FUND PARTICIPATION AGREEMENT
Xxxxx Xxx Variable Investment Trust
TABLE OF CONTENTS
ARTICLE I Sale of Fund Shares ........................3
ARTICLE II. Representations and Warranties..............6
ARTICLE III. Prospectus and Proxy Statements; Voting.....8
ARTICLE IV. Sales Material and Information.............10
ARTICLE V. Fees and Expenses..........................12
ARTICLE VI. Diversification and Qualification..........14
ARTICLE VII. Potential Conflicts and Compliance With
Shared Funding Exemptive Order.............16
ARTICLE VIII. Indemnification............................19
ARTICLE IX. Applicable Law ............................25
ARTICLE X. Termination................................25
ARTICLE XI. Notices ...................................27
ARTICLE XII. Miscellaneous..............................28
SCHEDULE A Contracts..................................32
SCHEDULE B Designated Portfolios......................33
SCHEDULE C Administrative Services ...................34
SCHEDULE D Reports per Section 6.6....................35
SCHEDULE E Expenses ..................................37
PARTICIPATION AGREEMENT
AMONG
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STEINROE VARIABLE INVESTMENT TRUST,
and
XXXXX XXX & FARNHAM, INCORPORATED
This Agreement, made and entered into as of this lst day of
June, 1998 by and among GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY (hereinafter "GWL&A"), a Colorado life insurance company,
on its own behalf and on behalf of its Separate Account
FutureFunds Series Account (hereinafter "FutureFunds" or the
"Account"); STEINROE VARIABLE INVESTMENT TRUST, a business trust
organized under the laws of Massachusetts (hereinafter the
"Fund"); and XXXXX XXX & XXXXXXX, INCORPORATED hereinafter the
"Adviser"), a Delaware corporation.
WHEREAS, the Fund engages in business as an open-end
management investment company and is available to act as the
investment vehicle for separate accounts established for variable
life insurance policies and/or variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by
insurance companies, including GWL&A, which have entered into
participation agreements similar to this Agreement (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 (hereinafter the "SEC"), dated July 1,
1988 (File No. 812-7044), 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, 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 life insurance companies that may or may not be
affiliated with one another (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
Portfolio(s) are registered under the Securities Act of 1933, as
amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as amended, and
any applicable state securities laws; and
WHEREAS, FutureFunds is a duly organized, validly existing
segregated asset account, established by resolution of the Board
of Directors of GWL&A on November 15, 1983, to set aside and
invest assets attributable to the group variable annuity
contracts; and
WHEREAS, GWL&A has registered FutureFunds as a unit
investment trust under the 1940 Act and has registered the
securities deemed to be issued by FutureFunds and the variable
annuity contracts supported wholly or partially by FutureFunds
under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, GWL&A intends to purchase shares of the
Portfolio(s) listed in Schedule B attached hereto and incorporated
by reference, as it may be amended from time to time by mutual
written agreement (the "Designated Portfolio(s)"), on behalf of
the Account to fund the group variable annuity contracts sold
through the FutureFunds (collectively, the "Contracts") and the
Fund is authorized to sell such shares to unit investment trusts
such as the Account at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Account also intends to purchase shares in
other open-end investment companies or series thereof, all of
which are not affiliated with the Fund (the "Unaffiliated Funds")
on behalf of the Account to fund the Contracts; and
NOW, THEREFORE, in consideration of their mutual promises,
GWL&A, the Fund and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to GWL&A those shares of the
Designated Portfolio(s) which the Account orders, executing such
orders each Business Day at the net asset value next computed
after receipt by the Fund or its designee of the order for the
shares of the Portfolios. For purposes of this Section 1.1, GWL&A
shall be the designee of the Fund for receipt of such orders and
receipt by such designee shall constitute receipt by the Fund,
provided that the Fund receives notice of any such order by 11:00
a.m. Mountain time on the next following Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange is
open for regular session trading and on which the Fund calculates
its net asset value pursuant to the rules of the SEC.
1.2. The Fund agrees to make shares of the Designated
Portfolio(s) available for purchase at the applicable net asset
value per share by GWL&A and the Account on each Business Day on
which the Fund calculates its Designated Portfolio(s)' net asset
value pursuant to rules of the SEC, and the Fund shall calculate
such net asset value on each day which the New York Stock Exchange
is open for regular session trading. Notwithstanding the
foregoing, the Board of Trustees of the Fund (hereinafter the
"Board") may refuse to sell shares of any Portfolio to any person,
or suspend or terminate the offering of shares of any Portfolio if
such action is required by law or by regulatory authorities having
jurisdiction or 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 Portfolio.
1.3. The Fund will not sell shares of the Designated
Portfolio(s) to any other Participating Insurance Company,
separate account unless an agreement containing provisions
substantially the same as Sections 2.1, 3.6, 3.7, 3.8, and Article
VII of this Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on GWL&A's request,
any full or fractional shares of the Fund held by GWL&A, executing
such requests on each Business Day at the net asset value next
computed after receipt by the Fund or its designee of the request
for redemption. To the extent permitted by the 1940 Act, requests
for redemption identified by GWL&A, or its agent, as being in
connection with surrenders, transfers, or death benefits under the
Contracts, upon prior written notice, may be executed within seven
(7) calendar days after receipt by the Fund or its designee of the
requests for redemption. This Section 1.4 may be amended, in
writing, by the parties consistent with the requirements of the
1940 Act and interpretations thereof. For purposes of this
Section 1.4, GWL&A shall be the designee of the Fund for receipt
of requests for redemption and receipt by such designee shall
constitute receipt by the Fund, provided that the Fund receives
notice of any such request for redemption by 11:00 A.M. Mountain
time on the next following Business Day.
1.5 The Parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Fund's shares
may be sold to other Participating Insurance Companies (subject to
Section 1.3 and Article VI hereof) and the cash value of the
Contracts may be invested in other investment companies.
1.6. GWL&A shall pay for Fund shares by 4:00 p.m. Eastern
time on the same Business Day after the Fund receives notice of an
order in accordance with the provisions of Section 1.1 hereof.
Payment shall be in federal funds transmitted by wire and/or by a
credit for any shares redeemed the same day as the purchase.
1.7. The Fund shall pay and transmit the proceeds of
redemptions of Fund shares by 2:00 p.m. Eastern time on the same
Business Day a redemption order is received in accordance with
Section 1.4 hereof. Payment shall be in federal funds transmitted
by wire and/or a credit for any shares purchased the same day as
the redemption.
