-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Cun2wNBxuiUoSi3Nf+oHrMhtEW17pxiQ8SMXY2sPrw/Xi8ObYdKSJdpIk78ODIqL wU/WPp9mmUoGLLzyX4VWgQ== 0000890566-98-000787.txt : 19980504 0000890566-98-000787.hdr.sgml : 19980504 ACCESSION NUMBER: 0000890566-98-000787 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 24 FILED AS OF DATE: 19980430 EFFECTIVENESS DATE: 19980430 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRICE T ROWE VAR AN ACCT OF FIR SEC BEN LIF INS&ANN CO OF NY CENTRAL INDEX KEY: 0000928973 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 033-83240 FILM NUMBER: 98606196 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-08726 FILM NUMBER: 98606197 BUSINESS ADDRESS: STREET 1: 700 HARRISON STREET CITY: TOPEKA STATE: KS ZIP: 66636 BUSINESS PHONE: 9132953226 MAIL ADDRESS: STREET 1: 700 HARRISON STREET CITY: TOPEKA STATE: KS ZIP: 66636-0001 FORMER COMPANY: FORMER CONFORMED NAME: PRICE T ROWE VAR ANN ACCT OF FIRST SEC BENEFIT LIFE INS & AN DATE OF NAME CHANGE: 19940825 485BPOS 1 File No. 33-83240 File No. 811-8726 ================================================================================ 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. 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 - -------------------------------------------------------------------------------- PART A ITEM OF FORM N-4 PROSPECTUS CAPTION - ---------------- ------------------ 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 (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 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 PART B ITEM OF FORM N-4 STATEMENT OF ADDITIONAL INFORMATION CAPTION - ---------------- ------------------------------------------- 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 T. ROWE PRICE VARIABLE ANNUITY - ------------------------------------------------------------------------------ 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 --------------------------------------------------------------------------- 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 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 CONTENTS - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ Contractual Expenses............................. 11 Annual Separate Account Expenses................. 11 Annual Portfolio Expenses........................ 11 Example.......................................... 12 CONDENSED FINANCIAL INFORMATION 13 - ------------------------------------------------------------------------------ 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 THE CONTRACT 17 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ Mortality and Expense Risk Charge................ 25 Premium Tax Charge............................... 25 Other Charges.................................... 25 Guarantee of Certain Charges..................... 25 Fund Expenses.................................... 26 ANNUITY PERIOD 26 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ Interest......................................... 29 Death Benefit.................................... 29 Contract Charges................................. 29 Exchanges and Withdrawals........................ 30 Payments from the Fixed Interest Account......... 30 MORE ABOUT THE CONTRACT 31 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ ADDITIONAL INFORMATION 41 Registration Statement........................... 41 Financial Statements............................. 42 STATEMENT OF ADDITIONAL INFORMATION 42 - ------------------------------------------------------------------------------ ILLUSTRATIONS 42 DEFINITIONS - ------------------------------------------------------------------------------ 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. SUMMARY - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------ 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. 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. 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. IRA DISCLOSURE STATEMENT - ------------------------------------------------------------------------------ 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. 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. 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. 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: 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. 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. 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 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. 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. 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. 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 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 -------
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. 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) 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 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. 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 -------------------------------------------------------------
See accompanying notes. 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 -- -- 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 -- - -------------------------------------------------------------------------------- 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 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 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. 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. 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. 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. 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. 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. 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. 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. 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:
1997 ----------------------------------------------------------- GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE ----------------------------------------------------------- (IN THOUSANDS) 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 ===========================================================
The change in the Company's net unrealized gains on fixed maturities was $7,000 and $(186,000) during 1997 and 1996, respectively. 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 ============================== 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. 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. 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.
DECEMBER 31, 1997 DECEMBER 31, 1996 ---------------------------------------------------- CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE ---------------------------------------------------- (IN THOUSANDS) Investment-type insurance contracts $367 $337 $359 $335 ====================================================
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. 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 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 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 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 ========== 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 $14,554 ========== SEE ACCOMPANYING NOTES. T. Rowe Price Variable Annuity Account of First Security Benefit Life Insurance and Annuity Company of New York Statement of Operations and Changes in Net Assets Year ended December 31, 1997 (IN THOUSANDS)
INTER- PERSONAL LIMITED- NEW AMERICA NATIONAL EQUITY STRATEGY TERM MID-CAP PRIME GROWTH STOCK INCOME BALANCED BOND GROWTH RESERVE SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNTSUBACCOUNT ------------------------------------------------------------------------------------- Dividend distributions ........................$ -- $ 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. 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)
INTER- PERSONAL NEW AMERICA NATIONAL EQUITY STRATEGY LIMITED-TERM GROWTH STOCK INCOME BALANCED 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 ========================================================================
SEE ACCOMPANYING NOTES. 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. 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:
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 - -
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. 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. 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 - 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). 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. 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 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. 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. 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 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 EX-3 2 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. 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 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: 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 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 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 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 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) - ---------------------------- --------------------------- ----------------------- SCHEDULE 2 ---------- Separate Accounts, Subaccounts and Funds Available Under the Contracts
