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[FLYING S LOGO] SECURITY BENEFIT LIFE
INSURANCE COMPANY LOGO
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A MEMBER OF THE SECURITY ONE SECURITY BENEFIT PLACE
BENEFIT GROUP OF COMPANIES TOPEKA, KANSAS 66636-0001
(785) 438-3000
AMENDMENT TO
MARKETING ORGANIZATION AGREEMENT
OF SECURITY BENEFIT LIFE INSURANCE COMPANY
AND SECURITY DISTRIBUTORS, INC.
Effective October 1, 2004
WHEREAS, you have entered into a selling agreement with Security Benefit Life
Insurance Company and Security Distributors, Inc. ("SDI") (hereinafter jointly
called "SBL"), including, but not limited to, the SBL Variable Products Sales
Agreement and/or Marketing Organization Agreement, as applicable (hereinafter
called the "Agreement"); and
WHEREAS, SBL desires to amend the Agreement as set forth below; and
WHEREAS, references herein to the "Marketing Organization" shall be read as
references to the "Broker/Dealer" with regard to the SBL Variable Products Sales
Agreement;
NOW, THEREFORE, the Agreement is hereby amended by deleting in its entirety
Section III of the Marketing Organization Agreement and paragraph 5 of the SBL
Variable Products Sales Agreement and replacing it with the following:
III. COMPLIANCE
A. GENERAL REQUIREMENTS. Marketing Organization agrees to abide by all
applicable local, state and federal laws and regulations, as well as
the rules and regulations of the NASD and SEC in conducting business
under this Agreement. Marketing Organization shall insure that all of
its Marketers comply with all such rules, laws, and regulations.
Marketing Organization agrees to comply with, and to cause their
Marketers to comply with, any sales manuals and/or policies,
procedures, rules and practices of SBL relating to the Products,
privacy, Marketer conduct and similar matters and provided to
Marketing Organization, as these sales manuals and/or policies,
procedures, rules and practices of SBL are now in effect or may be
amended or established in the future by SBL in its sole discretion.
Marketing Organization agrees to notify SBL and SDI immediately in
writing if it or any Marketer fails to comply with any applicable
local, state and federal law and regulation (including NASD and SEC
rules), or SBL's sales manuals and/or policies, procedures, rules and
practices.
B. SUITABILITY. Marketing Organization agree to abide by all applicable
state and federal laws and regulations concerning suitability.
Marketing Organization further agrees to abide by NASD rules and
interpretive guidance regarding suitability, as applicable. Marketing
Organization, through a senior manager who has responsibility for
suitability functions, shall provide upon SBL's request, an annual
certification certifying that Marketing Organization is performing
suitability functions as required by applicable state and federal laws
and regulations and NASD Conduct Rules. Marketing Organization agrees
to allow SBL to perform suitability audits from time to time.
Suitability audits may be performed at any of Marketing Organization's
sites, via electronic communication, or other means, as deemed
appropriate by SBL. If an audit is conducted at Marketing
Organization's site(s), Marketing Organization agrees to allow SBL
reasonable access to the building, and books and records as requested
by SBL or its representatives.
C. SUPERVISION OF MARKETERS. Marketing Organization shall recruit, train
and supervise Marketers for the sale of the Products. Marketing
Organization shall be responsible for any Marketer appointed hereunder
complying with the terms, conditions, and limitations as set forth in
this Agreement and any sales manuals and/or policies, procedures,
rules and practices of SBL. Marketing Organization shall supervise all
Marketers and be responsible for their training and compliance with
applicable insurance laws and regulations, and if any act or omission
of a Marketer or employee of Marketing Organization is the proximate
cause of any loss, claim, damage, liability or expense (including
reasonable attorneys' fees) to SBL or SDI, Marketing Organization
shall be liable therefore. Marketing Organization shall supervise its
Marketers and be responsible for their training and compliance with
applicable federal and state securities laws and regulations and the
rules of the NASD, and if any act or omission of a Marketer or
employee of Marketing Organization is the proximate cause of any loss,
claim, damage, liability or expense (including reasonable attorneys'
fees) to SBL or SDI, Marketing Organization shall be liable therefore.
Marketing Organization shall insure that only Marketers solicit
applications for Variable Products. SBL and SDI shall not have any
responsibility for the supervision, training or compliance with any
law or regulation of any Marketer or any employee of Marketing
Organization, and nothing in this Agreement shall be deemed to make
such a Marketer or employee an agent or employee of SBL or SDI.
