from the Separate Account.
Underlying mutual funds may declare dividends on a daily basis and pay such
dividends once a month. The Net Investment Factor allows for the monthly
reinvestment of these daily dividends. As described above, the gains and losses
from each Subaccount are credited or charged against the Subaccount without
regard to the gains or losses in the Company or other Subaccounts.
ALTERNATE ANNUITY OPTION RATES
The Company may, at the time of election of an Annuity Option, offer more
favorable rates in lieu of the guaranteed rates shown in the Annuity Tables.
55-02010-07
-17- BP 2010G1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY OPTIONS
OPTION 1
LIFE OPTION: This option provides payments for the life of the Annuitant. Table
A shows some of the guaranteed rates for this option.
OPTION 2
LIFE WITH FIXED PERIOD OPTION: This option provides payments for the life of the
Annuitant. A fixed period of 5, 10, 15 or 20 years may be chosen. Payments will
be made to the end of this period even if the Annuitant dies prior to the end of
the period. If the Annuitant dies before receiving all the payments during the
fixed period, the remaining payments will be made to the Designated Beneficiary.
Table A shows some of the guaranteed rates for this option.
OPTION 3
LIFE WITH INSTALLMENT OR UNIT REFUND OPTION: This option provides payment for
the life of the Annuitant, with a period certain determined by dividing the
Annuity Payout Amount by the amount of the first payment. A fixed number of
payments will be made even if the Annuitant dies. If the Annuitant dies before
receiving the fixed number of payments, any remaining payments will be made to
the Designated Beneficiary. Table A shows some of the guaranteed rates for this
option.
OPTION 4
JOINT AND LAST SURVIVOR OPTION: This option provides payments for the life of
the Annuitant and Joint Annuitant. Payments will be made as long as either is
living. Table B shows some of the guaranteed rates for this option.
OPTION 5
FIXED PERIOD OPTIONS: This option provides payments for a fixed number of years
between 5 and 20. If the Contract Value is held in the Fixed Account, then the
amount of the payments will vary as a result of the interest rate (as adjusted
periodically) credited on the Fixed Account. This rate is guaranteed to be no
less than the Guaranteed Rate shown on page 3. If the Contract Value is held in
the Separate Account, then the amount of the payments will vary as a result of
the investment performance of the Subaccounts chosen. If all the Annuitants die
before receiving the fixed number of payments, any remaining payments will be
made to the Designated Beneficiary.
OPTION 6
FIXED PAYMENT OPTION: This option provides a fixed payment amount. This amount
is paid until the amount applied, including daily interest adjustments, is paid.
If the Contract Value is held in the Fixed Account, then the number of payments
will vary as a result of the interest rate (as adjusted periodically) credited
on the Fixed Account. This rate is guaranteed to be no less than the Guaranteed
Rate shown on page 3. If the Contract Value is held in the Separate Account,
then the number of payments will vary as a result of the investment performance
of the Subaccounts chosen. If all the Annuitants die before receiving all the
payments, any remaining payments will be made to the Designated Beneficiary.
55-02010-08
FSB201 1(4-94) -18- BP 2010H1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY OPTIONS (cont'd)
OPTION 7
AGE RECALCULATION OPTION: This option provides payments based upon the
Annuitant's life expectancy, or the joint life expectancies of the Annuitant and
a beneficiary, at the Annuitant's attained age (and the Annuitant's
beneficiary's attained or adjusted age, if applicable) each year. The payments
are computed by reference to actuarial tables prescribed by the Treasury
Secretary. Payments are made until the amount applied is exhausted. If the
Contract Value is held in the Fixed Account, then the number of payments will
vary as a result of the interest rate (as adjusted periodically) credited on the
Fixed Account. This rate is guaranteed to be not less than the Guaranteed Rate
shown on page 3. If the Contract Value is held in the Separate Account, then the
number of payments will vary as a result of the investment performance of the
Subaccounts chosen. If all the Annuitants die before receiving the remaining
payments, such payments will be made to the Designated Beneficiary.
55-02010-08
-19- BP 2010H1
<PAGE>
ANNUITY TABLES
- --------------------------------------------------------------------------------
TABLE A
GUARANTEED MINIMUM AMOUNT
OF MONTHLY PAYMENT FOR
EACH $1,000 APPLIED
SINGLE LIFE ANNUITY
- --------------------------------------------------------------------------------
AGE OF MONTHLY PAYMENTS CERTAIN INSTALLMENT
PAYEE 0 60 120 180 240 REFUND
- --------------------------------------------------------------------------------
MALE
----
55 4.45 4.44 4.41 4.37 4.30 4.31
56 4.52 4.51 4.48 4.43 4.36 4.37
57 4.60 4.59 4.56 4.50 4.42 4.44
58 4.68 4.67 4.64 4.57 4.47 4.51
59 4.77 4.76 4.72 4.65 4.53 4.58
60 4.87 4.85 4.81 4.72 4.60 4.65
61 4.97 4.95 4.90 4.80 4.66 4.73
62 5.07 5.05 5.00 4.89 4.72 4.82
63 5.19 5.17 5.10 4.97 4.79 4.90
64 5.31 5.29 5.20 5.06 4.85 5.00
65 5.44 5.41 5.32 5.15 4.92 5.09
66 5.58 5.55 5.44 5.24 4.98 5.20
67 5.73 5.69 5.56 5.34 5.05 5.30
68 5.89 5.84 5.69 5.44 5.11 5.41
69 6.06 6.00 5.82 5.54 5.17 5.53
70 6.24 6.17 5.97 5.64 5.23 5.66
FEMALE
------
55 4.11 4.11 4.10 4.08 4.05 4.05
56 4.17 4.17 4.16 4.14 4.10 4.10
57 4.23 4.23 4.22 4.19 4.15 4.15
58 4.30 4.29 4.28 4.25 4.21 4.21
59 4.37 4.36 4.35 4.32 4.27 4.27
60 4.44 4.44 4.42 4.38 4.33 4.34
61 4.52 4.51 4.49 4.45 4.39 4.40
62 4.60 4.59 4.57 4.52 4.45 4.47
63 4.69 4.68 4.65 4.60 4.52 4.55
64 4.78 4.77 4.74 4.68 4.58 4.63
65 4.88 4.87 4.84 4.76 4.65 4.71
66 4.99 4.98 4.93 4.85 4.72 4.80
67 5.10 5.09 5.04 4.94 4.79 4.89
68 5.23 5.21 5.15 5.04 4.86 4.99
69 5.36 5.34 5.27 5.14 4.94 5.09
70 5.50 5.48 5.39 5.24 5.01 5.20
Rates not shown will be provided upon request. The guaranteed minimum monthly
payments shown apply to the initial payment for Variable Annuity Payments and to
each payment for Fixed Annuity Payments.
- --------------------------------------------------------------------------------
JOINT & LAST
SURVIVOR ANNUITY
TABLE B - MONTHLY FEMALE MALE AGE
INSTALLMENTS AGE 55 60 62 65 70
- --------------------------------------------------------------------------------
Until last Death 55 3.85 3.93 3.95 3.99 4.03
of Two Payees 60 3.98 4.10 4.15 4.21 4.29
per $1,000 of 62 4.03 4.18 4.23 4.30 4.40
benefit amount 65 4.11 4.28 4.35 4.45 4.59
70 4.21 4.45 4.54 4.69 4.92
Annual, semiannual, or quarterly payments can be determined from Table A or B by
multiplying the monthly payments by 11.812854, 5.9572233, and 2.9914201,
respectively.
55-02010-11
FSB2011 (4-94) -20- BP 2010K
<PAGE>
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
*Purchase Payments may be made until the earlier of the Annuity Payout Date or
termination of the Contract.
*A Death Benefit may be paid prior to the Annuity Payout Date according to the
Contract provisions.
*Annuity Payments begin on the Annuity Payout Date using the method as
specified in this Contract.
*The smallest annual rate of investment return that would have to be earned on
the assets of the Separate Account so that the dollar amount of Variable
Annuity Payments will not decrease is 3 1/2%. A daily charge corresponding to
an annual charge of .55% is applied to the assets of the Separate Account by
the Company. Please refer to the "Contract Value and Expense Provisions"
beginning on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
THE COMPANY'S PROMISE
In consideration for the Purchase Payments and the attached application, First
Security Benefit Life Insurance and Annuity Company of New York (the "Company")
will pay the benefits of this Contract according to its provisions.
LEGAL CONTRACT
PLEASE READ YOUR CONTRACT CAREFULLLY. It is a legal Contract between the Owner
and the Company. The Contract's table of contents is on page 2.
FREE LOOK PERIOD-RIGHT TO CANCEL
IF FOR ANY REASON THE OWNER IS NOT SATISFIED WITH THIS CONTRACT, HE OR SHE MAY
RETURN IT TO THE COMPANY WITHIN 30 DAYS FROM THE DATE OF RECEIPT. IT MAY BE
RETURNED BY DELIVERING OR MAILING IT TO THE COMPANY. IF RETURNED, THIS CONTRACT
SHALL BE DEEMED VOID FROM THE CONTRACT DATE. THE COMPANY WILL REFUND (I) ANY
PURCHASE PAYMENTS MADE AND ALLOCATED TO THE FIXED ACCOUNT; AND (II) SEPARATE
ACCOUNT CONTRACT VALUE AS OF THE DATE THE RETURNED POLICY IS POSTMARKED FOR
RETURN TO THE COMPANY, INCREASED BY ANY FEES OR OTHER CHARGES PAID.
Signed for First Security Benefit Life Insurance and Annuity Company of New York
on the Contract Date.
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
*Purchase Payments may be made until the earlier of the Annuity Payout Date or
termination of the Contract.
*A Death Benefit may be paid prior to the Annuity Payout Date according to the
Contract provisions.
*Annuity Payments begin on the Annuity Payout Date using the method specified
in this Contract.
*The smallest annual rate of investment return that would have to be earned on
the assets of the Separate Account so that the dollar amount of Variable
Annuity Payment will not decrease is 3 1/2%. A daily charge corresponding to an
annual charge of .55% is applied to the assets of the Separate Account by the
Company. Please refer to the "Contract Value and Expense Provisions" beginning
on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
Form FSB201 (R11-96)U BP 2010Q1
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
CONTRACT SPECIFICATIONS ............................................... 3
DEFINITIONS ........................................................... 4-6
GENERAL PROVISIONS .................................................... 7, 8
The Contract ........................................................ 7
Compliance .......................................................... 7
Misstatement of Age ................................................. 7
Evidence of Survival ................................................ 7
Incontestability .................................................... 7
Assignment .......................................................... 7
Exchanges ........................................................... 8
Claims of Creditors ................................................. 8
Nonforfeiture Values ................................................ 8
Non-Participating ................................................... 8
Statements .......................................................... 8
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS ....................... 9
Ownership ........................................................... 9
Joint Ownership ..................................................... 9
Annuitant ........................................................... 9
Primary and Secondary Beneficiaries ................................. 9
Ownership and Beneficiary Changes ................................... 9
PURCHASE PAYMENT PROVISIONS ........................................... 10
Flexible Purchase Payments .......................................... 10
Purchase Payment Limitations ........................................ 10
Purchase Payment Allocation ......................................... 10
Place of Payment .................................................... 10
CONTRACT VALUE AND EXPENSE PROVISIONS ................................. 10-12
Contract Value ...................................................... 10
Fixed Account Contract Value ........................................ 10
Fixed Account Interest Crediting .................................... 11
Separate Account Contract Value ..................................... 11
Accumulation Unit Value ............................................. 11
Determining Accumulation Units ...................................... 11
Mortality and Expense Risk Charge ................................... 12
Premium Tax Expense ................................................. 12
Mutual Fund Expenses ................................................ 12
WITHDRAWAL PROVISIONS ................................................. 12, 13
Withdrawals ......................................................... 12
Withdrawal Value .................................................... 13
Systematic Withdrawals .............................................. 13
Date of Request ..................................................... 13
Payment of Withdrawal Benefits ...................................... 13
DEATH BENEFIT PROVISIONS .............................................. 14, 15
Death Benefit ....................................................... 14
Proof of Death ...................................................... 14
Distribution Rules .................................................. 14, 15
ANNUITY PAYMENT PROVISIONS ............................................ 15-19
Annuity Payout Date ................................................. 15
Change of Annuity Payout Date ....................................... 15
Annuity Payout Amount ............................................... 15
Annuity Tables ...................................................... 16
Annuity Payments .................................................... 16
Change of Annuity Option ............................................ 16
Fixed Annuity Payments .............................................. 16
Variable Annuity Payments ........................................... 16
Annuity Units ....................................................... 16, 17
Net Investment Factor ............................................... 17
Alternate Annuity Option Rates ...................................... 17
Annuity Options ..................................................... 18, 19
ANNUITY TABLES ........................................................ 20
AMENDMENTS OR ENDORSEMENTS, IF ANY
-2- BP 2010Q1
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT SPECIFICATIONS
- --------------------------------------------------------------------------------
OWNER NAME: CONTRACT NUMBER:
OWNER DATE OF BIRTH: CONTRACT DATE:
JOINT OWNER NAME: ISSUE DATE:
JOINT OWNER DATE OF BIRTH: ANNUITY PAYOUT DATE:
ANNUITANT NAME: PLAN:
ANNUITANT DATE OF BIRTH: ASSIGNMENT:
ANNUITANT GENDER:
PRIMARY BENEFICIARY NAME: SECONDARY BENEFICIARY
NAME: See Application or subsequent change form
- --------------------------------------------------------------------------------
INITIAL PURCHASE PAYMENT ....................
MINIMUM SUBSEQUENT PURCHASE PAYMENTS ........ investment program
MINIMUM SYSTEMATIC WITHDRAWAL ............... $100
MORTALITY AND EXPENSE RISK CHARGE ........... .55% Annually
GUARANTEED RATE ............................. 3%
ANNUITY OPTION ..............................
SUBACCOUNTS:
New America Growth Subaccount
International Stock Subaccount
Mid-Cap Growth Subaccount
Equity Income Subaccount
Personal Strategy Balanced Subaccount
Limited-Term Bond Subaccount
Prime Reserve Subaccount
METHOD FOR DEDUCTIONS:
Deductions for any Premium Taxes will be allocated proportionately to the
Owner's Contract Value in the Subaccounts and the Fixed Account.
* The Annuity Payout Date and Annuity Option may be changed by the Owner prior
to the Annuity Payout Date. See "Change of Annuity Payout Date" and "Change
of Annuity Option."
FSB201 A (R9-96) -3- SBL90
<PAGE>
- --------------------------------------------------------------------------------
DEFINTIONS
- --------------------------------------------------------------------------------
ACCOUNT
An Account is one of the Subaccounts or the Fixed Account.
ACCUMULATION UNIT
The Accumulation Unit is a unit of measure. It is used to compute the Separate
Account Contract Value prior to the Annuity Payout Date. It is also used to
compute the Variable Annuity Payments for Annuity Options 5 through 7.
ANNUITANT
The Annuitant is the person named by the Owner on whose life the Annuity
Payments depend for Annuity Options 1 through 4. The Annuitant receives Annuity
Payments under this Contract. Please see "Annuitant" provisions on page 9.
ANNUITY OPTION
An Annuity Option is a set of provisions that form the basis for making Annuity
Payments. The Annuity Option is set prior to the Annuity Payout Date. Please see
"Annuity Options" on pages 18 and 19.
ANNUITY PAYOUT DATE
The Annuity Payout Date is the date on which Annuity Payments are scheduled to
begin. This date may be changed by the Owner. The Annuity Payout date is shown
on page 3. Please see "Annuity Payout Date" on page 15.
ANNUITY UNIT
The Annuity Unit is a unit of measure used to compute Variable Annuity Payments
for Annuity Options 1 through 4.
AUTOMATIC EXCHANGES
Automatic Exchanges are Exchanges among the Subaccounts and the Fixed Account.
Such exchanges are made automatically on a periodic basis by the Company at the
written request of the Owner.
COMPANY
The Company is First Security Benefit Life Insurance and Annuity Company of New
York.
CONTRACT ANNIVERSARY
A Contract Anniversary is a 12-month anniversary of the Contract Date.
CONTRACT DATE
The Contract Date is the date the Contract begins. The Contract Date is shown on
page 3.
CONTRACT YEAR
Contract Years are measured from the Contract Date.
CURRENT INTEREST
The Company may in its discretion pay Current Interest on the Fixed Account at a
rate that exceeds the Guaranteed Rate shown on page 3. The Company will declare
the rate of Current Interest, if any, from time to time.
DESIGNATED BENEFICIARY
Upon the death of the Owner or Joint Owner, the Designated Beneficiary will be
the first person on the following list who is alive on the date of death:
1. Owner;
2. Joint Owner;
3. Primary Beneficiary;
4. Secondary Beneficiary;
5. Annuitant; and
6. the Owner's estate if no one listed above is alive.
FSB201 B (4-94) -4- 55-02010-01
<PAGE>
- --------------------------------------------------------------------------------
DEFINITIONS (Continued)
- --------------------------------------------------------------------------------
DESIGNATED BENEFICIARY (Cont'd)
The Designated Beneficiary receives a death benefit upon the death of the Owner.
Please see "Ownership, Annuitant, and Beneficiary Provisions" on page 9 and
"Death Benefit Provisions" on pages 14 and 15.
FIXED ACCOUNT
The Fixed Account is part of the Company's general account. The Company manages
the general account and guarantees that it will credit interest on Fixed Account
Contract Value at an annual rate at least equal to the Guaranteed Rate. This
Rate is shown on page 3.
GUARANTEE PERIOD
Current Interest, if declared, is fixed for rolling periods of one year,
referred to as Guarantee Periods. The Guarantee Period that applies to any Fixed
Account Contract Value: (1) starts on the date that such Contract Value is
allocated to the Fixed Account pursuant to: (a) a Purchase Payment Received by
the Company; or (b) an Exchange to the Fixed Account; and (2) ends on the last
day of the same month in the year in which the Guarantee Period expires. When
any Guarantee Period expires, a new Guarantee Period shall start for such
Contract Value on the date that follows such expiration date. Such period shall
end on the immediately preceding date in the year in which the Guarantee Period
expires. For example, Contract Value exchanged to the Fixed Account on June 1
would have a Guarantee Period starting on that date and ending on June 30 of the
following year. A new Guarantee Period for such Contract Value would start on
July 1 of that year and end on June 30 of the following year.
HOME OFFICE
The address of the Company's Home Office is First Security Benefit Life
Insurance and Annuity Company of New York, 70 West Red Oak Lane, 4th Floor,
White Plains, New York 10604.
ISSUE DATE
The Issue Date is the date the Company uses to determine the date the Contract
becomes incontestable. The Issue Date is shown on page 3. Please see
"Incontestability" on page 7.
JOINT OWNER
The Joint Owner, if any, shares an undivided interest in the entire Contract
with the Owner. The Joint Owner, if any, is named on page 3. Please see "Joint
Ownership" provisions on page 9.
NONNATURAL PERSON
Any group or entity that is not a living person, such as a trust or corporation.
OWNER
The Owner is the person who has all rights under the Contract. The Owner is
named on page 3. Please see "Ownership" provisions on page 9.
PREMIUM TAX
Any Premium Taxes levied by a state or other governmental entity will be charged
against this Contract. When Premium Tax is assessed after the Purchase Payment
is applied, it will be deducted as described on page 3.
PURCHASE PAYMENT
A Purchase Payment is money Received by the Company and applied to the Contract.
RECEIVED BY THE COMPANY
The phrase "Received by the Company" means receipt by the Company in good order
at its Home Office at the address indicated above or such other address
designated in writing by the Company.
55-02010-01
-5- BP 2010A1
<PAGE>
- --------------------------------------------------------------------------------
DEFINITIONS (Continued)
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT
The T. Rowe Price Variable Annuity Account of First Security Benefit Life
Insurance and Annuity Company of New York is a Separate Account established and
maintained by the Company under New York law. The Separate Account is registered
with the Securities and Exchange Commission under the Investment Company Act of
1940 as Unit Investment Trust. It was established by the Company to support
variable annuity contracts. The Company owns the assets of the Separate Account
and maintains them apart from the assets of its general account and its other
separate accounts. The assets held in the Separate Account equal to the reserves
and other Contract liabilities with respect to the Separate Account shall not be
chargeable with liabilities arising out of any other business of the Company.
Income and realized and unrealized gains and losses from assets in the Separate
Account are credited to, or charged against, the Separate Account without regard
to the income, gains or losses from the Company's general account or its other
separate accounts. The Separate Account is divided into Subaccounts shown on
page 3. Income and realized and unrealized gains and losses from assets in each
Subaccount are credited to, or charged against, the Subaccount without regard to
income, gains or losses in the other Subaccounts. The Company has the right to
transfer to its general account any assets of the Separate Account that are in
excess of the reserves and other Contract liabilities with respect to the
Separate Account. The value of the assets in the Separate Account on each
Valuation Date is determined at the end of each Valuation Date.
SUBACCOUNT NET ASSET VALUE
The Subaccount Net Asset Value is equal to: (1) the net asset value of all
shares of the underlying mutual fund held by the Subaccount; plus (2) any cash
or other assets; less (3) all liabilities of the Subaccount.
SUBACCOUNTS
The Separate Account is divided into Subaccounts which invest in shares of
open-end management investment companies, commonly known as mutual funds. Each
Subaccount may invest its assets in a separate class or series of a designated
mutual fund or funds. The Subaccounts are shown on page 3. Subject to the
regulatory requirements then in force, the Company reserves the right to:
1. change or add designated mutual funds or other investment vehicles;
2. add, remove or combine Subaccounts;
3. add, delete or make substitutions for securities that are held or
purchased by the Separate Account or any Subaccount;
4. operate the Separate Account as a management investment company;
5. combine the assets of the Separate Account with other Separate Accounts
of the Company or an affiliate thereof;
6. restrict or eliminate any voting rights of the Owner with respect to the
Separate Account or other persons who have voting rights as to the
Separate Account; and
7. terminate and liquidate any Subaccount.
If any of these changes result in a material change to the Separate Account or a
Subaccount, the Company will notify the Owner of the change. The Company will
not change the investment policy of any Subaccount in any material respect
without complying with the filing and other procedures of the insurance
regulators of the state of issue.
VALUATION DATE
A Valuation Date is each day the New York Stock Exchange and the Company are
open for business.
VALUATION PERIOD
A Valuation Period is the interval of time from one Valuation Date to the next
Valuation Date.
FSB201 C (4-94)U 55-02010-09
-6- BP 201011
<PAGE>
- --------------------------------------------------------------------------------
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
THE CONTRACT
The entire Contract between the Owner and the Company consists of this Contract,
the attached Application, and any Amendments, Endorsements or Riders to the
Contract. All statements made in the Application will, as ruled by a court of
competent jurisdiction, be deemed representations and not warranties. The
Company will use no statement made by or on behalf of the Owner or the Annuitant
to void this Contract unless it is in the written Application. Any change in the
Contract can be made only with the written consent of the President, a Vice
President, or the Secretary of the Company.
The Purchase Payment(s) and the Application must be acceptable to the Company
under its rules and practices. If they are not, the Company's liability shall be
limited to a return of the Purchase Payment(s).
COMPLIANCE
The Company reserves the right to make any change to the provisions of this
Contract to comply with or give the Owner the benefit of any federal or state
statute, rule or regulation. This includes, but is not limited to, requirements
for annuity contracts under the Internal Revenue Code or the laws of any state.
The Company will provide the Owner with a copy of any such change and will
obtain approval for such a change with the insurance regulatory officials of the
state in which the Contract is delivered.
MISSTATEMENT OF AGE
If the age of the Annuitant has been misstated, payments shall be adjusted, when
allowed by law, to the amount which would have been provided for the correct
age. Proof of the age of an Annuitant may be required at any time, in a form
suitable to the Company. If payments have already commenced and the misstatement
has caused an underpayment, the full amount due with interest at a rate of 3%
will be paid with the next scheduled payment. If the misstatement has caused an
overpayment, the amount due with interest at the rate of 3% will be deducted
from one or more future payments.
EVIDENCE OF SURVIVAL
When any payments under this Contract depend on the payee being alive on a given
date, proof that the payee is living may be required by the Company. Such proof
must be in a form accepted by the Company, and may be required prior to making
the payments.
INCONTESTABILITY
This Contract will not be contested after it has been in force for two years
from the Issue Date during the life of the Owner.
ASSIGNMENT
Please refer to page 3 to see if this Contract may be assigned. If it may be
assigned, no Assignment under this Contract is binding unless Received by the
Company in writing. The Company assumes no responsibility for the validity,
legality, or tax status of any Assignment. The Assignment will be subject to any
payment made or other action taken by the Company before the Assignment is
Received by the Company. Once filed, the rights of the Owner, Annuitant and
Beneficiary are subject to the Assignment. Any claim is subject to proof of
interest of the assignee.
55-02010-09
-7- BP 201011
<PAGE>
- --------------------------------------------------------------------------------
GENERAL PROVISIONS (Continued)
- --------------------------------------------------------------------------------
EXCHANGES
The Owner may Exchange Contract Value among the Fixed Account and Subaccounts
subject to the following.
Exchanges are not allowed within 30 days of the Annuity Payout Date. After the
Annuity Payout Date, for Annuity Options 1 through 4, the Owner may Exchange
Contract Value only among Subaccounts. The Company reserves the right to: (1)
prohibit exchanges that would reduce an account to less than $500; (2) limit the
number of Exchanges allowed each Contract Year to six; and (3) subject to New
York Insurance Department approval, waive the limit on Exchanges allowed each
Contract Year. Exchanges must be at least $500 or, if less, the remaining
balance in the Fixed Account or a Subaccount.
Contract Value may be exchanged from the Fixed Account only: (1) during the
calendar month in which the applicable Guarantee Period expires; and (2)
pursuant to an Automatic Exchange. Exchanges of Fixed Account Value will be
made: (1) first from Fixed Account Contract Value for which the Guarantee Period
expires during the calendar month in which the Exchange is effected; (2) then in
the order that starts with Fixed Account Contract Value which has the longest
amount of time before its Guarantee Period expires; and (3) ends with that which
has the least amount of time before its Guarantee Period expires.
The Company will effect an Exchange to or from a Subaccount on the basis of
Accumulation Unit Value (or, when appropriate, Annuity Unit Value) determined at
the end of the Valuation Period in which the Exchange is effected. The Company
will effect an Exchange from the Fixed Account on the basis of Fixed Account
Contract Value at the end of the Valuation Period in which the Exchange is
effected.
The Company reserves the right to delay Exchanges from the Fixed Account for up
to 6 months. The Company will inform you if there will be a delay.
CLAIMS OF CREDITORS
The Contract Value and other benefits under this Contract are exempt from the
claims of creditors of the Owner to the extent allowed by law.
NONFORFEITURE VALUES
The Death Benefits, Withdrawal Values and Annuity Payout Values will at least
equal the minimum required by law.
NON-PARTICIPATING
This Contract is not participating and will pay no dividend.
STATEMENTS
At least once each Contract Year the Owner will be sent a statement including
the current Contract Value and any other information required by law. The Owner
may send a written request for a statement at other intervals. The Company may
charge a reasonable fee for such statements.
FSB201 D(R9-96) -8- BP 2010N1
<PAGE>
- --------------------------------------------------------------------------------
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS
- --------------------------------------------------------------------------------
OWNERSHIP
During the Owner's lifetime, all rights and privileges under the Contract may be
exercised only by the Owner. If the purchaser names someone other than himself
or herself as Owner, the purchaser has no rights in the Contract. No Owner may
be older than age 85 on the Contract Date.
JOINT OWNERSHIP
If a Joint Owner is named in the application, then the Owner and Joint Owner
share an undivided interest in the entire Contract as joint tenants with rights
of survivorship. When an Owner and Joint Owner have been named, the Company will
honor only requests for changes and the exercise of other Ownership rights made
by both the Owner and Joint Owner. When a Joint Owner is named, all references
to "Owner" throughout this Contract should be construed to mean both the Owner
and Joint Owner, except for the final sentence of the "Annuitant" provision
below, the "Statements" provision on page 8 and the "Death Benefit Provisions"
on pages 14 and 15.
ANNUITANT
The Annuitant is named on page 3. The Owner may change the Annuitant prior to
the Annuity Payout Date. The request for this change must be made in writing and
Received by the Company at least 30 days prior to the Annuity Payout Date. No
Annuitant may be named who is more than 85 years old on the Contract Date. When
the Annuitant dies prior to the Annuity Payout Date, the Owner must name a new
Annuitant within 30 days or, if sooner, by the Annuity Payout Date, except where
the Owner is a Nonnatural Person. If a new Annuitant is not named, the Owner
becomes the Annuitant.
PRIMARY AND SECONDARY BENEFICIARIES
The Primary Beneficiary and any Secondary Beneficiary are named on page 3. The
Owner may change any Beneficiary as described in "Ownership and Beneficiary
Changes" below. If the Primary Beneficiary dies prior to the Owner, the
Secondary Beneficiary becomes the Primary Beneficiary. Unless the Owner directs
otherwise, when there are two or more Primary Beneficiaries, they will receive
equal shares.
OWNERSHIP AND BENEFICIARY CHANGES
Subject to the terms of any existing Assignment, the Owner may name a new Owner,
a new Primary Beneficiary or a new Secondary Beneficiary. Any new choice of
Owner, Primary Beneficiary or Secondary Beneficiary will revoke any prior
choice. Any change must be made in writing and recorded at the Home Office. The
change will become effective as of the date the written request is signed,
whether or not the Owner is living at the time the change is recorded. A new
choice of Primary Beneficiary or Secondary Beneficiary will not apply to any
payment made or action taken by the Company prior to the time it was recorded.
The Company may require the Contract be returned so these changes may be made.
-9- BP 2010N1
<PAGE>
- --------------------------------------------------------------------------------
PURCHASE PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
FLEXIBLE PURCHASE PAYMENTS
The Contract becomes in force when the initial Purchase Payment is applied. The
Owner is not required to continue Purchase Payments in the amount or frequency
originally planned. The Owner may: (1) increase or decrease the amount of
Purchase Payments; or (2) change the frequency of Purchase Payments. A change in
frequency or amount of Purchase Payments does not require a written request.
PURCHASE PAYMENT LIMITATIONS
Total Purchase Payments to the Contract may not be greater than $1,000,000
without prior approval by the Company. The Minimum Subsequent Purchase Payment
amount is shown on page 3.
PURCHASE PAYMENT ALLOCATION
Purchase Payments may be allocated among the Fixed Account and the Subaccounts.
The allocations may be a whole dollar amount or whole percentage. However, no
less than $25 per Purchase Payment may be allocated to any Account. The Owner
may change the allocations by written notice to the Company.
PLACE OF PAYMENT
All Purchase Payments under this Contract are to be paid to the Company.
Purchase Payments after the first Purchase Payment are applied as of the end of
the Valuation Period during which they are Received by the Company.
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS
- --------------------------------------------------------------------------------
CONTRACT VALUE
On any Valuation Date, the Contract Value is the sum of: (1) the Separate
Account Contract Value; and (2) the Fixed Account Contract Value. At any time
after the first Contract Year and before the Annuity Payout Date, the Company
reserves the right to pay to the Owner the Contract Value as a lump sum if it is
below $2,000 and no Purchase Payments have been paid for three years.
FIXED ACCOUNT CONTRACT VALUE
On any Valuation Date, the Fixed Account Contract Value is equal to the first
Purchase Payment allocated under the Contract to the Fixed Account:
PLUS:
1. any other Purchase Payments allocated under the Contract to the Fixed
Account;
2. any Exchanges from the Separate Account to the Fixed Account; and
3. any interest credited to the Fixed Account.
LESS:
1. any Withdrawals deducted from the Fixed Account;
2. any Exchanges from the Fixed Account to the Separate Account;
3. any applicable Premium Taxes;
4. any Fixed Account Contract Value which is applied to any of Annuity
Options 1 through 4; and
5. any Annuity Payments made under Annuity Options 5 and 7.
55-02010-04
FSB201 E (4-94) -10- BP 2010D1
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
- --------------------------------------------------------------------------------
FIXED ACCOUNT INTEREST CREDITING
The Company will credit interest on Fixed Account Contract Value at an annual
rate at least equal to the Guaranteed Rate shown on page 3. Also, the Company
may in its sole judgment credit Current Interest at a rate in excess of the
Guaranteed Rate. The rate of Current Interest, if declared, will be fixed during
the Guarantee Period. Fixed Account Contract Value will earn Current Interest
during each Guarantee Period at the rate, if any, declared by the Company on the
first day of the Guarantee Period.
The Company may credit Current Interest on Contract Value that was allocated or
exchanged to the Fixed Account during one period at a different rate than
amounts allocated or exchanged to the Fixed Account in another period.
Therefore, at any time, portions of Fixed Account Contract Value may be earning
Current Interest at different rates based upon the period during which such
portions were allocated or exchanged to the Fixed Account.
SEPARATE ACCOUNT CONTRACT VALUE
On any Valuation Date, the Separate Account Contract Value is the sum of the
then current value of the Accumulation Units allocated to each Subaccount for
this Contract.
ACCUMULATION UNIT VALUE
The initial Accumulation Unit Value for each Subaccount was set at $10. Other
Accumulation Unit Values are found on each Valuation Date by dividing (1) by (2)
where:
1. is equal to:
a. the Subaccount Net Asset Value determined at the end of the current
Valuation Period; plus
b. any dividends declared by the Subaccount's underlying mutual fund that
are not part of the Subaccount Net Asset Value; less
c. the accrued Mortality and Expense Risk Charge; and
d. any taxes for which the Company has reserved which the Company deems to
have resulted from the operation of the Subaccount.
2. is the number of Accumulation Units at the start of the Valuation Period.
The Accumulation Unit Value may increase or decrease from one Valuation Period
to the next.
DETERMINING ACCUMULATION UNITS
The number of Accumulation Units allocated to a Subaccount under this Contract
is found by dividing: (1) the amount allocated to a Subaccount; by (2) the
Accumulation Unit Value for the Subaccount at the end of the Valuation Period
during which the amount is applied under the Contract. The number of
Accumulation Units allocated to a Subaccount under the Contract will not change
as a result of investment experience. Events that change the number of
Accumulation Units are:
1. Purchase Payments that are applied to the Subaccount;
2. Contract Value that is Exchanged into or out of the Subaccount
3. Withdrawals that are deducted from the Subaccount; and
4. Premium Taxes that are deducted from the Subaccount.
55-02010-04
-11- BP 2010D1
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
- --------------------------------------------------------------------------------
MORTALITY AND EXPENSE RISK CHARGE
The Company will deduct the Mortality and Expense Risk Charge shown on page 3.
This charge will be computed and deducted from each Subaccount on each Valuation
Date. This charge is factored into the Accumulation Unit and Annuity Unit Value
on each Valuation Date.
PREMIUM TAX EXPENSE
The Company reserves the right to deduct Premium Tax when due or any time
thereafter. Any applicable Premium Taxes will be allocated as described on page
3.
MUTUAL FUND EXPENSES
Each Subaccount invests in shares of a mutual fund. The net asset value per
share of each underlying fund reflects the deduction of any investment advisory
and administration fees and other expenses of the fund. These fees and expenses
are not deducted from the assets of a Subaccount, but are paid by the underlying
funds. The Owner indirectly bears a pro rata share of such fees and expenses. An
underlying fund's fees and expenses are not specified or fixed under the terms
of this Contract.
- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
WITHDRAWALS
A full Withdrawal of the Contract Value or partial Withdrawal of Separate
Account Contract Value is allowed at any time. Partial Withdrawals of Fixed
Account Contract Value are, however, restricted as described below.
This provision is subject to any federal or state Withdrawal restrictions.
A partial Withdrawal of Fixed Account Contract Value may be made only: (1)
pursuant to Systematic Withdrawals; (2) during the calendar month in which the
applicable Guarantee Period expires; and (3) once per Contract Year in an amount
up to the greater of $5,000 or 10 percent of the Fixed Account Contract Value at
the time of the partial Withdrawal.
Upon the Owner's request for a full Withdrawal, the Company will pay the
Withdrawal Value in a lump sum.
All Withdrawals must meet the following conditions.
1. The request for Withdrawal must be Received by the Company in writing or
under other methods allowed by the Company.
2. The Owner must apply: (a) while this Contract is in force; and (b) prior
to the Annuity Payout Date.
3. The amount Withdrawn must be at least $500.00 except for Systematic
Withdrawals, as discussed below, or when terminating the Contract.
A partial Withdrawal request must state the allocations for deducting the
Withdrawal from each Account. If the Owner does not specify the allocation, the
Company will contact the Owner for instructions. The Withdrawal will be effected
as of the end of the Valuation Period in which such instructions are Received by
the Company. Withdrawals of Fixed Account Contract Value will be made: (1) first
from Fixed Account Contract Value for which the Guarantee Period expires during
the calendar month in which the Withdrawal is effected; (2) then in the order
that starts with Fixed Account Contract Value which has the longest amount of
time before its Guarantee Period expires; and (3) ends with that which has the
least amount of time before its Guarantee Period expires.
55-02010-05
FSB201 F (4-94) -12- BP 2010E1
<PAGE>
- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS (Continued)
- --------------------------------------------------------------------------------
WITHDRAWAL VALUE
The Withdrawal Value at any time will be: (1) the Contract Value; less (2) any
Premium Taxes due or paid by the Company.
SYSTEMATIC WITHDRAWALS
Systematic Withdrawals are automatic periodic distributions from the Contract in
substantially equal amounts prior to the Annuity Payout Date. In order to start
Systematic Withdrawals, the Owner must make the request in writing. The Minimum
Systematic Withdrawal is shown on page 3. The Owner must choose the type of
payment, and its frequency. The payment type may be: (1) a percentage of
Contract Value; (2) a specified dollar amount; (3) all earnings in the Contract;
or (4) based upon the life expectancy of the Owner or the Owner and a
Beneficiary. The payment frequency may be: (1) monthly; (2) quarterly; (3)
semiannually; or (4) annually. Systematic Withdrawals of Fixed Account Contract
Value must provide for payments over a period of not less than 36 months.
Systematic Withdrawals may be stopped by the Owner upon proper written request
Received by the Company at least 30 days in advance. The Company reserves the
right to stop, modify or suspend Systematic Withdrawals.
Withdrawals, including systematic withdrawals, may: (1) subject the Owner to a
penalty tax if taken before age 59 1/2; and (2) may be restricted or limited if
made from an Individual Retirement Annuity qualified under Internal Revenue Code
(IRC) Section 408 or a Tax Sheltered Annuity qualified under IRC Section 403(b).
DATE OF REQUEST
The Company will effect a Withdrawal of Separate Account Contract Value on the
basis of Accumulation Unit Value determined at the end of the Valuation Period
in which all the required information is Received by the Company.
PAYMENT OF WITHDRAWAL BENEFITS
The Company reserves the right to suspend an Exchange or delay payment of a
Withdrawal from the Separate Account for any period:
1. when the New York Stock Exchange is closed; or
2. when trading on the New York Stock Exchange is restricted; or
3. when an emergency exists as a result of which: (a) disposal of securities
held in the Separate Account is not reasonably practicable; or (b) it is
not reasonably practicable to fairly value the net assets of the Separate
Account.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth above exist.
The Company further reserves the right to delay payment of a Withdrawal from the
Fixed Account for up to six months as required by most states. The Company will
notify you if there will be a delay.
55-02010-05
-13- BP 2010E1
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS
- --------------------------------------------------------------------------------
DEATH BENEFIT
If any Owner dies prior to the Annuity Payout Date, a Death Benefit will be paid
to the Designated Beneficiary when due Proof of Death and instructions regarding
payment are Received by the Company. If an Owner is a Nonnatural Person, then
the Death Benefit will be paid in the event of the death of the Annuitant or any
Joint Owner that is a natural person prior to the Annuity Payout Date. Further,
if an Owner is a Nonnatural Person, the amount of the death benefit is based on
the age of the Annuitant or any joint Owner that is a natural person on the
Issue Date.
If the age of each Owner was 75 or younger on the Issue Date, the Death Benefit
will be the greatest of: (1) the sum of all Purchase Payments, less any Premium
Taxes due or paid by the Company and less the sum of all partial Withdrawals;
(2) the Contract Value on the date due Proof of Death and instructions regarding
payment are Received by the Company, less any Premium Taxes due or paid by the
Company; or (3) the Stepped-Up Death Benefit below.
The Stepped-Up Death Benefit is:
1. the largest Death Benefit on any Contract Anniversary that is both an
exact multiple of five and occurs prior to the oldest Owner reaching age
76; plus
2. any Purchase Payments received since the applicable fifth Contract
Anniversary; less
3. any reductions caused by Withdrawals since the applicable fifth Contract
Anniversary; less
4. any Premium Taxes due or paid by the Company.
If the age of any Owner on the Issue Date was 76 or older, the Death Benefit
will be: (1) the Contract Value on the date due Proof of Death and instructions
regarding payment are Received by the Company; less (2) any Premium Taxes due or
paid by the Company.
If a lump sum payment is requested, the payment will be made in accordance with
any laws and regulations that govern the payment of Death Benefits.
The value of the Death Benefit is determined as of the date that both Proof of
Death and instructions regarding payment are Received by the Company in good
order.
PROOF OF DEATH
Any of the following will serve as Proof of Death:
1. certified copy of the death certificate;
2. certified decree of a court of competent jurisdiction as to the finding
of death;
3. written statement by a medical doctor who attended the deceased Owner; or
4. any proof accepted by the Company.
DISTRIBUTION RULES
The entire Death Benefit with any interest shall be paid within 5 years after
the death of any Owner, except as provided below. In the event that the
Designated Beneficiary elects an Annuity Option, the length of time for the
payment period may be longer than 5 years if: (1) the Designated Beneficiary is
a natural person; (2) the Death Benefit is paid out under Annuity Options 1
through 7; (3) payments are made over a period that does not exceed the life or
life expectancy of the Designated Beneficiary; and (4) Annuity Payments begin
within one year of the death of the Owner. If the deceased Owner's spouse is the
sole Designated Beneficiary, the spouse shall become the sole Owner of the
Contract. He or she may elect to: (1) keep the Contract in force until the
sooner of the spouse's death or the Annuity Payout Date; or (2) receive the
Death Benefit.
