PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 29th day of April, 2005 by and
between XXXXXXX XXXXX VARIABLE INSURANCE TRUST, an unincorporated business trust
formed under the laws of Delaware (the "Trust"), XXXXXXX, SACHS & CO., a new
York Limited partnership (the "Distributor"), and GE CAPITAL LIFE ASSURANCE
COMPANY OF NEW YORK, a New York life insurance company (the "Company"), on its
own behalf and on behalf of each separate account of the Company identified
herein.
WHEREAS, the Trust is a series-type mutual fund offering shares of
beneficial interest (the "Trust shares") consisting of one or more separate
series ("Series") of shares, each such Series representing an interest in a
particular investment portfolio of securities and other assets (a "Fund"), and
which Series may be subdivided into various classes ("Classes") with each such
Class supporting a distinct charge and expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies to be offered by
insurance companies and may also be utilized by qualified retirement plans; and
WHEREAS, the Distributor has the exclusive right to distribute Trust shares
to qualifying investors; and
WHEREAS, the Company desires that the Trust serve as an investment vehicle
for a certain separate account(s) of the Company and the Distributor desires to
sell shares of certain Series and/or Class(es) to such separate account(s);
NOW, THEREFORE, in consideration of their mutual promises, the Trust, the
Distributor and the Company agree as follows:
ARTICLE I
Additional Definitions
1.1 "Account" - the separate account of the Company described more
specifically in Schedule 1 to this Agreement. If more than one separate account
is described on Schedule 1, the term shall refer to each separate account so
described.
1.2 "Business Day" - each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.3 "Code" - the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.4 "Contracts" - the class of classes of variable annuity contracts
and/or variable life insurance policies issued by the Company and described more
specifically on Schedule 2 to this Agreement.
1.5 "Contract Owners" - the owners of the Contracts, as distinguished from
all Product Owners.
1.6 "Participating Account" - a separate account investing all or a portion
of its assets in the Trust, including the Account.
1.7 "Participating Insurance Company" - any insurance company investing in
the Trust on its behalf or on behalf of a Participating Account, including the
Company.
1.8 "Participating Plan" - any qualified retirement plan investing in the
Trust.
1.9 "Participating Investor" - any Participating Account, Participating
Insurance Company or Participating Plan, including the Account and the Company.
1.10 "Products" - variable annuity contracts and variable life insurance
policies supported by Participating Accounts, including the Contracts.
1.11 "Product Owners" - owners of Products, including Contract Owners.
1.12 "Trust Board" - the board of trustees of the Trust.
1.13 "Registration Statement" - with respect to the Trust shares or a class
of Contracts, the registration statement filed with the SEC to register such
securities under the 1933 Act, or the most recently filed amendment thereto, in
either case in the form in which it was declared or became effective. The
Contracts' Registration Statement for each class of Contracts is described more
specifically on Schedule 2 to this Agreement. The Trust's Registration Statement
is filed on Form N-1A (File No. 333-35883).
1.14 "1940 Act Registration Statement" - with respect to the Trust or the
Account, the registration statement filed with the SEC to register such person
as an investment company under the 1940 Act, or the most recently filed
amendment thereto. The Account's 1940 Act Registration Statement is described
more specifically on Schedule 2 to this Agreement. The Trust's 1940 Act
Registration Statement is filed on Form N-1A (File No. 811-08361).
1.15 "Prospectus" - with respect to shares of a Series (or Class) of the
Trust or a class of Contracts, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933 Act.
With respect to any provision of this Agreement requiring a party to take action
in accordance with a Prospectus, such reference thereto shall be deemed to be to
the version for the applicable Series, Class or Contracts last so filed prior to
the taking of such action. For purposes of Article IX, the term "Prospectus"
shall include any statement of additional information incorporated therein.
1.16 "Statement of Additional Information" - with respect to the shares of
the Trust or a class of Contracts, each version of the definitive statement of
additional information or supplement thereto filed with the SEC pursuant to Rule
497 under the 1933 Act. With respect to any provision of this Agreement
requiring a party to take action in accordance with a statement of Additional
Information, such reference thereto shall be deemed to be the last version so
filed prior to the taking of such action.
1.17 "SEC" - the Securities and Exchange Commission.
1.18 "NASD" - The National Association of Securities Dealers, Inc.
1.19 "1933 Act" - the Securities Exchange Act of 1933, as amended.
1.20 "1940 Act" - the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.3 Availability of Shares
(a) The Trust has granted to the Distributor exclusive authority to
distribute the Trust shares and to select which Series or Classes of Trust
shares shall be made available to Participating Investors. Pursuant to such
authority, and subject to Article X hereof, the Distributor shall make
available to the Company for purchase on behalf of the Account, shares of
the Series and Classes listed on Schedule 3 to this Agreement, such
purchases to be effected at net asset value in accordance with Section 2.3
of this Agreement. Such Series and Classes shall be made available to the
Company in accordance with the terms and provisions of this Agreement until
this Agreement is terminated pursuant to Article X or the Distributor
suspends or terminates the offering of shares of such Series or Classes in
the circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or Classes
of Trust shares in existence now or that may be established in the future
will be made available to the Company only as the Distributor may so
provide, subject to the Distributor's rights set forth in Article X to
suspend or terminate the offering of shares of any Series or Class or to
terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may revoke
the Distributor's authority pursuant to the terms and conditions of its
distribution agreement with the Distributor; and (ii) the Trust reserves
the right in its sole discretion to refuse to accept a request for the
purchase of Trust shares, including but not limited to requests for
purchases by persons considered by the Trust to be market timers.
2.2 Redemptions. The Trust shall redeem, at the Company's request, any full
or fractional Trust shares held by the Company on behalf of the Account, such
redemptions to be effected at net asset value in accordance with Section 2.3 of
this Agreement. Notwithstanding the foregoing, (i) the Company shall not redeem
Trust shares attributable to Contract Owners except in the circumstances
permitted in Article X of this Agreement, and (ii) the Trust may delay
redemption of Trust shares of any Series or Class to the extent permitted by the
1940 Act, any rules, regulations or orders thereunder, or the Prospectus for
such Series or Class.
2.3 Purchase and Redemption Procedures
(a) The Trust hereby appoints the company as an agent of the
Trust for the limited purpose of receiving purchase and redemption
requests on behalf of the Account (but not with respect to any Trust
shares that may be held in the general account of the Company) for
shares of those Series or Classes made available hereunder, based on
allocations of amounts to the Account or subaccounts thereof under the
Contracts, other transactions relating to the contracts or the Account
and customary processing of the Contracts. Receipt of any such
requests (or effectuation of such transaction or processing) on any
Business Day by the Company as such limited agent of the Trust prior
to the Trust's close of business as defined from time to time in the
applicable
Prospectus for such Series or class (which as of the date of execution
of this Agreement is defined as the close of regular trading on the
New York Stock exchange (normally 4:00 p.m. New York Time) shall
constitute receipt by the Trust on that same Business Day, provided
that the company uses its best efforts to provide actual and
sufficient notice of such request to the Trust by 8:30 a.m. New York
Time on the next following Business Day and the trust receives such
notice no later than 9:00 a.m. New York Time on such Business Day.
Such notice may be communicated by telephone to the office or person
designated for such notice by the Trust as indicated on Schedule 5 to
this Agreement, and shall be confirmed by facsimile.
