Exhibit 8
FUND PARTICIPATION AGREEMENT
BARON CAPITAL FUNDS TRUST
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares.....................................................3
ARTICLE II. Representations and Warranties..........................................7
ARTICLE III. Prospectuses and Proxy Statements; Voting..............................10
ARTICLE IV. Sales Material and Information.........................................12
ARTICLE V. Fees and Expenses......................................................14
ARTICLE VI. Diversification and Qualification......................................16
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order ..............................19
ARTICLE VIII. Indemnification .......................................................21
ARTICLE IX. Applicable Law.........................................................32
ARTICLE X. Termination............................................................33
ARTICLE XI. Notices................................................................36
ARTICLE XII. Miscellaneous..........................................................37
SCHEDULE A Contracts..............................................................41
SCHEDULE B Designated Portfolios..................................................42
SCHEDULE C Administrative Services................................................46
SCHEDULE D Reports per Section 6.6................................................45
SCHEDULE E Expenses...............................................................48
PARTICIPATION AGREEMENT
Among
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
BARON CAPITAL FUNDS TRUST,
BAMCO, INC.,
BARON CAPITAL, INC.
and
XXXXXXX XXXXXX & CO., INC.
THIS AGREEMENT, made and entered into as of this ____ day of April, 1999
by and among FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (hereinafter
"FGWL&A"), a New York life insurance company, on its own behalf and on behalf of
its Separate Account Variable Annuity-1 Series Account (the "Account"); BARON
CAPITAL FUNDS TRUST, a business trust organized under the laws of Delaware
(hereinafter the "Fund"); BAMCO, INC. (hereinafter the "Adviser"), a corporation
organized under the laws of New York; BARON CAPITAL, INC., a corporation
organized under the laws of New York (hereinafter the "Distributor"); and
XXXXXXX XXXXXX & CO., INC., a California corporation (hereinafter "Schwab").
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies, including FGWL&A, which have entered into
participation agreements similar to this Agreement (hereinafter "Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (hereinafter the "SEC"), dated June 16, 1998 (File No. 812-10958),
granting Participating Insurance Companies and variable annuity and variable
life insurance separate accounts exemptions from the provisions of sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
life insurance companies that may or may not be affiliated with one another and
qualified pension and retirement plans ("Qualified Plans") (hereinafter the
"Mixed and Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolio(s) are registered under
the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, (the "1934 Act") and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, FGWL&A has registered certain variable annuity contracts
supported wholly or partially by the Account (the "Contracts") under the 1933
Act and said Contracts are listed in Schedule A attached hereto and incorporated
herein by reference, as such Schedule may be amended from time to time by mutual
written agreement; and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of FGWL&A on
January 15, 1997, under the insurance laws of the State of New York, to set
aside and invest assets attributable to the Contracts; and
WHEREAS, FGWL&A has registered the Account as a unit investment trust
under the 1940 Act and has registered the securities deemed to be issued by the
Account under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, FGWL&A intends to purchase shares in the Portfolio(s) listed in
Schedule B attached hereto and incorporated herein by reference, as such
Schedule may be amended from time to time by mutual written agreement (the
"Designated Portfolio(s)"), on behalf of the Account to fund the Contracts, and
the Fund is authorized to sell such shares to unit investment trusts such as the
Account at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Account also intends to purchase shares in other open-end
investment companies or series thereof not affiliated with the Fund (the
"Unaffiliated Funds") on behalf of the Account to fund the Contracts; and
WHEREAS, Schwab will perform certain services for the Fund in connection
with the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, FGWL&A,
Schwab, the Fund, the Distributor and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to FGWL&A those shares of the Designated
Portfolio(s) which the Account orders, executing such orders on each Business
Day at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Designated Portfolios. For purposes
of this Section 1.1, FGWL&A shall be the designee of the Fund for receipt of
such orders and receipt by such designee shall constitute receipt by the Fund,
provided that the Fund receives notice of any such order by 10:00 a.m. Eastern
time on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which the
Designated Portfolio calculates its net asset value pursuant to the rules of the
SEC.
1.2. The Fund agrees to make shares of the Designated Portfolio(s)
available for purchase at the applicable net asset value per share by FGWL&A and
the Account on those days on which the Fund calculates its Designated
Portfolio(s)' net asset value pursuant to rules of the SEC, and the Fund shall
calculate such net asset value on each day which the New York Stock Exchange is
open for trading. Notwithstanding the foregoing, the Board of Trustees of the
Fund (hereinafter the "Board") may refuse to sell shares of any Designated
Portfolio to any person, or suspend or terminate the offering of shares of any
Designated Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of
such Designated Portfolio.
1.3. The Fund will not sell shares of the Designated Portfolio(s) to any
other Participating Insurance Company separate account unless an agreement
containing provisions substantially the same as Sections 2.1, 3.5, 3.6, 3.7, and
Article VII of this Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on FGWL&A's request, any full
or fractional shares of the Fund held by FGWL&A, executing such requests on each
Business Day at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. Requests for redemption identified
by FGWL&A, or its agent, as being in connection with surrenders, annuitizations,
or death benefits under the Contracts, upon prior written notice, may be
executed within seven (7) calendar days after receipt by the Fund or its
designee of the requests for redemption. This Section 1.4 may be amended, in
writing, by the parties consistent with the requirements of the 1940 Act and
interpretations thereof. For purposes of this Section 1.4, FGWL&A shall be the
designee of the Fund for receipt of requests for redemption and receipt by such
designee shall constitute receipt by the Fund, provided that the Fund receives
notice of any such request for redemption by 10:00 A.M. Eastern time on the next
following Business Day.
1.5. The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
Participating Insurance Companies (subject to Section 1.3 and Article VI hereof)
and the cash value of the Contracts may be invested in other investment
companies.
1.6. FGWL&A shall pay for Fund shares by 3:00 p.m. Eastern time on the
next Business Day after an order to purchase Fund shares is made in accordance
with the provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire and/or by a credit for any shares redeemed the same day as
the purchase.
1.7. The Fund shall pay and transmit the proceeds of redemptions of Fund
shares by 11:00 a.m. Eastern Time on the next Business Day after a redemption
order is received in accordance with Section 1.4 hereof. Payment shall be in
federal funds transmitted by wire and/or a credit for any shares purchased the
same day as the redemption.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to FGWL&A or the Account. Shares
ordered from the Fund will be recorded in an appropriate title for the Account
or the appropriate sub-account of the Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to FGWL&A of any income, dividends or capital
gain distributions payable on the Designated Portfolio(s)' shares. FGWL&A hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Designated Portfolio shares in additional shares of that
Designated Portfolio. FGWL&A reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify FGWL&A by the end of the next following Business Day of the
number of shares so issued as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Designated Portfolio available to FGWL&A on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and shall
use its best efforts to make such net asset value per share available by 6:00
p.m. Eastern time. In the event of an error in the computation of a Designated
Portfolio's net asset value per share ("NAV") or any dividend or capital gain
distribution (each, a "pricing error"), the Adviser or the Fund shall
immediately notify FGWL&A as soon as possible after discovery of the error. Such
notification may be verbal, but shall be confirmed promptly in writing in
accordance with Article XI of this Agreement. A pricing error shall be corrected
as follows: (a) if the pricing error results in a difference between the
erroneous NAV and the correct NAV of less than $0.01 per share, then no
corrective action need be taken; (b) if the pricing error results in a
difference between the erroneous NAV and the correct NAV equal to or greater
than $0.01 per share, but less than 1/2 of 1% of the Designated Portfolio's NAV
at the time of the error, then the Adviser shall reimburse the Designated
Portfolio for any loss, after taking into consideration any positive effect of
such error; however, no adjustments to Contractowner accounts need be made; and
(c) if the pricing error results in a difference between the erroneous NAV and
the correct NAV equal to or greater than 1/2 of 1% of the Designated Portfolio's
NAV at the time of the error, then the Adviser shall reimburse the Designated
Portfolio for any loss (without taking into consideration any positive effect of
such error) and shall reimburse FGWL&A for the costs of adjustments made to
correct Contractowner accounts in accordance with the provisions of Schedule E.
If an adjustment is necessary to correct a material error which has caused
Contractowners to receive less than the amount to which they are entitled, the
number of shares of the applicable sub-account of such Contractowners will be
adjusted and the amount of any underpayments shall be credited by the Adviser to
FGWL&A for crediting of such amounts to the applicable Contractowners accounts.
Upon notification by the Adviser of any overpayment due to a material error,
FGWL&A or Schwab, as the case may be, shall promptly remit to Adviser any
overpayment that has not been paid to Contractowners; however, Adviser
acknowledges that Schwab and FGWL&A do not intend to seek additional payments
from any Contractowner who, because of a pricing error, may have underpaid for
units of interest credited to his/her account. In no event shall Schwab or
FGWL&A be liable to Contractowners for any such adjustments or underpayment
amounts. A pricing error within categories (b) or (c) above shall be deemed to
be "materially incorrect" or constitute a "material error" for purposes of this
Agreement.
The standards set forth in this Section 1.10 are based on the Parties'
understanding of the views expressed by the staff of the SEC as of the date of
this Agreement. In the event the views of the SEC staff are later modified or
superseded by SEC or judicial interpretation, the parties shall amend the
foregoing provisions of this Agreement to comport with the appropriate
applicable standards, on terms mutually satisfactory to all Parties.
ARTICLE II. Representations and Warranties
2.1. FGWL&A represents and warrants that the Contracts and the
securities deemed to be issued by the Account under the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. FGWL&A further represents and warrants
that it is an insurance company duly organized and in good standing under
applicable law and that it has legally and validly established the Account prior
to any issuance or sale of units thereof as a segregated asset account under
Section 4240, et. seq. of the New York Insurance Law and has registered the
Account as a unit investment trust in accordance with the provisions of the 1940
Act to serve as a segregated investment account for the Contracts and that it
will maintain such registration for so long as any Contracts are outstanding as
required by applicable law.
2.2. The Fund represents and warrants that Designated Portfolio(s)
shares sold pursuant to this Agreement shall be registered under the 1933 Act,
duly authorized for issuance and sold in compliance with all applicable federal
securities laws including without limitation the 1933 Act, the 1934 Act, and the
1940 Act and that the Fund is and shall remain registered under the 0000 Xxx.
The Fund shall amend the registration statement for its shares under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares.
2.3. The Fund has adopted a plan pursuant to Rule 12b-1 under the 1940
Act and agrees to comply with applicable provisions and SEC staff
interpretations of the 1940 Act to assure that the investment advisory or
management fees paid to the Adviser by the Fund are in accordance with the
requirements of the 1940 Act.
2.4. The Fund and Adviser represents and warrants that it will make
every effort to ensure that the investment policies, fees and expenses of the
Designated Portfolio(s) are and shall at all times remain in compliance with the
insurance and other applicable laws of the State of New York and any other
applicable state to the extent required to perform this Agreement. The Fund
further represents and warrants that it will make every effort to ensure that
Designated Portfolio(s) shares will be sold in compliance with the insurance
laws of the State of New York and all applicable state insurance and securities
laws. The Fund shall register and qualify the shares for sale in accordance with
the laws of the various states if and to the extent required by applicable law.
FGWL&A and the Fund will endeavor to mutually cooperate with respect to the
implementation of any modifications necessitated by any change in state
insurance laws, regulations or interpretations of the foregoing that affect the
Designated Portfolio(s) (a "Law Change"), and to keep each other informed of any
Law Change that becomes known to either party. In the event of a Law Change, the
Fund agrees that, except in those circumstances where the Fund has advised
FGWL&A that its Board of Directors has determined that implementation of a
particular Law Change is not in the best interest of all of the Fund's
shareholders with an explanation regarding why such action is lawful, any action
required by a Law Change will be taken.
2.5. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the State of Delaware and that it does and
will comply in all material respects with the 1940 Act.
2.6. The Adviser represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the Fund in compliance in all material
respects with the laws of the State of New York and any applicable state and
federal securities laws.
2.7. The Distributor represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the Fund in compliance in all material
respects with the laws of the State of New York and any applicable state and
federal securities laws.
2.8. The Fund and the Adviser represent and warrant that all of their
respective officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are, and shall
continue to be at all times, covered by one or more blanket fidelity bonds or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid bonds shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company.
2.9. Schwab represents and warrants that it has completed, obtained and
performed, in all material respects, all registrations, filings, approvals, and
authorizations, consents and examinations required by any government or
governmental authority as may be necessary to perform this Agreement. Schwab
does and will comply, in all material respects, with all applicable laws, rules
and regulations in the performance of its obligations under this Agreement.
2.10. The Fund will provide FGWL&A with as much advance notice as is
reasonably practicable of any material change affecting the Designated
Portfolio(s) (including, but not limited to, any material change in the
registration statement or prospectus affecting the Designated Portfolio(s)) and
any proxy solicitation affecting the Designated Portfolio(s) and consult with
FGWL&A in order to implement any such change in an orderly manner, recognizing
the expenses of changes and attempting to minimize such expenses by implementing
them in conjunction with regular annual updates of the prospectus for the
Contracts. The Fund agrees to share equitably in expenses incurred by FGWL&A as
a result of actions taken by the Fund, consistent with the allocation of
expenses contained in Schedule E attached hereto and incorporated herein by
reference.
2.11. FGWL&A represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986 as
amended ("the Code"), that the Contracts are currently and at the time of
issuance will be treated as annuity contracts under applicable provisions of the
Code, and that it will make every effort to maintain such treatment and that it
will notify Schwab, the Fund, the Distributor and the Adviser 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. In addition, FGWL&A
represents and warrants that the Account is a "segregated asset account" and
that interests in the Account are offered exclusively through the purchase of or
transfer into a "variable contract" within the meaning of such terms under
Section 817 of the Code and the regulations thereunder. FGWL&A will use every
effort to continue to meet such definitional requirements, and it will notify
Schwab, the Fund, the Distributor and the Adviser immediately upon having a
reasonable basis for believing that such requirements have ceased to be met or
that they might not be met in the future. FGWL&A represents and warrants that it
will not purchase Fund shares with assets derived from tax-qualified retirement
plans except, indirectly, through Contracts purchased in connection with such
plans.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. At least annually, the Adviser or Distributor shall provide
FGWL&A and Schwab with as many copies of the Fund's current
prospectus for the Designated Portfolio(s) as FGWL&A and Schwab
may reasonably request for marketing purposes (including
distribution to Contractowners with respect to new sales of a
Contract), with expenses to be borne in accordance with Schedule
E hereof. If requested by FGWL&A in lieu thereof, the Adviser,
Distributor or Fund shall provide such documentation (including a
camera-ready copy and computer diskette of the current prospectus
for the Designated Portfolio(s)) and other assistance as is
reasonably necessary in order for FGWL&A once each year (or more
frequently if the prospectuses for the Designated Portfolio(s)
are amended) to have the prospectus for the Contracts and the
Fund's prospectus for the Designated Portfolio(s) printed
together in one document if requested on a timely basis. The Fund
and Adviser agree that the prospectus (and semi-annual and annual
reports) for the Designated Portfolio(s) will describe only the
Designated Portfolio(s) and will not name or describe any other
portfolios or series that may be in the Fund unless required by
law.
3.2. If applicable state or federal laws or regulations require that
the Statement of Additional Information ("SAI") for the Fund be
distributed to all Contractowners, then the Fund, Distributor
and/or the Adviser shall provide FGWL&A with copies of the Fund's
SAI or documentation thereof for the Designated Portfolio(s) in
such quantities, with expenses to be borne in accordance with
Schedule E hereof, as FGWL&A may reasonably require to permit
timely distribution thereof to Contractowners. The Adviser,
Distributor and/or the Fund shall also provide SAIs to any
Contractowner or prospective owner who requests such SAI from the
Fund (although it is anticipated that such requests will be made
to FGWL&A or Schwab).
3.3. The Fund, Distributor and/or Adviser shall provide FGWL&A and
Schwab with copies of the Fund's proxy material, reports to
stockholders and other communications to stockholders for the
Designated Portfolio(s), if any, in such quantity, with expenses
to be borne in accordance with Schedule E hereof, as FGWL&A may
reasonably require to permit timely distribution thereof to
Contractowners.
3.4. It is understood and agreed that, except with respect to
information regarding FGWL&A or Schwab provided in writing by
that party, neither FGWL&A nor Schwab are responsible for the
content of the prospectus or SAI for the Designated Portfolio(s).
It is also understood and agreed that, except with respect to
information regarding the Fund, the Distributor, the Adviser or
the Designated Portfolio(s) provided in writing by the Fund, the
Distributor or the Adviser, neither the Fund, the Distributor nor
Adviser are responsible for the content of the prospectus or SAI
for the Contracts.
3.5. If and to the extent required by law FGWL&A shall: (i) solicit
voting instructions from Contractowners;
(ii) vote the Designated Portfolio(s) shares held in the
Account in accordance with instructions received from
Contractowners: and
(iii) vote Designated Portfolio shares held in the Account for
which no instructions have been received in the same
proportion as Designated Portfolio(s) shares for which
instructions have been received from Contractowners, so
long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. FGWL&A reserves
the right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law.
3.6. FGWL&A shall be responsible for assuring that each of its separate
accounts holding shares of a Designated Portfolio calculates voting privileges
as directed by the Fund and agreed to by FGWL&A and the Fund. The Fund agrees to
promptly notify FGWL&A of any changes of interpretations or amendments of the
Mixed and Shared Funding Exemptive Order.
3.7. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or, as the Fund currently intends, comply with
Section 16(c) of the 1940 Act (although the Fund is not one of the trusts
described in Section 16(c) of that Act) as well as with Sections 16(a) and, if
and when applicable, 16(b). Further, the Fund will act in accordance with the
SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors or trustees and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information.
4.1. FGWL&A and Schwab shall furnish, or shall cause to be furnished, to
the Fund or its designee, a copy of each piece of sales literature or other
promotional material that FGWL&A or Schwab, respectively, develops or proposes
to use and in which the Fund (or a Portfolio thereof), its Adviser or one of its
sub-advisers or the Distributor is named in connection with the Contracts, at
least ten (10) Business Days prior to its use. No such material shall be used if
the Fund objects to such use within five (5) Business Days after receipt of such
material.
4.2. FGWL&A and Schwab shall not give any information or make any
representations or statements on behalf of the Fund in connection with the sale
of the Contracts other than the information or representations contained in the
registration statement, prospectus or SAI for the Fund shares, as the same may
be amended or supplemented from time to time, or in sales literature or other
promotional material approved by the Fund, Distributor or Adviser, except with
the permission of the Fund, Distributor or Adviser.
4.3. The Fund or the Adviser shall furnish, or shall cause to be
furnished, to FGWL&A and Schwab, a copy of each piece of sales literature or
other promotional material in which FGWL&A and/or its separate account(s), or
Schwab is named at least ten (10) Business Days prior to its use. No such
material shall be used if FGWL&A or Schwab objects to such use within five (5)
Business Days after receipt of such material.
4.4. The Fund, the Distributor and the Adviser shall not give any
information or make any representations on behalf of FGWL&A or concerning
FGWL&A, the Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or SAI for the
Contracts, as the same may be amended or supplemented from time to time, or in
sales literature or other promotional material approved by FGWL&A or its
designee, except with the permission of FGWL&A.