FSB201 G (R9-96) -14- BP 2010O1
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
DISTRIBUTION RULES (cont'd)
If any Owner dies after the Annuity Payout Date, Annuity Payments will continue
to be paid at least as rapidly as under the method of payment being used as of
the date of the Owner's death.
If the Owner is a Nonnatural Person, the distribution rules set forth above
apply in the event of the death of, or a change in, the Annuitant. This Contract
is deemed to incorporate any provision of Section 72(s) of the Internal Revenue
Code of 1986, as amended (the "Code"), or any successor provision. This Contract
is also deemed to incorporate any other provision of the code deemed necessary
by the Company, in its sole judgment, to qualify this Contract as an annuity.
The application of the distribution rules will be made in accordance with Code
section 72(s), or any successor provision, as interpreted by the Company in its
sole judgment.
The foregoing distribution rules do not apply to a Contract which is: (1)
provided under a plan described in Code section 401(a); (2) described in Code
section 403(b); (3) an individual retirement annuity or provided under an
individual retirement account or annuity; or (4) otherwise exempt from the Code
section 72(s) distribution rules.
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
ANNUITY PAYOUT DATE
The Owner may choose the Annuity Payout Date at the time of application. If no
Annuity Payout Date is chosen, the Company will use the later of: (1) the oldest
Annuitant's seventieth birthday; or (2) the fifth Contract Anniversary. The
Annuity Payout Date must be prior to the oldest Annuitant's ninetieth birthday.
The Annuity Payout Date is the date the first payment will be made to the
Annuitant under any of the Annuity Options.
CHANGE OF ANNUITY PAYOUT DATE
The Owner may change the Annuity Payout Date. A request for the change must be
made in writing. The written request must be Received by the Company at least 30
days prior to the new Annuity Payout Date as well as 30 days prior to the
previous Annuity Payout Date.
ANNUITY PAYOUT AMOUNT
The Annuity Payout Amount is applied to one of the Annuity Options listed on
pages 18 and 19. The Annuity Start Amount is: (1) the Contract Value on the
Annuity Payout Date; less (2) any Premium Taxes due or paid by the Company.
Unless otherwise directed by the Owner, Annuity Payout Amount derived from Fixed
Account Contract Value will be applied to purchase a Fixed Annuity Option; that
derived from Separate Account Contract Value will be applied to purchase a
Variable Annuity Option.
-15- BP 2010O1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY TABLES
The Annuity Tables show the guaranteed minimum amount of monthly Annuity Payment
that applies to the first payment for Variable Annuity Payments and to each
payment for Fixed Annuity Payments for each $1,000 of Annuity Payout Amount for
each of Annuity Options 1 through 4. The amount of each Annuity Payment for
Annuity Options 1 through 4 will depend on the Annuitant's age on the Annuity
Payout Date. The Annuity Tables state values for the exact ages shown. The
values will be interpolated based on the Annuitant's exact age on the Annuity
Payout Date. On request the Company will furnish the amount of monthly Annuity
Payment per $1,000 applied for any ages not shown.
The Company bases the Tables for Annuity Options 1 through 4 on: (1) the 1983
Table "A" Mortality Table projected for mortality improvement for 45 years using
Projection Scale G; and (2) an interest rate of 3 1/2% a year.
For Annuity Options 5 through 7, age is not considered. Annuity Payments for
these options are computed without reference to the Annuity Tables.
ANNUITY PAYMENTS
The Annuity Option is shown on page 3. The Owner may choose any form of Annuity
Option that is allowed by the Company. The Owner may choose an Annuity Option by
written request. This request must be Received by the Company at least 30 days
prior to the Annuity Payout Date. Several Annuity Options are listed on pages 18
and 19. No Annuity Option can be selected that requires the Company to make
periodic payments of less than $20.00. If no Annuity Option is chosen prior to
the Annuity Payout Date, the Company will use the Life with 10-Year Fixed Period
Option. Each Annuity Option allows for making Annuity Payments annually,
semiannually, quarterly or monthly.
CHANGE OF ANNUITY OPTION
Prior to the Annuity Payout Date, the Owner may change the Annuity Option
chosen. The Owner must request the change in writing. This request must be
Received by the Company at least 30 days prior to the Annuity Payout Date.
FIXED ANNUITY PAYMENTS
With respect to Fixed Annuity Payments, the amounts shown on the Tables are the
guaranteed minimum for each Annuity Payment for Annuity Options 1 through 4.
VARIABLE ANNUITY PAYMENTS
With respect to Fixed Annuity Payments, the amounts shown on the Tables are the
first Annuity Payment, based on the assumed interest rate of 3 1/2% for Annuity
Options 1 through 4. The amount of each Annuity Payment after the first for
these options is computed by means of Annuity Units. Neither expense actually
incurred (other than tax on investment return), nor mortality actually
experienced, shall adversely affect the dollar amount of annuity income already
commenced.
ANNUITY UNITS
The number of Annuity Units is found by dividing the first Annuity Payment by
the Annuity Unit Value for the selected Subaccount on the Annuity Payout Date.
The number of Annuity Units for the Subaccount then remains constant, unless an
Exchange of Annuity Units is made. After the first Annuity Payment, the dollar
amount of each subsequent Annuity Payment is equal to the number of Annuity
Units times the Annuity Unit Value for the Subaccount on the due date of the
Annuity Payment.
FSB201 H (4-94) 55-02010-13
-16- BP 201OM1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY UNITS (Cont'd)
The Annuity Unit Value for each Subaccount was first set at $1.00. The Annuity
Unit Value for any subsequent Valuation Date is equal to (a) times (b) times
(c), where:
(a) is the Annuity Unit Value on the immediately preceding Valuation Date;
(b) is the Net Investment Factor for the Valuation Date;
(c) is a factor used to adjust for an assumed interest rate of 3 1/2% per
year used to determine the Annuity Payment amounts. The assumed interest
rate is reflected in the Annuity Tables.
NET INVESTMENT FACTOR
The Net Investment Factor for any Subaccount at the end of any Valuation Period
is found by dividing (1) by (2) and subtracting (3) from the result, where:
1. is equal to:
a. the net asset value per share of the mutual fund held in the
Subaccount, found at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions
paid by the Subaccount's underlying mutual fund that is not included
in the net asset value per share; plus or minus
c. a per share charge or credit for any taxes reserved for, which the
Company deems to have resulted from the operation of the Subaccount.
2. is the net asset value per share of the Subaccount's underlying mutual
fund as found at the end of the prior Valuation Period.
3. is a factor representing the Mortality and Expense Risk Charge deducted
from the Separate Account.
Underlying mutual funds may declare dividends on a daily basis and pay such
dividends once a month. The Net Investment Factor allows for the monthly
reinvestment of these daily dividends. As described above, the gains and losses
from each Subaccount are credited or charged against the Subaccount without
regard to the gains or losses in the Company or other Subaccounts.
ALTERNATE ANNUITY OPTION RATES
The Company may, at the time of election of an Annuity Option, offer more
favorable rates in lieu of the guaranteed rates shown in the Annuity Tables.
55-02010-13
-17- BP 2010M1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY OPTIONS
OPTION 1
LIFE OPTION: This option provides payments for the life of the Annuitant. Table
A shows some of the guaranteed rates for this option.
OPTION 2
LIFE WITH FIXED PERIOD OPTION: This option provides payments for the life of the
Annuitant. A fixed period of 5, 10, 15 or 20 years may be chosen. Payments will
be made to the end of this period even if the Annuitant dies prior to the end of
the period. If the Annuitant dies before receiving all the payments during the
fixed period, the remaining payments will be made to the Designated Beneficiary.
Table A shows some of the guaranteed rates for this option.
OPTION 3
LIFE WITH INSTALLMENT OR UNIT REFUND OPTION: This option provides payment for
the life of the Annuitant, with a period certain determined by dividing the
Annuity Payout Amount by the amount of the first payment. A fixed number of
payments will be made even if the Annuitant dies. If the Annuitant dies before
receiving the fixed number of payments, any remaining payments will be made to
the Designated Beneficiary. Table A shows some of the guaranteed rates for this
option.
OPTION 4
JOINT AND LAST SURVIVOR OPTION: This option provides payments for the life of
the Annuitant and Joint Annuitant. Payments will be made as long as either is
living. Table B shows some of the guaranteed rates for this option.
OPTION 5
FIXED PERIOD OPTIONS: This option provides payments for a fixed number of years
between 5 and 20. If the Contract Value is held in the Fixed Account, then the
amount of the payments will vary as a result of the interest rate (as adjusted
periodically) credit on the Fixed Account. This rate is guaranteed to be no less
than the Guaranteed Rate shown on page 3. If the Contract Value is held in the
Separate Account, then the amount of the payments will vary as a result of the
investment performance of the Subaccounts chosen. If all the Annuitants die
before receiving the fixed number of payments, any remaining payments will be
made to the Designated Beneficiary.
OPTION 6
FIXED PAYMENT OPTION: This option provides a fixed payment amount. This amount
is paid until the amount applied, including daily interest adjustments, is paid.
If the Contract Value is held in the Fixed Account, then the number of payments
will vary as a result of the interest rate (as adjusted periodically) credited
on the Fixed Account. This rate is guaranteed to be no less than the Guaranteed
Rate shown on page 3. If the Contract Value is held in the Separate Account,
then the number of payments will vary as a result of the investment performance
of the Subaccounts chosen. If all the Annuitants die before receiving all the
payments, any remaining payments will be made to the Designated Beneficiary.
55-02010-08
FSB 201 1 (4-94) -18- BP 201041
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY OPTIONS (cont'd)
OPTION 7
AGE RECALCULATION OPTION: This option provides payments based upon the
Annuitant's life expectancy, or the joint life expectancies of the Annuitant and
a beneficiary, at the Annuitant's attained age (and the Annuitant's
beneficiary's attained or adjusted age, if applicable) each year. The payments
are computed by reference to actuarial tables prescribed by the Treasury
Secretary. Payments are made until the amount applied is exhausted. If the
Contract Value is held in the Fixed Account, then the number of payments will
vary as a result of the interest rate (as adjusted periodically) credited on the
Fixed Account. This rate is guaranteed to be not less than the Guaranteed Rate
shown on page 3. If the Contract Value is held in the Separate Account, then the
number of payments will vary as a result of the investment performance of the
Subaccounts chosen. If all the Annuitants die before receiving the remaining
payments, such payments will be made to the Designated Beneficiary.
55-02010-08
-19- BP 2010H1
<PAGE>
ANNUITY TABLES
- --------------------------------------------------------------------------------
TABLE A
GUARANTEED MINIMUM AMOUNT
OF MONTHLY PAYMENT FOR
EACH $1,000 APPLIED
SINGLE LIFE ANNUITY
- --------------------------------------------------------------------------------
AGE MONTHLY PAYMENTS CERTAIN INSTALLMENT
OF PAYEE 0 60 120 180 240 REFUND
- --------------------------------------------------------------------------------
UNISEX
55 4.11 4.11 4.10 4.08 4.05 4.05
56 4.17 4.17 4.16 4.14 4.10 4.10
57 4.23 4.23 4.22 4.19 4.15 4.15
58 4.30 4.29 4.28 4.25 4.21 4.21
59 4.37 4.36 4.35 4.32 4.27 4.27
60 4.44 4.44 4.42 4.38 4.33 4.34
61 4.52 4.51 4.49 4.45 4.39 4.40
62 4.60 4.59 4.57 4.52 4.45 4.47
63 4.69 4.68 4.65 4.60 4.52 4.55
64 4.78 4.77 4.74 4.68 4.58 4.63
65 4.88 4.87 4.84 4.76 4.65 4.71
66 4.99 4.98 4.93 4.85 4.72 4.80
67 5.10 5.09 5.04 4.94 4.79 4.89
68 5.23 5.21 5.15 5.04 4.86 4.99
69 5.36 5.34 5.27 5.14 4.94 5.09
70 5.50 5.48 5.39 5.24 5.01 5.20
Rates not shown will be provided upon request. The guaranteed minimum monthly
payments shown apply to the initial payment for Variable Annuity Payments and to
each payment for Fixed Annuity Payments.
- --------------------------------------------------------------------------------
JOINT & LAST AGE
SURVIVOR ANNUITY
TABLE B - MONTHLY
INSTALLMENTS AGE 55 60 62 65 70
- --------------------------------------------------------------------------------
Until last Death 55 3.77 3.87 3.90 3.95 4.00
of Two Payees 60 3.87 4.01 4.06 4.13 4.24
per $1,000 of 62 3.90 4.06 4.12 4.21 4.34
benefit amount 65 3.95 4.13 4.21 4.32 4.49
70 4.00 4.24 4.34 4.49 4.75
Annual, semiannual, or quarterly payments can be determined from Table A or B by
multiplying the monthly payments by 11.812854, 5.9572233, and 2.9914201,
respectively.
55-02010-12
FSB201 J (4-94)U -20- BP 2010L
<PAGE>
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
*Purchase Payments may be made until the earlier of the Annuity Payout Date or
termination of the Contract.
*A Death Benefit may be paid prior to the Annuity Payout Date according to the
Contract provisions.
*Annuity Payments begin on the Annuity Payout Date using the method as
specified in this Contract.
*The smallest annual rate of investment return that would have to be earned on
the assets of the Separate Account so that the dollar amount of Variable
Annuity Payments will not decrease is 3 1/2%. A daily charge corresponding to
an annual charge of .55% is applied to the assets of the Separate Account by
the Company. Please refer to the "Contract Value and Expense Provisions"
beginning on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
BP 2010Q4
TAX-SHELTERED ANNUITY ENDORSEMENT
________________________________________________________________________________
This Contract is established as a Tax-Sheltered Annuity ("TSA") under Section
403(b) of the Internal Revenue Code of 1986, as amended (the "Code") or any
successor provision, pursuant to the Owner's request in the application.
Accordingly, this Endorsement is attached to and made part of the Contract as of
its issue date or, if later, the date shown below.
TAX-SHELTERED ANNUITY PROVISIONS
To ensure treatment as a TSA, this Contract will be subject to the requirements
of Code Section 403(b), which are briefly summarized below:
CONTRIBUTION LIMITATIONS
(a) Purchase Payments made on behalf of the Owner pursuant to a salary
reduction agreement when added to "elective deferral" contributions under
all other plans, contracts or arrangements in which the Owner
participates, may not exceed the annual limitation on such contributions
as provided in Code Section 401(a)(30).
(b) Purchase Payments applied to the Contract on behalf of the Owner which
exceed the applicable "exclusion allowance" (within the meaning of Code
Section 403(b)(2)) or the limitations contained in Code Section 415 shall
not be excludable from gross income.
(c) Purchase Payments that exceed any of the foregoing limitations may be
returned, distributed or otherwise corrected using any method permissible
under the Code.
NONDISCRIMINATION REQUIREMENTS
(a) Except if this Contract is purchased by a "church" (within the meaning of
Code Section 3121(w)), the Plan must satisfy the nondiscrimination
requirements of Code Section 403(b)(12).
(b) Purchase Payments not made pursuant to a salary reduction agreement will
satisfy the nondiscrimination requirements of Code Section 403(b)(12)
provided they satisfy the requirements of Code Section 401(a)(4)
(nondiscrimination in contributions), Code Section 401(a)(5) (permitted
disparity), Code Section 401(a)(17) (annual limit on compensation), Code
Section 401(m) (average contribution percentage test) and Code Section
410(b) (coverage).
(c) Purchase Payments made pursuant to a salary reduction agreement will
satisfy the nondiscrimination requirements of Code Section 403(b)(12)
provided that every employee of the Employer sponsoring the Plan, may
elect to make Purchase Payments of more than $200 pursuant to a salary
reduction agreement.
DISTRIBUTION RESTRICTIONS AND REQUIREMENTS
(a) Distributions attributable to Purchase Payments made pursuant to a salary
reduction agreement may be made only when the Owner attains age 59 1/2,
separates from service, dies, becomes "disabled" (within the meaning of
the Code Section 403(b)(11)) or incurs a hardship. A distribution made
due to a hardship may not include income attributable to such Purchase
Payments.
FSB202 (R2-97) -1- SP 020231
<PAGE>
(b) Distributions from this Contract must comply with the minimum
distribution and incidental death benefit requirements of Code Section
403(b)(10). Accordingly, an Owner's entire interest under the Contract
generally must be distributed (or begin to be distributed) by April 1 of
the calendar year following the later of (i) the calendar year in which
the Owner attains age 70 1/2, or (ii) the calendar year in which the
Owner retires (the "Required Beginning Date").
Distributions commencing not later than the Required Beginning Date may
be made over the life of the Owner or over the lives of the Owner and his
or her Designated Beneficiary (or over a period not extending beyond the
life expectancy of the Owner or the life expectancy of the Owner and his
or her Designated Beneficiary).
(c) If the Owner dies before distribution of his or her interest in the
Contract has begun in accordance with paragraph (b) above, the Owner's
entire interest must be distributed within five years, unless: (i) such
interest is distributed to a Designated Beneficiary over his or her life
(or over a period not extending beyond such Designated Beneficiary's life
expectancy); and (ii) such distribution begins not later than one year
after the Owner's death. If the Designated Beneficiary is the Owner's
surviving spouse, the date on which the distributions are required to
begin shall not be earlier than the date on which the Owner would have
attained age 70 1/2.
(d) If the Owner dies after distribution of his or her interest in this
Contract has begun in accordance with paragraph (b) above but before his
or her entire interest has been distributed, the remaining interest must
be distributed at least as rapidly as under the method of distribution
being used prior to the Owner's death.
(e) All distributions must comply with a method of distribution offered by
the Company under this Contract.
(f) If the Owner receives a distribution from this Contract that qualifies as
an "eligible rollover distribution" (within the meaning of Code Section
402(f)(2)(A)) and elects to have such distribution paid directly to an
"eligible retirement plan" (within the meaning of Code Section 402(c)),
such distribution shall be made in the form of a direct transfer to the
eligible retirement plan. The Company may establish reasonable
administrative rules applicable to such direct transfers.
NONFORFEITABLITY
(a) The Owner's rights under this Contract shall be nonforfeitable except for
failure to pay future Premiums.
(b) This Contract may not be transferred, sold, assigned or pledged as
collateral for a loan or as security for the performance of an obligation
or for any other purposes to any person other than the Company.
MULTIPLE CONTRACTS
(a) If for any taxable year an Owner is covered by this Contract and any
other TSA, all such contracts shall be treated as a single contract.
-2- SP 020231
<PAGE>
PLAN PROVISIONS
The Plan, including certain Plan provisions required by the Employee Retirement
Income Security Act of 1974 or other applicable law, may limit the Owner's
rights under this Contract. The Plan provisions may:
(a) Limit the Owner's right to make Purchase Payments;
(b) Restrict the time when the Owner may elect to receive payments under this
Contract;
(c) Require the consent of the Owner's spouse before the Owner may elect to
receive payments under this Contract;
(d) Require that all distributions be made in the form of a joint and
survivor annuity for the Owner and the Owner's spouse unless both consent
to a different form of distribution;
(e) Require that the Owner's spouse be the Designated Beneficiary;
(f) Require that the Owner remain employed by the Employer sponsoring the
Plan for a specified period of time before the Owner's rights under this
Contract become fully vested; or
(g) Otherwise restrict the Owner's exercise of rights under the Contract or
give the Employer sponsoring the Plan (or a Plan representative) the
right to exercise certain rights on the Owner's behalf.
No such Plan provision shall limit an Owner's rights under this Contract, unless
the Employer sponsoring the Plan has provided the Company with written
notification of such provision. In no event shall any such Plan provision
enlarge the Company's obligations under this Contract.
TAX CONSEQUENCES
(a) The Company will not incur any liability or be responsible for the
timing, purpose or propriety of any contribution or distribution; any tax
or penalty imposed on account of any such contribution or distribution;
or any other failure, in whole or in part, by the Owner or the Employer
to comply with the provisions set forth in the Code or any other law.
ADMINISTRATION
The Company does not act as the administrator of the Plan. Accordingly, the
Company will not incur any liability or be responsible for interpreting the Plan
or deciding any questions arising thereunder.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
_____________________________
Endorsement Effective Date
(If Other Than Issue Date)
FSB202 (R2-97) -3- SP 020231
ENDORSEMENT
________________________________________________________________________________
INDIVIDUAL RETIREMENT ANNUITY PROVISIONS
________________________________________________________________________________
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
This Contract is established as an Individual Retirement Annuity ("IRA") as
defined in Section 408 of the Internal Revenue Code of 1986, as amended (the
"Code") or any successor provision pursuant to the Owner's request in the
Application. Accordingly, this endorsement is attached to and made part of the
Contract as of its Issue Date or, if later, the date shown below.
Notwithstanding any other provisions of the Contract to the contrary, the
following provisions shall apply.
RESTRICTIONS ON INDIVIDUAL RETIREMENT ANNUITY
To ensure treatment as an IRA, this Contract will be subject to the requirements
of Code Section 408, which are briefly summarized below.
1. The Contract is established for the exclusive benefit of the Owner or his
or her beneficiaries. The Owner shall be the Annuitant.
2. The Contract shall be nontransferable and the entire interest of the Owner
in the Contract is nonforfeitable.
3. Notwithstanding any provision of the Contract to the contrary, the
distribution of the Owner's interest shall be made in accordance with the
minimum distribution requirements of Section 401(a)(9) of the Internal
Revenue Code and the regulations thereunder, including the incidental death
benefit provisions of Section 1.401(a)(9)-2 of the proposed regulations.
The Owner's entire interest in the Contract must be distributed, or begin
to be distributed, by the Owner's required beginning date, which is the
April 1 following the calendar year in which the Owner reaches age 70 1/2.
For each succeeding year, a distribution must be made on or before December
31. By the required beginning date, the Owner may elect to have the balance
in the account distributed in one of the following forms:
1) A single lump sum payment;
2) Equal or substantially equal monthly, quarterly, or annual payments
over the life of the Owner or over the joint and last survivor lives
of the Owner and his or her Designated Beneficiary; or
3) Equal or substantially equal annual payments over a specified period
that may not be longer than the Owner's life expectancy or the joint
and last survivor life expectancy of the Owner and his or her
Designated Beneficiary.
An Annuity Option may not be elected with a Fixed Period that will guarantee
Annuity Payments beyond the life expectancy of the Annuitant and Beneficiary and
Annuity Payments must be made at least annually and in equal amounts.
4. If the Owner dies before his or her entire interest is distributed, the
entire remaining interest will be distributed as follows:
a. If the Owner dies on or after distributions have begun under Section 3,
the entire remaining interest must be distributed at least as rapidly
as provided under Section 3.
FSB203 (R2-97) SP020331
<PAGE>
________________________________________________________________________________
INDIVIDUAL RETIREMENT ANNUITY PROVISIONS (Continued)
________________________________________________________________________________
RESTRICTIONS ON INDIVIDUAL RETIREMENT ANNUITY (Continued)
b. If the Owner dies before distributions have begun under Section 3, the
entire remaining interest must be distributed as elected by the Owner
or, if the Owner has not so elected, as elected by the Designated
Beneficiary or Beneficiaries as follows:
1) by December 31 of the year containing the fifth anniversary of the
Owner's death; or
2) in equal or substantially equal payments over the life or life
expectancy of the Designated Beneficiary or Beneficiaries starting by
December 31 of the year following the year of the Owner's death. If,
however, the Designated Beneficiary is the Owner's surviving spouse,
then this Distribution is not required to begin until December 31 of
the later of: (1) the calendar year immediately following the
calendar year in which the Owner died; or (2) the calendar year in
which the Owner would have attained age 70 1/2.
5. An individual may satisfy the minimum distribution requirements under
Section 401(a)(9) of the Code by receiving a distribution from one IRA that
is equal to the amount required to satisfy the minimum distribution
requirements for two or more IRAs. For this purpose, the Owner of two or
more IRAs may use the "alternative method" described in Notice 88-38,
1988-1 C.B. 524, to satisfy the minimum distribution requirements described
above.
6. Any refund of premiums (other than those attributable to excess
contributions) will be applied before the close of the calendar year
following the year of the refund toward the payment of future premiums or
the purchase of additional benefits.
7. The annual premium shall not exceed the lesser of $2,000 or 100 percent of
compensation ($4,000 or 100 percent of compensation for Spousal IRAs
however, no more than $2,000 can be contributed to either spouse's IRA),
except for plans defined in Section 408(k) of the Code, for which annual
premiums shall not exceed $30,000.
8. Rollover contributions from other qualified plans permitted by the Internal
Revenue Code Sections 402(c), 403(a)(4), 403(b)(8), and 408(d)(3), are
excluded from the limit set forth in Section 8.
9. Notwithstanding any Contract provisions to the contrary, no amount may be
borrowed under the Contract and no portion may be used as security for a
loan.
10. Annuity Payments may not begin before the Annuitant attains the age of 59
1/2 without incurring a penalty tax except in the situations described in
Section 72(t) of the Code.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
______________________________
Endorsement Effective Date
(If Other Than Issue Date)
SP 020331
ENDORSEMENT
________________________________________________________________________________
DOLLAR COST AVERAGING OPTION PROVISIONS
________________________________________________________________________________
This endorsement is attached to and made part of the Contract as of its issue
date or, if later, the date shown below.
Prior to the Annuity Payout Date, the Company offers an Automatic Exchange
option, known as the Dollar Cost Averaging option. Under this option, the Owner
may authorize the Company to Exchange Contract Value from one Account to one or
more of the other Accounts on a monthly, quarterly, semiannual or annual basis
in an amount specified by the Owner.
To elect the option, the Owner's Contract Value must be at least $5,000 ($2,000
for a Contract funding a Qualified Plan) at the time the Owner's written request
is Received by the Company. The Owner's written request to the Company must set
forth the following information: (1) the Account from which Exchanges are to be
made; (2) the Account or Accounts to which Exchanges are to be made; (3) the
basis on which the amount of the Exchange is to be determined, which may be a
specific dollar amount, a fixed percentage or earnings only; (4) the frequency
of the Exchanges, which may be monthly, quarterly, semiannual or annual; and (5)
the length of time during which Exchanges are to be made or the total amount to
be exchanged over time.
Dollar Cost Averaging from the Fixed Account must extend over a minimum period
of one year. Exchanges made pursuant to this option must be in a minimum amount
of $200 and a minimum of $25 must be allocated to any one Account.
The Company will make Exchanges pursuant to this option on the date specified by
the Owner or, if no date is specified, on each monthly, quarterly, semiannual or
annual anniversary, whichever corresponds to the period selected by the Owner,
of the date the written request in proper form is Received by the Company. Such
Exchanges to and from the Subaccounts are made on the basis of the Accumulation
Unit Value determined as of the end of the Valuation Period in which they are
effected. Exchanges to and from the Fixed Account are made on the basis of Fixed
Account Contract Value as of the end of the Valuation Period in which they are
effected. Exchanges made pursuant to this option are not included in the six
Exchanges allowed per Contract Year.
Exchanges will be made until: (1) the total amount elected has been exchanged;
(2) the time period chosen has expired; or (3) Contract Value in the Account or
Accounts from which exchanges are made has been depleted. The Owner may
terminate the Dollar Cost Averaging option by written request to the Company,
and the option will terminate automatically on the Annuity Payout Date or on
receipt by the Company of Proof of Death of the Owner. If the Fixed Account is
part of the option, the following transactions also will terminate the option
automatically: (1) a Purchase Payment allocated to the Fixed Account; and (2)
any Exchange to or from the Fixed Account. The Owner may not have in effect at
the same time the Dollar Cost Averaging and Asset Rebalancing options.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
_____________________________
Endorsement Effective Date
(if Other Than Issue Date)
55-02110-00
FSB211 (9-94) SP 02111
ENDORSEMENT
________________________________________________________________________________
ASSET REBALANCING OPTION PROVISIONS
________________________________________________________________________________
This endorsement is attached to and made part of the Contract as of its issue
date or, if later, the date shown below.
Prior to the Annuity Payout Date, the Company offers an Automatic Exchange
option, known as the Asset Rebalancing option. Under this option, the Owner may
authorize the Company to Exchange Contract Value among the Accounts each quarter
to maintain a percentage allocation among the Accounts specified by the Owner.
To elect the option, the Owner's Contract Value must be at least $10,000 ($2,000
for a Contract funding a Qualified Plan) at the time the Owner's written request
is Received by the Company. The Owner's written request to the Company must set
forth the Accounts included under the option and the percent of Contract Value
which should be allocated to each Account each quarter. The Company may require
all Contract Value allocated to the Subaccounts to be included in the Asset
Rebalancing option. The Fixed Account may be included in the Asset Rebalancing
option, provided that upon an Asset Rebalancing request being Received by the
Company, Contract Value may be allocated among the Fixed Account and the
Subaccounts in the percentages selected by the Owner without violating the
limits on Exchanges from the Fixed Account. Please see "Exchanges" on page 8.
The Company will make the first Exchange pursuant to this option on the
beginning date which is: (1) the date specified by the Owner; or (2) if no date
is specified by the Owner, the request is received after the date specified or
the date specified is not a working day, the date the written request in proper
form is Received by the Company. Subsequent Exchanges will be made on each
quarterly anniversary of the beginning date. Exchanges to and from the
Subaccounts are made on the basis of the Accumulation Unit Value as of the end
of the Valuation Period in which they are effected. Exchanges to and from the
Fixed Account are made on the basis of Fixed Account Contract Value as of the
end of the Valuation Period in which they are effected. Exchanges made pursuant
to this option are not included in the six Exchanges allowed per Contract Year.
The Owner may terminate the Asset Rebalancing option by written request to the
Company. The option will terminate automatically: (1) on the Annuity Payout
Date; (2) on receipt by the Company of Proof of Death of the Owner; and (3) in
the event of an Exchange of Contract Value otherwise than pursuant to this
Automatic Exchange option. If the Fixed Account is part of the option, the
following transactions also will terminate the option automatically: (1) a
Purchase Payment allocated to the Fixed Account; (2) any Exchange to or from the
Fixed Account; and (3) any Withdrawal of Contract Value. The Owner may not have
in effect at the same time the Dollar Cost Averaging and Asset Rebalancing
options.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
______________________________
Endorsement Effective Date
(If Other Than Issue Date)
55-02120-00
FSB212 (4-94) SP 02121
Variable Annuity Application
APPLICATION TO FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW
YORK FOR AN INDIVIDUAL FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
Complete this application and mail to:
First Security Benefit Life Insurance
and Annuity Company of New York
P.O. Box 2788, Topeka, KS 66601-9804
For help with this application, or for more information, call us at
1-800-469-5304.
1 OWNER INFORMATION
[ ] Male
___________________________________________ [ ] Female
Name
_________________________________________________________
Street Address or P.O. Box
_________________________________________________________
City, State, ZIP Code
_________________________________________________________
Daytime Phone
_________________________________________________________
Evening Phone
_________________________________________________________
Date of Birth (Mo/Day/Yr)
_________________________________________________________
Social Security Number/Tax ID Number
2 JOINT OWNER INFORMATION
[ ] Male
___________________________________________ [ ] Female
Name
_________________________________________________________
Street Address or P.O. Box
_________________________________________________________
City, State, ZIP Code
_________________________________________________________
Daytime Phone
_________________________________________________________
Evening Phone
_________________________________________________________
Date of Birth (Mo/Day/Yr)
_________________________________________________________
Social Security Number/Tax ID Number
_________________________________________________________
Relationship to Owner
3 ANNUITANT INFORMATION
[ ] Same as Owner
[ ] Male
___________________________________________ [ ] Female
Name
_________________________________________________________
Street Address or P.O. Box
_________________________________________________________
City, State, ZIP Code
_________________________________________________________
Date of Birth (Mo/Day/Yr)
_________________________________________________________
Social Security Number/Tax ID Number
4 BENEFICIARIES
PRIMARY BENEFICIARIES
_________________________________________________________
Name
_________________________________________________________
Relationship to Owner
_________________________________________________________
Name
_________________________________________________________
Relationship to Owner
SECONDARY BENEFICIARIES
_________________________________________________________
Name
_________________________________________________________
Relationship to Owner
_________________________________________________________
Name
_________________________________________________________
Relationship to Owner
over, please
FSB200 (R1-98) 15-68440-00
<PAGE>
5 ALLOCATION OF PURCHASE PAYMENTS
Allocation of purchase payments - USE WHOLE PERCENTAGES NO LESS THAN 5%.
ALLOCATIONS MUST TOTAL 100%.
[ ] [ ] [ ]% NEW AMERICA GROWTH PORTFOLIO
[ ] [ ] [ ]% INTERNATIONAL STOCK PORTFOLIO
[ ] [ ] [ ]% MID-CAP GROWTH PORTFOLIO
[ ] [ ] [ ]% EQUITY INCOME PORTFOLIO
[ ] [ ] [ ]% PERSONAL STRATEGY BALANCED PORTFOLIO
[ ] [ ] [ ]% LIMITED-TERM BOND PORTFOLIO
[ ] [ ] [ ]% PRIME RESERVE PORTFOLIO
[ ] [ ] [ ]% FIXED INTEREST ACCOUNT
- ------------
[1] [0] [0]% TOTAL
6 METHOD OF PURCHASE
A. [ ] BY CHECK
Made payable to First Security Benefit Life Insurance
and Annuity Company of New York.
Amount
$[ ],[ ][ ][ ],[ ][ ][ ].[ ][ ]
B. [ ] BY EXCHANGE
From T. Rowe Price mutual fund account.
Amount
$[ ],[ ][ ][ ],[ ][ ][ ].[ ][ ]
Name of Fund
[ ]
Account Number
[ ][ ][ ][ ][ ][ ][ ][ ][ ]-[ ]
If you are establishing your account by exchange and your mutual fund ownership
registration is not exactly the same as in Sections 1 and 2, please obtain a
signature guarantee so that we may complete the transaction for you. Sign this
form in the presence of an officer of a commercial bank (FDIC member), trust
company, a member firm of the domestic stock exchange, or any other eligible
guarantor institution as defined by the Securities Exchange Act of 1934. We
cannot accept guarantees from notaries or others who will not provide
reimbursement in case of fraud.
____________________________________________________________
Signature Guaranteed by:
____________________________________________________________
Name of Guaranteeing Institution
____________________________________________________________
Signature of Authorized Officer Date
C. [ ] BY REPLACEMENT
Will the annuity applied for here replace or change any life insurance or
annuity?
[ ] YES [ ] NO
If yes, please provide the information below and complete the Exchange Form:
____________________________________________________________
Company Name
____________________________________________________________
Policy Number
7 INDIVIDUAL RETIREMENT ANNUITIES
A. TRADITIONAL IRA
Check the appropriate box below
[ ] Contributory IRA [ ] Rollover IRA [ ] Transfer IRA
B. ROTH IRA
Check the appropriate box below.
[ ] Contributory IRA [ ] Rollover from Traditional IRA
[ ] Transfer from Roth IRA
C. IRA TAX YEAR
For Contributory IRAs, indicate below the tax year for which the contribution
is made.
[ ] TAX YEAR ___________________________
8 SPECIAL INSTRUCTIONS
____________________________________________________________
____________________________________________________________
9 SIGNATURES
All statements made in this application are true to the best of my knowledge and
belief. I agree that this application shall be part of the Variable Annuity
Contract issued by First Security Benefit Life Insurance and Annuity Company of
New York. I UNDERSTAND THAT ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT MAY
VARY AS TO DOLLAR AMOUNT TO THE EXTENT THEY ARE BASED ON THE INVESTMENT
EXPERIENCE OF THE SELECTED SUBACCOUNTS. I have received and reviewed the
prospectuses that describe the Contract and the underlying mutual funds. I
understand that the Annuity Payout Date will be the later of: (1) the oldest
Annuitant's seventieth birthday or (2) the fifth contract anniversary, unless
instructed otherwise in the "Special Instructions" section above. I believe that
this Contract will meet my financial objectives.
TAX IDENTIFICATION NUMBER CERTIFICATION*
Under penalties of perjury I certify that:
a) the number shown on this form is my correct taxpayer identification number;
and
b) I am not subject to backup withholding because:
1) I am exempt from backup withholding; or
2) I have not been notified by the Internal Revenue Service (IRS) that I am
subject to backup withholding as a result of a failure to report all
interest or dividends; or
3) the IRS has notified me that I am no longer subject to backup withholding.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
____________________________________________________________
Owner's Signature Date
____________________________________________________________
Location (City/State)
____________________________________________________________
Joint Owner's Signature Date
____________________________________________________________
Location (City/State)
*CERTIFICATION INSTRUCTIONS
You must strike out the language in Clause (b) above if the IRS has notified you
that you ARE subject to backup withholding and you have not since received
notice from the IRS that backup withholding has terminated.
First Security Benefit Life Insurance and Annuity Company of New York, 70 West
Red Oak Lane, 4th Floor, White Plains, NY 10604
TRP605 (1/98)-NY
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
CHARTER
IV. The Board of Directors shall consist of not less than 9 nor more than 21
members, provided however that the number of directors shall be increased
to not less than 13 members within one year following the end of the
calendar year in which the Corporation's admitted assets exceed
[$500,000,000] $1.5 BILLION. Each director shall be at least eighteen years
of age and at all times a majority shall be citizens and residents of the
United States and not less than three shall be residents of the State of
New York. At least one third of the directors, but not less than four (4),
shall not be officers or employees of the Corporation or of any company
controlling, controlled by, or under common control with the Corporation
and shall not be beneficial owners of a controlling interest in the voting
stock of the Corporation or of any such company. The directors shall not be
required to hold any shares of stock in the Corporation.
<PAGE>
DECLARATION AND CERTIFICATE OF INCORPORATION
AND CHARTER OF
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
UNDER SECTION 1201 OF THE INSURANCE LAW
OF THE STATE OF NEW YORK
We, the undersigned, being natural persons each of whom is at least
eighteen years of age and the majority of whom are citizens and residents of the
United States and at least three of whom are residents of the State of New York,
hereby declare our intention to form a corporation for the purposes of
transacting the kinds of insurance specified in paragraphs "1", "2", and "3" of
Section 1113(a) of the Insurance Law of the State of New York and the kinds of
reinsurance authorized under Section 1114 of the Insurance Law of the State of
New York and we do hereby certify that the following is the proposed Charter of
the Corporation:
I. The name of the Corporation is First Security Benefit Life Insurance
and Annuity Company of New York.
II. The principal office of the Corporation shall be located in the City
of White Plains, County of Westchester and State of New York.
III. The kinds of insurance business to be transacted by the Corporation
shall be as follows:
(1) "Life Insurance" means every insurance upon the lives of
human beings, and every insurance appertaining thereto,
including, without limitation, the granting of endowment
benefits, additional benefits in the event of death by
accident, additional benefits to safeguard the contract from
lapse, accelerated payments of part or all of the death
benefit or a special surrender value upon diagnosis (A) of
terminal illness defined as a life expectancy of twelve
months or less, or (B) of a medical condition requiring
extraordinary medical care or treatment regardless of life
expectancy, or provide a special surrender value, upon total
and permanent disability of the insured, and optional modes
of settlement of proceeds. "Life insurance" also includes
additional benefits to safeguard the contract against lapse
in the event of unemployment of the insured. Amounts paid
the insurer for life insurance and proceeds applied under
optional modes of settlement or under dividend options may
be allocated by the insurer to one or more separate accounts
pursuant to section four thousand two hundred forty of the
Insurance Law of the State of New York.
<PAGE>
(2) "Annuities" means all agreements to make periodical payments
for a period certain or where the making or continuance of
all or some of a series of such payments, or the amount of
any such payment, depends upon the continuance of human
life, except payments made under the authority of paragraph
(1) hereof. Amounts paid the insurer to provide annuities
and proceeds applied under optional modes of settlement or
under dividend options may be allocated by the insurer to
one or more separate accounts pursuant to section four
thousand two hundred forty of the Insurance Law of the State
of New York.
(3) "Accident and Health Insurance" means (i) insurance against
death or personal injury by accident or by any specified
kind or kinds of accident and insurance against sickness,
ailment or bodily injury, including insurance providing
disability benefits pursuant to Article IX of the Workers'
Compensation Law of the State of New York, except as
specified in item (ii) hereof; and (ii) non-cancelable
disability insurance, meaning insurance against disability
resulting from sickness, ailment or bodily injury (but
excluding insurance solely against accidental injury) under
any contract which does not give the insurer the option to
cancel or otherwise terminate the contract at or after one
year from its effective date or renewal date.
"Reinsurance," meaning all kinds of reinsurance of the kinds
of insurance permitted in paragraphs 1, 2, and 3 of Section
1113(a) of the Insurance Law of the State of New York as
authorized by Section 1114 of the Insurance Law of the State
of New York.
IV. The Board of Directors shall consist of not less than 9 nor more than
21 members, provided however that the number of directors shall be
increased to not less than 13 members within one year following the
end of the calendar year in which the Corporation's admitted assets
exceed $500,000,000. Each director shall be at least eighteen years of
age and at all times a majority shall be citizens and residents of the
United States and not less than three shall be residents of the State
of New York. At least one third of the directors, but not less than
four (4), shall not be officers or employees of the Corporation or of
any company controlling, controlled by, or under common control with
the Corporation and shall not be beneficial owners of a controlling
interest in the voting stock of the Corporation or of any such
company. The directors shall not be required to hold any shares of
stock in the Corporation.
V. The mode and manner in which the corporate powers of the Corporation
shall be exercised are through a Board of Directors and through such
officers and agents as said Board shall empower.
<PAGE>
VI. The following named persons shall be the first directors of the
Corporation who shall serve until the first Annual Meeting of the
Corporation:
BOARD OF DIRECTORS
POST OFFICE
NAME RESIDENCE ADDRESS
Howard R. Fricke 2326 Mayfair Place
Topeka, Kansas 66611
Donald J. Schepker 5939 SW 31st Terrace
Topeka, Kansas 66614
Jeffrey B. Pantages 6820 SW Dancaster Road
Topeka, Kansas 66610
Roger K. Viola 2833 Plass
Topeka, Kansas 66611
John E. Hayes, Jr. 1535 SW Pembroke Lane
Topeka, Kansas 66604
T. Gerald Lee 3618 SW Blue Inn Road
Topeka, Kansas 66614
Katherine White 1035 Fifth Avenue
New York, New York 10028
Jane Boisseau 130 Barrow Street, Apt. 406
New York, New York 10014
Lee Laino 50 East 78th Street
New York, New York 10021
VII. The Annual Meeting of the stockholders of the Corporation shall be
held on the First Friday in April of each year (or if a legal holiday
on the next business day), on such date and at such place and time as
the Board of Directors shall by resolution prescribe in accordance
with the Corporation's By-Laws for the purpose of electing directors
and for the transaction of such other business as may properly be
brought before the meeting. At such Annual Meeting the directors shall
be elected for the ensuing year, the directors to take office
immediately upon election and to hold office until the next Annual
Meeting, and until their successors are elected and qualify. Whenever
any vacancy shall occur in the Board of Directors, by death,
resignation or otherwise, the remaining members of the Board, at a
meeting called for that purpose or at any regular meeting, shall elect
a director or directors to fill the vacancy or vacancies then existing
and each director so elected shall hold office for the unexpired term
of the director whose place he or she has taken. Upon their election,
the directors shall elect a Chairperson and such officers of the
Corporation as provided for in the By-Laws which the Board of
Directors shall have the power to take and amend.
