PARTICIPATION AGREEMENT
BY AND AMONG
GENWORTH LIFE INSURANCE COMPANY OF NEW YORK
AND
FEDERATED INSURANCE SERIES
AND
FEDERATED SECURITIES CORP.
THIS PARTICIPATION AGREEMENT (this "AGREEMENT"), made and entered into this
2nd day of April, 2007, by and among GENWORTH LIFE INSURANCE COMPANY OF NEW
YORK, organized under the laws of the State of New York (the "COMPANY"), on its
own behalf and on behalf of each segregated asset account of the Company named
in SCHEDULE 1 (REGISTERED ACCOUNTS) AND SCHEDULE 2 (UNREGISTERED ACCOUNTS) to
this Agreement as may be amended from time to time (each account individually
referred to as an "ACCOUNT" and collectively referred to as the "ACCOUNTS"),
Federated Insurance Series, an open-end management investment company organized
under the laws of the Commonwealth of Massachusetts (the "FUND") on its own
behalf and on behalf of the Portfolios named in SCHEDULE 3 (PORTFOLIOS) to this
Agreement (each portfolio individually referred to as a "PORTFOLIO" and
collectively referred to as the "PORTFOLIOS"); and Federated Securities Corp., a
corporation organized under the laws of the State of Pennsylvania (the
"DISTRIBUTOR").
WHEREAS, the Fund engages in business as an open-end management investment
fund and was established for the purpose of serving as the investment vehicle
for separate accounts established for variable life insurance contracts and
variable annuity contracts to be offered by insurance companies that have
entered into participation agreements similar to this Agreement (the
"PARTICIPATING INSURANCE COMPANIES") and for qualified pension and retirement
plans; and
WHEREAS, the Fund has received an order from the Securities & Exchange
Commission (the "SEC") granting Participating Insurance Companies and variable
life insurance separate accounts relief from the provisions of Sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended, (the
"1940 ACT") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit Fund shares of a Portfolio (the "SHARES") to be sold to and
held by variable annuity separate accounts and variable life insurance separate
accounts of both affiliated and unaffiliated Participating Insurance Companies
and qualified pension and retirement plans outside of the separate account
context (the "MIXED AND SHARED FUNDING EXEMPTIVE ORDER"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and Shares are registered under the Securities Act of
1933, as amended (the "1933 ACT"); and
WHEREAS, the Company has registered each Account listed on SCHEDULE 1 as a
unit investment trust under the 1940 Act; and
WHEREAS, each Account listed on SCHEDULE 2 is excluded from the definition
of an investment company as provided for by Section 3(c)(11) of the 1940 Act;
and
WHEREAS, the Company issues certain other variable life insurance and
variable annuity policies (the "CONTRACTS") set forth in SCHEDULE 4 (REGISTERED
CONTRACTS), interests under which have been or will be registered under the 1933
Act; and
WHEREAS, the Company issues certain other variable annuity contracts (also
hereinafter included within the term "CONTRACTS") to trustees of both qualified
pension and profit-sharing plans and certain government employee benefit plans
as identified in Section 3(a)(2) of the 1933 Act, set forth in SCHEDULE 5
(EXEMPT CONTRACTS) hereto; and
WHEREAS, the Company may issue certain variable annuity insurance contracts
(also hereinafter included within the term "CONTRACTS") set forth in SCHEDULE 6
(CONTRACTS WITH ACCREDITED INVESTORS), for sale to "accredited investors" as
that term is defined in Regulation D promulgated under the 1933 Act (hereinafter
"REGULATION D"), or other investors permitted by Regulation D; and
WHEREAS, each Account listed on SCHEDULE 7 (ACCOUNTS EXCLUDED FROM THE
DEFINITION OF INVESTMENT COMPANY) is excluded from the definition of an
investment company as provided by Section 3(c)(1) or Section 3(c)(7) of the 1940
Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company under the insurance laws of the State of New York, to set aside and
invest assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase Shares of the Portfolios named in
SCHEDULE 3, as such schedule may be amended from time to time on behalf of the
Accounts to fund the Contracts, and the Fund is authorized to sell such Shares
to the Accounts at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Portfolios and the Distributor agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. Subject to Article X hereof, the Fund agrees to make available to the
Company for purchase on behalf of the Accounts, Shares of those Portfolios
listed on SCHEDULE 3 to this Agreement, such purchases to be effected at net
asset value in accordance with Section 1.3 hereof. Notwithstanding the
foregoing:
(a) Portfolios (other than those listed on SCHEDULE 3) in existence now or
that may be established in the future will be made available to the Company
only as the Fund may so provide, and
(b) The board of directors of the Fund (the "BOARD") may suspend or
terminate the offering of the Shares of any Portfolio or class thereof, if
such action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Board acting in good
faith and in light of its fiduciary duties under federal and any applicable
state securities laws, suspension or termination is necessary and in the
best interests of the shareholders of such Portfolio.
(c) 1.2. The Fund shall redeem, at the Company's request, any full or fractional
Shares held by the Company on behalf of an Account, such redemptions to be
effected at net asset value in accordance with Section 1.3 of this Agreement.
Notwithstanding the foregoing, the Fund may delay redemption of Shares to the
extent permitted by the 1940 Act, and any rules, regulations or orders
thereunder.
1.3. PURCHASE AND REDEMPTION PROCEDURES
(a) The Fund hereby appoints the Company as its agent for the limited
purpose of receiving purchase and redemption requests on behalf of the
Accounts listed on SCHEDULE 1, 2 AND 7,
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WHERE PERMITTED BY APPLICABLE LAW, for Shares made available hereunder,
based on allocations of amounts to such Accounts or subaccounts thereof
under the Contracts listed in SCHEDULES 4, 5 AND 6 and other transactions
relating to such Contracts or such Accounts. Receipt of any such request
(or relevant transactional information therefor), by the Company as such
limited agent of the Fund, on any day the New York Stock Exchange ("NYSE")
is open for trading and on which the Fund calculates its net asset value
pursuant to the rules of the SEC (a "BUSINESS DAY") prior to the time that
the Fund ordinarily calculates its net asset value as described from time
to time in the Fund's prospectus (which as of the date of execution of this
Agreement is the close of regular trading on the NYSE) shall constitute
receipt by the Fund on that same Business Day, PROVIDED that:
(i) if the Company transmits such request to the Fund via the National
Securities Clearing Corporation's (the "NSCC") Defined Contribution
Clearance & Settlement ("DCC&S") platform, such request must be
received by the Company by the close of regular trading on the NYSE
(or such reasonably earlier time designated by the Company in response
to a change by the NSCC in the deadline for receipt of requests via
its DCC&S platform) and must be transmitted by the Company to the Fund
by the deadline designated by the NSCC pursuant to Rule 22c-1 of the
1940 Act (which as of the date of execution of this Agreement is 6:00
a.m. Eastern Time on the next following Business Day); or
(ii) if the Company transmits such request to the Fund through means
other than the DCC&S platform (e.g., by fax), such request must be
received by the Fund by 9:00 a.m. Eastern Time on the next following
Business Day.
With regard to purchase and redemptions of Shares under this Section
1.3(a), the Company is solely responsible for ensuring that each such
purchase or redemption is the net result of requests from Contract owners
for Contract transactions received by it or its duly designated agent each
Business Day before the time(s) that the Fund calculates its net asset
value.