1.8. Issuance and transfer of the Fund's shares will be by
book entry only. Stock certificates will not be issued to GWL&A
or the Account. Shares ordered from the Fund will be recorded in
an appropriate title for the Account or the appropriate sub-
account of the Account.
1.9. The Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to GWL&A of any
income dividends or capital gain distributions payable on the
Designated Portfolio(s)' shares. GWL&A hereby elects to receive
all such income dividends and capital gain distributions as are
payable on the Portfolio shares in additional shares of that
Portfolio. GWL&A reserves the right to revoke this election and
to receive all such income dividends and capital gain
distributions in cash. The Fund shall notify GWL&A by the end of
the next following Business Day of the number of shares so issued
as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for
each Designated Portfolio available to GWL&A on a daily basis as
soon as reasonably practical after the net asset value per share
is calculated and shall use its best efforts to make such net
asset value per share available by 6:00 p.m. Eastern time. In the
event of an error in the computation of a Designated Portfolio's
net asset value per share ("NAV") or any dividend or capital gain
distribution (each, a "pricing error"), the Adviser or the Fund
shall immediately notify GWL&A as soon as possible after the
discovery of the error. Such notification may be verbal, but
shall be confirmed promptly in writing in accordance with Article
XI of this Agreement. A pricing error shall be corrected as
follows: (a) if the pricing error results in a difference between
the erroneous NAV and the correct NAV of less than $0.01 per
share, then no corrective action need be taken; (b) if the pricing
error results in a difference between the erroneous NAV and the
correct NAV equal to or greater than $0.01 per share, but less
than 1/2 of 1% of the Designated Portfolio's NAV at the time of
the error, then the Adviser shall reimburse the Designated
Portfolio for any loss, after taking into consideration any
positive effect of such error; however, no adjustments to
Contractowner Account need be made; and (c) if the pricing error
results in a difference between the erroneous NAV and the correct
NAV equal to or greater than 1/2 of 1% of the Designated
Portfolio's NAV at the time of the error, then the Adviser shall
reimburse the Designated Portfolio for any loss (without taking
into consideration any positive effect of such error) and shall
reimburse GWL&A for the costs of adjustments made to correct the
Contractowner Account in accordance with the provisions of
Schedule E. If an adjustment is necessary to correct a material
error which has caused Contractowners to receive less than the
amount to which they are entitled, the number of shares of the
applicable sub-account of such Contractowners will be adjusted and
the amount of any underpayments shall be credited by the Adviser
to GWL&A for crediting of such amounts to the applicable
Contractowners Account. Upon notification by the Adviser of any
overpayment due to a material error, GWL&A shall promptly remit to
the Adviser any overpayment that has not been paid to
Contractowners; however, Adviser acknowledges that GWL&A does not
intend to seek additional payments from any Contractowner who,
because of a pricing error, may have underpaid for units of
interest credited to his/her account. In no event shall GWL&A be
liable to Contractowners for any such adjustments or underpayment
amounts. A pricing error within categories (b) or (c) above shall
be deemed to be "materially incorrect" or constitute a "material
error" for purposes of this Agreement.
The standards set forth in this Section 1.10 are based on the
Parties' understanding of the views expressed by the staff of the
Securities and Exchange Commission ("SEC") as of the date of this
Agreement. In the event the views of the SEC staff are later
modified or superseded by SEC or judicial interpretation, the
parties shall amend the foregoing provisions of this Agreement to
comport with the appropriate applicable standards, on terms
mutually satisfactory to all Parties.
ARTICLE II. Representations and Warranties
2.1. GWL&A represents and warrants that the Contracts will
be issued and sold in compliance in all material respects with all
applicable federal and state laws and that the sale of the
Contracts shall comply in all material respects with state
insurance suitability requirements. GWL&A further represents and
warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and
validly established the Account prior to any issuance or sale of
units thereof as a segregated asset account under Section 10-7-
401, et.seq. of the Colorado Insurance Law.
2.2. The Fund represents and warrants that Designated
Portfolio(s) shares sold pursuant to this Agreement shall be
registered under the 1933 Act, duly authorized for issuance and
sold in compliance with all applicable federal securities laws
including without limitation the 1933 Act, the 1934 Act, and the
1940 Act and that the Fund is and shall remain registered under
the 0000 Xxx. 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.
2.3. The Fund reserves the right to adopt a plan pursuant to
Rule 12b-1 under the 1940 Act and to impose an asset-based or
other charge to finance distribution expenses as permitted by
applicable law and regulation. In any event, the Fund and Adviser
agree to comply with applicable provisions and SEC staff
interpretations of the 1940 Act to assure that the investment
advisory or management fees paid to the Adviser by the Fund are in
accordance with the requirements of the 1940 Act. To the extent
that the Fund decides to finance distribution expenses pursuant to
Rule 12b-1, the Fund undertakes to have its 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 represents and warrants that it will make
every effort to ensure that the investment policies, fees and
expenses of the Designated Portfolio(s) are and shall at all times
remain in compliance with the insurance and other applicable laws
of the State of Colorado and any other applicable state to the
extent required to perform this Agreement. The Fund further
represents and warrants that it will make every effort to ensure
that Designated Portfolio(s) shares will be sold in compliance
with the insurance laws of the State of Colorado and all
applicable state insurance and securities laws. The Fund shall
register and qualify the shares for sale in accordance with the
laws of the various states if and to the extent required by
applicable law. GWL&A and the Fund will endeavor to mutually
cooperate with respect to the implementation of any modifications
necessitated by any change in state insurance laws, regulations or
interpretations of the foregoing that affect the Designated
Portfolio(s) (a "Law Change"), and to keep each other informed of
any Law Change that becomes known to either party. In the event
of a Law Change, the Fund agrees that, except in those
circumstances where the Fund has advised GWL&A that its Board of
Directors has determined that implementation of a particular Law
Change is not in the best interest of all of the Fund's
shareholders with an explanation regarding why such action is
lawful, any action required by a Law Change will be taken.
2.5. The Fund represents and warrants that it is lawfully
organized and validly existing under the laws of the State of
Massachusetts and that it does and will comply in all material
aspects with the 1940 Act.
2.6. The Adviser represents and warrants that it is and
shall remain duly registered under all applicable federal and
state securities laws and that it shall perform its obligations
for the Fund in compliance in all material respects with the laws
of the State of Delaware and any applicable state and federal
securities laws.