4.5. FGWL&A, the Fund, the Distributor and the Adviser shall not give
any information or make any representations on behalf of or concerning Schwab,
or use Xxxxxx'x name except with the permission of Schwab.
4.6. The Fund will provide to FGWL&A and Schwab at least one complete
copy of all registration statements, prospectuses, SAIs, sales literature and
other promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Designated
Portfolio(s), promptly after the filing of such document(s) with the SEC or NASD
or other regulatory authorities.
4.7. FGWL&A or Schwab will provide to the Fund at least one complete
copy of all registration statements, prospectuses, SAIs, reports, solicitations
for voting instructions, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Contracts or the Account,
contemporaneously with the filing of such document(s) with the SEC, NASD, or
other regulatory authority.
4.8. For purposes of Articles IV and VIII, the phrase "sales literature
and other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media; e.g.,
on-line networks such as the Internet or other electronic media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and shareholder reports, and proxy
materials (including solicitations for voting instructions) and any other
material constituting sales literature or advertising under the NASD rules, the
1933 Act or the 0000 Xxx.
4.9. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records, data and
access to operating procedures that may be reasonably requested in connection
with compliance and regulatory requirements related to this Agreement or any
party's obligations under this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund and the Adviser shall pay no fee or other compensation to
FGWL&A under this Agreement, and FGWL&A shall pay no fee or other compensation
to the Fund or Adviser under this Agreement, although the parties hereto will
bear certain expenses in accordance with Schedule E, Articles III, V, and other
provisions of this Agreement.
5.2. All expenses incident to performance by the Fund, the Distributor
and the Adviser under this Agreement shall be paid by the appropriate party, as
further provided in Schedule E. The Fund shall see to it that all shares of the
Designated Portfolio(s) are registered and authorized for issuance in accordance
with applicable federal law and, if and to the extent required, in accordance
with applicable state laws prior to their sale.
5.3. The parties shall bear the expenses of routine annual distribution
(mailing costs) of the Fund's prospectus and distribution (mailing costs) of the
Fund's proxy materials and reports to owners of Contracts offered by FGWL&A, in
accordance with Schedule E.
5.4. The Fund, the Distributor and the Adviser acknowledge that a
principal feature of the Contracts is the Contractowner's ability to choose from
a number of unaffiliated mutual funds (and portfolios or series thereof),
including the Designated Portfolio(s) and the Unaffiliated Funds, and to
transfer the Contract's cash value between funds and Designated Portfolios. The
Fund, the Distributor and the Adviser agree to cooperate with FGWL&A and Schwab
in facilitating the operation of the Account and the Contracts as described in
the prospectus for the Contracts, including but not limited to cooperation in
facilitating transfers between Unaffiliated Funds.
5.5. Schwab agrees to provide certain administrative services, specified
in Schedule C attached hereto and incorporated herein by reference, in
connection with the arrangements contemplated by this Agreement. The parties
acknowledge and agree that the services referred to in this Section 5.5 are
recordkeeping, shareholder communication, and other transaction facilitation and
processing, and related administrative services only and are not the services of
an underwriter or a principal underwriter of the Fund, and that Schwab is not an
underwriter for the shares of the Designated Portfolio(s), within the meaning of
the 1933 Act or the 0000 Xxx.
5.6. As compensation for the services specified in Schedule C hereto,
the Adviser agrees to pay Schwab a monthly Administrative Service Fee based on
the percentage per annum on Schedule C hereto applied to the average daily value
of the shares of the Designated Portfolio(s) held in the Account with respect to
Contracts sold by Schwab. This monthly Administrative Service Fee is due and
payable before the 15th (fifteenth) day following the last day of the month to
which it relates.
ARTICLE VI. Diversification and Qualification.
---------------------------------
6.1. The Fund, the Distributor and the Adviser represent and warrant
that the Fund will at all times sell its shares and invest its assets in
such a manner as to ensure that the Contracts will be treated as annuity
contracts under the Code, and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund, Distributor and Adviser
represent and warrant that the Fund and each Designated Portfolio
thereof will at all times comply with Section 817(h) of the Code and
Treasury Regulation ss.1.817-5, as amended from time to time, and any
Treasury interpretations thereof, relating to the diversification
requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications or successor
provisions to such Section or Regulations. The Fund, the Distributor and
the Adviser agree that shares of the Designated Portfolio(s) will be
sold only to Participating Insurance Companies and their separate
accounts and to Qualified Plans.
6.2. No shares of any Designated Portfolio of the Fund will be sold to
the general public.
6.3. The Fund, the Distributor and the Adviser represent and warrant
that the Fund and each Designated Portfolio is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that
each Designated Portfolio will maintain such qualification (under
Subchapter M or any successor or similar provisions) as long as this
Agreement is in effect.
6.4. The Fund, Distributor or Adviser will notify FGWL&A immediately
upon having a reasonable basis for believing that the Fund or any
Designated Portfolio has ceased to comply with the aforesaid Section
817(h) diversification or Subchapter M qualification requirements or
might not so comply in the future.
6.5. Without in any way limiting the effect of Sections 8.3, 8.4 and 8.5
hereof and without in any way limiting or restricting any other remedies
available to FGWL&A or Schwab, the Adviser or Distributor will pay all
costs associated with or arising out of any failure, or any anticipated
or reasonably foreseeable failure, of the Fund or any Designated
Portfolio to comply with Sections 6.1, 6.2, or 6.3 hereof, including all
costs associated with reasonable and appropriate corrections or
responses to any such failure; such costs may include, but are not
limited to, the costs involved in creating, organizing, and registering
a new investment company as a funding medium for the Contracts and/or
the costs of obtaining whatever regulatory authorizations are required
to substitute shares of another investment company for those of the
failed Portfolio (including but not limited to an order pursuant to
Section 26(b) of the 1940 Act); such costs are to include, but are not
limited to, reasonable fees and expenses of legal counsel and other
advisors to FGWL&A and any federal income taxes or tax penalties and
interest thereon (or "toll charges" or exactments or amounts paid in
settlement) incurred by FGWL&A with respect to itself or owners of its
Contracts in connection with any such failure or anticipated or
reasonably foreseeable failure.
6.6. The Fund at the Fund's expense shall provide FGWL&A or its designee
with reports certifying compliance with the aforesaid Section 817(h)
diversification and Subchapter M qualification requirements, at the
times provided for and substantially in the form attached hereto as
Schedule D and incorporated herein by reference; provided, however, that
providing such reports does not relieve the Fund of its responsibility
for such compliance or of its liability for any non-compliance.
6.7. FGWL&A agrees that if the Internal Revenue Service ("IRS") asserts
in writing in connection with any governmental audit or review of FGWL&A
or, to FGWL&A's knowledge, or any Contractowner that any Designated
Portfolio has failed to comply with the diversification requirements of
Section 817(h) of the Code or FGWL&A otherwise becomes aware of any
facts that could give rise to any claim against the Fund, Distributor or
Adviser as a result of such a failure or alleged failure:
(a) FGWL&A shall promptly notify the Fund, the Distributor and the
Adviser of such assertion or potential claim;
(b) FGWL&A shall consult with the Fund, the Distributor and the Adviser
as to how to minimize any liability that may arise as a result of such
failure or alleged failure;
(c) FGWL&A shall use its best efforts to minimize any liability of the
Fund, the Distributor and the Adviser resulting from such failure,
including, without limitation, demonstrating, pursuant to Treasury
Regulations, Section 1.817-5(a)(2), to the commissioner of the IRS that
such failure was inadvertent;
(d) any written materials to be submitted by FGWL&A to the IRS, any
Contractowner or any other claimant in connection with any of the
foregoing proceedings or contests (including, without limitation, any
such materials to be submitted to the IRS pursuant to Treasury
Regulations, Section 1.817-5(a)(2)) shall be provided by FGWL&A to the
Fund, the Distributor and the Adviser (together with any supporting
information or analysis) within at least two (2) business days prior to
submission;
(e) FGWL&A shall provide the Fund, the Distributor and the Adviser with
such cooperation as the Fund, the Distributor and the Adviser shall
reasonably request (including, without limitation, by permitting the
Fund, the Distributor and the Adviser to review the relevant books and
records of FGWL&A) in order to facilitate review by the Fund, the
Distributor and the Adviser of any written submissions provided to it or
its assessment of the validity or amount of any claim against it arising
from such failure or alleged failure;
(f) FGWL&A shall not with respect to any claim of the IRS or any
Contractowner that would give rise to a claim against the Fund, the
Distributor and the Adviser (i) compromise or settle any claim, (ii)
accept any adjustment on audit, or (iii) forego any allowable
administrative or judicial appeals, without the express written consent
of the Fund, the Distributor and the Adviser, which shall not be
unreasonably withheld; provided that, FGWL&A shall not be required to
appeal any adverse judicial decision unless the Fund and the Adviser
shall have provided an opinion of independent counsel to the effect that
a reasonable basis exists for taking such appeal; and further provided
that the Fund, the Distributor and the Adviser shall bear the costs and
expenses, including reasonable attorney's fees, incurred by FGWL&A in
complying with this clause (f).
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Designated Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners or by contract owners of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to disregard
the voting instructions of contract owners. The Board shall promptly inform
FGWL&A if it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. FGWL&A will report any potential or existing conflicts of which it
is aware to the Board. FGWL&A will assist the Board in carrying out its
responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by FGWL&A to inform the Board whenever contract owner voting instructions are to
be disregarded. Such responsibilities shall be carried out by FGWL&A with a view
only to the interests of its Contractowners.
7.3. If it is determined by a majority of the Board, or a majority of
its directors who are not interested persons of the Fund, the Distributor, the
Adviser or any sub-adviser to any of the Designated Portfolios (the "Independent
Directors"), that a material irreconcilable conflict exists, FGWL&A and other
Participating Insurance Companies shall, at their expense and to the extent
reasonably practicable (as determined by a majority of the Independent
Directors), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the separate accounts from the Fund or any
Designated Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by FGWL&A to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, FGWL&A may be
required, at the Fund's election, to withdraw the Account's investment in the
Fund and terminate this Agreement; provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent
Directors. Any such withdrawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of that six month period the Adviser, the
Distributor and the Fund shall continue to accept and implement orders by FGWL&A
for the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to FGWL&A conflicts with the
majority of other state regulators, then FGWL&A will withdraw the Account's
investment in the Fund and terminate this Agreement within six months after the
Board informs FGWL&A in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six month
period, the Fund shall continue to accept and implement orders by FGWL&A for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. FGWL&A shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contractowners affected by the irreconcilable material
conflict. In the event that the Board determines that any proposed action does
not adequately remedy any irreconcilable material conflict, then FGWL&A will
withdraw the Account's investment in the Fund and terminate this Agreement
within six (6) months after the Board informs FGWL&A in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the Independent Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable: and (b) Sections 3.5, 3.6, 3.7, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By FGWL&A
8.1(a).FGWL&A agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, Distributor or
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlement with the written consent of FGWL&A) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, expenses, damages or liabilities (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement or prospectus or SAI covering the
Contracts or contained in the Contracts or sales literature or
other promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this
Agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished in writing to FGWL&A or Schwab by or on
behalf of the Adviser, Distributor or Fund for use in the
registration statement or prospectus for the Contracts or in the
Contracts or sales literature or other promotional material (or
any amendment or supplement to any of the foregoing) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature or other
promotional material of the Fund not supplied by FGWL&A or
persons under its control) or wrongful conduct of FGWL&A or
persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI, or sales literature or other promotional
material of the Fund, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, if such a statement or
omission was made in reliance upon information furnished in
writing to the Fund by or on behalf of FGWL&A; or
(iv) arise as a result of any failure by FGWL&A to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by FGWL&A in this Agreement
or arise out of or result from any other material breach of this
Agreement by FGWL&A, including without limitation Section 2.11
and Section 6.7 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). FGWL&A shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.1(c). FGWL&A shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified FGWL&A in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify FGWL&A of any such claim shall not relieve FGWL&A
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision,
except to the extent that FGWL&A has been prejudiced by such failure to give
notice. In case any such action is brought against the Indemnified Parties,
FGWL&A shall be entitled to participate, at its own expense, in the defense of
such action. FGWL&A also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from FGWL&A
to such party of FGWL&A's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and FGWL&A will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.1(d).The Indemnified Parties will promptly notify FGWL&A of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by Schwab.
8.2(a).Schwab agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, Distributor or
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlement with the written consent of Schwab) or litigation (including
reasonable legal and other expenses), to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of Xxxxxx'x dissemination of information regarding the
Fund that is both (A) materially incorrect and (B) that was
neither contained in the Fund's registration statement nor in the
Fund's sales literature and other promotional material or
provided in writing to Schwab, or approved in writing, by or on
behalf of the Fund, Distributor or Adviser; or
(ii) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in sales
literature or other promotional material prepared or approved by
Schwab for the Contracts or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this Agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in
writing to FGWL&A or Schwab by or on behalf of the Adviser,
Distributor or the Fund or to Schwab by FGWL&A for use in the
registration statement, prospectus or SAI for the Contracts or in
the Contracts or sales literature or other promotional material
(or any amendment or supplement any of the foregoing) or
otherwise for use in connection with the sale of the Contracts;
or
(iii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or
other promotional material of the Fund not supplied by Schwab or
persons under its control) or wrongful conduct of Schwab or
persons under its control, with respect to the sale or
distribution of the Contracts; or
(iv) arise as a result of any failure by Schwab to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Schwab in this Agreement
or arise out of or result from any other material breach of this
Agreement by Schwab;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). Schwab shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages,
liabilities or litigation to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or negligence in the performance
of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties
under this Agreement or to any of the Indemnified Parties.
8.2(c). Schwab shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified Schwab in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify Schwab of any such
claim shall not relieve Schwab from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision,
except to the extent that Schwab has been prejudiced by such
failure to give notice. In case any such action is brought
against the Indemnified Parties, Schwab shall be entitled to
participate, at its own expense, in the defense of such action.
Schwab also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After
notice from Schwab to such party of Xxxxxx'x election to assume
the defense thereof, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and Schwab
will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than
reasonable costs of investigation.
8.2(d). The Indemnified Parties will promptly notify Schwab of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.3. Indemnification by the Adviser.
8.3(a). The Adviser agrees to indemnify and hold harmless FGWL&A and
Schwab and each of their directors and officers and each person,
if any, who controls FGWL&A or Schwab within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all
losses, claims, expenses, damages, liabilities (including amounts
paid in settlement with the written consent of the Adviser) or
litigation (including reasonable legal and other expenses) to
which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
or other promotional material of the Fund prepared by the Fund,
the Distributor or the Adviser (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this Agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in
writing to the Adviser, the Distributor or the Fund by or on
behalf of FGWL&A or Schwab for use in the registration statement,
prospectus or SAI for the Fund or in sales literature or other
promotional material (or any amendment or supplement to any of
the foregoing) or otherwise for use in connection with the sale
of the Contracts or the Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or
other promotional material for the Contracts not supplied by the
Adviser or persons under its control) or wrongful conduct of the
Fund, the Distributor or the Adviser or persons under their
control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI, or sales literature or other promotional
material covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance
upon information furnished in writing to FGWL&A or Schwab by or
on behalf of the Adviser, the Distributor or the Fund; or
(iv) arise as a result of any failure by the Fund, the Distributor or
the Adviser to provide the services and furnish the materials
under the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the
diversification and other qualification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, the Distributor
or the Adviser in this Agreement or arise out of or result from
any other material breach of this Agreement by the Adviser, the
Distributor or the Fund; or
(vi) arise out of or result from the incorrect or untimely calculation
or reporting by the Fund, the Distributor or the Adviser of the
daily net asset value per share or dividend or capital gain
distribution rate;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Adviser specified in Article VI hereof.
8.3(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.3(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that the Adviser
has been prejudiced by such failure to give notice. In case any such action is
brought against the Indemnified Parties, the Adviser will be entitled to
participate, at its own expense, in the defense thereof. The Adviser also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Adviser to such party of the
Adviser's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Adviser will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.3(d). FGWL&A and Schwab agree promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any
of its officers or directors in connection with the issuance or
sale of the Contracts or the operation of the Account.
8.4. Indemnification By the Fund.
8.4(a). The Fund agrees to indemnify and hold harmless FGWL&A and Schwab
and each of their respective directors and officers and each
person, if any, who controls FGWL&A or Schwab within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.4) against any and all
losses, claims, expenses, damages and liabilities (including
amounts paid in settlement with the written consent of the Fund)
or litigation (including reasonable legal and other expenses) to
which the Indemnified Parties may be required to pay or become
subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, expenses, damages,
liabilities or expenses (or actions in respect thereof) or
settlements, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund; or
(iii) arise out of or result from the incorrect or untimely calculation
or reporting of the daily net asset value per share or dividend
or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.4(b) and
8.4(c) hereof.
8.4(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.4(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve it from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision, except to the extent that the Fund has been
prejudiced by such failure to give notice. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund shall also be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.4(d). FGWL&A and Schwab each agree promptly to notify the Fund of the
commencement of any litigation or proceeding against itself or any of its
respective officers or directors in connection with the Agreement, the issuance
or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
8.5. Indemnification by the Distributor.
8.5(a).The Distributor agrees to indemnify and hold harmless FGWL&A and
Schwab and each of their respective directors and officers and each person, if
any, who controls FGWL&A or Schwab within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" for purposes of this Section 8.5)
against any and all losses, claims, expenses, damages and liabilities (including
amounts paid in settlement with the written consent of the Distributor) or
litigation (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
or other promotional material of the Fund prepared by the Fund,
Adviser or Distributor (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished in writing to the
Adviser, the Distributor or Fund by or on behalf of FGWL&A or
Schwab for use in the registration statement or SAI or prospectus
for the Fund or in sales literature or other promotional material
(or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI, sales literature or
other promotional material for the Contracts not supplied by the
Distributor or persons under its control) or wrongful conduct of
the Fund, the Distributor or Adviser or persons under their
control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI, sales literature or other promotional material
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished in writing to FGWL&A or Schwab by or on behalf of the
Adviser, the Distributor or Fund; or
(iv) arise as a result of any failure by the Fund, Adviser or
Distributor to provide the services and furnish the materials
under the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the
diversification and other qualification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, Adviser or
Distributor in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund, Adviser or
Distributor; or
(vi) arise out of or result from the incorrect or untimely calculation
or reporting of the daily net asset value per share or dividend
or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.5(b) and
8.5(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Distributor specified in Article VI
hereof.