- -------------------------------- ---------------------------------- ----------------------------------- Separate Account Subaccount Funds - -------------------------------- ---------------------------------- ----------------------------------- 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 ============================= ===================================
EX-4.A 3 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 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 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 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 EX-4.B 4 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 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 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 EX-4.C 5 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 (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 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 EX-4.D 6 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 ________________________________________________________________________________ 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 EX-4.E 7 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 EX-4.F 8 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 EX-5 9 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 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 EX-6.A 10 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. 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. (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. 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. 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. 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 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 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 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 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 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 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 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 EX-6.B 11 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. (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. (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. 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. (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. (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. 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. EX-8.A 12 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
SCHEDULE A 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
EX-8.B 13 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. 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. 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 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:
Policy Marketing Name SEC 1933 Act Name of Supporting Annuity or Life Registration Number Account - ------------------------- ---------------------- ----------------------- --------------------- 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 - ------------------------- ---------------------- ----------------------- --------------------- - ------------------------- ---------------------- ----------------------- --------------------- - ------------------------- ---------------------- ----------------------- --------------------- - ------------------------- ---------------------- ----------------------- ---------------------
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 SCHEDULE 2 FUNDS AVAILABLE UNDER EACH CLASS OF CONTRACTS Effective as of the Effective Date, the following Funds are available under the Contracts:
- --------------------------------- ------------------------------ ============================== 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 - --------------------------------- ------------------------------ ============================== - --------------------------------- ------------------------------ ============================== - --------------------------------- ------------------------------ ============================== - --------------------------------- ------------------------------ ==============================
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 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:
- -------------------------- --------------------- ----------------------- ====================== 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 - ------------------------- ---------------------- ----------------------- ====================== - ------------------------- ---------------------- ----------------------- ====================== - ------------------------- ---------------------- ----------------------- ====================== - ------------------------- ---------------------- ----------------------- ======================
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 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 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 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 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 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 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 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 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 (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 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 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 ________________________________________________________________________________ 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 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 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. 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. 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 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. 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 EXHIBIT C BIGHORN SHEEP LOGO EX-9 14 [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. 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 EX-10 15 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 EX-13 16 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 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 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 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% 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 EX-14 17 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 - ------------------------------ 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 - ------------------------------ 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 - ------------------------------ 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 - ------------------------------ 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 - ------------------------------ 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 - ------------------------------ 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 - ------------------------------ 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 - ------------------------------ EX-15 18 [ARTICLE] 6 [CIK] 0000928973 [SERIES] [NUMBER] 001 [NAME] PRIME RESERVE SUBACCOUNT [MULTIPLIER] 1,000 [CURRENCY] U.S. DOLLARS [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
EX-27.2 19 FDS - TRP NY - NEW AMERICA GROWTH
6 0000928973 T. ROWE PRICE VA OF FSBLIAC OF NEW YORK 002 NEW AMERICA GROWTH SUBACCOUNT 1,000 U.S. DOLLARS YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 1 2,741 3,296 0 0 0 3,296 3,296 0 0 3,296 0 0 170,990 143,768 0 0 0 0 452 3,296 0 0 0 (15) (15) 71 452 508 0 0 0 0 58 31 0 27 0 0 0 0 0 0 0 0 16.00 (.10) 3.28 0 0 0 19.28 (.01) 0 0
EX-27.3 20 FDS - TRP NY - INTERNATIONAL STOCK
6 0000928973 T. ROWE PRICE VA OF FSBLIAC OF NEW YORK 003 INTERNATIONAL STOCK SUBACCOUNT 1,000 U.S. DOLLARS YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 1 1,605 1,620 0 0 0 1,620 1,620 0 0 1,620 0 0 123,767 86,235 0 0 0 0 (50) 1,620 15 0 0 (8) 7 69 (50) 26 0 0 0 0 61 23 0 38 0 0 0 0 0 0 0 0 12.77 .07 .32 0 0 0 13.09 (.01) 0 0
EX-27.4 21 FDS - TRP NY - EQUITY INCOME
6 0000928973 T. ROWE PRICE VA OF FSBLIAC OF NEW YORK 004 EQUITY INCOME SUBACCOUNT 1,000 U.S. DOLLARS YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 1 5,192 6,053 0 0 0 6,053 6,054 (1) 0 6,053 0 0 321,371 181,250 0 0 0 0 680 6,054 108 0 0 (25) 83 304 680 1,067 0 0 0 0 180 40 0 140 0 0 0 0 0 0 0 0 14.70 .33 4.14 0 0 0 18.84 (.01) 0 0
EX-27.5 22 FDS - TRP NY - PERSONAL STRATEGY BALANCED
6 0000928973 T. ROWE PRICE VA OF FSBLIAC OF NEW YORK 005 PERSONAL STRATEGY BALANCED SUBACCOUNT 1,000 U.S. DOLLARS YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 1 1,104 1,218 0 0 0 1,218 1,217 0 1 1,218 0 0 76,805 39,697 0 0 0 0 90 1,217 30 0 0 (5) 25 28 90 143 0 0 0 0 41 4 0 37 0 0 0 0 0 0 0 0 13.51 .43 2.35 0 0 0 15.86 (.01) 0 0
EX-27.6 23 FDS - TRP NY - LIMITED TERM BOND
6 0000928973 T. ROWE PRICE VA OF FSBLIAC OF NEW YORK 006 LIMITED TERM BOND SUBACCOUNT 1,000 U.S. DOLLARS YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 1 498 500 0 0 0 500 500 0 0 500 0 0 43,165 33,375 0 0 0 0 3 500 22 0 0 (2) 20 (1) 3 22 0 0 0 0 24 15 0 9 0 0 0 0 0 0 0 0 10.92 .52 .68 0 0 0 11.60 0 0 0
EX-27.7 24 FDS - TRP NY - MID-CAP GROWTH
6 0000928973 T. ROWE PRICE VA OF FSBLIAC OF NEW YORK 007 MID-CAP GROWTH SUBACCOUNT 1,000 U.S. DOLLARS YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 1 957 1,077 0 0 0 1,077 1,077 0 0 1,077 0 0 91,142 0 0 0 0 0 120 1,077 0 0 0 (3) (3) 4 120 121 0 0 0 0 116 25 0 91 0 0 0 0 0 0 0 0 0 (.07) 11.82 0 0 0 11.82 (.01) 0 0
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