2.7. The Fund and the Adviser represent and warrant that all
of their officers, employees, investment advisers, and other
individuals or entities dealing with 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 minimal coverage required by
Section 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.
2.8. The Fund will provide GWL&A with as much advance notice
as is reasonably practicable of any material change affecting the
Designated Portfolio(s) (including, but not limited to, any
material change in its registration statement or prospectus
affecting the Designated Portfolio(s) and any proxy solicitation
affecting the Designated Portfolio(s) and consult with GWL&A in
order to implement any such change in an orderly manner,
recognizing the expenses of changes and attempting to minimize
such expenses by implementing them in conjunction with regular
annual updates of the prospectus for the Contracts. The Fund or
Adviser agree to share equitably in expenses incurred by GWL&A as
a result of actions taken by the Fund, consistent with the
allocation of expenses contained in Schedule E attached hereto and
incorporated herein by reference.
2.9. GWL&A represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of
1986, as amended (the "Code"), that the Contracts are currently
treated as annuity 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 Adviser
immediately upon having a reasonably basis for believing that the
Contracts have ceased to be so treated or that they might not be
so treated in the future. In addition, GWL&A represents and
warrants that the Account is a "segregated asset account" and that
interests in the Account are offered exclusively through the
purchase of or transfer into a "variable contract" within the
meaning of such terms under Section 817 of the Code and the
regulations thereunder. GWL&A will use every effort to continue
to meet such definitional requirements, and it will notify the
Fund and the Adviser immediately upon having a reasonable and good
faith basis for believing that such requirements have ceased to be
met or that they might not be met in the future.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. At least annually, the Fund or the Adviser shall
provide GWL&A with as many copies of the Fund's current prospectus
for the Designated Portfolio(s) as GWL&A may reasonably request
for marketing purposes (including distribution to Contractowners
with respect to new sales of a Contract). If requested by GWL&A
in lieu thereof, the Adviser or Fund shall provide such
documentation (including camera-ready copy and/or disk copy of the
current prospectus for the Designated Portfolio(s) also need pdf
format for digital prospectus) and other assistance as is
reasonably necessary in order for GWL&A once each year (or more
frequently if the prospectus for the Designated
Portfolio(s) are amended) to have the prospectus for any
Unaffiliated Funds and the Fund's prospectus for the Designated
Portfolio(s) printed together in one document. The Fund and
Adviser agree that the prospectuses (and semi-annual and annual
reports) for the Designated Portfolio(s) will described only the
Designated Portfolio(s) and will not name or describe any other
portfolios or series that may be in the Fund unless required by
law.
3.2. If applicable state or federal laws or regulations
require that the Statement of Additional Information ("SAI") for
the Fund be distributed to all Contractowners, then the Fund
and/or the Adviser shall provide GWL&A with copies of the Fund's
SAI or documentation thereof for the Designated Portfolios in such
quantities and/or with expenses to be borne in accordance with
Schedule E hereof, as GWL&A may reasonably require to permit
timely distribution thereof to Contractowners.
3.3. The Fund and/or the Adviser shall provide GWL&A with
copies of the Fund's proxy material, reports to stockholders and
other communications to stockholders for the Designated
Portfolio(s) in such quantity, with expenses to be borne in
accordance with Schedule E hereof, as GWL&A may reasonably request
to permit timely distribution thereof to Contractowners.
3.4. GWL&A assumes sole responsibility for ensuring that the
materials provided by the Fund in accordance with Sections 3.1
through 3.3 are delivered to Contractowners and prospective
Contractowners in accordance with applicable federal and state
securities laws and applicable insurance law.
3.5. It is understood and agreed that, except with respect
to information regarding GWL&A provided in writing, GWL&A is not
responsible for the content of the prospectus or SAI for the
Designated Portfolio(s). It is also understood and agreed that,
except with respect to information regarding the Fund, the Adviser
or the Designated Portfolio(s) provided in writing by the Fund or
the Adviser, neither the Fund nor the Adviser are responsible for
the content of the prospectus or SAI for the Contracts.
3.6. If and to the extent required by law, GWL&A shall:
(i) solicit voting instructions from Contractowners;
(ii) vote the Designated Portfolio(s) shares in accordance
with instructions from Contractowners; and
(iii) vote Designated Portfolio(s) shares for which no
instructions have been received in the same proportion
as Designated Portfolio(s) shares for which instructions
have been received from Contractowners, 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. GWL&A reserves the
right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by
law.
3.7. GWL&A shall be responsible for assuring that each of
their separate Account holding shares of a Designated Portfolio
calculates voting privileges as directed by the Fund and agreed to
by the Fund and GWL&A. The Fund agrees to promptly notify GWL&A
of any changes of interpretations or amendments of the Shared
Funding Exemptive Order.
3.8. 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 (except insofar as the SEC
may interpret Section 16 of the 1940 Act not to require such
meetings) or, as the Fund currently intends, 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 Commission
may promulgate with respect thereto.
3.9. GWL&A shall in no way recommend or oppose or interfere
with the solicitation of proxies for Fund shares held by
Contractowners without the prior written consent of the Fund,
which consent may be withheld in the Fund's sole discretion.
GWL&A will not initiate or solicit Contractowners to initiate any
proxy solicitation except to the extent that the failure of GWL&A
to so initiate or solicit would under the circumstances, be in
contravention with applicable federal or state law.
ARTICLE IV. Sales Material and Information
4.1. GWL&A shall furnish, or shall cause to be furnished, to
the Fund or its designee, each piece of sales literature or other
promotional material that GWL&A develops or proposes
to use and in which the Fund (or a Portfolio thereof), its
investment adviser or one of its sub-advisers is named in
connection with the Contracts, at least ten (10) Business Days
prior to its use. No such material shall be used if the Fund
objects to such use within five (5) Business Days after receipt of
such material.
4.2. GWL&A shall not give any information or make any
representations or statements on behalf of the Fund or Adviser in
connection with the sale of the Contracts other than the
information or representations contained in the registration
statement or prospectus for the Fund shares, as such registration
statement and prospectus 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 by the Adviser, except with the permission of the Fund or
the Adviser.
4.3. The Fund shall furnish, or shall cause to be furnished,
to GWL&A a copy of each piece of sales literature or other
promotional material in which GWL&A and/or its separate account(s)
is named at least ten (10) Business Days prior to its use. No such
material shall be used if GWL&A objects to such use within five
(5) Business Days after receipt of such material.