(b) The Company shall pay for Shares on the same day that it notifies the
Fund of a purchase request for such Shares. Payment for Shares shall be
made in federal funds transmitted to the Fund by wire to be received by the
Fund by 1:00 p.m. Eastern Time on the day the Fund is notified of the
purchase request for Shares (unless the Fund determines and so advises the
Company that sufficient proceeds are available from redemption of Shares of
other Portfolios effected pursuant to redemption requests tendered by the
Company on behalf of an Account). Upon receipt of federal funds so wired,
such funds shall cease to be the responsibility of the Company and shall
become the responsibility of the Fund.
(c) Payment for Shares redeemed by the Company on behalf of an Account
shall be made in federal funds transmitted by wire to the Company or any
other designated person on the day the Fund is properly notified of the
redemption order of such Shares (unless redemption proceeds are to be
applied to the purchase of Shares of other Portfolios in accordance with
Section 1.3(b) of this Agreement), except that the Fund reserves the right
to delay payment of redemption proceeds to the extent permitted under
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 registration statement. The Fund shall not bear any responsibility
whatsoever for the proper disbursement or crediting of redemption proceeds
by the Company; the Company alone shall be responsible for such action.
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(d) Any purchase or redemption request for Shares held or to be held in the
Company's general account shall be effected at the closing net asset value
per Share next determined after the Fund's receipt of such request,
PROVIDED that, in the case of a purchase request, payment for Shares so
requested is received by the Fund in federal funds prior to close of
business for determination of such value, as defined from time to time in
the Fund Prospectus.
1.4. The Fund shall use its best efforts to make the closing net asset value per
Share for each Portfolio available to the Company by 6:15 p.m. Eastern Time each
Business Day, and in any event, as soon as reasonably practicable after the
closing net asset value per Share for such Portfolio is calculated, and shall
calculate such closing net asset value in accordance with the Fund's Prospectus.
In the event the Fund is unable to make the 6:15 p.m. deadline stated herein, it
shall provide a reasonable amount of additional time for the Company to place
orders for the purchase and redemption of Shares. Neither the Fund, any
Portfolio, the Distributor, nor any of their affiliates shall be liable for any
information provided to the Company pursuant to this Agreement which information
is based on incorrect information supplied by the Company or any other
Participating Insurance Company to the Fund or the Distributor. Neither the
Company nor any of its affiliates shall be liable for any information provided
to the Fund or the Distributor pursuant to this Agreement which information is
based on incorrect information supplied by the Fund or the Distributor to the
Company. Any material error in the calculation or reporting of the closing net
asset value per Share shall be reported immediately upon discovery to the
Company. In such event the Company shall be entitled to an adjustment to the
number of Shares purchased or redeemed to reflect the correct closing net asset
value per Share and the Fund shall bear the cost of correcting such errors;
PROVIDED, HOWEVER, that the Fund will consider reasonable and documented
programming costs incurred by the Company associated with correcting such errors
subject to the mutual agreement of the Company and the Distributor; FURTHER
PROVIDED, HOWEVER, that if such errors are directly caused by the Company's
breach of this Agreement or its willful misconduct or negligence in the
performance of, or failure to perform, its obligations hereunder, the Company
shall be liable for such cost of correcting such errors. Any immaterial error
shall be corrected in the next Business Day's net asset value per Share.
1.5. The Company, on its behalf and on behalf of each Account, hereby elects to
receive all such dividends and distributions as are payable on any Shares in the
form of additional Shares of that Portfolio. The Company reserves the right, on
its behalf and on behalf of the Accounts, to revoke this election and to receive
all such dividends and capital gain distributions in cash. The Fund shall notify
the Company promptly of the number of Shares so issued as payment of such
dividends and distributions.
1.6. Issuance and transfer of Shares shall be by book entry only. Stock
certificates will not be issued to the Company or any Account. Purchase and
redemption orders for Shares shall be recorded in an appropriate ledger for each
Account or the appropriate subaccount of an Account.
1.7. (a) The parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; except as provided in this Section 1.7,
the Shares may be sold to other insurance companies (subject to Section
1.8 hereof) and amounts allocated to the Contracts may be invested in
other investment companies, subject to the terms of such Contracts. A
funding vehicle other than those listed on SCHEDULE 3 to this Agreement
may be made available for the investment of amounts allocated to the
Contracts.
(b) The Company shall not, without prior notice to the Distributor (unless
otherwise required by applicable law), take any action to operate any
Account that is a unit investment trust as a management investment company
under the 1940 Act.
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(c) The Company shall not, without prior notice to the Distributor (unless
otherwise required by applicable law), induce Contract owners to vote to
change or modify the Fund or change the Fund's Distributor.
(d) The Company shall not, without prior notice to the Fund, induce
Contract owners to vote on any matter submitted for consideration by the
shareholders of the Fund in a manner other than as recommended by the
Board.
1.8. The Fund shall sell Shares only to Participating Insurance Companies and
their separate accounts and to trustees of qualified pension and profit-sharing
plans, trustees of certain government employee benefit plans, or other persons
("QUALIFIED PERSONS") that communicate to the Fund that they qualify to purchase
Shares under Section 817(h) of the Code and the regulations thereunder without
impairing the ability of any Account to treat the portfolio investments of the
Fund as constituting investments of the Account for the purpose of satisfying
the diversification requirements of Section 817(h) of the Code (the
"DIVERSIFICATION REQUIREMENTS"). To the extent required by the Mixed and Shared
Funding Exemptive Order, the Fund shall not sell Shares to any insurance company
or separate account unless it enters into an agreement having provisions that
require of the parties what is, in substance, required by Articles VI and VII of
this Agreement to govern such sales. The Company hereby represents and warrants
that it and each Account are Qualified Persons.
1.9. The Company shall comply with all applicable laws and regulations designed
to prevent money "laundering," and if required by such laws or regulations, to
share with the Fund information about individuals, entities, organizations and
countries suspected of possible terrorist or money "laundering" activities in
accordance with Section 314(b) of the USA Patriot Act. In particular, the
Company agrees that: (a) as part of processing an application for a Contract it
will verify the identity of applicants and, if an applicant is not a natural
person, will verify the identity of prospective principal and beneficial owners
submitting an application for a Contract, (b) as part of its ongoing compliance
with the USA Patriot Act it will from time to time re-verify the identity of
Contract owners, including the identity of principal and beneficial owners of
Contracts held by non-natural persons, (c) as part of processing an application
for a Contract it will verify that no applicant, including prospective principal
or beneficial Contract owners is a "specially designated national" or a person
from an embargoed or "blocked" country as indicated by the Office of Foreign
Asset Control ("OFAC") list of such persons, (d) as part of its ongoing
compliance with the USA Patriot Act it will from time to time re-verify that no
Contract owner, including a principal or beneficial Contract owner, is a
"specially designated national" or a person from an embargoed or "blocked"
country as indicated by the OFAC list of such persons, (e) it will ensure that
money tendered to the Fund as payment for Shares did not originate with a bank
from a country or territory named on the list of high-risk or non-cooperating
countries or jurisdictions published by the Financial Action Task Force, and (f)
if any of (a) through (e) become untrue, then the Company will inform the Fund
and the Fund or its agent(s) in compliance with the USA Patriot Act or Bank
Secrecy Act, may instruct the Company to block one or more Contract owner
accounts with the Company or one or more of the Company's accounts with the
Fund.
