EXHIBIT 3
DISTRIBUTION AGREEMENT
BY AND BETWEEN
XXXXXXX XXXXXX & CO., INC.
AND
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
TABLE OF CONTENTS
Description
SECTION 1. AVAILABLE CONTRACTS 2
1.1 Availability 2
1.2 Modification of Contracts; Suspension or Restriction of
Sales 2
1.3 Reinsurance of Contracts 3
SECTION 2. CONTRACT DISTRIBUTION 3
2.1 Exclusive Appointments; Efforts; Independent Contractor 3
2.2 Registration of Associated Persons 4
2.3 Insurance Agent Licensing 5
2.4 Sales Agreements 5
2.5 Supervisory Responsibilities 6
2.6 Suitability Determinations 6
2.7 Marketing Materials 6
2.8 Non-marketing Materials 7
2.9 Banking Arrangements 8
2.10 Limitations on Authority 8
SECTION 3. RECORDKEEPING 9
3.1 Recordkeeping 9
SECTION 4. LEGAL COMPLIANCE 10
4.1 Securities Laws 10
4.2 Tax Laws 12
4.3 Insurance Laws and Other Laws 12
4.4 Notice of Certain Proceedings and Other Circumstances 14
4.5 Parties to Cooperate 15
4.6 Information About FIRST GREAT-WEST and SCHWAB 15
SECTION 5. COSTS AND EXPENSES 16
5.1 FIRST GREAT-WEST to Pay Employees 16
5.2 SCHWAB to Pay Employees 16
5.3 Each Party To Bear Own Costs 16
SECTION 6. INDEMNIFICATION 17
6.1 Indemnification by FIRST GREAT-WEST 17
6.2 Indemnification by SCHWAB 18
6.3 Limitation on Liability 20
6.4 Injunctive Relief 20
SECTION 7. TERM AND TERMINATION 20
7.1 Term 20
7.2 Events of Termination 20
7.3 Events of Default 22
7.4 Parties to Cooperate Respecting Termination 22
SECTION 8. CONFIDENTIALITY 22
SECTION 9. ARBITRATION 23
SECTION 10. BONDING AND INSURANCE 25
SECTION 11. NOTICES 25
SECTION 12. TRADEMARKS 25
SECTION 13. MISCELLANEOUS 27
13.1 Amendment 27
13.2 Non-Assignment 27
13.3 Governing Law 27
13.4 Survival of Provisions 27
13.5 Severability 27
13.6 Waiver 28
13.7 Right to Audit 28
13.8 Force Majeure 28
13.9 Entire Agreement 28
SCHEDULE 1 30
SCHEDULE 1.1 31
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") is made as of the
day of ________, 1997, by and between Xxxxxxx Xxxxxx & Co., Inc.,
a California corporation ("SCHWAB"), and First Great-West Life &
Annuity Insurance Company, a New York insurance company ("FIRST
GREAT-WEST"), on behalf of itself and each of its separate accounts
listed on Schedule 1 hereto, as the same may be amended from time
to time (each an "Account") (each, a "Party," collectively, the
"Parties").
RECITALS
WHEREAS, FIRST GREAT-WEST is a New York life insurance company duly
licensed as required by applicable law to issue life insurance and
annuity contracts identified on Schedule 1.1, as may be amended
from time to time, (each a "Contract," collectively, the
"Contracts") in certain states and other jurisdictions; and
WHEREAS, FIRST GREAT-WEST, has developed or is developing
Contracts, some of which shall be funded by segregated asset
accounts; and
WHEREAS, SCHWAB is licensed or will become licensed as required by
applicable law to market such Contracts pursuant to applicable
state law and is registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "1934 Act") and under the securities laws
in all fifty (50) states, and is a member of the National
Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, FIRST GREAT-WEST has extensive experience in the operation
of its insurance business and has trained personnel, equipment, and
facilities for conducting its present and future insurance
operations; and
WHEREAS, SCHWAB has extensive experience in the operation of its
business as a registered broker-dealer and has trained (and
NASD-registered) personnel, equipment, and facilities for
conducting its present and future broker-dealer operations; and
WHEREAS, certain personnel of SCHWAB may engage, or deemed to be
engaged, directly or indirectly, in the offering, selling,
advertising or marketing of certain Contracts the interests under
which are required to be registered under the Securities Act of
1933, as amended (the "1933 Act") ("registered Contracts"); the
confirming of transactions under registered Contracts as required
by the 1934 Act Rule 10b-10; the maintenance of records with
respect to registered Contracts as required by 1934 Act Rules 17a-3
and 17a-4 or other SEC or NASD rules applicable to registered
broker-dealers (all Distributor personnel engaged in these
activities, as well as all other persons whom Section 3(a)(18) of
the 1934 Act defines as associated persons of SCHWAB, are
collectively referred to herein as "Associated Persons"); and
WHEREAS, FIRST GREAT-WEST and SCHWAB desire to enter into an
agreement to have SCHWAB act as the principal underwriter and/or
insurance agent, as applicable, for the sale of the Contracts.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and of the mutual expectations of
benefit occurring from the activities herein contemplated, the
Parties hereto agree as follows:
SECTION 1. AVAILABLE CONTRACTS
1.1 Availability
(a) SCHWAB shall have exclusive marketing and distribution rights
for certain Contracts specifically identified in Schedule 1.1
(hereinafter, "Exclusive Contracts"). SCHWAB shall have
non-exclusive marketing and distribution rights for all Contracts
identified in Schedule 1.1 (hereinafter, "Other Contracts").
Schedule 1.1 may be amended from time to time as mutually agreed to
in writing between the two Parties. The Parties have agreed that
certain Contracts will be designed to be sold into the Internal
Revenue Code Section 403(b), 457 and 401(k) markets and made available
for distribution by SCHWAB and added to Schedule 1.1 when
available. SCHWAB acknowledges that FIRST GREAT-WEST is currently
marketing contracts similar to the Exclusive Contracts and may
develop and market contracts in the future with similar terms to
those contained in the Contracts. In no event may FIRST GREAT-WEST
directly or indirectly develop, issue, market or otherwise promote
any Contract that bears the name SCHWAB or any other proprietary
SCHWAB tradenames, trademarks or service xxxx without the prior
written approval of SCHWAB, except as permitted by and in
accordance with Section 12.1 hereof.
1.2 Modification of Contracts; Suspension or Restriction of Sales
(a) FIRST GREAT-WEST may modify the terms of any Contract, to the
extent permitted or required by applicable law. Any modification,
other than a modification required to be made to conform the
Contracts to a change in applicable law, shall be approved by
SCHWAB, which approval shall not be unreasonably withheld. SCHWAB
may, from time to time, propose modifications to the terms of any
Contract, and FIRST GREAT-WEST agrees to implement any such
modification in a timely manner, subject to FIRST GREAT-WEST's
approval, which shall not be unreasonably withheld. Prior to
implementation of any modification, the Parties must mutually agree
on such change or changes and agree as to who will bear the costs
associated with such change.
(b) Upon 180 days' prior written notice, FIRST GREAT-WEST may
suspend or restrict the sale of any Contract in any state or other
jurisdiction, FIRST GREAT-WEST will effect such withdrawal in
accordance with all applicable law. FIRST GREAT-WEST reserves the
right to immediately withdraw any fixed annuity contract (or
portion thereof) with respect to future sales where the declared
interest rate, as determined by FIRST GREAT-WEST's usual and
customary business practices, would be below that Contract's
declared minimum guaranteed interest rate. In addition,
notwithstanding any provision herein to the contrary, FIRST
GREAT-WEST may refuse to sell any Contract to any applicant for any
reason so long as such refusal does not violate any applicable
state insurance law. FIRST GREAT-WEST shall communicate the
reasons for any refusal to SCHWAB.
1.3 Reinsurance of Contracts
FIRST GREAT-WEST may reinsure any of the Contracts with a reinsurer
of its choice at any time in accordance with applicable law.