4.4. The Fund and the Adviser shall not give any information
or make any representations on behalf of GWL&A or concerning
GWL&A, the Account, or the Contracts other than the information or
representations contained in disclosure documents for the
Contracts, as such disclosure documents may be amended or
supplemented from time to time, or in reports for the Account, or
in sales literature or other promotional material approved by
GWL&A or its designee, except with the permission of GWL&A.
4.5. The Fund will provide to GWL&A at least one complete
copy of all registration statements, prospectuses, SAIs, reports,
proxy statements, sales literature and other promotional materials
designed for use in connection with the Contracts, and all
amendments to any of the above, that relate to the Designated
Portfolio(s), contemporaneously with the filing of such
document(s) with the SEC or NASD or other regulatory authorities.
The Fund will provide to GWL&A at least one copy of any exemptive
application and requests for no-action letters at such time as the
SEC staff may grant such application or request, to the extent
only that such applications and requests relate to the Fund's
investment objectives and policies or to the purchase of Fund
shares on behalf of the Account to fund the Contracts.
4.6. GWL&A will provide to the Fund at least one complete
copy of all 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, NASD, or other regulatory authority.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not
limited to, 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; e.g.,
on-line networks such as the Internet or other electronic media),
sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including
brochures, circulars, research 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, and proxy materials and any other material
constituting sales literature or advertising under the NASD rules,
the 1933 Act or the 0000 Xxx.
4.8. At the request of any party to this Agreement, each
other party will make available to the other party's independent
auditors and/or representative of the appropriate regulatory
agencies, all records, data and access to operating procedures
that may be reasonably requested in connection with compliance and
regulatory requirements related to this Agreement or any party's
obligations under this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund shall pay no fee or other compensation to
GWL&A under this Agreement, and GWL&A shall pay no fee or other
compensation to the Fund or Adviser under this Agreement, although
the parties hereto will bear certain expenses in accordance with
Schedule E, Articles III, V, and other provisions of this
Agreement.
5.2. All expenses incident to performance by the Fund and
Adviser under this Agreement shall be paid by the appropriate
party, as further provided in Schedule E. The Fund shall
see to it that all shares of the Designated Portfolio(s) are
registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent required, in
accordance with applicable state laws prior to their sale.
5.3. The parties shall bear the expenses of routine annual
distribution (mailing costs) of the Fund's prospectus and
distribution (mailing costs) of the Fund's proxy materials and
reports to owners of Contracts offered by GWL&A, as provided in
Schedule E.
5.4. The Fund and Adviser acknowledge that a principal
feature of the Contracts is the Contractowner's ability to choose
from a number of Unaffiliated Funds (and portfolios or series
thereof), including the Designated Portfolio(s) and the
Unaffiliated Funds, and to transfer the Contract's cash value
between funds and portfolios. The Fund and Adviser agree to
cooperate with GWL&A in facilitating the operation of the Account
and the Contracts as described in the prospectus for the
Contracts, including but not limited to cooperation in
facilitating transfers between Unaffiliated Funds.
5.5. GWL&A agrees to provide certain administrative
services, specified in Schedule C attached hereto and incorporated
herein by reference, in connection with the arrangements
contemplated by this Agreement. As compensation for the services
rendered, as specified in Schedule C hereto, the Adviser agrees to
pay GWL&A a monthly Administrative Service Fee based on the
percentage per annum on Schedule C hereto applied to the average
daily value of the shares of the Designated Portfolio(s) held in
the Account with respect to Contracts sold by GWL&A. This monthly
Administrative Service Fee is due and payable before the 15th
(fifteenth) day following the last day of the month to which it
relates. The parties acknowledge and agree that the services
referred to in this Section 5.5 and Schedule C hereto are
recordkeeping, shareholder communication, and other transaction
facilitation and processing, and related administrative services
only and are not the services of an underwriter or a principal
underwriter of the Fund.
ARTICLE VI. Diversification and Qualification
6.1. The Fund and Adviser represent and warrant that the
Fund will at all times sell its shares and invest its assets in
such a manner as to ensure that the Contracts will be treated as
variable life insurance and/or variable annuity contracts under
the Code, and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund and Adviser represent and
warrant that the Fund and each Designated Portfolio thereof will
at all times comply with Section 817(h) of the Code and Treasury
Regulation [Section] 1.817-5, as amended from time to time, 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. The Fund
and the Adviser agree that shares of the Designated Portfolio(s)
will be sold only to Participating Insurance Companies and their
separate Account.
6.2. No shares of Designated Portfolio of the Fund will be
sold to the general public.
6.3. The Fund and Adviser represent and warrant that the
Fund and each Designated Portfolio is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and
that each Designated Portfolio will maintain such qualification
(under Subchapter M or any successor or similar provisions) as
long as this Agreement is in effect.
6.4. The Fund or Adviser will notify GWL&A immediately upon
having a reasonable basis for believing that the Fund or any
Designated Portfolio has ceased to comply with the aforesaid
Section 817(h) diversification or Subchapter M qualification
requirements or might not so comply in the future.
6.5. Without in any way limiting the effect of Sections 8.2
and 8.3 hereof and without in any way limiting or restricting
other remedies available to GWL&A, the Adviser will pay all costs
associated with or arising out of any failure, or any anticipated
or reasonably foreseeable failure, of the Fund or any Designated
Portfolio to comply with Sections 6.1, 6.2, or 6.3 hereof,
including all costs associated with reasonable and appropriate
corrections or responses to any such failure; such costs may
include, but are not limited to, the costs involved in creating,
organizing, and registering a new investment company as a funding
medium for the Contracts and/or the costs of obtaining whatever
regulatory authorizations are required to substitute shares of
another investment company for those of
the failed Portfolio (including but not limited to an order
pursuant to Section 26(b) of the 1940 Act); such costs are to
include, but are not limited to, fees and expenses of legal
counsel and other advisors to GWL&A and any federal income taxes
or tax penalties and interests thereon (or "toll charges" or
exactments or amounts paid in settlement) incurred by GWL&A with
respect to itself or owners of its Contracts in connection with
any such failure or anticipated or reasonably foreseeable failure.
For purposes of this section 6.5 and Sections 8.2 and 8.3, a
failure to comply with Section 817(h) diversification or
Subchapter M qualification requirements shall not include any non-
compliance with such sections that is corrected within any grace
periods allowed under the Code.
6.6. The Fund at the Fund's expense shall provide GWL&A or
its designee with reports certifying compliance with the aforesaid
Section 817(h) diversification and Subchapter M qualification
requirements, at the times provided for and substantially in the
form attached hereto as Schedule D and incorporated herein by
reference; provided, however, that providing such reports does not
relieve the Fund of its responsibility for such compliance or of
its liability for any non-compliance.