(b) The Company shall pay for shares of each Series or Class on
the same day that it provides actual notice to the Trust of a purchase
request for such shares. Payment for Series or Class shares shall be
made in Federal funds transmitted to the Trust by wire to be received
by the Trust by 3:30 p.m. New York Time on the day the Trust receives
actual notice of the purchase request for Series or Class shares
(unless the Trust determines and so advises the Company that
sufficient proceeds are available from redemption of shares of other
Series or classes effected pursuant to redemption requests tendered by
the Company on behalf of the Account). In no event may proceeds from
the redemption of shares requested pursuant to an order received by
the Company after the Trust's close of business on any Business Day be
applied to the payment for shares for which a purchase order was
received prior to the trust's close of business on such day. If the
issuance of shares is canceled because Federal funds are not timely
received, the Company shall indemnify the respective Fund and
Distributor with respect to all costs expenses and losses relating
thereto. Upon the Trust's receipt of Federal funds so wired, such
funds shall cease to be the responsibility of the Company and shall
become the responsibility of the Trust. If Federal funds are not
received on time, such funds will be invested, and Series or class
shares purchased thereby will be issued, as soon as practicable after
actual receipt of such funds but in any event not on the same day that
the purchase order was received.
(c) Payment for Series or Class shares redeemed by the Account or
the Company shall be made in Federal funds transmitted by wire to the
Company or any other person properly designated in writing by the
Company. The Trust shall use its best efforts to transmit such funds
by 6:00 p.m. New York Time on the same Business Day after the Trust
receives actual notice of the redemption order for Series or class
shares (unless redemption proceeds are to be applied to the purchase
of Trust shares of other Series or Classes in accordance with section
2.3(b) of this agreement), except that the Trust reserves the right to
redeem Series or Class shares in assets other than cash and to delay
payment of redemption proceeds to the extent permitted by the 1940
Act, any rules or regulations or orders thereunder, or the applicable
Prospectus; provided, however, that if the Trust fails to transmit
such redemption proceeds by 6:00 p.m. New York Time on the same
Business Day and such failure is due to circumstances within the
Trust's or the Distributor's control, the Distributor will pay
interest to the Company equal to the amount of such proceeds
multiplied by the current Federal funds rate on each day that delivery
of the proceeds is overdue. The Trust 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.
(d) Any purchase or redemption request for Series or Class shares
held or to be held in the Company's general account shall be effected
at the net asset value per share next determined after the trust's
actual receipt of such request, provided that, in the case of a
purchase request, payment for Trust shares so requested is received by
the Trust in Federal funds prior to close of business for
determination of such value, as defined from time to time in the
Prospectus for such Series or Class.
(e) Prior to the first purchase of any Trust shares hereunder,
the Company and the Trust shall provide each other with all
information necessary to effect wire transmissions of Federal funds to
the other party and all other designated persons pursuant to such
protocols and security procedures as the parties may agree upon.
Should such information change thereafter, the Trust and the Company,
as applicable, shall notify the other in writing of such changes,
observing the same protocols and security procedures, at least three
Business Days in advance of when such change is to take effect. The
Company and the Trust shall observe customary procedures to protect
the confidentiality and security of such information.
(f) The procedures set forth herein are subject to any additional
terms set forth in the applicable Prospectus for the Series or Class
or by the requirements of applicable law.
2.4 Net Asset Value. The Trust shall make the net asset value per share for
each Series or Class available to the Company on a daily basis as soon as
reasonably practicable after the net asset value per share for such Series or
Class is calculated and shall use its best efforts to make such net asset value
per share available by 6:30 p.m. New York Time each Business Day. The Trust will
notify the Company as soon as possible if on any Business Day it is determined
that the calculation of net asset value per share will be available after 6:30
p.m. New York Time. The Trust shall calculate such net asset value in accordance
with the Prospectus for such Series or Class.
2.5 Dividends and Distributions. The Trust shall furnish notice to the
Company as soon as reasonably practicable of any income dividends or capital
gain distributions payable on any Series or Class shares. The Company, on its
behalf and on behalf of the Account, hereby elects to receive all such dividends
and distributions as are payable on any series or Class shares in the form of
additional shares of that Series or Class. The Company reserves the right, on
its behalf and on behalf of the Account, to revoke this election and to receive
all such dividends and capital gain distributions in cash; to be effective, such
revocation must be made in writing and received by the Trust at least three (3)
Business Days prior to a dividend or distribution date. The Trust shall notify
the Company promptly of the number of Series or class shares so issued as
payment of such dividends and distributions.
2.6 Book Entry. Issuance and transfer of Trust shares shall be by book
entry only. Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for the Trust shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
2.7 Pricing Errors. Any material errors in the calculation of net asset
value, dividends or capital gain information shall be reported immediately upon
discovery to the Company. An error shall be deemed "material" based on the
Trust's reasonable interpretation of the SEC's position and policy with regard
to materiality, as it may be modified from time to time. Neither the Trust, any
Fund, the Distributor, not 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 or on behalf of the Company or any
other Participating Company to the Trust or the Distributor; otherwise if the
Trust provides the Company with materially incorrect share net asset value, the
Company on behalf of the Account(s) described in Schedule 1, shall be entitled
to an adjustment to the number of shares purchased or redeemed to reflect
correct net asset value.
2.8 Limits on Purchasers. The Distributor and the Trust shall sell Trust
shares only to insurance companies and their separate accounts and to persons or
plans ("Qualified Persons") that qualify to purchase shares of the Trust under
Section 817(h) of the Code and the regulations thereunder without impairing the
ability of the Account to consider the portfolio investments of the Trust as
constituting investments of the Account for the purpose of satisfying the
diversification requirements of Section 817(h). The Distributor and the Trust
shall not sell Trust shares to any insurance company or separate account unless
an agreement complying with Article VIII of this Agreement is in effect to
govern such sales. The Company hereby represents and warrants that it and the
Aaccount are Qualified Persons.
ARTICLE III
Representations and Warranties
3.1 Company. The Company represents and warrants that: (i) the Company is
an insurance company duly organized and in good standing under New York
insurance law; (ii) the Account is a validly existing separate account, duly
established and maintained in accordance with applicable law; (iii) the
Account's 1940 Act Registration Statement will be or has been filed with the SEC
in accordance with the provisions of the 1940 Act and the Account will be or is
duly registered as a unit investment trust thereunder; (iv) the Contracts'
Registration Statement has been declared effective by the SEC prior to the
issuance or sale of the Contracts; (v) the Contracts will be issued in
compliance in all material respects with all applicable Federal and state laws;
(vi) the Contracts have been filed, qualified and/or approved for sale under the
insurance laws and regulations of the states in which the Contracts will be
offered only if and to the extent required by applicable law; (vii) the Account
will maintain its registration under the 1940 Act and will comply in all
material respects with the 1940 Act; (viii) subject to Article VI hereof, the
Contracts currently are, and at the time of issuance and for so long as they are
outstanding will be, treated as annuity contracts or life insurance policies,
whichever is appropriate, under applicable provisions of the Code; and (ix) the
Company's entering into and performing its obligations under this agreement does
not and will not violate its charter documents or by-laws, rules or regulations,
or any agreement to which it is a party. The Company will notify the Trust
promptly if for any reason it is unable to perform its obligations under this
Agreement.
3.2 Trust. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust formed and validly existing under the Delaware
law: (ii) the Trust's 1940 Act Registration Statement has been filed with the
SEC in accordance with the provisions of the 1940 Act and the Trust is duly
registered as an open-end management investment company thereunder; (iii) the
Trust's Registration Statement has been declared effective by the SEC; (iv) the
Trust shares will be issued in compliance in all material respects with all
applicable federal laws; (v)
the Trust will remain registered under and will comply in all material respects
with the 1940 Act during the term of this Agreement; (vi) each Fund of the Trust
qualifies or will qualify as a "regulated investment company" under Subchapter M
of the Code and complies or will comply with the diversification standards
prescribed in section 817(h) of the Code and the regulations thereunder; and
(vii) the investment policies of each Fund are in material compliance with any
investment restrictions set forth on Schedule 4 to this Agreement. The Trust,
however, makes no representation as to whether any aspect of its operations
(including, but not limited to, fees and expenses and investment policies)
otherwise complies with the insurance laws or regulations of any state.