SECTION 2. CONTRACT DISTRIBUTION
2.1 Exclusive Appointments; Efforts; Independent Contractor
(a) FIRST GREAT-WEST appoints SCHWAB, and SCHWAB accepts FIRST
GREAT-WEST's appointment, as the exclusive principal underwriter,
and, as applicable, exclusive insurance agent for the offer and
sale of the Exclusive Contracts and as non-exclusive principal
underwriter and insurance agent of the Other Contracts offered by
SCHWAB to the public, during the term of this Agreement, in each
state and other jurisdiction in which such Contracts may lawfully
be offered and sold. Notwithstanding anything herein to the
contrary, SCHWAB shall not act as, or be deemed to be, the
principal underwriter of any Contract that is not registered under
the 1933 Act and which appears on any of the Schedules attached
hereto.
(b) SCHWAB shall use all commercially reasonable efforts to
offer the Contracts for sale and distribution, but shall be under
no obligation to effectuate any particular amount of sales of
Contracts. SCHWAB shall, however, provide FIRST GREAT-WEST in
writing new product sales projections for the initial twelve (12)
month period of this Agreement and every twelve (12) month period
thereafter. The estimate should contain quarterly information for
the period in question. The estimate should also provide sales
estimates on a Contract by Contract basis, and include all
projected premiums. FIRST GREAT-WEST acknowledges that SCHWAB
currently sells, and may in the future sell, annuity contracts
and/or life insurance policies issued by life insurance companies
unaffiliated with FIRST GREAT-WEST.
(c) SCHWAB shall at all times function as, and be deemed to be, an
independent contractor.
(d) Except as may be necessary to comply with the requirements of
any applicable law or regulation, SCHWAB shall not, absent FIRST
GREAT-WEST's consent, actively promote the replacement of any
Contract or the redirection of the cash value of a Contract into
any other product; provided, however, that FIRST GREAT-WEST's
consent shall be presumed granted (i) upon the occurrence, with
respect to FIRST GREAT-WEST, of any event described in Sections
7.2(a)(iii) or 7.2(b) hereof only to the extent of Contract owners
in those jurisdictions in the events under 7.2(b)(ii) and (iii) or
(ii) upon the failure of FIRST GREAT-WEST to cure a default
pursuant to Section 7.3 hereof. "Actively promote" shall include,
but not be limited to, mailings specifically sent to or
conversations specifically held with Contract owners or licensed
agents of SCHWAB which induce or attempt to induce a Contract owner
to surrender the Contract and replace it with another product
(other than a product offered by FIRST GREAT-WEST or it
affiliates), or to direct premiums, cash values or deposits from a
Contract to any other product (other than a product offered by
FIRST GREAT-WEST or its affiliates). Notwithstanding the
foregoing, in no event shall this provision prevent SCHWAB from
concurrently or subsequently offering and selling to a Contract
owner any non-insurance product, whether or not offered by FIRST
GREAT-WEST or its affiliates. This provision shall survive the
termination of this Agreement other than pursuant to Sections
7.2(a)(iii), 7.2(b) or 7.3 hereof.
2.2 Registration of Associated Persons
(a) SCHWAB shall be responsible for ensuring, at its sole cost,
that each Associated Person involved with the offer or sale of
registered Contracts is duly registered and qualified pursuant to
the 1934 Act, NASD regulations, and any other required securities
regulatory body.
(b) In connection with such registration, SCHWAB shall conduct
such background investigations of the SCHWAB employees necessary to
determine their qualifications, good character and moral fitness to
offer and sell the Contracts. Such information shall be available
to FIRST GREAT-WEST upon request.
(c) SCHWAB shall continuously monitor the status of SCHWAB and
each of XXXXXX'x registered employees to ensure that they are and
remain properly registered and qualified.
2.3 Insurance Agent Licensing
(a) Neither SCHWAB nor any of its employees shall engage in
any activities that would require insurance agent licensing in the
state or jurisdiction where such activities are performed, unless
and until SCHWAB and its employees are properly licensed to perform
such services in the particular state or other jurisdiction. As
used herein, "properly licensed" includes the filing of an
appointment by FIRST GREAT-WEST, SCHWAB and/or other person when
required by the laws or regulations of the applicable state or
jurisdiction.
(b) SCHWAB shall, from time to time, advise FIRST GREAT-WEST of
the SCHWAB employees that it wishes FIRST GREAT-WEST to appoint as
FIRST GREAT-WEST insurance agents. In that connection, SCHWAB shall
conduct background investigations of the SCHWAB employees to
determine their qualifications, good character and moral fitness to
offer and sell the Contracts, and shall prepare and submit
completed agent appointment forms for FIRST GREAT-WEST's approval.
FIRST GREAT-WEST shall forward all approved agent appointment forms
in a timely manner to the appropriate state insurance departments
and pay all required appointment fees.
(c) SCHWAB shall be responsible for ensuring that all SCHWAB
employees engaged in the offer or sale of Contracts (whether or not
registered with the SEC under the 0000 Xxx) are properly licensed
and remain properly licensed under the insurance laws of the
applicable states and other jurisdictions to sell the Contracts. In
furtherance of this obligation, SCHWAB shall continuously monitor
the status of XXXXXX'x and each SCHWAB employee's insurance agent
license and renewal in each state and jurisdiction in which the
Contracts may be offered and sold. SCHWAB shall notify FIRST
GREAT-WEST in a timely manner of any license not renewed.
(d) SCHWAB agrees to undertake all actions necessary and to pay
all costs to effect licensing of itself and its employees and
renewals thereof as required for the business of this Agreement.
FIRST GREAT-WEST agrees to take all actions necessary and to pay
all costs to effect the appointment as insurance agents of SCHWAB
and its employees and renewals thereof as required for the business
of this Agreement.
(e) FIRST GREAT-WEST, in its sole discretion, may refuse to
appoint or renew the appointment of a SCHWAB employee as a FIRST
GREAT-WEST insurance agent. In the event FIRST GREAT-WEST refuses
to renew the appointment of a SCHWAB employee, it shall not act
except upon ten (10) days prior written notice to SCHWAB.
2.4 Sales Agreements
FIRST GREAT-WEST and SCHWAB may, from time to time, enter into
separate written agreements ("Sales Agreements"), on such terms and
conditions as they may determine to be not inconsistent with this
Agreement, with one or more organizations that agree to participate
in the distribution of the Contracts, provided, that such
organizations, shall to the extent required by law, be both
registered as a broker-dealer under the 1934 Act and a member of
the NASD, and provided further, that such organizations and their
agents or representatives soliciting applications for Contracts
shall be properly licensed, registered or otherwise qualified to
offer and sell the Contracts under the applicable insurance and
other laws of each state or other jurisdiction in which FIRST
GREAT-WEST is licensed to sell the Contracts. Such written
agreements with other organizations shall be subject to approval by
FIRST GREAT-WEST and shall incorporate terms and provisions
establishing requirements and standards of conduct on the sale of
the Contracts by the organization.
2.5 Supervisory Responsibilities
(a) SCHWAB shall be responsible for training, monitoring and
controlling the activities of SCHWAB employees involved in the
offer and sale of the Contracts. FIRST GREAT-WEST shall participate
in, and shall bear responsibility with respect to, such training,
monitoring, and control to the extent required by applicable NASD
rules, SEC laws, state insurance laws, or other applicable laws.
(b) Notwithstanding the above, FIRST GREAT-WEST shall provide
adequate training to SCHWAB supervisory personnel with respect to
the Contracts.
2.6 Suitability Determinations
SCHWAB agrees to establish written procedures that will require
SCHWAB employees to review all Contract applications to determine
that the Contracts are a "suitable" investment vehicle for the
applicant. While not limited to the following, such written
procedures must provide that a determination of suitability shall
be based on information furnished to a SCHWAB employee after
reasonable inquiry of such applicant concerning the applicant's
investment objectives and financial situation. In no event shall
Contracts be sold describing premiums as "vanishing" or Contracts
as being paid up at a time other than the date described in the
Contract itself.
2.7 Marketing Materials
(a) SCHWAB shall have the responsibility for developing, printing,
and distributing, at its sole cost, all marketing materials to be
used in connection with the offer and sale of the Contracts. As
used herein, "marketing materials" shall mean any "advertisement"
or "sales literature," as those terms are defined in NASD Conduct
Rule 2210(a), as amended from time to time, including any so-called
"dealer only" materials, and including any material intended to be
spoken in the solicitation of a Contract, such as telephone
scripts, scripted answers to questions and slide show scripts but
excluding Contract Prospectuses, registration statements, annual
and semi-annual reports and other materials that are developed by
FIRST GREAT-WEST.