6.7. GWL&A agrees that if the Internal Revenue Service
("IRS") asserts in writing in connection with any governmental
audit or review of GWL&A or, to GWL&A's knowledge, or any
Contractowner that any Designated Portfolio has failed to comply
with the diversification requirements of Section 817(h) of the
Code or GWL&A otherwise becomes away of any facts that could give
rise to any claim against the Fund or the Adviser as a result of
such failure or alleged failure:
(a) GWL&A shall promptly notify the Fund and the Adviser of
such assertion or potential claim;
(b) GWL&A shall consult with the Fund and the Adviser as to
how to minimize any liability that may arise as a result of
such failure or alleged failure;
(c) GWL&A shall use its best efforts to minimize any
liability of the Fund and the Adviser resulting from such
failure, including, without limitation, demonstrating,
pursuant to Treasury Regulations, Section 1.817-5(a)(2), to
the commissioner of the IRS that such failure was
inadvertent;
(d) any written materials to be submitted by GWL&A to the
IRS, any Contractowner or any other claimant in connection
with any of the foregoing proceedings or contests (including,
without limitation, any such materials to be submitted to the
IRS pursuant to Treasury Regulations, Section 1.817-5(a)(2))
shall be provided by GWL&A to the Fund and the Adviser
(together with any supporting information or analysis) within
at least two (2) business days prior to submission;
(e) GWL&A shall provide the Fund and the Adviser with such
cooperation as the Fund and the Adviser shall reasonably
request (including, without limitation, by permitting the
Fund and the Adviser to review the relevant books and records
of GWL&A) in order to facilitate review by the Fund and the
Adviser of any written submissions provided to it or its
assessment of the validity or amount of any claim against it
arising from such failure or alleged failure;
(f) GWL&A shall not with respect to any claim of the IRS or
any Contractowner that would give rise to a claim against the
Fund and the Adviser (i) compromise or settle any claim (ii)
accept any adjustment on audit, or (iii) forego any allowable
administrative or judicial appeals, without the express
written consent of the Fund and the Adviser, which shall not
be unreasonably withheld; provided that, GWL&A shall not be
required to appeal any adverse judicial decision unless the
Fund and the Adviser shall have provided an opinion of
independent counsel to the effect that a reasonable basis
exists for taking such appeal; and further provided that the
Fund and the Adviser shall bear the costs and expenses,
including reasonable attorney's fees, incurred by GWL&A in
complying with this clause (f).
ARTICLE VII. Potential Conflicts and Compliance With Shared
Funding Exemptive Order
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 interpretive 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 by
contract owners of different Participating Insurance Companies; or
(f) a decision by a Participating Insurance Company to disregard
the voting instructions of contract owners. The Board shall
promptly inform GWL&A if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2. GWL&A will report any potential or existing conflicts
of which it is aware to the Board. GWL&A 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 GWL&A to
inform the Board whenever contract owner voting instructions are
disregarded. Such responsibilities shall be carried out by GWL&A
with a view only to the interests of its Contractowners.
7.3. If it is determined by a majority of the Board, or a
majority of its trustees who are not interested persons of the
Fund, the Adviser or any sub-adviser to any of the Designated
Portfolios (the "Independent Trustees"), that a material
irreconcilable conflict exists, GWL&A and other Participating
Insurance Companies shall, at their expense and to the extent
reasonably practicable (as determined by a majority of the
Independent Trustees), 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 Account from the Fund or any Designated 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 GWL&A to disregard contract owner voting
instructions and that decision represents a minority position or
would preclude a majority vote, GWL&A may be required, at the
Fund's election, to withdraw the Account's investment in the Fund
and terminate this Agreement; 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 Independent Trustees. 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
Adviser and the Fund shall continue to accept and implement orders
by GWL&A 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
GWL&A conflicts with the majority of other state regulators, then
GWL&A will withdraw the Account's investment in the Fund and
terminate this Agreement within six months after the Board informs
GWL&A 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 GWL&A for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this
Agreement, a majority of the Independent Trustees 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. GWL&A shall not
be required by Section 7.3 to establish a new funding medium for
the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners 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 GWL&A will withdraw the Account's
investment in the Fund and terminate this Agreement within six (6)
months after the Board informs GWL&A 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 Independent Trustees.
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 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 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 3.6, 3.7,
3.8, 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 GWL&A
8.1(a). GWL&A agrees to indemnify and hold harmless the Fund
and the Adviser and each of their officers and directors or
trustees and each person, if any, who controls the Fund or the
Adviser 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, expenses,
damages, liabilities (including amounts paid in settlement with
the written consent of GWL&A) or litigation (including reasonable
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 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 or prospectus or SAI
covering the Contracts or contained in the Contracts or
sales literature for 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 in writing to GWL&A
by or on behalf of the Adviser or Fund for use in
the registration statement or prospectus for the
Contracts or in the Contracts or 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 of the Fund not supplied by GWL&A or
persons under its control) or wrongful conduct of GWL&A
or persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in
the 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 in writing to the
Fund by or on behalf of GWL&A; or
(iv) arise as a result of any failure by GWL&A to provide the
services and furnish the materials under the terms of
this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by GWL&A in
this Agreement or arise out of or result from any other
material breach of this Agreement by GWL&A, including
without limitation Section 2.10 and Section 6.7 hereof.
as limited by and in accordance with the provisions of Sections
8.1(b) and 8.1(c) hereof.
8.1(b). GWL&A shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, 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 negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this
Agreement or to any of the Indemnified Parties.
8.1(c). GWL&A 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 GWL&A 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 GWL&A of any such
claim shall not relieve GWL&A 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,
except to the extent that GWL&A has been prejudiced by such
failure to give notice. In case any such action is brought
against the Indemnified Parties, GWL&A shall be entitled to
participate, at its own expense, in the defense of such action.
GWL&A also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After
notice from GWL&A to such party of GWL&A's election to assume the
defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and GWL&A 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 GWL&A 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 for which the Indemnified
Parties intend to seek indemnification from GWL&A.