8.5(b).The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance or such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.5(c) The Distributor shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Distributor in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Distributor of
any such claim shall not relieve the Distributor from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision, except to the extent that the
Distributor has been prejudiced by such failure to give notice. In case any such
action is brought against the Indemnified Parties, the Distributor will be
entitled to participate, at its own expense, in the defense thereof. The
Distributor also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Distributor
to such party of the Distributor's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Distributor will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.5(d) FGWL&A and Schwab agree to promptly notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York,
without regard to the New York Conflict of Laws provisions.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with
respect to some or all Designated Portfolios, upon six (6) months
advance written notice delivered to the other parties; provided,
however, that such notice shall not be given earlier than six (6)
months following the date of this Agreement; or
(b) at the option of FGWL&A or Schwab by written notice to the
other parties with respect to any Designated Portfolio based upon
FGWL&A's or Xxxxxx'x determination that shares of such Designated
Portfolio are not reasonably available to meet the requirements
of the Contracts; or
(c) at the option of FGWL&A or Schwab by written notice to the
other parties with respect to any Designated Portfolio in the
event any of the Designated Portfolio's shares are not
registered, issued or sold in accordance with applicable state
and/ or federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued or to
be issued by FGWL&A; or
(d) at the option of the Fund, Distributor or Adviser in the
event that formal administrative proceedings are instituted
against FGWL&A or Schwab by the NASD, the SEC, the Insurance
Commissioner or like official of any state or any other
regulatory body regarding FGWL&A's or Xxxxxx'x duties under this
Agreement or related to the sale of the Contracts, the operation
of any Account, or the purchase of the Fund shares, if, in each
case, the Fund, Distributor or Adviser, as the case may be,
reasonably determines in its sole judgment exercised in good
faith, that any such administrative proceedings will have a
material adverse effect upon the ability of FGWL&A or Schwab to
perform its obligations under this Agreement; or
(e) at the option of FGWL&A or Schwab in the event that formal
administrative proceedings are instituted against the Fund, the
Distributor or the Adviser by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body,
if Schwab or FGWL&A reasonably determines in its sole judgment
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Fund,
the Distributor or the Adviser to perform their obligations under
this Agreement; or
(f) at the option of FGWL&A by written notice to the Fund with
respect to any Designated Portfolio if FGWL&A reasonably believes
that the Designated Portfolio will fail to meet the Section
817(h) diversification requirements or Subchapter M
qualifications specified in Article VI hereof; or
(g) at the option of either the Fund, the Distributor or the
Adviser, if (i) the Fund, Distributor or Adviser, respectively,
shall determine, in its sole judgment reasonably exercised in
good faith, that either FGWL&A or Schwab has suffered a material
adverse change in its business or financial condition or is the
subject of material adverse publicity and that material adverse
change or publicity will have a material adverse impact on
FGWL&A's or Xxxxxx'x ability to perform its obligations under
this Agreement, (ii) the Fund, Distributor or Adviser notifies
FGWL&A or Schwab, as appropriate, of that determination and its
intent to terminate this Agreement, and (iii) after considering
the actions taken by FGWL&A or Schwab and any other changes in
circumstances since the giving of such a notice, the
determination of the Fund, Distributor or Adviser shall continue
to apply on the sixtieth (60th) day following the giving of that
notice, which sixtieth day shall be the effective date of
termination; or
(h) at the option of either FGWL&A or Schwab, if (i) FGWL&A or
Schwab, respectively, shall determine, in its sole judgment
reasonably exercised in good faith, that the Fund, Distributor or
Adviser has suffered a material adverse change in its business or
financial condition or is the subject of material adverse
publicity and that material adverse change or publicity will have
a material adverse impact on the Fund's, Distributor's or
Adviser's ability to perform its obligations under this
Agreement, (ii) FGWL&A or Schwab notifies the Fund, Distributor
or Adviser, as appropriate, of that determination and its intent
to terminate this Agreement, and (iii) after considering the
actions taken by the Fund, Distributor or Adviser and any other
changes in circumstances since the giving of such a notice, the
determination of FGWL&A or Schwab shall continue to apply on the
sixtieth (60th) day following the giving of that notice, which
sixtieth day shall be the effective date of termination; or
(i) at the option of FGWL&A in the event that formal
administrative proceedings are instituted against Schwab by the
NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding Xxxxxx'x duties under this
Agreement or related to the sale of the Fund's shares or the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that FGWL&A determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of Schwab to perform its obligations related to
the Contracts; or
(j) at the option of Schwab in the event that formal
administrative proceedings are instituted against FGWL&A by the
NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding FGWL&A's duties under this
Agreement or related to the sale of the Fund's shares or the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that Schwab determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of FGWL&A to perform its obligations related to
the Contracts; or
(k) at the option of any non-defaulting party hereto in the event
of a material breach of this Agreement by any party hereto (the
"defaulting party") other than as described in 10.1(a)-(j);
provided, that the non-defaulting party gives written notice
thereof to the defaulting party, with copies of such notice to
all other non-defaulting parties, and if such breach shall not
have been remedied within thirty (30) days after such written
notice is given, then the non-defaulting party giving such
written notice may terminate this Agreement by giving thirty (30)
days written notice of termination to the defaulting party.
10.2. Notice Requirement.
No termination of this Agreement shall be effective unless and until the party
terminating this Agreement gives prior written notice to all other parties of
its intent to terminate, which notice shall set forth the basis for the
termination. Furthermore,
(a) in the event any termination is based upon the provisions of Article
VII, or the provisions of Section 10.1(a), 10.1(g) or 10.1(h) of this
Agreement, the prior written notice shall be given in advance of the
effective date of termination as required by those provisions unless
such notice period is shortened by mutual written agreement of the
parties; (b) in the event any termination is based upon the provisions
of Section 10.1(d), 10.1(e), 10.1(i) or 10.1(j) of this Agreement, the
prior written notice shall be given at least sixty (60) days before the
effective date of termination; and (c) in the event any termination is
based upon the provisions of Section 10.1(b), 10.1(c) or 10.1(f), the
prior written notice shall be given in advance of the effective date of
termination, which date shall be determined by the party sending the
notice.
10.3. Effect of Termination.
Notwithstanding any termination of this Agreement, other than as a result of a
failure by either the Fund or FGWL&A to meet Section 817(h) of the Code
diversification requirements, the Fund, the Distributor and the Adviser shall,
at the option of FGWL&A or Schwab, continue to make available additional shares
of the Designated Portfolio(s) pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Designated Portfolio(s), redeem investments in the
Designated Portfolio(s) and/or invest in the Designated Portfolio(s) upon the
making of additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.3 shall not apply to any terminations under Article
VII and the effect of such Article VII terminations shall be governed by Article
VII of this Agreement.
10.4. Surviving Provisions. Notwithstanding any termination of this
Agreement, each party's obligations under Article VIII to indemnify other
parties shall survive and not be affected by any termination of this Agreement.
In addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any termination of this
Agreement.
10.5. Survival of Agreement.
A termination by Schwab shall terminate this Agreement only as to Schwab, and
this Agreement shall remain in effect as to the other parties; provided,
however, that in the event of a termination by Schwab the other parties shall
have the option to terminate this Agreement upon 60 (sixty) days notice, rather
than the six (6) months specified in Section 10.1(a).
ARTICLE XI. Notices
--------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Baron Capital Funds Trust
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx
Chief Operating Officer
If to FGWL&A:
First Great-West Life & Annuity Insurance Company
Attention:
If to the Adviser:
BAMCO, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
General Counsel
If to the Distributor:
Baron Capital, Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
General Counsel
If to Schwab:
Xxxxxxx Xxxxxx & Co., Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: General Counsel
ARTICLE XII. Miscellaneous
12.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain. Without limiting the foregoing, no party hereto shall disclose
any information that another party has designated as proprietary.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the New York Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of FGWL&A are being conducted in a manner consistent with the New
York Variable Annuity Regulations and any other applicable law or regulations.
12.6. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in a forum jointly
selected by the relevant parties (but if applicable law requires some other
forum, then such other forum) in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
12.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
12.9. Schwab and FGWL&A are hereby expressly put on notice of the
limitation of liability as set forth in the Declarations of Trust of the Fund
and agree that the obligations assumed by the Fund, Distributor and the Adviser
pursuant to this Agreement shall be limited in any case to the Fund, Distributor
and Adviser and their respective assets and neither Schwab nor FGWL&A shall seek
satisfaction of any such obligation from the shareholders of the Fund,
Distributor or the Adviser, the Trustees, officers, employees or agents of the
Fund, Distributor or Adviser, or any of them.
12.10. The Fund, the Distributor and the Adviser agree that the
obligations assumed by FGWL&A and Schwab pursuant to this Agreement shall be
limited in any case to FGWL&A and Schwab and their respective assets and neither
the Fund, Distributor nor Adviser shall seek satisfaction of any such obligation
from the shareholders of FGWL&A or Schwab, the directors, officers, employees or
agents of the FGWL&A or Schwab, or any of them, except to the extent permitted
under this Agreement.
12.11. No provision of this Agreement may be deemed or construed to
modify or supersede any contractual rights, duties, or indemnifications, as
between the Adviser and the Fund, and the Distributor and the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By its authorized officer,
By:______________________________
Title:
Date:
BARON CAPITAL FUNDS TRUST
By its authorized officer,
By:__/s/_Morty Schaja____________
Title:
Date:
BAMCO, INC.
By its authorized officer,
By:__/s/ Xxxxx X. Martinson________
----------------------
Title:
Date:
BARON CAPITAL, INC.
By its authorized officer,
By:__ /s/ Xxxxx X. Xxxxxxxxx ____
-------------------------
Title:
Date:
XXXXXXX XXXXXX & CO., INC.
By its authorized officer,
By:__/s/ Xxxxx X. Sarinske___
---------------------
Title:
Date:
Schwab Variable Annuity
SCHEDULE A
Contracts Form Numbers
First Great-West Life & Annuity Insurance Company
Group Variable/Fixed Annuity Contract J434NY
SCHEDULE B
Designated Portfolios
Baron Capital Asset Fund
SCHEDULE C
Administrative Services
To be performed by Xxxxxxx Xxxxxx & Co., Inc.
X. Xxxxxx will provide the properly registered and licensed personnel and
systems needed for all customer servicing and support - for both Fund
and Contract information and questions - including the following:
o respond to Contractowner inquiries
o mail fund and Contract prospectuses
o entry of initial and subsequent orders
o transfer of cash to FGWL&A and/or Fund
o explanations of Designated Portfolio objectives and characteristics
o entry of transfers between Unaffiliated Funds, including the Designated
Portfolios
o Contract balance and allocation inquiries
o communicate all purchase, withdrawal, and exchange orders received from
Contractowners to FGWL&A which will transmit orders to Funds
o train call center representatives to explain Fund objectives, Morningstar
categories, Fund selection data and differences between publicly traded
funds and the Funds
o provide performance data and Fund prices
o shareholder services including researching trades, resolving trade
disputes, etc.
o coordinate the writing, printing and distribution of semi-annual and annual
reports to Contract owners investing in the Designated Portfolios
o create and update Designated Portfolio profiles and other shareholder
communications
o establish scheduled account rebalances o Web trading and account servicing
o touch-tone telephone trading and account servicing
o establish dollar cost averaging
o communications to Contractowners related to product changes, including but
not limited to changes in the available Designated Portfolios
B. For the foregoing services, Schwab shall receive a monthly fee equal to ___%
per annum of the average daily value of the shares of the Designated Portfolios
listed on Schedule B attributable to Contractowners, payable by the Adviser
directly to Schwab, such payments being due and payable within 15 (fifteen) days
after the last day of the month to which such payment relates.
C. The Fund will calculate and Schwab will verify with FGWL&A the asset balance
for each day on which the fee is to be paid pursuant to this Agreement with
respect to each Designated Portfolio.
SCHEDULE D
Reports per Section 6.6
With regard to the reports relating to the quarterly testing of
compliance with the requirements of Section 817(h) and Subchapter M under the
Internal Revenue Code (the "Code") and the regulations thereunder, the Fund
shall provide within twenty (20) Business Days of the close of the calendar
quarter a report to FGWL&A in the Form D1 attached hereto and incorporated
herein by reference, regarding the status under such sections of the Code of the
Designated Portfolio(s), and if necessary, identification of any remedial action
to be taken to remedy non-compliance.
With regard to the reports relating to the year-end testing of
compliance with the requirements of Subchapter M of the Code, referred to
hereinafter as "RIC status," the Fund will provide the reports on the following
basis: (i) the last quarter's quarterly reports can be supplied within the
20-day period, and (ii) a year-end report will be provided 45 days after the end
of the calendar year. However, if a problem with regard to RIC status, as
defined below, is identified in the third quarter report, on a weekly basis,
starting the first week of December, additional interim reports will be provided
specially addressing the problems identified in the third quarter report. If any
interim report memorializes the cure of the problem, subsequent interim reports
will not be required.
A problem with regard to RIC status is defined as any violation of the
following standards, as referenced to the applicable sections of the Code:
(a) Less than ninety percent of gross income is derived from sources of
income specified in Section 851(b)(2); (b) Thirty percent or greater
gross income is derived from the sale or disposition of assets specified
in Section 851(b)(3);
(c) Less than fifty percent of the value of total assets consists of
assets specified in Section 851(b)(4)(A); and (d) No more than
twenty-five percent of the value of total assets is invested in the
securities of one issuer, as that requirement is set forth in Section
851(b)(4)(B).
FORM D1
CERTIFICATE OF COMPLIANCE
For the quarter ended:
---------------------------
___________________ (investment advisor) for Fund hereby notifies you
that, based on internal compliance testing performed as of the end of the
calendar quarter ended ________, 19____, the Designated Portfolios were in
compliance with all requirements of Section 817(h) and Subchapter M of the
Internal Revenue Code (the "Code") and the regulations thereunder as required in
the Fund Participation Agreement among First Great-West Life & Annuity Insurance
Company, Xxxxxxx Xxxxxx & Co., Inc. and other than the exceptions discussed
below:
Exceptions Remedial Action
Signed this day of , .
----- ---------- ------------
------------------------
(Signature)
By:
-----------------------------------------------
(Type or Print Name and Title/Position)
SCHEDULE E
EXPENSES
The Fund and/or the Distributor and/or Adviser, and FGWL&A will coordinate the
functions and pay the costs of the completing these functions based upon an
allocation of costs in the tables below. Costs shall be allocated to reflect the
Fund's share of the total costs determined according to the number of pages of
the Fund's respective portions of the documents.
------------------------- ---------------------- ---------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Prospectus Printing of combined FGWL&A Fund,
prospectuses Distributor or
Adviser, as
applicable
------------------------- ---------------------- ---------------------- ------------------
Fund, Distributor or FGWL&A Fund,
Adviser shall supply Distributor or
FGWL&A with such Adviser, as
numbers of the applicable
Designated
Portfolio(s)
prospectus(es) as
FGWL&A shall
reasonably request
------------------------- ---------------------- ---------------------- ------------------
Distribution to New FGWL&A FGWL&A
and Inforce Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution to Schwab Schwab
Prospective Clients
------------------------- ---------------------- ---------------------- ------------------
Product Prospectus Printing for Inforce FGWL&A FGWL&A
Clients
------------------------- ---------------------- ---------------------- ------------------
Printing for FGWL&A Schwab
Prospective Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution to New FGWL&A FGWL&A
and Inforce Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution to Schwab Schwab
Prospective Clients
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Prospectus If Required by Fund, Fund, Distributor or Fund,
Update & Distribution Distributor or Adviser Distributor or
Adviser Adviser
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Product Prospectus If Required by Fund, FGWL&A Fund,
Update & Distribution Distributor or Distributor or
Adviser Adviser
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund SAI Printing Fund, Distributor or Fund,
Adviser Distributor or
Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Product SAI Printing FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Proxy Material for Printing if proxy Fund, Distributor or Fund,
Mutual Fund: required by Law Adviser Distributor or
Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A Fund,
(including labor) if Distributor or
proxy required by Law Adviser
------------------------- ---------------------- ---------------------- ------------------
Printing & FGWL&A FGWL&A
distribution if
required by FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Printing & FGWL&A Schwab
distribution if
required by Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Annual & Printing of combined FGWL&A Fund,
Semi-Annual Report reports Distributor or
Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A and Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Other communication to If Required by the Schwab Fund,
New and Prospective Fund, Distributor or Distributor or
clients Adviser Adviser
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A Schwab FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Other communication to Distribution FGWL&A Fund,
inforce (including labor and Distributor or
printing) if Adviser required by the Fund, Distributor
or Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
(including labor and
printing)if required
by FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A Schwab
(including labor and
printing if required
by Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Errors in Share Price Cost of error to FGWL&A Fund or Adviser
calculation pursuant to participants
Section 1.10
------------------------- ---------------------- ---------------------- ------------------
Cost of FGWL&A Fund or Adviser
administrative work
to correct error
------------------------- ---------------------- ---------------------- ------------------
Operations of the Fund All operations and Fund, Distributor or Fund or Adviser
related expenses, Adviser
including the cost
of registration and
qualification of
shares, taxes on the
issuance or transfer
of shares, cost of
management of the
business affairs of
the Fund, and
expenses paid or
assumed by the fund
pursuant to any Rule
12b-1 plan
------------------------- ---------------------- ---------------------- ------------------
Operations of the Federal registration FGWL&A FGWL&A
Account of units of separate
account (24f-2 fees)
------------------------- ---------------------- ---------------------- ------------------
FUND PARTICIPATION AGREEMENT
Dreyfus Variable Investment Fund
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares.....................................................3
ARTICLE II. Representations and Warranties..........................................7
ARTICLE III. Prospectuses and Proxy Statements; Voting..............................11
ARTICLE IV. Sales Material and Information.........................................13
ARTICLE V. Fees and Expenses......................................................15
ARTICLE VI. Diversification and Qualification......................................16
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order ..............................20
ARTICLE VIII. Indemnification .......................................................22
ARTICLE IX. Applicable Law.........................................................31
ARTICLE X. Termination............................................................31
ARTICLE XI. Notices................................................................35
ARTICLE XII. Miscellaneous..........................................................36
SCHEDULE A Contracts..............................................................40
SCHEDULE B Designated Portfolios..................................................41
SCHEDULE C Administrative Services................................................42
SCHEDULE D Reports per Section 6.6................................................44
SCHEDULE E Expenses...............................................................47
PARTICIPATION AGREEMENT
Among
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
DREYFUS VARIABLE INVESTMENT FUND
THE DREYFUS CORPORATION
and
XXXXXXX XXXXXX & CO., INC.
THIS AGREEMENT, made and entered into as of this 1st day of May , 1999
by and among FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (hereinafter
"FGWL&A"), a New York life insurance company, on its own behalf and on behalf of
its Separate Account Variable Annuity-1 Series Account (the "Account"); DREYFUS
VARIABLE INVESTMENT FUND, a business trust organized under the laws of the
Commonwealth of Massachusetts (hereinafter the "Fund"); (hereinafter the
"Fund"); THE DREYFUS CORPORATION (hereinafter the "Adviser"), a Corporation
organized under the laws of New York; and XXXXXXX XXXXXX & CO., INC., a
California corporation (hereinafter "Schwab").
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies, including FFGWL&A\, which have entered into
participation agreements similar to this Agreement (hereinafter "Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (hereinafter the "SEC"), dated December 31, 1997 (File No.