5
1.10. (a) The Company shall comply with the terms and conditions of the Fund's
prospectus and statement of additional information and all applicable
laws, rules and regulations governing the Company's performance under this
Agreement, including without limitation compliance with the 1940 Act and
Rule 22c-2 thereunder.
(b) The Company has adopted policies and procedures reasonably designed to
protect the Fund from disruption or harm caused by "market timing" and
other types of frequent trading in Shares (the "COMPANY'S MARKET TIMING
POLICY"), a copy of which is attached hereto as Exhibit A. The Company
shall take all reasonable measures to consistently and effectively enforce
the Company's Market Timing Policy for the duration of this Agreement. The
Company shall also provide the Distributor any proposed amendments to the
Company's Market Timing Policy and the complete text of such proposed
amendments concurrently with their adoption.
(c) In accordance with Rule 22c-2(a)(2), the Company shall provide,
promptly upon request by the Distributor, certain shareholder information,
including, but not limited to, the Taxpayer Identification Number of all
shareholders that purchased, redeemed, transferred, or exchanged shares
held through an account with the Company, and the amount and dates of such
shareholder purchases, redemptions, transfers and exchanges.
(d) The Company understands and agrees that the Distributor may review
omnibus transactions for potentially harmful or disruptive trading
activity and notify the Company in writing if it determines that any such
activity has occurred. Upon such written notification from the
Distributor, the Company shall follow the Fund's or its agent's
instructions to restrict or prohibit further purchases or exchanges of
Shares by a Contract owner.
(e) The Company understands and agrees that the Fund has adopted policies
and procedures reasonably designed to protect the Fund from disruption or
harm caused by "market timing" or other types of frequent or short-term
trading in Shares, which policies and procedures may be amended from time
to time. The Company understands and agrees that, notwithstanding anything
in this Agreement to the contrary, the Distributor reserves the right to
(i) refuse any purchase or exchange order at any time for any reason
without prior notice to the Company, and (ii) delay settlement of any
redemption order if the Distributor determines, in its sole discretion,
that such delay is necessary to protect the Fund from potential disruption
or harm. In no way will any delay be beyond that allowed under Section
22(e) of the 1940 Act.
(f) In compliance with this Section 1.10, the Company shall not undertake
any activity that will cause it to violate any federal or state law, rule
or regulation concerning the privacy of owners of the Contracts. This
includes, but is not limited to, the provision of Contract owner names or
other identifying information.
1.11. The Company understands and agrees that: (i) the Distributor offers shares
of other mutual funds or other classes of mutual funds with the same investment
objective, strategy and portfolio management team as the Portfolios, (ii) the
mutual fund and share class most appropriate for each Account depends, among
other things, on the eligibility for investment and servicing requirements of
each such Account, and (iii) to the extent the appropriate eligibility
requirements are satisfied, the parties hereto shall cooperate to effect a
transfer of Account assets to the mutual fund best suited for such assets.
6
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that:
(a) the Contracts listed on SCHEDULE 4 are or will be registered under the
1933 Act and that the Contracts listed on SCHEDULES 5 AND 6 are exempt from
registration under the 1933 Act;
(b) the Accounts listed on SCHEDULES 2 AND 7 are and will remain excluded
from the definition of an investment company under the 1940 Act, and that
it will immediately notify the Fund and the Distributor upon having a
reasonable basis for believing that such Accounts have ceased to be so
excluded or that they might become investment companies in the future;
(c) each Account listed on SCHEDULE 1 is and will be registered as unit
investment trust in accordance with the provisions of the 1940 Act;
(d) the Contracts are and will be issued and sold in compliance in all
material respects with all applicable federal and state laws;
(e) each Account meets the definition of a "separate account" under the
1940 Act;
(f) it is an insurance company duly organized and in good standing under
applicable law and that it has legally and validly established each Account
as a separate account under applicable law and that it has legally and
validly established each Account, prior to any issuance or sale of any
Contract funded by that Account, as a segregated asset account under the
Insurance Laws of the State of New York and has registered or, prior to any
issuance or sale of the Contracts, will register to the extent required by
law each 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, and that it will maintain such registration for so long as
required by the 1940 Act;
(g) it will amend the registration statement under the 1933 Act for the
Contracts and the registration statement under the 1940 Act for the
Accounts listed on SCHEDULE 1 from time to time as required in order to
effect the continuous offering of the Contracts or as may otherwise be
required by applicable law;
(h) it will register and qualify the Contracts for sale in accordance with
the securities laws of the various states only if and to the extent deemed
necessary by the Company;
(i) each Account is a segregated asset account and that interests in each
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 Internal Revenue Code of 1986, as amended (the "CODE"), and the
regulations thereunder. The Company will use every effort to continue to
meet such definitional requirement and will notify the Fund immediately
upon having a reasonable basis for believing such requirements have ceased
to be met or that they might not be met in the future;
(j) the Contracts are currently and at the time of issuance will be treated
as life insurance or 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 Distributor immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future;
7
(k) it will not purchase Shares with assets derived from tax-qualified
retirement plans except, indirectly, through Contracts purchased in
connection with such plans; and
(l) it has or will adopt and implement policies and procedures reasonably
designed to ensure that each purchase or redemption order for Shares that
it submits pursuant to Section 1.3(a) herein is the net result of requests
from Contract owners for Contract transactions received by it or its agents
each Business Day before the time(s) that the Fund calculates its net asset
value; which procedures shall include the establishment and maintenance of
records sufficient to demonstrate such compliance.
2.2. The Fund represents and warrants that:
(a) it will not sell Shares to any purchaser whose purchase of such Shares
would result in a violation of the conditions imposed by the Mixed and
Shared Fund Exemptive Order;
(b) Shares of each Portfolio sold pursuant to this Agreement and listed on
SCHEDULE 3 will be registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law and that the Fund is and will
remain registered under the 1940 Act for as long as such Shares are
outstanding. The Fund will amend the registration statement for its Shares
of the Portfolios under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of Shares. The Fund
will 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;
(c) it believes, in good faith, that each Portfolio listed on SCHEDULE 3 is
currently 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 provision)
and that it will notify the Company immediately upon having a reasonable
basis for believing that a Portfolio has ceased to so qualify or that it
might not so qualify in the future;
(d) in performing the services described in this Agreement, the Fund will
comply in all material respects with all applicable federal securities
laws, rules and regulations. The Fund further represents and warrants that
its investment objectives, policies and restrictions comply with all
applicable state investment laws, rules and regulations. The Fund makes no
representation as to whether any aspect of its operations (including, but
not limited to, fees and expenses and investment policies, objectives and
restrictions) complies with the insurance laws and regulations of any
state. The Fund agrees that upon request it will use its best efforts to
furnish the information required by state insurance laws so that the
Company can obtain the authority needed to issue the Contracts in the
various states;
(e) it currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although
it reserves the right to make such payments in the future;
(f) it is lawfully organized and validly existing under the laws of the
Commonwealth of Massachusetts and that it does and will comply in all
material respects with applicable provisions of the 1940 Act; and
(g) all of its directors, trustees, officers, employees, investment
advisers, and other individuals/entities having access to the funds and/or
securities of the Portfolios are and continue to be at all times covered by
a blanket fidelity bond or similar coverage for the benefit of the
Portfolios in an amount not less than the minimal coverage as required
currently by Rule 17g-1 of
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the 1940 Act or related provisions as may be promulgated from time to time.