<PAGE>
VIII. The duration of the corporate existence of the Corporation shall be
perpetual.
IX. The amount of the authorized capital of the Corporation shall be
$2,000,000 and shall consist of 200,000 shares of Common Stock having
a par value of $10.00 per share.
IN WITNESS WHEREOF, we the undersigned Incorporators, have made and subscribed
this Certificate on the date and at the place hereinafter attested.
<PAGE>
STATE OF KANSAS )
) ss.:
COUNTY OF SHAWNEE)
HOWARD R. FRICKE
----------------------------
On the first day of September, 1994, before me personally came Howard R. Fricke
to me known and known to me to be the individual incorporator specified in and
who executed the foregoing instrument and acknowledged to me that (s)he executed
the same.
DEBORAH D. PRYER
- --------------------------
NOTARY PUBLIC
<PAGE>
STATE OF KANSAS )
) ss.:
COUNTY OF SHAWNEE)
T. GERALD LEE
-------------------------
On the second day of September, 1994, before me personally came T. Gerald Lee to
me known and known to me to be the individual incorporator specified in and who
executed the foregoing instrument and acknowledged to me that (s)he executed the
same.
MARILYN P. SCHNEIDER
- -------------------------------
NOTARY PUBLIC
<PAGE>
STATE OF KANSAS )
) ss.:
COUNTY OF SHAWNEE)
JEFF PANTAGES
-------------------------
On the first day of September, 1994, before me personally came Jeff Pantages to
me known and known to me to be the individual incorporator specified in and who
executed the foregoing instrument and acknowledged to me that (s)he executed the
same.
L. CHARMAINE LUCAS
- -----------------------------
NOTARY PUBLIC
<PAGE>
STATE OF KANSAS )
) ss.:
COUNTY OF SHAWNEE)
DONALD J. SCHEPKER
------------------------------
On the first day of September, 1994, before me personally came Donald J.
Schepker to me known and known to me to be the individual incorporator specified
in and who executed the foregoing instrument and acknowledged to me that (s)he
executed the same.
DIANA L. FELDHAUSEN
- -----------------------------
NOTARY PUBLIC
<PAGE>
STATE OF KANSAS )
) ss.:
COUNTY OF SHAWNEE)
ROGER K. VIOLA
--------------------------
On the sixth day of September, 1994, before me personally came Roger K. Viola to
me known and known to me to be the individual incorporator specified in and who
executed the foregoing instrument and acknowledged to me that (s)he executed the
same.
L. CHARMAINE LUCAS
- ----------------------------
NOTARY PUBLIC
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
KATHERINE P. WHITE
------------------------------
On the 31st day of August, 1994, before me personally came Katherine P. White to
me known and known to me to be the individual incorporator specified in and who
executed the foregoing instrument and acknowledged to me that (s)he executed the
same.
SUSAN S. SANFORD
- --------------------------
NOTARY PUBLIC
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
LEE LAINO
---------------------
On the first day of September, 1994, before me personally came Lee Laino to me
known and known to me to be the individual incorporator specified in and who
executed the foregoing instrument and acknowledged to me that (s)he executed the
same.
ROBERT J. WITTISH
- -------------------------
NOTARY PUBLIC
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
JANE BOISSEAU
-------------------------
On the 12th day of September, 1994, before me personally came Jane Boisseau to
me known and known to me to be the individual incorporator specified in and who
executed the foregoing instrument and acknowledged to me that (s)he executed the
same.
ALICIA HUGHES
- -------------------------
NOTARY PUBLIC
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
BY-LAWS, ARTICLE III
SECTION 1. NUMBER AND QUALIFICATIONS. The affairs and business of the
Corporation shall be conducted and managed by a Board of Directors consisting of
not less than nine (9) or more than twenty-one (21) directors, who shall hold
office for the term of one year and until their successors are elected and
qualify. The number of directors shall be increased to not less than thirteen
(13) within one year following the end of the calendar year in which the
Corporation's admitted assets exceed [$500,000,000] $1.5 BILLION. At least one
third of the directors, but not less than four (4), shall not be officers or
employees of the Corporation or of any such company controlling, controlled by,
or under common control with the Corporation, and shall not be beneficial owners
of a controlling interest in the voting stock of the Corporation or of any such
company (hereinafter referred to as "Non-Affiliated Directors"). The number of
directors shall be determined by a majority vote of the entire Board of
Directors and may be increased or decreased from time to time, within the limits
prescribed in this section, by vote of the shareholder at any special meeting.
At all times a majority of the directors shall be citizens and residents of the
United States and not less than three thereof shall be residents of the State of
New York. Directors shall be at least 18 years of age but need not be
shareholders.
<PAGE>
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
BY-LAWS, ARTICLE III
SECTION 3. MEETING, QUORUM, ACTION WITHOUT MEETING. Meetings of the
Board may be held at any place, either within or outside the State of
New York, provided a quorum be in attendance. Except as may be
otherwise provided by the Charter or by the Business Corporation Law of
the State of New York, a majority of the directors in office shall
constitute a quorum at any meeting of the Board and the vote of a
majority of a quorum of directors shall constitute the act of the
Board. At least one Non-Affiliated Director must be included within any
quorum for the transaction of business at any meeting of the Board.
[The Board of Directors shall hold an annual meeting, without notice,
immediately after the annual meeting of shareholders or within ten days
thereafter upon one day's notice in the manner provided herein.]
Meetings of the Board of Directors shall take place on a quarterly
basis and additional meetings may be established by resolution adopted
by the Board. The Chairperson of the Board (if any) or the President or
Secretary may call, and at the request of any two directors must call,
a special meeting of the Board of Directors, five days' notice of which
shall be given by mail, or two days' notice personally or by telegraph
or cable, to each director.
Any one or more members of the Board of any Committee thereof may
participate in any meeting of such Board or Committee by means of a
conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same
time. Participation by such means shall constitute presence in person
at a meeting.
Any action required or permitted to be taken by the Board or any
Committee thereof may be taken without a meeting if time is of the
essence and all members of the Board or the Committee consent in
writing to the adoption of a resolution authorizing the action. The
resolution and the written consents thereto by the members of the Board
or Committee shall be filed with the minutes of the proceedings of the
Board or Committee. Such action shall not be taken in lieu of regular
meetings of the Board of Directors established as provided in this
Section 3.
<PAGE>
BY-LAWS
OF
FIRST SECURITY BENEFIT LIFE INSURANCE AND
ANNUITY COMPANY OF NEW YORK
ARTICLE I
NAME, LOCATION AND PURPOSE
SECTION 1. NAME. The name of this Corporation is First Security Benefit
Life Insurance and Annuity Company of New York.
SECTION 2. LOCATION. The principal office of the Corporation shall be
in the City of White Plains, County of Westchester, State of New York.
SECTION 3. PURPOSE. The purpose for which the Corporation is formed is
to make contracts of insurance of any and all kinds as set forth in the Charter.
ARTICLE II
SHAREHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the shareholders may be held
at such place or places, within or without the State of New York, as shall be
fixed by the directors and stated in the notice of the meeting.
SECTION 2. ANNUAL MEETING. The annual meeting of shareholders for the
election of directors and the transaction of such other business as may properly
come before the meeting shall be held on the first Friday in April or, if such
day shall be a legal holiday, then on the next succeeding business day.
SECTION 3. NOTICE OF ANNUAL MEETING. Notice of the annual meeting shall
be given to each shareholder entitled to vote at least ten days prior to, but
not more than fifty days before, the meeting.
SECTION 4. SPECIAL MEETINGS. Special meetings of the shareholders for
any purpose or purposes may be called at any time and place as shall be stated
in the notice of the special meeting, for such purpose or purposes as may be
stated in the notice of said meeting made by the President or Secretary and must
be called upon receipt by either of them of the written request of the holders
of twenty-five percent of the stock then outstanding and entitled to vote.
<PAGE>
SECTION 5. NOTICE OF SPECIAL MEETING. Notice of a special meeting,
stating the time, place and purpose or purposes thereof, shall be given to each
shareholder entitled to vote, at least ten days prior to, but not more than
fifty days before, the meeting. The notice shall also set forth at whose
direction it is being issued.
SECTION 6. QUORUM. At any meeting of the shareholders, the holders of a
majority of the shares of stock then entitled to vote shall constitute a quorum
for all purposes, except as otherwise provided by law or the Charter.
SECTION 7. ADJOURNED MEETINGS. Any meeting of shareholders may be
adjourned to a designated time and place by a vote of a majority in interest of
the shareholders present in person or by proxy and entitled to vote, even though
less than a quorum is so present. No notice of such an adjourned meeting need be
given, other than by announcement at the meeting, and any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 8. VOTING. At each meeting of the shareholders, every holder of
stock then entitled to vote may vote in person or by proxy, and shall have one
vote for each share of stock registered in his or her name.
SECTION 9. PROXIES. Every proxy must be dated and signed by the
shareholder or by his or her attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date of its execution, unless otherwise
provided therein. Every proxy shall be revocable at the will of the shareholder
executing it, except where an irrevocable proxy is permitted by statute.
SECTION 10. ACTION BY WRITTEN CONSENT OF SHAREHOLDERS. Whenever, by any
provision of statute or of the Charter or of these By-Laws, the vote of
shareholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action, the meeting and vote of shareholders may
be dispensed with, if all the shareholders who would have been entitled to vote
upon the action if such meeting were held shall consent in writing to such
corporate action being taken.
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. NUMBER AND QUALIFICATIONS. The affairs and business of the
Corporation shall be conducted and managed by a Board of Directors consisting of
not less than nine (9) or more than twenty-one (21) directors, who shall hold
office for the term of one year and until their successors are elected and
qualify. The number of directors shall be increased to not less than thirteen
(13) within one year following the end of the calendar year in which the
Corporation's admitted assets exceed $500,000,000. At least one third of the
directors, but not less than four (4), shall not be officers or employees of the
Corporation or of any such company controlling, controlled by, or under common
control with the Corporation, and shall not be beneficial owners of a
controlling interest in the voting stock of the Corporation or of any such
company (hereinafter referred to as "Non-Affiliated Directors"). The number of
directors shall be determined by a majority vote of the entire Board of
Directors and may be increased or decreased from time to time, within the limits
prescribed in this section, by vote of the shareholder at any special meeting.
At all times a majority of the directors shall be citizens and residents of the
United States and not less than three thereof shall be residents of the State of
New York. Directors shall be at least 18 years of age but need not be
shareholders.
SECTION 2. POWERS. The Board of Directors may adopt such rules and
regulations for the conduct of its meetings, the exercise of its powers and the
management of the affairs of the Corporation as it may deem proper, consistent
with the laws of the State of New York, the Charter and these By-Laws.
In addition to the powers and authorities by these By-Laws expressly
conferred upon them, the directors may exercise all such powers of the
Corporation and do such lawful acts and things as are not by statute or by the
Charter or by these By-Laws directed or required to be exercised or done by the
shareholders.
SECTION 3. MEETING, QUORUM, ACTION WITHOUT MEETING. Meetings of the
Board may be held at any place, either within or outside the State of New York,
provided a quorum be in attendance. Except as may be otherwise provided by the
Charter or by the Business Corporation Law of the State of New York, a majority
of the directors in office shall constitute a quorum at any meeting of the Board
and the vote of a majority of a quorum of directors shall constitute the act of
the Board. At least one Non-Affiliated Director must be included within any
quorum for the transaction of business at any meeting of the Board.
<PAGE>
The Board of Directors shall hold an annual meeting, without notice,
immediately after the annual meeting of shareholders or within ten days
thereafter upon one day's notice in the manner provided herein. Meetings of the
Board of Directors shall take place on a quarterly basis and additional meetings
may be established by a resolution adopted by the Board. The Chairperson of the
Board (if any) or the President or Secretary may call, and at the request of any
two directors must call, a special meeting of the Board of Directors, five days'
notice of which shall be given by mail, or two days' notice personally or by
telegraph or cable, to each director.
Any one or more members of the Board or any Committee thereof may
participate in any meeting of such Board or Committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at a meeting.
Any action required or permitted to be taken by the Board or any
Committee thereof may be taken without a meeting if time is of the essence and
all members of the Board or the Committee consent in writing to the adoption of
a resolution authorizing the action. The resolution and the written consents
thereto by the members of the Board or Committee shall be filed with the minutes
of the proceedings of the Board or Committee. Such action shall not be taken in
lieu of regular meetings of the Board of Directors established as provided in
this Section 3.
SECTION 4. VACANCIES, REMOVAL. Except as otherwise provided in the
Charter or in the following paragraph, vacancies occurring in the membership of
the Board of Directors, from whatever cause arising (including vacancies
occurring by reason of the removal of directors without cause and newly created
directorships resulting from any increase in the authorized number of
directors), may be filled by a majority vote of the remaining directors, though
less than a quorum, or such vacancies may be filled by the shareholders.
Any one or more of the directors may be removed, (a) either for or
without cause, at any time, by vote of the shareholders holding a majority of
the outstanding stock of the Corporation entitled to vote, present in person or
by proxy, at any meeting of the shareholders or, (b) for cause, by action of the
Board of Directors at any regular or special meeting of the Board. A vacancy or
vacancies occurring from such removal may be filled at a regular or special
meeting of shareholders or at a regular or special meeting of the Board of
Directors.
SECTION 5. COMMITTEES. The Board of Directors, by resolution adopted by
a majority of the entire Board, may designate from its members an Executive
Committee of three (3) members, or other committee or committees, each
consisting of three (3) or more members, at least one-third of whom shall be
Non-Affiliated Directors, with such powers and authority (to the extent
permitted by law) as may be provided in said resolution. A quorum shall be a
majority of the members of the committee, provided that a quorum for a committee
consisting of three (3) members shall consist of all three (3) members and
provided further that any quorum shall include at least one (1) Non-Affiliated
Director.
<PAGE>
SECTION 6. COMPENSATION. The Board of Directors may fix a reasonable
compensation to be paid to directors for attending meetings of the Board of
Directors, provided such directors are not salaried officers or employees of the
Corporation.
<PAGE>
ARTICLE IV
OFFICERS
SECTION 1. ELECTION OF EXECUTIVE OFFICERS. The executive officers of
the Corporation may include the President, Vice President (number to be
determined by the directors), Secretary and Treasurer, elected annually by the
directors, who shall hold office at the pleasure of the directors. In addition,
the Board of Directors may elect a Chairperson of the Board of Directors. Except
for the offices of President and Secretary, any two offices or more may be held
by one person.
SECTION 2. OTHER OFFICERS. The Board of Directors may appoint such
other officers and agents with such powers and duties as it shall deem
necessary.
SECTION 3. THE CHAIRPERSON OF THE BOARD. The Chairperson of the Board
of Directors, if one be elected, shall, when present, preside at all meetings of
the Board of Directors, and of the shareholders, and he or she shall have and
perform such other duties as from time to time may be assigned to him or her by
the Board of Directors or the Executive Committee.
SECTION 4. THE PRESIDENT. The President, who may, but need not, be a
director, shall, in the absence or non-election of a Chairperson of the Board,
preside at all meetings of the shareholders and directors. He or she shall be
the chief executive officer of the Corporation. While the directors are not in
session, he or she shall have general management and control of the business and
affairs of the Corporation. He or she shall from time to time report to the
Board of Directors any information and recommendations concerning the business
or affairs of the Corporation which my be proper or needed, and shall see that
all orders and resolutions of the Board of Directors are carried into effect,
and shall perform such other duties and services, not inconsistent with law or
these By-Laws, as pertain to this office or as are required by the Board of
Directors.
SECTION 5. THE VICE PRESIDENT. The Vice President, or if there be more
than one, the Senior or Executive Vice President, as determined by the Board of
Directors, in the absence or disability of the President, shall exercise the
powers and perform the duties of the President and each Vice President shall
exercise such other powers and perform such other duties as shall be prescribed
by the directors.
SECTION 6. THE TREASURER. The Treasurer shall have custody of all
funds, securities and evidences of indebtedness of the Corporation; he or she
shall receive and give receipts and acquittances for moneys paid in on account
of the Corporation, and shall pay out of the funds on hand all bills, payrolls,
and other just debts of the Corporation, of whatever nature, upon maturity; he
or she shall enter regularly in books to be kept by him or her for that purpose,
full and accurate accounts of all moneys received and paid out by him or her on
account of the Corporation, and he or she shall perform all other duties
incident to the office of Treasurer and as may be prescribed by the directors.
<PAGE>
SECTION 7. ASSISTANT TREASURERS. The Assistant Treasurers, in order of
their seniority, shall have all of the powers and shall perform the duties of
the Treasurer in case of the absence of the Treasurer or his or her inability to
act, and have such other powers and duties as they may be assigned or directed
to perform.
SECTION 8. THE SECRETARY. The Secretary shall keep the minutes of all
proceedings of the directors and of the shareholders; he or she shall attend to
the giving and serving of all notices to the shareholders and directors or other
notice required by law or by these By-Laws; he or she shall affix the seal of
the Corporation to deeds, contracts and other instruments in writing requiring a
seal, when duly signed or when so ordered by the directors; he or she shall have
charge of the certificate books and stock books and such other books and papers
as the Board may direct, and he or she shall perform all other duties incident
to the office of Secretary.
SECTION 9. ASSISTANT SECRETARIES. The Assistant Secretaries, in order
of their seniority, shall have all of the powers and shall perform the duties of
the Secretary in case of the absence of the Secretary or his or her inability to
act, and have such other powers and duties as they may be assigned or directed
to perform.
SECTION 10. COMPENSATION. The compensation of all officers shall be
fixed by the Board of Directors, and the fact that any officer is a director
shall not preclude him or her from receiving a salary as an officer, or from
voting upon the resolution providing the same.
SECTION 11. VACANCIES. All vacancies occurring among any of the offices
shall be filled by the Board of Directors. In the case of a temporary disability
or absence of any officer, the Board of Directors may designate an incumbent for
the time being, who during such incumbency shall have the powers of such
officer. Any officer may be removed at any time by the affirmative vote of a
majority of the directors present at a special meeting of directors called for
the purpose.
<PAGE>
ARTICLE V
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may appoint an
executive committee consisting of three (3) members of the Board of Directors of
the Corporation. The executive committee shall have such power and possess such
authority as the Board of Directors shall, by by-laws or by resolution, vest in
it subject to any limitations of law. All vacancies in the membership of this
committee shall be filled by the Board of Directors. The Board of Directors may
remove any member of the executive committee for cause by a majority vote of all
the directors. The executive committee shall have and is hereby granted full
power and authority to conduct and control the business of the Corporation
between meetings of the Board of Directors except as otherwise limited by the
Board of Directors or any provisions of law. Action of the executive committee
shall be by majority vote of the quorum. The executive committee shall meet as
such time, date or place as it may at its discretion determine, and shall keep
minutes of its meetings.
SECTION 2. AUDIT COMMITTEE. The Board of Directors shall appoint a
committee consisting of three (3) or more directors, all of whom shall be
Non-Affiliated Directors. The committee's duties shall include: recommending the
selection of independent certified public accountants, reviewing the company's
financial condition, the scope and results of the independent audit and any
internal audit, nominating candidates for director, evaluating the performance
of the Corporation's principal officers and recommending to the Board of
Directors the selection and compensation of such principal officers, and
recommending to the Board of Directors any plan to issue options to its officers
or employees for the purchase of shares of stock.
SECTION 3. OTHER COMMITTEES. The Board of Directors by resolution or
resolutions, may designate one or more other committees. Each such committee
shall consist of three (3) or more directors of the Corporation and shall have
and may exercise such powers as vested in the committee by the Board of
Directors. These committees shall have such name or names as the Board of
Directors shall determine. The existence of any such committee may be
terminated, or its powers and authority modified at any time by resolution of
the Board of Directors.
SECTION 4. COMPENSATION. The Board of Directors may fix a reasonable
compensation to be paid to directors for attending meetings of committees,
provided such directors are not salaried officers or employees of the
Corporation.
<PAGE>
ARTICLE VI
CAPITAL STOCK
SECTION 1. FORM AND EXECUTION OF CERTIFICATES. Certificates of stock
shall be in such form as required by the Business Corporation Law of the State
of New York and as shall be adopted by the Board of Directors. They shall be
numbered and registered in the order issued; shall be signed by the Chairperson
or a Vice Chairperson of the Board (if any) or by the President or a Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer and may be sealed with the corporate seal or a facsimile
thereof. When such a certificate is countersigned by a transfer agent or
registered by a registrar, the signatures of any such officers may be facsimile.
SECTION 2. TRANSFER. Transfer of shares shall be made only upon the
books of the Corporation by the registered holder in person or by attorney, duly
authorized, and upon surrender of the certificate or certificates for such
shares properly assigned for transfer. Transfer of fractional shares shall not
be made upon the records or books of the Corporation, nor shall certificates for
fractional shares be issued by the Corporation.
SECTION 3. LOST OR DESTROYED CERTIFICATES. The holder of any
certificate representing shares of stock of the Corporation may notify the
Corporation of any loss, theft or destruction thereof, and the Board of
Directors may thereupon, in its discretion, cause a new certificate for the same
number of shares, to be issued to such holder upon satisfactory proof of such
loss, theft or destruction, and the deposit of indemnity by way of bond or
otherwise, in such form and amount and with such surety or sureties as the Board
of Directors may require, to indemnify the Corporation against loss or liability
by reason of the issuance of such new certificates.
SECTION 4. RECORD DATE. In lieu of closing the books of the
Corporation, the Board of Directors may fix, in advance, a date, not exceeding
fifty days, nor less than ten days, as the record date for the determination of
shareholders entitled to receive notice of, or to vote, at any meeting of
shareholders, or to consent to any proposal without a meeting, or for the
purpose of determining shareholders entitled to receive payment of any
dividends, or allotment of any rights, or for any other purpose.
<PAGE>
ARTICLE VII
CORPORATE FUNDS AND SECURITIES
SECTION 1. DEPOSITS OF FUNDS. Bills, notes, checks, negotiable
instruments or any other evidence of indebtedness payable to and received by the
Company may be endorsed for deposit to the credit of the Company by such
officers or agents of the Company as the Board of Directors or Executive
Committee may determine and, when authorized by the Board of Directors or
Executive Committee, may be endorsed for deposit to the credit of agents of the
Company in such manner as the Board of Directors or Executive Committee may
direct.
SECTION 2. WITHDRAWALS OF FUNDS. All disbursements of the funds of the
Company shall be made by check, draft or other order signed by such officers or
agents of the Company as the Board of Directors or Executive Committee may from
time to time authorized to sign the same.
SECTION 3. SALE AND TRANSFER OF SECURITIES. All sales and transfers of
securities shall be made by any member of the Executive Committee or by any
officer of the Company under authority granted by a resolution of the Board of
Directors or the Executive Committee.
ARTICLE VIII
MISCELLANEOUS
SECTION 1. DIVIDENDS. In accordance with the laws of the State of New
York, the directors may declare dividends from time to time upon the capital
stock of the Corporation, which shall be payable in cash, property or shares of
the Corporation.
SECTION 2. SEAL. The directors shall provide a suitable corporate seal
which shall read First Security Benefit Life Insurance and Annuity Company of
New York and which words may be changed at any time by resolution of the Board
of Directors and shall be in the charge of the Secretary and shall be used as
authorized by the By-Laws.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall begin
the first day of January and terminate on the last day of December of each year.
SECTION 4. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by or under the authority of a resolution of the Board of Directors.
Such authorization may be general or confined to specific instances.
<PAGE>
SECTION 5. NOTICE AND WAIVER OF NOTICE. Any notice required to be given
under these By-Laws may be waived by the person entitled thereto, in writing, by
telegram, cable, telex or radiogram, and the presence of any person at a meeting
shall constitute waiver of notice thereof as to such person.
Whenever any notice is required by these By-Laws to be given, personal
notice is not meant unless expressly so stated; and any notice so required shall
be deemed to be sufficient if given by depositing it in a post office or post
box in a sealed postpaid wrapper, addressed to such shareholder, officer or
director, or by transmitting via telecopy, telegram, cable, telex or similar
means at such address or other routing information as appears on the books of
the Corporation and such notice shall be deemed to have been given on the day of
such deposit or transmission.
ARTICLE IX
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. AUTHORIZATION FOR INDEMNIFICATION.
(a) The Corporation may indemnify any person, made, or threatened to be
made, a party to an action or proceeding other than one by or in the right of
the Corporation to procure a judgment in its favor, whether civil or criminal,
including an action by or in the right of any other Corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer of the
Corporation served in any capacity at the request of the Corporation, by reason
of the fact that he or she, his or her testator or intestate, was a director or
officer of the Corporation, or served such other corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise in any capacity,
against judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees actually and necessarily incurred as a result of such
action or proceeding, or any appeal therein, if such director or officer acted,
in good faith, for a purpose which he or she reasonably believed to be in, or,
in the case of service for any other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise, not opposed to, the
best interests of the corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his or her conduct was
unlawful.
(b) The termination of any such civil or criminal action or proceeding
by judgment, settlement, conviction or upon a plea of NOLO CONTENDERE, or its
equivalent, shall not in itself create a presumption that any such director or
officer did not act, in good faith, for a purpose which he or she reasonably
believed to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the Corporation or that he or she had
reasonable cause to believe that his or her conduct was unlawful.
<PAGE>
(c) The Corporation may indemnify any person made, or threatened to be
made, a party to an action by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she, his or her testator
or intestate, is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director or officer of any other
corporation of any type or kind, domestic or foreign, of any partnership, joint
venture, trust, employee benefit plan or any other enterprise, against amounts
paid in settlement and reasonable expenses, including attorneys' fees, actually
and necessarily incurred by him or her in connection with the defense or
settlement of such action, or in connection with an appeal therein, if such
director or officer acted, in good faith, for a purpose which he or she
reasonably believed to be in or in the case of service for other corporation or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, not opposed to the best interests of the corporation, except that no
indemnification under this paragraph shall be made in respect of (1) a
threatened action, or a pending action which is settled or otherwise disposed
of, or (2) any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation, unless and only to the extent that the
court in which the action was brought, or, if no action was brought, any court
of competent jurisdiction, determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such portion of the settlement and expenses as the court deems
proper.
(d) For the purpose of this section, the Corporation shall be deemed to
have requested a person to serve an employee benefit plan where the performance
by such person of his or her duties to the Corporation also imposes duties on,
or otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit plan in
the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the Corporation.
SECTION 2. INDEMNIFICATION BY THE COURT.
(a) Notwithstanding the failure of the Corporation to provide
indemnification, and despite any contrary resolution of the board or of the
shareholders in the specific case under law, indemnification shall be awarded by
a court to the extent authorized under section 1 of this Article and the laws of
the State of New York. Application therefor may be made, in every case, either:
(1) In the civil action or proceeding in which the expenses
were incurred or other amounts were paid, or
(2) To the supreme court in a separate proceeding, in which
case the application shall set forth the disposition of any previous
application made to any court for the same or similar relief and also
reasonable cause for the failure to make application for such relief in
the action or proceeding in which the expenses were incurred or other
amounts were paid.
<PAGE>
(b) The application shall be made in such manner and form as may be
required by the applicable rules of court or, in the absence thereof, by
direction of a court to which it is made. Such application shall be upon notice
to the Corporation. The court may also direct that notice be given at the
expense of the Corporation to the shareholders and such other persons as it may
designate in such manner as it may require.
(c) Where indemnification is sought by judicial action, the court may
allow a person such reasonable expenses, including attorneys' fees, during the
pendency of the litigation as are necessary in connection with his or her
defense therein, if the court shall find that the defendant has by his or her
pleadings or during the course of the litigation raised genuine issues of fact
or law.
SECTION 3. INDEMNIFICATION OTHER THAN BY COURT AWARD.
(a) A person who has been successful, on the merits or otherwise, in
the defense of a civil or criminal action or proceeding of the character
described in section 1 of this Article shall be entitled to indemnification as
authorized in such section.
(b) Except as provided in paragraph (a), any indemnification under
sections 1, 2 and 4 of this Article shall be made by the Corporation, only if
authorized in the specific case:
(1) By the Board acting by a quorum consisting of directors
who are not parties to such action or proceeding upon a finding that
the director or officer has met the standard of conduct set forth in
section 1, or established pursuant to section 3, of this Article as the
case may be, or,
(2) If a quorum under subparagraph (1) is not obtainable or,
even if obtainable, a quorum of disinterested directors so directs, due
diligence:
(A) By the Board upon the opinion in writing of
independent legal counsel that indemnification is proper in
the circumstances because the applicable standard of conduct
set forth in such sections has been met by such director or
officer, or
(B) By the shareholders upon a finding that the
director or officer has met the applicable standard of conduct
set forth in such sections.
(c) Expenses incurred in defending a civil or criminal action or
proceeding may be paid by the Corporation in advance of the final disposition of
such action or proceeding if upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount as, and to the extent, required by
paragraph (a) of section 5 of this Article.
<PAGE>
SECTION 4. OTHER RIGHTS. The indemnification and advancement of
expenses granted pursuant to, or provided by, this Article and the laws of the
State of New York shall not be deemed exclusive of any other rights to which a
director or officer seeking indemnification or advancement of expenses may be
entitled, whether contained in the Charter or the By-Laws, when authorized by
such Charter or By-Laws, (i) a resolution of shareholders, (ii) a resolution of
directors, or (iii) an agreement providing for such indemnification, provided
that no indemnification may be made to or on behalf of any director, or officer
if a judgment or other final adjudication adverse to the director or officer
establishes that his or her acts were committed in bad faith or were the result
of advice and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he or she personally gained in fact a financial profit or
other advantage to which he or she was not legally entitled. Nothing contained
in this Article shall affect any rights to indemnification to which corporate
personnel other than directors and officers may be entitled by contract or
otherwise under New York law.
SECTION 5. OTHER PROVISIONS AFFECTING INDEMNIFICATION. (a) All expenses
incurred in defending a civil or criminal action or proceeding which are
advanced by the Corporation under paragraph (c) of section 3 of this Article or
allowed by a court under paragraph (c) of section 2 of this Article shall be
repaid in case the person receiving such advancement or allowance is ultimately
found, under the procedure set forth in this Article, not to be entitled to
indemnification or, where indemnification is granted, to the extent the expenses
so advanced by the Corporation or allowed by the court exceed the
indemnification to which he or she is entitled.
(b) No indemnification, advancement or allowance shall be made under
this Article in any circumstance where it appears:
(1) That the indemnification would be inconsistent with the
laws of the State of New York;
(2) That the indemnification would be inconsistent with a
provision of the Charter, a By-Law, a resolution of the Board or of the
shareholders, an agreement or other proper corporate action, in effect
at the time of the accrual of the alleged cause of action asserted in
the threatened or pending action or proceeding in which the expenses
were incurred or other amounts were paid, which prohibits or otherwise
limits indemnification; or
(3) If there has been a settlement approved by the court, that
the indemnification would be inconsistent with any condition with
respect to indemnification expressly imposed by the court in approving
the settlement.
<PAGE>
(c) If, under this Article, any expenses or other amounts are paid by
way of indemnification, otherwise than by court order or action by the
shareholders, the Corporation shall, not later than the next annual meeting of
shareholders unless such meeting is held within three months from the date of
such payment, and, in any event, within fifteen months from the date of such
payment, mail to its shareholders of record at the time entitled to vote for the
election of directors a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation.
(d) If any action with respect to indemnification of directors and
officers is taken by way of amendment of the By-Laws, resolution of directors,
or by agreement, then the Corporation shall, not later than the next annual
meeting of shareholders, unless such meeting is held within three months from
the date of such action, and, in any event, within fifteen months from the date
of such action, mail to its shareholders of record at the time entitled to vote
for the election of directors a statement specifying the action taken.
(e) No payment of indemnification, advancement or allowance under
sections seven hundred twenty-one to seven hundred twenty-seven inclusive of the
New York Business Corporation Law shall be made unless a notice has been filed
with the Superintendent of Insurance of the State of New York (the
"Superintendent") not less than thirty days prior to such payment, specifying
the payees, the amounts, the manner in which such payment is authorized and the
nature and status, at the time of such notice, of the litigation or threatened
litigation. If any action with respect to indemnification of directors or
officers shall be taken by amendment of the by-laws, such action shall be in
accordance with the approval requirements in sections one thousand two hundred
nine and one thousand two hundred ten of Article 12 of the New York Insurance
Law. If any action shall be taken by resolution of directors, or by agreement or
otherwise, a notice shall be filed with the Superintendent not less than thirty
days thereafter specifying the action taken.
SECTION 6. INSURANCE. (a) Subject to paragraph (b) of this section, the
Corporation shall have power to purchase and maintain insurance:
(1) To indemnify the Corporation for any obligation which it
incurs as a result of the indemnification of directors and officers
under the provisions of this Article, and
(2) To indemnify directors and officers in instances in which
they may be indemnified by the Corporation under the provisions of this
article, and
(3) To indemnify directors and officers in instances in which
they may not otherwise by indemnified by the Corporation under the
provisions of this article provided the contract of insurance covering
such directors and officers provides, in a manner acceptable to the
superintendent of insurance, for a retention amount and for
coinsurance.
<PAGE>
(b) No insurance under paragraph (a) may provide for any payment, other
than cost of defense, to or on behalf of any director or officer:
(1) if a judgment or other final adjudication adverse to the
insured director or officer establishes that his or her acts of active
and deliberate dishonesty were material to the cause of action so
adjudicated, or that he or she personally gained in fact a financial
profit or other advantage to which he or she was not legally entitled,
or
(2) in relation to any risk the insurance of which is
prohibited under the insurance law of this state.
(c) Insurance under any or all subparagraphs of paragraph (a) may be
included in a single contract or supplement thereto. Retrospective rated
contracts are prohibited.
(d) The Corporation shall, within the time and to the persons provided
in the laws of the State of New York, mail a statement in respect of any
insurance it has purchased or renewed under this section, specifying the
insurance carrier, date of the contract, cost of the insurance, corporate
positions insured, and a statement explaining all sums, not previously reported
in a statement to shareholders, paid under any indemnification insurance
contract.
(e) This section is meant to conform with the public policy of the
State of New York which is to spread the risk of corporate management,
notwithstanding any other general or special law of the state or of any other
jurisdiction including the Federal Government.
<PAGE>
ARTICLE X
INSURANCE
SECTION 1. KINDS OF INSURANCE. The Board of Directors shall determine
the kinds of insurance and the nature of the risks to be covered pursuant to the
provisions of the Charter.
SECTION 2. CLASSIFICATION OF RISKS. Subject to statutory requirements,
the Board of Directors shall have authority to establish reasonable
classifications within the respective kinds of insurance.
SECTION 3. REINSURANCE. The Corporation may contract for reinsurance on
its own risks and may make or issue reinsurance contracts on the risks of
others, in accordance with the provisions of the Charter.
ARTICLE XI
AMENDMENTS
SECTION 1. BY SHAREHOLDERS. These By-Laws may be amended at any
shareholders' meeting by vote of the shareholders holding a majority of the
outstanding stock having voting power, present either in person or by proxy,
provided notice of the amendment is included in the notice or waiver of notice
of such meeting.
SECTION 2. BY DIRECTORS. The Board of Directors may also amend these
By-Laws at any regular or special meeting of the Board by a majority vote of the
entire Board, but any By-Laws so made by the Board of Directors may be altered
or repealed by the shareholders.
PARTICIPATION AGREEMENT
AMONG
T. ROWE PRICE FIXED INCOME SERIES, INC.,
T. ROWE PRICE EQUITY SERIES, INC.,
T. ROWE PRICE INTERNATIONAL SERIES, INC.,
AND
T. ROWE PRICE INVESTMENT SERVICES, INC.
AND
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of this 11th day of October,
1995 by and among First Security Benefit Life Insurance and Annuity Company of
New York (hereinafter, the "Company"), a New York life insurance company, on its
own behalf and on behalf of each segregated asset account of the Company set
forth on Schedule A hereto as may be amended from time to time (each account
hereinafter referred to as the "Account"), and the T. Rowe Price Fixed Income
Series, Inc., T. Rowe Price Equity Series, Inc., and T. Rowe Price International
Series, Inc., each a corporation organized under the laws of Maryland (each
Fund, hereinafter referred to as the "Fund") and T. Rowe Price Investment
Services, Inc. (hereinafter, the "Underwriter"), a Maryland corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is or will be available to act as the investment vehicle
for separate accounts established for variable life insurance and variable
annuity contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC") granting Participating Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company
Act of 1940, as amended, (hereinafter, the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T) (b)(15) thereunder, if and to the extent necessary to permit shares of
the Fund to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
(hereinafter, the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter, the "1933 Act"); and
WHEREAS, T. Rowe Price Associates, Inc. and Rowe Price-Fleming
International, Inc. (each hereinafter referred to as the "Adviser," and all
references hereinafter to "Adviser" shall refer to the investment adviser for a
Fund, as pertinent) are each duly registered as an investment adviser under the
federal Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Company has registered or will register certain variable
life insurance or variable annuity contracts (or interests in a separate account
funding such contracts) supported wholly or partially by the Account (the
"Contracts") under the 1933 Act, and said Contracts are listed in Schedule A
hereto, as it may be amended from time to time by mutual written agreement; and
WHEREAS, the Account is duly established and maintained as a segregated
asset account, established by resolution of the Board of Directors of the
Company, or by the Executive Committee of the Board, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts; and
WHEREAS, the Company has registered or will register the Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1 The Underwriter agrees to sell to the Company those shares of the
Designated Portfolios which the Account orders, executing such orders on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Designated Portfolios.
1.2 The Fund agrees to make shares of the Designated Portfolios
available for purchase at the applicable net asset value per share by the
Company and the Account on those days on which the Fund calculates its net asset
value pursuant to rules of the Securities and Exchange Commission, and the Fund
shall use reasonable efforts to calculate such net asset value on each day which
the New York Stock Exchange is open for trading. Notwithstanding the foregoing,
the Board of Trustees or Directors of the Fund (hereinafter the "Board") may
refuse to sell shares of any Designated Portfolio to any person, or suspend or
terminate the offering of shares of any Designated Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Designated Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Designated Portfolios will be sold to the general public. The Fund
and the Underwriter will not sell Fund shares to any insurance company or
separate account unless an agreement containing provisions substantially the
same as Articles I, III and VII of this Agreement is in effect to govern such
sales.
1.4 The Fund agrees to redeem, on the Company's request, any full or
fractional shares of the Designated Portfolios held by the Company, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption, except that
the Fund reserves the right to suspend the right of redemption or postpone the
date of payment or satisfaction upon redemption consistent with Section 22(e) of
the 1940 Act and any rules thereunder, and in accordance with the procedures and
policies of the Fund as described in the then current prospectus. Cash
redemptions ordinarily shall be paid not later than one Business Day, as defined
below, following receipt by the Fund or its designee of the request for
redemption unless, as described herein, the Fund exercises its rights under
Section 22(e) of the 1940 Act and any rules thereunder. Cash payments shall be
made in federal funds transmitted by wire.
1.5 For purposes of Sections 1.1 and 1.4, the Company shall be the
designee of the Fund for receipt of purchase and redemption orders from the
Account, and receipt by such designee shall constitute receipt by the Fund;
provided that the Company receives the order by 4:00 p.m. Baltimore time and the
Fund receives notice of such order by 9:30 a.m. Baltimore time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its net
asset value pursuant to the rules of the SEC.
1.6 The Company agrees to purchase and redeem the shares of each
Designated Portfolio offered by the then current prospectus of the Fund and in
accordance with the provisions of such prospectus.
1.7 The Company shall pay for Fund shares one Business Day after an
order to purchase Fund shares is made in accordance with the provisions of
Section 1.5 hereof. Payment shall be in federal funds transmitted by wire by
3:00 p.m. Baltimore time. If payment in Federal Funds for any purchase is not
received or is received by the Fund after 3:00 p.m. Baltimore time on such
Business Day, the Company shall promptly, upon the Fund's request, reimburse the
Fund for any charges, costs, fees, interest or other expenses incurred by the
Fund in connection with any advances to, or borrowings or overdrafts by, the
Fund, or any similar expenses incurred by the Fund, as a result of portfolio
transactions effected by the Fund based upon such purchase request. For purposes
of Section 2.8 and 2.9 hereof, upon receipt by the Fund of the federal funds so
wired, such funds shall cease to be the responsibility of the Company and shall
become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9 The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Designated Portfolios' shares. The
Company hereby elects to receive all such income, dividends, and capital gain
distributions as are payable on Designated Portfolio shares in additional shares
of that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions. The Fund shall use its best efforts to furnish
advance notice of the day such dividends and distributions are expected to be
paid.
1.10 The Fund shall make the net asset value per share for each
Designated Portfolio available to the Company on a daily basis as soon as
reasonably practical after the net asset value per share is calculated (normally
by 6:30 p.m. Baltimore time) and shall use its best efforts to make such net
asset value per share available by 7 p.m. Baltimore time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts (or interests
in a separate account funding such Contracts) are or will be registered under
the 1933 Act; that the Contracts will be issued in compliance in all material
respects with all applicable federal and state laws; and that the Company will
require any person authorized to sell the Contract to do so in compliance in all
material respects with all applicable federal and state laws. The Company
further represents and warrants that it is an insurance company duly organized,
validly existing, and in good standing under applicable law and that it has
legally and validly established the Account prior to any issuance or sale
thereof as a segregated asset account under New York insurance laws and has
registered or, prior to any issuance or sale of the Contracts, will register the
Account as a unit investment trust in accordance with the provisions of the 1940
Act to serve as a segregated investment account for the Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of New York and all
applicable federal and state securities laws and that the Fund is and shall
remain registered as an open-end management investment company under the 1940
Act. The Fund shall amend the Registration Statement for its shares under the
1933 Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Fund shall register and qualify the
shares for sale in accordance with the laws of the various states only if and to
the extent deemed advisable by the Fund or the Underwriter.