(b) SCHWAB shall submit definitive copies of all marketing
materials to FIRST GREAT-WEST for its written approval, which shall
not be unreasonably withheld, at least five (5) business days prior
to printing or finalization.
(c) SCHWAB shall, to the extent required, file in a timely manner
all marketing materials with the NASD, the SEC, or any other
securities regulatory body, as appropriate, and shall obtain any
necessary approval of these regulatory bodies of such marketing
materials.
(d) FIRST GREAT-WEST shall, to the extent required by law, file in
a timely manner all marketing materials with the various state
insurance regulatory bodies, and shall obtain any necessary
approval of these regulatory bodies of such marketing materials.
2.8 Non-marketing Materials
(a) FIRST GREAT-WEST shall be responsible for preparing, printing
in quantity and delivering to SCHWAB, at FIRST GREAT-WEST's sole
cost: (i) all Contract forms, applications and related materials,
(ii) all forms pertaining to the processing of premium payments,
refunds and other monies, and (iii) all forms pertaining to
transactions, claims, and other features available under the
Contracts, including, but not limited to, full or partial
surrenders, exchanges, transfers, loans, systematic purchases,
death claims, changes in premium allocations, and changes in
beneficiary. FIRST GREAT-WEST shall submit definitive copies of
all materials to SCHWAB for its written approval, which shall not
be unreasonably withheld, at least five (5) business days prior to
printing or finalization.
(b) SCHWAB shall be responsible for preparing, printing, and
distributing, at its sole cost, all correspondence with Contract
owners, except for correspondence or other communication prepared,
printed, and distributed by FIRST GREAT-WEST. FIRST GREAT-WEST and
SCHWAB agree that SCHWAB shall submit copies of all prototypes of
correspondence, with all variations, and copies of all materials
being mass mailed to Contract owners to FIRST GREAT-WEST for its
written approval, which shall not be unreasonably withheld, at
least five (5) business days prior to printing or finalization.
(c) FIRST GREAT-WEST shall be responsible for preparing, printing,
and distributing, or causing the same to be done, at its sole cost:
(i) all Contract owner account statements, (ii) confirmations of
Contract owner transactions required to be delivered to Contract
owners pursuant to Section 4.1(g), and (iii) all documents
described in Sections 4.1(b), 4.1(h) and 4.2(c)hereof. FIRST
GREAT-WEST and SCHWAB agree that FIRST GREAT-WEST shall submit the
form of all items (i) and (ii) and definitive copies of (iii) to
SCHWAB for its written approval, which shall not be unreasonably
withheld, at least five (5) business days prior to printing or
finalization. FIRST GREAT-WEST acknowledges that these materials,
with the exception of 4.2(c), are marketing materials and may be
used as such by SCHWAB.
(d) SCHWAB and FIRST GREAT-WEST agree that correspondence or other
communication to any policyowner involving a complaint shall be
submitted to the other for written approval prior to mailing or
communicating with the policyowner.
2.9 Banking Arrangements
(a) SCHWAB agrees to handle all premium payments or other monies
that it receives in connection with the sale of the Contracts as a
fiduciary for the benefit of FIRST GREAT-WEST. All such premium
payments shall be the property of FIRST GREAT-WEST.
(b) Premium payments may be received by either SCHWAB or FIRST
GREAT-WEST. SCHWAB shall deposit and maintain any premium payments
received by SCHWAB (whether such premium payments are received in
the form of a check, pursuant to an authorization to wire transfer
monies from a SCHWAB client's account, or in any other manner) in
one or more segregated accounts maintained by FIRST GREAT-WEST in
its name (or in the name of an Account) at one or more banks or
other financial institutions, and in connection therewith SCHWAB
shall: (i) send FIRST GREAT-WEST a copy of the deposit slip or
wire transfer ticket by overnight mail or fax, and (ii) immediately
deposit any monies received with an application into such
depository account or accounts as designated from time to time by
FIRST GREAT-WEST. FIRST GREAT-WEST shall be responsible for
depositing any premium payments received at the offices of FIRST
GREAT-WEST.
2.10 Limitations on Authority
(a) SCHWAB and its employees shall have no authority to, and shall
not: (i) add, alter, waive or discharge any Contract or application
provision or Prospectus provision or represent that such can be
done by FIRST GREAT-WEST or SCHWAB; (ii) extend the time of making
any payments; (iii) alter or substitute FIRST GREAT-WEST's forms in
any manner; (iv) give or offer to give, on behalf of FIRST
GREAT-WEST, any tax or legal advice related to the purchase of a
Contract; (v) guarantee the issuance of any Contract or the
reinstatement of any lapsed Contract; or (vi) exercise any
authority on behalf of FIRST GREAT-WEST other than that expressly
conferred on SCHWAB or its employees by this Agreement.
(b) FIRST GREAT-WEST and its employees shall have no authority to,
and shall not (i) give or offer to give on behalf of SCHWAB, any
tax or legal advice related to the purchase of a Contract, or (ii)
exercise any authority on behalf of SCHWAB other than that
expressly conferred on FIRST GREAT-WEST or its employees by this
Agreement.
SECTION 3. RECORDKEEPING
3.1 Recordkeeping
(a) Each Party agrees to keep, at its principal office, all
accounts, books and other records required by and in accordance
with applicable federal and state law, including any state
insurance laws, and the regulations of any regulatory body having
jurisdiction over such accounts, books, and other records,
including but not limited to Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940 (" 1940 Act") and Rules 17a-3 and
17a-4 under the 1934 Act.
(b) Any and all accounts, books and other records of FIRST
GREAT-WEST, the Accounts, and SCHWAB as may pertain to the
Contracts and this Agreement shall be maintained so as to clearly
and accurately disclose the nature and details of Contract
transactions or any transactions related thereto.
(c) Any accounts, books, and other records maintained by FIRST
GREAT-WEST, at its expense, as agent for the benefit of SCHWAB
shall conform to the requirements of Rules 17a-3 and 17a-4 under
the 1934 Act, and as further amplified in SEC Release 34-8389.
Furthermore, such accounts, books, and other records shall remain
the property of SCHWAB, shall be surrendered promptly to SCHWAB at
its request without charge, and shall at all times be subject to
inspection by SCHWAB, the SEC pursuant to Section 17(a) of the 1934
Act and any other appropriate governmental agency. SCHWAB shall
have responsibility for maintaining the records required of it by
applicable law or regulations with respect to broker-dealer
operations, although, in XXXXXX'x discretion and at FIRST
GREAT-WEST's expense, SCHWAB may use FIRST GREAT-WEST as its agent
for this purpose.
(d) Any accounts, books, and other records maintained by SCHWAB,
at its expense, as agent for the benefit of FIRST GREAT-WEST or the
Accounts, shall conform to the requirements of Rules 31a-1 and
31a-2 under the 1940 Act or such other SEC requirement as relates
to non-1940 Act products or as required by state insurance
regulators and conveyed to SCHWAB in writing. Furthermore, such
accounts, books, and records shall remain the property of FIRST
GREAT-WEST or the Accounts, shall be surrendered promptly to FIRST
GREAT-WEST or the Accounts upon request by FIRST GREAT-WEST without
charge, and shall at all times be subject to inspection by FIRST
GREAT-WEST, whether acting on behalf of itself or the Accounts, the
SEC pursuant to Section 31(b) of the 1940 Act and any other
appropriate governmental agency. FIRST GREAT-WEST or the Accounts
shall have responsibility for maintaining the records required of
them by applicable law or regulations with respect to investment
company operations, although, in FIRST GREAT-WEST's discretion and
at the Distributor's expense, FIRST GREAT-WEST and the Accounts may
use SCHWAB as their agent for this purpose.
(e) Upon the written request of either Party to the other, or upon
termination of this Agreement, a Party shall provide to the other
without charge the originals, if the requesting Party is required
to maintain such originals, or, at the requesting Party's cost,
copies of the accounts, books and other records or electronic
information representing the accounts, books and records if that is
the format in which they are maintained.