The aforesaid bond includes coverage for larceny and embezzlement and is
issued by a reputable bonding company.
2.3. The Distributor represents and warrants that it is a member in good
standing of the National Association of Securities Dealers, Inc. and is
registered, and shall remain registered, as a broker-dealer with the SEC. The
Distributor further represents that it will sell and distribute Shares in
accordance in all material respects with all applicable federal and state
securities laws, including without limitation the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 ACT"), and the 0000 Xxx.
2.4. Each party represents that the execution and delivery of this Agreement and
the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate or board action, as applicable, 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.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS: VOTING
3.1. The Fund shall bear the costs of preparing, filing with the SEC, and
setting for printing the Fund's prospectus, Statement of Additional Information
("SAI"), including any amendments or supplements thereto, periodic reports to
shareholders, Fund proxy material and other shareholder communications
(collectively, the "Fund Materials"), and the Fund will provide to the Company a
camera-ready or other formatted copy of all Fund Materials.
It is understood and agreed that the Company is not responsible for the content
of the Fund Materials, except to the extent that statements in the Fund
Materials reflect information given to the Fund by the Company. It is also
understood and agreed that, except with respect to information provided to the
Company by the Fund, the Distributor, the Portfolios, the Fund, the Distributor
shall not be responsible for the content of the prospectus, SAI or disclosure
statement for the Contracts or non-affiliated funds.
3.2. The Company shall print in quantity and deliver to existing Contract owners
the Fund Materials. The Fund shall bear the costs of printing the Fund Materials
for existing Contract owners. The Company shall bear the costs of delivering the
Fund Materials to existing Contract owners.
3.3. The Company shall print in quantity and deliver to prospective Contract
owners the Fund prospectus and, if requested, the SAI for the Fund. The Fund
shall bear the costs of printing the Fund prospectus and SAI for prospective
Contract owners. The Company shall bear the costs of delivering the Fund
prospectus and SAI to prospective Contract owners.
3.4. The Company, at its expense, will distribute proxy material, reports and
other communications to existing Contract owners and tabulate the votes. If and
to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the Shares of each Portfolio held in the Accounts in accordance
with instructions received from Contract owners; and
(c) vote Shares of each Portfolio held in the Accounts for which no timely
instructions have been received, as well as Shares it owns, in the same
proportion as Shares of each such Portfolio for which instructions have
been received from the Contract owners; in each case, for so long as and to
the extent that the SEC continues to interpret the 1940 Act to require
pass-through voting privileges for owners of Contracts listed on SCHEDULE
4. Except as set forth above, the Company reserves the right to vote Shares
held in any account in its own right, to the extent permitted by
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law. The Company will be responsible for assuring that each Account
calculates voting privileges in a manner consistent with all legal
requirements, including the Mixed and Shared Funding Exemptive Order.
3.5. The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular, the Fund will act in accordance with the
SEC's interpretation of the requirements of Section 16(a) of the 1940 Act with
respect to periodic elections of trustees and with whatever rules the SEC may
promulgate with respect thereto.
3.6 The Company and its agents will not in any way recommend any proposal or
oppose or interfere with any proposal submitted by the Fund at a meeting of
Contract owners or shareholders of the Fund, and will in no way recommend,
oppose or interfere with the solicitation of proxies for Fund shares held by
Contract owners, without the prior written consent of the Fund, which consent
may be withheld in the Fund's sole discretion; PROVIDED, HOWEVER, that this
provision shall not prohibit the Company from voting for shares held on its own
behalf or on behalf of Contract owners to the extent permitted by law.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Distributor will provide the Company on a timely basis with investment
performance information for the Portfolios, including total return for the
preceding calendar month and calendar quarter, the calendar year to date, and
the prior one-year, five-year, and ten year (or life of the Portfolio) periods.
The Company may, based on the SEC-mandated information supplied by the
Distributor, prepare communications concerning investment performance for
Contract owners ("CONTRACT OWNER MATERIALS"). The Company will provide the
Distributor with copies of all Contract Owner Materials at least fifteen (15)
business days prior to their first use. No such material will be used if the
Distributor reasonably objects to such use within fifteen (15) business days
after receipt of such material. It is understood that neither the Distributor,
the Fund nor the Portfolios will be responsible for errors or omissions in, or
the content of, Contract Owner Materials except to the extent that the error or
omission resulted from information provided by or on behalf of the Distributor,
the Fund or the Portfolio.
4.2. The Company will not give any information or make any representations or
statements on behalf of the Fund or concerning the Portfolios in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement, prospectus or SAI for Shares, as such
registration statement, prospectus and SAI may be amended or supplemented from
time to time, or in reports or proxy statements for the Portfolio, or in
published reports for the Portfolio which are in the public domain or approved
by the Fund or the Distributor for distribution, or in sales literature or other
material provided by the Fund or the Distributor, except with permission of the
Fund or the Distributor. The Fund and/or the Distributor, as applicable, agrees
to respond to any request for approval on a prompt and timely basis. Nothing in
this Section 4.2 will be construed as preventing the Company or its employees or
agents from giving advice on investment in the Portfolios.
4.3. The Company will furnish, or will cause to be furnished, to the Fund or the
Distributor or its designee, each piece of sales literature or other promotional
material in which the Fund, the Portfolios or the Distributor is named, at least
fifteen (15) business days prior to its use. No such material will be used if
the Fund or the Distributor reasonably objects to such use within fifteen (15)
business days after receipt of such material. Likewise, the Fund or the
Distributor will furnish, or will cause to be furnished, to the Company or its
designee, each piece of sales literature or other promotional material in which
the Company is named, at least fifteen (15) business days prior to its use. No
such material will be used if the Company reasonably objects to such use within
fifteen (15) business days after receipt of such material.
10
4.4. The Fund and the Distributor will not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, each Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or SAI for the
Contracts, as such registration statement, prospectus and SAI may be amended or
supplemented from time to time, or in published reports for each Account or the
Contracts which are in the public domain or approved by the Company for
distribution to Contract owners, or in sales literature or other material
provided by the Company, except with permission of the Company. The Company
agrees to respond to any request for approval on a prompt and timely basis.
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 Portfolios or their Shares, contemporaneously with the filing of
such document with the SEC, the NASD or other regulatory authority.
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 reference the Funds or the Portfolios and relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC,
the 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 messages), 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
advertisements sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees), 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. The Fund and each Portfolio hereby consents to the Company's use of the
name "GE Investments Funds, Inc." and the name of each Portfolio listed on
SCHEDULE 3 in connection with the marketing of the Contracts, subject to the
terms of Sections 4.1, 4.2 and 4.3 of this Agreement. Such consent will
terminate with the termination of this Agreement.