3.3 Distributor. The Distributor represents and warrants that: (i) the
Distributor is a limited partnership duly organized and in good standing under
New York law; (ii) the Distributor is registered as a broker-dealer under
federal and applicable state securities laws and is a member of the NASD; and
(iii) the Distributor is registered as an investment adviser under federal
securities laws. The Distributor further represents that it will sell and
distribute Fund shares in accordance with applicable federal and state
securities laws, including without limitation, the 1933 Act, the Securities
Exchange Act of 1934, and the 1940 Act.
3.4 Legal Authority. Each party represents and warrants that the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate,
partnership or trust 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 IV
Regulatory Requirements
4.1 Trust Filings. The Trust shall amend the Trust's Registration Statement
and the Trust's 1940 Act Registration Statement from time to time as required in
order to effect the continuous offering of Trust shares in compliance with
applicable law and to maintain the Trust's registration under the 1940 Act for
so long as Trust Shares are sold.
4.2 Contracts Filings. The Company shall amend the Contracts' Registration
Statement and the Account's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of the contracts in
compliance with applicable law or as may otherwise be required by applicable
law, but in any event shall maintain a current effective Contracts' Registration
Statement and the Account's Registration Statement under the 1940 Act for so
long as the Contracts are outstanding unless the Company (i) has supplied the
Trust with an SEC no-action letter or opinion of counsel satisfactory to the
Trust's counsel to the effect that maintaining such Registration Statement(s) on
a current basis is no longer required, or (ii) has made a reasonable
determination based on SEC no-action or interpretive positions that maintaining
such Registration Statement(s) is no longer required, provided that this
subsection (ii) shall not apply to circumstances where the Company has
determined that maintaining such registrations(s) is not required pursuant to
Section 3(c)(1) or 3(c)(7) of the 1940 Act or the non-public offering exemptions
under the 1933 Act. The Company shall be responsible for filing all such
Contract forms, applications, marketing materials and other documents relating
to the Contracts and/or the Account with state insurance commissions, as
required or customary, and shall use its best efforts: (a) to obtain any and all
approvals thereof, under applicable state insurance law, of each state or other
jurisdiction in which Contracts are or may be offered for sale; and (b) to keep
such approvals in effect for so long as the Contracts are outstanding.
4.3 Voting of Trust Shares. With respect to any matter put to vote by the
holders of Trust shares ("Voting Shares"), the Company will provide
"pass-through" voting privileges to owners of contracts registered with the SEC
as long as the 1940 Act requires such privileges in such cases. In cases in
which "pass-through" privileges apply, the Company will (i) solicit voting
instructions from Contract Owners of SEC-registered Contracts; (ii) vote Voting
Shares attributable to Contract Owners in accordance with instructions or
proxies timely received from such Contract Owners; and (iii) vote Voting Shares
held by it that are not attributable to reserves for SEC-registered Contracts or
for which it has not received timely voting instructions in the same proportion
as instructions received in a timely fashion from Owners of SEC-registered
Contracts. The Company shall be responsible for ensuring that it calculates
"pass-through" votes for the Account in a manner consistent with the provisions
set forth above and with other Participating Insurance Companies. Neither the
Company nor any of its affiliates will in any way recommend action in connection
with, or oppose or interfere with, the solicitation of proxies for the Trust
shares held for such Contract Owners, except with respect to matters as to which
the Company has the right under Rule 6e-2 or 6e-3(T) under the 1940 Act, to vote
Voting Shares without regard to voting instructions from Contract Owners.
4.4 State Insurance Restrictions. The Company acknowledges and agrees that
it is the responsibility of the Company and other Participating Insurance
Companies to determine investment restrictions and any other restrictions,
limitations or requirements under state insurance law applicable to any Fund or
the Trust or the Distributor, and that neither the Trust nor the Distributor
shall bear any responsibility to the Company, other Participating Insurance
determination. Schedule 4 sets forth the investment restrictions that the
Company and/or other Participating Insurance companies have determined are
applicable to any Fund and with which the trust has agreed to comply as of the
date of this Agreement. The Company shall inform the Trust of any investment
restrictions imposed by state insurance law that the Company determines may
become applicable to the Trust or a Fund from time to time as a result of the
Account's investment therein, other than those set forth on Schedule 4 to this
Agreement. Upon receipt of any such information from the company or any other
Participating Insurance Company, the trust shall determine whether it is in the
best interests of shareholders to comply with any such restrictions. If the
Trust determines that it is not in the best interests of shareholders (it being
understood that "shareholders" for this purpose shall mean Product Owners) to
comply with restriction determined to be applicable by the Company, the trust
shall so inform the Company, and the Trust and the company shall discuss
alternative accommodations in the circumstances. If the Trust determines that it
is in the best interests of shareholders to comply with such restrictions, the
Trust and the Company shall amend Schedule 4 to this Agreement to reflect such
restrictions, subject to obtaining any required shareholder approval thereof.
4.5 Drafts of Filings. The Trust and the Company shall provide to each
other copies of draft versions of any Registration Statements, Prospectuses,
Statement of Additional Information, periodic and other shareholder or Contract
Owner reports, proxy statements, solicitations for voting instructions,
applications for exemptions, requests for no-action letters, and all amendments
or supplements to any of the above, prepared by or on behalf of either of them
and that mentions the other party by name. Such drafts shall be provided to the
other party sufficiently in advance of filing such materials with regulatory
authorities in order to allow such other party a reasonable opportunity to
review the materials; provided that each party shall only comment on that
portion of the draft that relates to that party or the conduct of its business.
4.6 Copies of Filings. The Trust and the Company shall provide to search
other at least one complete copy of all Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or Contract
Owner reports, proxy statements,
solicitations of voting instructions, applications for exemptions, requests for
no-action letters, and all amendments or supplements to any of the above, that
relate to the Trust, the Contracts or the Account, as the case may be, promptly
after the filing by or on behalf of each such party of such document with the
SEC or other regulatory authorities (it being understood that this provision is
not intended to require the Trust to provide to the company copies of any such
documents prepared, filed or used by Participating Investors other than the
Company and the Account).
4.7 Regulatory Responses. Each party shall promptly provide to all other
parties copies of responses to no-action requests, notices, orders and other
rulings received by such party with respect to any filing covered by Section 4.6
of this Agreement.
4.8 Complaints and Proceedings
(a) The Trust and/or the Distributor shall immediately notify the
Company of: (i) the issuance by any court or regulatory body of any stop
order, cease and desist order, or other similar order (but not including an
order of a regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Trust's Registration Statement or the
Prospectus of any series or Class: (ii) any request by the SEC for any
amendment to the Trust's Registration Statement or the Prospectus of any
Series or Class; (iii) the initiation of any proceedings for that purpose
or for any other purposes relating to the registration or offering of the
Trust shares; or (iv) any other action or circumstances that may prevent
the lawful offer or sale of Trust shares or any class or Series in any
state or jurisdiction, including, without limitation, any circumstance in
which (A) such shares are not registered, and, in all material respects,
issued and sold in accordance with applicable state and federal law or (B)
such law precludes the use of such shares as an underlying investment
medium for the Contracts. The Trust will make every reasonable 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) The Company shall immediately notify the Trust and the Distributor
of: (i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order (but not including an order
of a regulatory body exempting or approving a proposed transaction or
arrangement) with respect to the Contracts' Registration Statement or the
Contracts' Prospectus: (ii) any request by the SEC for any amendment to the
Contracts' Registration Statement or Prospectus: (iii) the initiation of
any proceedings for that purpose or for any other purposes relating to the
registration or offering of the contracts; or (iv) any other action or
circumstances that may prevent the lawful offer or sale of the Contracts or
any class of Contracts in any state or jurisdiction, including, without
limitation, any circumstance in which such Contracts are not registered,
qualified and approved, and, in all material respects, issued and sold in
accordance with applicable state and federal laws. The Company will make
every reasonable 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.