2.3 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it may
make such payments in the future. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund will undertake to have a
Board, a majority of whom are not interested persons of the Fund, formulate and
approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses.
2.4 The Fund makes no representations as to whether any aspect of its
operations, including but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the various
states, except that the Fund represents that the Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the laws
of the State of New York to the extent required to perform this Agreement.
2.5 The Fund represents that it is lawfully organized, validly existing,
and in good standing under the laws of the State of Maryland and that it does
and will comply in all material respects with the 1940 Act.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of New York and any applicable state
and federal securities laws.
2.7 The Underwriter represents and warrants that the Adviser is and
shall remain duly registered under all applicable federal and state securities
laws and that the Adviser shall perform its obligations for the Fund in
compliance in all material respects with the laws of the State of New York and
any applicable state and federal securities laws.
2.8 The Fund and the Underwriter represent and warrant that all of their
respective directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimum coverage as required currently by Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.9 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
employed or controlled by the Company dealing with the money and/or securities
of the Account are and shall continue to be at all times covered by a blanket
fidelity bond or similar coverage in an amount not less than $5 million. The
aforesaid bond includes coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. The Company agrees to hold for the
benefit of the Fund and to pay to the Fund any amounts lost from larceny,
embezzlement or other events covered by the aforesaid bond to the extent such
amounts properly belong to the Fund pursuant to the terms of this Agreement.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1 Unless the parties otherwise agree in writing, the Fund shall
provide such documentation (including a final copy of the new prospectus as set
in type at the Fund's expense) and other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if the prospectus
for the Fund is amended) to have the prospectus for the Contracts and the Fund's
prospectus printed together in one document. The expense of printing the Fund's
prospectus for distribution to existing owners of Contracts shall be borne by
the Underwriter or the Fund. The expense of printing the Fund's prospectus for
distribution to prospective customers shall be governed by a Distribution
Agreement between the Company and the Underwriter.
3.2 The Fund's prospectus shall state that the Statement of Additional
Information ("SAI") for the Fund is available from the Company, and the
Underwriter (or the Fund), at its expense, shall print and provide a copy of
such SAI free of charge to the Company for itself and for any owner of a
Contract who requests such SAI.
3.3 The Fund (or the Underwriter), at its expense, shall provide the
Company with copies of the Fund's proxy material, reports to shareholders, and
other communications to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners. The Fund (or the
Underwriter) shall bear the expense of mailing the Fund's proxy material and
other communications to contract owners. The Fund (or the Underwriter) shall
bear the expense of mailing Fund reports (including the Fund's semi-annual and
annual reports) to Contract owners.
3.4 The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
portfolio for which instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law.
3.5 Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required by the Shared Funding Exemptive Order
and consistent with any reasonable standards that the Fund may adopt.
3.6 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the SEC's interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors or trustees and with whatever
rules the SEC may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material that the Company develops or uses and in which the Fund (or a Portfolio
thereof) or the Adviser or the Underwriter is named, at least ten calendar days
prior to its use. No such material shall be used if the Fund or its designee
reasonably objects to such use within ten calendar days after receipt of such
material. The Fund or its designee reserves the right to reasonably object to
the continued use of such material, and no such material shall be used if the
Fund or its designee so objects.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus or SAI for
the Fund shares, as such registration statement and prospectus or SAI may be
amended or supplemented from time to time, or in reports or proxy statements for
the Fund, or in sales literature or other promotional material approved by the
Fund or its designee or by the Underwriter, except with the permission of the
Fund or the Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company, each piece of sales literature or other
promotional material in which the Company, the Contract, and/or its Account, is
named at least ten calendar days prior to its use. No such material shall be
used if the Company reasonably objects to such use within ten calendar days
after receipt of such material. The Company reserves the right to reasonably
object to the continued use of such material and no such material shall be used
if the Company so objects.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts inconsistent with the information or representations
contained in a registration statement or prospectus, or SAI for the Contracts,
as such registration statement, prospectus or SAI may be amended or supplemented
from time to time, or in published reports for the Account which are in the
public domain or approved by the Company for distribution to Contract owners, or
in sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Fund or its shares, contemporaneously with the filing of such
document(s) with the SEC or other regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, SAIs, reports, solicitations for
voting instructions, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Contracts or the Account,
contemporaneously with the filing of such document(s) with the SEC or other
regulatory authorities.
4.7 The Fund will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Designated Portfolio,
and of any material change in the Fund's registration statement, particularly
any change resulting in a change to the registration statement or prospectus for
any Account. The Fund will work with the Company so as to enable the Company to
solicit proxies from Contract Owners, or to make changes to its prospectus or
registration statement, in an orderly manner. The Fund will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual updates for such prospectuses.
4.8 For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following: advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media), sales literature (I.E., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, reports, market letters, form letters, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, and registration
statements, prospectuses, SAIs, shareholder reports, proxy materials, and any
other communications distributed or made generally available.
ARTICLE V. OTHER FEES AND EXPENSES
5.1 The Fund and the Underwriter shall pay no fee or other compensation
to the Company under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing, and such payments will be made out of existing fees otherwise payable
to the Underwriter, past profits of the Underwriter, or other resources
available to the Underwriter. No such payments shall be made directly by the
Fund.
Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3 The Fund (or the Underwriter) shall bear the expenses of mailing the
Fund's prospectus to owners of Contracts issued by the Company. The expense of
mailing the Fund's prospectus to prospective owners of Contracts shall be
governed by a Distribution Agreement between the Company and the Underwriter.
ARTICLE VI. DIVERSIFICATION AND QUALIFICATION
6.1 The Fund will invest the assets of each Designated Portfolio in such
a manner as to ensure that the Contracts will be treated as annuity or life
insurance contracts, whichever is appropriate, under the Internal Revenue Code
of 1986, as amended (the "Code") and the regulations issued thereunder (or any
successor provisions). Without limiting the scope of the foregoing, each
Designated Portfolio has complied and will continue to comply with Section
817(h) of the Code and Treasury Regulation ss.1.817-5, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, and any amendments or
other modifications or successor provisions to such Section or Regulations. In
the event of a breach of this Article VI by the Fund, it will take all
reasonable steps (a) to notify the Company of such breach as promptly as
possible and (b) to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Regulation 817.5.
6.2 The Fund represents that each Designated Portfolio is or will be
qualified as a Regulated Investment Company under Subchapter M of the Code, and
that it will make every effort to maintain such qualification (under Subchapter
M or any successor or similar provisions) and that it will notify the Company
immediately upon having a reasonable basis for believing that it has ceased to
so qualify or that it might not so qualify in the future.
6.3 The Company represents that the Contracts are currently, and at the
time of issuance shall be, treated as life insurance or annuity insurance
contracts, under applicable provisions of the Code, and that it will make every
effort to maintain such treatment, and that it will notify the Fund and the
Underwriter immediately upon having a reasonable basis for believing the
Contracts have ceased to be so treated or that they might not be so treated in
the future. The Company agrees that any prospectus offering a contract that is a
"modified endowment contract" as that term is defined in Section 7702A of the
Code (or any successor or similar provision), shall identify such contract as a
modified endowment contract.
ARTICLE VII. POTENTIAL CONFLICTS. The following provisions apply effective upon
investment in the Fund by a separate account of a Participating Insurance
Company supporting variable life insurance contracts.
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever Contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested Board members), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (I.E., annuity contract owners, life insurance 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 (2) establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment in
the Fund and terminate this Agreement with respect to each Account provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. Any such withdrawal and
termination must take place within six (6) months after the Fund gives written
notice that this provision is being implemented, and until the end of that six
month period the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
7.5 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 Fund and terminate this Agreement with
respect to such Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Until the end of the foregoing six month period, the Fund shall continue to
accept and implement orders by the Company for the purchase (and redemption) of
shares of the Fund.
7.6 For purposes of Section 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contract if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs 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 members of the Board.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
8.1(a). The Company agrees to indemnify and hold harmless the
Fund and the Underwriter and each of their officers and directors and each
person, if any, who controls the Underwriter within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or
litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
Registration Statement, prospectus, or statement of additional
information for the Contracts or contained in the Contracts (or
any amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on
behalf of the Fund for use in the Registration Statement,
prospectus or statement of additional information for the
Contracts or in the Contracts (or any amendment or supplement)
or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or are based upon any statements or representations
or the omission or alleged omission of any statements or
representations about the Contracts contained in sales
literature for the Contracts (or any amendment or supplement)
that arise out of or are based upon state insurance law; or
(iii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the
Fund not supplied by the Company or persons under its control)
or wrongful conduct of the Company or persons under its
authorization or control (which shall not include any T. Rowe
Price Representative, or any Representative or employee of T.
Rowe Price Insurance Agency, as such persons are defined or
referred to in the Distribution Agreement), with respect to the
sale or distribution of the Contracts or Fund Shares; or
(iv) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(v) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the terms
of this Agreement (including a failure, whether unintentional or
in good faith or otherwise, to comply with the qualification
requirements specified in Article VI of this Agreement); or
(vi) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c)
hereof.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of its obligations or
duties under this Agreement, or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action and to settle the claim at its own expense; provided,
however, that no such settlement shall, without the Indemnified Parties' written
consent, include any factual stipulation referring to the Indemnified Parties or
their conduct. After notice from the Company to such party of the Company's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Company will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company
of the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the operation
of the Fund.
8.2 INDEMNIFICATION BY THE UNDERWRITER
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers, the Account, and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts; and
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or SAI or sales literature
of the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Underwriter or Fund by or on behalf of the Company for use
in the Registration Statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control or by or on behalf of the Fund) or wrongful conduct of
the Fund or Underwriter or persons under their control, with
respect to the sale or distribution of the Contracts or Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement,
prospectus or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made
in reliance upon information furnished to the Company by or on
behalf of the Underwriter or the Fund; or
(iv) arise as a result of any failure by the Underwriter or the Fund
to provide the services and furnish the materials under the
terms of this Agreement (including a failure by the Fund,
whether unintentional or in good faith or otherwise, to comply
with the diversification and other qualification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; as limited by and
in accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action and to settle the claim at its own expense; provided,
however, that no such settlement shall, without the Indemnified Parties' written
consent, include any factual stipulation referring to the Indemnified Parties or
their conduct. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
8.3 INDEMNIFICATION BY THE FUND
8.3(a). The Fund agrees to indemnify and hold harmless the
Company and each of its directors and officers, the Account, and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of the Fund) or litigation
(including legal and other expenses) to which the Indemnified Parties may be
required to pay or which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, expenses, damages, liabilities or expenses (or actions in respect
thereof) or settlements, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund; as limited by and in
accordance with the provisions of Sections 8.3(b) and 8.3(c)
hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or the Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the expense thereof, with counsel satisfactory to the party named in the
action and to settle the claim at its own expense; provided, however, that no
such settlement shall, without the Indemnified Parties' written consent, include
any factual stipulation referring to the Indemnified Parties or their conduct.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify
the Fund of the commencement of any litigation or proceeding against it or any
of its respective officers or directors in connection with the Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. APPLICABLE LAW
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, any Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
10.1 This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party, for any reason with respect to
some or all Designated Portfolios after five (5) years
from the effective date of this Agreement, by six (6)
months' advance written notice delivered to the other
parties; or
(b) termination by the Company by written notice to the Fund
and the Underwriter based upon the Company's determination
that shares of the Fund are not reasonably available to
meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund
and the Underwriter in the event any of the Portfolio's
shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law
precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued
by the Company; or
(d) termination by the Fund or Underwriter in the event that
formal administrative proceedings are instituted against
the Company by the NASD, the SEC, the Insurance
Commissioner or like official of any state or any other
regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, the
operation of any Account, or the purchase of the Fund
shares, provided, however, that the Fund or Underwriter
determines in its sole judgment exercised in good faith,
that any such administrative proceedings will have a
material adverse effect upon the ability of the Company to
perform its obligations under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund
or Underwriter by the NASD, the SEC, or any state
securities or insurance department or any other regulatory
body, provided, however, that the Company determines in
its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse
effect upon the ability of the Fund or Underwriter to
perform its obligations under this Agreement; or
(f) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Designated
Portfolio in the event that such Portfolio ceases to
qualify as a Regulated Investment Company under Subchapter
M or fails to comply with the Section 817(h)
diversification requirements specified in Article VI
hereof, or if the Company reasonably believes that such
Portfolio may fail to so qualify or comply; or
(g) termination by the Fund or Underwriter by written notice
to the Company in the event that the Contracts fail to
meet the qualifications specified in Article VI hereof; or
(h) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both of
the Fund or the Underwriter respectively, shall determine,
in their sole judgment exercised in good faith, that the
Company has suffered a material adverse change in its
business, operations, financial condition, or prospects
since the date of this Agreement or is the subject of
material adverse publicity; or
(i) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that the Fund,
the Adviser or the Underwriter has suffered a material
adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or
is the subject of material adverse publicity; or
(j) termination by the Underwriter by written notice to the
Company, upon a termination of the Master Agreement
between the Company and the Underwriter, or termination of
the Distribution Agreement.
10.2 EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Underwriter,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, the owners of the Existing Contracts may be permitted
to reallocate investments in the Fund, redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.2 shall not apply to
any termination under Article VII and the effect of such Article VII termination
shall be governed by Article VII of this Agreement. The parties further agree
that this Section 10.2 shall not apply to any termination under Section 10.1(f)
or (g) of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets held
in the Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or except for a
redemption that arises in connection with the Company's right to make additions
to, deletions from, substitutions for, or combinations of the securities that
are held by the Account (hereinafter referred to as a "Substitution
Redemption"). Upon request, the Company will promptly furnish to the Fund and
the Underwriter the opinion of counsel for the Company (which counsel shall be
reasonably satisfactory to the Fund and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Substitution Redemptions will be governed by a Master Agreement between the
Company, the Underwriter, and certain affiliates of the Underwriter.
Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent Contract Owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Fund or the Underwriter 90 days notice of its intention to do so.
10.4 Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
ARTICLE XI. NOTICES
Any notice required or permitted to be given under any provision other
than Article I, shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Henry H. Hopkins, Esq.
If to the Company:
First Security Benefit Life Insurance and Annuity Company
of New York
70 West Red Oak Lane, Fourth Floor
White Plains, New York 10604
Attention: Anita Larson
Copy to:
Security Benefit Life Insurance Company
700 Harrison Street
Topeka, Kansas 66636
Attention: Amy J. Lee, Esq.
If to Underwriter:
T. Rowe Price Investment Services
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Henry H. Hopkins
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property
of such Fund, and in the case of a series company, the respective Designated
Portfolio listed on Schedule A hereto as though such Designated Portfolio had
separately contracted with the Company and the Underwriter for the enforcement
of any claims against the Fund. The parties agree that neither the Board,
officers, agents or shareholders assume any personal liability or responsibility
for obligations entered into by or on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the New York Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of the Company are being conducted in a manner consistent with the
New York variable annuity laws and regulations and any other applicable law or
regulations.
12.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8 This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
12.9 The term "affiliated person" as used in this Agreement shall be
defined as provided in Section 2(a)(3) of the 1940 Act.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
COMPANY: FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
By its authorized officer
BY:__________________________________
Anita Larson
Title: CHIEF ADMINISTRATIVE OFFICER
Date: OCTOBER 11, 1995
FUND: T. ROWE PRICE FIXED INCOME SERIES, INC.
By its authorized officer
BY:__________________________________
James S. Riepe
Title: VICE PRESIDENT
Date: OCTOBER 11, 1995
FUND: T. ROWE PRICE EQUITY INCOME SERIES, INC.
By its authorized officer
BY:__________________________________
James S. Riepe
Title: VICE PRESIDENT
Date: OCTOBER 11, 1995
FUND: T. ROWE PRICE INTERNATIONAL SERIES, INC.
By its authorized officer
BY:__________________________________
James S. Riepe
Title: VICE PRESIDENT
Date: OCTOBER 11, 1995
UNDERWRITER: T. ROWE PRICE INVESTMENT SERVICES, INC.
By its authorized officer
BY:__________________________________
Nancy M. Morris
Title: VICE PRESIDENT
Date: OCTOBER 11, 1995
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
<S> <C> <C>
NAME OF SEPARATE ACCOUNT AND CONTRACTS FUNDED BY
DATE ESTABLISHED BY BOARD OF DIRECTORS SEPARATE ACCOUNT DESIGNATED PORTFOLIOS
T. Rowe Price Variable Annuity T. Rowe Price No-Load T. ROWE PRICE EQUITY SERIES, INC.
Account of First Security Benefit Variable Annuity o T. Rowe Price New America
Life Insurance and Annuity Growth Portfolio
Company of New York,
November 11, 1994 o T. Rowe Price Equity Income
Portfolio
o T. Rowe Price Personal
Strategy Balanced Portfolio
T. ROWE PRICE FIXED INCOME
SERIES, INC.
o T. Rowe Price Limited-Term
Bond Portfolio
T. ROWE PRICE INTERNATIONAL
SERIES, INC.
o T. Rowe Price International
Stock Portfolio
</TABLE>
MASTER AGREEMENT
AMONG
T. ROWE PRICE INVESTMENT SERVICES, INC.,
T. ROWE PRICE ASSOCIATES, INC.,
AND
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT is made as of the 11th day of October, 1995 by and
among T. ROWE PRICE INVESTMENT SERVICES, INC. ("INVESTMENT SERVICES"), T. ROWE
PRICE ASSOCIATES, INC. ("PRICE ASSOCIATES"), both Maryland corporations with
principal offices at 100 East Pratt Street, Baltimore, Maryland 21202, and FIRST
SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK ("SECURITY
BENEFIT"), a New York insurance company with principal offices at 70 West Red
Oak Lane, Fourth Floor, White Plans, New York 10604.
WITNESSETH:
WHEREAS, Security Benefit is a stock life insurance and annuity
company authorized to conduct an insurance business in the State of New York;
WHEREAS, Security Benefit issues, among other things, variable
insurance products;
WHEREAS, Investment Services markets various investment products;
WHEREAS, Price Associates is the parent company of Investment
Services;
WHEREAS, the parties are desirous of entering into a relationship
whereby Investment Services will market and distribute a variable annuity
product to be issued by the Security Benefit;
WHEREAS, this Agreement is intended to serve as the framework for
setting forth certain rights, responsibilities and obligations of the parties;
WHEREAS, at or about the same time as entering into this
Agreement, Security Benefit will enter into a Distribution Agreement with
Investment Services, a Participation Agreement with Investment Services and the
Funds, and an Insurance Agency Agreement ("AGENCY AGREEMENT") with T. Rowe Price
Insurance Agency, Inc. ("AGENCY"); and
WHEREAS, this Agreement together with the Distribution Agreement,
the Participation Agreement, and the Agency Agreement are intended to serve as
the framework for setting forth the various rights, responsibilities and
obligations of the parties vis-a-vis one another with respect to the overall
relationship;
NOW THEREFORE, it is agreed as follows:
ARTICLE 1
ADDITIONAL DEFINITIONS
1.1 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.
1.2 CONTRACTS -- The variable annuity products developed by the parties
in accordance with Article 2, which shall consist of the variable annuity
products identified on SCHEDULE 1 to this Agreement as of the Effective Date and
any class of variable insurance products that may be added to SCHEDULE 1 from
time to time in accordance with Article 2 of this Agreement. For this purpose
and under this Agreement generally, the phrase a "class of Contracts" shall mean
those Contracts: (i) issued by Security Benefit on the same contract form (but
allowing for state variations) with the same benefits, features and charges
distinguishing such class and reflected on the schedule pages included therein;
(ii) providing for investment in the same Subaccounts which in turn invest in
the same Funds; and (iii) covered by the same Registration Statement.
1.3 DISTRIBUTOR -- The same meaning as provided in the Distribution
Agreement.
1.4 EFFECTIVE DATE -- The date as of which this Agreement is executed.
1.5 FUND AND FUND SERIES -- An investment company or series thereof
serving as a funding medium for the Contracts or a class thereof, which shall
include those Funds and Fund Series named on SCHEDULE 2 to this Agreement as of
the Effective Date, and any other investment company or series thereof that may
be added to SCHEDULE 2 from time to time in accordance with Article 2 of this
Agreement.
1.6 GENERAL ACCOUNT -- The assets of Security Benefit other than those
allocated to a separate account.
1.7 ICA-40 -- The federal Investment Company Act of 1940, as amended.
------
1.8 INSURANCE COMMISSION -- The appropriate agency charged with
regulating insurance activities in New York State.
1.9 PROSPECTUS -- Unless the context otherwise requires, the prospectus
and statement of additional information, if any, included in a Registration
Statement or the definitive form thereof for any class of Contracts, including
any supplement thereto, as filed with the SEC under SA-33.
1.10 REGISTRATION STATEMENT -- Unless the context otherwise requires, a
registration statement or amendment thereto for a class of Contracts filed with
the SEC under SA-33.
1.11 RELATED AGREEMENT(S) -- The Distribution Agreement, the
Participation Agreement, and the Agency Agreement including the schedules to
each, as such Agreements and schedules may be amended from time to time.
1.12 SA-33 -- The Securities Act of 1933, as amended.
-----
1.13 SEC -- The Securities and Exchange Commission.
1.14 SECURITIES COMMISSION -- The appropriate agency charged with
regulating securities activities in New York State, but not the SEC.
1.15 SEPARATE ACCOUNT -- Each separate account of Security Benefit
supporting a class of Contracts, which shall consist of the separate accounts
named or otherwise identified on SCHEDULE 3 to this Agreement as of the
Effective Date, and any other separate account of Security Benefit that may be
added to SCHEDULE 3 from time to time in accordance with Article 2 of this
Agreement.
1.16 SUBACCOUNT -- A sub-division of the Separate Account available
under a class of Contracts, which shall include those subaccounts named or
otherwise identified on SCHEDULE 3 to this Agreement as of the Effective Date,
and any other subaccount that may be added to SCHEDULE 3 from time to time in
accordance with Article 2 of this Agreement.
ARTICLE 2
PRODUCT DESIGN AND PRODUCT DEVELOPMENT
2.1 SCOPE. The parties intend that this Agreement shall govern certain
aspects of their relationship with respect to the development, administration
and offering of one or more classes of Contracts, to be marketed and distributed
by Investment Services or other Distributors and to be issued, underwritten and
administered by Security Benefit. Nothing contained in this Agreement creates
the relationship of employer-employee, joint venture, partnership or association
between Security Benefit on the one hand and Investment Services and Price
Associates on the other hand.
2.2 EXCLUSIVITY.
(a) Until May 1, 1999, neither Security Benefit, nor an Affiliate
thereof, shall commence, proceed with or finalize discussions or
negotiations with any mutual fund or brokerage complex, or any Affiliate
thereof, set forth on SCHEDULE 4 (the "SCHEDULE 4 COMPANIES") regarding
the development, registration or distribution of any variable annuity or
variable life insurance product without the prior written consent of
Investment Services. Until May 1, 1999, neither Investment Services nor
any Affiliate thereof shall commence, proceed with or finalize any
discussions or negotiations with any insurance company which is not
Security Benefit or an Affiliate thereof regarding the development,
registration or distribution in New York of any variable annuity product
without the prior written consent of Security Benefit. In the event
that, prior to May 1, 1999, Investment Services determines to enter into
an agreement for the development, registration or distribution in New
York of any variable life insurance product for distribution by
Investment Services, Investment Services will consider Security Benefit,
or an Affiliate thereof, for such product; provided that Investment
Services shall not be prohibited from entering into such an agreement
with any other party.
(b) Nothing in this Agreement shall prohibit:
(i) Funds managed by Price Associates or Rowe
Price-Fleming International, Inc. ("ROWE
PRICE-FLEMING") or their respective Affiliates from
entering into agreements with insurance companies
other than Security Benefit to act as investment
vehicles for such companies' separate accounts; or
(ii) Price Associates, Rowe Price-Fleming or their
respective Affiliates from providing investment
advisory services to insurance companies other than
Security Benefit, as a sub-adviser or otherwise,
with respect to such companies' variable insurance
products; or
(iii) Security Benefit, or an Affiliate thereof, from
entering into a participation agreement with a fund
established or operated by a Schedule 4 Company, to
act as a funding vehicle for a variable insurance
product established or operated by Security
Benefit, or an Affiliate thereof, provided that
such variable insurance product is marketed and/or
distributed by Security Benefit or an Affiliate
thereof; or
(iv) Security Benefit, or an Affiliate thereof, from
entering into an agreement with a Schedule 4
Company for the provision of investment advisory
services to an underlying investment vehicle of a
variable insurance product established or operated
by Security Benefit or an Affiliate thereof,
provided that such variable insurance product is
marketed and/or distributed by Security Benefit, or
an Affiliate thereof.
2.3 PRODUCT DESIGN. The first class of Contracts shall contain the
features indicated in SCHEDULE 5 and Sections 2.5 and 2.6, provided that such
features are not inconsistent with the features described in the initial
Registration Statement filed with the SEC and declared effective on or prior to
the Effective Date and as provided in the Contract filed as an exhibit thereto.
Security Benefit and Investment Services shall consult in good faith with each
other in connection with the development of any subsequent class of Contract
with respect to the parameters set forth in Sections 2.5 and 2.6, and the
desired features and benefits for each class of Contracts. The features and
benefits may include, among others:
(a) minimum and maximum initial and subsequent premium
payments and premium payment plans;
(b) premium payment allocations, including limits thereon;
(c) transfers among Subaccounts, including transfers made in
connection with various asset rebalancing and dollar cost
averaging programs, and limits thereon and charges
therefor;
(d) full and partial withdrawals, including limits and charges
thereon;
(e) minimum guaranteed death benefits;
(f) annuity options and modes, including any such options or
modes that Security Benefit has available, and partial
annuitization;
(g) overall limits on charges and expenses, and any limits on
allocations thereof to subaccounts;
(h) funding media underlying the Subaccounts; and
(i) availability of a General Account option and terms and
conditions thereof.
Security Benefit shall be responsible for creating one or more Contract
forms, as appropriate for the states or jurisdictions agreed upon for the
marketing of the Contracts.
2.4 GEOGRAPHIC SCOPE OF MARKETING. Unless otherwise agreed in writing,
Security Benefit shall use its best efforts to make the Contracts available for
issuance in the State of New York. Security Benefit, recognizing the business
needs of Investment Services, will use its best efforts, as appropriate, to make
the Contracts available as promptly as practicable in New York. It is understood
that Security Benefit will make all reasonable efforts to have the Contracts
approved, filed or otherwise cleared in New York so that the Contracts can be
offered no later than the third quarter of 1995.
2.5 SPECIFIC PARAMETERS. The specific parameters to be reflected in the
first class of Contracts and to be considered in the development of any
subsequent class of Contracts include the following:
(A) PREMIUM TAX. Assessments of a premium tax against a Contract
only upon annuitization, surrender or death, and not against premium
payments when accepted by Security Benefit; except that Security Benefit
may reserve the right to deduct premium taxes at any time;
(B) RESERVATION OF RIGHTS. That any right to restrict, terminate,
or otherwise limit transfer, premium payment allocation, or partial
withdrawal privileges, or to impose charges therefor, to deduct premium
tax assessments, or to impose or increase other expenses or charges
related to such Contracts and reserved by Security Benefit may not be
exercised without the written consent of Investment Services and without
first having made appropriate modifications to applicable Contract
forms, Registration Statements and Prospectuses;
(C) ANNUITY OPTIONS. The annuity options available shall be
similar in kind and number to those offered by competitors and include
any annuity options that Security Benefit or its Affiliates have
available, and any change or amendment to the assumed interest rate used
in connection with such annuity options from that used in the first
class of Contracts may be made only with the written consent of
Investment Services; and
(D) GENERAL ACCOUNT. The General Account option shall be designed
and offered in a manner that will qualify the interests therein for the
exclusion provided by Section 3(a)(8) of SA-33. The General Account
option shall offer rates of interest determined, under normal
circumstances, in accordance with Security Benefit's normal interest
rate crediting procedures set forth in SCHEDULE 6 to this Agreement.
Security Benefit shall consult with Investment Services in advance with
respect to the General Account's current interest rates to be declared,
and the views of Investment Services shall be reasonably considered in
the establishment of such rates; provided that the determination of the
current rate to be credited shall be made by Security Benefit. Security
Benefit and Investment Services have determined to use interest rate
crediting procedures that maintain sufficient liquidity in the General
Account to allow exchanges from such Account to any Subaccount pursuant
to the dollar cost averaging and asset rebalancing options. Security
Benefit and Investment Services agree that in the event that short-term
rates fall to a level such that it is difficult to maintain the
contractually guaranteed minimum interest rate of three (3) percent that
must be credited on the General Account, the parties hereto shall in
good faith enter into discussions with a view to changing the interest
rate crediting procedures, or taking other steps to allow Security
Benefit to support the contractually guaranteed interest rate, which
steps may include requiring the dollar cost averaging from the General
Account be implemented over a minimum period of time in excess of the
one-year period currently required.
2.6 SECTION 403(B) PLANS. Security Benefit has informed Investment
Services of its profitability concerns if the Contracts are used to fund plans
under Section 403(b) of the Internal Revenue Code of 1986, as amended ("403(b)
Plans"). As a result, Security Benefit reserves the right to cease offering the
first class of Contracts in connection with 403(b) Plans and to create a
separate contract for 403(b) Plans with different specifications than those of
the Contracts. Security Benefit shall consult with Investment Services prior to
creating such separate contracts and take such action only after obtaining
Investment Services' written consent, which shall not be unreasonably withheld.
Once such separate contracts are available, Investment Services will no longer
offer the first class of Contracts to fund 403(b) Plans; provided, however, that
403(b) Plans to which the Contracts have been offered prior to the creation of
such separate contracts may continue to offer the Contracts. Security Benefit
shall assist Investment Services in understanding its approach to marketing,
administering and processing 403(b) Plans.
2.7 CHANGES IN OR RELATING TO A CONTRACT FORM. After the initial
Registration Statement for a class of Contracts has been declared effective by
the SEC, the parties from time to time may mutually agree upon a material change
in the terms and provisions of a Contract form(s) for such class or an amendment
or rider to such Contract form(s). Except to the extent necessary to comply with
applicable laws, rules, regulations or orders, or to accommodate the termination
of a Fund or Fund Series pursuant to a decision of that Fund's management,
Security Benefit shall not change unilaterally in any material respect the terms
and provisions of a Contract form for a class of Contracts, including, but not
limited to, a change in the variable information included in schedule pages
distinguishing such class of Contracts, or a change in the Separate Account or
Subaccounts thereof designated to support such Contract or any Fund or other
funding media underlying any Subaccount, or make any amendment or rider to such
Contract form whatsoever, without first obtaining Investment Services' written
consent thereto, which shall not be unreasonably withheld. Any such change
agreed upon or consented to in accordance with this Section shall be reflected
on the Schedules to this Agreement, to the extent appropriate, in accordance
with the provisions of Section 2.9.
2.8 CHANGES RELATING TO OUTSTANDING CONTRACTS OR RELATED SEPARATE
ACCOUNTS, SUBACCOUNTS AND FUNDS. After a Contract has been issued and is
outstanding, Security Benefit shall not make any material change unilaterally to
such Contract or the class of Contracts including such Contract or to the
Separate Account or Subaccounts supporting such Contract or class, including,
but not limited to, reinsuring such Contract or such class with another insurer,
transferring a Separate Account or Subaccount to another insurer, substituting a
Fund or Fund Series or terminating investment therein, or adding new funding
media, without first giving Investment Services the opportunity to review such
change and obtaining Investment Services' written consent thereto, which shall
not be unreasonably withheld, except to the extent necessary to comply with
applicable laws, rules, regulations or orders, or to accommodate the termination
of a Fund or Fund Series pursuant to a decision of that Fund's management.
Notwithstanding the above, Security Benefit will not substitute a Fund or Fund
Series or terminate investment therein without the consent of Investment
Services and Price Associates unless it is necessary for the best interests of
Contract owners in all states in which the Contracts are held, the continuation
of such option would cause undue risk to Security Benefit, and Investment
Services and Price Associates shall have received an opinion from counsel,
acceptable to them, that the substitution or termination is in the best
interests of Contract owners in all states in which the Contracts are held and
the continuation of such option would cause undue risk to Security Benefit. Any
such change implemented in accordance with this Section shall be reflected on
the Schedules to this Agreement, to the extent appropriate, in accordance with
the provisions of Section 2.9.
2.9 SCHEDULES. The Schedules as in effect on the Effective Date provide
particular information concerning the class of Contracts agreed upon as of such
Date. When the parties agree upon the features and benefits of another class of
Contracts, or agree upon any change pursuant to Section 2.7 or 2.8, the
Schedules may be amended and updated and signed by the parties to reflect such
changes, to the extent appropriate. The provisions of this Agreement shall be
equally applicable to each such added class of Contracts, Separate Account(s)
and Subaccounts supporting such Contracts and Funds and Fund Series, unless the
context otherwise requires. With respect to SCHEDULE 7, Security Benefit shall
update such Schedule promptly or otherwise notify Investment Services in writing
of any changes to such Schedule.
ARTICLE 3
REGISTRATION, DISTRIBUTION AND ADMINISTRATION
OF THE CONTRACTS
3.1 REGISTRATION, FILINGS AND APPROVALS RELATING TO THE CONTRACTS.
(a) Security Benefit shall be solely responsible for developing
and preparing all necessary Contract forms and related applications,
Registration Statements, Prospectuses and other documents in the usual
form, and for establishing the appropriate Separate Accounts and
Subaccounts to support the Contracts and invest in the designated Funds.
Security Benefit may establish more than one Separate Account for this
purpose; however, no variable insurance products other than the
Contracts shall be issued through a Separate Account, nor shall the
Funds be made available to any other variable insurance products issued
by Security Benefit, if any, without Investment Services' prior written
consent. Each Separate Account shall be established in accordance with
applicable state law.
(b) Security Benefit shall be responsible for filing all such
Contract forms, applications, Registration Statements, Prospectuses and
other documents with the SEC and applicable Securities Commissions.
(c) Security Benefit shall be responsible for filing all such
Contract forms, applications and other documents relating to the
Contracts and/or the Separate Accounts, as required or customary, with
Insurance Commissions. Security Benefit shall be responsible for one
year from the effective date of this Agreement for informing Investment
Services of any states or jurisdictions requiring the registration of a
Fund or Fund Series with a regulatory body of such state or
jurisdiction.
(d) Security Benefit shall be responsible for filing amendments
to such Contract forms, applications, Registration Statements,
Prospectuses and other documents to the extent appropriate or required
by applicable law.
3.2 REGISTRATIONS, FILINGS AND APPROVALS RELATING TO THE FUNDS
(a) Investment Services shall be responsible for establishing any
Fund or Fund Series selected as a funding medium for a class of
Contracts, to the extent such Fund or Fund Series is not otherwise
established or maintained by another person.
(b) With respect to each Fund or Fund Series for which Investment
Services is responsible pursuant to paragraph (a) hereof, Investment
Services shall be responsible for filing all initial registration
statements, applications, prospectuses and other documents for the Fund
and its shares with the SEC and Securities Commission, it being
understood that, once a Fund has been established and has begun to offer
its shares to investors, such Fund shall thereafter be responsible for
its own operations and compliance with applicable requirements.
3.3 DISTRIBUTION. The Contracts shall be distributed solely through
Investment Services, any Affiliate thereof, or a Distributor, pursuant to the
Distribution Agreement. Investment Services and its Affiliates shall develop,
implement and manage the marketing programs for the Contracts, including, but
not limited to, the operation of the Investment Services telesales center(s).
3.4 AGENT LICENSING.
(a) Licensing of insurance agents to solicit applications for the
Contracts shall be governed by the Agency Agreement.
(b) Security Benefit shall be responsible for compliance with
applicable insurance laws governing agent appointment of all persons
including persons associated with Investment Services or an Affiliate
thereof, or a Distributor, engaged in the sale or solicitation of the
Contracts. Security Benefit shall provide such persons with an Agent and
Administration Manual ("MANUAL"), substantially in the form attached
hereto as EXHIBIT A. Security Benefit shall inform Investment Services
of any applicable insurance rules and regulations of which it becomes
aware and which it has reason to believe Investment Services is not
aware.
3.5 CONTRACT AND SEPARATE ACCOUNT ADMINISTRATION
(a) Security Benefit shall be responsible for the insurance
underwriting, issuance, service, and administration of the Contracts and
for the administration of the Separate Accounts, including, without
limitation, maintenance of a toll-free telephone service center, such
function to be performed in all respects at a level commensurate with
those standards prevailing in the variable insurance industry. Security
Benefit has developed procedures for performing such underwriting,
issuing, servicing and administrative functions, which procedures are
set forth in the Manual. Security Benefit shall not materially amend or
supplement the Manual or adopt or implement any other administrative
rules, procedures or systems without first giving Investment Services an
opportunity to review any such material and obtaining Investment
Services' written consent.
(b) Nothing in this Section 3.5 shall relieve Security Benefit of
its duty, or otherwise diminish such duty, to perform its obligations
under this Agreement, nor shall this Section relieve Security Benefit of
its liabilities, or otherwise diminish such liabilities, for its failure
to perform its obligations under this Agreement.
ARTICLE 4
COMPENSATION AND EXPENSES
4.1 COMPENSATION FOR SECURITY BENEFIT. Unless the parties otherwise
agree in writing, the sole source of compensation for Security Benefit for
carrying out its responsibilities and obligations assumed under this Agreement
or the Related Agreements shall be the revenues derived from the charges
deducted in connection with the Contracts.
4.2 COMPENSATION FOR INVESTMENT SERVICES Unless the parties otherwise
agree in writing, Investment Services shall receive no compensation for carrying
out its responsibilities and obligations assumed under this Agreement.
4.3 COMPENSATION FOR INVESTMENT ADVISORY SERVICES. Price Associates
and/or Rowe Price-Fleming have executed investment management agreements with
the Funds specified on SCHEDULE 2 as of the Effective Date. Security Benefit,
other than as a shareholder, bears no responsibility in any respect for payment
of investment advisory services to the Funds.
4.4 COMPENSATION FOR AGENCY, INC. Agency, an affiliate of Investment
Services, shall enter into an Agency Agreement with Security Benefit and shall
receive the compensation provided for therein, if any, subject to any amendment
to such agreement mutually agreed to by the parties thereto.
4.5 COMPENSATION FOR THE DISTRIBUTORS. Investment Services may enter
into sales agreements with Distributors under the terms specified in the
Distribution Agreement. Investment Services and the Agency shall be solely
responsible for the payment of compensation to the Distributors, if any, for
solicitation activities relating to the Contracts.
4.6 SEEDING OF FUNDS AND FUND SERIES. Investment Services or an
Affiliate thereof shall be responsible for providing seed capital for any Fund
or Fund Series for whose establishment it is responsible under Section 3.2(a).
4.7 OTHER INVESTMENT VEHICLES OF SEPARATE ACCOUNTS OF SECURITY BENEFIT.
In the event that Security Benefit or an Affiliate thereof is seeking an
unaffiliated investment manager for any mutual funds serving as investment
vehicles for other separate accounts established and operated by Security
Benefit or such Affiliate, Security Benefit will consider the appointment of
Price Associates or Rowe Price-Fleming, or an Affiliate of the foregoing, as a
sub-adviser for such funds, or, in the alternative, to enter into a
participation agreement with a fund managed by any of the foregoing; provided
that Security Benefit believes, in its sole discretion, that Price Associates or
Rowe Price-Fleming meets the criteria and standards, including marketing
standards, that the Company employs for selecting investment managers for such
mutual funds, and provided further that Security Benefit shall not be prohibited
from providing such recommendation of, or entering into an agreement with, any
other party.
4.8 EXPENSES. Except as otherwise provided herein and in the Related
Agreements, or in SCHEDULE 7 to this Agreement, each party shall bear the
expenses it incurs in carrying out its responsibilities and obligations assumed
under this Agreement or the Related Agreements.
ARTICLE 5
ADDITIONAL RESPONSIBILITIES AND OBLIGATIONS
5.1 RESOURCES. Security Benefit and Investment Services shall each
allocate sufficient technical support, human resources and all other resources
reasonably necessary to carry out their respective responsibilities and
obligations assumed under this Agreement and the related Agreements in a timely
manner.
5.2 DUE DILIGENCE. Each party shall provide the other parties access to
such of its records, officers and employees at reasonable times as is necessary
to enable the parties to fulfill their obligations under this Agreement and any
Related Agreements and applicable law.
5.3 EXCHANGES AND REPLACEMENTS.
(A) SECURITY BENEFIT. During the term of this Agreement and
subject to Sections 9.1 and 9.3 hereof, neither Security Benefit nor any
of its Affiliates shall knowingly induce or cause, or attempt to induce
or cause, directly or indirectly, any Contract owner to lapse,
terminate, surrender, exchange or cancel his or her Contract, or to
cease or discontinue making premium payments thereunder except where
such act or attempt to cause a lapse, termination, surrender, exchange
or cancellation is in response to an enactment of federal or state
legislation, order or decision of any court or regulatory body,
administrative agency, or any other governmental instrumentality, a
change in circumstances which makes the Contracts or insurance contracts
of that type (E.G., annuity contracts or life insurance policies) an
unsuitable investment for existing Contract owners, or is in response to
any event or occurrence which results or is likely to result in material
adverse publicity pertaining to any party to this Agreement.
(B) INVESTMENT SERVICES. Unless the parties otherwise agree in
writing, during the term of this Agreement and subject to Sections 9.1
and 9.2 hereof, neither Investment Services nor any of its Affiliates
shall execute a program to induce or cause, or attempt to induce or
cause, directly or indirectly, all or substantially all Contract owners
of a class of Contracts to lapse, terminate, surrender, exchange or
cancel their Contracts, or to cease or discontinue making premium
payments thereunder except where such lapse, termination, surrender,
exchange or cancellation is in response to an enactment of federal or
state legislation, order or decision of any court or regulatory body,
administrative agency, or any other governmental instrumentality, a
change in circumstances which makes the contracts or insurance contracts
of that type (E.G., annuity contracts of life insurance policies) an
unsuitable investment for existing Contract owners, is in response to
any event or occurrence which results or is likely to result in material
adverse publicity pertaining to any party to this Agreement, or is in
response to normal marketing activities or practices of Investment
Services or its Affiliates.