SECTION 4. LEGAL COMPLIANCE
4.1 Securities Laws
(a) FIRST GREAT-WEST represents and warrants that:
(i) interests in each Account funding any Contract or Contracts
will be registered under the 1933 Act to the extent required by the
1933 Act,
(ii) the Contracts will be duly authorized for issuance and sale in
compliance with all applicable federal and state laws, including,
without limitation, the 1933 Act, the 1934 Act, the 1940 Act and
New York law,
(iii) each Account is and will remain registered under the 1940
Act, to the extent required by the 1940 Act,
(iv) each Account does and will comply in all material respects
with the requirements of the 1940 Act and the rules thereunder, to
the extent required,
(v) each Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933
Act and the rules thereunder,
(vi) FIRST GREAT-WEST will amend the registration statement for its
Contracts under the 1933 Act and for its Accounts under the 1940
Act from time to time as required in order to effect the continuous
offering of its Contracts or as may otherwise be required by
applicable law, subject to its right to discontinue or withdraw
from future sale any Contract pursuant to 1.2(b) of this Agreement,
and
(vii) each prospectus for the Contracts, including any statement of
additional information (collectively, as the context requires,
"Contract Prospectus") will at all times comply in all material
respects with the requirements of the 1933 Act and the rules
thereunder.
(b) FIRST GREAT-WEST represents and warrants that it will prepare,
print, and deliver, in a timely manner annual and semi-annual
reports for the Accounts, Contract Prospectuses, voting instruction
forms, as required, and related materials to all existing Contract
owners, as appropriate. The costs of preparing and delivering the
foregoing materials shall be borne by FIRST GREAT-WEST.
(c) SCHWAB represents and warrants that it is duly registered with
the SEC as a broker-dealer under the 1934 Act, that it is licensed
as a broker-dealer in all 50 states, and that the activities of
SCHWAB and its employees in connection with the offer and sale of
Contracts shall be in compliance with applicable federal and state
securities laws in all material respects.
(d) SCHWAB agrees that neither it nor its employees shall make any
representations concerning the Contracts, except those contained in
or reasonably derived from the Contract Prospectus, registration
statements, annual or semi-annual reports of the Accounts, or in
other written materials prepared by or on behalf of FIRST
GREAT-WEST.
(e) SCHWAB shall reimburse FIRST GREAT-WEST for the cost of
printing the Contract Prospectuses for persons other than existing
Contract owners, and SCHWAB shall pay for all costs of delivering
Contract Prospectuses to such persons.
(f) SCHWAB agrees to execute such papers and do such acts and
things as shall from time to time be reasonably requested by FIRST
GREAT-WEST for the purpose of maintaining the registration of the
Contracts under the 1933 Act and any Account under the 1940 Act and
any applicable insurance regulatory authority.
(g) SCHWAB, directly or through FIRST GREAT-WEST (at FIRST
GREAT-WEST's expense), shall, upon or prior to the completion of
each Contract transaction for which a confirmation is legally
required, send a written confirmation to the Contract owner for
each such transaction, in a form and manner which complies with the
requirements of the 1934 Act, state laws and regulations, and the
disclosure requirements of the NASD. Such confirmations shall be
furnished to all Contract owners in accordance with securities
laws, shall reflect the facts of the transaction, and, if
applicable, shall show that they are being sent by FIRST GREAT-WEST
on behalf of SCHWAB. The Parties agree that the form and the manner
of use of confirmations in connection with transactions occurring
in Contract accounts shall be supervised by SCHWAB. FIRST
GREAT-WEST shall prepare and distribute such confirmations in
accordance with XXXXXX'x instructions. FIRST GREAT-WEST shall make
no changes or variations in either the form or the manner of
distribution of such confirmations without the written approval of
SCHWAB and shall cause such confirmations to be issued as directed
by SCHWAB and on behalf of SCHWAB.
(h) FIRST GREAT-WEST represents and warrants that it shall
prepare, print, deliver and file with the SEC or other appropriate
regulatory body, or cause the same to be done, as required by law
and in a timely manner, all registration statements, annual and
semi-annual reports, proxies and related materials, and other
documents relating to all underlying investment vehicles to which
Contract owner premiums may be allocated. FIRST GREAT-WEST's
obligations in this regard, and the allocation of expenses relating
thereto, shall be delineated in a separate agreement with each
underlying investment vehicle and SCHWAB, to which FIRST GREAT-WEST
shall be a party.
4.2 Tax Laws
(a) FIRST GREAT-WEST represents and warrants that the Contracts
currently are treated as annuity, endowment, or life insurance
contracts under applicable provisions of the Internal Revenue Code
of 1986, as amended ("Code") and that it will make every effort to
maintain such treatment; FIRST GREAT-WEST will notify SCHWAB
immediately upon having a reasonable basis for believing that any
of the Contracts have ceased to be so treated or that they might
not be so treated in the future.
(b) FIRST GREAT-WEST represents and warrants that 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 Code and the regulations thereunder to the extent
required by law. FIRST GREAT-WEST will make every effort to
continue to meet such definitional requirements, and it will notify
SCHWAB immediately upon having a reasonable basis for believing
that such requirements have ceased to be met or that they might not
be met in the future.
(c) FIRST GREAT-WEST agrees to administer the Contracts in a
manner that will comply with all federal and state tax law.
(d) FIRST GREAT-WEST agrees to prepare, print, and deliver to
Contract owners, and, to the extent required, file with the
Internal Revenue Service and any other appropriate regulatory body,
all reports, forms, and other information necessary for FIRST
GREAT-WEST to comply with applicable federal and state tax law.
4.3 Insurance Laws and Other Laws
(a) FIRST GREAT-WEST shall take all actions necessary to the
extent required by law to obtain and maintain all regulatory
approvals required to issue the Contracts for sale in any states
where the contracts are being offered for sale.
(b) SCHWAB shall take all actions necessary to ensure that it and
its employees are properly licensed and appointed by FIRST
GREAT-WEST to sell insurance and annuities in the jurisdictions in
which they are selling and shall execute such papers and do such
acts and things as shall from time to time be reasonably requested
by FIRST GREAT-WEST for the purpose of qualifying and maintaining
qualification of the Contracts for sale under the applicable laws
of any state.
(c) FIRST GREAT-WEST represents and warrants that:
(i) it is an insurance company duly organized, validly existing and
in good standing under the laws of the State of New York and has
full corporate power, authority and legal right to execute, deliver
and perform its duties and comply with its obligations under this
Agreement,
(ii) it will legally and validly establish and maintain each
Account as a segregated asset account under Section 4220of the New
York Insurance Code and the regulations thereunder, and
(iii) the Contracts comply in all material respects with all other
applicable federal and state laws and regulations.
(d) SCHWAB represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of
the State of California and has full power, authority, and legal
right to execute, deliver, and perform its duties and comply with
its obligations under this Agreement.
(e) SCHWAB represents and warrants that it is a member in good
standing of the NASD and that it has obtained all approvals
necessary to offer the Contracts and otherwise enter into and carry
out all transactions contemplated by this Agreement, has obtained
or will obtain all approvals, licenses, authorizations, orders or
consents, and shall be duly registered and appointed or otherwise
qualified under the securities and insurance laws of any state or
other jurisdiction where offers or sales of the Contracts may be
made.
(f) SCHWAB agrees that it shall be bonded as required by all
applicable laws and regulations. SCHWAB shall be responsible for
carrying out its sales and underwriting obligations hereunder in
continued compliance with applicable NASD Rules of Fair Practice
and federal and state securities laws and regulations and state
insurance laws and regulations.
4.4 Notice of Certain Proceedings and Other Circumstances
(a) FIRST GREAT-WEST shall immediately notify SCHWAB of:
(i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order with respect to any
Contract or to any Account's registration statement under the 1933
Act relating to the Contracts or any Contract Prospectus,
(ii) any request by the SEC or other regulatory body for any
amendment to such registration statement or Contract Prospectus,
(iii) the initiation of any proceeding materially affecting the
offering or sale of the Contracts or the ability of FIRST
GREAT-WEST to issue or sell such Contracts,
(iv) any other actions or circumstances that may prevent the
lawful offer or sale of any of the Contracts in any state.
FIRST GREAT-WEST shall make every effort to prevent the issuance of
any such stop order, cease and desist order or similar order and,
if any such order is issued, to obtain the lifting thereof at the
earliest possible time.