ARTICLE V. FEES AND EXPENSES
5.1. Except as otherwise provided herein, 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 or the Distributor, 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 Portfolios' Shares; the preparation of all
statements and notices required by any federal or state law; all taxes on the
issuance or transfer of the Portfolios' Shares; and any expenses permitted to be
paid or assumed by a Portfolio pursuant to a plan, if any, under Rule 12b-1
under the 1940 Act.
11
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will use every effort to enable each Portfolio to comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, as amended from time
to time, relating to the Diversification Requirements for variable annuity or
life insurance contracts and any amendments or other modifications to such
Section or Regulation. In the event of a breach of this Article VI by the
Portfolio, it will take all reasonable steps: (a) to notify the Company of such
breach; and (b) to adequately diversify the Portfolio so as to achieve
compliance within the grace period afforded by Treasury Regulation 1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Portfolios for the existence of any material
irreconcilable conflict among the interests of the Contract owners of all
Accounts investing in the Portfolios and determine what action, if any, should
be taken in response to such conflicts. A material irreconcilable 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
the Portfolios are being managed; (e) a difference in voting instructions given
by Participating Insurance Companies or by variable annuity and variable life
insurance Contract owners; or (f) a decision by an insurer to disregard the
voting instructions of Contract owners. The Board will promptly inform the
Company if it determines that a material irreconcilable 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 agrees to assist the Board in carrying out its
responsibilities, as delineated in the Mixed and 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 it has determined to
disregard Contract owner voting instructions. The Company's responsibilities
hereunder will be carried out with a view only to the interest of Contract
owners.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested directors, that a material irreconcilable conflict exists, the
Company will, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict,
including: (a) withdrawing the assets allocable to some or all of the Accounts
from the Portfolios and reinvesting such assets in a different investment
medium, subject to the requirements of Section 26(c) of the 1940 Act, 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., variable annuity Contract owners or variable life
insurance 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 (b) 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 the Company's
judgment represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Portfolios and terminate this Agreement with respect
to such Account; PROVIDED, HOWEVER, that such withdrawal and termination will be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested directors of the Board. No
charge or penalty will be imposed as a result of such withdrawal.
12
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 insurance regulators, then the Company will withdraw the
affected Account's investment in the Portfolios and terminate this Agreement
with respect to such subaccount; PROVIDED, HOWEVER, that such withdrawal and
termination will be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
directors of the Board. No charge or penalty will be imposed as a result of such
withdrawal.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Board will determine whether any proposed
action adequately remedies any material irreconcilable conflict, but in no event
will the Fund or the Distributor be required to establish a new funding medium
for the Contracts. The Company will 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 materially affected by the material
irreconcilable conflict.
7.7. The Company will at least annually submit to the Board such reports,
materials or data as the Board may reasonably request so that the Board may
fully carry out the duties imposed upon it as delineated in the Mixed and Shared
Funding Exemptive Order, and said reports, materials and data will be submitted
more frequently if deemed appropriate by the Board.
7.8. The Fund and the Distributor will at least annually submit to the Company
such reports, materials or data as the Company may reasonably request so that
the Company may fully carry out the duties imposed upon it by state and federal
regulators, and said reports, materials and data will be submitted more
frequently if deemed appropriate by the Company.
7.9. If and to the extent that Rule 6e-2 and Rule 6e-3(T) under the 1940 Act 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 Mixed and Shared Funding Exemptive Order) on
terms and conditions materially different from those contained in the Mixed and
Shared Funding Exemptive Order, then: (a) the Fund and/or the Participating
Insurance Companies, as appropriate, will 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, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement will 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
(a) The Company agrees to indemnify and hold harmless the Fund, the
Portfolios, the Distributor, and each person, if any, who controls or is
associated with the Fund, the Portfolios, or the Distributor within the
meaning of such terms under the federal securities laws and any director,
trustee, officer, partner, employee or agent of the foregoing
(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 the
Company) or litigation (including reasonable legal and other expenses), to
which the Indemnified Parties may become subject under any statute,
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 Shares or the
Contracts and:
(1) 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 SAI for the
13
Contracts or contained in the Contracts or sales literature or other
promotional material 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 or necessary to make such statements not
misleading in light of the circumstances in which they were made;
PROVIDED that this agreement to indemnify will 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
written information furnished to the Company by the Fund, the
Portfolio, or the Distributor for use in the registration statement,
prospectus or SAI 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 Shares; or
(2) arise out of or as a result of statements or representations by or
on behalf of the Company (other than statements or representations
contained in the Fund's registration statement, prospectus, SAI or
sales literature or other promotional material of the Fund not
supplied by the Company or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Shares; or
(3) arise out of any untrue statement or alleged untrue statement of a
material fact contained in the Fund's registration statement,
prospectus, SAI or sales literature or other promotional material of
the Fund (or amendment or supplement) or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make such statements not misleading in light
of the circumstances in which they were made, if such a statement or
omission was made in reliance upon and in conformity with information
furnished to the Fund by or on behalf of the Company or persons under
its control; or
(4) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(5) arise out of 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 by the Company of this
Agreement;
except to the extent provided in Sections 8.l(b) and 8.3 hereof. This
indemnification will be in addition to any liability that the Company otherwise
may have.
(b) No party will be entitled to indemnification under Section 8.l(a) to
the extent such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the performance of
such party's duties under this Agreement, or by reason of such party's
reckless disregard of its obligations or duties under this Agreement by the
party seeking indemnification.
(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or actions by
regulatory authorities against them in connection with the issuance or sale
of the Shares or the Contracts or the operation of the Fund.
14
8.2. INDEMNIFICATION BY THE DISTRIBUTOR, THE FUND AND EACH PORTFOLIO
(a) The Distributor, the Fund and each Portfolio agree to indemnify and
hold harmless the Company and each person, if any, who controls or is
associated with the Company within the meaning of such terms under the
federal securities laws and any director, trustee, officer, partner,
employee or agent of the foregoing (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 Distributor, the Fund or a Portfolio, as
applicable) or litigation (including reasonable legal and other expenses)
to which the Indemnified Parties may become subject under any statute,
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 Shares or the
Contracts and:
(1) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement, prospectus or SAI for the Fund or sales literature or other
promotional material 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 or necessary to make such statements not misleading in light
of the circumstances in which they were made; PROVIDED that this
agreement to indemnify will 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 Distributor, the Fund or a Portfolio by or on behalf of the
Company for use in the registration statement, prospectus or SAI for
the Fund or in sales literature of the Fund (or any amendment or
supplement thereto) or otherwise for use in connection with the sale
of the Contracts or Shares; or
(2) arise out of or as a result of statements or representations
(other than statements or representations contained in the Contracts,
or Contract registration statements, prospectuses, SAIs or sales
literature or other promotional materials for the Contracts not
supplied by the Distributor, the Fund or persons under their control)
or wrongful conduct of the Distributor, the Fund or a Portfolio or
persons under the control of the Distributor, the Fund or a Portfolio
respectively, with respect to the sale of the Shares; or
(3) arise out of any untrue statement or alleged untrue statement of a
material fact contained in Contract registration statements,
prospectuses, SAIs or sales literature or other promotional material
of the Contracts (or any amendment or supplement thereto), or the
omission or alleged omission to state therein a material fact required
to be stated or necessary to make such statement or statements not
misleading in light of the circumstances in which they were made, if
such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company by the Distributor,
the Fund or a Portfolio or persons under the control of the
Distributor, the Fund or a Portfolio; or
(4) arise as a result of any failure by the Fund, the Distributor, or
a Portfolio 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 Requirements and procedures related thereto specified
in Article VI of this Agreement); or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor, the Fund or a Portfolio
in this Agreement, or arise out of or result from
15
any other material breach of this Agreement by the Distributor, the Fund or a
Portfolio, including the failure of any Portfolio to comply with the
diversification requirements set forth in Section 817(h) of the Code or to
qualify as a "regulated investment company" under Subchapter M of the Code;
except to the extent provided in Sections 8.2(b) and 8.3 hereof. This
indemnification will be in addition to any liability that the Distributor, the
Fund or the Portfolio otherwise may have.