5.4 SERVICE AND QUALITY STANDARDS. Security Benefit and Investment
Services have agreed to implement certain additional service and quality
standards as set forth in EXHIBIT B, which may be amended from time to time.
ARTICLE 6
PROPRIETARY MATTERS
6.1 TRADEMARKS
(A) T. ROWE PRICE LICENSED MARKS. Investment Services is a wholly
owned subsidiary of Price Associates, which acts as the investment
adviser to a number of registered investment companies (such investment
companies, Investment Services, Rowe Price-Fleming and Price Associates
being referred to herein as the "T. Rowe Price Family"). Investment
Services acts as principal underwriter for each registered investment
company in the T. Rowe Price Family, including T. Rowe Price Equity
Series, Inc., T. Rowe Price International Series, Inc. and T. Rowe Price
Fixed Income Series, Inc., the underlying investment media for the
Contracts. Entities in the T. Rowe Price Family own all right, title and
interest in and to the names, trademarks and service marks "T. Rowe
Price," "Invest with Confidence," "Tele Access," "T. Rowe Price Variable
Annuity Analyzer," "Variable Annuity Analyzer," and the "Bighorn Sheep"
logo in the style shown in EXHIBIT C attached hereto, and any other
names, trademarks, service marks or logos later specified by Investment
Services or Price Associates (the "T. ROWE PRICE LICENSED MARKS" or the
"LICENSOR'S LICENSED MARKS"). Entities within the T. Rowe Price Family
use the T. Rowe Price licensed marks pursuant to various agreements with
one another. Investment Services and Price Associates hereby grant to
Security Benefit a non-exclusive license to use the T. Rowe Price
licensed marks in connection with its performance of the services
contemplated under this Agreement and the Related Agreements, subject to
the terms and conditions set forth in paragraph (c) hereof.
(B) SECURITY BENEFIT LICENSED MARKS. Security Benefit or its
Affiliates are the owners of all right, title and interest in and to the
name, trademark and service mark "Security Benefit" 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
Security Benefit (the "SECURITY BENEFIT LICENSED MARKS" or the
"LICENSOR'S LICENSED MARKS"). Security Benefit hereby grants to
Investment Services, Price Associates and their Affiliates a
non-exclusive license to use the Security Benefit licensed marks in
connection with their performance of the services contemplated by this
Agreement and the Related Agreements, subject to the terms and
conditions set forth in paragraph (c) hereof.
(C) TERMS AND CONDITIONS
(I) TERM. The grant of license by Investment Services and
Security Benefit (each, a "LICENSOR") to the other and Affiliates
thereof (the "LICENSEES") shall terminate automatically when the
Contracts shall cease to be outstanding or invested in a Fund or
Fund Series or sooner upon termination by the licensor, unless
otherwise agreed in writing by the parties. Upon automatic
termination, every licensee shall cease to use a licensor's
licensed marks. Upon Investment Services' termination of the
grant of license, Security Benefit shall immediately cease to
issue new annuity contracts or life insurance contracts or
service existing Contracts under any of the Investment Services
licensed marks, and shall likewise cease any activity which
suggests that it has any right under any of the Investment
Services licensed marks or that it has any association with
Investment Services or an Affiliate thereof in connection with
any such contracts. Similarly, upon Security Benefit's
termination of the grant of license, Investment Services shall
immediately cease to distribute new annuity contracts or life
insurance contracts or promotional, sales or advertising material
relating to any such contract under the Security Benefit licensed
marks and shall likewise cease any activity which suggests that
it has any right under the Security Benefit licensed marks or
that it has any association with Security Benefit or an Affiliate
thereof in connection with any such contracts.
(II) PRE-RELEASE APPROVAL OF TRADEMARK-BEARING MATERIALS.
In addition to any pre-release approvals that may be required
under a Related Agreement or a participation agreement, a
licensee shall obtain the prior written approval of the licensor
for the public release by such licensee of any materials bearing
the licensor's licensed marks. Such material shall include, but
not be limited to, samples of each Contract form and application,
form correspondence with Contract owners, Contract owner reports
and any other materials that bear any of the licensor's licensed
marks.
(III) RECALL. During the term of this grant of license, a
licensor may request that a licensee submit samples of any
materials bearing any of the licensor's licensed marks which were
previously approved by the licensor but, due to changed
circumstances, the licensor may wish to reconsider, or which were
not previously approved in the manner set forth above. If, on
reconsideration or on initial review, respectively, any such
samples fail to meet with the written approval of the licensor,
then the licensee shall immediately cease distributing such
disapproved materials. The licensee shall obtain the prior
written approval of the licensor for the use of any new materials
developed to replace the disapproved materials, in the manner set
forth above.
(IV) ACKNOWLEDGEMENT OF OWNERSHIP. Each licensee
hereunder: (1) acknowledges and stipulates that the licensor's
licensed marks are valid and enforceable trademarks and/or
service marks; and that such licensee does not own the licensor's
licensed marks and claims no rights therein other than as a
licensee under this Agreement; (2) agrees never to contend
otherwise in legal proceedings or in other circumstances; and (3)
acknowledges and agrees that the use of the licensor's licensed
marks pursuant to this grant of license shall inure to the
benefit of the licensor.
6.2 OWNERSHIP OF PROPRIETARY INFORMATION; CONFIDENTIALITY.
(A) INFORMATION AND PROSPECTS. The names, addresses and other
information relating to prospects or leads for the Contracts acquired by
Investment Services or its Affiliates or its agents or representatives
in connection with marketing activities shall be the exclusive property
of, and shall be exclusively owned by, Investment Services or its
Affiliates, as the case may be. The records created and maintained by
Security Benefit, or by any subcontractor on behalf of such Company,
that pertain to Contract owners and the servicing and administration of
the Contracts shall be the exclusive property of, and shall be
exclusively owned by, Security Benefit. However, to the extent that any
information may come to the attention of Security Benefit or any
Affiliate thereof, or be entered into the records created or maintained
by or on behalf of such Company or an Affiliate thereof, as a result of
its relationship with Investment Services or an Affiliate thereof and
not from an independent source, such information shall be kept
confidential and shall not be used by Security Benefit or its
Affiliates, or their respective agents or employees for any purpose,
including but not limited to any marketing purpose, except in connection
with the performance of its duties and responsibilities hereunder or
under a Related Agreement or under the Contracts. In no event shall the
names and addresses of such customers and prospective customers be
furnished by Security Benefit or its Affiliate, or any agent or
subcontractor thereof, to any other company or person (except as
required by law or regulation and then only upon prior written notice to
Investment Services).
(B) 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 customers or prospective customers for the
Contracts, the names, addresses and other personal information relating
to Contract owners, 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).
(C) RETURN OF INFORMATION. Upon a party's written request to
another party, such other party shall return to the requesting party any
information or materials of a proprietary nature obtained by or on
behalf of such other party in the course of the performance of this
Agreement or any Related Agreement.
(D) OWNERSHIP OF CONTRACT, FORMS AND OTHER MATERIALS. Any
Contract forms, riders or materials developed or used by Security
Benefit in connection with the relationship between Security Benefit,
Investment Services, and Price Associates under this Agreement and the
Related Agreements shall remain the exclusive property of Security
Benefit.
(E) GENERAL. The intent of this Section 6.2 is that no party or
any Affiliate thereof shall utilize, or permit to be utilized, its
knowledge of any other party or of any Affiliate thereof which is
derived as a result of the relationship created through the funding and
sale of the Contracts or the solicitation of sales of any product or
service, except to the extent necessary by the terms of this Agreement
or to further the purposes of this Agreement, or except as expressly
permitted with the written consent of the other parties. This Section
6.2 shall remain operative and in full force and effect regardless of
the termination of this Agreement, and shall survive any such
termination.
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 Contracts 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 upon advice of its counsel
such issuance is required in order 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. 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.
<PAGE>
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 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 the fulfillment of the terms of this
Agreement, 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, 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.
7.4 ADMINISTRATIVE SYSTEM. Security Benefit represents and warrants to
Investment Services and Price Associates that it has implemented the
administrative systems and procedures necessary to issue, underwrite for
insurance purposes, service and administer the Contracts and administer the
Separate Accounts in accordance with the terms and provisions of this Agreement.
ARTICLE 8
INDEMNIFICATION AND REMEDIES
8.1 INDEMNIFICATION
(A) INDEMNIFICATION BY SECURITY BENEFIT. In addition to any
indemnification liability Security Benefit may have under any of the
Related Agreements or otherwise, Security Benefit shall indemnify and
hold harmless Investment Services, Price Associates, and their
Affiliates and any officer, director, employee or agent of any of the
foregoing, against any and all losses, liabilities, damages, claims or
expenses, joint or several (including the reasonable costs of settling a
claim, investigating or defending any alleged loss, liability, damage,
claim or expense and reasonable legal counsel fees incurred in
connection therewith), to which Investment Services, Price Associates
and/or any such person may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses,
liabilities, damages, claims or expenses result because of a material
breach by Security Benefit of any provision of this Agreement or which
proximately result from any acts or omission of Security Benefit or
Security Benefits's officers, directors, employees, agents (which for
these purposes shall not include an Underwriter Representative or
Distributor Representative as those terms are defined in the
Distribution Agreement) or subcontractors that are not in accordance
with this Agreement, including but not limited to any violation of any
federal or state statute or regulation. Notwithstanding the above, no
person shall be entitled to indemnification pursuant to this Section
8.1(a) if such loss, liability, damage, claim or expense is due to the
willful misfeasance, bad faith, gross negligence or reckless disregard
of duty by the person seeking indemnification.
(B) INDEMNIFICATION BY INVESTMENT SERVICES. In addition to any
indemnification liability Investment Services may have under any of the
Related Agreements, Investment Services shall indemnify and hold
harmless Security Benefit and any Affiliate and any officer, director,
employee or agent of any of the foregoing, against any and all losses,
liabilities, damages, claims or expenses, joint or several (including
the reasonable costs of settling a claim, investigating or defending any
alleged loss, liability, damage, claim or expense and reasonable legal
counsel fees incurred in connection therewith), to which Security
Benefit and/or any such person may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses,
liabilities, damages, claims or expenses result because of a material
breach by Investment Services of any provision of this Agreement, or
which proximately result from any acts or omission of Investment
Services's officers, directors, employees, agents or subcontractors that
are not in accordance with this Agreement, including but not limited to
any violation of any federal or state statute or regulation.
Notwithstanding the above, no person shall be entitled to
indemnification pursuant to this Section 8.1(b) if such loss, liability,
damage, claim or expense is due to the willful misfeasance, bad faith,
gross negligence or reckless disregard of duty by the person seeking
indemnification.
(C) INDEMNIFICATION BY PRICE ASSOCIATES. Price Associates shall
indemnify and hold harmless Security Benefit and any Affiliate and any
officer, director, employee or agent of any of the foregoing, against
any and all losses, liabilities, damages, claims or expenses, joint or
several (including the reasonable costs of settling a claim,
investigating or defending any alleged loss, liability, damage, claim or
expense and reasonable legal counsel fees incurred in connection
therewith), to which Security Benefit and/or any such person may become
subject under any statute or regulation, at common law or otherwise,
insofar as such losses, liabilities, damages, claims or expenses result
because of the material breach by Price Associates of any provision of
this Agreement, including but not limited to any violation of any
federal or state statute or regulation. Further, Price Associates shall
indemnify Security Benefit under this Agreement and the Related
Agreements to the extent that its Affiliates are unable to fulfill their
indemnification obligations under this Agreement or any Related
Agreements. Notwithstanding the above, no person shall be entitled to
indemnification pursuant to this Section 8.1(c) if such loss, liability,
damage, claim or expense is due to the willful misfeasance, bad faith,
gross negligence or reckless disregard of duty by the person seeking
indemnification.
(D) GENERAL. After receipt by a party entitled to indemnification
("indemnified party") under this Section 8.1 of notice of the
commencement of any action, if a claim in respect thereof is to be made
against any person obligated to provide indemnification under this
Section 8.1 ("indemnifying party"), such indemnified party will notify
the indemnifying party in writing of the commencement thereof within a
reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served
upon the indemnified party; provided that the failure to so notify the
indemnifying party shall not relieve the indemnifying party from any
liability under this Section 8.1 except to the extent that the
indemnifying party shall have been prejudiced as a result of the failure
or delay in giving such notice. The indemnifying party shall be entitled
to participate, at its own expense, in the defense, or, if the
indemnifying party so elects, to assume the defense of any suit brought
to enforce any such claim, but, if the indemnifying party elects to
assume the defense, such defense shall be conducted by legal counsel
chosen by the indemnifying party and satisfactory to the indemnified
party, to its Affiliates and any officer, director, employee or agent of
any of the foregoing, in the suit. In the event that the indemnifying
party elects to assume the defense of any such suit and retain such
legal counsel, the indemnified party, its Affiliates and any officer,
director, employee or agent of any of the foregoing in the suit, shall
bear the fees and expenses of any additional legal counsel retained by
them. If the indemnifying party does not elect to assume the defense of
any such suit, the indemnifying party will reimburse the indemnified
party, such Affiliates, officers, directors, employees or agents in such
suit for the reasonable fees and expenses of any legal counsel retained
by them.
(E) SUCCESSORS. A successor by law of Investment Services, Price
Associates, or Security Benefit, as the case may be, shall be entitled
to the benefits of the indemnification provisions contained in this
Section 8.1.
8.2 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.
8.3 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. No prior writings by or between the parties with
respect to the subject matter hereof shall be used by a party in connection with
the interpretation of any provision of this Agreement. This Agreement shall be
construed and its provisions interpreted under and in accordance with the
internal laws of the state of Maryland without giving effect to principles of
conflict of laws. This Section 8.3 shall not be construed to deny Security
Benefit, or an Affiliate thereof, of any rights to which it is entitled as an
owner of shares of the Fund.
8.4 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 duly enforceable as if the provision at issue had never been a
part hereof.
ARTICLE 9
TERM AND TERMINATION
9.1 TERMINATION. This Agreement shall terminate of its own accord when
all Contracts issued pursuant to this Agreement and the Related Agreements are
no longer outstanding and no owner, annuitant, or beneficiary thereof is
receiving any annuity benefits from Security Benefit, or after five years from
the Effective Date may be terminated by any party upon six months written notice
to the other parties. Upon termination of this Agreement, Articles 3, 6 and 8
shall nevertheless survive and continue in full force and effect.
9.2 CHANGES RELATING TO SECURITY BENEFIT. Upon the occurrence of any of
the following events, Investment Services shall have the right, in its sole
discretion, to make arrangements for an exchange of all or a portion of the
Contracts then outstanding, into insurance contracts issued by another insurance
carrier mutually acceptable to the parties, and, upon being notified of
Investment Services' exercise of such right, Security Benefit shall cooperate in
effecting transactions entitled by such exchange in an expeditious manner, it
being understood that Security Benefit may structure the exchange as a
reinsurance or similar transaction, and that Security Benefit shall be entitled
to reasonable compensation from such insurance carrier in connection with such
transaction:
(a) Security Benefit shall have become insolvent or its
surplus shall have become impaired as such terms are
defined under applicable insurance law of Security
Benefit's state of domicile;
(b) the A.M. Best & Co. rating of Security Benefit is not "A"
(or if such rating organization changes its rating system
after the Effective Date, an equivalent rating) or better;
(c) the Standard & Poor's claims paying ability rating of
Security Benefit is not "A-" (or if such rating
organization changes its rating system after the Effective
Date, an equivalent rating) or better;
(d) Investment Services determines that Security Benefit is in
material breach of any provision of this Agreement or of
any Related Agreement, unless such breach has been cured
within ten (10) days after receipt of notice of such
breach;
(e) in Investment Services' 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 Contracts or insurance
contracts of that type (E.G., annuity contracts or life
insurance policies) an unsuitable investment for
prospective customers of Investment Services, or any
event, occurrence or circumstance which results or is
likely to result in material adverse publicity to any
party to this Agreement or an Affiliate thereof) which
substantially and materially undermines the distribution
or servicing of the Contracts or the reputation and
goodwill of any party to this Agreement;
(f) an assignment or transfer of this Agreement by Security
Benefit that does not comply with the provisions of
Section 9.4 of this Agreement;
9.3 CHANGES RELATING TO INVESTMENT SERVICES. Security Benefit shall have
the right, in its sole discretion, to make changes in the Contracts, including
causing a substitution of a Fund or Fund Series, upon the occurrence or
determination of any of the following events:
(a) Investment Services, Price Associates, 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;
(b) Investment Services, Price Associates, or an Affiliate
thereof has a receiver, liquidator or trustee appointed
over its affairs;
(c) Security Benefit determines that Investment Services or
Price Associates is in material breach of any provision of
this Agreement or of any Related Agreement, unless such
breach is cured with ten (10) days after receipt of notice
of such breach;
(d) an assignment or transfer of this Agreement by Investment
Services or Price Associates that does not comply with the
provisions of Section 9.4 of this Agreement; or
(e) in Security Benefit'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 Contracts or insurance
contracts of that type (E.G., annuity contracts ---- or
life insurance policies) an unsuitable investment for
prospective customers of Security Benefit, or any event,
occurrence or circumstance which results or is likely to
result in material adverse publicity to any party to this
Agreement or an Affiliate thereof) which substantially and
materially undermines the distribution or servicing of the
Contracts or the reputation and goodwill of any party to
this Agreement.
9.4 ASSIGNMENT AND TRANSFER. This Agreement may not be assigned or
transferred by any party without the prior written consent of the other party
hereto.
ARTICLE 10
GENERAL PROVISIONS
10.1 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 the other party at the
following addresses (or at such other address for a party as shall be specified
by like notice);
if to Security Benefit, to:
First Security Benefit Life Insurance and Annuity Company
of New York
Attn: Anita Larson
70 West Red Oak Lane, Fourth Floor
White Plains, New York 10604
copy to:
Security Benefit Life Insurance Company
Attn: Amy J. Lee, Esq.
700 Harrison Street
Topeka, Kansas 66636
if to Investment Services, to:
T. Rowe Price Investment Services, Inc.
Attn: Henry H. Hopkins, Esq.
100 East Pratt Street
Baltimore, Maryland 21202
if to Price Associates, to:
T. Rowe Price Associates, Inc.
Attn: Henry H. Hopkins, Esq.
100 East Pratt Street
Baltimore, Maryland 21202
10.2 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.
10.3 COUNTERPARTS. 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.
10.4 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each duly executed this
Agreement as of the day and year first above written.
FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
By its authorized officer
BY:_________________________________
Anita Larson
Title: CHIEF ADMINISTRATIVE OFFICER
Date: OCTOBER 11, 1995
T. ROWE PRICE INVESTMENT SERVICES, INC.
By its authorized officer
BY:_________________________________
Nancy M. Morris
Title: VICE PRESIDENT
Date: OCTOBER 11, 1995
T. ROWE PRICE ASSOCIATES, INC.
By its authorized officer
BY:_________________________________
Nancy M. Morris
Title: VICE PRESIDENT
Date: OCTOBER 11, 1995
<PAGE>
SCHEDULE 1
CLASSES OF CONTRACTS
SUPPORTED BY SEPARATE ACCOUNTS
LISTED ON SCHEDULE 3
Effective as of the Effective Date, the following classes of Contracts are
subject to the Agreement:
<TABLE>
<CAPTION>
Policy Marketing Name SEC 1933 Act Name of Supporting Annuity or Life
Registration Number Account
- ------------------------- ---------------------- ----------------------- ---------------------
<S> <C>
T. Rowe Price No-Load 33-83240 T. Rowe Price Annuity
Variable Annuity Variable Annuity
Account of Security
Benefit
- ------------------------- ---------------------- ----------------------- ---------------------
Effective as of _______, the following classes of Contracts are hereby added to
this Schedule 1 and made subject to the Agreement:
- ------------------------- ---------------------- ----------------------- ---------------------
Policy Marketing Name SEC 1933 Act Name of Supporting Annuity or Life
Registration Number Account
- ------------------------- ---------------------- ----------------------- ---------------------
- ------------------------- ---------------------- ----------------------- ---------------------
- ------------------------- ---------------------- ----------------------- ---------------------
- ------------------------- ---------------------- ----------------------- ---------------------
</TABLE>
IN WITNESS WHEREOF, Investment Services, Price Associates, and Security Benefit
hereby amend this Schedule 1 in accordance with Article II of the Agreement.
______________________ __________________________
Security Benefit Investment Services
______________________
Price Associates
<PAGE>
SCHEDULE 2
FUNDS AVAILABLE UNDER
EACH CLASS OF CONTRACTS
Effective as of the Effective Date, the following Funds are available under the
Contracts:
<TABLE>
<CAPTION>
- --------------------------------- ------------------------------ ==============================
<S> <C> <C>
Contracts Marketing Name Fund Fund Series
- --------------------------------- ------------------------------ ==============================
oEquity Income Portfolio
oNew America Growth Portfolio
T. Rowe Price No-Load Variable T. Rowe Price Equity Series, oT. Rowe Price Personal
Annuity Inc. Strategy Balanced Portfolio
- --------------------------------- ------------------------------ ==============================
T. Rowe Price International International Stock Portfolio
Series, Inc.
- --------------------------------- ------------------------------ ==============================
T. Rowe Price Fixed Income Limited-Term Bond Portfolio
Series, Inc.
- --------------------------------- ------------------------------ ==============================
Effective as of __________________, this Schedule 2 is hereby amended to reflect
the following changes in Fund or Fund Series available under the Contracts:
- --------------------------------- ------------------------------ ==============================
Contracts Marketing Name Fund Fund Series
- --------------------------------- ------------------------------ ==============================
- --------------------------------- ------------------------------ ==============================
- --------------------------------- ------------------------------ ==============================
- --------------------------------- ------------------------------ ==============================
</TABLE>
IN WITNESS WHEREOF, Investment Services, Price Associates and Security Benefit
hereby amend this Schedule 2 in accordance with Article II of the Agreement.
______________________ ______________________
Security Benefit Investment Services
______________________
Price Associates
<PAGE>
SCHEDULE 3
SEPARATE ACCOUNTS OF THE SECURITY BENEFIT
COMPANIES SUPPORTING THE CONTRACTS
Effective as of the Effective Date, the following separate account and
subaccounts are subject to the Agreement:
<TABLE>
<CAPTION>
- -------------------------- --------------------- ----------------------- ======================
<S> <C>
Date Established by
Name of Separate Account Board of Directors SEC 1940 Act Type of Product
and Subaccounts of the Company Registration Number Supported by Account
- -------------------------- --------------------- ----------------------- ======================
T. Rowe Price Variable November 11, 1994 811-8726 Variable Annuity
Annuity Account of
Security Benefit
o Equity Income
Subaccount
o International Stock
Subaccount
o Limited-Term Bond
Subaccount
o New America Growth
Subaccount
o Personal Strategy
Balanced Subaccount
- -------------------------- --------------------- ----------------------- ======================
Effective as of , the following separate accounts and/or subaccounts are hereby
added to this Schedule 3 and made subject to the Agreement:
- ------------------------- ---------------------- ----------------------- ======================
Date Established by
Name of Separate Board of Directors SEC 1940 Act Type of Product
Account and Subaccounts of the Company Registration Number Supported by Account
- ------------------------- ---------------------- ----------------------- ======================
- ------------------------- ---------------------- ----------------------- ======================
- ------------------------- ---------------------- ----------------------- ======================
- ------------------------- ---------------------- ----------------------- ======================
</TABLE>
IN WITNESS WHEREOF, Security Benefit, Investment Services, and Price Associates
hereby amend this Schedule 3 in accordance with Article II of the Agreement.
____________________ ________________________
Security Benefit Investment Services
____________________
Price Associates
<PAGE>
SCHEDULE 4
BROKERAGE FIRMS AND MUTUAL FUNDS SPONSORS
Benham
Dreyfus
Fidelity
First Trust
Harbor Capital
Heine Security
Invesco
Jack White
Janus
Neuberger & Berman
Schwab
Scudder
Steinroe
Strong
Twentieth Century
Vanguard
<PAGE>
SCHEDULE 5
CONTRACT SPECIFICATIONS
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
THE COMPANY'S PROMISE
In consideration for the Purchase Payments and the attached application, First
Security Benefit Life Insurance and Annuity Company of New York (the "Company")
will pay the benefits of this Contract according to its provisions.
LEGAL CONTRACT
PLEASE READ YOUR CONTRACT CAREFULLY. It is a legal Contract between the Owner
and the Company. The Contract's table of contents is on page 2.
FREE LOOK PERIOD-RIGHT TO CANCEL
IF FOR ANY REASON THE OWNER IS NOT SATISFIED WITH THIS CONTRACT, HE OR SHE MAY
RETURN IT TO THE COMPANY WITHIN 30 DAYS FROM THE DATE OF RECEIPT. IT MAY BE
RETURNED BY DELIVERING OR MAILING IT TO THE COMPANY. IF RETURNED, THIS CONTRACT
SHALL BE DEEMED VOID FROM THE CONTRACT DATE. THE COMPANY WILL REFUND (I) ANY
PURCHASE PAYMENTS MADE AND ALLOCATED TO THE FIXED ACCOUNT; AND (II) SEPARATE
ACCOUNT CONTRACT VALUE AS OF THE DATE THE RETURNED POLICY IS POSTMARKED FOR
RETURN TO THE COMPANY, INCREASED BY ANY FEES OR OTHER CHARGES PAID.
Signed for First Security Benefit Life Insurance and Annuity Company of New York
on the Contract Date.
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
*Purchase Payments may be made until the earlier of the Annuity Payout Date or
termination of the Contract.
*A Death Benefit may be paid prior to the Annuity Payout Date according to the
Contract provisions.
*Annuity Payments begin on the Annuity Payout Date using the method specified
in this Contract.
*The smallest annual rate of investment return that would have to be earned on
the assets of the Separate Account so that the dollar amount of Variable
Annuity Payments will not decrease is 3 1/2%. A daily charge corresponding to
an annual charge of .55% is applied to the assets of the Separate Account by
the Company. Please refer to the "Contract Value and Expense Provisions"
beginning on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
Form FSB201 (R11-96) BP 2010P1
<PAGE>
TABLE OF CONTENTS
PAGE
CONTRACT SPECIFICATIONS ................................................ 3
DEFINITIONS ............................................................ 4-6
GENERAL PROVISIONS ..................................................... 7, 8
The Contract ......................................................... 7
Compliance ........................................................... 7
Misstatement of Age or Sex ........................................... 7
Evidence of Survival ................................................. 7
Incontestability ..................................................... 7
Assignment ........................................................... 7
Exchanges ............................................................ 8
Claims of Creditors .................................................. 8
Nonforfeiture Values ................................................. 8
Non-Participating .................................................... 8
Statements ........................................................... 8
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS ........................ 9
Ownership ............................................................ 9
Joint Ownership ...................................................... 9
Annuitant ............................................................ 9
Primary and Secondary Beneficiaries .................................. 9
Ownership and Beneficiary Changes .................................... 9
PURCHASE PAYMENT PROVISIONS ............................................ 10
Flexible Purchase Payments ........................................... 10
Purchase Payment Limitations ......................................... 10
Purchase Payment Allocation .......................................... 10
Place of Payment ..................................................... 10
CONTRACT VALUE AND EXPENSE PROVISIONS .................................. 10-12
Contract Value ....................................................... 10
Fixed Account Contract Value ......................................... 10
Fixed Account Interest Crediting ..................................... 11
Separate Account Contract Value ...................................... 11
Accumulation Unit Value .............................................. 11
Determining Accumulation Units ....................................... 11
Mortality and Expense Risk Charge .................................... 12
Premium Tax Expense .................................................. 12
Mutual Fund Expenses ................................................. 12
WITHDRAWAL PROVISIONS .................................................. 12, 13
Withdrawals .......................................................... 12
Withdrawal Value ..................................................... 13
Systematic Withdrawals ............................................... 13
Date of Request ...................................................... 13
Payment of Withdrawal Benefits ....................................... 13
DEATH BENEFIT PROVISIONS ............................................... 14, 15
Death Benefit ........................................................ 14
Proof of Death ....................................................... 14
Distribution Rules ................................................... 14, 15
ANNUITY PAYMENT PROVISIONS ............................................. 15-19
Annuity Payout Date .................................................. 15
Change of Annuity Payout Date ........................................ 15
Annuity Payout Amount ................................................ 15
Annuity Tables ....................................................... 16
Annuity Payments ..................................................... 16
Change of Annuity Option ............................................. 16
Fixed Annuity Payments ............................................... 16
Variable Annuity Payments ............................................ 16
Annuity Units ........................................................ 16, 17
Net Investment Factor ................................................ 17
Alternate Annuity Option Rates ....................................... 17
Annuity Options ...................................................... 18, 19
ANNUITY TABLES ......................................................... 20
AMENDMENTS OR ENDORSEMENTS, IF ANY
-2- BP 2010P1
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT SPECIFICATIONS
- --------------------------------------------------------------------------------
OWNER NAME: CONTRACT NUMBER:
OWNER DATE OF BIRTH: CONTRACT DATE:
JOINT OWNER NAME: ISSUE DATE:
JOINT OWNER DATE OF BIRTH: ANNUITY PAYOUT DATE:
ANNUITANT NAME: PLAN:
ANNUITANT DATE OF BIRTH: ASSIGNMENT:
ANNUITANT GENDER:
PRIMARY BENEFICIARY NAME: SECONDARY BENEFICIARY:
NAME: See Application or subsequent change from
- --------------------------------------------------------------------------------
INITIAL PURCHASE PAYMENT ..............
MINIMUM SUBSEQUENT PURCHASE PAYMENTS .. investment program
MINIMUM SYSTEMATIC WITHDRAWAL ......... $100
MORTALITY AND EXPENSE RISK CHARGE ..... .55% Annually
GUARANTEED RATE ....................... 3%
ANNUITY OPTION ........................
SUBACCOUNTS:
New America Growth Subaccount
International Stock Subaccount
Mid-Cap Growth Subaccount
Equity Income Subaccount
Personal Strategy Balanced Subaccount
Limited-Term Bond Subaccount
Prime Reserve Subaccount
METHOD FOR DEDUCTIONS:
Deductions for any Premium Taxes will be allocated proportionately to the
Owner's Contract Value in the Subaccounts and the Fixed Account.
*The Annuity Payout Date and Annuity Option may be changed by the Owner prior
to the Annuity Payout Date. See "Change of Annuity Payout Date" and "Change of
Annuity Option."
FSB201 A (R9-96) -3- SBL90
<PAGE>
- --------------------------------------------------------------------------------
DEFINTIONS
- --------------------------------------------------------------------------------
ACCOUNT
An Account is one of the Subaccounts or the Fixed Account.
ACCUMULATION UNIT
The Accumulation Unit is a unit of measure. It is used to compute the Separate
Account Contract Value prior to the Annuity Payout Date. It is also used to
compute the Variable Annuity Payments for Annuity Options 5 through 7.
ANNUITANT
The Annuitant is the person named by the Owner on whose life the Annuity
Payments depend for Annuity Options 1 through 4. The Annuitant receives Annuity
Payments under this Contract. Please see "Annuitant" provisions on page 9.
ANNUITY OPTION
An Annuity Option is a set of provisions that form the basis for making Annuity
Payments. The Annuity Option is set prior to the Annuity Payout Date. Please see
"Annuity Options" on pages 18 and 19.
ANNUITY PAYOUT DATE
The Annuity Payout Date is the date on which Annuity Payments are scheduled to
begin. This date may be changed by the Owner. The Annuity Payout date is shown
on page 3. Please see "Annuity Payout Date" on page 15.
ANNUITY UNIT
The Annuity Unit is a unit of measure used to compute Variable Annuity Payments
for Annuity Options 1 through 4.
AUTOMATIC EXCHANGES
Automatic Exchanges are Exchanges among the Subaccounts and the Fixed Account.
Such exchanges are made automatically on a periodic basis by the Company at the
written request of the Owner.
COMPANY
The Company is First Security Benefit Life Insurance and Annuity Company of New
York.
CONTRACT ANNIVERSARY
A Contract Anniversary is a 12-month anniversary of the Contract Date.
CONTRACT DATE
The Contract Date is the date the Contract begins. The Contract Date is shown on
page 3.
CONTRACT YEAR
Contract Years are measured from the Contract Date.
CURRENT INTEREST
The Company may in its discretion pay Current Interest on the Fixed Account at a
rate that exceeds the Guaranteed Rate shown on page 3. The Company will declare
the rate of Current Interest, if any, from time to time.
DESIGNATED BENEFICIARY
Upon the death of the Owner or Joint Owner, the Designated Beneficiary will be
the first person on the following list who is alive on the date of death:
1. Owner;
2. Joint Owner;
3. Primary Beneficiary;
4. Secondary Beneficiary;
5. Annuitant; and
6. the Owner's estate if no one listed above is alive.
55-02010-01
FSB201 B (4-94) -4- BP 2010A1
<PAGE>
- --------------------------------------------------------------------------------
DEFINITIONS (Continued)
- --------------------------------------------------------------------------------
DESIGNATED BENEFICIARY (Cont'd)
The Designated Beneficiary receives a death benefit upon the death of the Owner.
Please see "Ownership, Annuitant, and Beneficiary Provisions" on page 9 and
"Death Benefit Provisions" on pages 14 and 15.
FIXED ACCOUNT
The Fixed Account is part of the Company's general account. The Company manages
the general account and guarantees that it will credit interest on Fixed Account
Contract Value at an annual rate at least equal to the Guaranteed Rate. This
Rate is shown on page 3.
GUARANTEE PERIOD
Current Interest, if declared, is fixed for rolling periods of one year,
referred to as Guarantee Periods. The Guarantee Period that applies to any Fixed
Account Contract Value: (1) starts on the date that such Contract Value is
allocated to the Fixed Account pursuant to: (a) a Purchase Payment Received by
the Company; or (b) an Exchange to the Fixed Account; and (2) ends on the last
day of the same month in the year in which the Guarantee Period expires. When
any Guarantee Period expires, a new Guarantee Period shall start for such
Contract Value on the date that follows such expiration date. Such period shall
end on the immediately preceding date in the year in which the Guarantee Period
expires. For example, Contract Value exchanged to the Fixed Account on June 1
would have a Guarantee Period starting on that date and ending on June 30 of the
following year. A new Guarantee Period for such Contract Value would start on
July 1 of that year and end on June 30 of the following year.
HOME OFFICE
The address of the Company's Home Office is First Security Benefit Life
Insurance and Annuity Company of New York, 70 West Red Oak Lane, 4th Floor,
White Plains, New York 10604.
ISSUE DATE
The Issue Date is the date the Company uses to determine the date the Contract
becomes incontestable. The Issue Date is shown on page 3. Please see
"Incontestability" on page 7.
JOINT OWNER
The Joint Owner, if any, shares an undivided interest in the entire Contract
with the Owner. The Joint Owner, if any, is named on page 3. Please see "Joint
Ownership" provisions on page 9.
NONNATURAL PERSON
Any group or entity that is not a living person, such as a trust or corporation.
OWNER
The Owner is the person who has all rights under the Contract. The Owner is
named on page 3. Please see "Ownership" provisions on page 9.
PREMIUM TAX
Any Premium Taxes levied by a state or other governmental entity will be charged
against this Contract. When Premium Tax is assessed after the Purchase Payment
is applied, it will be deducted as described on page 3.
PURCHASE PAYMENT
A Purchase Payment is money Received by the Company and applied to the Contract.
RECEIVED BY THE COMPANY
The phrase "Received by the Company" means receipt by the Company in good order
at its Home Office at the address indicated above or such other address
designated in writing by the Company.
55-02010-01
-5- BP 2010A1
<PAGE>
- --------------------------------------------------------------------------------
DEFINITIONS (Continued)
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT
The T. Rowe Price Variable Annuity Account of First Security Benefit Life
Insurance and Annuity Company of New York is a Separate Account established and
maintained by the Company under New York law. The Separate Account is registered
with the Securities and Exchange Commission under the Investment Company Act of
1940 as Unit Investment Trust. It was established by the Company to support
variable annuity contracts. The Company owns the assets of the Separate Account
and maintains them apart from the assets of its general account and its other
separate accounts. The assets held in the Separate Account equal to the reserves
and other Contract liabilities with respect to the Separate Account shall not be
chargeable with liabilities arising out of any other business of the Company.
Income and realized and unrealized gains and losses from assets in the Separate
Account are credited to, or charged against, the Separate Account without regard
to the income, gains or losses from the Company's general account or its other
separate accounts. The Separate Account is divided into Subaccounts shown on
page 3. Income and realized and unrealized gains and losses from assets in each
Subaccount are credited to, or charged against, the Subaccount without regard to
income, gains or losses in the other Subaccounts. The Company has the right to
transfer to its general account any assets of the Separate Account that are in
excess of the reserves and other Contract liabilities with respect to the
Separate Account. The value of the assets in the Separate Account on each
Valuation Date is determined at the end of each Valuation Date.
SUBACCOUNT NET ASSET VALUE
The Subaccount Net Asset Value is equal to: (1) the net asset value of all
shares of the underlying mutual fund held by the Subaccount; plus (2) any cash
or other assets; less (3) all liabilities of the Subaccount.
SUBACCOUNTS
The Separate Account is divided into Subaccounts which invest in shares of
open-end management investment companies, commonly known as mutual funds. Each
Subaccount may invest its assets in a separate class or series of a designated
mutual fund or funds. The Subaccounts are shown on page 3. Subject to the
regulatory requirements then in force, the Company reserves the right to:
1. change or add designated mutual funds or other investment vehicles;
2. add, remove or combine Subaccounts;
3. add, delete or make substitutions for securities that are held or
purchased by the Separate Account or any Subaccount;
4. operate the Separate Account as a management investment company;
5. combine the assets of the Separate Account with other Separate Accounts
of the Company or an affiliate thereof;
6. restrict or eliminate any voting rights of the Owner with respect to the
Separate Account or other persons who have voting rights as to the
Separate Account; and
7. terminate and liquidate any Subaccount.
If any of these changes result in a material change to the Separate Account or a
Subaccount, the Company will notify the Owner of the change. The Company will
not change the investment policy of any Subaccount in any material respect
without complying with the filing and other procedures of the insurance
regulators of the state of issue.
VALUATION DATE
A Valuation Date is each day the New York Stock Exchange and the Company are
open for business.
VALUATION PERIOD
A Valuation Period is the interval of time from one Valuation Date to the next
Valuation Date.
55-02010-02
FSB201 C (4-94) -6- BP 2010B1
<PAGE>
- --------------------------------------------------------------------------------
GENERAL PROVISIONS
- --------------------------------------------------------------------------------
THE CONTRACT
The entire Contract between the Owner and the Company consists of this Contract,
the attached Application, and any Amendments, Endorsements or Riders to the
Contract. All statements made in the Application will, as ruled by a court of
competent jurisdiction, be deemed representations and not warranties. The
Company will use no statement made by or on behalf of the Owner or the Annuitant
to void this Contract unless it is in the written Application. Any change in the
Contract can be made only with the written consent of the President, a Vice
President, or the Secretary of the Company.
The Purchase Payment(s) and the Application must be acceptable to the Company
under its rules and practices. If they are not, the Company's liability shall be
limited to a return of the Purchase Payment(s).
COMPLIANCE
The Company reserves the right to make any change to the provisions of this
Contract to comply with or give the Owner the benefit of any federal or state
statute, rule or regulation. This includes, but is not limited to, requirements
for annuity contracts under the Internal Revenue Code or the laws of any state.
The Company will provide the Owner with a copy of any such change and will
obtain approval for such a change with the insurance regulatory officials of the
state in which the Contract is delivered.
MISSTATEMENT OF AGE AND SEX
If the age or sex of the Annuitant has been misstated, payments shall be
adjusted, when allowed by law, to the amount which would have been provided for
the correct age or sex. Proof of the age of an Annuitant may be required at any
time, in a form suitable to the Company. If payments have already commenced and
the misstatement has caused an underpayment, the full amount due with interest
at a rate of 3% will be paid with the next scheduled payment. If the
misstatement has caused an overpayment, the amount due with interest at the rate
of 3% will be deducted from one or more future payments.
EVIDENCE OF SURVIVAL
When any payments under this Contract depend on the payee being alive on a given
date, proof that the payee is living may be required by the Company. Such proof
must be in a form accepted by the Company, and may be required prior to making
the payments.
INCONTESTABILITY
This Contract will not be contested after it has been in force for two years
from the Issue Date during the life of the Owner.
ASSIGNMENT
Please refer to page 3 to see if this Contract may be assigned. If it may be
assigned, no Assignment under this Contract is binding unless Received by the
Company in writing. The Company assumes no responsibility for the validity,
legality, or tax status of any Assignment. The Assignment will be subject to any
payment made or other action taken by the Company before the Assignment is
Received by the Company. Once filed, the rights of the Owner, Annuitant and
Beneficiary are subject to the Assignment. Any claim is subject to proof of
interest of the assignee.
55-02010-02
-7- BP 2010B1
<PAGE>
- --------------------------------------------------------------------------------
GENERAL PROVISIONS (Continued)
- --------------------------------------------------------------------------------
EXCHANGES
The Owner may Exchange Contract Value among the Fixed Account and Subaccounts
subject to the following.
Exchanges are not allowed within 30 days of the Annuity Payout Date. After the
Annuity Payout Date, for Annuity Options 1 through 4, the Owner may Exchange
Contract Value only among Subaccounts. The Company reserves the right to: (1)
prohibit exchanges that would reduce an account to less than $500; (2) limit the
number of Exchanges allowed each Contract Year to six; and (3) subject to New
York Insurance Department approval, waive the limit on Exchanges allowed each
Contract Year. Exchanges must be at least $500 or, if less, the remaining
balance in the Fixed Account or a Subaccount.
Contract Value may be exchanged from the Fixed Account only: (1) during the
calendar month in which the applicable Guarantee Period expires; and (2)
pursuant to an Automatic Exchange. Exchanges of Fixed Account Value will be
made: (1) first from Fixed Account Contract Value for which the Guarantee Period
expires during the calendar month in which the Exchange is effected; (2) then in
the order that starts with Fixed Account Contract Value which has the longest
amount of time before its Guarantee Period expires; and (3) ends with that which
has the least amount of time before its Guarantee Period expires.