(c) Each party shall immediately notify the other parties when it
receives notice, or otherwise becomes aware of, the commencement of any
litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or the
Contracts.
(d) The Company shall provide to the Trust and the Distributor any
complaints it has received from Contract Owners pertaining to the Trust or
a Fund, and the Trust and Distributor shall each provide to the Company any
complaints it has received from Contract Owners relating to the Contracts.
4.9 Cooperation. Each party hereto shall cooperate with the other parties
and all appropriate government authorities (including without limitation the
SEC, the NASD and state securities and insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry by any such authority relating to this Agreement or
the transactions contemplated hereby. However, such access shall not extend to
attorney-client privileged information.
ARTICLE V
Sale, Administration and Servicing of the Contracts
5.1 Sale of the Contracts. The Company shall be responsible for the sale an
marketing of the Contracts. Subject to Article II and Section 5.4, the Company
shall make available Contracts, the Contracts' and Trust's Prospectuses,
Contracts' and Trust's Statements of Additional Information, and all amendments
or supplements to any of the foregoing to Contract Owners and prospective
Contract Owners, all in material compliance accordance with federal and state
laws. The Company shall consistent with industry practice, use reasonable
efforts to ensure that all persons offering the Contracts are duly licensed and
registered under applicable insurance and securities laws. The Company shall
ensue that procedures are in place that sales of the Contracts satisfy
applicable suitability requirements under insurance and securities laws an
regulations, including without limitation to rules of the NASD. The Company
shall adopt and implement procedures reasonably designed to ensure that
information concerning the Trust and the Distributor that is intended for use
only by brokers or agents selling the Contracts (i.e., information that is not
intended for distribution to Contract Owners or offerees) is so used.
5.2 Administration and Servicing of the Contracts. In connection with the
offering of the Contracts, the Company shall be fully responsible for the
underwriting, issuance, service and administration of the Contracts and for the
administration of the Account, including, without limitation, the calculation of
performance information for the Contracts, the timely payment of Contract Owner
redemption requests and processing of Contract transactions, and the maintenance
of a service center. The Company shall use its best efforts to perform such
functions in all respect at a level commensurate with those standards prevailing
in the variable insurance industry. Subject to Section 5.4, the Company shall
provide to Contract Owners all Trust reports, solicitations for voting
instructions including any related Trust proxy solicitation materials, and
updated Trust Prospectuses as required under the federal securities laws.
5.3 Customer Complaints. The Company shall establish reasonable procedures
to promptly address all customer complaints and resolve such complaints
consistent with high ethical standards and principles of ethical conduct.
5.4 Trust Prospectuses and Reports. In order to enable the Company to
fulfill its obligations under this Agreement and the federal securities laws,
the Trust shall provide the Company with a copy, in camera-ready form or form
otherwise suitable for printing or duplication of: (i) the Trust's Prospectus
for the Series and classes listed on Schedule 3 and any supplement thereto: (ii)
each Statement of Additional Information and any supplement thereto; (iii) any
trust proxy soliciting material for such Series or Classes; and (iv) any trust
periodic shareholder reports or other communications with shareholders. The
Trust and the company may
agree upon alternate arrangements, but in all cases, the Trust reserves the
right to approve the printing of any such material. The Trust shall provide the
Company notice reasonable in the circumstances, it being understood that
circumstances surrounding such supplement may not allow for advance notice. The
Company may not alter any material so provided by the Trust or the Distributor
(including without limitation presenting or delivering such material in a
different medium, e.g., electronic or Internet) without the prior written
consent of the Distributor.
5.5 Trust Advertising Material. No piece of advertising or sales literature
or other promotional material in which the trust or the Distributor is named
shall be used by the Company or any person directly or indirectly authorized by
the Company, including without limitation, underwriters, distributors, and
sellers of the Contracts, except with the prior written consent of the Trust or
the distributor, as applicable, as to the form, content and medium of such
material, which consent shall not be unreasonably withheld; provided that such
prior written consent shall not be required if the Company receives a written or
facsimile acknowledgement from the Trust or the Distributor that such material
has been received by the Trust or the Distributor for review at least 10
Business Days prior to its use, and, after the expiration of such 10 Business
Day period, the Trust or the Distributor has not commented upon the content of
such material and is therefore deemed to consent to its use. No further changes
may be made to material approved in accordance with this Section 5.5 without
obtaining the Trust's or Distributor's consent to such changes as set forth in
the preceding sentence. The Trust or Distributor may at any time in its sole
discretion revoke such consent upon reasonable determination that such
revocation is necessary, and upon notification of such revocation, the Company
shall discontinue use of the material subject to such revocation, it being
understood that the Company shall be afforded a reasonable period of time to
discontinue such use. Until further notice to the Company, the Trust has
delegated its rights and responsibilities under this provision to the
Distributor.
5.6 Contracts Advertising Material. No piece of advertising or sales
literature or other promotional material in which the Company is named shall be
used by the Trust or the Distributor, except with the prior written consent of
the Company, which consent shall not be unreasonably withheld; provided that
such prior written consent shall not be required if the Trust receives a written
or facsimile acknowledgement that such material has been received by the Company
for review at least 10 Business Days prior to its use and, after the expiration
of such 10 Business Day period, the Company has not commented upon the content
of such material and is therefore deemed to consent to its use. The Company may
at any time in its sole discretion revoke any consent upon reasonable
determination that such revocation is necessary, and upon notification of such
revocation, the Trust and the Distributor shall discontinue use of the material
subject to revocation, it being understood that Trust and Distributor shall be
afforded a reasonable period of time to discontinue such use. The Company, upon
prior written notice to the Trust, may delegate its rights add responsibilities
under this provision to the principal underwriter for the Contracts.
5.7 Trade Names. No party shall use any other party's names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of such other party, or after written consent therefore
has been revoked, provided that separate consent is not required under this
Section 5.7 to the extent that consent to use a party's name, logo, trademark or
service xxxx in connection with a particular piece of advertising or sales
literature has previously been given by a party under Section 5.5 or 5.6 of this
Agreement. The Company shall not use in advertising, publicity or otherwise the
name of the Trust, Distributor, or any of their affiliates on to any trade name,
trademark, trade device, service xxxx, symbol or any abbreviation, contraction
or simulation thereof of the Trust, Distributor, or their affiliates without the
prior written consent
of the Trust or the Distributor in each instance. The Trust and the Distributor
shall not use iin advertising, publicity or otherwise the name of the Company,
or any of its affiliates nor any trade name, trademark, trade device, service
xxxx, symbol or any abbreviation, contraction or simulation thereof of the
Company, or its affiliates without the prior written consent of the Company in
each instance.
5.8 Representation by Company. Except with the prior written consent of the
Trust, the Company shall not give any information or make any representations or
statements about the Trust or the Funds nor shall it authorize or allow any
other person to do so except information or representation contained in the
Trust's Registration Statement or the Trust's Prospectuses or in reports or
proxy statements for the Trust, or in sales literature or other promotional
material approved in writing by the Trust or its designee in accordance with
this Article V, or in published reports or statements of the Trust in the public
domain.
5.9 Representations by Trust. Except with the prior written consent of the
Company, the Trust shall not give any information or make any representations on
behalf of the Company or concerning the Company, the Account or the Contracts
other than the information or representations contained in the Contracts'
Registration Statement or Contracts' Prospectus or in published reports of the
Account which are in the public domain or in sales literature or other
promotional material approved in writing by the Company in accordance with this
Article V.