812-10606), granting Participating Insurance Companies and variable annuity and
variable life insurance separate accounts exemptions from the provisions of
sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as
amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
life insurance companies that may or may not be affiliated with one another and
qualified pension and retirement plans ("Qualified Plans") (hereinafter the
"Mixed and Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolio(s) are registered under
the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, FGWL&A has registered certain variable annuity contracts
supported wholly or partially by the Account (the "Contracts") under the 1933
Act and said Contracts are listed in Schedule A attached hereto and incorporated
herein by reference, as such Schedule may be amended from time to time by mutual
written agreement; and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of FGWL&A on
January 15, 1997, under the insurance laws of the State of New York, to set
aside and invest assets attributable to the Contracts; and
WHEREAS, FGWL&A has registered the Account as a unit investment trust
under the 1940 Act and has registered the securities deemed to be issued by the
Account under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, FGWL&A intends to purchase shares in the Portfolio(s) listed in
Schedule B attached hereto and incorporated herein by reference, as such
Schedule may be amended from time to time by mutual written agreement (the
"Designated Portfolio(s)"), on behalf of the Account to fund the Contracts, and
the Fund is authorized to sell such shares to unit investment trusts such as the
Account at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Account also intends to purchase shares in other open-end
investment companies or series thereof not affiliated with the Fund (the
"Unaffiliated Funds") on behalf of the Account to fund the Contracts; and
WHEREAS, Schwab will perform certain services for the Fund in connection
with the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, FGWL&A,
Schwab, the Fund and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to FGWL&A those shares of the Designated
Portfolio(s) which the Account orders, executing such orders, subject to Section
1.6 hereof, on each Business Day at the net asset value next computed after
receipt by the Fund or its designee of the order for the shares of the
Designated Portfolios. For purposes of this Section 1.1, FGWL&A shall be the
designee of the Fund for receipt of such orders and receipt by such designee
shall constitute receipt by the Fund, provided that the Fund receives notice of
any such order by 12:00 noon Eastern time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Designated Portfolio calculates its net asset value
pursuant to the rules of the SEC.
1.2. The Fund agrees to make shares of the Designated Portfolio(s)
available for purchase at the applicable net asset value per share by FGWL&A and
the Account on those days on which the Fund calculates its Designated
Portfolio(s)' net asset value pursuant to rules of the SEC, and the Fund shall
calculate such net asset value on each day which the New York Stock Exchange is
open for trading. Notwithstanding the foregoing, the Board of Trustees of the
Fund (hereinafter the "Board") may refuse to sell shares of any Designated
Portfolio to any person, or suspend or terminate the offering of shares of any
Designated Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of
such Designated Portfolio.
1.3. The Fund will not sell shares of the Designated Portfolio(s) to any
other Participating Insurance Company separate account unless an agreement
containing provisions substantially similar as Sections 2.1, 3.5, 3.6, 3.7, and
Article VII of this Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on FGWL&A's request, any full
or fractional shares of the Fund held by FGWL&A, executing such requests on each
Business Day at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. Requests for redemption identified
by FGWL&A, or its agent, as being in connection with surrenders, annuitizations,
or death benefits under the Contracts, upon prior written notice, may be
executed within seven (7) calendar days after receipt by the Fund or its
designee of the requests for redemption. This Section 1.4 may be amended, in
writing, by the parties consistent with the requirements of the 1940 Act and
interpretations thereof. For purposes of this Section 1.4, FGWL&A shall be the
designee of the Fund for receipt of requests for redemption and receipt by such
designee shall constitute receipt by the Fund, provided that the Fund receives
notice of any such request for redemption by 12:00 noon Eastern time on the next
following Business Day.
1.5. The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
Participating Insurance Companies (subject to Section 1.3 and Article VI hereof)
and the cash value of the Contracts may be invested in other investment
companies.
1.6. FGWL&A shall pay for Fund shares by 3:00 p.m. Eastern time on the
next Business Day after an order to purchase Fund shares is made in accordance
with the provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire and/or by a credit for any shares redeemed the same day as
the purchase. If the payment is not received by the Fund by 3:00 p.m. Eastern
time, best efforts are made to effect payment by 5:30 p.m. Eastern time. If for
some reason payment can not be effected by 5:30 p.m. Eastern time, trades will
be settled on the Business Day on which such payment is received by the Fund at
the net asset value computed on the Business day immediately preceding such day
and FGWL&A will be responsible for any resulting gains/losses to contract
holders.
1.7. The Fund shall pay and transmit the proceeds of redemptions of Fund
shares by 12:00 noon Eastern Time on the next Business Day after a redemption
order is received in accordance with Section 1.4 hereof. Payment shall be in
federal funds transmitted by wire and/or a credit for any shares purchased the
same day as the redemption.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to FGWL&A or the Account. Shares
ordered from the Fund will be recorded in an appropriate title for the Account
or the appropriate sub-account of the Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to FGWL&A of any income, dividends or capital
gain distributions payable on the Designated Portfolio(s)' shares. FGWL&A hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Designated Portfolio shares in additional shares of that
Designated Portfolio. FGWL&A reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify FGWL&A by the end of the next following Business Day of the
number of shares so issued as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Designated Portfolio available to FGWL&A on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and shall
use its best efforts to make such net asset value per share available by 6:00
p.m. Eastern time. In the event of an error in the computation of a Designated
Portfolio's net asset value per share ("NAV") or any dividend or capital gain
distribution (each, a "pricing error"), the Adviser or the Fund shall
immediately notify FGWL&A as soon as possible after discovery of the error. Such
notification may be verbal, but shall be confirmed promptly in writing in
accordance with Article XI of this Agreement. A pricing error shall be corrected
as follows: (a) if the pricing error results in a difference between the
erroneous NAV and the correct NAV of less than $0.01 per share, then no
corrective action need be taken; (b) if the pricing error results in a
difference between the erroneous NAV and the correct NAV equal to or greater
than $0.01 per share, but less than 1/2 of 1% of the Designated Portfolio's NAV
at the time of the error, then the Adviser shall reimburse the Designated
Portfolio for any loss, after taking into consideration any positive effect of
such error; however, no adjustments to Contractowner accounts need be made; and
(c) if the pricing error results in a difference between the erroneous NAV and
the correct NAV equal to or greater than 1/2 of 1% of the Designated Portfolio's
NAV at the time of the error, then the Adviser shall reimburse the Designated
Portfolio for any loss (without taking into consideration any positive effect of
such error) and shall reimburse FGWL&A for the costs of adjustments made to
correct Contractowner accounts in accordance with the provisions of Schedule E.
If an adjustment is necessary to correct a material error which has caused
Contractowners to receive less than the amount to which they are entitled, the
number of shares of the applicable sub-account of such Contractowners will be
adjusted and the amount of any underpayments shall be credited by the Adviser to
FGWL&A for crediting of such amounts to the applicable Contractowners accounts.
Upon notification by the Adviser of any overpayment due to a material error,
FGWL&A or Schwab, as the case may be, shall promptly remit to Adviser any
overpayment that has not been paid to Contractowners; however, Adviser
acknowledges that Schwab and FGWL&A do not intend to seek additional payments
from any Contractowner who, because of a pricing error, may have underpaid for
units of interest credited to his/her account. In no event shall Schwab or
FGWL&A be liable to Contractowners for any such adjustments or underpayment
amounts, unless such adjustment or underpayment amount was the result of
incorrect information furnished by FGWL&A or information furnished untimely by
FGWL&A or otherwise as a result of or relating to a breach of this Agreement by
FGWL&A. A pricing error within categories (b) or (c) above shall be deemed to be
"materially incorrect" or constitute a "material error" for purposes of this
Agreement.
The standards set forth in this Section 1.10 are based on the Parties'
understanding of the views expressed by the staff of the SEC as of the date of
this Agreement. In the event the views of the SEC staff are later modified or
superseded by SEC or judicial interpretation, the parties shall amend the
foregoing provisions of this Agreement to comport with the appropriate
applicable standards, on terms mutually satisfactory to all Parties.
ARTICLE II. Representations and Warranties
2.1. FGWL&A represents and warrants that the Contracts and the securities deemed
to be issued by the Account under the Contracts are or will be registered under
the 1933 Act; that the Contracts will be issued and sold in compliance in all
material respects with all applicable federal and state laws and that the sale
of the Contracts shall comply in all material respects with state insurance
suitability requirements. FGWL&A further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law and
that it has legally and validly established the Account prior to any issuance or
sale of units thereof as a segregated asset account under Section 4240, et. seq.
of the New York Insurance Law and has registered the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts and that it will maintain such
registration for so long as any Contracts are outstanding as required by
applicable law.
2.2. FGWL&A represents and warrants that the income, gains and losses,
whether or not realized, from assets allocated to each of the Accounts are, in
accordance with the Contracts, to be credited to or charged against such
Accounts without regard to other income, gains or losses from assets allocated
to any other accounts of FGWL&A. FGWL&A represents and warrants that the assets
of each of the Accounts are and will be kept separate from FGWL&A's General
Accounts and any other separate accounts FGWL&A may have, and will not be
charged with liabilities from any business that FGWL&A may conduct or the
liabilities of any companies affiliated with FGWL&A.
2.3. The Fund represents and warrants that Designated Portfolio(s)
shares sold pursuant to this Agreement shall be registered under the 1933 Act,
duly authorized for issuance and sold in compliance with all applicable federal
securities laws including without limitation the 1933 Act, the 1934 Act, and the
1940 Act and that the Fund is and shall remain registered under the 0000 Xxx.
The Fund shall amend the registration statement for its shares under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares.
2.4. The Fund reserves the right to adopt a plan pursuant to Rule 12b-1
under the 1940 Act and to impose an asset-based or other charge to finance
distribution expenses as permitted by applicable law and regulation. In any
event, the Fund and Adviser agree to comply with applicable provisions and SEC
staff interpretations of the 1940 Act to assure that the investment advisory or
management fees paid to the Adviser by the Fund are in accordance with the
requirements of the 1940 Act. To the extent that the Fund decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have its
Board, a majority of whom are not interested persons of the Fund, formulate and
approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses.
2.5. The Fund and Adviser represents and warrants that it will make
every effort to ensure that the investment policies, fees and expenses of the
Designated Portfolio(s) are and shall at all times remain in compliance with the
insurance and other applicable laws of the State of New York and any other
applicable state to the extent required to perform this Agreement. The Fund
further represents and warrants that it will make every effort to ensure that
Designated Portfolio(s) shares will be sold in compliance with the insurance
laws of the State of New York and all applicable state insurance and securities
laws. The Fund shall register and qualify the shares for sale in accordance with
the laws of the various states if and to the extent required by applicable law.
FGWL&A and the Fund will endeavor to mutually cooperate with respect to the
implementation of any modifications necessitated by any change in state
insurance laws, regulations or interpretations of the foregoing that affect the
Designated Portfolio(s) (a "Law Change"), and to keep each other informed of any
Law Change that becomes known to either party. In the event of a Law Change, the
Fund agrees that, except in those circumstances where the Fund has advised
FGWL&A that its Board of Directors has determined that implementation of a
particular Law Change is not in the best interest of all of the Fund's
shareholders with an explanation regarding why such action is lawful, any action
required by a Law Change will be taken.
2.6. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.7. The Adviser represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the Fund in compliance in all material
respects with the laws of the State of New York and any applicable state and
federal securities laws.
2.8. The Fund and the Adviser represent and warrant that all of their
respective officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are, and shall
continue to be at all times, covered by one or more blanket fidelity bonds or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid bonds shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company.
2.9. Schwab represents and warrants that it has completed, obtained and
performed, in all material respects, all registrations, filings, approvals, and
authorizations, consents and examinations required by any government or
governmental authority as may be necessary to perform this Agreement. Schwab
does and will comply, in all material respects, with all applicable laws, rules
and regulations in the performance of its obligations under this Agreement.
2.10. FGWL&A represents and warrants that all of its employees and agents who
deal with the money and/or securities of the Fund are and shall continue to be
at all times covered by a blanket fidelity bond or similar coverage. The
aforesaid Bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company in an amount not less than $5 million.
2.11. The Fund will provide FGWL&A with as much advance notice as is
reasonably practicable of any material change affecting the Designated
Portfolio(s) (including, but not limited to, any material change in the
registration statement or prospectus affecting the Designated Portfolio(s)) and
any proxy solicitation affecting the Designated Portfolio(s) and consult with
FGWL&A in order to implement any such change in an orderly manner, recognizing
the expenses of changes and attempting to minimize such expenses by implementing
them in conjunction with regular annual updates of the prospectus for the
Contracts. The Fund agrees to share equitably in expenses incurred by FGWL&A as
a result of actions taken by the Fund, consistent with the allocation of
expenses contained in Schedule E attached hereto and incorporated herein by
reference.
2.12. FGWL&A represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986 as
amended ("the Code"), that the Contracts are currently and at the time of
issuance will be treated as annuity contracts under applicable provisions of the
Code, and that it will make every effort to maintain such treatment and that it
will notify Schwab, the Fund and the Adviser 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. In addition, FGWL&A
represents and warrants that the Account is a "segregated asset account" and
that interests in the Account are offered exclusively through the purchase of or
transfer into a "variable contract" within the meaning of such terms under
Section 817 of the Code and the regulations thereunder. FGWL&A will use every
effort to continue to meet such definitional requirements, and it will notify
Schwab, the Fund and the Adviser immediately upon having a reasonable basis for
believing that such requirements have ceased to be met or that they might not be
met in the future. FGWL&A represents and warrants that it will not purchase Fund
shares with assets derived from tax-qualified retirement plans except,
indirectly, through Contracts purchased in connection with such plans.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. At least annually, the Fund and/or Adviser shall provide FGWL&A
and Schwab with as many copies of the Fund's current prospectus
for the Designated Portfolio(s) as FGWL&A and Schwab may
reasonably request for marketing purposes (including distribution
to Contractowners with respect to new sales of a Contract), with
expenses to be borne in accordance with Schedule E hereof. If
requested by FGWL&A in lieu thereof, the Adviser or Fund shall
provide such documentation (including a camera-ready copy and
computer diskette of the current prospectus for the Designated
Portfolio(s)) and other assistance as is reasonably necessary in
order for FGWL&A once each year (or more frequently if the
prospectuses for the Designated Portfolio(s) are amended) to have
the prospectus for the Contracts and the Fund's prospectus for
the Designated Portfolio(s) printed together in one document. The
Fund and Adviser agree that the prospectus (and semi-annual and
annual reports) for the Designated Portfolio(s) will describe
only the Designated Portfolio(s) and will not name or describe
any other portfolios or series that may be in the Fund unless
required by law.
3.2. If applicable state or federal laws or regulations require that
the Statement of Additional Information ("SAI") for the Fund be
distributed to all Contractowners, then the Fund and/or the
Adviser shall provide FGWL&A with copies of the Fund's SAI or
documentation thereof for the Designated Portfolio(s) in such
quantities, with expenses to be borne in accordance with Schedule
E hereof, as FGWL&A may reasonably require to permit timely
distribution thereof to Contractowners. The Adviser and/or the
Fund shall also provide SAIs to any Contractowner or prospective
owner who requests such SAI from the Fund (although it is
anticipated that such requests will be made to FGWL&A or Schwab).
3.3. The Fund and/or Adviser shall provide FGWL&A and Schwab with
copies of the Fund's proxy material, reports to stockholders and
other communications to stockholders for the Designated
Portfolio(s) in such quantity, with expenses to be borne in
accordance with Schedule E hereof, as FGWL&A may reasonably
require to permit timely distribution thereof to Contractowners.
3.4. It is understood and agreed that, except with respect to
information regarding FGWL&A or Schwab provided in writing by
that party, neither FGWL&A nor Schwab are responsible for the
content of the prospectus or SAI for the Designated Portfolio(s).
It is also understood and agreed that, except with respect to
information regarding the Fund, the Adviser or the Designated
Portfolio(s) provided in writing by the Fund or the Adviser,
neither the Fund nor Adviser are responsible for the content of
the prospectus or SAI for the Contracts.
3.5. If and to the extent required by law FGWL&A shall: (i) solicit
voting instructions from Contractowners;
(ii) vote the Designated Portfolio(s) shares held in the
Account in accordance with instructions received from
Contractowners: and
(iii) vote Designated Portfolio shares held in the Account for
which no instructions have been received in the same
proportion as Designated Portfolio(s) shares for which
instructions have been received from Contractowners, so
long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. FGWL&A reserves
the right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law.
3.6. FGWL&A shall be responsible for assuring that each of its separate
accounts holding shares of a Designated Portfolio calculates voting privileges
as directed by the Fund and agreed to by FGWL&A and the Fund. The Fund agrees to
promptly notify FGWL&A of any changes of interpretations or amendments of the
Mixed and Shared Funding Exemptive Order.
3.7. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the 1940
Act, not to require such meetings) or, as the Fund currently intends, comply
with Section 16(c) of the 1940 Act with respect to shareholder meetings to
consider the removal of a Board member (although the Fund is not one of the
trusts described in Section 16(c) of that Act) as well as with Sections 16(a)
and, if and when applicable, 16(b). Further, the Fund will act in accordance
with the SEC's interpretation of the requirements of Section 16(a) with respect
to periodic elections of directors or trustees and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information.
4.1. FGWL&A and Schwab shall furnish, or shall cause to be furnished, to
the Fund or its designee, a copy of each piece of sales literature or other
promotional material that FGWL&A or Schwab, respectively, develops or proposes
to use and in which the Fund (or a Portfolio thereof), its Adviser or one of its
sub-advisers is named in connection with the Contracts, at least ten (10)
Business Days prior to its use. No such material shall be used if the Fund
objects to such use within five (5) Business Days after receipt of such
material.
4.2. FGWL&A and Schwab shall not give any information or make any
representations or statements on behalf of the Fund in connection with the sale
of the Contracts other than the information or representations contained in the
registration statement, prospectus or SAI for the Fund shares, as the same may
be amended or supplemented from time to time, or in sales literature or other
promotional material approved by the Fund or Adviser, except with the permission
of the Fund or Adviser.
4.3. The Fund or the Adviser shall furnish, or shall cause to be
furnished, to FGWL&A and Schwab, a copy of each piece of sales literature or
other promotional material in which FGWL&A and/or its separate account(s), or
Schwab is named at least ten (10) Business Days prior to its use. No such
material shall be used if FGWL&A or Schwab objects to such use within five (5)
Business Days after receipt of such material.
4.4. The Fund and the Adviser shall not give any information or make any
representations on behalf of FGWL&A or concerning FGWL&A, the Account, or the
Contracts other than the information or representations contained in a
registration statement, prospectus or SAI for the Contracts, as the same may be
amended or supplemented from time to time, or in sales literature or other
promotional material approved by FGWL&A or its designee, except with the
permission of FGWL&A.
4.5. FGWL&A, the Fund and the Adviser shall not give any information or
make any representations on behalf of or concerning Schwab, or use Xxxxxx'x name
except with the permission of Schwab.
4.6. The Fund will provide to FGWL&A and Schwab at least one complete
copy of all registration statements, prospectuses, SAIs, sales literature and
other promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Designated
Portfolio(s), contemporaneously with the filing of such document(s) with the SEC
or NASD or other regulatory authorities.
4.7. FGWL&A or Schwab will provide to the Fund at least one complete
copy of all registration statements, prospectuses, SAIs, reports, solicitations
for voting instructions, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Contracts or the Account,
contemporaneously with the filing of such document(s) with the SEC, NASD, or
other regulatory authority.