The Company will effect an Exchange to or from a Subaccount on the basis of
Accumulation Unit Value (or, when appropriate, Annuity Unit Value) determined at
the end of the Valuation Period in which the Exchange is effected. The Company
will effect an Exchange from the Fixed Account on the basis of Fixed Account
Contract Value at the end of the Valuation Period in which the Exchange is
effected.
The Company reserves the right to delay Exchanges from the Fixed Account for up
to 6 months. The Company will inform you if there will be a delay.
CLAIMS OF CREDITORS
The Contract Value and other benefits under this Contract are exempt from the
claims of creditors of the Owner to the extent allowed by law.
NONFORFEITURE VALUES
The Death Benefits, Withdrawal Values and Annuity Payout Values will at least
equal the minimum required by law.
NON-PARTICIPATING
This Contract is not participating and will pay no dividend.
STATEMENTS
At least once each Contract Year the Owner will be sent a statement including
the current Contract Value and any other information required by law. The Owner
may send a written request for a statement at other intervals. The Company may
charge a reasonable fee for such statements.
FSB201 D (R9-96) -8- BP 2010N1
<PAGE>
- --------------------------------------------------------------------------------
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS
- --------------------------------------------------------------------------------
OWNERSHIP
During the Owner's lifetime, all rights and privileges under the Contract may be
exercised only by the Owner. If the purchaser names someone other than himself
or herself as Owner, the purchaser has no rights in the Contract. No Owner may
be older than age 85 on the Contract Date.
JOINT OWNERSHIP
If a Joint Owner is named in the application, then the Owner and Joint Owner
share an undivided interest in the entire Contract as joint tenants with rights
of survivorship. When an Owner and Joint Owner have been named, the Company will
honor only requests for changes and the exercise of other Ownership rights made
by both the Owner and Joint Owner. When a Joint Owner is named, all references
to "Owner" throughout this Contract should be construed to mean both the Owner
and Joint Owner, except for the final sentence of the "Annuitant" provision
below, the "Statements" provision on page 8 and the "Death Benefit Provisions"
on pages 14 and 15.
ANNUITANT
The Annuitant is named on page 3. The Owner may change the Annuitant prior to
the Annuity Payout Date. The request for this change must be made in writing and
Received by the Company at least 30 days prior to the Annuity Payout Date. No
Annuitant may be named who is more than 85 years old on the Contract Date. When
the Annuitant dies prior to the Annuity Payout Date, the Owner must name a new
Annuitant within 30 days or, if sooner, by the Annuity Payout Date, except where
the Owner is a Nonnatural Person. If a new Annuitant is not named, the Owner
becomes the Annuitant.
PRIMARY AND SECONDARY BENEFICIARIES
The Primary Beneficiary and any Secondary Beneficiary are named on page 3. The
Owner may change any Beneficiary as described in "Ownership and Beneficiary
Changes" below. If the Primary Beneficiary dies prior to the Owner, the
Secondary Beneficiary becomes the Primary Beneficiary. Unless the Owner directs
otherwise, when there are two or more Primary Beneficiaries, they will receive
equal shares.
OWNERSHIP AND BENEFICIARY CHANGES
Subject to the terms of any existing Assignment, the Owner may name a new Owner,
a new Primary Beneficiary or a new Secondary Beneficiary. Any new choice of
Owner, Primary Beneficiary or Secondary Beneficiary will revoke any prior
choice. Any change must be made in writing and recorded at the Home Office. The
change will become effective as of the date the written request is signed,
whether or not the Owner is living at the time the change is recorded. A new
choice of Primary Beneficiary or Secondary Beneficiary will not apply to any
payment made or action taken by the Company prior to the time it was recorded.
The Company may require the Contract be returned so these changes may be made.
-9- BP 2010N1
<PAGE>
- --------------------------------------------------------------------------------
PURCHASE PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
FLEXIBLE PURCHASE PAYMENTS
The Contract becomes in force when the initial Purchase Payment is applied. The
Owner is not required to continue Purchase Payments in the amount or frequency
originally planned. The Owner may: (1) increase or decrease the amount of
Purchase Payments; or (2) change the frequency of Purchase Payments. A change in
frequency or amount of Purchase Payments does not require a written request.
PURCHASE PAYMENT LIMITATIONS
Total Purchase Payments to the Contract may not be greater than $1,000,000
without prior approval by the Company. The Minimum Subsequent Purchase Payment
amount is shown on page 3.
PURCHASE PAYMENT ALLOCATION
Purchase Payments may be allocated among the Fixed Account and the Subaccounts.
The allocations may be a whole dollar amount or whole percentage. However, no
less than $25 per Purchase Payment may be allocated to any Account. The Owner
may change the allocations by written notice to the Company.
PLACE OF PAYMENT
All Purchase Payments under this Contract are to be paid to the Company.
Purchase Payments after the first Purchase Payment are applied as of the end of
the Valuation Period during which they are Received by the Company.
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS
- --------------------------------------------------------------------------------
CONTRACT VALUE
On any Valuation Date, the Contract Value is the sum of: (1) the Separate
Account Contract Value; and (2) the Fixed Account Contract Value. At any time
after the first Contract Year and before the Annuity Payout Date, the Company
reserves the right to pay to the Owner the Contract Value as a lump sum if it is
below $2,000 and no Purchase Payments have been paid for three years.
FIXED ACCOUNT CONTRACT VALUE
On any Valuation Date, the Fixed Account Contract Value is equal to the first
Purchase Payment allocated under the Contract to the Fixed Account:
PLUS:
1. any other Purchase Payments allocated under the Contract to the Fixed
Account;
2. any Exchanges from the Separate Account to the Fixed Account; and
3. any interest credited to the Fixed Account.
LESS:
1. any Withdrawals deducted from the Fixed Account;
2. any Exchanges from the Fixed Account to the Separate Account;
3. any applicable Premium Taxes;
4. any Fixed Account Contract Value which is applied to any of Annuity
Options 1 through 4; and
5. any Annuity Payments made under Annuity Options 5 and 7.
55-02010-04
FSB201 E (4-94) -10- BP 2010D1
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
- --------------------------------------------------------------------------------
FIXED ACCOUNT INTEREST CREDITING
The Company will credit interest on Fixed Account Contract Value at an annual
rate at least equal to the Guaranteed Rate shown on page 3. Also, the Company
may in its sole judgment credit Current Interest at a rate in excess of the
Guaranteed Rate. The rate of Current Interest, if declared, will be fixed during
the Guarantee Period. Fixed Account Contract Value will earn Current Interest
during each Guarantee Period at the rate, if any, declared by the Company on the
first day of the Guarantee Period.
The Company may credit Current Interest on Contract Value that was allocated or
exchanged to the Fixed Account during one period at a different rate than
amounts allocated or exchanged to the Fixed Account in another period.
Therefore, at any time, portions of Fixed Account Contract Value may be earning
Current Interest at different rates based upon the period during which such
portions were allocated or exchanged to the Fixed Account.
SEPARATE ACCOUNT CONTRACT VALUE
On any Valuation Date, the Separate Account Contract Value is the sum of the
then current value of the Accumulation Units allocated to each Subaccount for
this Contract.
ACCUMULATION UNIT VALUE
The initial Accumulation Unit Value for each Subaccount was set at $10. Other
Accumulation Unit Values are found on each Valuation Date by dividing (1) by (2)
where:
1. is equal to:
a. the Subaccount Net Asset Value determined at the end of the current
Valuation Period; plus
b. any dividends declared by the Subaccount's underlying mutual fund that
are not part of the Subaccount Net Asset Value; less
c. the accrued Mortality and Expense Risk Charge; and
d. any taxes for which the Company has reserved which the Company deems
to have resulted from the operation of the Subaccount.
2. is the number of Accumulation Units at the start of the Valuation Period.
The Accumulation Unit Value may increase or decrease from one Valuation Period
to the next.
DETERMINING ACCUMULATION UNITS
The number of Accumulation Units allocated to a Subaccount under this Contract
is found by dividing: (1) the amount allocated to a Subaccount; by (2) the
Accumulation Unit Value for the Subaccount at the end of the Valuation Period
during which the amount is applied under the Contract. The number of
Accumulation Units allocated to a Subaccount under the Contract will not change
as a result of investment experience. Events that change the number of
Accumulation Units are:
1. Purchase Payments that are applied to the Subaccount;
2. Contract Value that is Exchanged into or out of the Subaccount;
3. Withdrawals that are deducted from the Subaccount; and
4. Premium Taxes that are deducted from the Subaccount.
55-02010-04
-11- BP 2010D1
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
- --------------------------------------------------------------------------------
MORTALITY AND EXPENSE RISK CHARGE
The Company will deduct the Mortality and Expense Risk Charge shown on page 3.
This charge will be computed and deducted from each Subaccount on each Valuation
Date. This charge is factored into the Accumulation Unit and Annuity Unit Value
on each Valuation Date.
PREMIUM TAX EXPENSE
The Company reserves the right to deduct Premium Tax when due or any time
thereafter. Any applicable Premium Taxes will be allocated as described on page
3.
MUTUAL FUND EXPENSES
Each Subaccount invests in shares of a mutual fund. The net asset value per
share of each underlying fund reflects the deduction of any investment advisory
and administration fees and other expenses of the fund. These fees and expenses
are not deducted from the assets of a Subaccount, but are paid by the underlying
funds. The Owner indirectly bears a pro rata share of such fees and expenses. An
underlying fund's fees and expenses are not specified or fixed under the terms
of this Contract.
- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
WITHDRAWALS
A full Withdrawal of the Contract Value or partial Withdrawal of Separate
Account Contract Value is allowed at any time. Partial Withdrawals of Fixed
Account Contract Value are, however, restricted as described below. This
provision is subject to any federal or state Withdrawal restrictions.
A partial Withdrawal of Fixed Account Contract Value may be made only: (1)
pursuant to Systematic Withdrawals; (2) during the calendar month in which the
applicable Guarantee Period expires; and (3) once per Contract Year in an amount
up to the greater of $5,000 or 10 percent of the Fixed Account Contract Value at
the time of the partial Withdrawal.
Upon the Owner's request for a full Withdrawal, the Company will pay the
Withdrawal Value in a lump sum.
All Withdrawals must meet the following conditions.
1. The request for Withdrawal must be Received by the Company in writing or
under other methods allowed by the Company.
2. The Owner must apply: (a) while this Contract is in force; and (b) prior
to the Annuity Payout Date.
3. The amount Withdrawn must be at least $500.00 except for Systematic
Withdrawals, as discussed below, or when terminating the Contract.
A partial Withdrawal request must state the allocations for deducting the
Withdrawal from each Account. If the Owner does not specify the allocation, the
Company will contact the Owner for instructions. The Withdrawal will be effected
as of the end of the Valuation Period in which such instructions are Received by
the Company. Withdrawals of Fixed Account Contract Value will be made: (1) first
from Fixed Account Contract Value for which the Guarantee Period expires during
the calendar month in which the Withdrawal is effected; (2) then in the order
that starts with Fixed Account Contract Value which has the longest amount of
time before its Guarantee Period expires; and (3) ends with that which has the
least amount of time before its Guarantee Period expires.
55-02010-05
FSB201 F (4-94) -12- BP 2010E1
<PAGE>
- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS (Continued)
- --------------------------------------------------------------------------------
WITHDRAWAL VALUE
The Withdrawal Value at any time will be: (1) the Contract Value; less (2) any
Premium Taxes due or paid by the Company.
SYSTEMATIC WITHDRAWALS
Systematic Withdrawals are automatic periodic distributions from the Contract in
substantially equal amounts prior to the Annuity Payout Date. In order to start
Systematic Withdrawals, the Owner must make the request in writing. The Minimum
Systematic Withdrawal is shown on page 3. The Owner must choose the type of
payment, and its frequency. The payment type may be: (1) a percentage of
Contract Value; (2) a specified dollar amount; (3) all earnings in the Contract;
or (4) based upon the life expectancy of the Owner or the Owner and a
Beneficiary. The payment frequency may be: (1) monthly; (2) quarterly; (3)
semiannually; or (4) annually. Systematic Withdrawals of Fixed Account Contract
Value must provide for payments over a period of not less than 36 months.
Systematic Withdrawals may be stopped by the Owner upon proper written request
Received by the Company at least 30 days in advance. The Company reserves the
right to stop, modify or suspend Systematic Withdrawals.
Withdrawals, including systematic withdrawals, may: (1) subject the Owner to a
penalty tax if taken before age 59 1/2; and (2) may be restricted or limited if
made from an Individual Retirement Annuity qualified under Internal Revenue Code
(IRC) Section 408 or a Tax Sheltered Annuity qualified under IRC Section 403(b).
DATE OF REQUEST
The Company will effect a Withdrawal of Separate Account Contract Value on the
basis of Accumulation Unit Value determined at the end of the Valuation Period
in which all the required information is Received by the Company.
PAYMENT OF WITHDRAWAL BENEFITS
The Company reserves the right to suspend an Exchange or delay payment of a
Withdrawal from the Separate Account for any period:
1. when the New York Stock Exchange is closed; or
2. when trading on the New York Stock Exchange is restricted; or
3. when an emergency exists as a result of which: (a) disposal of securities
held in the Separate Account is not reasonably practicable; or (b) it is
not reasonably practicable to fairly value the net assets of the Separate
Account.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth above exist.
The Company further reserves the right to delay payment of a Withdrawal from the
Fixed Account for up to six months as required by most states. The Company will
notify you if there will be a delay.
55-02010-05
-13- BP 2010E1
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS
- --------------------------------------------------------------------------------
DEATH BENEFIT
If any Owner dies prior to the Annuity Payout Date, a Death Benefit will be paid
to the Designated Beneficiary when due Proof of Death and instructions regarding
payment are Received by the Company. If an Owner is a Nonnatural Person, then
the Death Benefit will be paid in the event of the death of the Annuitant or any
Joint Owner that is a natural person prior to the Annuity Payout Date. Further,
if an Owner is a Nonnatural Person, the amount of the death benefit is based on
the age of the Annuitant or any joint Owner that is a natural person on the
Issue Date.
If the age of each Owner was 75 or younger on the Issue Date, the Death Benefit
will be the greatest of: (1) the sum of all Purchase Payments, less any Premium
Taxes due or paid by the Company and less the sum of all partial Withdrawals;
(2) the Contract Value on the date due Proof of Death and instructions regarding
payment are Received by the Company, less any Premium Taxes due or paid by the
Company; or (3) the Stepped-Up Death Benefit below.
The Stepped-Up Death Benefit is:
1. the largest Death Benefit on any Contract Anniversary that is both an
exact multiple of five and occurs prior to the oldest Owner reaching age
76; plus
2. any Purchase Payments received since the applicable fifth Contract
Anniversary; less
3. any reductions caused by Withdrawals since the applicable fifth Contract
Anniversary; less
4. any Premium Taxes due or paid by the Company.
If the age of any Owner on the Issue Date was 76 or older, the Death Benefit
will be: (1) the Contract Value on the date due Proof of Death and instructions
regarding payment are Received by the Company; less (2) any Premium Taxes due or
paid by the Company.
If a lump sum payment is requested, the payment will be made in accordance with
any laws and regulations that govern the payment of Death Benefits.
The value of the Death Benefit is determined as of the date that both Proof of
Death and instructions regarding payment are Received by the Company in good
order.
PROOF OF DEATH
Any of the following will serve as Proof of Death:
1. certified copy of the death certificate;
2. certified decree of a court of competent jurisdiction as to the finding
of death;
3. written statement by a medical doctor who attended the deceased Owner; or
4. any proof accepted by the Company.
DISTRIBUTION RULES
The entire Death Benefit with any interest shall be paid within 5 years after
the death of any Owner, except as provided below. In the event that the
Designated Beneficiary elects an Annuity Option, the length of time for the
payment period may be longer than 5 years if: (1) the Designated Beneficiary is
a natural person; (2) the Death Benefit is paid out under Annuity Options 1
through 7; (3) payments are made over a period that does not exceed the life or
life expectancy of the Designated Beneficiary; and (4) Annuity Payments begin
within one year of the death of the Owner. If the deceased Owner's spouse is the
sole Designated Beneficiary, the spouse shall become the sole Owner of the
Contract. He or she may elect to: (1) keep the Contract in force until the
sooner of the spouse's death or the Annuity Payout Date; or (2) receive the
Death Benefit.
FSB201 G (R9-96) -14- BP 2010O1
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
DISTRIBUTION RULES (cont'd)
If any Owner dies after the Annuity Payout Date, Annuity Payments will continue
to be paid at least as rapidly as under the method of payment being used as of
the date of the Owner's death.
If the Owner is a Nonnatural Person, the distribution rules set forth above
apply in the event of the death of, or a change in, the Annuitant. This Contract
is deemed to incorporate any provision of Section 72(s) of the Internal Revenue
Code of 1986, as amended (the "Code"), or any successor provision. This Contract
is also deemed to incorporate any other provision of the Code deemed necessary
by the Company, in its sole judgment, to qualify this Contract as an annuity.
The application of the distribution rules will be made in accordance with Code
section 72(s), or any successor provision, as interpreted by the Company in its
sole judgment.
The foregoing distribution rules do not apply to a Contract which is: (1)
provided under a plan described in Code section 401(a); (2) described in Code
section 403(b); (3) an individual retirement annuity or provided under an
individual retirement account or annuity; or (4) otherwise exempt from the Code
section 72(s) distribution rules.
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
ANNUITY PAYOUT DATE
The Owner may choose the Annuity Payout Date at the time of application. If no
Annuity Payout Date is chosen, the Company will use the later of: (1) the oldest
Annuitant's seventieth birthday; or (2) the fifth Contract Anniversary. The
Annuity Payout Date must be prior to the oldest Annuitant's ninetieth birthday.
The Annuity Payout Date is the date the first payment will be made to the
Annuitant under any of the Annuity Options.
CHANGE OF ANNUITY PAYOUT DATE
The Owner may change the Annuity Payout Date. A request for the change must be
made in writing. The written request must be Received by the Company at least 30
days prior to the new Annuity Payout Date as well as 30 days prior to the
previous Annuity Payout Date.
ANNUITY PAYOUT AMOUNT
The Annuity Payout Amount is applied to one or more of the Annuity Options
listed on pages 18 and 19. The Annuity Payout Amount is: (1) the Contract Value
on the Annuity Payout Date; less (2) any Premium Taxes due or paid by the
Company. Unless otherwise directed by the Owner, Annuity Payout Amount derived
from Fixed Account Contract Value will be applied to purchase a Fixed Annuity
Option; that derived from Separate Account Contract Value will be applied to
purchase a Variable Annuity Option.
-15- BP 2010O1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY TABLES
The Annuity Tables show the guaranteed minimum amount of monthly Annuity Payment
that applies to the first payment for Variable Annuity Payments and to each
payment for Fixed Annuity Payments for each $1,000 of Annuity Payout Amount for
each of Annuity Options 1 through 4. The amount of each Annuity Payment for
Annuity Options 1 through 4 will depend on the Annuitant's sex and age on the
Annuity Payout Date. The Annuity Tables state values for the exact ages shown.
The values will be interpolated based on the Annuitant's exact age on the
Annuity Payout Date. On request the Company will furnish the amount of monthly
Annuity Payment per $1,000 applied for any ages not shown.
The Company bases the Tables for Annuity Options 1 through 4 on: (1) the 1983
Table "A" Mortality Table projected for mortality improvement for 45 years using
Projection Scale G; and (2) an interest rate of 3 1/2% a year.
For Annuity Options 5 through 7, age and sex are not considered. Annuity
Payments for these options are computed without reference to the Annuity Tables.
ANNUITY PAYMENTS
The Annuity Option is shown on page 3. The Owner may choose any form of Annuity
Option that is allowed by the Company. The Owner may choose an Annuity Option by
written request. This request must be Received by the Company at least 30 days
prior to the Annuity Payout Date. Several Annuity Options are listed on pages 18
and 19. No Annuity Option can be selected that requires the Company to make
periodic payments of less than $20.00. If no Annuity Option is chosen prior to
the Annuity Payout Date, the Company will use the Life with 10-Year Fixed Period
Option. Each Annuity Option allows for making Annuity Payments annually,
semiannually, quarterly or monthly.
CHANGE OF ANNUITY OPTION
Prior to the Annuity Payout Date, the Owner may change the Annuity Option
chosen. The Owner must request the change in writing. This request must be
Received by the Company at least 30 days prior to the Annuity Payout Date.
FIXED ANNUITY PAYMENTS
With respect to Fixed Annuity Payments, the amounts shown on the Tables are the
guaranteed minimum for each Annuity Payment for Annuity Options 1 through 4.
VARIABLE ANNUITY PAYMENTS
With respect to Fixed Annuity Payments, the amounts shown on the Tables are the
first Annuity Payment, based on the assumed interest rate of 3 1/2% for Annuity
Options 1 through 4. The amount of each Annuity Payment after the first for
these options is computed by means of Annuity Units. Neither expense actually
incurred (other than tax on investment return), nor mortality actually
experienced, shall adversely affect the dollar amount of annuity income already
commenced.
ANNUITY UNITS
The number of Annuity Units is found by dividing the first Annuity Payment by
the Annuity Unit Value for the selected Subaccount on the Annuity Payout Date.
The number of Annuity Units for the Subaccount then remains constant, unless an
Exchange of Annuity Units is made. After the first Annuity Payment, the dollar
amount of each subsequent Annuity Payment is equal to the number of Annuity
Units times the Annuity Unit Value for the Subaccount on the due date of the
Annuity Payment.
55-02010-07
FSB201 H (4-94) -16- BP 2010G1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY UNITS (Cont'd)
The Annuity Unit Value for each Subaccount was first set at $1.00. The Annuity
Unit Value for any subsequent Valuation Date is equal to (a) times (b) times
(c), where:
(a) is the Annuity Unit Value on the immediately preceding Valuation Date;
(b) is the Net Investment Factor for the Valuation Date;
(c) is a factor used to adjust for an assumed interest rate of 3 1/2% per
year used to determine the Annuity Payment amounts. The assumed interest
rate is reflected in the Annuity Tables.
NET INVESTMENT FACTOR
The Net Investment Factor for any Subaccount at the end of any Valuation Period
is found by dividing (1) by (2) and subtracting (3) from the result, where:
1. is equal to:
a. the net asset value per share of the mutual fund held in the
Subaccount, found at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions
paid by the Subaccount's underlying mutual fund that is not included
in the net asset value per share; plus or minus
c. a per share charge or credit for any taxes reserved for, which the
Company deems to have resulted from the operation of the Subaccount.
2. is the net asset value per share of the Subaccount's underlying mutual
fund as found at the end of the prior Valuation Period.
3. is a factor representing the Mortality and Expense Risk Charge deducted
from the Separate Account.
Underlying mutual funds may declare dividends on a daily basis and pay such
dividends once a month. The Net Investment Factor allows for the monthly
reinvestment of these daily dividends. As described above, the gains and losses
from each Subaccount are credited or charged against the Subaccount without
regard to the gains or losses in the Company or other Subaccounts.
ALTERNATE ANNUITY OPTION RATES
The Company may, at the time of election of an Annuity Option, offer more
favorable rates in lieu of the guaranteed rates shown in the Annuity Tables.
55-02010-07
-17- BP 2010G1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY OPTIONS
OPTION 1
LIFE OPTION: This option provides payments for the life of the Annuitant. Table
A shows some of the guaranteed rates for this option.
OPTION 2
LIFE WITH FIXED PERIOD OPTION: This option provides payments for the life of the
Annuitant. A fixed period of 5, 10, 15 or 20 years may be chosen. Payments will
be made to the end of this period even if the Annuitant dies prior to the end of
the period. If the Annuitant dies before receiving all the payments during the
fixed period, the remaining payments will be made to the Designated Beneficiary.
Table A shows some of the guaranteed rates for this option.
OPTION 3
LIFE WITH INSTALLMENT OR UNIT REFUND OPTION: This option provides payment for
the life of the Annuitant, with a period certain determined by dividing the
Annuity Payout Amount by the amount of the first payment. A fixed number of
payments will be made even if the Annuitant dies. If the Annuitant dies before
receiving the fixed number of payments, any remaining payments will be made to
the Designated Beneficiary. Table A shows some of the guaranteed rates for this
option.
OPTION 4
JOINT AND LAST SURVIVOR OPTION: This option provides payments for the life of
the Annuitant and Joint Annuitant. Payments will be made as long as either is
living. Table B shows some of the guaranteed rates for this option.
OPTION 5
FIXED PERIOD OPTIONS: This option provides payments for a fixed number of years
between 5 and 20. If the Contract Value is held in the Fixed Account, then the
amount of the payments will vary as a result of the interest rate (as adjusted
periodically) credited on the Fixed Account. This rate is guaranteed to be no
less than the Guaranteed Rate shown on page 3. If the Contract Value is held in
the Separate Account, then the amount of the payments will vary as a result of
the investment performance of the Subaccounts chosen. If all the Annuitants die
before receiving the fixed number of payments, any remaining payments will be
made to the Designated Beneficiary.
OPTION 6
FIXED PAYMENT OPTION: This option provides a fixed payment amount. This amount
is paid until the amount applied, including daily interest adjustments, is paid.
If the Contract Value is held in the Fixed Account, then the number of payments
will vary as a result of the interest rate (as adjusted periodically) credited
on the Fixed Account. This rate is guaranteed to be no less than the Guaranteed
Rate shown on page 3. If the Contract Value is held in the Separate Account,
then the number of payments will vary as a result of the investment performance
of the Subaccounts chosen. If all the Annuitants die before receiving all the
payments, any remaining payments will be made to the Designated Beneficiary.
55-02010-08
FSB201 1(4-94) -18- BP 2010H1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY OPTIONS (cont'd)
OPTION 7
AGE RECALCULATION OPTION: This option provides payments based upon the
Annuitant's life expectancy, or the joint life expectancies of the Annuitant and
a beneficiary, at the Annuitant's attained age (and the Annuitant's
beneficiary's attained or adjusted age, if applicable) each year. The payments
are computed by reference to actuarial tables prescribed by the Treasury
Secretary. Payments are made until the amount applied is exhausted. If the
Contract Value is held in the Fixed Account, then the number of payments will
vary as a result of the interest rate (as adjusted periodically) credited on the
Fixed Account. This rate is guaranteed to be not less than the Guaranteed Rate
shown on page 3. If the Contract Value is held in the Separate Account, then the
number of payments will vary as a result of the investment performance of the
Subaccounts chosen. If all the Annuitants die before receiving the remaining
payments, such payments will be made to the Designated Beneficiary.
55-02010-08
-19- BP 2010H1
<PAGE>
ANNUITY TABLES
- --------------------------------------------------------------------------------
TABLE A
GUARANTEED MINIMUM AMOUNT
OF MONTHLY PAYMENT FOR
EACH $1,000 APPLIED
SINGLE LIFE ANNUITY
- --------------------------------------------------------------------------------
AGE OF MONTHLY PAYMENTS CERTAIN INSTALLMENT
PAYEE 0 60 120 180 240 REFUND
- --------------------------------------------------------------------------------
MALE
----
55 4.45 4.44 4.41 4.37 4.30 4.31
56 4.52 4.51 4.48 4.43 4.36 4.37
57 4.60 4.59 4.56 4.50 4.42 4.44
58 4.68 4.67 4.64 4.57 4.47 4.51
59 4.77 4.76 4.72 4.65 4.53 4.58
60 4.87 4.85 4.81 4.72 4.60 4.65
61 4.97 4.95 4.90 4.80 4.66 4.73
62 5.07 5.05 5.00 4.89 4.72 4.82
63 5.19 5.17 5.10 4.97 4.79 4.90
64 5.31 5.29 5.20 5.06 4.85 5.00
65 5.44 5.41 5.32 5.15 4.92 5.09
66 5.58 5.55 5.44 5.24 4.98 5.20
67 5.73 5.69 5.56 5.34 5.05 5.30
68 5.89 5.84 5.69 5.44 5.11 5.41
69 6.06 6.00 5.82 5.54 5.17 5.53
70 6.24 6.17 5.97 5.64 5.23 5.66
FEMALE
------
55 4.11 4.11 4.10 4.08 4.05 4.05
56 4.17 4.17 4.16 4.14 4.10 4.10
57 4.23 4.23 4.22 4.19 4.15 4.15
58 4.30 4.29 4.28 4.25 4.21 4.21
59 4.37 4.36 4.35 4.32 4.27 4.27
60 4.44 4.44 4.42 4.38 4.33 4.34
61 4.52 4.51 4.49 4.45 4.39 4.40
62 4.60 4.59 4.57 4.52 4.45 4.47
63 4.69 4.68 4.65 4.60 4.52 4.55
64 4.78 4.77 4.74 4.68 4.58 4.63
65 4.88 4.87 4.84 4.76 4.65 4.71
66 4.99 4.98 4.93 4.85 4.72 4.80
67 5.10 5.09 5.04 4.94 4.79 4.89
68 5.23 5.21 5.15 5.04 4.86 4.99
69 5.36 5.34 5.27 5.14 4.94 5.09
70 5.50 5.48 5.39 5.24 5.01 5.20
Rates not shown will be provided upon request. The guaranteed minimum monthly
payments shown apply to the initial payment for Variable Annuity Payments and to
each payment for Fixed Annuity Payments.
- --------------------------------------------------------------------------------
JOINT & LAST
SURVIVOR ANNUITY
TABLE B - MONTHLY FEMALE MALE AGE
INSTALLMENTS AGE 55 60 62 65 70
- --------------------------------------------------------------------------------
Until last Death 55 3.85 3.93 3.95 3.99 4.03
of Two Payees 60 3.98 4.10 4.15 4.21 4.29
per $1,000 of 62 4.03 4.18 4.23 4.30 4.40
benefit amount 65 4.11 4.28 4.35 4.45 4.59
70 4.21 4.45 4.54 4.69 4.92
Annual, semiannual, or quarterly payments can be determined from Table A or B by
multiplying the monthly payments by 11.812854, 5.9572233, and 2.9914201,
respectively.
55-02010-11
FSB201 1 (4-94) -20- BP 2010K
<PAGE>
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
*Purchase Payments may be made until the earlier of the Annuity Payout Date or
termination of the Contract.
*A Death Benefit may be paid prior to the Annuity Payout Date according to the
Contract provisions.
*Annuity Payments begin on the Annuity Payout Date using the method as
specified in this Contract.
*The smallest annual rate of investment return that would have to be earned on
the assets of the Separate Account so that the dollar amount of Variable
Annuity Payments will not decrease is 3 1/2%. A daily charge corresponding to
an annual charge of .55% is applied to the assets of the Separate Account by
the Company. Please refer to the "Contract Value and Expense Provisions"
beginning on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
<PAGE>
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT
THE COMPANY'S PROMISE
In consideration for the Purchase Payments and the attached application, First
Security Benefit Life Insurance and Annuity Company of New York (the "Company")
will pay the benefits of this Contract according to its provisions.
LEGAL CONTRACT
PLEASE READ YOUR CONTRACT CAREFULLLY. It is a legal Contract between the Owner
and the Company. The Contract's table of contents is on page 2.
FREE LOOK PERIOD-RIGHT TO CANCEL
IF FOR ANY REASON THE OWNER IS NOT SATISFIED WITH THIS CONTRACT, HE OR SHE MAY
RETURN IT TO THE COMPANY WITHIN 30 DAYS FROM THE DATE OF RECEIPT. IT MAY BE
RETURNED BY DELIVERING OR MAILING IT TO THE COMPANY. IF RETURNED, THIS CONTRACT
SHALL BE DEEMED VOID FROM THE CONTRACT DATE. THE COMPANY WILL REFUND (I) ANY
PURCHASE PAYMENTS MADE AND ALLOCATED TO THE FIXED ACCOUNT; AND (II) SEPARATE
ACCOUNT CONTRACT VALUE AS OF THE DATE THE RETURNED POLICY IS POSTMARKED FOR
RETURN TO THE COMPANY, INCREASED BY ANY FEES OR OTHER CHARGES PAID.
Signed for First Security Benefit Life Insurance and Annuity Company of New York
on the Contract Date.
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
*Purchase Payments may be made until the earlier of the Annuity Payout Date or
termination of the Contract.
*A Death Benefit may be paid prior to the Annuity Payout Date according to the
Contract provisions.
*Annuity Payments begin on the Annuity Payout Date using the method specified
in this Contract.
*The smallest annual rate of investment return that would have to be earned on
the assets of the Separate Account so that the dollar amount of Variable
Annuity Payment will not decrease is 3 1/2%. A daily charge corresponding to an
annual charge of .55% is applied to the assets of the Separate Account by the
Company. Please refer to the "Contract Value and Expense Provisions" beginning
on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
Form FSB201 (R11-96)U BP 2010Q1
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TABLE OF CONTENTS
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PAGE
CONTRACT SPECIFICATIONS ............................................... 3
DEFINITIONS ........................................................... 4-6
GENERAL PROVISIONS .................................................... 7, 8
The Contract ........................................................ 7
Compliance .......................................................... 7
Misstatement of Age ................................................. 7
Evidence of Survival ................................................ 7
Incontestability .................................................... 7
Assignment .......................................................... 7
Exchanges ........................................................... 8
Claims of Creditors ................................................. 8
Nonforfeiture Values ................................................ 8
Non-Participating ................................................... 8
Statements .......................................................... 8
OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS ....................... 9
Ownership ........................................................... 9
Joint Ownership ..................................................... 9
Annuitant ........................................................... 9
Primary and Secondary Beneficiaries ................................. 9
Ownership and Beneficiary Changes ................................... 9
PURCHASE PAYMENT PROVISIONS ........................................... 10
Flexible Purchase Payments .......................................... 10
Purchase Payment Limitations ........................................ 10
Purchase Payment Allocation ......................................... 10
Place of Payment .................................................... 10
CONTRACT VALUE AND EXPENSE PROVISIONS ................................. 10-12
Contract Value ...................................................... 10
Fixed Account Contract Value ........................................ 10
Fixed Account Interest Crediting .................................... 11
Separate Account Contract Value ..................................... 11
Accumulation Unit Value ............................................. 11
Determining Accumulation Units ...................................... 11
Mortality and Expense Risk Charge ................................... 12
Premium Tax Expense ................................................. 12
Mutual Fund Expenses ................................................ 12
WITHDRAWAL PROVISIONS ................................................. 12, 13
Withdrawals ......................................................... 12
Withdrawal Value .................................................... 13
Systematic Withdrawals .............................................. 13
Date of Request ..................................................... 13
Payment of Withdrawal Benefits ...................................... 13
DEATH BENEFIT PROVISIONS .............................................. 14, 15
Death Benefit ....................................................... 14
Proof of Death ...................................................... 14
Distribution Rules .................................................. 14, 15
ANNUITY PAYMENT PROVISIONS ............................................ 15-19
Annuity Payout Date ................................................. 15
Change of Annuity Payout Date ....................................... 15
Annuity Payout Amount ............................................... 15
Annuity Tables ...................................................... 16
Annuity Payments .................................................... 16
Change of Annuity Option ............................................ 16
Fixed Annuity Payments .............................................. 16
Variable Annuity Payments ........................................... 16
Annuity Units ....................................................... 16, 17
Net Investment Factor ............................................... 17
Alternate Annuity Option Rates ...................................... 17
Annuity Options ..................................................... 18, 19
ANNUITY TABLES ........................................................ 20
AMENDMENTS OR ENDORSEMENTS, IF ANY
-2- BP 2010Q1
<PAGE>
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CONTRACT SPECIFICATIONS
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OWNER NAME: CONTRACT NUMBER:
OWNER DATE OF BIRTH: CONTRACT DATE:
JOINT OWNER NAME: ISSUE DATE:
JOINT OWNER DATE OF BIRTH: ANNUITY PAYOUT DATE:
ANNUITANT NAME: PLAN:
ANNUITANT DATE OF BIRTH: ASSIGNMENT:
ANNUITANT GENDER:
PRIMARY BENEFICIARY NAME: SECONDARY BENEFICIARY
NAME: See Application or subsequent change form
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INITIAL PURCHASE PAYMENT ....................
MINIMUM SUBSEQUENT PURCHASE PAYMENTS ........ investment program
MINIMUM SYSTEMATIC WITHDRAWAL ............... $100
MORTALITY AND EXPENSE RISK CHARGE ........... .55% Annually
GUARANTEED RATE ............................. 3%
ANNUITY OPTION ..............................
SUBACCOUNTS:
New America Growth Subaccount
International Stock Subaccount
Mid-Cap Growth Subaccount
Equity Income Subaccount
Personal Strategy Balanced Subaccount
Limited-Term Bond Subaccount
Prime Reserve Subaccount
METHOD FOR DEDUCTIONS:
Deductions for any Premium Taxes will be allocated proportionately to the
Owner's Contract Value in the Subaccounts and the Fixed Account.
* The Annuity Payout Date and Annuity Option may be changed by the Owner prior
to the Annuity Payout Date. See "Change of Annuity Payout Date" and "Change
of Annuity Option."
FSB201 A (R9-96) -3- SBL90
<PAGE>
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DEFINTIONS
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ACCOUNT
An Account is one of the Subaccounts or the Fixed Account.
ACCUMULATION UNIT
The Accumulation Unit is a unit of measure. It is used to compute the Separate
Account Contract Value prior to the Annuity Payout Date. It is also used to
compute the Variable Annuity Payments for Annuity Options 5 through 7.
ANNUITANT
The Annuitant is the person named by the Owner on whose life the Annuity
Payments depend for Annuity Options 1 through 4. The Annuitant receives Annuity
Payments under this Contract. Please see "Annuitant" provisions on page 9.
ANNUITY OPTION
An Annuity Option is a set of provisions that form the basis for making Annuity
Payments. The Annuity Option is set prior to the Annuity Payout Date. Please see
"Annuity Options" on pages 18 and 19.
ANNUITY PAYOUT DATE
The Annuity Payout Date is the date on which Annuity Payments are scheduled to
begin. This date may be changed by the Owner. The Annuity Payout date is shown
on page 3. Please see "Annuity Payout Date" on page 15.
ANNUITY UNIT
The Annuity Unit is a unit of measure used to compute Variable Annuity Payments
for Annuity Options 1 through 4.
AUTOMATIC EXCHANGES
Automatic Exchanges are Exchanges among the Subaccounts and the Fixed Account.
Such exchanges are made automatically on a periodic basis by the Company at the
written request of the Owner.
COMPANY
The Company is First Security Benefit Life Insurance and Annuity Company of New
York.
CONTRACT ANNIVERSARY
A Contract Anniversary is a 12-month anniversary of the Contract Date.
CONTRACT DATE
The Contract Date is the date the Contract begins. The Contract Date is shown on
page 3.
CONTRACT YEAR
Contract Years are measured from the Contract Date.
CURRENT INTEREST
The Company may in its discretion pay Current Interest on the Fixed Account at a
rate that exceeds the Guaranteed Rate shown on page 3. The Company will declare
the rate of Current Interest, if any, from time to time.
DESIGNATED BENEFICIARY
Upon the death of the Owner or Joint Owner, the Designated Beneficiary will be
the first person on the following list who is alive on the date of death:
1. Owner;
2. Joint Owner;
3. Primary Beneficiary;
4. Secondary Beneficiary;
5. Annuitant; and
6. the Owner's estate if no one listed above is alive.
FSB201 B (4-94) -4- 55-02010-01
<PAGE>
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DEFINITIONS (Continued)
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DESIGNATED BENEFICIARY (Cont'd)
The Designated Beneficiary receives a death benefit upon the death of the Owner.
Please see "Ownership, Annuitant, and Beneficiary Provisions" on page 9 and
"Death Benefit Provisions" on pages 14 and 15.
FIXED ACCOUNT
The Fixed Account is part of the Company's general account. The Company manages
the general account and guarantees that it will credit interest on Fixed Account
Contract Value at an annual rate at least equal to the Guaranteed Rate. This
Rate is shown on page 3.
GUARANTEE PERIOD
Current Interest, if declared, is fixed for rolling periods of one year,
referred to as Guarantee Periods. The Guarantee Period that applies to any Fixed
Account Contract Value: (1) starts on the date that such Contract Value is
allocated to the Fixed Account pursuant to: (a) a Purchase Payment Received by
the Company; or (b) an Exchange to the Fixed Account; and (2) ends on the last
day of the same month in the year in which the Guarantee Period expires. When
any Guarantee Period expires, a new Guarantee Period shall start for such
Contract Value on the date that follows such expiration date. Such period shall
end on the immediately preceding date in the year in which the Guarantee Period
expires. For example, Contract Value exchanged to the Fixed Account on June 1
would have a Guarantee Period starting on that date and ending on June 30 of the
following year. A new Guarantee Period for such Contract Value would start on
July 1 of that year and end on June 30 of the following year.
HOME OFFICE
The address of the Company's Home Office is First Security Benefit Life
Insurance and Annuity Company of New York, 70 West Red Oak Lane, 4th Floor,
White Plains, New York 10604.
ISSUE DATE
The Issue Date is the date the Company uses to determine the date the Contract
becomes incontestable. The Issue Date is shown on page 3. Please see
"Incontestability" on page 7.
JOINT OWNER
The Joint Owner, if any, shares an undivided interest in the entire Contract
with the Owner. The Joint Owner, if any, is named on page 3. Please see "Joint
Ownership" provisions on page 9.
NONNATURAL PERSON
Any group or entity that is not a living person, such as a trust or corporation.
OWNER
The Owner is the person who has all rights under the Contract. The Owner is
named on page 3. Please see "Ownership" provisions on page 9.
PREMIUM TAX
Any Premium Taxes levied by a state or other governmental entity will be charged
against this Contract. When Premium Tax is assessed after the Purchase Payment
is applied, it will be deducted as described on page 3.
PURCHASE PAYMENT
A Purchase Payment is money Received by the Company and applied to the Contract.
RECEIVED BY THE COMPANY
The phrase "Received by the Company" means receipt by the Company in good order
at its Home Office at the address indicated above or such other address
designated in writing by the Company.