5.10 Advertising. For purposes of this Article V, the phrase 'sales
literature or other promotional material" includes, but is not limited to, any
material constituting sales literature or advertising under the NASD rules, the
1940 Act or the 0000 Xxx.
5.11 Periodic Trust Information. The Trust agrees to use its best efforts
to provide to the Company, within 5 Business days after the end of a calendar
month and shall provide no later than 10 Business Days after the end of the
calendar month, the following information with respect to each Fund of the Trust
set forth on Schedule 3, each as of the last Business Day of such calendar
month: each Fund's 10 largest portfolio holdings (based on the percentage of
each Fund's net assets); the five industry sectors in which each Fund's
investments are most heavily weighted; and year-to-date SEC standardized
performance data. In addition, the Trust agrees to use its best efforts to
provide to the Company within 10 Business Days after the end of a calendar
quarter and shall provide no later than 15 Business Days after the end of the
calendar quarter a market commentary from the portfolio manager of each Fund set
forth on Schedule 3, as of the last Business Day of such quarter. Also, the
Trust agrees to provide the Company, within 15 Business Days after a request is
submitted to the Trust by the Company, the following information with respect to
each Fund set forth on Schedule 3, each as of the date or dates specified in
such request: net asset value; net asset value per share; and such other share
information as may be agreed by the Company and the Trust from time to time. The
trust acknowledges that such information may be furnished to the Company's
internal or independent auditors and to the insurance departments in which the
Company does business.
ARTICLE VI
Compliance with Code
6.1 Section 817(h). Each Fund of the Trust shall comply with Section 817(h)
of the Code and the regulations issued thereunder to the extent applicable to
the Fund as an investment company underlying the Account, and the Trust shall
(i) notify the Company immediately upon having a reasonable basis for believing
that a Fund has ceased to so qualify or that it might not so
qualify in the future, and (ii) take all reasonable steps to adequately
diversify a Fund to achieve compliance with the grace period afforded by
Treasury Regulation 1.817-5.
6.2 Subchapter M. Each Fund of the Trust shall maintain the qualification
of the fund as a registered investment company (under Subchapter M or any
successor or similar provision), and the Trust shall (i) notify the Company
immediately upon having a reasonable basis for believing that a Fund has ceased
to so qualify or that it might not so qualify in the future, and (ii) take all
reasonable steps to maintain qualification or to requalify the Funds as a
registered investment company under Subchapter M.
6.3 Contracts. The Company shall ensure the continued treatment of the
Contract as annuity Contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code and shall notify the Trust
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.
ARTICLE VII
Expenses
7.1 Expenses. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to this
Agreement) shall be paid by such party to the extent permitted by law.
7.2 Trust Expenses. Expenses incident to the Trust's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) registration and qualification of the Trust shares under the federal
securities laws;
(b) preparation and filing with the SEC of the Trust's Prospectuses,
Trust's Statements of Additional Information, Trust's Registration
Statement, Trust proxy materials and shareholder reports, and
preparation of a camera-ready of the foregoing;
(c) preparation of all statements and notices required by any Federal or
state securities law;
(d) printing of all materials and reports required to be provided by the
Trust to existing shareholders and Contract Owners;
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating ot the Trust, including,
without limitation, all fees due under Rule 24f-2 in connection with
sales of Trust shares to qualified retirement plans, custodial
auditing, transfer agent and advisory fees, fees for insurance
coverage and Trustees' fees; and
(g) any expenses permitted to be paid or assumed by the Trust pursuant to
a plan, if any, under Rule 12b-1 under the 1940 Act.
7.3 Company Expenses. Expenses incident to the Company's performance of its
duties and obligations under this agreement include, but are not limited to the
costs of:
(a) registration and qualification of the Contracts under the federal
securities laws;
(b) preparation and filing with the SEC of the Contracts' Prospectus and
Contracts' Registration Statement;
(c) the sale, marketing and distribution of the Contracts, including
printing and dissemination of Contracts' and the trust's Prospectuses
for new sales of Contracts and compensation for Contract sales;
(d) administration of the Contracts;
(e) distribution of and solicitation of voting instructions with respect
to trust proxy materials to existing Contract Owners;
(f) mailing of all materials and reports required to be provided by the
Trust to existing Shareholders and Contract Owners;
(g) payment of all applicable fees relating to the Contracts, including,
without limitation, all fees due under Rule 24f-2;
(h) preparation, printing and dissemination of all statements and notices
to Contract Owners required by any Federal or state insurance law
other than those paid for by the Trust; and
(i) preparation, printing and dissemination of all marketing materials for
the contracts and Trust (to the extent it relates to the contracts)
except where other arrangements are made in advance.
7.4 12b-1 Payments. The Trust shall pay no fee or other compensation to the
Company under this Agreement, except that if the Trust or any Series or Class
adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to
finance distribution expenses, then payments may be made to the Company in
accordance with such plan. The Trust currently does not intend to make any
payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940
Act or in contravention of such rule, although it may make payments pursuant to
Rule 12b-1 in the future. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1 and such formulation is required by the 1940 Act
or any rules or order thereunder, the Trust undertakes to have a board of
Trustees, a majority of whom are not interested persons of the Trust, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
ARTICLE VIII
Potential Conflicts
8.1 Exemptive Order. The parties to this Agreement acknowledge that the
Trust has received an order (the "Exemptive Order") granting relief from various
provisions of the 1940 Act and the rules thereunder to the extent necessary to
permit Trust shares to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated Participating
Insurance Companies and other Qualified Persons (as defined in Section 2.8
hereof). The Exemptive Order requires the Trust and each Participating Insurance
Company to comply with conditions and undertakings substantially as provided in
this Article VIII. The Trust will not enter into a participation agreement with
any other Participating Insurance
Company unless it imposes the same conditions and undertakings on that Company
as are imposed on the Company pursuant to this Article VIII.
8.2 Company Monitoring Requirements. The Company will monitor its
operations and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts between
or among the interests of Participating Plans, Product Owners of variable life
insurance policies and Product Owners of variable annuity contracts.
8.3 Company Reporting Requirements. The Company shall report any conflict
or potential conflicts to the Trust Board and will provide the Trust Board, at
least annually, with all information reasonable necessary for the Trust Board to
consider any issues raised by such existing or potential conflicts or by the
conditions and undertakings required by the exemptive Order. The Company also
shall assist the Trust Board in carrying out its obligations including but not
limited to: (a) informing the Trust Board whenever it disregards Contract Owner
voting instructions with respect to variable life insurance policies, and (b)
providing such other information and reports as the Trust Board may reasonably
request. The Company will carry out these obligations with a view only to the
interests of Contract Owners.
8.4 Trust Board Monitoring and Determination. The Trust Board shall monitor
the Trust for the existence of any material irreconcilable conflicts between or
among the interests of Participating Plans, Product Owners of variable life
insurance policies and Product Owners of variable annuity contracts and
determine what action, if any, should be taken in response to those conflicts. A
majority vote of Trustees who are not interested persons of the Trust as defined
in the 1940 Act (the "disinterested trustees") shall represent a conclusive
determination as to the existence of material irreconcilable conflict between or
among the interests of Product Owners and Participating Plans and as to whether
any proposed action adequately remedies any material irreconcilable conflict.
The Trust Board shall give prompt written notice to the Company and
Participating Plan of any such determination.
8.5 Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans, the Company will, at its own expense, take whatever action
is necessary to remedy such conflict as it adversely affects Contract Owners up
to and including (1) establishing a new registered management investment
company, and (2) withdrawing assets from the trust attributable to reserves for
the Contracts subject to the conflict and reinvesting such assets in a different
investment medium (including another Fund of the Trust) or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected Contract Owners, and, as appropriate, segregating the assets supporting
the Contracts of any group of such owners that votes in favor of such
withdrawal, or offering to such owners the option of making such a change. The
Company will carry out the responsibility to take the foregoing action with a
view only to the interests of Contract Owners.