(b) SCHWAB shall immediately notify FIRST GREAT-WEST of:
(i) the issuance by any court or regulatory body of any order
having a material effect with respect to XXXXXX'x ability to
perform its obligations hereunder,
(ii) the initiation of any proceeding materially affecting the
offering or sale of the Contracts or the ability of SCHWAB to sell
such Contracts, and
(iii) any other actions or circumstances that may prevent the
lawful offer or sale of any of the Contracts in any state.
(c) SCHWAB shall notify FIRST GREAT-WEST within three (3) business
days if it or any of its officers, directors, employees or
registered representatives who are licensed to sell insurance and
are appointed by FIRST GREAT-WEST is or becomes subject to any
proceedings or is sanctioned or suspended (i) by the SEC or NASD,
(ii) by any court for securities, insurance or financial
institution law violations, or (iii) by any state regulatory
authority.
(d) In the case of an oral or written consumer or regulatory
agency complaint, SCHWAB and FIRST GREAT-WEST shall notify the
other within three (3) business days of receipt and shall
coordinate and fully cooperate in responding to such complaints.
SCHWAB and FIRST GREAT-WEST shall develop procedures to coordinate,
investigate and respond to such complaints.
4.5 Parties to Cooperate
SCHWAB and FIRST GREAT-WEST shall cooperate fully in any insurance
or securities regulatory examination, investigation, or proceeding
or any judicial proceeding with respect to FIRST GREAT-WEST,
SCHWAB, and their respective affiliates, agents and representatives
to the extent that such examination, investigation, or proceeding
arises in connection with Contracts distributed under this
Agreement. SCHWAB and FIRST GREAT-WEST shall furnish applicable
federal and state regulatory authorities with any information or
reports in connection with its services or sales under this
Agreement, which authorities may lawfully request in order to
ascertain whether FIRST GREAT-WEST or SCHWAB sales and operations
are being conducted in a manner consistent with any applicable law
or regulations. The Parties shall, at least 10 business days prior
to provision of such information, notify the other to enable that
Party, if it so desires, to interpose any legal objections to
provision of the reports or information.
4.6 Information About FIRST GREAT-WEST and SCHWAB
(a) FIRST GREAT-WEST shall provide to SCHWAB or its designated
agent at least one complete copy of all SEC registration
statements, Contract Prospectuses, reports, any required voting
instruction solicitation material, applications for exemptions,
requests for no-action letters, and all amendments to any of the
above, that relate to each Account or the Contracts, at least five
(5) business days prior to the filing of such document with the SEC
or other regulatory authorities for approval.
(b) Neither FIRST GREAT-WEST nor any of its affiliates will give
any information or make any representations or statements on behalf
of or concerning SCHWAB or its affiliates in connection with the
sale of the Contracts other than (i) the information or
representations contained in the registration statement, including
the Contract Prospectus contained therein, as such registration
statement and Prospectus may be amended from time to time; or (ii)
in reports or voting instruction solicitation materials for the
Accounts; or (iii) in marketing material prepared by SCHWAB, except
with the express written permission of SCHWAB.
(c) Except with the express written permission of FIRST
GREAT-WEST, neither SCHWAB nor any of its affiliates, officers or
employees will give any information or make any representations or
statements on behalf of or concerning FIRST GREAT-WEST or its
affiliates or the Contracts or Accounts, in connection with the
sale of the Contracts other than
(i) the information or representations contained in the Contracts,
the registration statement, including the Contract Prospectus
contained therein, as such registration statement and Prospectus
may be amended from time to time, or the Prospectuses of the
underlying funds; or
(ii) in reports or voting instruction solicitation materials for
the Accounts; or
(iii) in marketing material or other material approved or developed
by FIRST GREAT-WEST.
SECTION 5. COSTS AND EXPENSES
5.1 FIRST GREAT-WEST to Pay Employees
FIRST GREAT-WEST shall have the responsibility for paying any
compensation due its employees. FIRST GREAT-WEST specifically
agrees to indemnify, hold harmless and defend SCHWAB against any
and all expense, cost, causes of action, liability, loss or damage,
including reasonable attorneys' fees, resulting or arising from or
related to any claim against SCHWAB for compensation allegedly owed
to a FIRST GREAT-WEST employee. FIRST GREAT-WEST specifically
agrees that it shall not represent to any employee, broker-dealer,
or registered representative that any compensation or fees are
payable to them from SCHWAB.
5.2 SCHWAB to Pay Employees
SCHWAB shall have the responsibility for paying any compensation
due its employees. SCHWAB specifically agrees to indemnify, hold
harmless and defend FIRST GREAT-WEST against any and all expense,
cost, causes of action, liability, loss or damage, including
reasonable attorneys' fees, resulting or arising from or related to
any claim against FIRST GREAT-WEST for compensation allegedly owed
to a SCHWAB employee. SCHWAB specifically agrees that it shall not
represent to any employee, broker-dealer, or registered
representative that any compensation or fees are payable to them
from FIRST GREAT-WEST.
5.3 Each Party To Bear Own Costs
Except as otherwise expressly provided, each Party to this
Agreement shall bear all expenses of fulfilling its duties and
obligations hereunder.
SECTION 6. INDEMNIFICATION
6.1 Indemnification by FIRST GREAT-WEST
(a) FIRST GREAT-WEST shall indemnify and hold harmless SCHWAB
against any loss, liability, claim, damage or expense (including
the reasonable cost of investigating or defending any alleged loss,
liability, claim, damage or expense, and reasonable counsel fees
incurred in connection therewith) arising by reason of any person's
acquiring any Contract, which may be based upon any federal or
state securities act, or on any other statute or at common law,
(i) on the ground that the Contract, offering document,
registration statement or related Contract Prospectus, as from time
to time amended and supplemented, or the annual or interim reports
to Contract owners, any published marketing materials or
communications with any Contract owner or prospective Contract
owner concerning the Contract, include an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein
not misleading, if such statement or omission was made in reliance
upon, and in conformity with, information furnished by or on behalf
of FIRST GREAT-WEST to SCHWAB; or
(ii) on the ground that FIRST GREAT-WEST, its employees, officers,
or directors, failed to comply with any applicable securities or
other laws and regulations in connection with its rendering of
Contract issue, recordkeeping, confirmation or other services under
this Agreement; or
(iii) on the ground of FIRST GREAT-WEST's negligence or
misconduct, or that of FIRST GREAT-WEST's employees, officers, or
directors, in the performance of its duties hereunder, or breach by
FIRST GREAT-WEST of any representation or warranty hereunder.
The indemnities in this Section 6.1 shall, upon the same terms and
conditions, extend to and inure to the benefit of each director,
officer and employee of SCHWAB and any person controlling or
controlled by SCHWAB within the meaning of Section 15 of the 1933
Act or Xxxxxxx 00 xx xxx 0000 Xxx.
(x) In no case is the indemnity of FIRST GREAT-WEST in favor of
SCHWAB and any such controlling or controlled persons to be deemed
to protect SCHWAB or any such controlling or controlled persons
thereof against any liability to FIRST GREAT-WEST, or the Accounts
or its Contract owners to which SCHWAB or any such controlling or
controlled persons would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
its duties or by reason of reckless disregard of its obligations
and duties under this Agreement. In addition, in no case is FIRST
GREAT-WEST to be liable under its indemnity agreement contained in
Section 6.1(a) with respect to any claim made against SCHWAB or any
such controlling or controlled persons, unless SCHWAB or such
controlling or controlled persons, as the case may be shall have
notified FIRST GREAT-WEST in writing by fax or overnight mail
within two (2) days after the summons or other first legal process
giving information of the nature of the claim shall have been
served upon SCHWAB or such controlling or controlled persons (or
after SCHWAB or such controlling or controlled persons shall have
received notice of such service on any designated agent), but
failure to notify FIRST GREAT-WEST of any such claim shall not
relieve FIRST GREAT-WEST from any liability which it may have to
the person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph.
FIRST GREAT-WEST will be entitled to participate at its own expense
in the defense, or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, but if FIRST GREAT-WEST
elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to SCHWAB or such controlling
or controlled person or persons, defendant or defendants in the
suit. In the event FIRST GREAT-WEST elects to assume the defense of
any such suit and retains such counsel, SCHWAB or such controlling
or controlled person or persons, defendant or defendants in the
suit, shall bear the fees and expense of any additional counsel
retained by SCHWAB or such controlling or controlled person or
persons, but, in case FIRST GREAT-WEST does not elect to assume the
defense of any such suit, it will reimburse SCHWAB or such
controlling or controlled person or persons, defendant or
defendants in the suit, for the reasonable fees and expense of any
counsel retained by them. FIRST GREAT-WEST shall promptly notify
SCHWAB of the commencement of any litigation or proceedings against
FIRST GREAT-WEST or any of its officers, directors, employees or
agents in connection with the issuance or sale of the Contracts.