(b) No party will be entitled to indemnification under Section 8.2(a) to
the extent such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the performance of
such party's duties under this Agreement, or by reason of such party's
reckless disregard of its obligations or duties under this Agreement by the
party seeking indemnification.
(c) The Indemnified Parties will promptly notify the Distributor, the Fund
or a Portfolio of the commencement of any litigation, proceedings,
complaints or actions by regulatory authorities against them in connection
with the issuance or sale of the Contracts or the operation of the account.
8.3. INDEMNIFICATION PROCEDURE
Any person obligated to provide indemnification under this Article VIII
("INDEMNIFYING PARTY" for the purpose of this Section 8.3) will not be liable
under the indemnification provisions of this Article VIII with respect to any
claim made against a party entitled to indemnification under this Article VIII
("INDEMNIFIED PARTY" for the purpose of this Section 8.3) unless such
Indemnified Party will have notified the Indemnifying Party in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim will have been served upon such
Indemnified Party (or after such party will have received notice of such service
on any designated agent), but failure to notify the Indemnifying Party of any
such claim will not relieve the Indemnifying Party from any liability, which it
may have to the Indemnified Party against whom such action is brought otherwise
than on account of the indemnification provision of this Article VIII. In case
any such action is brought against the Indemnified Party, the Indemnifying Party
will be entitled to participate, at its own expense, in the defense thereof. The
Indemnifying Party also will be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnified Party named in the action. After notice
from the Indemnifying Party to the Indemnified Party of the Indemnifying Party's
election to assume the defense thereof, the Indemnified Party will bear the fees
and expenses of any additional counsel retained by it, and the Indemnifying
Party 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, unless:
(a) the Indemnifying Party and the Indemnified Party will have mutually agreed
to the retention of such counsel; or (b) the named parties to any such
proceeding (including any impleaded parties) include both the Indemnifying Party
and the Indemnified Party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The Indemnifying Party will not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there is a final judgment for the plaintiff, the Indemnifying Party agrees
to indemnify the Indemnified Party from and against any loss or liability by
reason of such settlement or judgment. A successor by law of the parties to this
Agreement will be entitled to the benefits of the indemnification contained in
this Article VIII. The indemnification provisions contained in this Article VIII
will survive any termination of this Agreement.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.
16
9.2. This Agreement will be subject to the provisions of the 1933 Act, the 1934
Act and the 1940 Act, 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, the Mixed and Shared Funding Exemptive
Order) and the terms hereof will be interpreted and construed in accordance
therewith.
ARTICLE X. TERMINATION
10.1. This Agreement will terminate:
(a) at the option of any party, with or without cause, upon
one-hundred-eighty (180) days' advance written notice to the other parties;
or
(b) at the option of the Company, upon receipt of the Company's written
notice by the other parties, with respect to a Portfolio if Shares are not
reasonably available to meet the requirements of the Contracts as
determined in good faith by the Company; or
(c) at the option of the Company, upon receipt of the Company's written
notice by the other parties, with respect to a Portfolio in the event any
of the 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) at the option of the Fund, upon receipt of the Fund's written notice by
the other parties, upon institution of formal proceedings against the
Company by the NASD, the SEC, the insurance commission 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 administration of the
Contracts, the operation of the Account, or the purchase of Shares,
PROVIDED that the Fund determines in its sole judgment, exercised in good
faith, that any such proceeding would have a material adverse effect on the
Company's ability to perform its obligations under this Agreement; or
(e) at the option of the Company, upon receipt of the Company's written
notice by the other parties, upon institution of formal proceedings against
the Fund, the Distributor, or a Portfolio by the NASD, the SEC, or any
state securities or insurance department or any other regulatory body,
PROVIDED that the Company determines in its sole judgment, exercised in
good faith, that any such proceeding would have a material adverse effect
on the Fund's, the Distributor's, or a Portfolio's ability to perform its
obligations under this Agreement; or
(f) at the option of the Company, upon receipt of the Company's written
notice by the other parties, if a Portfolio ceases to qualify as a
"regulated investment company" under Subchapter M of the Code, or under any
successor or similar provision, or if the Company reasonably and in good
faith believes that a Portfolio may fail to so qualify; or
(g) at the option of the Company, upon receipt of the Company's written
notice by the other parties, with respect to a Portfolio if the Portfolio
fails to meet the Diversification Requirements specified in Article VI
hereof or if the Company reasonably and in good faith believes the
Portfolio may fail to meet such requirements; or
(h) at the option of any party to this Agreement, upon written notice to
the other parties, upon another party's material breach of any provision of
this Agreement which material breach is not cured within thirty (30) days
of said notice; or
17
(i) at the option of the Company, if the Company determines in its sole
judgment exercised in good faith, that either the Fund, the Distributor, or
a Portfolio has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement or is
the subject of material adverse publicity which is likely to have a
material adverse impact upon the business and operations of the Company;
PROVIDED, however that no such termination shall be effective under this
subsection (i) until the Fund, the Distributor, or the Portfolio (as
appropriate) has been afforded a reasonable opportunity to respond to a
statement by the Company concerning the reason for notice of termination
hereunder; or
(j) at the option of the Fund or the Distributor, upon receipt of the
Fund's or the Distributor's written notice by the Company, if the Fund or
the Distributor, respectively determines in its sole judgment exercised in
good faith, that the Company has suffered a material adverse change in its
business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is likely
to have a material adverse impact upon the business and operations of the
Fund or the Distributor; PROVIDED, however that no such termination shall
be effective under this subsection (j) until the Company has been afforded
a reasonable opportunity to respond to a statement by the Fund, the
Distributor, or the Portfolio (as appropriate) concerning the reason for
notice of termination hereunder; or
(k) at the option of the Company or the Fund upon a determination by a
majority of the Board, or a majority of the disinterested Board members,
that a material irreconcilable conflict exists among the interests of: (1)
all Contract owners of variable insurance products of all Accounts; or (2)
the interests of the Participating Insurance Companies investing in the
Portfolio as set forth in Article VII of this Agreement; or
(l) at the option of the Fund or the Distributor if the Fund or the
Distributor determines in its sole judgment exercised in good faith that
the Company has failed to comply with the requirements of Section 1.10 of
this Agreement.
10.2. NOTICE REQUIREMENT
No termination of this Agreement will 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 will set forth the basis for the
termination.