8.6 Withdrawal. If a material irreconcilable conflict arises because of the
Company's decision to disregard the voting instructions of Contract Owners of
variable life insurance policies and that decision represents a minority
position or would preclude a majority vote at any Fund shareholder meeting,
then, at the request of the Trust Board, the Company will redeem the shares of
the Trust to which the disregarded voting instructions relate. No charge or
penalty, however, will be imposed in connection with such redemption.
8.7 Expenses Associated with Remedial Action. In no event shall the trust
be required to bear the expense of establishing a new funding medium for any
Contract. The Company shall not be required by this Article to establish a new
funding medium for any Contract if an offer to do so has been declined by vote
of a majority of the Contract Owners materially adversely affected by the
irreconcilable material conflict.
8.8 Successor Rules. If and to the extent that Rule 6e-2 and Rule 6e-3(T)
are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provisions of the 1940 Act or the rules promulgated thereunder with respect to
mixed and shared funding on terms and conditions materially different from those
contained in the Exemptive Order, then (i) the Trust and/or the Company, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (ii) Sections 8.2 through 8.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
Indemnification
9.1 Indemnification by the Company. The Company hereby agrees to, and
shall, indemnify and hold harmless the trust, the Distributor and each person
who controls or is affiliated with the Trust or the Distributor within the
meaning of such terms under the 1933 Act or 1940 Act (but not any Participating
Insurance Companies or Qualified Persons) and any officer, trustee, partner,
director, employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amounts
paid in settlement of, and action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Contracts Registration Statement, Contracts
Prospectus, sales literature or other promotional material for the
Contracts or the Contracts themselves (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or omission
was made in reliance upon and in conformity with information furnished
in writing to the Company by the Trust or the Distributor for use in
the Contracts' Registration Statement, Contracts' Prospectus or in the
Contracts or sales literature or promotional material for the
Contracts (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the
Trust Registration Statement, any Prospectus for Series or classes or
sales literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated threin or
necessary to make the
statements therein 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 information furnished to the
Trust or Distributor in writing by or on behalf of the Company; or
(c) arise out of or are based upon any wrongful conduct of, or violation
of federal or state law by, the Company or persons under its control,
with respect to the sale, marketing or distribution of the contracts
or Trusts shares; or
(d) arise as a result of any failure by the Company, or persons under its
control or any third party with which the Company has contractually
delegated administration responsibilities for the contracts, to
provide services, furnish materials or make payments as required under
this Agreement; or
(e) arise out of any material breach by the company or persons under its
control of this Agreement (including any breach of any warranties
contained in Article III hereof); or
(f) arise out of any failure to transmit a request for redemption or
purchase of Trust shares or payment therefore on a timely basis in
accordance with the procedures set forth in Article II, or any
unauthorized use of the names or trade names of the Trust or the
Distributor.
This indemnification is in addition to any liability that the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification.
9.2 Indemnification by the Trust. The Trust hereby agrees to, and shall,
indemnify and hold harmless the Company and each person who controls or is
affiliated with the Company within the meaning of such terms under the 1933 Act
or 1940 Act and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under nay statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Trust Registration Statement, any Prospectus for
Series or Classes or sales literature or other promotional material of
the trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements threin not misleading in light of the circumstances in
which they were made; provided that this obligation to indemnify shall
not apply if such statement or omission was made in reliance upon and
in conformity with information furnished in writing by the Company to
the Trust or the Distributor for use in the trust Registration
Statement, Trust Prospectus or sales literature or promotional
material for the Trust (or any amendment or supplement to any of
the foregoing) or otherwise for use in connections with the sale of
the Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the
Contracts Registration Statement, Contracts Prospectus or Sales
Literature or other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing by
the trust to the Company; or
(c) arise out of or are based upon wrongful conduct of or violation of
federal or state law by the Trust or its Trustees or officers or
persons under its control with respect to the sale of trust shares; or
(d) arise as a result of any failure by the Trust or its Trustees or
officers or persons under its control to provide services, furnish
materials or make payments as required under the terms of this
Agreement;
(e) arise out of any material breach by the trust of this Agreement or
persons under its control (including any breach of Section 6.1 of this
Agreement and any warranties contained in Article III hereof);
(f) arise out of any unauthorized use of the names or trade names of the
Company; or
(g) arise out of or result from the materially incorrect or untimely
calculation or reporting of the daily net asset value per share or
dividend or capital gain distribution rate, provided that the
foregoing shall be limited to reasonable administrative costs, and
shall not apply where such miscalculation or report is the result of
(i) incorrect information supplied by or on behalf of the Company to
the Trust or the distributor, or (ii) circumstances outside the
Trust's or the distributor's control.
It being understood that in no way shall the Trust be liable to the Company with
respect to any violation of insurance law, compliance with which is a
responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Trust in accordance with Section 4.4 hereof.
This indemnification is in addition to any liability that the Trust may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification.
9.3 Indemnification by the Distributor. The Distributor hereby agrees to,
and shall, indemnify and hold harmless the Company and each person who controls
or is affiliated with the Company within the meaning of such terms under the
1933 Act or 1940 Act of any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities, joint or
several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they or any of them may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Trust Registration Statement, any Prospectus for
Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in
which they were made; provided that this obligation to indemnify shall
not apply if such statement or omission was made in reliance upon and
in conformity with information furnished in writing by the Company to
the Trust or Distributor for use in the Trust Registration Statement,
Trust Prospectus or sales literature or promotional material for the
Trust (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the
Contracts' Registration Statement, Contracts' Prospectus or sales
literature or other promotions material for the Contracts (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing by
the Distributor to the Company; or
(c) arise our of or are based upon wrongful conduct of or violation of
federal or state law by the Distributor or persons under its control
with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Distributor or persons under
its control to provide services, furnish materials or make payments as
required under the terms of this Agreement;
(e) arise out of any material breach by the distributor or persons under
its control of this Agreement (including any breach of Section 6.1 of
this Agreement and any warranties contained in Article III hereof); or
(f) arise out of any unauthorized use of the names or trade names of the
Company;
it being understood that in no way shall the Distributor be liable to the
Company with respect to any violation of insurance law, compliance with which is
a responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Distributor in accordance with Section 4.4
hereof. This indemnification is in addition to any liability that the
Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is caused
by the willful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
9.4 Rule of Construction. It is the parties' intention that, in the event
of an occurrence for which the trust has agreed to indemnify the Company, the
Company shall seek
indemnification from the Trust only in circumstances in which the Trust is
entitled to seek indemnification from a third party with respect to the same
event or cause thereof.