6.2 Indemnification by SCHWAB
(a) SCHWAB shall indemnify and hold harmless FIRST GREAT-WEST and
the Accounts against any loss, liability, claim, damage or expense
(including the reasonable cost of investigating or defending any
alleged loss, liability, claim, damage or expense and reasonable
counsel fees incurred in connection therewith) arising by reason of
any person's acquiring any Contract, which may be based upon any
federal or state securities act, or on any other statute or at
common law:
(i) on the ground that the Contract, offering document,
registration statement or related Contract Prospectus, as from time
to time amended and supplemented, or the annual or interim reports
to Contract owners, any published marketing materials or
communications with any Contract owner or prospective Contract
owner concerning the Contract, include an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein
not misleading, if such statement or omission was made in reliance
upon, and in conformity with, information furnished in connection
therewith by or on behalf of SCHWAB to FIRST GREAT-WEST; or
(ii) on the ground that SCHWAB, its employees, officers or
directors failed to comply with any applicable securities or other
laws and regulations in connection with its rendering of Contract
issue, recordkeeping, confirmation or other services under this
Agreement; or
(iii) on the ground of XXXXXX'x negligence or misconduct, or that
of XXXXXX'x employees, officers or directors, in the performance of
its duties hereunder, or breach of any representation or warranty
hereunder.
The indemnities in this Section 6.2 shall, upon the same terms and
conditions, extend to and inure to the benefit of each director,
officer and employee of FIRST GREAT-WEST and any person controlling
or controlled by FIRST GREAT-WEST within the meaning of Section 15
of the 1933 Act or Xxxxxxx 00 xx xxx 0000 Xxx.
(x) In no case is the indemnity of SCHWAB in favor of FIRST
GREAT-WEST and any such controlling or controlled persons to be
deemed to protect FIRST GREAT-WEST or any such controlling or
controlled persons thereof against any liability to SCHWAB to which
FIRST GREAT-WEST or any such controlling or controlled persons
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties or by
reason of reckless disregard of its obligations and duties under
this Agreement. In addition, in no case is SCHWAB to be liable
under its indemnity agreement contained in Section 6.2(a) with
respect to any claim made against FIRST GREAT-WEST or any such
controlling or controlled persons, unless FIRST GREAT-WEST or such
controlling or controlled persons, as the case may be shall have
notified SCHWAB in writing within two (2) days after the summons or
other first legal process giving information of the nature of the
claim shall have been served upon FIRST GREAT-WEST or such
controlling or controlled persons (or after FIRST GREAT-WEST or
such controlling or controlled persons shall have received notice
of such service on any designated agent), but failure to notify
SCHWAB of any such claim shall not relieve SCHWAB from any
liability which it may have to the person against whom such action
is brought otherwise than on account of its indemnity agreement
contained in this paragraph. SCHWAB will be entitled to participate
at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but
if SCHWAB elects to assume the defense, such defense shall be
conducted by counsel chosen by it and satisfactory to FIRST
GREAT-WEST or such controlling or controlled person or persons,
defendant or defendants in the suit. In the event SCHWAB elects to
assume the defense of any such suit and retain such counsel, FIRST
GREAT-WEST or such controlling or controlled person or persons,
defendant or defendants in the suit, shall bear the fees and
expense of any additional counsel retained by FIRST GREAT-WEST or
such controlling or controlled person or persons, but, in case
SCHWAB does not elect to assume the defense of any such suit, it
will reimburse FIRST GREAT-WEST or such controlling or controlled
person or persons, defendant or defendants in the suit, for the
reasonable fees and expense of any counsel retained by them. SCHWAB
shall promptly notify FIRST GREAT-WEST of the commencement of any
litigation or proceedings against SCHWAB or any of its officers,
directors, employees or agents in connection with the issuance or
sale of the Contracts.
6.3 Limitation on Liability
In no event shall either Party under this Agreement be liable for
lost profits or for exemplary, special, punitive or consequential
damages alleged to have been sustained by the other Party, as
opposed to a third party.
6.4 Injunctive Relief
The Parties each agree that monetary damages may be an inadequate
remedy in the event of a breach by either Party of any of the
covenants in this Agreement, and that any such breach by a Party
may cause the other Party great and irreparable injury and damage.
Accordingly, nothing in this Agreement shall limit a Party's right
to obtain equitable relief when appropriate.
SECTION 7. TERM AND TERMINATION
7.1 Term
This Agreement shall be effective as of the date first above
written and shall remain in full force and effect thereafter,
subject to Section 7.2 below.
7.2 Events of Termination
(a) In addition to the provisions of Section 7.3, this Agreement
shall terminate at either Party's option, without penalty:
(i) with or without cause, on not less than 180 days written notice
to the other Party;
(ii) upon the mutual written consent of the Parties;
(iii) upon written notice of one Party to the other in the event of
bankruptcy or insolvency of the Party to which notice is given; or
(b) This Agreement shall terminate at the option of SCHWAB, in the
event of
(i) fraud, misrepresentation, conversion or unlawful withholding of
funds by FIRST GREAT-WEST;
(ii) the dissolution or disqualification of FIRST GREAT-WEST to do
business under any applicable state or federal law where FIRST
GREAT-WEST's ability to perform is materially impaired; however,
such termination shall extend only to the jurisdiction(s) where
FIRST GREAT-WEST is prohibited from doing business;
(iii) the suspension or revocation of any material license or
permit held by FIRST GREAT-WEST by the appropriate governmental
agency or authority; however, such termination shall extend only to
the jurisdiction(s) where FIRST GREAT-WEST is prohibited from doing
business;
(iv) the sale (without the prior written consent of SCHWAB, which
consent shall not be unreasonably withheld) of the FIRST GREAT-WEST
business relating to the Contracts, which sale is to an
unaffiliated person or entity, whether by merger, consolidation, or
sale of substantially all of FIRST GREAT-WEST's assets or stock
related to the Contracts, during the term of, and any extension of,
this Agreement;
(v) upon institution of formal proceedings against FIRST
GREAT-WEST by the NASD, SEC, or any other regulatory body regarding
FIRST GREAT-WEST's duties under this Agreement, the sale of the
Contracts, or the operation of any Account, which would materially
impair the marketability of the Contracts, provided that such
proceedings result in a finding of material wrongdoing by FIRST
GREAT-WEST, or which result in disqualification from continued
membership with the NASD or registration with the SEC; or
(vi) any termination at the option of SCHWAB of that
certain Administration Agreement of even date herewith between
FIRST GREAT-WEST and SCHWAB (the "Administration Agreement")
pursuant to Section 7.2(a)(iii), 7.2(b)(i)-(iv), or 7.3 of the
Administration Agreement.
(c) This Agreement shall terminate at the option of FIRST
GREAT-WEST, in the event of:
(i) fraud, misrepresentation, conversion or unlawful withholding of
funds by SCHWAB;
(ii) the dissolution or disqualification of SCHWAB to do business
under any applicable state or federal law where XXXXXX'x ability to
perform is materially impaired; however, such termination shall
extend only to the jurisdiction(s) where SCHWAB is prohibited from
doing business;
(iii) the suspension or revocation of any material license or
permit held by SCHWAB by the appropriate governmental agency or
authority; however, such termination shall extend only to the
jurisdiction(s) where SCHWAB is prohibited from doing business;
(iv) the sale (without the prior written consent of FIRST
GREAT-WEST, which consent shall not be unreasonably withheld) of
XXXXXX'x business to an unaffiliated person or entity, whether by
merger, consolidation, or sale of substantially all of XXXXXX'x
assets or stock or otherwise, during the term of, and any extension
of, this Agreement;
(v) upon institution of formal disciplinary proceedings against
SCHWAB by the NASD, SEC, or any other regulatory body, which would
materially impair the marketability of the Contracts, provided that
such proceedings result in a finding of material wrongdoing by
SCHWAB, or which result in disqualification from continued
membership with the NASD or registration with the SEC; or
(vi) any termination at the option of FIRST GREAT-WEST of the
Administration Agreement pursuant to Section 7.2(a)(iii),
7.2(c)(i)-(iv), or 7.3 of the Administration Agreement.