8.2. Indemnification by the Adviser
8.2(a). The Adviser agrees to indemnify and hold harmless
GWL&A and its directors and officers and each person, if any, who
controls GWL&A 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, expenses,
damages, liabilities (including amounts paid in settlement with
the written consent of the Adviser) or litigation (including
reasonable 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 or other promotional material of the
Fund prepared by the Fund or the Adviser (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 in writing
to the Adviser or Fund by or on behalf of GWL&A 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, SAI
or sales literature or other promotional material for the
Contracts not supplied by the Adviser or persons under
its control) or wrongful conduct of the Fund or Adviser
or persons under their control, with respect to the sale
or distribution of the Contracts or Fund shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in
a registration statement, prospectus, SAI, 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 in writing to GWL&A by or on behalf
of the Adviser or Fund; or
(iv) arise as a result of any failure by the Fund or the
Adviser 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
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or
Adviser in this Agreement or arise out of or result from
any other material breach of this Agreement by the
Adviser or the Fund; or
(vi) to the extent set forth in Section 1.10, arise out of or
result from the incorrect or untimely calculation or
reporting of the daily net asset value per share or
dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections
8.2(b) and 8.2(c) hereof. This indemnification is in addition to
and apart from the responsibilities and obligations of the Adviser
specified in Article VI hereof.
8.2(b). The Adviser shall not be liable under this
indemnification provision with respect to any losses, claims,
expenses, 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 negligence
in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to any of the Indemnified Parties.
8.2(c). The Adviser 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 Adviser 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 Adviser of any such claim shall not relieve the Adviser 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, except to the extent that the Adviser
has been prejudiced by such failure to give notice. In case any
such action is brought against the Indemnified Parties, the
Adviser will be entitled to participate, at its own expense, in
the defense thereof. The Adviser also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named
in the action. After notice from the Adviser to such party of the
Adviser'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 Adviser 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). GWL&A agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of
its officers and directors in connection with the issuance or sale
of the Contracts or the operation of the Account for which GWL&A
intend to seek indemnification from the Adviser.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless GWL&A
and its directors and officers and each person, if any, who
controls GWL&A 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 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; or
(iii) arise out of or result from the incorrect or untimely
calculation or reporting of the daily net asset value per
share or dividend or capital gain distribution rate;
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,
expenses, damages, liabilities or litigation to which an
Indemnified Party would otherwise by subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or 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 any of the Indemnified Parties.
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 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 it 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, except to the extent that the Fund has
been prejudiced by such failure to give notice. 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 defense
thereof, with counsel satisfactory to the party named in the
action. 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). GWL&A agrees promptly to notify the Fund of the
commencement of any litigation or proceedings against itself or
any of its respective officers or directors in connection with
this Agreement, the issuance or sale of the Contracts, the
operation of the Account, or the sale or acquisition of shares of
the Fund for which GWL&A intend to seek indemnification from 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 State
of Colorado, without regard to the Colorado Conflict of Laws
provisions.
9.2. This Agreement shall be made 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 Securities and Exchange Commission
may grant (including, but not limited
to the Shared Funding Exemptive Order) and the terms hereof shall
be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with
respect to some or all Portfolios, upon six (6) months
advance written notice delivered to the other parties;
provided, however, that such notice shall not be given
earlier than six (6) months following the date of this
Agreement;
or
(b) at the option of GWL&A by written notice to the other
parties with respect to any Portfolio based upon GWL&A's
reasonable and good faith determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) at the option of GWL&A by written notice to the other
parties with respect to any Portfolio 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
GWL&A; or
(d) at the option of the Fund in the event that formal
administrative proceedings are instituted against
GWL&A by the NASD, the SEC, the Insurance Commissioner or
like official of any state or any other regulatory body
regarding GWL&A'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 if the Fund reasonably
determines in its sole judgement exercised in good faith,
that any such administrative proceedings will have a material
adverse effect upon the ability of GWL&A to perform its
obligations under this Agreement; or
(e) at the option of GWL&A in the event that formal
administrative proceedings are instituted against the Fund or
Adviser by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body, if
GWL&A reasonably determines in its sole judgement
exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the
ability of the Fund or Adviser to perform their obligations
under this Agreement; or
(f) at the option of GWL&A by written notice to the Fund and
the Adviser with respect to any Portfolio if GWL&A reasonably
and in good faith believes that the Portfolio will fail to
meet the Section 817(h) diversification requirements or
Subchapter M qualifications specified in Article VI hereof;
or
(g) at the option of either the Fund or Adviser, if (i) the
Fund or Adviser, respectively, shall determine, in their sole
judgement reasonably exercised in good faith, that GWL&A has
suffered a material adverse change in their business or
financial condition or is the subject of material adverse
publicity and that material adverse
change or publicity will have a material adverse impact on
GWL&A's ability to perform its obligations under this
Agreement, (ii) the Fund or Adviser notifies GWL&A of that
determination and its intent to terminate this Agreement, and
(iii) after considering the actions taken by GWL&A and any
other changes in circumstances since the giving of such
notice, the determination of the Fund or Adviser shall
continue to apply on the sixtieth (60th) day following the
giving of that notice, which sixtieth day shall be the
effective date of termination; or
(h) at the option of either GWL&A, if (i) GWL&A shall
determine, in its sole judgment reasonably exercised in good
faith, that either the Fund or Adviser has suffered a
material adverse change in its business or financial
condition or is the subject of material adverse publicity and
that material adverse change or publicity will have a
material adverse impact upon the Fund's or the Adviser's
ability to perform its obligations under this Agreement, (ii)
GWL&A notifies the Fund or the Adviser, as appropriate, of
that determination and its intent to terminate this
Agreement, and (iii) after considering the actions taken by
the Fund or the Adviser and any other changes in
circumstances since the giving of such notice, the
determination of GWL&A shall continue to apply on the
sixtieth (60th) day following the giving of that notice,
which sixtieth day shall be the effective date of
termination; or
(i) at the option of any non-defaulting party hereto in the
event of a material breach of this Agreement by any party
hereto (the "defaulting party") other than as described in
10.1(a)-(h); provided, that the non-defaulting party gives
written notice thereof to the defaulting party, with copies
of such notice to all other non-defaulting parties, and if
such breach shall not have been remedied within thirty (30)
days after such written notice is given, then the non-
defaulting party giving such written notice may terminate
this Agreement by giving thirty (30) days written notice of
termination to the defaulting party.