4.8. For purposes of Articles IV and VIII, the phrase "sales literature
and other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media; e.g.,
on-line networks such as the Internet or other electronic media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and shareholder reports, and proxy
materials (including solicitations for voting instructions) and any other
material constituting sales literature or advertising under the NASD rules, the
1933 Act or the 0000 Xxx.
4.9. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records, data and
access to operating procedures that may be reasonably requested in connection
with compliance and regulatory requirements related to this Agreement or any
party's obligations under this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund and the Adviser shall pay no fee or other compensation to
FGWL&A under this Agreement, and FGWL&A shall pay no fee or other compensation
to the Fund or Adviser under this Agreement, although the parties hereto will
bear certain expenses in accordance with Schedule E, Articles III, V, and other
provisions of this Agreement.
5.2. All expenses incident to performance by the Fund and the Adviser
under this Agreement shall be paid by the appropriate party, as further provided
in Schedule E. The Fund shall see to it that all shares of the Designated
Portfolio(s) are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent required, in accordance with
applicable state laws prior to their sale.
5.3. The parties shall bear the expenses of routine annual distribution
(mailing costs) of the Fund's prospectus and distribution (mailing costs) of the
Fund's proxy materials and reports to owners of Contracts offered by FGWL&A, in
accordance with Schedule E.
5.4. The Fund and the Adviser acknowledge that a principal feature of
the Contracts is the Contractowner's ability to choose from a number of
unaffiliated mutual funds (and portfolios or series thereof), including the
Designated Portfolio(s) and the Unaffiliated Funds, and to transfer the
Contract's cash value between funds and Designated Portfolios. The Fund and the
Adviser agree to cooperate with FGWL&A and Schwab in facilitating the operation
of the Account and the Contracts as described in the prospectus for the
Contracts, including but not limited to cooperation in facilitating transfers
between Unaffiliated Funds.
5.5. Schwab agrees to provide certain administrative services, specified
in Schedule C attached hereto and incorporated herein by reference, in
connection with the arrangements contemplated by this Agreement. The parties
acknowledge and agree that the services referred to in this Section 5.5 are
recordkeeping, shareholder communication, and other transaction facilitation and
processing, and related administrative services only and are not the services of
an underwriter or a principal underwriter of the Fund, and that Schwab is not an
underwriter for the shares of the Designated Portfolio(s), within the meaning of
the 1933 Act or the 0000 Xxx.
5.6. As compensation for the services specified in Schedule C hereto,
the Adviser agrees to pay Schwab a monthly Administrative Service Fee based on
the percentage per annum on Schedule C hereto applied to the average daily value
of the shares of the Designated Portfolio(s) held in the Account with respect to
Contracts sold by Schwab. This monthly Administrative Service Fee is due and
payable before the 15th (fifteenth) day following the last day of the month to
which it relates.
ARTICLE VI. Diversification and Qualification.
---------------------------------
6.1. The Fund and the Adviser represent and warrant that the Fund will
at all times sell its shares and invest its assets in such a manner as
to ensure that the Contracts will be treated as annuity contracts under
the Code, and the regulations issued thereunder. Without limiting the
scope of the foregoing, the Fund and Adviser represent and warrant that
the Fund and each Designated Portfolio thereof will at all times comply
with Section 817(h) of the Code and Treasury Regulation ss.1.817-5, as
amended from time to time, and any Treasury interpretations thereof,
relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts and any amendments or other
modifications or successor provisions to such Section or Regulations.
The Fund and the Adviser agree that shares of the Designated
Portfolio(s) will be sold only to Participating Insurance Companies and
their separate accounts and to Qualified Plans.
6.2. No shares of any Designated Portfolio of the Fund will be sold to
the general public.
6.3. The Fund and the Adviser represent and warrant that the Fund and
each Designated Portfolio is currently qualified as a Regulated
Investment Company under Subchapter M of the Code, and that each
Designated Portfolio will maintain such qualification (under Subchapter
M or any successor or similar provisions) as long as this Agreement is
in effect.
6.4. The Fund or Adviser will notify FGWL&A immediately upon having a
reasonable basis for believing that the Fund or any Designated Portfolio
has ceased to comply with the aforesaid Section 817(h) diversification
or Subchapter M qualification requirements or might not so comply in the
future.
6.5. Without in any way limiting the effect of Sections 8.3, 8.4 and 8.5
hereof and without in any way limiting or restricting any other remedies
available to FGWL&A or Schwab, the Adviser will pay all costs associated
with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Fund or any Designated Portfolio to comply
with Sections 6.1, 6.2, or 6.3 hereof, including all costs associated
with reasonable and appropriate corrections or responses to any such
failure; such costs may include, but are not limited to, the costs
involved in creating, organizing, and registering a new investment
company as a funding medium for the Contracts and/or the costs of
obtaining whatever regulatory authorizations are required to substitute
shares of another investment company for those of the failed Portfolio
(including but not limited to an order pursuant to Section 26(b) of the
1940 Act); such costs are to include, but are not limited to, reasonable
fees and expenses of legal counsel and other advisors to FGWL&A and any
federal income taxes or tax penalties and interest thereon (or "toll
charges" or exactments or amounts paid in settlement) incurred by FGWL&A
with respect to itself or owners of its Contracts in connection with any
such failure or anticipated or reasonably foreseeable failure.
6.6. The Fund at the Fund's expense shall provide FGWL&A or its designee
with reports certifying compliance with the aforesaid Section 817(h)
diversification and Subchapter M qualification requirements, at the
times provided for and substantially in the form attached hereto as
Schedule D and incorporated herein by reference; provided, however, that
providing such reports does not relieve the Fund of its responsibility
for such compliance or of its liability for any non-compliance.
6.7. FGWL&A agrees that if the Internal Revenue Service ("IRS") asserts
in writing in connection with any governmental audit or review of FGWL&A
or, to FGWL&A's knowledge, or any Contractowner that any Designated
Portfolio has failed to comply with the diversification requirements of
Section 817(h) of the Code or FGWL&A otherwise becomes aware of any
facts that could give rise to any claim against the Fund or Adviser as a
result of such a failure or alleged failure:
(a) FGWL&A shall promptly notify the Fund and the Adviser of such
assertion or potential claim;
(b) FGWL&A shall consult with the Fund and the Adviser as to how to
minimize any liability that may arise as a result of such failure or
alleged failure;
(c) FGWL&A shall use its best efforts to minimize any liability of the
Fund and the Adviser resulting from such failure, including, without
limitation, demonstrating, pursuant to Treasury Regulations, Section
1.817-5(a)(2), to the commissioner of the IRS that such failure was
inadvertent;
(d) any written materials to be submitted by FGWL&A to the IRS, any
Contractowner or any other claimant in connection with any of the
foregoing proceedings or contests (including, without limitation, any
such materials to be submitted to the IRS pursuant to Treasury
Regulations, Section 1.817-5(a)(2)) shall be provided by FGWL&A to the
Fund and the Adviser (together with any supporting information or
analysis) within at least two (2) business days prior to submission;
(e) FGWL&A shall provide the Fund and the Adviser with such cooperation
as the Fund and the Adviser shall reasonably request (including, without
limitation, by permitting the Fund and the Adviser to review the
relevant books and records of FGWL&A) in order to facilitate review by
the Fund and the Adviser of any written submissions provided to it or
its assessment of the validity or amount of any claim against it arising
from such failure or alleged failure;
(f) FGWL&A shall not with respect to any claim of the IRS or any
Contractowner that would give rise to a claim against the Fund and the
Adviser (i) compromise or settle any claim, (ii) accept any adjustment
on audit, or (iii) forego any allowable administrative or judicial
appeals, without the express written consent of the Fund and the
Adviser, which shall not be unreasonably withheld; provided that, FGWL&A
shall not be required to appeal any adverse judicial decision unless the
Fund and the Adviser shall have provided an opinion of independent
counsel to the effect that a reasonable basis exists for taking such
appeal; and further provided that the Fund and the Adviser shall bear
the costs and expenses, including reasonable attorney's fees, incurred
by FGWL&A in complying with this clause (f).
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Designated Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners or by contract owners of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to disregard
the voting instructions of contract owners. The Board shall promptly inform
FGWL&A if it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. FGWL&A will report any potential or existing conflicts of which it
is aware to the Board. FGWL&A will assist the Board in carrying out its
responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by FGWL&A to inform the Board whenever contract owner voting instructions are to
be disregarded. Such responsibilities shall be carried out by FGWL&A with a view
only to the interests of its Contractowners.
7.3. If it is determined by a majority of the Board, or a majority of
its directors who are not interested persons of the Fund the Adviser or any
sub-adviser to any of the Designated Portfolios (the "Independent Directors"),
that a material irreconcilable conflict exists, FGWL&A and other Participating
Insurance Companies shall, at their expense and to the extent reasonably
practicable (as determined by a majority of the Independent Directors), take
whatever steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to and including: (1) withdrawing the assets allocable to some or
all of the separate accounts from the Fund or any Designated Portfolio and
reinvesting such assets in a different investment medium, including (but not
limited to) another portfolio of the Fund, or submitting the question whether
such segregation should be implemented to a vote of all affected contract owners
and, as appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or variable contract
owners of one or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to the affected contract owners the option of
making such a change; and (2) establishing a new registered management
investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by FGWL&A to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, FGWL&A may be
required, at the Fund's election, to withdraw the Account's investment in the
Fund and terminate this Agreement; provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent
Directors. Any such withdrawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of that six month period the Adviser and the Fund
shall continue to accept and implement orders by FGWL&A for the purchase (and
redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to FGWL&A conflicts with the
majority of other state regulators, then FGWL&A will withdraw the Account's
investment in the Fund and terminate this Agreement within six months after the
Board informs FGWL&A in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Independent Directors. Until the end of the foregoing six month period, the Fund
shall continue to accept and implement orders by FGWL&A for the purchase (and
redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the Independent Directors shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
FGWL&A shall not be required by Section 7.3 to establish a new funding medium
for the Contracts if an offer to do so has been declined by vote of a majority
of Contractowners affected by the irreconcilable material conflict. In the event
that the Board determines that any proposed action does not adequately remedy
any irreconcilable material conflict, then FGWL&A will withdraw the Account's
investment in the Fund and terminate this Agreement within six (6) months after
the Board informs FGWL&A in writing of the foregoing determination; provided,
however, that such withdrawal and termination shall be limited to the extent
required by any such material irreconcilable conflict as determined by a
majority of the Independent Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable: and (b) Sections 3.5, 3.6, 3.7, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By FGWL&A
8.1(a).FGWL&A agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, Distributor or
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlement with the written consent of FGWL&A) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, expenses, damages or liabilities (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement or prospectus or SAI covering the
Contracts or contained in the Contracts or sales literature or
other promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this
Agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished in writing to FGWL&A or Schwab by or on
behalf of the Adviser, Distributor or Fund for use in the
registration statement or prospectus for the Contracts or in the
Contracts or sales literature or other promotional material (or
any amendment or supplement to any of the foregoing) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature or other
promotional material of the Fund not supplied by FGWL&A or
persons under its control) or wrongful conduct of FGWL&A or
persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI, or sales literature or other promotional
material of the Fund, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, if such a statement or
omission was made in reliance upon information furnished in
writing to the Fund by or on behalf of FGWL&A; or
(iv) arise as a result of any failure by FGWL&A to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by FGWL&A in this Agreement
or arise out of or result from any other material breach of this
Agreement by FGWL&A, including without limitation Section 2.11
and Section 6.7 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). FGWL&A shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject, to the extent that any
such losses, claims, expenses, damages, liabilities or litigation arise out of
or result from such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to any of the Indemnified Parties.
8.1(c). FGWL&A shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified FGWL&A in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify FGWL&A of any such claim shall not relieve FGWL&A
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision,
except to the extent that FGWL&A has been prejudiced by such failure to give
notice. In case any such action is brought against the Indemnified Parties,
FGWL&A shall be entitled to participate, at its own expense, in the defense of
such action. FGWL&A also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from FGWL&A
to such party of FGWL&A's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and FGWL&A will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.1(d).The Indemnified Parties will promptly notify FGWL&A of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by Schwab.
8.2(a).Schwab agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, Distributor or
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlement with the written consent of Schwab) or litigation (including
reasonable legal and other expenses), to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of Xxxxxx'x dissemination of information regarding the
Fund that is both (A) materially incorrect and (B) that was
neither contained in the Fund's registration statement nor in the
Fund's sales literature and other promotional material or
provided in writing to Schwab, or approved in writing, by or on
behalf of the Fund, Distributor or Adviser; or
(ii) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in sales
literature or other promotional material prepared or approved by
Schwab for the Contracts or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this Agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in
writing to FGWL&A or Schwab by or on behalf of the Adviser,
Distributor or the Fund or to Schwab by FGWL&A for use in the
registration statement, prospectus or SAI for the Contracts or in
the Contracts or sales literature or other promotional material
(or any amendment or supplement any of the foregoing) or
otherwise for use in connection with the sale of the Contracts;
or
(iii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or
other promotional material of the Fund not supplied by Schwab or
persons under its control) or wrongful conduct of Schwab or
persons under its control, with respect to the sale or
distribution of the Contracts; or
(iv) arise as a result of any failure by Schwab to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Schwab in this Agreement
or arise out of or result from any other material breach of this
Agreement by Schwab;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). Schwab shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages,
liabilities or litigation to which an Indemnified Party would
otherwise be subject, to the extent that any such losses, claims,
expenses, damages, liabilities or litigation arise out of or
result from such Indemnified Party's willful misfeasance, bad
faith, or negligence in the performance of such Indemnified
Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations or duties under this Agreement or to any
of the Indemnified Parties.
8.2(c). Schwab shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified Schwab in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify Schwab of any such
claim shall not relieve Schwab from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision,
except to the extent that Schwab has been prejudiced by such
failure to give notice. In case any such action is brought
against the Indemnified Parties, Schwab shall be entitled to
participate, at its own expense, in the defense of such action.
Schwab also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After
notice from Schwab to such party of Xxxxxx'x election to assume
the defense thereof, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and Schwab
will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than
reasonable costs of investigation.
8.2(d). The Indemnified Parties will promptly notify Schwab of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.3. Indemnification by the Adviser.
8.3(a). The Adviser agrees to indemnify and hold harmless FGWL&A and
Schwab and each of their directors and officers and each person,
if any, who controls FGWL&A or Schwab within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all
losses, claims, expenses, damages, liabilities (including amounts
paid in settlement with the written consent of the Adviser) or
litigation (including reasonable legal and other expenses) to
which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
or other promotional material of the Fund prepared by the Fund or
the Adviser (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished in writing to the
Adviser or the Fund by or on behalf of FGWL&A or Schwab for use
in the registration statement, prospectus or SAI for the Fund or
in sales literature or other promotional material (or any
amendment or supplement to any of the foregoing) or otherwise for
use in connection with the sale of the Contracts or the Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or
other promotional material for the Contracts not supplied by the
Adviser or persons under its control) or wrongful conduct of the
Fund or the Adviser or persons under their control, with respect
to the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI, or sales literature or other promotional
material covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance
upon information furnished in writing to FGWL&A or Schwab by or
on behalf of the Adviser or the Fund; or
(iv) arise as a result of any failure by the Fund or the Adviser to
provide the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification and
other qualification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or the Adviser in
this Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser or the Fund; or
(vi) arise out of or result from the incorrect or untimely calculation
or reporting by the Fund or the Adviser of the daily net asset
value per share or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Adviser specified in Article VI hereof.
8.3(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject, to the
extent that any such losses, claims, expenses, damages, liabilities or
litigation arise out of or result from such Indemnified Party's willful
misfeasance, bad faith, or negligence in the performance of such Indemnified
Party's duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement or to any of the Indemnified Parties.
8.3(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that the Adviser
has been prejudiced by such failure to give notice. In case any such action is
brought against the Indemnified Parties, the Adviser will be entitled to
participate, at its own expense, in the defense thereof. The Adviser also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Adviser to such party of the
Adviser's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Adviser will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.3(d). FGWL&A and Schwab agree promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any
of its officers or directors in connection with the Agreement,
the issuance or sale of the Contracts, the operation of the
Account, or sale or acquisition of shares of the Fund.
8.4. Indemnification By the Fund.
8.4(a). The Fund agrees to indemnify and hold harmless FGWL&A and Schwab
and each of their respective directors and officers and each
person, if any, who controls FGWL&A or Schwab within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.4) against any and all
losses, claims, expenses, damages and liabilities (including
amounts paid in settlement with the written consent of the Fund)
or litigation (including reasonable legal and other expenses) to
which the Indemnified Parties may be required to pay or become
subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, expenses, damages,
liabilities or expenses (or actions in respect thereof) or
settlements, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund; or
(iii) arise out of or result from the incorrect or untimely calculation
or reporting of the daily net asset value per share or dividend
or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.4(b) and
8.4(c) hereof.
8.4(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject, to the
extent that any such losses, claims, expenses, damages, liabilities or
litigation arise out of or result from such Indemnified Party's willful
misfeasance, bad faith, or negligence in the performance of such Indemnified
Party's duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement or to any of the Indemnified Parties.