10.3. EFFECT OF TERMINATION
Subject to Section 1.10 hereof, notwithstanding any termination of this
Agreement, the Fund will, at the option of the Company, continue to make
available additional Shares pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement that have Contract value invested in Shares of such Portfolio
(hereinafter referred to as "EXISTING CONTRACTS"). Specifically, without
limitation, the owners of the Existing Contracts will be permitted to reallocate
investments in a Portfolio (as in effect on such date), redeem investments in a
Portfolio and/or invest in Portfolio upon the making of additional purchase
payments under the Existing Contracts.
10.4. SURVIVING PROVISIONS
Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII to indemnify other parties will survive and not be affected
by any termination of this Agreement. In addition, each party's obligations
under Section 12.6 will survive and not be affected by any termination
18
of this Agreement. Finally, with respect to Existing Contracts, all provisions
of this Agreement also will survive and not be affected by any termination of
this Agreement.
ARTICLE XI. NOTICES
11.1. Any notice will be deemed duly 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 parties.
If to the Company:
Genworth Life Insurance Company of New York
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel, Securities
If to the Fund:
Federated Insurance Series
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
If to the Distributor:
Federated Securities Corp.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
ARTICLE XII. MISCELLANEOUS
12.1 The Fund and the Distributor acknowledge that the identities of the
customers of the Company or any of its affiliates (collectively the "COMPANY
PROTECTED PARTIES" for purposes of this Section 12.1), information maintained
regarding those customers, and all computer programs and procedures or other
information developed or used by the Company Protected Parties or any of their
employees or agents in connection with the Company's performance of its duties
under this Agreement are the valuable property of the Company Protected Parties.
The Fund and the Distributor agree that if they come into possession of any list
or compilation of the identities of or other information about the Company
Protected Parties' customers, or any other information or property of the
Company Protected Parties, other than such information as is publicly available
or as may be independently developed or compiled by the Fund and the Distributor
from information supplied to them by the Company Protected Parties' customers
who also maintain accounts directly with the Fund or the Distributor, the Fund
and the Distributor will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or other
property except: (a) with the Company's prior written consent; or (b) as
required by law or judicial process. The Company acknowledges that the
identities of the customers of the Fund, the Distributor or any of their
affiliates (collectively the "DISTRIBUTOR PROTECTED PARTIES" for purposes of
this Section 12.1), information maintained regarding those customers, and all
computer programs and procedures or other information developed or used by the
Distributor Protected Parties or any of their employees or agents in connection
with the Fund's or the Distributor's performance of their respective duties
under this Agreement are the valuable property of the Distributor Protected
Parties. The Company agrees that if it comes into possession of any list or
compilation of the identities of or other information about the Distributor
Protected Parties' customers, or any other information or property of the
Distributor Protected Parties, other than such information as is publicly
available or as may be independently developed or compiled by the Company from
information supplied to them by the Distributor Protected Parties' customers who
also maintain accounts directly with the Company, the Company will hold such
19
information or property in confidence and refrain from using, disclosing or
distributing any of such information or other property except: (a) with the
Fund's or the Distributor's prior written consent; or (b) as required by law or
judicial process. Each party acknowledges that any breach of the agreements in
this Section 12.1 would result in immediate and irreparable harm to the other
parties for which there would be no adequate remedy at law and agree that in the
event of such a breach, the other parties will be entitled to equitable relief
by way of temporary and permanent injunctions, as well as such other relief as
any court of competent jurisdiction deems appropriate.
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 will constitute one and the same instrument.
12.4. If any provision of this Agreement will be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement will not be
affected thereby.
12.5. This Agreement will not be assigned by any party hereto without the prior
written consent of all the parties. If the proposed assignment is to an
affiliate of any party having the same ultimate parent as such party, such
consent shall not be unreasonably withheld.
12.6. Each party to this Agreement will maintain all records required by law,
including records detailing the services it provides. Such records will be
preserved, maintained and made available to the extent required by law and in
accordance with the 1940 Act and the rules thereunder. Each party to this
Agreement will cooperate with each other party and all appropriate governmental
authorities (including without limitation the SEC, the NASD and state insurance
regulators) and will permit each other and 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. Upon request by the
Fund and at the Fund's expense, the Company agrees to promptly make copies or,
if required, originals of all records pertaining to the performance of services
under this Agreement available to the Fund. The Fund agrees that the Company
will have the right to inspect, audit and copy all records pertaining to the
performance of services under this Agreement pursuant to the requirements of any
state insurance department. Each party also agrees to promptly notify the other
parties if it experiences any difficulty in maintaining the records in an
accurate and complete manner. This provision will survive termination of this
Agreement.
12.7. The parties to this Agreement acknowledge and agree that all liabilities
of the Fund arising, directly or indirectly, under this agreement, will be
satisfied solely out of the assets of the Fund and that no trustee, officer,
agent or holder of Shares of beneficial interest of the Fund will be personally
liable for any such liabilities.
12.8. The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts, the
Accounts or the Portfolios or other applicable terms of this Agreement.
12.9. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights.
12.10. Notwithstanding anything else in this Agreement to the contrary, absent a
negligent act of commission or omission, each party hereunder shall have no
liability to the other parties for any losses, damages, injuries, claims, cost
or expenses arising as a result of war, insurrection, terrorist activities,
20
strikes or labor difficulties or any other similar or dissimilar acts of God
beyond the reasonable control of such party.
12.11 . The parties acknowledge that the consideration received by the Company
in exchange for the performance of its obligations hereunder is the right to
purchase and redeem Fund Shares as provided herein, and the Fund shall not pay
any remuneration to the Company hereunder.
12.12. A copy of the Fund's Agreement and Declaration of Trust is on file with
the Secretary of the Commonwealth of Massachusetts and notice is hereby given
that any agreements that are executed on behalf of the Fund by any Trustee or
officer of the Fund are executed in his or her capacity as Trustee or officer
and not individually. The obligations of this Agreement shall only be binding
upon the assets and property of the Fund or the Distributor and shall not be
binding upon any Trustee, officer or shareholder of the Fund individually.
12.13 Nothing in this Agreement shall impede the Fund's Trustees or shareholders
of the Shares of the Portfolios from exercising any of the rights provided to
such Trustees or shareholders in the Fund's Declaration of Trust, as amended, a
copy of which will be provided to the Insurer upon request.
12.14 It is understood that the name "Federated" or any derivative thereof or
logo associated with that name (the "Marks") is the valuable property of the
Distributor and its affiliates, and that the Company has the right to use such
name (or derivative or logo) only so long as this Agreement is in effect and the
Distributor or an affiliate of the Distributor continues to serve as the
principal underwriter of the Fund. Upon termination of this Agreement the
Company shall forthwith cease to use the Marks. The Company agrees that it shall
not use the Marks in a manner that disparages or degrades the business or
reputation of the Distributor, the Fund, or any of their affiliates, or that
infringes, dilutes, or otherwise violates the Marks. Upon request, the Company
agrees to provide appropriate attribution of the use of the Marks (e.g., through
the use of "TM" or (R) symbols, and appropriate notice regarding reservation of
rights).
[Signature Page Follows.]
21
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the date specified above.