Marketing Organization shall (i) supervise Marketers' compliance with
all applicable suitability requirements under state insurance laws and
regulations and (ii) provide adequate training to insure that
Marketers have thorough knowledge of each Fixed Product and the
ability to make appropriate product presentations and suitability
determinations in compliance with applicable law. Marketing
Organization also shall (i) supervise Marketers' compliance with all
applicable suitability requirements under federal and state securities
laws and regulations and NASD rules and (ii) provide adequate training
to insure that Marketers have thorough knowledge of each Variable
Product and the ability to make appropriate product presentations and
suitability determinations in compliance with applicable law.
Marketing Organization shall not, and shall cause the Marketers not
to, recommend the purchase of a Product to a prospective purchaser
unless it has reasonable grounds to believe that such purchase is
suitable for the prospective purchaser and is in accordance with
applicable rules and regulations of any regulatory authority,
including, in the case of Variable Products, the SEC and the NASD.
Marketing Organization, in submitting an application for a Product,
shall be deemed to have warranted to SBL, that it has made a
determination of suitability based on information concerning the
prospective purchaser's insurance and investment objectives, risk
tolerance, need for liquidity, and financial and insurance situation
and needs, or on such other factors that Marketing Organization deems
appropriate under the circumstances and in compliance with applicable
law.
If a Marketer performs any unauthorized transaction with respect to a
Product, fails to submit to the supervision of or otherwise meet the
rules and standards of Marketing Organization, or fails to hold any
required license, appointment, registration or association with
Marketing Organization, Marketing Organization immediately shall
notify SBL in writing and act to terminate the sales activities of
such Marketer relating to the Products.
Upon request by SBL or SDI, Marketing Organization shall furnish
appropriate records or other documentation to evidence the diligent
supervision of Marketers by Marketing Organization.
D. LICENSING. Marketing Organization agrees that neither it nor the
Marketers shall solicit or submit applications for any of the Products
unless Marketing Organization and its Marketers are properly licensed
under all applicable state insurance laws. Marketing Organization
shall be responsible for each Marketer becoming so licensed and shall
notify SBL if any Marketer ceases to be so licensed. With respect to
sales of Variable Products: (1) Marketing Organization hereby confirms
that it is a member in good standing of the NASD and agrees to notify
SBL if it ceases to be a member of the NASD, (2) Marketing
Organization agrees to abide by the applicable NASD Conduct Rules,
which rules are incorporated herein as if set forth in full, and (3)
Marketing Organization shall insure that all Marketers are duly
registered pursuant to applicable state and federal securities laws
and regulations and shall notify SBL if any Marketer ceases to be so
registered.
Marketing Organization shall provide to SBL adequate proof of any
licenses, securities registration, bonds or other requirements or
qualifications as may be required by SBL or the state or states where
Marketing Organization is authorized to solicit insurance and
securities.
E. ANTI-MONEY LAUNDERING. Marketing Organization agrees to abide by all
applicable federal laws and regulations regarding anti-money
laundering, including the "know your customer" requirements. Marketing
Organization shall implement an appropriate customer identification
program, and if Marketing Organization is relying on a registered
investment adviser to perform certain procedures required by the
customer identification rules, Marketing Organization must ensure that
all conditions of the customer identification rules are met, including
that: (1) such reliance is reasonable under the circumstances; (2) the
investment adviser is regulated by a federal functional regulator
(i.e., the SEC); and (3) the investment adviser enters into a contract
requiring it to certify annually to the Marketing Organization that it
has implemented an anti-money laundering program, and that it will
perform (or its agents will perform) specified requirements of
Marketing Organization's customer identification program(s). Further,
to the extent required and requested by SBL, Marketing Organization
shall provide to SBL copies of certifications received by the
Marketing Organization from investment advisers it is relying upon to
meet the requirements of the customer identification rules.
Section VII.A. of the Marketing Organization Agreement is hereby deleted in its
entirety and replaced with the following and the following is added to the SBL
Variable Products Sales Agreement:
A. CONFIDENTIALITY. This Confidentiality provision shall survive the
termination of this Agreement.
1. Definition. "Confidential Information" for the purposes of this
Agreement shall include all information of SBL and/or any of its
affiliates to which Marketing Organization has had or will have
access, whether in oral, written, electronic, graphic or
machine-readable form, including without limitation business or
financial information, customer information, customer names,
operations or systems manuals, decision processes, specifications,
profiles, system and management architectures, diagrams, graphs,
models, sketches, technical data, research, plans, strategies,
forecasts, forecast assumptions, business practices, marketing
information and material, proprietary ideas, concepts, know-how,
methodologies and all other information related to SBL's business
and/or the business of any of its affiliates. Confidential
Information shall also include all information of a third party to
which SBL and/or any of its affiliates have access and to which
Marketing Organization or any of its Representatives (as defined
below) has had or will have access, incorporating any of the
information described herein.