55-02010-01
-5- BP 2010A1
<PAGE>
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DEFINITIONS (Continued)
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SEPARATE ACCOUNT
The T. Rowe Price Variable Annuity Account of First Security Benefit Life
Insurance and Annuity Company of New York is a Separate Account established and
maintained by the Company under New York law. The Separate Account is registered
with the Securities and Exchange Commission under the Investment Company Act of
1940 as Unit Investment Trust. It was established by the Company to support
variable annuity contracts. The Company owns the assets of the Separate Account
and maintains them apart from the assets of its general account and its other
separate accounts. The assets held in the Separate Account equal to the reserves
and other Contract liabilities with respect to the Separate Account shall not be
chargeable with liabilities arising out of any other business of the Company.
Income and realized and unrealized gains and losses from assets in the Separate
Account are credited to, or charged against, the Separate Account without regard
to the income, gains or losses from the Company's general account or its other
separate accounts. The Separate Account is divided into Subaccounts shown on
page 3. Income and realized and unrealized gains and losses from assets in each
Subaccount are credited to, or charged against, the Subaccount without regard to
income, gains or losses in the other Subaccounts. The Company has the right to
transfer to its general account any assets of the Separate Account that are in
excess of the reserves and other Contract liabilities with respect to the
Separate Account. The value of the assets in the Separate Account on each
Valuation Date is determined at the end of each Valuation Date.
SUBACCOUNT NET ASSET VALUE
The Subaccount Net Asset Value is equal to: (1) the net asset value of all
shares of the underlying mutual fund held by the Subaccount; plus (2) any cash
or other assets; less (3) all liabilities of the Subaccount.
SUBACCOUNTS
The Separate Account is divided into Subaccounts which invest in shares of
open-end management investment companies, commonly known as mutual funds. Each
Subaccount may invest its assets in a separate class or series of a designated
mutual fund or funds. The Subaccounts are shown on page 3. Subject to the
regulatory requirements then in force, the Company reserves the right to:
1. change or add designated mutual funds or other investment vehicles;
2. add, remove or combine Subaccounts;
3. add, delete or make substitutions for securities that are held or
purchased by the Separate Account or any Subaccount;
4. operate the Separate Account as a management investment company;
5. combine the assets of the Separate Account with other Separate Accounts
of the Company or an affiliate thereof;
6. restrict or eliminate any voting rights of the Owner with respect to the
Separate Account or other persons who have voting rights as to the
Separate Account; and
7. terminate and liquidate any Subaccount.
If any of these changes result in a material change to the Separate Account or a
Subaccount, the Company will notify the Owner of the change. The Company will
not change the investment policy of any Subaccount in any material respect
without complying with the filing and other procedures of the insurance
regulators of the state of issue.
VALUATION DATE
A Valuation Date is each day the New York Stock Exchange and the Company are
open for business.
VALUATION PERIOD
A Valuation Period is the interval of time from one Valuation Date to the next
Valuation Date.
FSB201 C (4-94)U 55-02010-09
-6- BP 201011
<PAGE>
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GENERAL PROVISIONS
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THE CONTRACT
The entire Contract between the Owner and the Company consists of this Contract,
the attached Application, and any Amendments, Endorsements or Riders to the
Contract. All statements made in the Application will, as ruled by a court of
competent jurisdiction, be deemed representations and not warranties. The
Company will use no statement made by or on behalf of the Owner or the Annuitant
to void this Contract unless it is in the written Application. Any change in the
Contract can be made only with the written consent of the President, a Vice
President, or the Secretary of the Company.
The Purchase Payment(s) and the Application must be acceptable to the Company
under its rules and practices. If they are not, the Company's liability shall be
limited to a return of the Purchase Payment(s).
COMPLIANCE
The Company reserves the right to make any change to the provisions of this
Contract to comply with or give the Owner the benefit of any federal or state
statute, rule or regulation. This includes, but is not limited to, requirements
for annuity contracts under the Internal Revenue Code or the laws of any state.
The Company will provide the Owner with a copy of any such change and will
obtain approval for such a change with the insurance regulatory officials of the
state in which the Contract is delivered.
MISSTATEMENT OF AGE
If the age of the Annuitant has been misstated, payments shall be adjusted, when
allowed by law, to the amount which would have been provided for the correct
age. Proof of the age of an Annuitant may be required at any time, in a form
suitable to the Company. If payments have already commenced and the misstatement
has caused an underpayment, the full amount due with interest at a rate of 3%
will be paid with the next scheduled payment. If the misstatement has caused an
overpayment, the amount due with interest at the rate of 3% will be deducted
from one or more future payments.
EVIDENCE OF SURVIVAL
When any payments under this Contract depend on the payee being alive on a given
date, proof that the payee is living may be required by the Company. Such proof
must be in a form accepted by the Company, and may be required prior to making
the payments.
INCONTESTABILITY
This Contract will not be contested after it has been in force for two years
from the Issue Date during the life of the Owner.
ASSIGNMENT
Please refer to page 3 to see if this Contract may be assigned. If it may be
assigned, no Assignment under this Contract is binding unless Received by the
Company in writing. The Company assumes no responsibility for the validity,
legality, or tax status of any Assignment. The Assignment will be subject to any
payment made or other action taken by the Company before the Assignment is
Received by the Company. Once filed, the rights of the Owner, Annuitant and
Beneficiary are subject to the Assignment. Any claim is subject to proof of
interest of the assignee.
55-02010-09
-7- BP 201011
<PAGE>
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GENERAL PROVISIONS (Continued)
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EXCHANGES
The Owner may Exchange Contract Value among the Fixed Account and Subaccounts
subject to the following.
Exchanges are not allowed within 30 days of the Annuity Payout Date. After the
Annuity Payout Date, for Annuity Options 1 through 4, the Owner may Exchange
Contract Value only among Subaccounts. The Company reserves the right to: (1)
prohibit exchanges that would reduce an account to less than $500; (2) limit the
number of Exchanges allowed each Contract Year to six; and (3) subject to New
York Insurance Department approval, waive the limit on Exchanges allowed each
Contract Year. Exchanges must be at least $500 or, if less, the remaining
balance in the Fixed Account or a Subaccount.
Contract Value may be exchanged from the Fixed Account only: (1) during the
calendar month in which the applicable Guarantee Period expires; and (2)
pursuant to an Automatic Exchange. Exchanges of Fixed Account Value will be
made: (1) first from Fixed Account Contract Value for which the Guarantee Period
expires during the calendar month in which the Exchange is effected; (2) then in
the order that starts with Fixed Account Contract Value which has the longest
amount of time before its Guarantee Period expires; and (3) ends with that which
has the least amount of time before its Guarantee Period expires.
The Company will effect an Exchange to or from a Subaccount on the basis of
Accumulation Unit Value (or, when appropriate, Annuity Unit Value) determined at
the end of the Valuation Period in which the Exchange is effected. The Company
will effect an Exchange from the Fixed Account on the basis of Fixed Account
Contract Value at the end of the Valuation Period in which the Exchange is
effected.
The Company reserves the right to delay Exchanges from the Fixed Account for up
to 6 months. The Company will inform you if there will be a delay.
CLAIMS OF CREDITORS
The Contract Value and other benefits under this Contract are exempt from the
claims of creditors of the Owner to the extent allowed by law.
NONFORFEITURE VALUES
The Death Benefits, Withdrawal Values and Annuity Payout Values will at least
equal the minimum required by law.
NON-PARTICIPATING
This Contract is not participating and will pay no dividend.
STATEMENTS
At least once each Contract Year the Owner will be sent a statement including
the current Contract Value and any other information required by law. The Owner
may send a written request for a statement at other intervals. The Company may
charge a reasonable fee for such statements.
FSB201 D(R9-96) -8- BP 2010N1
<PAGE>
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OWNERSHIP, ANNUITANT AND BENEFICIARY PROVISIONS
- --------------------------------------------------------------------------------
OWNERSHIP
During the Owner's lifetime, all rights and privileges under the Contract may be
exercised only by the Owner. If the purchaser names someone other than himself
or herself as Owner, the purchaser has no rights in the Contract. No Owner may
be older than age 85 on the Contract Date.
JOINT OWNERSHIP
If a Joint Owner is named in the application, then the Owner and Joint Owner
share an undivided interest in the entire Contract as joint tenants with rights
of survivorship. When an Owner and Joint Owner have been named, the Company will
honor only requests for changes and the exercise of other Ownership rights made
by both the Owner and Joint Owner. When a Joint Owner is named, all references
to "Owner" throughout this Contract should be construed to mean both the Owner
and Joint Owner, except for the final sentence of the "Annuitant" provision
below, the "Statements" provision on page 8 and the "Death Benefit Provisions"
on pages 14 and 15.
ANNUITANT
The Annuitant is named on page 3. The Owner may change the Annuitant prior to
the Annuity Payout Date. The request for this change must be made in writing and
Received by the Company at least 30 days prior to the Annuity Payout Date. No
Annuitant may be named who is more than 85 years old on the Contract Date. When
the Annuitant dies prior to the Annuity Payout Date, the Owner must name a new
Annuitant within 30 days or, if sooner, by the Annuity Payout Date, except where
the Owner is a Nonnatural Person. If a new Annuitant is not named, the Owner
becomes the Annuitant.
PRIMARY AND SECONDARY BENEFICIARIES
The Primary Beneficiary and any Secondary Beneficiary are named on page 3. The
Owner may change any Beneficiary as described in "Ownership and Beneficiary
Changes" below. If the Primary Beneficiary dies prior to the Owner, the
Secondary Beneficiary becomes the Primary Beneficiary. Unless the Owner directs
otherwise, when there are two or more Primary Beneficiaries, they will receive
equal shares.
OWNERSHIP AND BENEFICIARY CHANGES
Subject to the terms of any existing Assignment, the Owner may name a new Owner,
a new Primary Beneficiary or a new Secondary Beneficiary. Any new choice of
Owner, Primary Beneficiary or Secondary Beneficiary will revoke any prior
choice. Any change must be made in writing and recorded at the Home Office. The
change will become effective as of the date the written request is signed,
whether or not the Owner is living at the time the change is recorded. A new
choice of Primary Beneficiary or Secondary Beneficiary will not apply to any
payment made or action taken by the Company prior to the time it was recorded.
The Company may require the Contract be returned so these changes may be made.
-9- BP 2010N1
<PAGE>
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PURCHASE PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
FLEXIBLE PURCHASE PAYMENTS
The Contract becomes in force when the initial Purchase Payment is applied. The
Owner is not required to continue Purchase Payments in the amount or frequency
originally planned. The Owner may: (1) increase or decrease the amount of
Purchase Payments; or (2) change the frequency of Purchase Payments. A change in
frequency or amount of Purchase Payments does not require a written request.
PURCHASE PAYMENT LIMITATIONS
Total Purchase Payments to the Contract may not be greater than $1,000,000
without prior approval by the Company. The Minimum Subsequent Purchase Payment
amount is shown on page 3.
PURCHASE PAYMENT ALLOCATION
Purchase Payments may be allocated among the Fixed Account and the Subaccounts.
The allocations may be a whole dollar amount or whole percentage. However, no
less than $25 per Purchase Payment may be allocated to any Account. The Owner
may change the allocations by written notice to the Company.
PLACE OF PAYMENT
All Purchase Payments under this Contract are to be paid to the Company.
Purchase Payments after the first Purchase Payment are applied as of the end of
the Valuation Period during which they are Received by the Company.
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CONTRACT VALUE AND EXPENSE PROVISIONS
- --------------------------------------------------------------------------------
CONTRACT VALUE
On any Valuation Date, the Contract Value is the sum of: (1) the Separate
Account Contract Value; and (2) the Fixed Account Contract Value. At any time
after the first Contract Year and before the Annuity Payout Date, the Company
reserves the right to pay to the Owner the Contract Value as a lump sum if it is
below $2,000 and no Purchase Payments have been paid for three years.
FIXED ACCOUNT CONTRACT VALUE
On any Valuation Date, the Fixed Account Contract Value is equal to the first
Purchase Payment allocated under the Contract to the Fixed Account:
PLUS:
1. any other Purchase Payments allocated under the Contract to the Fixed
Account;
2. any Exchanges from the Separate Account to the Fixed Account; and
3. any interest credited to the Fixed Account.
LESS:
1. any Withdrawals deducted from the Fixed Account;
2. any Exchanges from the Fixed Account to the Separate Account;
3. any applicable Premium Taxes;
4. any Fixed Account Contract Value which is applied to any of Annuity
Options 1 through 4; and
5. any Annuity Payments made under Annuity Options 5 and 7.
55-02010-04
FSB201 E (4-94) -10- BP 2010D1
<PAGE>
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CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
- --------------------------------------------------------------------------------
FIXED ACCOUNT INTEREST CREDITING
The Company will credit interest on Fixed Account Contract Value at an annual
rate at least equal to the Guaranteed Rate shown on page 3. Also, the Company
may in its sole judgment credit Current Interest at a rate in excess of the
Guaranteed Rate. The rate of Current Interest, if declared, will be fixed during
the Guarantee Period. Fixed Account Contract Value will earn Current Interest
during each Guarantee Period at the rate, if any, declared by the Company on the
first day of the Guarantee Period.
The Company may credit Current Interest on Contract Value that was allocated or
exchanged to the Fixed Account during one period at a different rate than
amounts allocated or exchanged to the Fixed Account in another period.
Therefore, at any time, portions of Fixed Account Contract Value may be earning
Current Interest at different rates based upon the period during which such
portions were allocated or exchanged to the Fixed Account.
SEPARATE ACCOUNT CONTRACT VALUE
On any Valuation Date, the Separate Account Contract Value is the sum of the
then current value of the Accumulation Units allocated to each Subaccount for
this Contract.
ACCUMULATION UNIT VALUE
The initial Accumulation Unit Value for each Subaccount was set at $10. Other
Accumulation Unit Values are found on each Valuation Date by dividing (1) by (2)
where:
1. is equal to:
a. the Subaccount Net Asset Value determined at the end of the current
Valuation Period; plus
b. any dividends declared by the Subaccount's underlying mutual fund that
are not part of the Subaccount Net Asset Value; less
c. the accrued Mortality and Expense Risk Charge; and
d. any taxes for which the Company has reserved which the Company deems to
have resulted from the operation of the Subaccount.
2. is the number of Accumulation Units at the start of the Valuation Period.
The Accumulation Unit Value may increase or decrease from one Valuation Period
to the next.
DETERMINING ACCUMULATION UNITS
The number of Accumulation Units allocated to a Subaccount under this Contract
is found by dividing: (1) the amount allocated to a Subaccount; by (2) the
Accumulation Unit Value for the Subaccount at the end of the Valuation Period
during which the amount is applied under the Contract. The number of
Accumulation Units allocated to a Subaccount under the Contract will not change
as a result of investment experience. Events that change the number of
Accumulation Units are:
1. Purchase Payments that are applied to the Subaccount;
2. Contract Value that is Exchanged into or out of the Subaccount
3. Withdrawals that are deducted from the Subaccount; and
4. Premium Taxes that are deducted from the Subaccount.
55-02010-04
-11- BP 2010D1
<PAGE>
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CONTRACT VALUE AND EXPENSE PROVISIONS (Continued)
- --------------------------------------------------------------------------------
MORTALITY AND EXPENSE RISK CHARGE
The Company will deduct the Mortality and Expense Risk Charge shown on page 3.
This charge will be computed and deducted from each Subaccount on each Valuation
Date. This charge is factored into the Accumulation Unit and Annuity Unit Value
on each Valuation Date.
PREMIUM TAX EXPENSE
The Company reserves the right to deduct Premium Tax when due or any time
thereafter. Any applicable Premium Taxes will be allocated as described on page
3.
MUTUAL FUND EXPENSES
Each Subaccount invests in shares of a mutual fund. The net asset value per
share of each underlying fund reflects the deduction of any investment advisory
and administration fees and other expenses of the fund. These fees and expenses
are not deducted from the assets of a Subaccount, but are paid by the underlying
funds. The Owner indirectly bears a pro rata share of such fees and expenses. An
underlying fund's fees and expenses are not specified or fixed under the terms
of this Contract.
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WITHDRAWAL PROVISIONS
- --------------------------------------------------------------------------------
WITHDRAWALS
A full Withdrawal of the Contract Value or partial Withdrawal of Separate
Account Contract Value is allowed at any time. Partial Withdrawals of Fixed
Account Contract Value are, however, restricted as described below.
This provision is subject to any federal or state Withdrawal restrictions.
A partial Withdrawal of Fixed Account Contract Value may be made only: (1)
pursuant to Systematic Withdrawals; (2) during the calendar month in which the
applicable Guarantee Period expires; and (3) once per Contract Year in an amount
up to the greater of $5,000 or 10 percent of the Fixed Account Contract Value at
the time of the partial Withdrawal.
Upon the Owner's request for a full Withdrawal, the Company will pay the
Withdrawal Value in a lump sum.
All Withdrawals must meet the following conditions.
1. The request for Withdrawal must be Received by the Company in writing or
under other methods allowed by the Company.
2. The Owner must apply: (a) while this Contract is in force; and (b) prior
to the Annuity Payout Date.
3. The amount Withdrawn must be at least $500.00 except for Systematic
Withdrawals, as discussed below, or when terminating the Contract.
A partial Withdrawal request must state the allocations for deducting the
Withdrawal from each Account. If the Owner does not specify the allocation, the
Company will contact the Owner for instructions. The Withdrawal will be effected
as of the end of the Valuation Period in which such instructions are Received by
the Company. Withdrawals of Fixed Account Contract Value will be made: (1) first
from Fixed Account Contract Value for which the Guarantee Period expires during
the calendar month in which the Withdrawal is effected; (2) then in the order
that starts with Fixed Account Contract Value which has the longest amount of
time before its Guarantee Period expires; and (3) ends with that which has the
least amount of time before its Guarantee Period expires.
55-02010-05
FSB201 F (4-94) -12- BP 2010E1
<PAGE>
- --------------------------------------------------------------------------------
WITHDRAWAL PROVISIONS (Continued)
- --------------------------------------------------------------------------------
WITHDRAWAL VALUE
The Withdrawal Value at any time will be: (1) the Contract Value; less (2) any
Premium Taxes due or paid by the Company.
SYSTEMATIC WITHDRAWALS
Systematic Withdrawals are automatic periodic distributions from the Contract in
substantially equal amounts prior to the Annuity Payout Date. In order to start
Systematic Withdrawals, the Owner must make the request in writing. The Minimum
Systematic Withdrawal is shown on page 3. The Owner must choose the type of
payment, and its frequency. The payment type may be: (1) a percentage of
Contract Value; (2) a specified dollar amount; (3) all earnings in the Contract;
or (4) based upon the life expectancy of the Owner or the Owner and a
Beneficiary. The payment frequency may be: (1) monthly; (2) quarterly; (3)
semiannually; or (4) annually. Systematic Withdrawals of Fixed Account Contract
Value must provide for payments over a period of not less than 36 months.
Systematic Withdrawals may be stopped by the Owner upon proper written request
Received by the Company at least 30 days in advance. The Company reserves the
right to stop, modify or suspend Systematic Withdrawals.
Withdrawals, including systematic withdrawals, may: (1) subject the Owner to a
penalty tax if taken before age 59 1/2; and (2) may be restricted or limited if
made from an Individual Retirement Annuity qualified under Internal Revenue Code
(IRC) Section 408 or a Tax Sheltered Annuity qualified under IRC Section 403(b).
DATE OF REQUEST
The Company will effect a Withdrawal of Separate Account Contract Value on the
basis of Accumulation Unit Value determined at the end of the Valuation Period
in which all the required information is Received by the Company.
PAYMENT OF WITHDRAWAL BENEFITS
The Company reserves the right to suspend an Exchange or delay payment of a
Withdrawal from the Separate Account for any period:
1. when the New York Stock Exchange is closed; or
2. when trading on the New York Stock Exchange is restricted; or
3. when an emergency exists as a result of which: (a) disposal of securities
held in the Separate Account is not reasonably practicable; or (b) it is
not reasonably practicable to fairly value the net assets of the Separate
Account.
Rules and regulations of the Securities and Exchange Commission will govern as
to whether the conditions set forth above exist.
The Company further reserves the right to delay payment of a Withdrawal from the
Fixed Account for up to six months as required by most states. The Company will
notify you if there will be a delay.
55-02010-05
-13- BP 2010E1
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS
- --------------------------------------------------------------------------------
DEATH BENEFIT
If any Owner dies prior to the Annuity Payout Date, a Death Benefit will be paid
to the Designated Beneficiary when due Proof of Death and instructions regarding
payment are Received by the Company. If an Owner is a Nonnatural Person, then
the Death Benefit will be paid in the event of the death of the Annuitant or any
Joint Owner that is a natural person prior to the Annuity Payout Date. Further,
if an Owner is a Nonnatural Person, the amount of the death benefit is based on
the age of the Annuitant or any joint Owner that is a natural person on the
Issue Date.
If the age of each Owner was 75 or younger on the Issue Date, the Death Benefit
will be the greatest of: (1) the sum of all Purchase Payments, less any Premium
Taxes due or paid by the Company and less the sum of all partial Withdrawals;
(2) the Contract Value on the date due Proof of Death and instructions regarding
payment are Received by the Company, less any Premium Taxes due or paid by the
Company; or (3) the Stepped-Up Death Benefit below.
The Stepped-Up Death Benefit is:
1. the largest Death Benefit on any Contract Anniversary that is both an
exact multiple of five and occurs prior to the oldest Owner reaching age
76; plus
2. any Purchase Payments received since the applicable fifth Contract
Anniversary; less
3. any reductions caused by Withdrawals since the applicable fifth Contract
Anniversary; less
4. any Premium Taxes due or paid by the Company.
If the age of any Owner on the Issue Date was 76 or older, the Death Benefit
will be: (1) the Contract Value on the date due Proof of Death and instructions
regarding payment are Received by the Company; less (2) any Premium Taxes due or
paid by the Company.
If a lump sum payment is requested, the payment will be made in accordance with
any laws and regulations that govern the payment of Death Benefits.
The value of the Death Benefit is determined as of the date that both Proof of
Death and instructions regarding payment are Received by the Company in good
order.
PROOF OF DEATH
Any of the following will serve as Proof of Death:
1. certified copy of the death certificate;
2. certified decree of a court of competent jurisdiction as to the finding
of death;
3. written statement by a medical doctor who attended the deceased Owner; or
4. any proof accepted by the Company.
DISTRIBUTION RULES
The entire Death Benefit with any interest shall be paid within 5 years after
the death of any Owner, except as provided below. In the event that the
Designated Beneficiary elects an Annuity Option, the length of time for the
payment period may be longer than 5 years if: (1) the Designated Beneficiary is
a natural person; (2) the Death Benefit is paid out under Annuity Options 1
through 7; (3) payments are made over a period that does not exceed the life or
life expectancy of the Designated Beneficiary; and (4) Annuity Payments begin
within one year of the death of the Owner. If the deceased Owner's spouse is the
sole Designated Beneficiary, the spouse shall become the sole Owner of the
Contract. He or she may elect to: (1) keep the Contract in force until the
sooner of the spouse's death or the Annuity Payout Date; or (2) receive the
Death Benefit.
FSB201 G (R9-96) -14- BP 2010O1
<PAGE>
- --------------------------------------------------------------------------------
DEATH BENEFIT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
DISTRIBUTION RULES (cont'd)
If any Owner dies after the Annuity Payout Date, Annuity Payments will continue
to be paid at least as rapidly as under the method of payment being used as of
the date of the Owner's death.
If the Owner is a Nonnatural Person, the distribution rules set forth above
apply in the event of the death of, or a change in, the Annuitant. This Contract
is deemed to incorporate any provision of Section 72(s) of the Internal Revenue
Code of 1986, as amended (the "Code"), or any successor provision. This Contract
is also deemed to incorporate any other provision of the code deemed necessary
by the Company, in its sole judgment, to qualify this Contract as an annuity.
The application of the distribution rules will be made in accordance with Code
section 72(s), or any successor provision, as interpreted by the Company in its
sole judgment.
The foregoing distribution rules do not apply to a Contract which is: (1)
provided under a plan described in Code section 401(a); (2) described in Code
section 403(b); (3) an individual retirement annuity or provided under an
individual retirement account or annuity; or (4) otherwise exempt from the Code
section 72(s) distribution rules.
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS
- --------------------------------------------------------------------------------
ANNUITY PAYOUT DATE
The Owner may choose the Annuity Payout Date at the time of application. If no
Annuity Payout Date is chosen, the Company will use the later of: (1) the oldest
Annuitant's seventieth birthday; or (2) the fifth Contract Anniversary. The
Annuity Payout Date must be prior to the oldest Annuitant's ninetieth birthday.
The Annuity Payout Date is the date the first payment will be made to the
Annuitant under any of the Annuity Options.
CHANGE OF ANNUITY PAYOUT DATE
The Owner may change the Annuity Payout Date. A request for the change must be
made in writing. The written request must be Received by the Company at least 30
days prior to the new Annuity Payout Date as well as 30 days prior to the
previous Annuity Payout Date.
ANNUITY PAYOUT AMOUNT
The Annuity Payout Amount is applied to one of the Annuity Options listed on
pages 18 and 19. The Annuity Start Amount is: (1) the Contract Value on the
Annuity Payout Date; less (2) any Premium Taxes due or paid by the Company.
Unless otherwise directed by the Owner, Annuity Payout Amount derived from Fixed
Account Contract Value will be applied to purchase a Fixed Annuity Option; that
derived from Separate Account Contract Value will be applied to purchase a
Variable Annuity Option.
-15- BP 2010O1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY TABLES
The Annuity Tables show the guaranteed minimum amount of monthly Annuity Payment
that applies to the first payment for Variable Annuity Payments and to each
payment for Fixed Annuity Payments for each $1,000 of Annuity Payout Amount for
each of Annuity Options 1 through 4. The amount of each Annuity Payment for
Annuity Options 1 through 4 will depend on the Annuitant's age on the Annuity
Payout Date. The Annuity Tables state values for the exact ages shown. The
values will be interpolated based on the Annuitant's exact age on the Annuity
Payout Date. On request the Company will furnish the amount of monthly Annuity
Payment per $1,000 applied for any ages not shown.
The Company bases the Tables for Annuity Options 1 through 4 on: (1) the 1983
Table "A" Mortality Table projected for mortality improvement for 45 years using
Projection Scale G; and (2) an interest rate of 3 1/2% a year.
For Annuity Options 5 through 7, age is not considered. Annuity Payments for
these options are computed without reference to the Annuity Tables.
ANNUITY PAYMENTS
The Annuity Option is shown on page 3. The Owner may choose any form of Annuity
Option that is allowed by the Company. The Owner may choose an Annuity Option by
written request. This request must be Received by the Company at least 30 days
prior to the Annuity Payout Date. Several Annuity Options are listed on pages 18
and 19. No Annuity Option can be selected that requires the Company to make
periodic payments of less than $20.00. If no Annuity Option is chosen prior to
the Annuity Payout Date, the Company will use the Life with 10-Year Fixed Period
Option. Each Annuity Option allows for making Annuity Payments annually,
semiannually, quarterly or monthly.
CHANGE OF ANNUITY OPTION
Prior to the Annuity Payout Date, the Owner may change the Annuity Option
chosen. The Owner must request the change in writing. This request must be
Received by the Company at least 30 days prior to the Annuity Payout Date.
FIXED ANNUITY PAYMENTS
With respect to Fixed Annuity Payments, the amounts shown on the Tables are the
guaranteed minimum for each Annuity Payment for Annuity Options 1 through 4.
VARIABLE ANNUITY PAYMENTS
With respect to Fixed Annuity Payments, the amounts shown on the Tables are the
first Annuity Payment, based on the assumed interest rate of 3 1/2% for Annuity
Options 1 through 4. The amount of each Annuity Payment after the first for
these options is computed by means of Annuity Units. Neither expense actually
incurred (other than tax on investment return), nor mortality actually
experienced, shall adversely affect the dollar amount of annuity income already
commenced.
ANNUITY UNITS
The number of Annuity Units is found by dividing the first Annuity Payment by
the Annuity Unit Value for the selected Subaccount on the Annuity Payout Date.
The number of Annuity Units for the Subaccount then remains constant, unless an
Exchange of Annuity Units is made. After the first Annuity Payment, the dollar
amount of each subsequent Annuity Payment is equal to the number of Annuity
Units times the Annuity Unit Value for the Subaccount on the due date of the
Annuity Payment.
FSB201 H (4-94) 55-02010-13
-16- BP 201OM1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY UNITS (Cont'd)
The Annuity Unit Value for each Subaccount was first set at $1.00. The Annuity
Unit Value for any subsequent Valuation Date is equal to (a) times (b) times
(c), where:
(a) is the Annuity Unit Value on the immediately preceding Valuation Date;
(b) is the Net Investment Factor for the Valuation Date;
(c) is a factor used to adjust for an assumed interest rate of 3 1/2% per
year used to determine the Annuity Payment amounts. The assumed interest
rate is reflected in the Annuity Tables.
NET INVESTMENT FACTOR
The Net Investment Factor for any Subaccount at the end of any Valuation Period
is found by dividing (1) by (2) and subtracting (3) from the result, where:
1. is equal to:
a. the net asset value per share of the mutual fund held in the
Subaccount, found at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions
paid by the Subaccount's underlying mutual fund that is not included
in the net asset value per share; plus or minus
c. a per share charge or credit for any taxes reserved for, which the
Company deems to have resulted from the operation of the Subaccount.
2. is the net asset value per share of the Subaccount's underlying mutual
fund as found at the end of the prior Valuation Period.
3. is a factor representing the Mortality and Expense Risk Charge deducted
from the Separate Account.
Underlying mutual funds may declare dividends on a daily basis and pay such
dividends once a month. The Net Investment Factor allows for the monthly
reinvestment of these daily dividends. As described above, the gains and losses
from each Subaccount are credited or charged against the Subaccount without
regard to the gains or losses in the Company or other Subaccounts.
ALTERNATE ANNUITY OPTION RATES
The Company may, at the time of election of an Annuity Option, offer more
favorable rates in lieu of the guaranteed rates shown in the Annuity Tables.
55-02010-13
-17- BP 2010M1
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY OPTIONS
OPTION 1
LIFE OPTION: This option provides payments for the life of the Annuitant. Table
A shows some of the guaranteed rates for this option.
OPTION 2
LIFE WITH FIXED PERIOD OPTION: This option provides payments for the life of the
Annuitant. A fixed period of 5, 10, 15 or 20 years may be chosen. Payments will
be made to the end of this period even if the Annuitant dies prior to the end of
the period. If the Annuitant dies before receiving all the payments during the
fixed period, the remaining payments will be made to the Designated Beneficiary.
Table A shows some of the guaranteed rates for this option.
OPTION 3
LIFE WITH INSTALLMENT OR UNIT REFUND OPTION: This option provides payment for
the life of the Annuitant, with a period certain determined by dividing the
Annuity Payout Amount by the amount of the first payment. A fixed number of
payments will be made even if the Annuitant dies. If the Annuitant dies before
receiving the fixed number of payments, any remaining payments will be made to
the Designated Beneficiary. Table A shows some of the guaranteed rates for this
option.
OPTION 4
JOINT AND LAST SURVIVOR OPTION: This option provides payments for the life of
the Annuitant and Joint Annuitant. Payments will be made as long as either is
living. Table B shows some of the guaranteed rates for this option.
OPTION 5
FIXED PERIOD OPTIONS: This option provides payments for a fixed number of years
between 5 and 20. If the Contract Value is held in the Fixed Account, then the
amount of the payments will vary as a result of the interest rate (as adjusted
periodically) credit on the Fixed Account. This rate is guaranteed to be no less
than the Guaranteed Rate shown on page 3. If the Contract Value is held in the
Separate Account, then the amount of the payments will vary as a result of the
investment performance of the Subaccounts chosen. If all the Annuitants die
before receiving the fixed number of payments, any remaining payments will be
made to the Designated Beneficiary.
OPTION 6
FIXED PAYMENT OPTION: This option provides a fixed payment amount. This amount
is paid until the amount applied, including daily interest adjustments, is paid.
If the Contract Value is held in the Fixed Account, then the number of payments
will vary as a result of the interest rate (as adjusted periodically) credited
on the Fixed Account. This rate is guaranteed to be no less than the Guaranteed
Rate shown on page 3. If the Contract Value is held in the Separate Account,
then the number of payments will vary as a result of the investment performance
of the Subaccounts chosen. If all the Annuitants die before receiving all the
payments, any remaining payments will be made to the Designated Beneficiary.
55-02010-08
FSB 201 1 (4-94) -18- BP 201041
<PAGE>
- --------------------------------------------------------------------------------
ANNUITY PAYMENT PROVISIONS (Continued)
- --------------------------------------------------------------------------------
ANNUITY OPTIONS (cont'd)
OPTION 7
AGE RECALCULATION OPTION: This option provides payments based upon the
Annuitant's life expectancy, or the joint life expectancies of the Annuitant and
a beneficiary, at the Annuitant's attained age (and the Annuitant's
beneficiary's attained or adjusted age, if applicable) each year. The payments
are computed by reference to actuarial tables prescribed by the Treasury
Secretary. Payments are made until the amount applied is exhausted. If the
Contract Value is held in the Fixed Account, then the number of payments will
vary as a result of the interest rate (as adjusted periodically) credited on the
Fixed Account. This rate is guaranteed to be not less than the Guaranteed Rate
shown on page 3. If the Contract Value is held in the Separate Account, then the
number of payments will vary as a result of the investment performance of the
Subaccounts chosen. If all the Annuitants die before receiving the remaining
payments, such payments will be made to the Designated Beneficiary.
55-02010-08
-19- BP 2010H1
<PAGE>
ANNUITY TABLES
- --------------------------------------------------------------------------------
TABLE A
GUARANTEED MINIMUM AMOUNT
OF MONTHLY PAYMENT FOR
EACH $1,000 APPLIED
SINGLE LIFE ANNUITY
- --------------------------------------------------------------------------------
AGE MONTHLY PAYMENTS CERTAIN INSTALLMENT
OF PAYEE 0 60 120 180 240 REFUND
- --------------------------------------------------------------------------------
UNISEX
55 4.11 4.11 4.10 4.08 4.05 4.05
56 4.17 4.17 4.16 4.14 4.10 4.10
57 4.23 4.23 4.22 4.19 4.15 4.15
58 4.30 4.29 4.28 4.25 4.21 4.21
59 4.37 4.36 4.35 4.32 4.27 4.27
60 4.44 4.44 4.42 4.38 4.33 4.34
61 4.52 4.51 4.49 4.45 4.39 4.40
62 4.60 4.59 4.57 4.52 4.45 4.47
63 4.69 4.68 4.65 4.60 4.52 4.55
64 4.78 4.77 4.74 4.68 4.58 4.63
65 4.88 4.87 4.84 4.76 4.65 4.71
66 4.99 4.98 4.93 4.85 4.72 4.80
67 5.10 5.09 5.04 4.94 4.79 4.89
68 5.23 5.21 5.15 5.04 4.86 4.99
69 5.36 5.34 5.27 5.14 4.94 5.09
70 5.50 5.48 5.39 5.24 5.01 5.20
Rates not shown will be provided upon request. The guaranteed minimum monthly
payments shown apply to the initial payment for Variable Annuity Payments and to
each payment for Fixed Annuity Payments.
- --------------------------------------------------------------------------------
JOINT & LAST AGE
SURVIVOR ANNUITY
TABLE B - MONTHLY
INSTALLMENTS AGE 55 60 62 65 70
- --------------------------------------------------------------------------------
Until last Death 55 3.77 3.87 3.90 3.95 4.00
of Two Payees 60 3.87 4.01 4.06 4.13 4.24
per $1,000 of 62 3.90 4.06 4.12 4.21 4.34
benefit amount 65 3.95 4.13 4.21 4.32 4.49
70 4.00 4.24 4.34 4.49 4.75
Annual, semiannual, or quarterly payments can be determined from Table A or B by
multiplying the monthly payments by 11.812854, 5.9572233, and 2.9914201,
respectively.
55-02010-12
FSB201 J (4-94)U -20- BP 2010L
<PAGE>
A BRIEF DESCRIPTION OF THIS CONTRACT
This is a FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACT.
*Purchase Payments may be made until the earlier of the Annuity Payout Date or
termination of the Contract.
*A Death Benefit may be paid prior to the Annuity Payout Date according to the
Contract provisions.
*Annuity Payments begin on the Annuity Payout Date using the method as
specified in this Contract.
*The smallest annual rate of investment return that would have to be earned on
the assets of the Separate Account so that the dollar amount of Variable
Annuity Payments will not decrease is 3 1/2%. A daily charge corresponding to
an annual charge of .55% is applied to the assets of the Separate Account by
the Company. Please refer to the "Contract Value and Expense Provisions"
beginning on page 10.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND MAY INCREASE OR DECREASE IN
ACCORDANCE WITH THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT. THERE ARE NO
GUARANTEED MINIMUM PAYMENTS OR CASH VALUES. (SEE "CONTRACT VALUE AND EXPENSE
PROVISIONS" AND "ANNUITY PAYMENT PROVISIONS" FOR DETAILS.)
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
70 West Red Oak Lane, 4th Floor, White Plains, New York 10604
<PAGE>
TAX-SHELTERED ANNUITY ENDORSEMENT
________________________________________________________________________________
TAX-SHELTERED ANNUITY ENDORSEMENT
________________________________________________________________________________
This Contract is established as a Tax-Sheltered Annuity ("TSA") under Section
403(b) of the Internal Revenue Code of 1986, as amended (the "Code") or any
successor provision, pursuant to the Owner's request in the application.
Accordingly, this Endorsement is attached to and made part of the Contract as of
its issue date or, if later, the date shown below.
TAX-SHELTERED ANNUITY PROVISIONS
To ensure treatment as a TSA, this Contract will be subject to the requirements
of Code Section 403(b), which are briefly summarized below:
CONTRIBUTION LIMITATIONS
(a) Purchase Payments made on behalf of the Owner pursuant to a salary
reduction agreement when added to "elective deferral" contributions under
all other plans, contracts or arrangements in which the Owner
participates, may not exceed the annual limitation on such contributions
as provided in Code Section 401(a)(30).
(b) Purchase Payments applied to the Contract on behalf of the Owner which
exceed the applicable "exclusion allowance" (within the meaning of Code
Section 403(b)(2)) or the limitations contained in Code Section 415 shall
not be excludable from gross income.
(c) Purchase Payments that exceed any of the foregoing limitations may be
returned, distributed or otherwise corrected using any method permissible
under the Code.
NONDISCRIMINATION REQUIREMENTS
(a) Except if this Contract is purchased by a "church" (within the meaning of
Code Section 3121(w)), the Plan must satisfy the nondiscrimination
requirements of Code Section 403(b)(12).
(b) Purchase Payments not made pursuant to a salary reduction agreement will
satisfy the nondiscrimination requirements of Code Section 403(b)(12)
provided they satisfy the requirements of Code Section 401(a)(4)
(nondiscrimination in contributions), Code Section 401(a)(5) (permitted
disparity), Code Section 401(a)(17) (annual limit on compensation), Code
Section 401(m) (average contribution percentage test) and Code Section
410(b) (coverage).
(c) Purchase Payments made pursuant to a salary reduction agreement will
satisfy the nondiscrimination requirements of Code Section 403(b)(12)
provided that every employee of the Employer sponsoring the Plan, may
elect to make Purchase Payments of more than $200 pursuant to a salary
reduction agreement.
DISTRIBUTION RESTRICTIONS AND REQUIREMENTS
(a) Distributions attributable to Purchase Payments made pursuant to a salary
reduction agreement may be made only when the Owner attains age 59 1/2,
separates from service, dies, becomes "disabled" (within the meaning of
the Code Section 403(b)(11)) or incurs a hardship. A distribution made
due to a hardship may not include income attributable to such Purchase
Payments.
FSB202 (R2-97) -1- SP 020231
<PAGE>
(b) Distributions from this Contract must comply with the minimum
distribution and incidental death benefit requirements of Code Section
403(b)(10). Accordingly, an Owner's entire interest under the Contract
generally must be distributed (or begin to be distributed) by April 1 of
the calendar year following the later of (i) the calendar year in which
the Owner attains age 70 1/2, or (ii) the calendar year in which the
Owner retires (the "Required Beginning Date").
Distributions commencing not later than the Required Beginning Date may
be made over the life of the Owner or over the lives of the Owner and his
or her Designated Beneficiary (or over a period not extending beyond the
life expectancy of the Owner or the life expectancy of the Owner and his
or her Designated Beneficiary).
(c) If the Owner dies before distribution of his or her interest in the
Contract has begun in accordance with paragraph (b) above, the Owner's
entire interest must be distributed within five years, unless: (i) such
interest is distributed to a Designated Beneficiary over his or her life
(or over a period not extending beyond such Designated Beneficiary's life
expectancy); and (ii) such distribution begins not later than one year
after the Owner's death. If the Designated Beneficiary is the Owner's
surviving spouse, the date on which the distributions are required to
begin shall not be earlier than the date on which the Owner would have
attained age 70 1/2.
(d) If the Owner dies after distribution of his or her interest in this
Contract has begun in accordance with paragraph (b) above but before his
or her entire interest has been distributed, the remaining interest must
be distributed at least as rapidly as under the method of distribution
being used prior to the Owner's death.
(e) All distributions must comply with a method of distribution offered by
the Company under this Contract.
(f) If the Owner receives a distribution from this Contract that qualifies as
an "eligible rollover distribution" (within the meaning of Code Section
402(f)(2)(A)) and elects to have such distribution paid directly to an
"eligible retirement plan" (within the meaning of Code Section 402(c)),
such distribution shall be made in the form of a direct transfer to the
eligible retirement plan. The Company may establish reasonable
administrative rules applicable to such direct transfers.
NONFORFEITABLITY
(a) The Owner's rights under this Contract shall be nonforfeitable except for
failure to pay future Premiums.
(b) This Contract may not be transferred, sold, assigned or pledged as
collateral for a loan or as security for the performance of an obligation
or for any other purposes to any person other than the Company.
MULTIPLE CONTRACTS
(a) If for any taxable year an Owner is covered by this Contract and any
other TSA, all such contracts shall be treated as a single contract.