GENWORTH LIFE INSURANCE COMPANY OF NEW
YORK
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
FEDERATED INSURANCE SERIES
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
FEDERATED SECURITIES CORP.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
22
SCHEDULE 1
REGISTERED ACCOUNTS
DATE OF RESOLUTION OF
COMPANY'S BOARD WHICH
NAME OF ACCOUNT: ESTABLISHED THE ACCOUNT:
---------------- ------------------------
Genworth Life of New York VA Separate Account 1 March 20, 2000
Genworth Life of New York VL Separate Account 1 April 1, 1996
23
SCHEDULE 2
UNREGISTERED ACCOUNTS
DATE OF RESOLUTION OF COMPANY'S BOARD WHICH
NAME OF ACCOUNT: ESTABLISHED THE ACCOUNT:
---------------- ------------------------
24
SCHEDULE 3
NAME(S) OF PORTFOLIO
Federated Insurance Series
Federated American Leaders Fund II-Primary Shares
Federated Capital Income Fund II
Federated High Income Bond Fund II-Primary Shares
Federated High Income Bond Fund II-Service Shares
Federated Xxxxxxxx Fund II-Service Shares
25
SCHEDULE 4
REGISTERED CONTRACTS
Accumulator NY 333-88312
Commonwealth Variable Annuity NY 333-39955
Choice NY/Foundation NY 333-47016
Selections NY 333-97085
26
SCHEDULE 5
EXEMPT CONTRACTS
27
SCHEDULE 6
CONTRACTS WITH ACCREDITED INVESTORS
N/A
28
SCHEDULE 7
ACCOUNTS EXCLUDED FROM THE DEFINITION OF INVESTMENT COMPANY
DATE OF RESOLUTION OF COMPANY'S BOARD
NAME OF ACCOUNT: WHICH ESTABLISHED THE ACCOUNT:
---------------- ------------------------------
29
EXHIBIT A
COMPANY'S MARKET TIMING POLICY
The Separate Account does not accommodate frequent transfers of Account Value
among Subaccounts. When owners or someone on their behalf submit requests to
transfer all or a portion of their assets between Subaccounts, the requests
result in the purchase and redemption of shares of the Portfolios in which the
Subaccounts invest. Frequent Subaccount transfers, therefore, cause
corresponding frequent purchases and redemptions of shares of the Portfolios.
Frequent purchases and redemptions of shares of the Portfolios can dilute the
value of a Portfolio's shares, disrupt the management of the Portfolio's
investment portfolio, and increase brokerage and administrative costs.
Accordingly, when an owner or someone on their behalf engages in frequent
Subaccount transfers, other owners and persons with rights under the Policies
(such as the beneficiaries) may be harmed.
The Separate Account discourages frequent transfers, purchases and redemptions.
To discourage frequent Subaccount transfers, we adopted the policy described in
the "Transfers Among the Subaccount" section. This policy requires owners who
request more than 12 Subaccount transfers in a calendar year to submit such
requests in writing by U.S. Mail or by overnight delivery service (the "U.S.
Mail requirement"). The U.S. Mail requirement creates a delay of at least one
day between the time transfer decisions are made and the time such transfers are
processed. This delay is intended to discourage frequent Subaccount transfers by
limiting the effectiveness of abusive "market timing" strategies (in particular,
"time-zone" arbitrage) that rely on "same-day" processing of transfer requests.
In addition, we will not honor transfer requests if any Subaccount that would be
affected by the transfer is unable to purchase or redeem shares of the Portfolio
in which the Subaccount invests or if the transfer would adversely affect Unit
Values. Whether these restrictions apply is determined by the affected
Portfolio(s), and although we apply the restrictions uniformly when we receive
information from the Portfolio(s), we cannot guarantee that the Portfolio(s)
will apply their policies and procedures in a uniform basis.
There can be no assurance that the U.S. Mail requirement will be effective in
limiting frequent Subaccount transfers or that we can prevent all frequent
Subaccount transfer activity that may adversely affect owners, other persons
with material rights under the Policies, or Portfolio shareholders generally.
For instance, imposing the U.S. Mail requirement after 12 Subaccount transfers
may not be restrictive enough to deter an owner seeking to engage in abusing
market timing strategies.
We may revise our frequent Subaccount transfer policy and related procedures, at
our sole discretion, at any time and without prior notice, as we deem necessary
or appropriate to better detect and deter frequent transfer activity that may
adversely affect owners, other persons with material rights under the Policies,
or Portfolio shareholders generally, to comply with state or federal regulatory
requirements, or to impose additional or alternative restrictions on owners
engaging in frequent Subaccount transfers. For example, we may invoke our right
to refuse transfers if the transfer involves the same Subaccount within a 30 day
period and/or we may change our procedures to monitor for a different number of
transfers within a specified time period or to impose a minimum time period
between each transfer.
There are inherent risks that changing our policies and procedures in the future
may not be effective in limiting frequent Subaccount transfers. We will not
implement any policy and procedure at the Policy level that discriminates among
owners, however, we may be compelled to adopt policies and procedures adopted by
the Portfolios on behalf of the Portfolios and we will do so unless we cannot
service such
30
policies and procedures or we believe such policies and procedures contradict
state or federal regulations or such policies and procedures contradict with the
terms of your Policy.
As stated in the previous paragraph, each of the Portfolios in which the
Subaccounts invest may have its own policies and procedures with respect to
frequent purchases and redemption of Portfolio shares. The prospectuses for the
Portfolios describe any such policies and procedures. The frequent trading
policies and procedures of a Portfolio may be different, and more or less
restrictive, than the frequent trading policies and procedures of other
Portfolios and the policies and procedures we have adopted to discourage
frequent Subaccount transfers. Owners should be aware that we may not, have the
contractual obligation nor the operational capability to monitor owners'
Subaccount transfer requests and apply the frequent trading policies and
procedures of the respective Portfolios that would be affected by the transfers.
Accordingly, owners and other persons who have material rights under the
Policies should assume that the sole protection they may have against potential
harm from frequent Subaccount transfers is the protection, if any, provided by
the policies and procedures we have adopted to discourage frequent Subaccount
transfers.
Owners and other persons with material rights under the Policies also should be
aware that the purchase and redemption orders received by the Portfolios
generally are "omnibus" orders from intermediaries such as retirement plans or
separate accounts funding variable insurance contracts. These omnibus orders
reflect the aggregation and netting of multiple orders from individual
retirement plan participants and/or individual owners of variable insurance
contracts. The omnibus nature of these orders may limit the Portfolios' ability
to apply their respective frequent trading policies and procedures. We cannot
guarantee that the Portfolios will not be harmed by transfer activity relating
to the retirement plans and/or other insurance companies that may invest in the
Portfolios. In addition, if a Portfolio believes an omnibus order we submit may
reflect one or more Subaccount transfer requests from owners engaged in frequent
transfer activity, the Portfolio may reject a portion of or the entire omnibus
order. If a Portfolio rejects part of an omnibus order it believes is
attributable to transfers that exceed its market timing policies and procedures,
it will return the amount to us and we will credit the amount to the Policy
owner as of the Valuation Day of our receipt of the amount. You may realize a
loss if the Unit Value on the Valuation Day we credit the amount back to your
account has increased since the original date of your transfer.
We apply our policies and procedures without exception, waiver, or special
arrangement.
31