Confidential Information expressly includes "NPI." NPI has the
meaning ascribed to "Nonpublic Personal Information" in Title V of
the Gramm-Leach-Bliley Act of 1999 or any successor federal
statute, and the rules and regulations thereunder, all as may be
amended or supplemented from time to time (collectively,
"Applicable Law") as it relates to SBL or its affiliates'
customers. Marketing Organization shall keep, and shall cause its
Representatives to keep, NPI confidential and may use and disclose
NPI only as necessary to carry out those specific aspects of the
business purpose for which the NPI is/was disclosed to Marketing
Organization or the Marketers and in accordance with this
Agreement and Applicable Law. Confidential Information also
includes non-public personal or financial information as defined
by any applicable state or federal laws, rules or regulations.
Such definitions include, but are not limited to, information
protected under applicable state insurance or state securities
laws, as they may be amended from time to time.
Confidential Information shall not include information that: (a)
is in the public domain at the time of its use or disclosure to
Marketing Organization or the Marketers through no fault of
Marketing Organization or its Representatives; (b) was lawfully in
the possession of or demonstrably known by Marketing Organization
or the Marketers prior to its receipt from SBL or any of its
affiliates; (c) is independently developed by Marketing
Organization or the Marketers without use of or reference to the
Confidential Information; or (d) becomes known to Marketing
Organization lawfully from a third party that, to Marketing
Organization's knowledge, is not subject to an obligation of
confidentiality to SBL or any of its affiliates.
2. Rights and Responsibilities. Marketing Organization represents,
warrants and covenants that Marketing Organization is capable, has
implemented and shall maintain appropriate physical, electronic
and procedural safeguards of the Confidential Information that
comply with state and federal laws and regulations, and that meet
privacy obligations hereunder. Marketing Organization shall
maintain the confidentiality of the Confidential Information using
procedures reasonably calculated to comply with state and federal
laws and regulations, as adopted and amended. Marketing
Organization shall exercise no less than a reasonable degree of
care to not: (a) transfer, disclose, allow access to or
duplication of any of the Confidential Information to or by any
third party; (b) use any of the Confidential Information for any
purpose other than in connection with the business purpose for
which it was disclosed; or (c) take any other action with respect
to the Confidential Information inconsistent with the confidential
and proprietary nature of such information, without prior written
permission from SBL.
Marketing Organization may disclose the Confidential Information
to the officers, directors, employees, Marketers, consultants,
attorneys, accountants, agents or other representatives (each, a
"Representative") of Marketing Organization who have a need to
know such Confidential Information solely in connection with the
business purpose for which it was disclosed, provided that
Marketing Organization shall: (i) cause such Representatives to
comply with this Agreement; and (ii) assume full responsibility
for any breach of this Agreement caused by any such
Representatives. Marketing Organization shall promptly notify SBL
of any disclosure or use of any Confidential Information by any of
their Representatives in breach of this Agreement. SBL reserves
the right, without an obligation to do so, to review Marketing
Organization's policies and procedures used to maintain the
confidentiality of Confidential Information.
If Marketing Organization is required to disclose any of the
Confidential Information pursuant to a subpoena, court order,
statute, law, rule, regulation or other similar requirement (a
"Legal Requirement"), Marketing Organization shall, to the extent
permitted by law, provide prompt notice of such Legal Requirement
to SBL so it may seek an appropriate protective order or other
appropriate remedy or waive compliance with the provisions of this
Agreement. If SBL is not successful in obtaining a protective
order or other appropriate remedy and Marketing Organization is,
in the opinion of its counsel, compelled to disclose such
Confidential Information under pain of liability for contempt of
court or other censure or liability, or if SBL waives compliance
with the provisions of this Agreement in writing, then Marketing
Organization may disclose, without liability hereunder, such
Confidential Information in accordance with, but solely to the
extent necessary, in the opinion of its counsel to comply with,
the Legal Requirement.
Marketing Organization acknowledges that a breach of its
obligations under this section on Confidentiality shall result in
irreparable and continuing damage to SBL for which monetary
damages may not be sufficient, and agrees that in addition to
SBL's other rights and remedies hereunder or at law, SBL shall be
entitled to injunctive and/or other equitable relief, and such
further relief as may be awarded by a court of competent
jurisdiction.
SECURITY DISTRIBUTORS, INC. SECURITY BENEFIT LIFE INSURANCE COMPANY
By: /s/ GREGORY GARVIN By: /s/ GREGORY GARVIN
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Title: President Title: Vice President