8.4(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve it from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision, except to the extent that the Fund has been
prejudiced by such failure to give notice. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund shall also be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.4(d). FGWL&A and Schwab each agree promptly to notify the Fund of the
commencement of any litigation or proceeding against itself or any of its
respective officers or directors in connection with the Agreement, the issuance
or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York,
without regard to the New York Conflict of Laws provisions.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with
respect to some or all Designated Portfolios, upon six (6) months
advance written notice delivered to the other parties; provided,
however, that such notice shall not be given earlier than six (6)
months following the date of this Agreement; or
(b) at the option of FGWL&A or Schwab by written notice to the
other parties with respect to any Designated Portfolio based upon
FGWL&A's or Xxxxxx'x determination that shares of such Designated
Portfolio are not reasonably available to meet the requirements
of the Contracts; or
(c) at the option of FGWL&A or Schwab by written notice to the
other parties with respect to any Designated Portfolio in the
event any of the Designated Portfolio's shares are not
registered, issued or sold in accordance with applicable state
and/ or federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued or to
be issued by FGWL&A; or
(d) at the option of the Fund or Adviser in the event that formal
administrative proceedings are instituted against FGWL&A or
Schwab by the NASD, the SEC, the Insurance Commissioner or like
official of any state or any other regulatory body regarding
FGWL&A's or Xxxxxx'x duties under this Agreement or related to
the sale of the Contracts, the operation of any Account, or the
purchase of the Fund shares, if, in each case, the Fund or
Adviser, as the case may be, reasonably determines in its sole
judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability
of FGWL&A or Schwab to perform its obligations under this
Agreement; or
(e) at the option of FGWL&A or Schwab in the event that formal
administrative proceedings are instituted against the Fund or the
Adviser by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body, if Schwab or
FGWL&A reasonably determines in its sole judgment exercised in
good faith, that any such administrative proceedings will have a
material adverse effect upon the ability of the Fund or the
Adviser to perform their obligations under this Agreement; or
(f) at the option of FGWL&A by written notice to the Fund with
respect to any Designated Portfolio if FGWL&A reasonably believes
that the Designated Portfolio will fail to meet the Section
817(h) diversification requirements or Subchapter M
qualifications specified in Article VI hereof; or
(g) at the option of either the Fund or the Adviser, if (i) the
Fund or Adviser, respectively, shall determine, in its sole
judgment reasonably exercised in good faith, that either FGWL&A
or Schwab has suffered a material adverse change in its business
or financial condition or is the subject of material adverse
publicity and that material adverse change or publicity will have
a material adverse impact on FGWL&A's or Xxxxxx'x ability to
perform its obligations under this Agreement, (ii) the Fund or
Adviser notifies FGWL&A or Schwab, as appropriate, of that
determination and its intent to terminate this Agreement, and
(iii) after considering the actions taken by FGWL&A or Schwab and
any other changes in circumstances since the giving of such a
notice, the determination of the Fund or Adviser shall continue
to apply on the sixtieth (60th) day following the giving of that
notice, which sixtieth day shall be the effective date of
termination; or
(h) at the option of either FGWL&A or Schwab, if (i) FGWL&A or
Schwab, respectively, shall determine, in its sole judgment
reasonably exercised in good faith, that the Fund or Adviser has
suffered a material adverse change in its business or financial
condition or is the subject of material adverse publicity and
that material adverse change or publicity will have a material
adverse impact on the Fund's or Adviser's ability to perform its
obligations under this Agreement, (ii) FGWL&A or Schwab notifies
the Fund or Adviser, as appropriate, of that determination and
its intent to terminate this Agreement, and (iii) after
considering the actions taken by the Fund or Adviser and any
other changes in circumstances since the giving of such a notice,
the determination of FGWL&A or Schwab shall continue to apply on
the sixtieth (60th) day following the giving of that notice,
which sixtieth day shall be the effective date of termination; or
(i) at the option of FGWL&A in the event that formal
administrative proceedings are instituted against Schwab by the
NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding Xxxxxx'x duties under this
Agreement or related to the sale of the Fund's shares or the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that FGWL&A determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of Schwab to perform its obligations related to
the Contracts; or
(j) at the option of Schwab in the event that formal
administrative proceedings are instituted against FGWL&A by the
NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding FGWL&A's duties under this
Agreement or related to the sale of the Fund's shares or the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that Schwab determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of FGWL&A to perform its obligations related to
the Contracts; or
(k) at the option of any non-defaulting party hereto in the event
of a material breach of this Agreement by any party hereto (the
"defaulting party") other than as described in 10.1(a)-(j);
provided, that the non-defaulting party gives written notice
thereof to the defaulting party, with copies of such notice to
all other non-defaulting parties, and if such breach shall not
have been remedied within thirty (30) days after such written
notice is given, then the non-defaulting party giving such
written notice may terminate this Agreement by giving thirty (30)
days written notice of termination to the defaulting party.
10.2. Notice Requirement.
No termination of this Agreement shall be effective unless and until the
party terminating this Agreement gives prior written notice to all other parties
of its intent to terminate, which notice shall set forth the basis for the
termination. Furthermore,
(a) in the event any termination is based upon the provisions of Article
VII, or the provisions of Section 10.1(a), 10.1(g) or 10.1(h) of this
Agreement, the prior written notice shall be given in advance of the
effective date of termination as required by those provisions unless
such notice period is shortened by mutual written agreement of the
parties; (b) in the event any termination is based upon the provisions
of Section 10.1(d), 10.1(e), 10.1(i) or 10.1(j) of this Agreement, the
prior written notice shall be given at least sixty (60) days before the
effective date of termination; and (c) in the event any termination is
based upon the provisions of Section 10.1(b), 10.1(c) or 10.1(f), the
prior written notice shall be given in advance of the effective date of
termination, which date shall be determined by the party sending the
notice.
10.3. Effect of Termination.
Notwithstanding any termination of this Agreement, other than as a result of a
failure by either the Fund or FGWL&A to meet the diversification requirements of
Section 817(h) of the Code diversification requirements, the Fund and the
Adviser shall, at the option of FGWL&A or Schwab, continue to make available
additional shares of the Designated Portfolio(s) pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Designated
Portfolio(s), redeem investments in the Designated Portfolio(s) and/or invest in
the Designated Portfolio(s) upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.3 shall not
apply to any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement.
10.4. Surviving Provisions. Notwithstanding any termination of this
Agreement, each party's obligations under Article VIII to indemnify other
parties shall survive and not be affected by any termination of this Agreement.
In addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any termination of this
Agreement.
10.5. Survival of Agreement.
A termination by Schwab shall terminate this Agreement only as to Schwab, and
this Agreement shall remain in effect as to the other parties; provided,
however, that in the event of a termination by Schwab the other parties shall
have the option to terminate this Agreement upon 60 (sixty) days notice, rather
than the six (6) months specified in Section 10.1(a).
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Dreyfus Variable Investment Fund
c/o The Dreyfus Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:Xxxx X. Xxxxxx, Esq.
Xxxxxx X. Xxxxxx, Esq.
If to FGWL&A:
First Great-West Life & Annuity Insurance Company
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention:Assistant Vice President, Savings Products
If to the Adviser:
The Dreyfus Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:Xxxx X. Xxxxxx, Esq.
Xxxxxx X. Xxxxxx, Esq.
If to Schwab:
Xxxxxxx Xxxxxx & Co., Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: General Counsel
ARTICLE XII. Miscellaneous
12.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain. Without limiting the foregoing, no party hereto shall disclose
any information that another party has designated as proprietary.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the New York Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of FGWL&A are being conducted in a manner consistent with the New
York Variable Annuity Regulations and any other applicable law or regulations.
12.6. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in a forum jointly
selected by the relevant parties (but if applicable law requires some other
forum, then such other forum) in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
12.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
12.9. Schwab and FGWL&A are hereby expressly put on notice of the
limitation of liability as set forth in the Agreement and Declaration of Trust
of the Fund and agree that the obligations assumed by the Fund and the Adviser
pursuant to this Agreement shall be limited in any case to the Fund and Adviser
and their respective assets and neither Schwab nor FGWL&A shall seek
satisfaction of any such obligation from the shareholders of the Fund or the
Adviser, the Trustees, officers, employees or agents of the Fund or Adviser, or
any of them. This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets of the Fund
and shall not be binding upon any director, officer or shareholder of the Fund
individually.
12.10. The Fund and the Adviser agree that the obligations assumed by
FGWL&A and Schwab pursuant to this Agreement shall be limited in any case to
FGWL&A and Schwab and their respective assets and neither the Fund nor Adviser
shall seek satisfaction of any such obligation from the shareholders of FGWL&A
or Schwab, the directors, officers, employees or agents of the FGWL&A or Schwab,
or any of them, except to the extent permitted under this Agreement.
12.11. No provision of this Agreement may be deemed or construed to
modify or supersede any contractual rights, duties, or indemnifications, as
between the Adviser and the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By its authorized officer,
By:______________________________
Title:
Date:
DREYFUS VARIABLE INVESTMENT FUND
By its authorized officer,
By:______________________________
Title:
Date:
THE DREYFUS CORPORATION
By its authorized officer,
By:____________________________
Title:
Date:
XXXXXXX XXXXXX & CO., INC.
By its authorized officer,
By:__/s/ Xxxxxxx X. Klipp________
--------------------
Title:
Date:
Schwab Variable Annuity
SCHEDULE A
Contracts Form Numbers
First Great-West Life & Annuity Insurance Company
Group Variable/Fixed Annuity Contract J434NY
SCHEDULE B
Designated Portfolios
Dreyfus Capital Appreciation Portfolio
Dreyfus Growth & Income Portfolio
SCHEDULE C
Administrative Services
To be performed by Xxxxxxx Xxxxxx & Co., Inc.
X. Xxxxxx will provide the properly registered and licensed personnel and
systems needed for all customer servicing and support - for both Fund and
Contract information and questions - including the following:
o respond to Contractowner inquiries
o mail fund and Contract prospectuses
o entry of initial and subsequent orders
o transfer of cash to FGWL&A and/or Fund
o explanations of Designated Portfolio objectives and characteristics
o entry of transfers between Unaffiliated Funds, including the Designated
Portfolios
o Contract balance and allocation inquiries
o communicate all purchase, withdrawal, and exchange orders received from
Contractowners to FGWL&A which will transmit orders to Funds
o train call center representatives to explain Fund objectives, Morningstar
categories, Fund selection data and differences between publicly traded
funds and the Funds
o provide performance data and Fund prices
o shareholder services including researching trades, resolving trade
disputes, etc.
o coordinate the writing, printing and distribution of semi-annual and annual
reports to Contract owners investing in the Designated Portfolios
o create and update Designated Portfolio profiles and other shareholder
communications
o establish scheduled account rebalances
o Web trading and account servicing
o touch-tone telephone trading and account servicing
o establish dollar cost averaging
o communications to Contractowners related to product changes, including but
not limited to changes in the available Designated Portfolios
B. For the foregoing services, Schwab shall receive a monthly fee equal to ____%
per annum of the average daily value of the shares of the Designated Portfolios
listed on Schedule B attributable to Contractowners, payable by the Adviser
directly to Schwab, such payments being due and payable within 15 (fifteen) days
after the last day of the month to which such payment relates.
C. The Fund will calculate and Schwab will verify with FGWL&A the asset balance
for each day on which the fee is to be paid pursuant to this Agreement with
respect to each Designated Portfolio.
SCHEDULE D
Reports per Section 6.6
With regard to the reports relating to the quarterly testing of
compliance with the requirements of Section 817(h) and Subchapter M under the
Internal Revenue Code (the "Code") and the regulations thereunder, the Fund
shall provide within twenty (20) Business Days of the close of the calendar
quarter a report to FGWL&A in the Form D1 attached hereto and incorporated
herein by reference, regarding the status under such sections of the Code of the
Designated Portfolio(s), and if necessary, identification of any remedial action
to be taken to remedy non-compliance.
With regard to the reports relating to the year-end testing of
compliance with the requirements of Subchapter M of the Code, referred to
hereinafter as "RIC status," the Fund will provide the reports on the following
basis: (i) the last quarter's quarterly reports can be supplied within the
20-day period, and (ii) a year-end report will be provided 45 days after the end
of the calendar year. However, if a problem with regard to RIC status, as
defined below, is identified in the third quarter report, on a weekly basis,
starting the first week of December, additional interim reports will be provided
specially addressing the problems identified in the third quarter report. If any
interim report memorializes the cure of the problem, subsequent interim reports
will not be required.
A problem with regard to RIC status is defined as any violation of the
following standards, as referenced to the applicable sections of the Code:
(a) Less than ninety percent of gross income is derived from sources of
income specified in Section 851(b)(2); (b) Thirty percent or greater
gross income is derived from the sale or disposition of assets specified
in Section 851(b)(3);
(c) Less than fifty percent of the value of total assets consists of
assets specified in Section 851(b)(4)(A); and (d) No more than
twenty-five percent of the value of total assets is invested in the
securities of one issuer, as that requirement is set forth in Section
851(b)(4)(B).
FORM D1
CERTIFICATE OF COMPLIANCE
For the quarter ended:
---------------------------
___________________ (investment advisor) for Fund hereby notifies you
that, based on internal compliance testing performed as of the end of the
calendar quarter ended ________, 19____, the Designated Portfolios were in
compliance with all requirements of Section 817(h) and Subchapter M of the
Internal Revenue Code (the "Code") and the regulations thereunder as required in
the Fund Participation Agreement among First Great-West Life & Annuity Insurance
Company, Xxxxxxx Xxxxxx & Co., Inc. and other than the exceptions discussed
below:
Exceptions Remedial Action
Signed this day of , .
----- ---------- ------------
------------------------
(Signature)
By:
-----------------------------------------------
(Type or Print Name and Title/Position)
SCHEDULE E
EXPENSES
The Fund and/or the Adviser, and FGWL&A will coordinate the functions and pay
the costs of the completing these functions based upon an allocation of costs in
the tables below. Costs shall be allocated to reflect the Fund's share of the
total costs determined according to the number of pages of the Fund's respective
portions of the documents.
------------------------- ---------------------- ---------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Prospectus Printing of combined FGWL&A Fund or Adviser,
prospectuses as applicable
------------------------- ---------------------- ---------------------- ------------------
Fund or Adviser FGWL&A Fund or Adviser,
shall supply FGWL&A as applicable
with such numbers of
the Designated
Portfolio(s)
prospectus(es) as
FGWL&A shall
reasonably request
------------------------- ---------------------- ---------------------- ------------------
Distribution to New FGWL&A FGWL&A
and Inforce Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution to Schwab Schwab
Prospective Clients
------------------------- ---------------------- ---------------------- ------------------
Product Prospectus Printing for Inforce FGWL&A FGWL&A
Clients
------------------------- ---------------------- ---------------------- ------------------
Printing for FGWL&A Schwab
Prospective Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution to New FGWL&A FGWL&A
and Inforce Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution to Schwab Schwab
Prospective Clients
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Prospectus If Required by Fund Fund or Adviser Fund or Adviser
Update & Distribution or Adviser
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Product Prospectus If Required by Fund FGWL&A Fund or Adviser
Update & Distribution or Adviser
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund SAI Printing Fund or Adviser Fund or Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Product SAI Printing FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Proxy Material for Printing if proxy Fund or Adviser Fund or Adviser
Mutual Fund: required by Law
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A Fund or Adviser
(including labor) if
proxy required by Law
------------------------- ---------------------- ---------------------- ------------------
Printing & FGWL&A FGWL&A
distribution if
required by FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Printing & FGWL&A Schwab
distribution if
required by Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Annual & Printing of combined FGWL&A Fund or Adviser
Semi-Annual Report reports
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A and Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Other communication to If Required by the Schwab Fund or Adviser
New and Prospective Fund or Adviser
clients
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A Schwab FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Other communication to Distribution FGWL&A Fund or Adviser
inforce (including labor and
printing) if required by the Fund or Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
(including labor and
printing)if required
by FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A Schwab
(including labor and
printing if required
by Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Errors in Share Price Cost of error to FGWL&A Fund or Adviser
calculation pursuant to participants
Section 1.10
------------------------- ---------------------- ---------------------- ------------------
Cost of FGWL&A Fund or Adviser
administrative work
to correct error
------------------------- ---------------------- ---------------------- ------------------
Operations of the Fund All operations and Fund or Adviser Fund or Adviser
related expenses,
including the cost
of registration and
qualification of
shares, taxes on the
issuance or transfer
of shares, cost of
management of the
business affairs of
the Fund, and
expenses paid or
assumed by the fund
pursuant to any Rule
12b-1 plan
------------------------- ---------------------- ---------------------- ------------------
Operations of the Federal registration FGWL&A FGWL&A
Account of units of separate
account (24f-2 fees)
------------------------- ---------------------- ---------------------- ------------------
FUND PARTICIPATION AGREEMENT
The Prudential Series Fund, Inc.
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares.....................................................4
ARTICLE II. Representations and Warranties..........................................7
ARTICLE III. Prospectuses and Proxy Statements; Voting..............................11
ARTICLE IV. Sales Material and Information.........................................13
ARTICLE V. Fees and Expenses......................................................16
ARTICLE VI. Diversification and Qualification......................................17
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order ..............................20
ARTICLE VIII. Indemnification .......................................................22
ARTICLE IX. Applicable Law.........................................................35
ARTICLE X. Termination............................................................35
ARTICLE XI. Notices................................................................39
ARTICLE XII. Miscellaneous..........................................................40
SCHEDULE A Contracts..............................................................44
SCHEDULE B Designated Portfolios..................................................45
SCHEDULE C Administrative Services................................................46
SCHEDULE D Reports per Section 6.6................................................47
SCHEDULE E Expenses...............................................................50
PARTICIPATION AGREEMENT
Among
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
THE PRUDENTIAL SERIES FUND, INC.,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
and
XXXXXXX XXXXXX & CO., INC.
THIS AGREEMENT, made and entered into as of this 1st day of May, 1999 by
and among FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (hereinafter
"FGWL&A"), a New York life insurance company, on its own behalf and on behalf of
its Separate Account Variable Annuity-1 Series Account (the "Account"); THE
PRUDENTIAL SERIES FUND, INC., an open-end management investment company
organized under the laws of Maryland (hereinafter the "Fund"); THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA (hereinafter the "Adviser"), a New Jersey mutual
insurance company; PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC (hereinafter
the "Distributor"), a Delaware limited liability company; and XXXXXXX XXXXXX &
CO., INC., a California corporation (hereinafter "Schwab").
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies, including FGWL&A, which have entered into
participation agreements similar to this Agreement (hereinafter "Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (hereinafter the "SEC"), dated March 5, 1999 (File No. IC-23728),
granting Participating Insurance Companies and variable annuity and variable
life insurance separate accounts exemptions from the provisions of sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
life insurance companies that may or may not be affiliated with one another and
qualified pension and retirement plans ("Qualified Plans") (hereinafter the
"Mixed and Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolio(s) are registered under
the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, (the "1934 Act") and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, FGWL&A has registered certain variable annuity contracts
supported wholly or partially by the Account (the "Contracts") under the 1933
Act and said Contracts are listed in Schedule A attached hereto and incorporated
herein by reference, as such Schedule may be amended from time to time by mutual
written agreement; and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of FGWL&A on
January 15, 1997, under the insurance laws of the State of New York, to set
aside and invest assets attributable to the Contracts; and
WHEREAS, FGWL&A has registered the Account as a unit investment trust
under the 1940 Act and has registered the securities deemed to be issued by the
Account under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, FGWL&A intends to purchase shares in the Portfolio(s) listed in
Schedule B attached hereto and incorporated herein by reference, as such
Schedule may be amended from time to time by mutual written agreement (the
"Designated Portfolio(s)"), on behalf of the Account to fund the Contracts, and
the Fund is authorized to sell such shares to unit investment trusts such as the
Account at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Account also intends to purchase shares in other open-end
investment companies or series thereof not affiliated with the Fund (the
"Unaffiliated Funds") on behalf of the Account to fund the Contracts; and
WHEREAS, Schwab will perform certain services for the Fund in connection
with the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, FGWL&A,
Schwab, the Fund, the Distributor and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares.
-------------------
1.1. The Fund agrees to sell to FGWL&A those shares of the Designated
Portfolio(s) which the Account orders, executing such orders on each Business
Day at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Designated Portfolios. For purposes
of this Section 1.1, FGWL&A shall be the designee of the Fund for receipt of
such orders and receipt by such designee shall constitute receipt by the Fund,
provided that the Fund receives notice of any such order by 9:30 a.m. Eastern
time on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which the
Designated Portfolio calculates its net asset value pursuant to the rules of the
SEC.
1.2. The Fund agrees to make shares of the Designated Portfolio(s)
available for purchase at the applicable net asset value per share by FGWL&A and
the Account on those days on which the Fund calculates its Designated
Portfolio(s)' net asset value pursuant to rules of the SEC, and the Fund shall
calculate such net asset value on each day which the New York Stock Exchange is
open for trading. Notwithstanding the foregoing, the Board of Trustees of the
Fund (hereinafter the "Board") may refuse to sell shares of any Designated
Portfolio to any person, or suspend or terminate the offering of shares of any
Designated Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of
such Designated Portfolio.