9.5 Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement to hereof as soon as
practicable thereafter, provided that the omission to so notify the indemnifying
party will not relieve it from any liability under this Article IX, except to
the extent that the omission results in a failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
the failure to give such notice. The indemnifying party, upon the request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) 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 in appropriate due to actual or potential
differing interests between them. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent but if
settled with such consent or if there be 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 shall be entitled to
the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
Relationship of the Parties; Termination
10.1 Non-Exclusivity and Non-Interference. The parties hereto acknowledge
that the arrangement contemplated by this Agreement is not exclusive; the Trust
shares may be sold to other insurance companies and investors (subject to
Section 2.8 hereof) and the cash value of the Contracts may be invested in other
investment companies, provided, however, that until this Agreement is terminated
pursuant to this Article X:
(a) the Company shall promote the Trust and the Funds made available
hereunder on a substantially similar basis as other funding vehicles
available under the Contracts;
(b) the Company shall not, without prior notice to the Distributor (unless
otherwise required by applicable law), take any action to operate the
Account as a management investment company under the 1940Act;
(c) the Company shall not, without the prior written consent of the
Distributor, which consent shall not be unreasonably withheld,
solicit, induce or encourage Contract Owners to change or modify the
Trust, or to change the Trust's Distributor or investment adviser
(unless otherwise required by applicable law);
(d) the Company shall not solicit, induce or encourage Contract Owners to
transfer or withdraw Contract Values allocated to a Fund or to
exchange their Contracts for contracts not allowing for investment in
the Trust, except with 60 days prior written notice to the Distributor
under circumstances where the Company has determined such
solicitation, inducement or encouragement to be in the best interests
of Contact Owners (unless otherwise required by applicable law),
provided that the foregoing shall not apply in connection with the
implementation and operation of an asset allocation program by the
Company;
(e) the Company shall not substitute another investment company for one or
more Funds without providing written notice to the Distributor at
least 30 days in advance of effecting any such substitution; and
(f) the Company shall not withdraw the Account's investment in the Trust
or a Fund of the Trust except as necessary to facilitate Contract
Owner requests and routine Contract processing.
10.2 Termination of Agreement. This Agreement shall not terminate until (i)
the Trust is dissolved, liquidated, or merged into another entity, or (ii) as to
any Fund that has been made available hereunder, the Account no longer invests
in that Fund and the Company has confirmed in writing to the Distributor, if so
requested by the Distributor, that it no longer intends to invest in such Fund.
However, certain obligations of, or restrictions on, the parties to this
Agreement may terminate as provided in Sections 10.3 through 10.5 and the
Company may be required to redeem Trust shares pursuant to Section 10.6 or in
the circumstances contemplated by Article VIII. Article IX and Sections 5.7 and
10.7 shall survive any termination of this Agreement.
10.3 Termination of Offering of Trust Shares. The obligation of the Trust
and the Distributor to make Trust share available to the Company for purchase
pursuant to Article of this Agreement shall terminate at the option of the
Distributor upon written notice to the Company as provided below:
(a) upon institution of formal proceedings against the Company, or the
Distributor's reasonable determination that institution of such
proceedings is being considered by the NASD, the SED, the insurance
omission of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the
Contracts, the operation of the Account, the administration of the
contracts or the purchase of Trust shares, or an expected or
anticipated ruling, judgment or outcome which would, in the
Distributor's reasonable judgment exercised in good faith, materially
impair the Company's or Trust's ability to meet and perform the
Company's or Trust's obligations and duties hereunder, such
termination effective upon 15 days prior written notice;
(b) subject to the Trust's compliance with Article VI, in the event any of
the Contracts are not registered, issued or sold in accordance with
applicable federal and/or state law, such termination effective
immediately upon receipt of written notice;
(c) if the Distributor shall determine, in its sole judgment exercised in
good faith, that either (1) the Company shall have suffered a material
adverse change in its
business or financial condition or (2) the Company shall have been the
subject of material adverse publicity which is likely to have a
material adverse impact upon the business and operations of either the
Trust or the Distributor, such termination effective upon 30 days
prior written notice;
(d) if the Distributor suspends or terminates the offering of Trust shares
of any Series or class to all Participating Investors or only
designated Participating Investors, if such action is required by law
or by regulatory authorities having jurisdiction or if, in the sole
discretion of the Distributor acting in good faith, suspension or
termination is necessary in the best interests of the shareholders of
any series or class (it being understood that "shareholders" for this
purpose shall mean Product Owners), such notice effective immediately
upon receipt of written notice, it being understood that a lack of
Participating Investor interest in a Series or Class may be grounds
for a suspension or termination as to such Series or Class and that a
suspension or termination shall apply only to the specified Series or
Class;
(e) upon the Company's assignment of this Agreement (including, without
limitation, any transfer of the Contracts or the Account to another
insurance company pursuant to an assumption reinsurance agreement)
unless the Trust consents thereto, such termination effective upon 30
days prior written notice;
(f) if the Company is in material breach of any provision of this
Agreement, which breach has not been cured to be the satisfaction of
the Trust within 10 days after written notice of such beach has been
delivered to the Company, such termination effective upon expiration
of such 10-day period;
(g) upon (i) the determination of the Trust's Board to dissolve, liquidate
or merge the Trust as contemplated by Section 10.2(i), in connection
with which the Trust and the Distributor undertake to provide the
Company with advance notice of any such meeting at which dissolution,
liquidation or merger of the Trust is considered, (ii) termination of
the Agreement pursuant to Section 10.2(ii), or (iii) notice from the
Company pursuant to Section 10.4 or 10.5, such termination pursuant
hereto be effective upon 15 days prior written notice; or
(h) at any time upon six months prior notice.
Except in the case of an option exercised under clause (b), (d) or (g), the
obligations shall terminate only as to new Contracts and the Distributor shall
continue to make Trust shares available to the extent necessary to permit Owners
of contracts in effect on the effective date of such termination (hereinafter
referred to as "Existing Contracts") to reallocate investments in the Trust,
redeem investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under Existing Contracts.
10.4 Termination of Investment in a Fund. The Company may elect to cease
investing in a Fund, promoting a Fund as an investment option under the
contracts, or withdraw its investment or the Account's investment in a Fund,
subject to compliance with applicable law, upon written notice to the Trust of
any of the following events (unless provided otherwise below, effective as soon
as reasonably practicable but in not event later than 10 days after the
occurrence of the event):
(a) if the Trust informs the Company pursuant to Section 4.4 that it will
not cause such Fund to comply with investment restrictions as
requested by the Company and the Trust and the Company are unable to
agree upon any reasonable alternative accommodations;
(b) if shares in such Fund are not reasonably available to meet the
requirements of the Contracts as determined by the Company (including
any non-availability as a result of notice given by the Distributor
pursuant to Section 10.3(d)), and the Distributor, after receiving
written notice from the Company of such non-availability, fails to
make available, within 5 Business Days after receipt of such notice, a
sufficient number of shares in such Fund to meet the requirements of
the Contracts; or
(c) if such Fund fails to meet the diversification requirements specified
in Section 817(h) of the Code and any regulations thereunder and the
Trust, upon written request, fails to provide reasonable assurance
that it will take action to cure or correct such failure;
(d) if the Company determines in its sole judgment, exercised in good
faith, that either the Investment Adviser or the Distributor 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, such termination effective upon 30 days prior written notice;
(e) upon the Trust's or the Distributor's assignment of this Agreement,
unless the Company consents thereto, such termination effective upon
30 days prior written notice; or
(f) at any time upon 6 months prior notice.
Such termination shall apply only as to the affected Fund and shall not apply to
any other Fund in which the Company or the Account invests.
10.5 Termination of Investment by the Company. The Company may elect to
cease investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Contracts, or withdraw its
investment or the Accounts investment in the Trust, subject to compliance with
applicable law, upon written notice to the trust within 15 days of the
occurrence of any of the following events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by the NASD, the SEC
or any state securities or insurance commission or any other
regulatory body;
(b) if, with respect to the Trust or a Fund, the Trust or the Fund ceases
to qualify as a regulated investment company under Subchapter M of the
Code, as defined therein, or any successor or similar provision, or if
the Company reasonably believes that the Trust may fail to so qualify,
and the Trust upon written request, fails to provide reasonable
assurance that it will take action to cure or correct such failure
within 30 days;
(c) if the Trust or Distributor is in material breach of a provision of
this Agreement, which breach has not been cured to the satisfaction of
the Company within 10 days after written notice of such breach has
been delivered to the Trust or the Distributor, as the case may be,
such termination effective upon expiration of such 10-day "cure"
period;
(d) if the Company determines in its sole judgment, exercised in good
faith, that either the Investment Adviser or the Distributor 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, such termination effective upon 30 days prior written notice;
(e) upon the Trust's or the Distributor's assignment of this Agreement,
unless the Company consents thereto, such termination effective upon
30 days prior written notice; or
(f) at any time upon 6 month prior notice.