10.2. Notice Requirement. No termination of this Agreement
shall be effective unless and until the party terminating this
Agreement gives prior written notice to all other parties of its
intent to terminate, which notice shall set forth the basis for
such termination. Furthermore,
(a) in the event any termination is based upon the provisions
of Article VII, or the provisions of Section 10.1(a),
10.1(g), 10.1(h) or 10.1(i) of this Agreement, the prior
written notice shall be given in advance of the effective
date of termination as required by those provisions unless
such notice period is shortened by mutual written agreement
of the parties;
(b) in the event any termination is based upon the provisions
of Section 10.1(d) or 10.1(e) of this Agreement, the prior
written notice shall be given at least sixty (60) days before
the effective date of termination; and
(c) in the event any termination is based upon the provisions
of Section 10.1(b), 10.1(c) or 10.1(f), the prior written
notice shall be given in advance of the effective date of
termination, which date shall be determined by the party
sending the notice.
10.3. Effect of Termination. Notwithstanding any
termination of this Agreement other than as a result of failure by
either the Fund or GWL&A to meet Section 817(h) of the Code
diversification requirements, the Fund and the Adviser, shall, at
the option of GWL&A, continue to make available additional shares
of the Designated Portfolios 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, without limitation, the
owners of the Existing Contracts shall be permitted to reallocate
investments in the Designated Portfolio(s), redeem investments in
the Designated Portfolios(s) and/or invest in the Designated
Portfolios upon the making of additional purchase payments under
the Existing Contracts. The parties agree that this Section 10.3
shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by
Article VII of this Agreement.
10.4. Surviving Provisions. Notwithstanding any termination
of this Agreement, each party's obligations under Article VIII to
indemnify other parties shall survive and not be affected by any
termination of this Agreement. In addition, with respect to
Existing Contracts, all provisions of this Agreement shall also
survive and not be affected by any termination of this Agreement.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by
registered or certified mail to the other party at the address of
such party set forth below or at such other address as such party
may from time to time specify in writing to the other party.
If to the Fund:
SteinRoe Variable Investment Trust
Xxx Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Legal Department
If to GWL&A:
Great-West Life & Annuity Insurance Company
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Assistant Vice President, Law Department
If to the Adviser:
Xxxxx Xxx & Farnham, Inc.
Xxx Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Legal Department
ARTICLE XII. Miscellaneous
12.1. 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. Without limiting the foregoing, no party hereto shall
disclose any information that another party has designated as
proprietary.
12.2. 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.
12.3. This Agreement may be executed simultaneously in two
or more counterparts, each of which taken together shall
constitute one and the same instrument.
12.4. 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.
12.5. 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
Colorado 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 and/or variable life operations of GWL&A are
being conducted in a manner consistent with the Colorado Variable
Annuity Life Insurance Regulations, Colorado Variable Annuity
Regulations, as applicable, and any other applicable law or
regulations.
12.6. Any controversy or claim arising out of or relating to
this Agreement, or breach thereof, may, upon the agreement of all
parties, be settled by arbitration in a forum jointly selected by
the relevant parties (but if applicable law requires some other
forum, then such other forum) in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, or
other arbitration rules as mutually agreed to by parties and
judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof.
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 or obligations
hereunder may not be assigned by any party without the prior
written consent of all parties hereto.
12.9. GWL&A is hereby expressly put on notice of the
limitation of liability as set forth in the Trust Instrument of
the Fund and agree that the obligations assumed by the Fund
pursuant to this Agreement shall be limited in any case to the
Fund and its assets and GWL&A shall seek satisfaction of any such
obligation from the shareholders of the Fund or the Adviser, the
Trustees, officers, employees or agents of the Fund, or any of
them, except to the extent permitted under this Agreement.
12.10. GWL&A agrees that the obligations assumed by the
Adviser pursuant to this Agreement shall be limited in any case to
the Adviser and its assets and GWL&A shall not seek satisfaction
of any such obligations from the shareholders of the Adviser, the
directors, officers, employees or agents of the Adviser, or any of
them, except to the extent permitted under this Agreement.
12.11. The Fund and the Adviser agree that the obligations
assumed by GWL&A pursuant to this Agreement shall be limited in
any case to GWL&A and its respective assets and neither the Fund
nor the Adviser shall seek satisfaction of any such obligation
from the shareholders of GWL&A or its directors, officers,
employees or agents or any of them, except to the extent permitted
under this Agreement.
12.12. No provision of this Agreement may be deemed or
construed to modify or supersede any contractual rights, duties,
or indemnifications, as between the Adviser and the Fund.
12.13. No provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly
authorized and executed by both parties.
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.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By its authorized officer,
By: [SIGNATURE]
Title: Assistant Vice President
Date: June 1, 1998
STEINROE VARIABLE INVESTMENT TRUST
By its authorized officer,
By: XXXXX X. XXXXXX
Title: Assistant Secretary
Date: June 1, 1998
XXXXX XXX & XXXXXXX, INCORPORATED
By its authorized officer,
By: XXXXXX X. XXXXX
Title: President- Mutual Funds Division
Date: June 1, 1998
SCHEDULE A
Contracts Form Numbers
--------- ------------
FutureFunds
SCHEDULE B
Designated Portfolios
---------------------
Xxxxx Xxx Balanced Fund, Variable Series
SCHEDULE C
Administrative Services
A. Administrative services to purchasers of Contracts shall
be the responsibility of GWL&A and not the Fund or the Adviser.
Such services include the provision of properly registered and
licensed personnel and systems necessary for all customer
servicing and support for both Designated Portfolio(s) and
Contract information and questions including:
respond to Contractowner inquiries
delivery of prospectus-both Designated Portfolios and Contracts
preparation and delivery of quarterly statements
maintenance of all Contractowner records
provision of tax reporting, as applicable
entry of initial and subsequent orders
transfer of cash to Designated Portfolio(s)
explanation of obligations and characteristics of Designated
Portfolio(s)
facilitation of transfers between Designated Portfolio(s)
and/or Unaffiliated Funds
B. For the administrative services provided, GWL&A shall
receive a fee of 0.15% per annum of the average daily net asset
value of the Designated Portfolio(s) held by GWL&A's customers,
payable by the Adviser to GWL&A, such payments being due and
payable within 15 (fifteen) days after the last day of the month
to which such payment relates.
C. The Fund will calculate the asset balance for each day on
which the fee is to be paid pursuant to this Agreement with
respect to each Designated Portfolio.
SCHEDULE D
Reports per Section 6.6
With regard to the reports relating to the quarterly testing
of compliance with the requirement of Section 817(h) and
Subchapter M under the Internal Revenue Code (the "Code") and the
regulations thereunder, the Fund shall provide within twenty (20)
Business Days of the close of the calendar quarter (45 days for
the last quarter) a report to GWL&A in the Form D1 attached hereto
and incorporated herein by reference, regarding the status under
such sections of the Code of the Designated Portfolio(s), and if
necessary, identification of any remedial action to be taken to
remedy non-compliance.