7.3 Events of Default
If either Party breaches this Agreement or is in default in the
performance of any of its duties and obligations hereunder (the
"defaulting Party"), the non-defaulting Party may give written
notice thereof to the defaulting Party, and if such breach or
default is not remedied within 90 days after such written notice is
given, then the non-defaulting Party may terminate this Agreement
by giving 90 days written notice of such termination to the
defaulting Party.
7.4 Parties to Cooperate Respecting Termination
The Parties agree to cooperate and give reasonable assistance to
one another in effecting an orderly transition following
termination.
SECTION 8. CONFIDENTIALITY
Subject to the requirements of legal process and regulatory
authority, each Party shall treat as confidential (a) the identity
of existing or prospective Contract owners and the investment
managers enrolled in XXXXXX'x Financial Advisor Service Program
("investment managers"), (b) any financial or other information
provided by existing or prospective Contract owners or investment
managers, and (c) any other information reasonably identified as
confidential in writing by any other Party hereto (collectively
"confidential information"). Except as permitted by this Agreement,
no Party shall disclose, disseminate or utilize any confidential
information without the express written consent of the affected
Party until such time as such information may come into the public
domain, except as permitted by this Agreement or as otherwise
necessary to service the Contracts and/or respond to appropriate
regulatory authorities. Each Party shall take all reasonable
precautions to prevent the unauthorized disclosure of any
confidential information. Nothing in this Section 8 shall prevent
SCHWAB from using the confidential information pertaining to
existing or prospective Contract owners for marketing purposes. In
no event shall confidential information pertaining to existing or
prospective Contract owners be furnished by FIRST GREAT-WEST to any
other company or person (except as required by law or regulation)
or be used to solicit sales of any kind, including but not limited
to any other products, securities or services for a period of two
years following termination of this Agreement. Without limiting the
foregoing, no Party shall disclose any information that another
Party reasonably considers to be proprietary. For purposes of this
Agreement, proprietary information includes, but is not limited to,
computer system and client information. The intent of this Section
8 is that no Party or any affiliate thereof shall utilize, or
permit to be utilized, its knowledge of the other Party that is
derived as a result of the relationship created by this Agreement
and any related agreements, except to the extent necessary by the
terms of this Agreement or the related agreements.
SECTION 9. ARBITRATION
Any controversy or claim arising out of or relating to this
Agreement, or the breach hereof, shall be settled by arbitration
under the rules of the NASD in effect at that time. If the NASD
refuses jurisdiction, or the Parties mutually agree in writing, the
arbitration procedure described herein shall be used. In either
event, the decision of the arbitrator(s) is final and judgment upon
the award rendered may be entered in any court having jurisdiction
thereof.
To initiate arbitration, either FIRST GREAT-WEST or SCHWAB shall
notify the other Party in writing of its desire to arbitrate,
stating the nature of its dispute and the remedy sought. The Party
to which the notice is sent shall respond to the notification in
writing within ten (10) days of its receipt.
The arbitration hearing shall be before a panel of three
arbitrators, each of whom must be (1) a present or former officer
of a life insurance or reinsurance company and/or (2) an officer
and principal of a registered Broker-Dealer. The panel must contain
at least one representative from each of (1) and (2). An
arbitrator may not be a present or former director, officer,
employee, attorney, or consultant of FIRST GREAT-WEST or SCHWAB or
either's affiliates.
FIRST GREAT-WEST and SCHWAB shall each name five (5) candidates to
serve as an arbitrator. FIRST GREAT-WEST and SCHWAB shall each
choose one candidate from the other Party's list, and these two
candidates shall serve as the first two arbitrators. FIRST
GREAT-WEST and SCHWAB shall each present their initial lists of
five (5) candidates by written notification to the other Party
within twenty-five (25) days of the date of the mailing of the
notification initiating the arbitration. Any subsequent additions
to the list which are required shall be presented within ten (10)
days of the date the naming Party receives notice that a candidate
that has been chosen declines to serve.
The two arbitrators shall then select the third arbitrator from the
eight (8) candidates remaining on the lists of FIRST GREAT-WEST and
SCHWAB within fourteen (14) days of the acceptance of their
positions as arbitrators. If the two arbitrators cannot agree on
the choice of a third, then this choice shall be referred back to
the Parties. FIRST GREAT-WEST and SCHWAB shall take turns striking
the name of one of the remaining candidates from the initial eight
(8) candidates until only one candidate remains. If the candidate
so chosen shall decline to serve as the third arbitrator, the
candidate whose name was stricken last shall be nominated as the
third arbitrator. This process shall continue until a candidate has
been chosen and accepted. This candidate shall serve as the third
arbitrator. The first turn at striking the name of a candidate
shall belong to the Party that is responding to the other Party's
initiation of the arbitration. Once chosen, the arbitrators are
empowered to decide all substantive and procedural issues by a
majority of votes.
It is agreed that each of the three arbitrators should be impartial
regarding the dispute. Therefore, at no time will either Party
contact or otherwise communicate with any person who is to be or
who has been designated as a candidate to serve as an arbitrator
concerning the dispute, except upon the basis of jointly drafted
communications provide by both Parties to inform those candidates
actually chosen as arbitrators of the nature and facts of the
dispute. Likewise, any written or oral arguments provided to the
arbitrators concerning the dispute shall be coordinated with the
other Party and shall be provided simultaneously to the other Party
or shall take place in the presence of the other Party. Further, at
no time shall any arbitrator be informed that the arbitrator has
been named or chosen by one Party or the other.
The arbitration hearing shall be held on a date fixed by the
arbitrators. In no event shall this date be later than six (6)
months after the appointment of the third arbitrator. As soon as
possible, the arbitrators shall establish pre-arbitration
procedures as warranted by the facts and issues of the particular
case. At least ten (10) days prior to the arbitration hearing, each
Party shall provide the other Party and the arbitrators with a
detailed statement of the facts and arguments it will present at
the arbitration hearing. The arbitrators may consider any relevant
evidence; they shall give the evidence such weight as they deem it
entitled to after consideration of any objections raised concerning
it. The Party initiating the arbitrations shall have the burden of
proving its case by a preponderance of the evidence. Each Party may
examine any witnesses who testify at the arbitration hearing, the
arbitrators shall apportion the costs of arbitration, which shall
include but not be limited to their own fees and expenses, as they
deem appropriate.
SECTION 10. BONDING AND INSURANCE
Each Party shall maintain sufficient fidelity bond coverage
(including coverage for larceny and embezzlement) and errors and
omissions insurance coverage as may be required by applicable law
or as such Party deems necessary in light of its obligations under
this Agreement.
SECTION 11. NOTICES
Any notice required or permitted to be sent under this Agreement
shall be given to the following persons at the following addresses
and facsimile numbers, or such other persons, addresses or
facsimile numbers as the Party receiving such notices or
communications may subsequently direct in writing:
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
000-000-0000
Xxxxxx Low
XXXXXXX XXXXXX & CO., INC.
Office of Corporate Counsel
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
000-000-0000
Xxxx Xxxxxxxxx
SECTION 12. TRADEMARKS
12.1 SCHWAB owns all right, title and interest in and to the name,
trademark and service xxxx "SCHWAB", and SCHWAB owns (or will own
prior to use) all other tradenames, trademarks and service marks
that may be used by SCHWAB in performing XXXXXX'x obligations under
this Agreement (collectively with the "SCHWAB" name, trademark and
service xxxx, the "SCHWAB licensed marks" or the "licensor's
licensed marks"). SCHWAB hereby grants to FIRST GREAT-WEST
(including its affiliates) a non-exclusive license to use the
SCHWAB licensed marks in connection with FIRST GREAT-WEST's
performance of the services contemplated under this Agreement
subject to the terms and conditions set forth in this Section 12.