1.3. The Fund will not sell shares of the Designated Portfolio(s) to any
other Participating Insurance Company separate account unless an agreement
containing provisions the substance of which are the same as Sections 2.1
(except with respect to Colorado law), 3.5, 3.6, 3.7, and Article VII of this
Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on FGWL&A's request, any full
or fractional shares of the Fund held by FGWL&A, executing such requests on each
Business Day at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. Requests for redemption identified
by FGWL&A, or its agent, as being in connection with surrenders, annuitizations,
or death benefits under the Contracts, upon prior written notice, may be
executed within seven (7) calendar days after receipt by the Fund or its
designee of the requests for redemption. This Section 1.4 may be amended, in
writing, by the parties consistent with the requirements of the 1940 Act and
interpretations thereof. For purposes of this Section 1.4, FGWL&A shall be the
designee of the Fund for receipt of requests for redemption and receipt by such
designee shall constitute receipt by the Fund, provided that the Fund receives
notice of any such request for redemption by 9:30 A.M. Eastern time on the next
following Business Day.
1.5. The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
Participating Insurance Companies (subject to Section 1.3 and Article VI hereof)
and the cash value of the Contracts may be invested in other investment
companies.
1.6. FGWL&A shall pay for Fund shares by 3:00 p.m. Eastern time on the
next Business Day after an order to purchase Fund shares is made in accordance
with the provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire and/or by a credit for any shares redeemed the same day as
the purchase.
1.7. The Fund shall pay and transmit the proceeds of redemptions of Fund
shares by 3:00 P.M. Eastern Time on the next Business Day after a redemption
order is received in accordance with Section 1.4 hereof. Payment shall be in
federal funds transmitted by wire and/or a credit for any shares purchased the
same day as the redemption.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to FGWL&A or the Account. Shares
ordered from the Fund will be recorded in an appropriate title for the Account
or the appropriate sub-account of the Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to FGWL&A of any income, dividends or capital
gain distributions payable on the Designated Portfolio(s)' shares. FGWL&A hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Designated Portfolio shares in additional shares of that
Designated Portfolio. FGWL&A reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify FGWL&A by
the end of the next following Business Day of the number of shares so issued as
payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Designated Portfolio available to FGWL&A on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and shall
use its best efforts to make such net asset value per share available by 7:00
p.m. Eastern time. In the event of an error in the computation of a Designated
Portfolio's net asset value per share ("NAV") or any dividend or capital gain
distribution (each, a "pricing error"), the Adviser or the Fund shall
immediately notify FGWL&A as soon as possible after discovery of the error. Such
notification may be verbal, but shall be confirmed promptly in writing in
accordance with Article XI of this Agreement. A pricing error shall be corrected
as follows: (a) if the pricing error results in a difference between the
erroneous NAV and the correct NAV of less than $0.01 per share, then no
corrective action need be taken; (b) if the pricing error results in a
difference between the erroneous NAV and the correct NAV equal to or greater
than $0.01 per share, but less than 1/2 of 1% of the Designated Portfolio's NAV
at the time of the error, then the Adviser shall reimburse the Designated
Portfolio for any loss, after taking into consideration any positive effect of
such error; however, no adjustments to Contractowner accounts need be made; and
(c) if the pricing error results in a difference between the erroneous NAV and
the correct NAV equal to or greater than 1/2 of 1% of the Designated Portfolio's
NAV at the time of the error, then the Adviser shall reimburse the Designated
Portfolio for any loss (without taking into consideration any positive effect of
such error) and shall reimburse FGWL&A for the costs of adjustments made to
correct Contractowner accounts in accordance with the provisions of Schedule E.
If an adjustment is necessary to correct a material error which has caused
Contractowners to receive less than the amount to which they are entitled, the
number of shares of the applicable sub-account of such Contractowners will be
adjusted and the amount of any underpayments shall be credited by the Adviser to
FGWL&A for crediting of such amounts to the applicable Contractowners accounts.
Upon notification by the Adviser of any overpayment due to a material error,
FGWL&A or Schwab, as the case may be, shall promptly remit to Adviser any
overpayment that has not been paid to Contractowners; however, Adviser
acknowledges that Schwab and FGWL&A do not intend to seek additional payments
from any Contractowner who, because of a pricing error, may have underpaid for
units of interest credited to his/her account. In no event shall Schwab or
FGWL&A be liable to Contractowners for any such adjustments or underpayment
amounts. A pricing error within categories (b) or (c) above shall be deemed to
be "materially incorrect" or constitute a "material error" for purposes of this
Agreement.
The standards set forth in this Section 1.10 are based on the Parties'
understanding of the views expressed by the staff of the SEC as of the date of
this Agreement. In the event the views of the SEC staff are later modified or
superseded by SEC or judicial interpretation, the parties shall amend the
foregoing provisions of this Agreement to comport with the appropriate
applicable standards, on terms mutually satisfactory to all Parties.
ARTICLE II. Representations and Warranties
2.1. FGWL&A represents and warrants that the Contracts and the
securities deemed to be issued by the Account under the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. FGWL&A further represents and warrants
that it is an insurance company duly organized and in good standing under
applicable law and that it has legally and validly established the Account prior
to any issuance or sale of units thereof as a segregated asset account under
Section 4240, et. seq. of the New York Insurance Law and has registered the
Account as a unit investment trust in accordance with the provisions of the 1940
Act to serve as a segregated investment account for the Contracts and that it
will maintain such registration for so long as any Contracts are outstanding as
required by applicable law.
2.2. The Fund represents and warrants that Designated Portfolio(s)
shares sold pursuant to this Agreement shall be registered under the 1933 Act,
duly authorized for issuance and sold in compliance with all applicable federal
securities laws including without limitation the 1933 Act, the 1934 Act, and the
1940 Act and that the Fund is and shall remain registered under the 0000 Xxx.
The Fund shall amend the registration statement for its shares under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares.
2.3. The Fund reserves the right to adopt a plan pursuant to Rule 12b-1
under the 1940 Act and to impose an asset-based or other charge to finance
distribution expenses as permitted by applicable law and regulation. In any
event, the Fund and Adviser agree to comply with applicable provisions and SEC
staff interpretations of the 1940 Act to assure that the investment advisory or
management fees paid to the Adviser by the Fund are in accordance with the
requirements of the 1940 Act. To the extent that the Fund decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have its
Board, a majority of whom are not interested persons of the Fund, formulate and
approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses.
2.4. The Fund represents and warrants that it will make every effort to
ensure that the investment policies, fees and expenses of the Designated
Portfolio(s) are and shall at all times remain in compliance with the insurance
and other applicable laws of the State of New York and any other applicable
state to the extent required to perform this Agreement. The Fund further
represents and warrants that it will make every effort to ensure that Designated
Portfolio(s) shares will be sold in compliance with the insurance laws of the
State of New York and all applicable state insurance and securities laws. The
Fund shall register and qualify the shares for sale in accordance with the laws
of the various states if and to the extent required by applicable law. FGWL&A
and the Fund will endeavor to mutually cooperate with respect to the
implementation of any modifications necessitated by any change in state
insurance laws, regulations or interpretations of the foregoing that affect the
Designated Portfolio(s) (a "Law Change"), and to keep each other informed of any
Law Change that becomes known to either party. In the event of a Law Change, the
Fund agrees that, except in those circumstances where the Fund has advised
FGWL&A that its Board of Directors has determined that implementation of a
particular Law Change is not in the best interest of all of the Fund's
shareholders with an explanation regarding why such action is lawful, any action
required by a Law Change will be taken.
2.5. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the State of Maryland and that it does and
will comply in all material respects with the 1940 Act.
2.6. The Adviser represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the Fund in compliance in all material
respects with any applicable state and federal securities laws.
2.7. The Distributor represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the Fund in compliance in all material
respects with the laws of any applicable state and federal securities laws.
2.8. The Fund and the Adviser represent and warrant that all of their
respective officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are, and shall
continue to be at all times, covered by one or more blanket fidelity bonds or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid bonds shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company.
2.9. Schwab represents and warrants that it has completed, obtained and
performed, in all material respects, all registrations, filings, approvals, and
authorizations, consents and examinations required by any government or
governmental authority as may be necessary to perform this Agreement. Schwab
does and will comply, in all material respects, with all applicable laws, rules
and regulations in the performance of its obligations under this Agreement.
2.10. The Fund will provide FGWL&A with as much advance notice as is
reasonably practicable of any material change affecting the Designated
Portfolio(s) (including, but not limited to, any material change in the
registration statement or prospectus affecting the Designated Portfolio(s)) and
any proxy solicitation affecting the Designated Portfolio(s) and consult with
FGWL&A in order to implement any such change in an orderly manner, recognizing
the expenses of changes and attempting to minimize such expenses by implementing
them in conjunction with regular annual updates of the prospectus for the
Contracts. The Fund agrees to share equitably in expenses incurred by FGWL&A as
a result of actions taken by the Fund, consistent with the allocation of
expenses contained in Schedule E attached hereto and incorporated herein by
reference.
2.11. FGWL&A represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986 as
amended ("the Code"), that the Contracts are currently and at the time of
issuance will be treated as annuity contracts under applicable provisions of the
Code, and that it will make every effort to maintain such treatment and that it
will notify Schwab, the Fund, the Distributor and the Adviser 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. In addition, FGWL&A
represents and warrants that the Account is a "segregated asset account" and
that interests in the Account are offered exclusively through the purchase of or
transfer into a "variable contract" within the meaning of such terms under
Section 817 of the Code and the regulations thereunder. FGWL&A will use every
effort to continue to meet such definitional requirements, and it will notify
Schwab, the Fund, the Distributor and the Adviser immediately upon having a
reasonable basis for believing that such requirements have ceased to be met or
that they might not be met in the future. FGWL&A represents and warrants that it
will not purchase Fund shares with assets derived from tax-qualified retirement
plans except, indirectly, through Contracts purchased in connection with such
plans.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. At least annually, the Adviser or Distributor shall provide
FGWL&A and Schwab with as many copies of the Fund's current
prospectus for the Designated Portfolio(s) as FGWL&A and Schwab
may reasonably request for marketing purposes (including
distribution to Contractowners with respect to new sales of a
Contract), with expenses to be borne in accordance with Schedule
E hereof. If requested by FGWL&A in lieu thereof, the Adviser,
Distributor or Fund shall provide such documentation (including a
camera-ready copy and computer diskette of the current prospectus
for the Designated Portfolio(s)) and other assistance as is
reasonably necessary in order for FGWL&A once each year (or more
frequently if the prospectuses for the Designated Portfolio(s)
are amended) to have the prospectus for the Contracts and the
Fund's prospectus for the Designated Portfolio(s) printed
together in one document. The Fund and Adviser agree that the
prospectus (and semi-annual and annual reports) for the
Designated Portfolio(s) will describe only the Designated
Portfolio(s) and will not name or describe any other portfolios
or series that may be in the Fund unless required by law.
3.2. If applicable state or federal laws or regulations require that
the Statement of Additional Information ("SAI") for the Fund be
distributed to all Contractowners, then the Fund, Distributor
and/or the Adviser shall provide FGWL&A with copies of the Fund's
SAI or documentation thereof for the Designated Portfolio(s) in
such quantities, with expenses to be borne in accordance with
Schedule E hereof, as FGWL&A may reasonably require to permit
timely distribution thereof to Contractowners. The Adviser,
Distributor and/or the Fund shall also provide SAIs to any
Contractowner or prospective owner who requests such SAI from the
Fund (although it is anticipated that such requests will be made
to FGWL&A or Schwab).
3.3. The Fund, Distributor and/or Adviser shall provide FGWL&A and
Schwab with copies of the Fund's proxy material, reports to
stockholders and other communications to stockholders for the
Designated Portfolio(s) in such quantity, with expenses to be
borne in accordance with Schedule E hereof, as FGWL&A may
reasonably require to permit timely distribution thereof to
Contractowners.
3.4. It is understood and agreed that, except with respect to
information regarding FGWL&A or Schwab provided in writing by
that party, neither FGWL&A nor Schwab are responsible for the
content of the prospectus or SAI for the Designated Portfolio(s).
It is also understood and agreed that, except with respect to
information regarding the Fund, the Distributor, the Adviser or
the Designated Portfolio(s) provided in writing by the Fund, the
Distributor or the Adviser, neither the Fund, the Distributor nor
Adviser are responsible for the content of the prospectus or SAI
for the Contracts.
3.5. If and to the extent required by law FGWL&A shall: (i) solicit
voting instructions from Contractowners;
(ii) vote the Designated Portfolio(s) shares held in the
Account in accordance with instructions received from
Contractowners: and
(iii) vote Designated Portfolio shares held in the Account for
which no instructions have been received in the same
proportion as Designated Portfolio(s) shares for which
instructions have been received from Contractowners, so
long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. FGWL&A reserves
the right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law.
3.6. FGWL&A shall be responsible for assuring that each of its separate
accounts holding shares of a Designated Portfolio calculates voting privileges
as directed by the Fund and agreed to by FGWL&A and the Fund. The Fund agrees to
promptly notify FGWL&A of any changes of interpretations or amendments of the
Mixed and Shared Funding Exemptive Order.
3.7. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or, as the Fund currently intends, comply with
Section 16(c) of the 1940 Act (although the Fund is not one of the trusts
described in Section 16(c) of that Act) as well as with Sections 16(a) and, if
and when applicable, 16(b). Further, the Fund will act in accordance with the
SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors or trustees and with whatever rules the SEC may
promulgate with respect thereto.
ARTICLE IV. Sales Material and Information.
4.1. FGWL&A and Schwab shall furnish, or shall cause to be furnished, to
the Fund or its designee, a copy of each piece of sales literature or other
promotional material that FGWL&A or Schwab, respectively, develops or proposes
to use and in which the Fund (or a Portfolio thereof), its Adviser or one of its
sub-advisers or the Distributor is named in connection with the Contracts, at
least ten (10) Business Days prior to its use. No such material shall be used if
the Fund objects to such use within five (5) Business Days after receipt of such
material.
4.2. FGWL&A and Schwab shall not give any information or make any
representations or statements on behalf of the Fund in connection with the sale
of the Contracts other than the information or representations contained in the
registration statement, including the prospectus or SAI for the Fund shares, as
the same may be amended or supplemented from time to time, or in sales
literature or other promotional material approved by the Fund, Distributor or
Adviser, except with the permission of the Fund, Distributor or Adviser.
4.3. The Fund or the Adviser shall furnish, or shall cause to be
furnished, to FGWL&A and Schwab, a copy of each piece of sales literature or
other promotional material in which FGWL&A and/or its separate account(s), or
Schwab is named at least ten (10) Business Days prior to its use. No such
material shall be used if FGWL&A or Schwab objects to such use within five (5)
Business Days after receipt of such material.
4.4. The Fund, the Distributor and the Adviser shall not give any
information or make any representations on behalf of FGWL&A or concerning
FGWL&A, the Account, or the Contracts other than the information or
representations contained in a registration statement, including the prospectus
or SAI for the Contracts, as the same may be amended or supplemented from time
to time, or in sales literature or other promotional material approved by FGWL&A
or its designee, except with the permission of FGWL&A.
4.5. FGWL&A, the Fund, the Distributor and the Adviser shall not give
any information or make any representations on behalf of or concerning Schwab,
or use Xxxxxx'x name except with the permission of Schwab.
4.6. The Fund will provide to FGWL&A and Schwab at least one complete
copy of all registration statements, prospectuses, SAIs, sales literature and
other promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Designated
Portfolio(s) within a reasonable period of time following the filing of such
document(s) with the SEC or NASD or other regulatory authorities.
4.7. FGWL&A or Schwab will provide to the Fund at least one complete
copy of all registration statements, prospectuses, SAIs, reports, solicitations
for voting instructions, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Contracts or the Account,
contemporaneously with the filing of such document(s) with the SEC, NASD, or
other regulatory authority.
4.8. For purposes of Articles IV and VIII, the phrase "sales literature
and other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media; e.g.,
on-line networks such as the Internet or other electronic media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and shareholder reports, and proxy
materials (including solicitations for voting instructions) and any other
material constituting sales literature or advertising under the NASD rules, the
1933 Act or the 0000 Xxx.
4.9. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records, data and
access to operating procedures that may be reasonably requested in connection
with compliance and regulatory requirements related to this Agreement or any
party's obligations under this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund and the Adviser shall pay no fee or other compensation to
FGWL&A under this Agreement, and FGWL&A shall pay no fee or other compensation
to the Fund or Adviser under this Agreement, although the parties hereto will
bear certain expenses in accordance with Schedule E, Articles III, V, and other
provisions of this Agreement.
5.2. All expenses incident to performance by the Fund, the Distributor
and the Adviser under this Agreement shall be paid by the appropriate party, as
further provided in Schedule E. The Fund shall see to it that all shares of the
Designated Portfolio(s) are registered and authorized for issuance in accordance
with applicable federal law and, if and to the extent required, in accordance
with applicable state laws prior to their sale.
5.3. The parties shall bear the expenses of routine annual distribution
(mailing costs) of the Fund's prospectus and distribution (mailing costs) of the
Fund's proxy materials and reports to owners of Contracts offered by FGWL&A, in
accordance with Schedule E.
5.4. The Fund, the Distributor and the Adviser acknowledge that a
principal feature of the Contracts is the Contractowner's ability to choose from
a number of unaffiliated mutual funds (and portfolios or series thereof),
including the Designated Portfolio(s) and the Unaffiliated Funds, and to
transfer the Contract's cash value between funds and Designated Portfolios. The
Fund, the Distributor and the Adviser agree to cooperate with FGWL&A and Schwab
in facilitating the operation of the Account and the Contracts as described in
the prospectus for the Contracts, including but not limited to cooperation in
facilitating transfers between Unaffiliated Funds.
5.5. Schwab agrees to provide certain administrative services, specified
in Schedule C attached hereto and incorporated herein by reference, in
connection with the arrangements contemplated by this Agreement. The parties
acknowledge and agree that the services referred to in this Section 5.5 are
recordkeeping, shareholder communication, and other transaction facilitation and
processing, and related administrative services only and are not the services of
an underwriter or a principal underwriter of the Fund, and that Schwab is not an
underwriter for the shares of the Designated Portfolio(s), within the meaning of
the 1933 Act or the 0000 Xxx.
5.6. As compensation for the services specified in Schedule C hereto,
the Adviser agrees to pay Schwab a monthly Administrative Service Fee based on
the percentage per annum on Schedule C hereto applied to the average daily value
of the shares of the Designated Portfolio(s) held in the Account with respect to
Contracts sold by Schwab. This monthly Administrative Service Fee is due and
payable before the 15th (fifteenth) day following the last day of the month to
which it relates.
ARTICLE VI. Diversification and Qualification.
---------------------------------
6.1. The Fund, the Distributor and the Adviser represent and warrant
that the Fund will at all times sell its shares and invest its assets in
such a manner as to ensure that the Contracts will be treated as annuity
contracts under the Code, and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund, Distributor and Adviser
represent and warrant that the Fund and each Designated Portfolio
thereof will at all times comply with Section 817(h) of the Code and
Treasury Regulation ss.1.817-5, as amended from time to time, and any
Treasury interpretations thereof, relating to the diversification
requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications or successor
provisions to such Section or Regulations. The Fund, the Distributor and
the Adviser agree that shares of the Designated Portfolio(s) will be
sold only to Participating Insurance Companies and their separate
accounts and to Qualified Plans.