With regard to the reports relating to the year-end testing
of compliance with the requirements of Subchapter M of the Code,
referred to hereinafter as "RIC status," the Fund will provide a
year-end report within 45 days after the end of the calendar year.
However, if a problem with regard to RIC status, as defined below,
is identified in any of the quarterly reports, on a weekly basis
thereafter, additional interim reports will be provided
specifically addressing the problems identified in such report.
If any interim report memorializes the cure of the problem,
subsequent interim reports will not be required.
A problem with regard to RIC status is defined as any
violation of the following standards, as referenced to the
applicable sections of the Code:
(a) If, at the Fund's fiscal year end, less than ninety
percent of gross income is derived from sources of income
specified in Section 851(b)(2);
(b) If, at the Fund's fiscal year end, thirty percent or
greater gross income is derived from the sale or disposition
of assets specified in Section 851(b)(3);
(c) If, at the end of each fiscal quarter end, less than
fifty percent of the value of the Fund's total assets
consists of assets specified in Sections 851(b)(4)(A); and
(d) If, at the end of each fiscal quarter end, no more than
twenty-five percent of the value of total assets of the Fund
is invested in the securities of one issuer, as that
requirement is set forth in Section 851(b)(4)(B).
FORM D1
CERTIFICATE OF COMPLIANCE
I, _______, a duly authorized officers, director or agent of
_____ Fund hereby certify that ______ Fund is in compliance with
all requirements of Section 817(h) and Subchapter M of the
Internal Revenue Code(the "Code") and the regulations thereunder
as required in the Fund Participation Agreement among Great-West
Life & Annuity Insurance Company, and ________________ other than
the exceptions discussed below:
Exceptions Remedial Action
_______________________________ ______________________________
_______________________________ ______________________________
_______________________________ ______________________________
_______________________________ ______________________________
_______________________________ ______________________________
_______________________________ ______________________________
_______________________________ ______________________________
_______________________________ ______________________________
_______________________________ ______________________________
_______________________________ ______________________________
_______________________________ ______________________________
_______________________________ ______________________________
_______________________________ ______________________________
If no exception to report, please indicate "None."
Signed this ___ day of ________, _____.
_______________________________________
(Signature)
By: ___________________________________
(Type or Print Name and Title/Position)
SCHEDULE E
EXPENSES
The Fund and/or Adviser, and GWL&A will coordinate the functions
and pay the costs of completing these functions based upon an
allocation of costs in the tables below. Costs shall be allocated
to reflect the Fund's share of the total costs determined
according to the number of pages of the Fund's respective portions
of the document.
Item Function Party Responsible Party Responsible
for Coordination for Expense
--------------------------------------------------------------------------------------
Mutual Fund Printing of GWL&A Fund or Adviser,
Prospectus combined as applicable
prospectuses
--------------------------------------------------------------------------------------
Fund or Adviser GWL&A Fund or Adviser,
shall supply as applicable
GWL&A film/disk
or such number of
Designated Portfolio(s)
prospectus(es) as
GWL&A requires for
printing combined
prospectus
--------------------------------------------------------------------------------------
Distribution to New GWL&A GWL&A
and Inforce Clients
--------------------------------------------------------------------------------------
Distribution to GWL&A GWL&A
Prospective Clients
--------------------------------------------------------------------------------------
Mutual Fund If Required by Fund Fund or Adviser Fund or Adviser
Prospectus Update or Adviser
& Distribution
--------------------------------------------------------------------------------------
If Required by GWL&A GWL&A GWL&A
--------------------------------------------------------------------------------------
Item Function Party Responsible Party Responsible
for Coordination for Expense
--------------------------------------------------------------------------------------
Mutual Fund SAI Printing Fund or Adviser Fund or Adviser
--------------------------------------------------------------------------------------
Distribution GWL&A GWL&A
--------------------------------------------------------------------------------------
Product Disclosure Printing GWL&A GWL&A
Documents
--------------------------------------------------------------------------------------
Distribution GWL&A GWL&A
--------------------------------------------------------------------------------------
Item Function Party Responsible Party Responsible
for Coordination for Expense
--------------------------------------------------------------------------------------
Proxy Material for Printing if proxy Fund or Adviser Fund or Adviser
Mutual Fund: required by Law
--------------------------------------------------------------------------------------
Distribution GWL&A Fund or Adviser
(including labor)
if proxy required
by Law
--------------------------------------------------------------------------------------
Printing & distri- GWL&A GWL&A
bution if required
by GWL&A
--------------------------------------------------------------------------------------
Item Function Party Responsible Party Responsible
for Coordination for Expense
--------------------------------------------------------------------------------------
Mutual Fund Annual & Printing of GWL&A Fund or Adviser
Semi-Annual Report combined reports
--------------------------------------------------------------------------------------
Distribution GWL&A GWL&A
--------------------------------------------------------------------------------------
Other communication If Required by GWL&A Fund or Adviser
to New and Fund or Adviser
Prospective clients
--------------------------------------------------------------------------------------
If Required GWL&A GWL&A
by GWL&A
--------------------------------------------------------------------------------------
Item Function Party Responsible Party Responsible
for Coordination for Expense
--------------------------------------------------------------------------------------
Other communication Distribution GWL&A Fund or Adviser
to inforce (including labor)
if required by
the Fund or Adviser
--------------------------------------------------------------------------------------
If Required GWL&A GWL&A
by GWL&A
--------------------------------------------------------------------------------------
Item Function Party Responsible Party Responsible
for Coordination for Expense
--------------------------------------------------------------------------------------
Errors in Share Price Cost of error GWL&A Fund or Adviser
calculation pursuant to participants
to Section 1.10
--------------------------------------------------------------------------------------
Cost of admin- GWL&A Fund or Adviser
istrative work
to correct error
--------------------------------------------------------------------------------------
Operations of the All operations and Fund or Adviser Fund or Adviser
Fund related expenses,
including the cost
of registration and
qualification of shares,
taxes on the issuance
or transfer of shares,
cost of management of
the business affairs of
the Fund, and expenses
paid or assumed by the
fund pursuant to any
rule 12b-1 plan
--------------------------------------------------------------------------------------
Operations of the All operations and GWL&A GWL&A
Account related expenses
--------------------------------------------------------------------------------------