-2- SP 020231
<PAGE>
PLAN PROVISIONS
The Plan, including certain Plan provisions required by the Employee Retirement
Income Security Act of 1974 or other applicable law, may limit the Owner's
rights under this Contract. The Plan provisions may:
(a) Limit the Owner's right to make Purchase Payments;
(b) Restrict the time when the Owner may elect to receive payments under this
Contract;
(c) Require the consent of the Owner's spouse before the Owner may elect to
receive payments under this Contract;
(d) Require that all distributions be made in the form of a joint and
survivor annuity for the Owner and the Owner's spouse unless both consent
to a different form of distribution;
(e) Require that the Owner's spouse be the Designated Beneficiary;
(f) Require that the Owner remain employed by the Employer sponsoring the
Plan for a specified period of time before the Owner's rights under this
Contract become fully vested; or
(g) Otherwise restrict the Owner's exercise of rights under the Contract or
give the Employer sponsoring the Plan (or a Plan representative) the
right to exercise certain rights on the Owner's behalf.
No such Plan provision shall limit an Owner's rights under this Contract, unless
the Employer sponsoring the Plan has provided the Company with written
notification of such provision. In no event shall any such Plan provision
enlarge the Company's obligations under this Contract.
TAX CONSEQUENCES
(a) The Company will not incur any liability or be responsible for the
timing, purpose or propriety of any contribution or distribution; any tax
or penalty imposed on account of any such contribution or distribution;
or any other failure, in whole or in part, by the Owner or the Employer
to comply with the provisions set forth in the Code or any other law.
ADMINISTRATION
The Company does not act as the administrator of the Plan. Accordingly, the
Company will not incur any liability or be responsible for interpreting the Plan
or deciding any questions arising thereunder.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
_____________________________
Endorsement Effective Date
(If Other Than Issue Date)
FSB202 (R2-97) -3- SP 020231
BP 2010Q4
<PAGE>
ENDORSEMENT
________________________________________________________________________________
INDIVIDUAL RETIREMENT ANNUITY PROVISIONS
________________________________________________________________________________
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
This Contract is established as an Individual Retirement Annuity ("IRA") as
defined in Section 408 of the Internal Revenue Code of 1986, as amended (the
"Code") or any successor provision pursuant to the Owner's request in the
Application. Accordingly, this endorsement is attached to and made part of the
Contract as of its Issue Date or, if later, the date shown below.
Notwithstanding any other provisions of the Contract to the contrary, the
following provisions shall apply.
RESTRICTIONS ON INDIVIDUAL RETIREMENT ANNUITY
To ensure treatment as an IRA, this Contract will be subject to the requirements
of Code Section 408, which are briefly summarized below.
1. The Contract is established for the exclusive benefit of the Owner or his
or her beneficiaries. The Owner shall be the Annuitant.
2. The Contract shall be nontransferable and the entire interest of the Owner
in the Contract is nonforfeitable.
3. Notwithstanding any provision of the Contract to the contrary, the
distribution of the Owner's interest shall be made in accordance with the
minimum distribution requirements of Section 401(a)(9) of the Internal
Revenue Code and the regulations thereunder, including the incidental death
benefit provisions of Section 1.401(a)(9)-2 of the proposed regulations.
The Owner's entire interest in the Contract must be distributed, or begin
to be distributed, by the Owner's required beginning date, which is the
April 1 following the calendar year in which the Owner reaches age 70 1/2.
For each succeeding year, a distribution must be made on or before December
31. By the required beginning date, the Owner may elect to have the balance
in the account distributed in one of the following forms:
1) A single lump sum payment;
2) Equal or substantially equal monthly, quarterly, or annual payments
over the life of the Owner or over the joint and last survivor lives
of the Owner and his or her Designated Beneficiary; or
3) Equal or substantially equal annual payments over a specified period
that may not be longer than the Owner's life expectancy or the joint
and last survivor life expectancy of the Owner and his or her
Designated Beneficiary.
An Annuity Option may not be elected with a Fixed Period that will guarantee
Annuity Payments beyond the life expectancy of the Annuitant and Beneficiary and
Annuity Payments must be made at least annually and in equal amounts.
4. If the Owner dies before his or her entire interest is distributed, the
entire remaining interest will be distributed as follows:
a. If the Owner dies on or after distributions have begun under Section 3,
the entire remaining interest must be distributed at least as rapidly
as provided under Section 3.
FSB203 (R2-97) SP020331
<PAGE>
________________________________________________________________________________
INDIVIDUAL RETIREMENT ANNUITY PROVISIONS (Continued)
________________________________________________________________________________
RESTRICTIONS ON INDIVIDUAL RETIREMENT ANNUITY (Continued)
b. If the Owner dies before distributions have begun under Section 3, the
entire remaining interest must be distributed as elected by the Owner
or, if the Owner has not so elected, as elected by the Designated
Beneficiary or Beneficiaries as follows:
1) by December 31 of the year containing the fifth anniversary of the
Owner's death; or
2) in equal or substantially equal payments over the life or life
expectancy of the Designated Beneficiary or Beneficiaries starting by
December 31 of the year following the year of the Owner's death. If,
however, the Designated Beneficiary is the Owner's surviving spouse,
then this Distribution is not required to begin until December 31 of
the later of: (1) the calendar year immediately following the
calendar year in which the Owner died; or (2) the calendar year in
which the Owner would have attained age 70 1/2.
5. An individual may satisfy the minimum distribution requirements under
Section 401(a)(9) of the Code by receiving a distribution from one IRA that
is equal to the amount required to satisfy the minimum distribution
requirements for two or more IRAs. For this purpose, the Owner of two or
more IRAs may use the "alternative method" described in Notice 88-38,
1988-1 C.B. 524, to satisfy the minimum distribution requirements described
above.
6. Any refund of premiums (other than those attributable to excess
contributions) will be applied before the close of the calendar year
following the year of the refund toward the payment of future premiums or
the purchase of additional benefits.
7. The annual premium shall not exceed the lesser of $2,000 or 100 percent of
compensation ($4,000 or 100 percent of compensation for Spousal IRAs
however, no more than $2,000 can be contributed to either spouse's IRA),
except for plans defined in Section 408(k) of the Code, for which annual
premiums shall not exceed $30,000.
8. Rollover contributions from other qualified plans permitted by the Internal
Revenue Code Sections 402(c), 403(a)(4), 403(b)(8), and 408(d)(3), are
excluded from the limit set forth in Section 8.
9. Notwithstanding any Contract provisions to the contrary, no amount may be
borrowed under the Contract and no portion may be used as security for a
loan.
10. Annuity Payments may not begin before the Annuitant attains the age of 59
1/2 without incurring a penalty tax except in the situations described in
Section 72(t) of the Code.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
______________________________
Endorsement Effective Date
(If Other Than Issue Date)
FSB203 (R2-97) SP 020331
<PAGE>
ENDORSEMENT
________________________________________________________________________________
DOLLAR COST AVERAGING OPTION PROVISIONS
________________________________________________________________________________
This endorsement is attached to and made part of the Contract as of its issue
date or, if later, the date shown below.
Prior to the Annuity Payout Date, the Company offers an Automatic Exchange
option, known as the Dollar Cost Averaging option. Under this option, the Owner
may authorize the Company to Exchange Contract Value from one Account to one or
more of the other Accounts on a monthly, quarterly, semiannual or annual basis
in an amount specified by the Owner.
To elect the option, the Owner's Contract Value must be at least $5,000 ($2,000
for a Contract funding a Qualified Plan) at the time the Owner's written request
is Received by the Company. The Owner's written request to the Company must set
forth the following information: (1) the Account from which Exchanges are to be
made; (2) the Account or Accounts to which Exchanges are to be made; (3) the
basis on which the amount of the Exchange is to be determined, which may be a
specific dollar amount, a fixed percentage or earnings only; (4) the frequency
of the Exchanges, which may be monthly, quarterly, semiannual or annual; and (5)
the length of time during which Exchanges are to be made or the total amount to
be exchanged over time.
Dollar Cost Averaging from the Fixed Account must extend over a minimum period
of one year. Exchanges made pursuant to this option must be in a minimum amount
of $200 and a minimum of $25 must be allocated to any one Account.
The Company will make Exchanges pursuant to this option on the date specified by
the Owner or, if no date is specified, on each monthly, quarterly, semiannual or
annual anniversary, whichever corresponds to the period selected by the Owner,
of the date the written request in proper form is Received by the Company. Such
Exchanges to and from the Subaccounts are made on the basis of the Accumulation
Unit Value determined as of the end of the Valuation Period in which they are
effected. Exchanges to and from the Fixed Account are made on the basis of Fixed
Account Contract Value as of the end of the Valuation Period in which they are
effected. Exchanges made pursuant to this option are not included in the six
Exchanges allowed per Contract Year.
Exchanges will be made until: (1) the total amount elected has been exchanged;
(2) the time period chosen has expired; or (3) Contract Value in the Account or
Accounts from which exchanges are made has been depleted. The Owner may
terminate the Dollar Cost Averaging option by written request to the Company,
and the option will terminate automatically on the Annuity Payout Date or on
receipt by the Company of Proof of Death of the Owner. If the Fixed Account is
part of the option, the following transactions also will terminate the option
automatically: (1) a Purchase Payment allocated to the Fixed Account; and (2)
any Exchange to or from the Fixed Account. The Owner may not have in effect at
the same time the Dollar Cost Averaging and Asset Rebalancing options.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
_____________________________
Endorsement Effective Date
(if Other Than Issue Date)
55-02110-00
FSB211 (9-94) SP 02111
<PAGE>
ENDORSEMENT
________________________________________________________________________________
ASSET REBALANCING OPTION PROVISIONS
________________________________________________________________________________
This endorsement is attached to and made part of the Contract as of its issue
date or, if later, the date shown below.
Prior to the Annuity Payout Date, the Company offers an Automatic Exchange
option, known as the Asset Rebalancing option. Under this option, the Owner may
authorize the Company to Exchange Contract Value among the Accounts each quarter
to maintain a percentage allocation among the Accounts specified by the Owner.
To elect the option, the Owner's Contract Value must be at least $10,000 ($2,000
for a Contract funding a Qualified Plan) at the time the Owner's written request
is Received by the Company. The Owner's written request to the Company must set
forth the Accounts included under the option and the percent of Contract Value
which should be allocated to each Account each quarter. The Company may require
all Contract Value allocated to the Subaccounts to be included in the Asset
Rebalancing option. The Fixed Account may be included in the Asset Rebalancing
option, provided that upon an Asset Rebalancing request being Received by the
Company, Contract Value may be allocated among the Fixed Account and the
Subaccounts in the percentages selected by the Owner without violating the
limits on Exchanges from the Fixed Account. Please see "Exchanges" on page 8.
The Company will make the first Exchange pursuant to this option on the
beginning date which is: (1) the date specified by the Owner; or (2) if no date
is specified by the Owner, the request is received after the date specified or
the date specified is not a working day, the date the written request in proper
form is Received by the Company. Subsequent Exchanges will be made on each
quarterly anniversary of the beginning date. Exchanges to and from the
Subaccounts are made on the basis of the Accumulation Unit Value as of the end
of the Valuation Period in which they are effected. Exchanges to and from the
Fixed Account are made on the basis of Fixed Account Contract Value as of the
end of the Valuation Period in which they are effected. Exchanges made pursuant
to this option are not included in the six Exchanges allowed per Contract Year.
The Owner may terminate the Asset Rebalancing option by written request to the
Company. The option will terminate automatically: (1) on the Annuity Payout
Date; (2) on receipt by the Company of Proof of Death of the Owner; and (3) in
the event of an Exchange of Contract Value otherwise than pursuant to this
Automatic Exchange option. If the Fixed Account is part of the option, the
following transactions also will terminate the option automatically: (1) a
Purchase Payment allocated to the Fixed Account; (2) any Exchange to or from the
Fixed Account; and (3) any Withdrawal of Contract Value. The Owner may not have
in effect at the same time the Dollar Cost Averaging and Asset Rebalancing
options.
FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ROGER K. VIOLA HOWARD R. FRICKE
Secretary President
______________________________
Endorsement Effective Date
(If Other Than Issue Date)
55-02120-00
FSB212 (4-94) SP 02121
<PAGE>
SCHEDULE 6
INTEREST RATE CREDITING PROCEDURES
Security Benefit's and Investment Services' assumptions are based
fundamentally on the premise that the fixed account would not likely be viewed
as a long term investment vehicle, but rather as a temporary holding portfolio
during market swings or to take advantage of dollar cost averaging investment
techniques. Accordingly, Security Benefit assumed only 10% of all contributions
made to the Annuity would be allocated to the fixed account. Other assumptions
were made as to how long the assets would stay in the fixed account and the rate
of new sales. The overall conclusion from the tests suggests that investments
made for the fixed account should be in bonds with durations of two to three
years to match the estimated net asset flows.
Another significant issue discussed was the anticipated asset size of the
fixed account. With current sales projections for 1995, 1996, and 1997, and only
10% assumed to be invested in the fixed account, it is not deemed to be
practical for Security Benefit to segregate a portfolio of this size.
However, if a segregated portfolio is not maintained by Security Benefit,
the methodology of establishing the monthly crediting rate becomes an issue. In
discussing this matter with Investment Services, Security Benefit concluded that
an acceptable approach in setting the periodic rate would be to start with the
yield on 2 1/2 year duration Treasury notes [(2 yr. T-Note + 3 yr. T-Note)/2],
add 60 basis points for anticipated credit spread and then deduct an agreed upon
pricing spread of 145 basis points. The resulting rate will be compared to
direct market competitor rates and one year CD's and may be adjusted. Security
Benefit believes that once the fixed account reaches approximately $200 million,
it will then consider actually segregating a portfolio if it is deemed
beneficial to the contract.
After a period of one year, Security Benefit and Investment Services will
revisit the scenario testing based upon actual experience. Security Benefit and
Investment Services will revisit the scenario testing sooner if market
conditions warrant. Such experience will then be used to adjust asset movement
assumptions if necessary.
<PAGE>
SCHEDULE 7
OTHER EXPENSES
(1) Security Benefit shall pay the costs of printing and mailing the
Separate Account Financial Statement; provided, however, that Security
Benefit may make reasonable inquiry regarding the feasibility of
including such Financial Statement in any mailing to all Contract owners
made by Investment Services, and Investment Services may determine in
its sole judgment to include such Separate Account Financial Statement
in such mailing with no charge to Security Benefit for mailing expenses
unless the parties otherwise agree; and
(2) Security Benefit shall pay to Investment Services by each February 28,
the estimated cost of printing and mailing the Annual Statement of
Account to Contract owners based upon the number of Contract owners and
the cost of preparing Security Benefit's normal statement; provided,
however, that Investment Services shall be responsible for printing and
mailing such Annual Statement of Account to Contract owners.
<PAGE>
EXHIBIT A
AGENT AND ADMINISTRATION MANUAL
(TABLE OF CONTENTS ONLY)
TABLE OF CONTENTS
1. T. ROWE PRICE AND SECURITY BENEFIT RELATIONSHIP
*Who is SBG?
*Who is T. Rowe Price?
*SBG and TRP Relationship
2. WHAT IS AN ANNUITY?
*Annuity Basics
*Fixed and Variable Annuities
*Immediate vs Deferred Annuities
*Accumulation and Annuitization Period
*Single and Periodic Premiums
3. GENERAL PROVISIONS OF THE CONTRACT
*Free Look Period/Exchanges
*Dollar Cost Averaging/Asset Rebalancing
*Purchase Payments
*Ownership, Annuitant, and Beneficiary
*Contract Value and Expenses/Taxation
4. INVESTMENT OPTIONS
*New America Growth
*International Stock and Equity Income
*Personal Strategy Balanced
*Limited Term Bond
*Fixed Interest Account
5. BENEFITS
*Death Benefit Amount and Distribution
*Periodic Withdrawal
*Systematic Withdrawal
6. ANNUITY PAYOUT OPTIONS
*Dates
*Life Option (1)
*Life Annuity and Period Certain (2)
*Unit Refund Annuity (3)/Joint and Survivor Annuity (4)
*Payments for Fixed Period (5)/Payments for Fixed Amount (6)
*Age Recalculation (7)
7. SCREENS
*User Identification/Client/Alpha Screen
*Values Information/Fixed Interest Account/ACH
*Services/Contract Names and Addresses/Transaction History
*Purchases/Exchanges/Notes
*Forms/DMS/Escheatment
8. MISCELLANEOUS
*Confirmations/Statements of Accounts
*Application Check List
*Letters
*Checks
*Addresses and Writing Instructions
*Processing Questions
9. ADMINISTRATIVE PROCEDURES
*Document Handling Procedures
*New Application Procedure-CC/Batch Entry Procedure
*New Application Procedure-AA
*Application Approval List
*1035 Exchanges and Procedures
*DMS Indexing-Records Management
10. ADMINISTRATIVE SCREEN PROCEDURES
*Inquiry
*New Business
*Financial
*Service
*Communications
*Screen Navigation
<PAGE>
EXHIBIT B
SERVICE AND QUALITY STANDARDS
Investment Services and Security Benefit both recognize the importance of
providing accurate and timely service to Variable Annuity Contract owners. The
parties, therefore, agree to measure and monitor performance to service
standards and processing quality, and to report results to each on a quarterly
basis. Investment Services and Security Benefit will meet on an annual basis to
review service levels and if necessary, establish an action plan for improving
performance levels. Adjustments to service and quality standards may be made as
agreed to by both Investment Services and Security Benefit.
1. SALES/NEW CONTRACTS
Security Benefit will:
1. Incoming calls from Investment Services representatives -- Security
Benefit will have a four person group of representatives to answer
incoming calls from Investment Services representatives between the
hours of 9 a.m. - 6 p.m. EST each day the New York Stock Exchange is
open. If Security Benefit representatives are unavailable, the
Investment Services representative will leave a message. The Investment
Services representative should be called back within four hours,
provided that calls received by Security Benefit after 2 p.m. EST may be
returned within the first hour of the next business day. As needed,
Security Benefit representatives will be available for conference calls
with Investment Services representatives and potential Contract owners
for complex issues.
2. Contract Establishment -- New contracts will be established on the day
of application receipt, unless the application is not in good order.
Security Benefit will notify Investment Services daily with the number
of applications being held (number of days and reason) for further
information from the applicant. The contract and welcome letter will be
issued within 2 days of contract establishment.
3. Confirmation Statements -- Security Benefit will send the Contract
owners a confirmation statement the business day after the contract is
established. For one-time transaction events (does not include automatic
transactions), Security Benefit will send the confirmation the next
business day.
4. Security Benefit will provide a daily status report (see attached
example #1) for Investment Services.
<PAGE>
Investment Services will:
1. Sales Calls -- Investment Services will answer all telephone sales
inquiries within the following timeframes:
o 90% of the calls will be answered within 10 seconds
o The abandonment rate will not exceed 2%
o If assistance from an Investment Services Representative is
necessary, and a message is taken, the call will be returned the
same day, or if the message was received late in the day, the
following business morning.
2. Fulfillment Kit -- Investment Services will mail the fulfillment kit the
business day after receiving the fulfillment request.
2. ADMINISTRATION AND OPERATION SERVICE STANDARDS
Security Benefit will:
1. Written Transaction Requests -- Security Benefit will process written
requests for transactions on the day of receipt (if a business day).
Investment Services is to be notified of the quantity of requests held
for further information from the contractholder.
2. Contract Maintenance Requests -- Security Benefit will process
contractholder maintenance (i.e., services options) requests and
Investment Services generated requests on day of receipt (if a business
day) if received by 4 pm EST, otherwise it will be processed the next
business day.
3. Correspondence -- If Security Benefit rejects a Contract owner
transaction request, Security Benefit will send a letter to the Contract
owner by the next business day. If a maintenance request is rejected,
Security Benefit will send a letter to the Contract owner by the next
business day. If Security Benefit rejects an Investment Services
generated transaction or maintenance request, Security Benefit will
notify the Investment Services representative on the day of receipt of
the request for Investment Services action. All non-system generated
correspondence will be noted on the Security Benefit Software in the
Notes screen of the Contract owner's records.
4. Adjustment Requests -- If a contract's records require adjustment,
Investment Services will notify Security Benefit in writing. Adjustment
requests will be processed by Security Benefit on the day of receipt of
received by 4 pm EST. Security Benefit will notify Investment Services
of any outstanding adjustment requests each day. Security Benefit to
provide monthly summary (see attached sample #2) of adjustments
processed.
5. Research Documentation -- Security Benefit will fulfill Investment
Services request for contract documentation within 2 hours by fax if the
request was received by 4 pm EST. If the request is received after 4 pm
EST, then Security Benefit will provide the requested information by 11
am EST the next business day.
6. Regulatory Changes -- Security Benefit will take timely action to comply
with legislation and/or regulations which result in changes to the
administration of the Variable Annuity Plan.
Investment Services will:
1. Service Calls - Investment Services will answer all telephone service
calls within the following timeframes:
o 80% of the calls will be answered within 20 seconds
o The abandonment rate will not exceed 5%
o If assistance from an Investment Services Representative is
necessary, and a message is taken, the call will be returned the
same day, or if the message was received late in the day, the
following business morning.
2. All financial transactions received via telephone in good order by 4 pm
EST will be processed the same day.
3. All maintenance will be processed by the next business day. Research
requests will be completed within 3 business days. If not completed by
the third day, the request will be forwarded to an Investment Services
Coordinator for follow-up with Security Benefit.
4. Correspondence -- Any correspondence requests handled by Investment
Services will be answered within 3 business days of the requests.
Investment Services will note the correspondence on the Security Benefit
Software in the Notes screen of the contractholder's records.
3. QUALITY TARGET GOALS
Both Security Benefit and Investment Services will maintain the following
quality target goals:
FUNCTION GOAL (%)
Contract Set-up 98
Correspondence Rating Accuracy 98
Contract Maintenance Accuracy 98
Financial Transactions 99
4. EXAMPLE EXHIBITS
Example #1
Security Benefit Daily Status Report
Date: xx/xx/xx
Contracts Established xxx
Contracts Carried Over* xxx Oldest Date xx/xx/xx
Purchases Processed xxx
Exchanges Processed xxx
Withdrawals Processed xxx
Transaction Requests Carried Over* xxx Oldest Date xx/xx/xx
Correspondence Received xxx
Correspondence Processed xxx
Correspondence Carried Over* xxx Oldest Date xx/xx/xx
Adjustments Received xxx
Adjustments Processed xxx
Adjustments Carried Over* xxx Oldest Date xx/xx/xx
* For any items carried over, aging and status should be provided (i.e.,
10 items - 2 days outstanding, missing beneficiary information).
Example #2
Adjustment Monthly Summary
Month: XXX, 19XX
Adjustment Submitted by:
Security Benefit xxx xx%
Investment Services xxx xx%
BIS
LAIS
SAS (Investment Services to be broken down by department)
OMIC
BIC
WIC
Errors Caused by:
Security Benefit xxx xx%
Investment Services xxx xx%
BIS
LAIS
SAS (Investment Services to be broken down by department)
OMIC
BIC
WIC
Error Detail -- Security Benefit Adjustments
DATE PROCESSED REP NAME DEPARTMENT CONTRACT # DOLLAR AMOUNT
xx/xx/xx J. Rep XXX xxxxxxx $xxx.xx
Error Detail -- Investment Services Adjustments
DATE PROCESSED REP NAME DEPARTMENT CONTRACT # DOLLAR AMOUNT
xx/xx/xx J. Rep XXX xxxxxxx $xxx.xx
<PAGE>
EXHIBIT C
BIGHORN SHEEP LOGO
[SBG LOGO]
- --------------------------------------------------------------------------------
Security Benefit Life Insurance Company 700 SW Harrison St.
Security Benefit Group, Inc. Topeka, Kansas 66636-0001
Security Distributors, Inc. (785) 431-3000
Security Management Company, LLC
April 30, 1998
First Security Benefit Life Insurance
and Annuity Company of New York
70 West Red Oak Lane, 4th Floor
White Plains, NY 10604
Dear Sir/Madam:
This letter is with reference to the Registration Statement of T. Rowe Price
Variable Annuity Account of which First Security Benefit Life Insurance and
Annuity Company of New York (hereinafter "FSBL") is the Depositor. Said
Registration Statement is being filed with the Securities and Exchange
Commission for the purpose of registering the variable annuity contracts issued
by FSBL and the interests of T. Rowe Price Variable Annuity Account of First
Security Benefit Life Insurance and Annuity Company of New York under such
variable annuity contracts which will be sold pursuant to an indefinite
registration.
I have examined the Declaration and Certificate of Incorporation and bylaws of
FSBL, minutes of the meeting of its Board of Directors and other records, and
pertinent provisions of the New York insurance laws, together with applicable
certificates of public officials and other documents which I have deemed
relevant. Based on the foregoing, it is my opinion that:
1. FSBL is duly organized and validly existing as a stock life insurance
company under the laws of New York.
2. T. Rowe Price Variable Annuity Account FSBL has been validly created as a
Separate Account in accordance with the pertinent provisions of the
insurance laws of New York.
3. FSBL has the power, and has validly and legally exercised it, to create and
issue the variable annuity contracts which are administered within and by
means of T. Rowe Price Variable Annuity Account of FSBL.
4. The amount of variable annuity contracts to be sold pursuant to the
indefinite registration, when issued, will represent binding obligations of
FSBL in accordance with their terms providing said contracts were issued for
the considerations set forth therein and evidenced by appropriate policies
and certificates.
<PAGE>
April 30, 1998
Page 2
I hereby consent to the inclusion in the Registration Statement of my foregoing
opinion.
Respectfully submitted,
/s/ ROGER K. VIOLA
Roger K. Viola
Vice President
First Security Benefit Life Insurance and
Annuity Company of New York
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and to the
use of our reports dated February 6, 1998, with respect to the financial
statements of First Security Benefit Life Insurance and Annuity Company of New
York and the financial statements of T. Rowe Price Variable Annuity Account
included in Post-Effective Amendment No. 5 to the Registration Statement (Form
N-4 No. 33-83240) and the related Statement of Additional Information
accompanying the Prospectus of T. Rowe Price Variable Annuity Account.
Ernst & Young LLP
Kansas City, Missouri
April 27, 1998
EXHIBIT 13
EQUITY INCOME
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1997
1 Year
1000 (1+T) 1 = 1,281.63
((1+T) 1)1 = (1.28163)1
1+T = 1.28163
T = .2816
3.75 Years (From Date of Inception 3/31/94)
1000 (1+T) 3.75 = 2,124.92
((1+T) 3.75)3.75 = (2.12492)3.75
1+T = 1.22262
T = .2226
INTERNATIONAL STOCK
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1997
1 Year
1000 (1+T) 1 = 1,025.06
((1+T) 1)1 = (1.02506)1
1+T = 1.02506
T = .0251
3.75 Years (From Date of Inception 3/31/94)
1000 (1+T) 3.75 = 1,311.31
((1+T) 3.75)3.75 = (1.31131)3.75
1+T = 1.07495
T = .0750
<PAGE>
LIMITED-TERM BOND
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1997
1 Year
1000 (1+T) 1 = 1,061.30
((1+T) 1)1 = (1.06130)1
1+T = 1.06130
T = .0613
3.64 Years (From Date of Inception 5/13/94)
1000 (1+T) 3.64 = 1,218.41
((1+T) 3.64)3.64 = (1.21841)3.64
1+T = 1.05577
T = .0558
NEW AMERICA GROWTH
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1997
1 Year
1000 (1+T) 1 = 1,205.00
((1+T) 1)1 = (1.20500)1
1+T = 1.20500
T = .2050
3.75 Years (From Date of Inception 3/31/94)
1000 (1+T) 3.75 = 2,172.10
((1+T) 3.75)3.75 = (2.17210)3.75
1+T = 1.22979
T = .2298
<PAGE>
PERSONAL STRATEGY BALANCED
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1997
1 Year
1000 (1+T) 1 = 1,173.95
((1+T) 1)1 = (1.17395)1
1+T = 1.17395
T = .1740
3 Years (From Date of Inception 12/30/94)
1000 (1+T) 3 = 1,705.38
((1+T) 3)3 = (1.70538)3
1+T = 1.19474
T = .1947
MID-CAP GROWTH
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1997
1 Year (From Date of Inception 12/31/96)
1000 (1+T) 1 = 1,188.13
((1+T) 1)1 = (1.18813)1
1+T = 1.18813
T = .1881
PRIME RESERVE
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1997
1 Year (From Date of Inception 12/31/96)
1000 (1+T) 1 = 1,048.00
((1+T) 1)1 = (1.04800)1
1+T = 1.04800
T = .0480
<PAGE>
PRIME RESERVE
Money Market Yield as of December 31, 1997
CALCULATION OF CHANGE IN UNIT VALUE:
( Unrounded Unrounded )
( Price Price )
( 12-31-97 - 12-24-97 ) = 10.475090732687 - 10.465302796564 = .00093440108
--------------------------- -----------------------------------
( Unrounded Price ) 18.24241359853
( 12-24-97 )
ANNUALIZED YIELD:
365/7 (.00093440108) = 4.87%
EFFECTIVE YIELD:
(1 + .00093440108)365/7 - 1 = 4.99%
<PAGE>
LIMITED - TERM BOND
YIELD CALCULATION AS OF DECEMBER 31, 1997
[ [ (2,339.04) ]6 ]
2 [ [ ---------------------------- + 1 ] ] - 1
[ [ (41,411.6109 x 11.60) ] ]
[ ( (2,339.04) )6 ]
2 [ (------------------------------- + 1 ) ] - 1
[ ( (480,374.6864) ) ]
2 [((.00486920 + 1)6 ) - 1]
2 [((1.00486920)6) - 1]
2 [(1.02957) - 1]
2 (.02957)
= .0591 or 5.91% December 31, 1997
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE)
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Howard R. Fricke, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint James R. Schmank, and Roger K. Viola, and each of them, my true and
lawful attorneys, each with full power and authority for me and in my name and
behalf to sign Registration Statements, any amendments thereto and any
applications for exemptive relief filed pursuant to the Investment Company Act
of 1940 or the Securities Act of 1933, as amended, and any instrument or
document filed as part thereof, or in connection therewith or in any way related
thereto, in connection with Variable Annuity Contracts offered, issued or sold
by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any T. ROWE PRICE VARIABLE
ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF
NEW YORK with like effect as though said Registration Statements and other
documents had been signed and filed personally by me in the capacity aforesaid.
Each of the aforesaid attorneys acting alone shall have all the powers of all of
said attorneys. I hereby ratify and confirm all that the said attorneys, or any
of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of March, 1998.
HOWARD R. FRICKE
------------------------------
Howard R. Fricke
SUBSCRIBED AND SWORN to before me this 16th day of March, 1998.
L. CHARMAINE LUCAS
------------------------------
Notary Public
My Commission Expires:
04/01/98
- ------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE)
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Roger K. Viola, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke and James R. Schmank, and each of them, my true and
lawful attorneys, each with full power and authority for me and in my name and
behalf to sign Registration Statements, any amendments thereto and any
applications for exemptive relief filed pursuant to the Investment Company Act
of 1940 or the Securities Act of 1933, as amended, and any instrument or
document filed as part thereof, or in connection therewith or in any way related
thereto, in connection with Variable Annuity Contracts offered, issued or sold
by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any T. ROWE PRICE VARIABLE
ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF
NEW YORK with like effect as though said Registration Statements and other
documents had been signed and filed personally by me in the capacity aforesaid.
Each of the aforesaid attorneys acting alone shall have all the powers of all of
said attorneys. I hereby ratify and confirm all that the said attorneys, or any
of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of March, 1998.
ROGER K. VIOLA
------------------------------
Roger K. Viola
SUBSCRIBED AND SWORN to before me this 17th day of March, 1998.
L. CHARMAINE LUCAS
------------------------------
Notary Public
My Commission Expires:
04/01/98
- ------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE)
KNOW ALL MEN BY THESE PRESENTS:
THAT I, James R. Schmank, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke and Roger K. Viola, and each of them, my true and
lawful attorneys, each with full power and authority for me and in my name and
behalf to sign Registration Statements, any amendments thereto and any
applications for exemptive relief filed pursuant to the Investment Company Act
of 1940 or the Securities Act of 1933, as amended, and any instrument or
document filed as part thereof, or in connection therewith or in any way related
thereto, in connection with Variable Annuity Contracts offered, issued or sold
by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any T. ROWE PRICE VARIABLE
ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE AND ANNUITY COMPANY OF
NEW YORK with like effect as though said Registration Statements and other
documents had been signed and filed personally by me in the capacity aforesaid.
Each of the aforesaid attorneys acting alone shall have all the powers of all of
said attorneys. I hereby ratify and confirm all that the said attorneys, or any
of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of March, 1998.
JAMES R. SCHMANK
------------------------------
James R. Schmank
SUBSCRIBED AND SWORN to before me this 17th day of March, 1998.
L. CHARMAINE LUCAS
------------------------------
Notary Public
My Commission Expires:
04/01/98
- ------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE)
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Donald J. Schepker, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke, James R. Schmank, and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign Registration Statements, any amendments
thereto and any applications for exemptive relief filed pursuant to the
Investment Company Act of 1940 or the Securities Act of 1933, as amended, and
any instrument or document filed as part thereof, or in connection therewith or
in any way related thereto, in connection with Variable Annuity Contracts
offered, issued or sold by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK with like effect as though said Registration
Statements and other documents had been signed and filed personally by me in the
capacity aforesaid. Each of the aforesaid attorneys acting alone shall have all
the powers of all of said attorneys. I hereby ratify and confirm all that the
said attorneys, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of March, 1998.
DONALD J. SCHEPKER
------------------------------
Donald J. Schepker
SUBSCRIBED AND SWORN to before me this 13th day of March, 1998.
DIANA L. FELDHAUSEN
------------------------------
Notary Public
My Commission Expires:
03/23/99
- ------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK)
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Katherine White, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke, James R. Schmank, and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign Registration Statements, any amendments
thereto and any applications for exemptive relief filed pursuant to the
Investment Company Act of 1940 or the Securities Act of 1933, as amended, and
any instrument or document filed as part thereof, or in connection therewith or
in any way related thereto, in connection with Variable Annuity Contracts
offered, issued or sold by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK with like effect as though said Registration
Statements and other documents had been signed and filed personally by me in the
capacity aforesaid. Each of the aforesaid attorneys acting alone shall have all
the powers of all of said attorneys. I hereby ratify and confirm all that the
said attorneys, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of March, 1998.
KATHERINE WHITE
------------------------------
Katherine White
SUBSCRIBED AND SWORN to before me this 18th day of March, 1998.
PATRICIA DAWSON
------------------------------
Notary Public
My Commission Expires:
04/01/98
- ------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE)
KNOW ALL MEN BY THESE PRESENTS:
THAT I, John E. Hayes, Jr., being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke, James R. Schmank, and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign Registration Statements, any amendments
thereto and any applications for exemptive relief filed pursuant to the
Investment Company Act of 1940 or the Securities Act of 1933, as amended, and
any instrument or document filed as part thereof, or in connection therewith or
in any way related thereto, in connection with Variable Annuity Contracts
offered, issued or sold by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK with like effect as though said Registration
Statements and other documents had been signed and filed personally by me in the
capacity aforesaid. Each of the aforesaid attorneys acting alone shall have all
the powers of all of said attorneys. I hereby ratify and confirm all that the
said attorneys, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of March, 1998.
JOHN E. HAYES, JR.
------------------------------
John E. Hayes, Jr.
SUBSCRIBED AND SWORN to before me this 24th day of March, 1998.
L. CHARMAINE LUCAS
------------------------------
Notary Public
My Commission Expires:
04/01/98
- ------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE)
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Kris A. Robbins, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke, James R. Schmank, and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign Registration Statements, any amendments
thereto and any applications for exemptive relief filed pursuant to the
Investment Company Act of 1940 or the Securities Act of 1933, as amended, and
any instrument or document filed as part thereof, or in connection therewith or
in any way related thereto, in connection with Variable Annuity Contracts
offered, issued or sold by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK with like effect as though said Registration
Statements and other documents had been signed and filed personally by me in the
capacity aforesaid. Each of the aforesaid attorneys acting alone shall have all
the powers of all of said attorneys. I hereby ratify and confirm all that the
said attorneys, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of March, 1998.
KRIS A. ROBBINS
------------------------------
Kris A. Robbins
SUBSCRIBED AND SWORN to before me this 3rd day of April, 1998.
L. CHARMAINE LUCAS
------------------------------
Notary Public
My Commission Expires:
April 1, 2002
- ------------------------------
<PAGE>
POWER OF ATTORNEY
STATE OF KANSAS )
) ss.
COUNTY OF SHAWNEE)
KNOW ALL MEN BY THESE PRESENTS:
THAT I, Stephen R. Herbert, being a Director of FIRST SECURITY BENEFIT LIFE
INSURANCE AND ANNUITY COMPANY OF NEW YORK, by these presents do make, constitute
and appoint Howard R. Fricke, James R. Schmank, and Roger K. Viola, and each of
them, my true and lawful attorneys, each with full power and authority for me
and in my name and behalf to sign Registration Statements, any amendments
thereto and any applications for exemptive relief filed pursuant to the
Investment Company Act of 1940 or the Securities Act of 1933, as amended, and
any instrument or document filed as part thereof, or in connection therewith or
in any way related thereto, in connection with Variable Annuity Contracts
offered, issued or sold by FIRST SECURITY BENEFIT LIFE INSURANCE COMPANY and any
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK with like effect as though said Registration
Statements and other documents had been signed and filed personally by me in the
capacity aforesaid. Each of the aforesaid attorneys acting alone shall have all
the powers of all of said attorneys. I hereby ratify and confirm all that the
said attorneys, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of April, 1998.
STEPHEN R. HERBERT
------------------------------
Stephen R. Herbert
SUBSCRIBED AND SWORN to before me this 3rd day of April, 1998.
ELISA SCARAZZINI
------------------------------
Notary Public
My Commission Expires:
05/31/98
- ------------------------------
[ARTICLE] 6
[CIK] 0000928973
[SERIES]
[NUMBER] 001
[NAME] PRIME RESERVE SUBACCOUNT
[MULTIPLIER] 1,000
[CURRENCY] U.S. DOLLARS
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1997
[PERIOD-START] JAN-01-1997
[PERIOD-END] DEC-31-1997
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 790
[INVESTMENTS-AT-VALUE] 790
[RECEIVABLES] 0
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 790
[PAYABLE-FOR-SECURITIES] 789
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1
[TOTAL-LIABILITIES] 790
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 0
[SHARES-COMMON-STOCK] 75,383
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 789
[DIVIDEND-INCOME] 25
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] (3)
[NET-INVESTMENT-INCOME] 22
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 22
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 168
[NUMBER-OF-SHARES-REDEEMED] 92
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 76
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 0
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 0
[AVERAGE-NET-ASSETS] 0
[PER-SHARE-NAV-BEGIN] 0
[PER-SHARE-NII] .58
[PER-SHARE-GAIN-APPREC] 10.47
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.47
[EXPENSE-RATIO] (.01)
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000928973
<NAME> T. ROWE PRICE VA OF FSBLIAC OF NEW YORK
<SERIES>
<NUMBER> 002
<NAME> NEW AMERICA GROWTH SUBACCOUNT
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 2,741
<INVESTMENTS-AT-VALUE> 3,296
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,296
<PAYABLE-FOR-SECURITIES> 3,296
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 3,296
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 170,990
<SHARES-COMMON-PRIOR> 143,768
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 452
<NET-ASSETS> 3,296
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (15)
<NET-INVESTMENT-INCOME> (15)
<REALIZED-GAINS-CURRENT> 71
<APPREC-INCREASE-CURRENT> 452
<NET-CHANGE-FROM-OPS> 508
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 58
<NUMBER-OF-SHARES-REDEEMED> 31
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 27
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 16.00
<PER-SHARE-NII> (.10)
<PER-SHARE-GAIN-APPREC> 3.28
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.28
<EXPENSE-RATIO> (.01)
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000928973
<NAME> T. ROWE PRICE VA OF FSBLIAC OF NEW YORK
<SERIES>
<NUMBER> 003
<NAME> INTERNATIONAL STOCK SUBACCOUNT
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1,605
<INVESTMENTS-AT-VALUE> 1,620
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,620
<PAYABLE-FOR-SECURITIES> 1,620
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 1,620
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 123,767
<SHARES-COMMON-PRIOR> 86,235
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (50)
<NET-ASSETS> 1,620
<DIVIDEND-INCOME> 15
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (8)
<NET-INVESTMENT-INCOME> 7
<REALIZED-GAINS-CURRENT> 69
<APPREC-INCREASE-CURRENT> (50)
<NET-CHANGE-FROM-OPS> 26
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 61
<NUMBER-OF-SHARES-REDEEMED> 23
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 38
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 12.77
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> .32
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.09
<EXPENSE-RATIO> (.01)
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000928973
<NAME> T. ROWE PRICE VA OF FSBLIAC OF NEW YORK
<SERIES>
<NUMBER> 004
<NAME> EQUITY INCOME SUBACCOUNT
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 5,192
<INVESTMENTS-AT-VALUE> 6,053
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,053
<PAYABLE-FOR-SECURITIES> 6,054
<SENIOR-LONG-TERM-DEBT> (1)
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 6,053
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 321,371
<SHARES-COMMON-PRIOR> 181,250
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 680
<NET-ASSETS> 6,054
<DIVIDEND-INCOME> 108
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (25)
<NET-INVESTMENT-INCOME> 83
<REALIZED-GAINS-CURRENT> 304
<APPREC-INCREASE-CURRENT> 680
<NET-CHANGE-FROM-OPS> 1,067
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 180
<NUMBER-OF-SHARES-REDEEMED> 40
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 140
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 14.70
<PER-SHARE-NII> .33
<PER-SHARE-GAIN-APPREC> 4.14
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.84
<EXPENSE-RATIO> (.01)
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000928973
<NAME> T. ROWE PRICE VA OF FSBLIAC OF NEW YORK
<SERIES>
<NUMBER> 005
<NAME> PERSONAL STRATEGY BALANCED SUBACCOUNT
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1,104
<INVESTMENTS-AT-VALUE> 1,218
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,218
<PAYABLE-FOR-SECURITIES> 1,217
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1
<TOTAL-LIABILITIES> 1,218
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 76,805
<SHARES-COMMON-PRIOR> 39,697
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 90
<NET-ASSETS> 1,217
<DIVIDEND-INCOME> 30
<INTEREST-INCOME> 0
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