10.6. Company Required to Redeem. The parties understand and acknowledge
that it is essential for compliance with Section 817(h) of the Code that the
Contracts qualify as annuity contracts or life insurance policies, as
applicable, under the Code. Accordingly, if any of the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable, under
the Code, or if the Trust reasonably believes that any such Contracts may fail
to so qualify, the Trust shall have the right to require the Company to redeem
Trust shares attributable to such Contracts upon notice to the Company and the
Company shall so redeem such Trust shares in order to ensure that the Trust
complies with the provisions of Section 817(h) of the Code applicable to
ownership of Trust shares. Notice to the Company shall specify the period of
time the Company has to redeem the Trust shares or to make other arrangements
satisfactory to the Trust and its counsel, such period of time to be determined
with reference to the requirements of Section 817(h) of the Code. In addition,
the Company may be required to redeem Trust shares pursuant to action taken or
request made by the Trust Board in accordance with the Exemptive Order described
in Article VIII or any conditions or undertakings set forth or referenced
therein, or other SEC rule, regulation or order that may be adopted after the
date hereof. The Company agrees to redeem shares in the circumstances described
herein and to comply with applicable terms and provisions. Also, in the even
that the Distributor suspends or terminates the offering of a Series or Class
pursuant to Section 10.3(d) of this agreement, the Company, upon request by the
Distributor, will cooperate in taking appropriate action to withdraw the
Account's investment in the respective Fund.
10.7. Confidentiality. A party will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
other parties to the Agreement and their affiliates.
ARTICLE XI
Applicability to New Accounts and New Contracts
The parties in this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts, any Series or Class, additions of new classes of Contracts to be
issued by the Company and separate accounts therefore investing in the Trust.
Such amendments may be made effective by executing the form of amendment
included on each schedule attached hereto. The provisions if this Agreement
shall be equally applicable to each such class of Contracts, Series, Class or
separate account, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all of
the parties.
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this Agreement is
to be made in writing and shall be given:
If to the Trust:
Xxxxxxx X. Grip
President
Xxxxxxx Sachs Variable Insurance Trust
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Distributor:
Xxxxxxx X. Grip
Vice President
Xxxxxxx Sachs & Co.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Company:
Xxxxxxx Xxxxxx, Esq.
GE Capital Life Assurance Company of New York
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent facsimile to the person designated in writing for such notices.
ARTICLE XIII
Miscellaneous
13.1. Interpretation. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the state of
Delaware, without giving effect to the principles of conflicts of laws, subject
to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act and Securities Exchange Act of 1934, as amended, and the
rules, regulation and rulings thereunder, including such exemptions
from those statutes, rules, and regulations as the SEC may grant, and
the terms hereof shall be limited, interpreted and construed in
accordance therewith.
(b) 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.
(c) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
(d) The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are
entitled to under state and federal laws.
13.2. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which together shall constitute one and the same
instrument.
13.3. No Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Company, the Distributor or the
Trust without the prior written consent of the other parties.
13.4. Declaration of Trust. A copy of the Declaration of Trust by the Trust
is on file with the Secretary of State of the state of Delaware, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as trustees, and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually, but binding only upon the assets and
property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and behalf by its duly authorized officer on the date
specified below.
XXXXXXX XXXXX VARIABLE INSURANCE TRUST
(Trust)
Date: By:
--------------- --------------------------------------------
Name:
Title:
XXXXXXX, SACHS & CO.
(Distributor)
Date: By:
--------------- --------------------------------------------
Name:
Title:
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
(Company)
Date: By:
--------------- --------------------------------------------
Name: Xxxxxxxx X. Stiff
Title: Senior Vice President
Schedule 1
Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
----------------------------------------------------------------------------------------------
Date Established Board
Name of Account and of Directors of the SEC 1940 Act Type of Product
Subaccounts Company Registration Number Supported by Account
----------------------------------------------------------------------------------------------
GE Capital Life Separate 4/1/1996 811-08475 Variable Annuity
Account II
----------------------------------------------------------------------------------------------
GE Capital Life Separate 3/20/2000 811-09861 Variable Life
Account III
----------------------------------------------------------------------------------------------
================================================================================
[Form of Amendment to Schedule 1]
Effective as of , the following separate accounts of the Company are hereby
-----
added to this Schedule 1 and made subject to the Agreement:
----------------------------------------------------------------------------------------------
Date Established Board
Name of Account and of Directors of the SEC 1940 Act Type of Product
Subaccounts Company Registration Number Supported by Account
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 1 in accordance with Article XI of the Agreement.
-------------------------------------- ------------------------------------
Xxxxxxx Sachs Variable Insurance Trust GE Capital Life Assurance Company of
New York
--------------------------------------
Xxxxxxx, Xxxxx & Co.
Schedule 2
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 1
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
--------------------------------------------------------------------------------
SEC 1933 Act
Registration Contract Form Annuity or
Policy Marketing Name Number Number Life
--------------------------------------------------------------------------------
GE Capital Life Separate Account II Annuity
Commonwealth VA NY 333-39955 NY1066
GE Choice NY 333-47016 NY1155
GE Selections NY 333-97085 NY1157
--------------------------------------------------------------------------------
GE Capital Life Separate Account III 333-88312 NY1260/NY1261 Life
GE Accumulator NY
--------------------------------------------------------------------------------
================================================================================
[Form of Amendment to Schedule 2]
Effective as of , the following classes of Contracts are hereby added to
-----
this Schedule 2 and made subject to the Agreement:
-----------------------------------------------------------------------------
SEC 1933 Act Name of Supporting Annuity or
Policy Marketing Name Registration Number Account Life
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 2 in accordance with Article XI of the Agreement.
Schedule 3
Trust Classes and Series
Available Under
Each Class of Contracts
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Contracts:
--------------------------------------------------------------------------------
Contract Marketing Name Trust Classes and Series
--------------------------------------------------------------------------------
GE Capital Life Separate Account II
Commonwealth VA NY Xxxxxxx Xxxxx Mid Cap Equity Fund
GE Choice NY Xxxxxxx Sachs Growth and Income Fund
GE Selections NY
--------------------------------------------------------------------------------
GE Capital Life Separate Account III
GE Accumulator NY Xxxxxxx Xxxxx Mid Cap Equity Fund
Xxxxxxx Sachs Growth and Income Fund
--------------------------------------------------------------------------------
[Form of Amendment to Schedule 3]
Effective as of . This Schedule 3 is hereby amended to reflect the
--------------
following changes in Trust Classes and Series:
--------------------------------------------------------------------------------
Contract Marketing Name Trust Classes and Series
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 3 in accordance with Article XI of the Agreement.
-------------------------------------- ------------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust GE Capital Life Assurance Company of
New York
--------------------------------------
Xxxxxxx, Sachs & Co.
Schedule 4
Investment Restrictions
Applicable to the Trust
Effective as of the date the Amendment was executed, the following investment
restrictions are applicable to the Trust:
================================================================================
[Form of Amendment to Schedule 4]
Effective as of , this Schedule 4 is hereby amended to reflect
----------------
the following changes:
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 4 in accordance with Article XI of the Agreement.
-------------------------------------- ------------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust GE Capital Life Assurance Company of
New York
--------------------------------------
Xxxxxxx, Sachs & Co.
Schedule 5
Notice Provided Pursuant to Section 2.3(a)
Notice provided to the Trust by the Company concerning purchases and redemption
orders pursuant to Section 2.3(a) of this Agreement shall be made to:
Xxxxxxx Xxxxx Asset Management
Shareholder Services (Chicago)