12.2 FIRST GREAT-WEST owns all right, title and interest in and to
the name, trademark and service xxxx "First Great-West Life &
Annuity Insurance Company", and FIRST GREAT-WEST owns (or will own
prior to use) all other tradenames, trademarks and service marks
that may be used by FIRST GREAT-WEST in performing FIRST
GREAT-WEST's obligations under this Agreement (collectively with
the "First Great-West Life & Annuity Insurance Company" name,
trademark and service xxxx, the "FIRST GREAT-WEST licensed marks"
or the "licensor's licensed marks"). FIRST GREAT-WEST hereby grants
to SCHWAB (including its affiliates) a non-exclusive license to use
the FIRST GREAT-WEST licensed marks in connection with XXXXXX'x
performance of the services contemplated by this Agreement, subject
to the terms and conditions set forth in this Section 12.
12.3 The grant of license by SCHWAB and FIRST GREAT-WEST (each, a
"licensor") to the other and affiliates thereof (the "licensees")
shall terminate automatically when the Contracts cease to be
outstanding or by either Party at its election upon termination of
this Agreement. Upon automatic termination, each licensee shall
cease to use a licensor's licensed marks. Upon FIRST GREAT-WEST's
elective termination of this license, SCHWAB (including its
affiliates) shall immediately cease to distribute promotional,
sales or advertising material relating to any Contract and shall
likewise cease any activity that suggests that it has any right
under the FIRST GREAT-WEST licensed marks or that it has any
association with FIRST GREAT-WEST or any affiliate of FIRST
GREAT-WEST in connection with any such Contracts. Similarly, upon
XXXXXX'x elective termination of this license, FIRST GREAT-WEST
(including its affiliates) shall cease to issue as soon as
reasonably practicable, any new Contracts bearing any of the SCHWAB
licensed marks and shall likewise cease any activity which suggests
that it has any right under any of the SCHWAB licensed marks or
that it has any association with SCHWAB or any affiliate of SCHWAB,
except that FIRST GREAT-WEST shall have the right to administer any
outstanding Contracts bearing any of the SCHWAB licensed marks and
in connection therewith to use the SCHWAB licensed marks.
12.4 Notwithstanding any provision in this Agreement to the
contrary, a licensee shall obtain the prior written approval of the
licensor for the public release by such licensee of any materials
bearing the licensor's licensed marks. The licensor's approval
shall not be unreasonably withheld.
12.5 During the term of this grant of license, a licensor may
request that a licensee submit samples of any materials bearing any
of the licensor's licensed marks that were previously approved by
the licensor but, due to changed circumstances, the licensor may
wish to reconsider, or that were not previously approved in the
manner set forth above. If, on the reconsideration or on initial
review, respectively, any such samples fail to meet with the
written approval of the licensor, then the licensee shall
immediately cease distributing such disapproved materials. The
licensor's approval shall not be unreasonably withheld. The
licensee shall obtain the prior written approval of the licensor
for the use of any new materials developed to replace the
disapproved materials, in the manner set forth above.
12.6 Each licensee hereunder: (i) acknowledges and stipulates that
the licensor's licensed marks are valid and enforceable trademarks
and/or service marks and that such licensee does not own the
licensor's licensed marks and claims no rights therein other than
as a licensee under this Agreement; (ii) agrees never to contend
otherwise in legal proceedings or in other circumstances; and (iii)
acknowledges and agrees that the use of the licensor's licensed
marks pursuant to this grant of license shall inure to the benefit
of the licensor.
SECTION 13. MISCELLANEOUS
13.1 Amendment
This Agreement may be amended at any time by a writing executed by
the Parties.
13.2 Non-Assignment
This Agreement shall not be assigned by either Party without the
prior written consent of the other Party, provided, however, that
FIRST GREAT-WEST or SCHWAB may subcontract or assign provision of
services to affiliates or subsidiaries, including Financial
Administrative Services Corporation. Such assignment or
subcontracting does not relieve FIRST GREAT-WEST or SCHWAB of any
responsibility with regard to its obligations under this Agreement
for such services.
13.3 Governing Law
This Agreement shall be interpreted in accordance with and governed
by the laws of the State of New York.
13.4 Survival of Provisions
Sections 2.1(d), 3.1, 4.4, 4.5, 4.6, 5, 6, 8, 9, 10, 12, and 13.7
shall survive termination of this Agreement.
13.5 Severability
Should any provision of this Agreement be held or made invalid by
a court decision, statute, rule, or otherwise, the remainder of
this Agreement shall not be affected thereby.
13.6 Waiver
Any failure or delay by either Party to enforce at any time any of
the provisions of this Agreement, or to exercise any right or
option which is herein provided, or to require at any time the
performance of any of the provisions hereof, shall in no way be
construed to be a waiver of such provision of this Agreement.
13.7 Right to Audit
FIRST GREAT-WEST, its employees or authorized representatives may
audit, inspect and examine at reasonable times, during regular
business hours and with at least 24 hours prior notice, all books
and records of SCHWAB and its agents of all transactions arising
under this Agreement. FIRST GREAT-WEST agrees to limit its review
of the books and records to the extent necessary and as often as
necessary to fulfill all contractual obligations to the holders of
Contracts, to comply with all legal and regulatory requirements, to
meet the requirements of FIRST GREAT-WEST auditors and to ensure
compliance with this Agreement.
SCHWAB, its employees or authorized representatives may audit,
inspect and examine at reasonable times, during regular business
hours and with at least 24 hours prior notice, all books and
records of FIRST GREAT-WEST and its agents of all transactions
arising under this Agreement. SCHWAB agrees to limit its review of
the books and records to the extent necessary and as often as
necessary to fulfill all contractual obligations to the holders of
Policies, to comply with all legal and regulatory requirements, to
meet the requirements of SCHWAB auditors and to ensure compliance
with this Agreement.
13.8 Force Majeure
Neither Party shall be liable for damages due to delay or failure
to perform any obligation under this Agreement where such delay or
failure results directly or indirectly from circumstances beyond
the control and without the fault or negligence of such Party.
13.9 Entire Agreement
This Agreement shall be the sole and only agreement between FIRST
GREAT-WEST and SCHWAB regarding the distribution of the Contracts,
and it supersedes all prior and contemporaneous agreements
regarding the distribution of the Contracts. This Agreement may not
be amended, supplemented, or modified, except as expressly
permitted herein, without the written agreement of the Parties.
IN WlTNESS WHEREOF, the Parties hereto have executed this Agreement
as of the day and year first written above.
XXXXXXX XXXXXX & CO., INC. FIRST GREAT-WEST LIFE &
ANNUITY
INSURANCE COMPANY
BY: _/s/ Xxxx Xxxxxx _________ BY:_/s/ Xxxxxx
Low_________________
Xxxx Xxxxxx Xxxxxx Low
Vice President, Annuities & Life Insurance Executive Vice
President, Financial Services
BY: _/s/ D.C. Lennox______________
X.X. Xxxxxx
Xx. Vice President, General Counsel
and Secretary
SCHEDULE 1
SEPARATE ACCOUNTS OF
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Variable Annuity-1 Series Account, a separate account established
under New York law on January 15, 1997.
Fixed Annuity Account, a separate account established under New
York law on January 15, 1997.
SCHEDULE 1.1
CONTRACTS AVAILABLE FOR OFFER AND SALE
1. The Schwab Variable Annuity. Form J434. Exclusive marketing.
Registered with SEC. Contributions may be allocated among a number
of investment options. The value of the contributions allocated to
the variable annuity option will vary according to the investment
experience of the investment options. Also, contributions may be
allocated to one or more guaranteed certificate periods. If, prior
to maturity of a certificate, the Contract is surrendered in full
or in part or amounts allocated to a certificate are transferred,
a market value adjustment to the Contract value will be made. The
market value adjustment may be a positive or negative adjustment
based on the results of an indexed calculation. This product may
be issued as an XXX or non-qualified contract.
2. The Schwab Fixed Annuity. Form J424. Flexible Premium Deferred
Market Value Adjusted Annuity. Exclusive marketing. Registered
with SEC. Contributions may be allocated to one or more guaranteed
certificate periods. If, prior to maturity of a certificate, the
Contract is surrendered in full or in part or amounts allocated to
a certificate are transferred, a market value adjustment to the
Contract value will be made. The market value adjustment may be a
positive or negative adjustment based on the results of an indexed
calculation. This product may be issued as an XXX or non-qualified
contract.
3. Single Premium Immediate Annuity. Non-exclusive marketing. Not
registered with SEC. Form numbers J260, J261.
schwab1stgwl&a
31