6.2. No shares of any Designated Portfolio of the Fund will be sold to
the general public.
6.3. The Fund, the Distributor and the Adviser represent and warrant
that the Fund and each Designated Portfolio is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that
each Designated Portfolio will maintain such qualification (under
Subchapter M or any successor or similar provisions) as long as this
Agreement is in effect.
6.4. The Fund, Distributor or Adviser will notify FGWL&A immediately
upon having a reasonable basis for believing that the Fund or any
Designated Portfolio has ceased to comply with the aforesaid Section
817(h) diversification or Subchapter M qualification requirements or
might not so comply in the future.
6.5. Without in any way limiting the effect of Sections 8.3, 8.4 and 8.5
hereof and without in any way limiting or restricting any other remedies
available to FGWL&A or Schwab, the Adviser or Distributor will pay all
costs associated with or arising out of any failure, or any anticipated
or reasonably foreseeable failure, of the Fund or any Designated
Portfolio to comply with Sections 6.1, 6.2, or 6.3 hereof, including all
costs associated with reasonable and appropriate corrections or
responses to any such failure; such costs may include, but are not
limited to, the costs involved in creating, organizing, and registering
a new investment company as a funding medium for the Contracts and/or
the costs of obtaining whatever regulatory authorizations are required
to substitute shares of another investment company for those of the
failed Portfolio (including but not limited to an order pursuant to
Section 26(b) of the 1940 Act); such costs are to include, but are not
limited to, reasonable fees and expenses of legal counsel and other
advisors to FGWL&A and any federal income taxes or tax penalties and
interest thereon (or "toll charges" or exactments or amounts paid in
settlement) incurred by FGWL&A with respect to itself or owners of its
Contracts in connection with any such failure or anticipated or
reasonably foreseeable failure.
6.6. The Fund at the Fund's expense shall provide FGWL&A or its designee
with reports certifying compliance with the aforesaid Section 817(h)
diversification and Subchapter M qualification requirements, at the
times provided for and substantially in the form attached hereto as
Schedule D and incorporated herein by reference; provided, however, that
providing such reports does not relieve the Fund of its responsibility
for such compliance or of its liability for any non-compliance.
6.7. FGWL&A agrees that if the Internal Revenue Service ("IRS") asserts
in writing in connection with any governmental audit or review of FGWL&A
or, to FGWL&A's knowledge, or any Contractowner that any Designated
Portfolio has failed to comply with the diversification requirements of
Section 817(h) of the Code or FGWL&A otherwise becomes aware of any
facts that could give rise to any claim against the Fund, Distributor or
Adviser as a result of such a failure or alleged failure:
(a) FGWL&A shall promptly notify the Fund, the Distributor and the
Adviser of such assertion or potential claim;
(b) FGWL&A shall consult with the Fund, the Distributor and the Adviser
as to how to minimize any liability that may arise as a result of such
failure or alleged failure;
(c) FGWL&A shall use its best efforts to minimize any liability of the
Fund, the Distributor and the Adviser resulting from such failure,
including, without limitation, demonstrating, pursuant to Treasury
Regulations, Section 1.817-5(a)(2), to the commissioner of the IRS that
such failure was inadvertent;
(d) any written materials to be submitted by FGWL&A to the IRS, any
Contractowner or any other claimant in connection with any of the
foregoing proceedings or contests (including, without limitation, any
such materials to be submitted to the IRS pursuant to Treasury
Regulations, Section 1.817-5(a)(2)) shall be provided by FGWL&A to the
Fund, the Distributor and the Adviser (together with any supporting
information or analysis) within at least two (2) business days prior to
submission;
(e) FGWL&A shall provide the Fund, the Distributor and the Adviser with
such cooperation as the Fund, the Distributor and the Adviser shall
reasonably request (including, without limitation, by permitting the
Fund, the Distributor and the Adviser to review the relevant books and
records of FGWL&A) in order to facilitate review by the Fund, the
Distributor and the Adviser of any written submissions provided to it or
its assessment of the validity or amount of any claim against it arising
from such failure or alleged failure;
(f) FGWL&A shall not with respect to any claim of the IRS or any
Contractowner that would give rise to a claim against the Fund, the
Distributor and the Adviser (i) compromise or settle any claim, (ii)
accept any adjustment on audit, or (iii) forego any allowable
administrative or judicial appeals, without the express written consent
of the Fund, the Distributor and the Adviser, which shall not be
unreasonably withheld; provided that, FGWL&A shall not be required to
appeal any adverse judicial decision unless the Fund and the Adviser
shall have provided an opinion of independent counsel to the effect that
a reasonable basis exists for taking such appeal; and further provided
that the Fund, the Distributor and the Adviser shall bear the costs and
expenses, including reasonable attorney's fees, incurred by FGWL&A in
complying with this clause (f).
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Designated Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners or by contract owners of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to disregard
the voting instructions of contract owners. The Board shall promptly inform
FGWL&A if it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. FGWL&A will report any potential or existing conflicts of which it
is aware to the Board. FGWL&A will assist the Board in carrying out its
responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by FGWL&A to inform the Board whenever contract owner voting instructions are to
be disregarded. Such responsibilities shall be carried out by FGWL&A with a view
only to the interests of its Contractowners.
7.3. If it is determined by a majority of the Board, or a majority of
its directors who are not interested persons of the Fund, the Distributor, the
Adviser or any sub-adviser to any of the Designated Portfolios (the "Independent
Directors"), that a material irreconcilable conflict exists, FGWL&A and other
Participating Insurance Companies shall, at their expense and to the extent
reasonably practicable (as determined by a majority of the Independent
Directors), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the separate accounts from the Fund or any
Designated Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by FGWL&A to disregard Contractowner voting instructions and that decision
represents a minority position or would preclude a majority vote, FGWL&A may be
required, at the Fund's election, to withdraw the Account's investment in the
Fund and terminate this Agreement; provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent
Directors. Any such withdrawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of that six month period the Adviser, the
Distributor and the Fund shall continue to accept and implement orders by FGWL&A
for the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to FGWL&A conflicts with the
majority of other state regulators, then FGWL&A will withdraw the Account's
investment in the Fund and terminate this Agreement within six months after the
Board informs FGWL&A in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six month
period, the Fund shall continue to accept and implement orders by FGWL&A for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. FGWL&A shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contractowners affected by the irreconcilable material
conflict. In the event that the Board determines that any proposed action does
not adequately remedy any irreconcilable material conflict, then FGWL&A will
withdraw the Account's investment in the Fund and terminate this Agreement
within six (6) months after the Board informs FGWL&A in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the Independent Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable: and (b) Sections 3.5, 3.6, 3.7, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By FGWL&A
8.1(a).FGWL&A agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, Distributor or
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlement with the written consent of FGWL&A) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, expenses, damages or liabilities (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement or prospectus or SAI covering the
Contracts or contained in the Contracts or sales literature or
other promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this
Agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished in writing to FGWL&A or Schwab by or on
behalf of the Adviser, Distributor or Fund for use in the
registration statement or prospectus for the Contracts or in the
Contracts or sales literature or other promotional material (or
any amendment or supplement to any of the foregoing) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature or other
promotional material of the Fund not supplied by FGWL&A or
persons under its control) or wrongful conduct of FGWL&A or
persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI, or sales literature or other promotional
material of the Fund, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, if such a statement or
omission was made in reliance upon information furnished in
writing to the Fund by or on behalf of FGWL&A; or
(iv) arise as a result of any failure by FGWL&A to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by FGWL&A in this Agreement
or arise out of or result from any other material breach of this
Agreement by FGWL&A, including without limitation Section 2.11
and Section 6.7 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). FGWL&A shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.1(c). FGWL&A shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified FGWL&A in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify FGWL&A of any such claim shall not relieve FGWL&A
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision,
except to the extent that FGWL&A has been prejudiced by such failure to give
notice. In case any such action is brought against the Indemnified Parties,
FGWL&A shall be entitled to participate, at its own expense, in the defense of
such action. FGWL&A also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from FGWL&A
to such party of FGWL&A's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and FGWL&A will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.1(d).The Indemnified Parties will promptly notify FGWL&A of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by Schwab.
8.2(a).Schwab agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, Distributor or
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlement with the written consent of Schwab) or litigation (including
reasonable legal and other expenses), to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of Xxxxxx'x dissemination of information regarding the
Fund that is both (A) materially incorrect and (B) that was
neither contained in the Fund's registration statement nor in the
Fund's sales literature and other promotional material or
provided in writing to Schwab, or approved in writing, by or on
behalf of the Fund, Distributor or Adviser; or
(ii) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in sales
literature or other promotional material prepared or approved by
Schwab for the Contracts or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this Agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in
writing to FGWL&A or Schwab by or on behalf of the Adviser,
Distributor or the Fund or to Schwab by FGWL&A for use in the
registration statement, prospectus or SAI for the Contracts or in
the Contracts or sales literature or other promotional material
(or any amendment or supplement any of the foregoing) or
otherwise for use in connection with the sale of the Contracts;
or
(iii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or
other promotional material of the Fund not supplied by Schwab or
persons under its control) or wrongful conduct of Schwab or
persons under its control, with respect to the sale or
distribution of the Contracts; or
(iv) arise as a result of any failure by Schwab to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Schwab in this Agreement
or arise out of or result from any other material breach of this
Agreement by Schwab;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). Schwab shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages,
liabilities or litigation to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or negligence in the performance
of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties
under this Agreement or to any of the Indemnified Parties.
8.2(c). Schwab shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified Schwab in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify Schwab of any such
claim shall not relieve Schwab from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision,
except to the extent that Schwab has been prejudiced by such
failure to give notice. In case any such action is brought
against the Indemnified Parties, Schwab shall be entitled to
participate, at its own expense, in the defense of such action.
Schwab also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After
notice from Schwab to such party of Xxxxxx'x election to assume
the defense thereof, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and Schwab
will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than
reasonable costs of investigation.
8.2(d). The Indemnified Parties will promptly notify Schwab of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.3. Indemnification by the Adviser.
8.3(a). The Adviser agrees to indemnify and hold harmless FGWL&A and
Schwab and each of their directors and officers and each person,
if any, who controls FGWL&A or Schwab within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all
losses, claims, expenses, damages, liabilities (including amounts
paid in settlement with the written consent of the Adviser) or
litigation (including reasonable legal and other expenses) to
which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
or other promotional material of the Fund prepared by the Fund,
the Distributor or the Adviser (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this Agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in
writing to the Adviser, the Distributor or the Fund by or on
behalf of FGWL&A or Schwab for use in the registration statement,
prospectus or SAI for the Fund or in sales literature or other
promotional material (or any amendment or supplement to any of
the foregoing) or otherwise for use in connection with the sale
of the Contracts or the Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or
other promotional material for the Contracts not supplied by the
Adviser or persons under its control) or wrongful conduct of the
Fund, the Distributor or the Adviser or persons under their
control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI, or sales literature or other promotional
material covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance
upon information furnished in writing to FGWL&A or Schwab by or
on behalf of the Adviser, the Distributor or the Fund; or
(iv) arise as a result of any failure by the Fund, the Distributor or
the Adviser to provide the services and furnish the materials
under the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the
diversification and other qualification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, the Distributor
or the Adviser in this Agreement or arise out of or result from
any other material breach of this Agreement by the Adviser, the
Distributor or the Fund; or
(vi) arise out of or result from the incorrect or untimely calculation
or reporting by the Fund, the Distributor or the Adviser of the
daily net asset value per share (subject to Section 1.10 of this
Agreement) or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Adviser specified in Article VI hereof.
8.3(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.3(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that the Adviser
has been prejudiced by such failure to give notice. In case any such action is
brought against the Indemnified Parties, the Adviser will be entitled to
participate, at its own expense, in the defense thereof. The Adviser also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Adviser to such party of the
Adviser's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Adviser will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.3(d). FGWL&A and Schwab agree promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any
of its officers or directors in connection with the issuance or
sale of the Contracts or the operation of the Account.
8.4. Indemnification By the Fund.
8.4(a). The Fund agrees to indemnify and hold harmless FGWL&A and Schwab
and each of their respective directors and officers and each
person, if any, who controls FGWL&A or Schwab within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.4) against any and all
losses, claims, expenses, damages and liabilities (including
amounts paid in settlement with the written consent of the Fund)
or litigation (including reasonable legal and other expenses) to
which the Indemnified Parties may be required to pay or become
subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, expenses, damages,
liabilities or expenses (or actions in respect thereof) or
settlements, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund; or
(iii) arise out of or result from the incorrect or untimely calculation
or reporting of the daily net asset value per share (subject to
Section 1.10 of this Agreement) or dividend or capital gain
distribution rate;
as limited by and in accordance with the provisions of Sections 8.4(b) and
8.4(c) hereof.
8.4(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.4(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve it from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision, except to the extent that the Fund has been
prejudiced by such failure to give notice. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund shall also be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.4(d). FGWL&A and Schwab each agree promptly to notify the Fund of the
commencement of any litigation or proceeding against itself or any of its
respective officers or directors in connection with the Agreement, the issuance
or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
8.5. Indemnification by the Distributor.
8.5(a).The Distributor agrees to indemnify and hold harmless FGWL&A and
Schwab and each of their respective directors and officers and each person, if
any, who controls FGWL&A or Schwab within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" for purposes of this Section 8.5)
against any and all losses, claims, expenses, damages and liabilities (including
amounts paid in settlement with the written consent of the Distributor) or
litigation (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
or other promotional material of the Fund prepared by the Fund,
Adviser or Distributor (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished in writing to the
Adviser, the Distributor or Fund by or on behalf of FGWL&A or
Schwab for use in the registration statement or SAI or prospectus
for the Fund or in sales literature or other promotional material
(or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI, sales literature or
other promotional material for the Contracts not supplied by the
Distributor or persons under its control) or wrongful conduct of
the Fund, the Distributor or Adviser or persons under their
control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI, sales literature or other promotional material
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished in writing to FGWL&A or Schwab by or on behalf of the
Adviser, the Distributor or Fund; or
(iv) arise as a result of any failure by the Fund, Adviser or
Distributor to provide the services and furnish the materials
under the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the
diversification and other qualification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, Adviser or
Distributor in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund, Adviser or
Distributor; or
(vi) arise out of or result from the incorrect or untimely calculation
or reporting of the daily net asset value per share (subject to
Section 1.10 of this Agreement) or dividend or capital gain
distribution rate;
as limited by and in accordance with the provisions of Sections 8.5(b) and
8.5(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Distributor specified in Article VI
hereof.
8.5(b).The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance or such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.5(c) The Distributor shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Distributor in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Distributor of
any such claim shall not relieve the Distributor from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision, except to the extent that the
Distributor has been prejudiced by such failure to give notice. In case any such
action is brought against the Indemnified Parties, the Distributor will be
entitled to participate, at its own expense, in the defense thereof. The
Distributor also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Distributor
to such party of the Distributor's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Distributor will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.5(d) FGWL&A and Schwab agree to promptly notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York,
without regard to the New York Conflict of Laws provisions.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with
respect to some or all Designated Portfolios, upon six (6) months
advance written notice delivered to the other parties; provided,
however, that such notice shall not be given earlier than six (6)
months following the date of this Agreement; or
(b) at the option of FGWL&A or Schwab by written notice to the
other parties with respect to any Designated Portfolio based upon
FGWL&A's or Xxxxxx'x determination that shares of such Designated
Portfolio are not reasonably available to meet the requirements
of the Contracts; or
(c) at the option of FGWL&A or Schwab by written notice to the
other parties with respect to any Designated Portfolio in the
event any of the Designated Portfolio's shares are not
registered, issued or sold in accordance with applicable state
and/ or federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued or to
be issued by FGWL&A; or
(d) at the option of the Fund, Distributor or Adviser in the
event that formal administrative proceedings are instituted
against FGWL&A or Schwab by the NASD, the SEC, the Insurance
Commissioner or like official of any state or any other
regulatory body regarding FGWL&A's or Xxxxxx'x duties under this
Agreement or related to the sale of the Contracts, the operation
of any Account, or the purchase of the Fund shares, if, in each
case, the Fund, Distributor or Adviser, as the case may be,
reasonably determines in its sole judgment exercised in good
faith, that any such administrative proceedings will have a
material adverse effect upon the ability of FGWL&A or Schwab to
perform its obligations under this Agreement; or
(e) at the option of FGWL&A or Schwab in the event that formal
administrative proceedings are instituted against the Fund, the
Distributor or the Adviser by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body,
if Schwab or FGWL&A reasonably determines in its sole judgment
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Fund,
the Distributor or the Adviser to perform their obligations under
this Agreement; or
(f) at the option of FGWL&A by written notice to the Fund with
respect to any Designated Portfolio if FGWL&A reasonably believes
that the Designated Portfolio will fail to meet the Section
817(h) diversification requirements or Subchapter M
qualifications specified in Article VI hereof; or
(g) at the option of either the Fund, the Distributor or the
Adviser, if (i) the Fund, Distributor or Adviser, respectively,
shall determine, in its sole judgment reasonably exercised in
good faith, that either FGWL&A or Schwab has suffered a material
adverse change in its business or financial condition or is the
subject of material adverse publicity and that material adverse
change or publicity will have a material adverse impact on
FGWL&A's or Xxxxxx'x ability to perform its obligations under
this Agreement, (ii) the Fund, Distributor or Adviser notifies
FGWL&A or Schwab, as appropriate, of that determination and its
intent to terminate this Agreement, and (iii) after considering
the actions taken by FGWL&A or Schwab and any other changes in
circumstances since the giving of such a notice, the
determination of the Fund, Distributor or Adviser shall continue
to apply on the sixtieth (60th) day following the giving of that
notice, which sixtieth day shall be the effective date of
termination; or
(h) at the option of either FGWL&A or Schwab, if (i) FGWL&A or
Schwab, respectively, shall determine, in its sole judgment
reasonably exercised in good faith, that the Fund, Distributor or
Adviser has suffered a material adverse change in its business or
financial condition or is the subject of material adverse
publicity and that material adverse change or publicity will have
a material adverse impact on the Fund's, Distributor's or
Adviser's ability to perform its obligations under this
Agreement, (ii) FGWL&A or Schwab notifies the Fund, Distributor
or Adviser, as appropriate, of that determination and its intent
to terminate this Agreement, and (iii) after considering the
actions taken by the Fund, Distributor or Adviser and any other
changes in circumstances since the giving of such a notice, the
determination of FGWL&A or Schwab shall continue to apply on the
sixtieth (60th) day following the giving of that notice, which
sixtieth day shall be the effective date of termination; or
(i) at the option of FGWL&A in the event that formal
administrative proceedings are instituted against Schwab by the
NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding Xxxxxx'x duties under this
Agreement or related to the sale of the Fund's shares or the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that FGWL&A determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of Schwab to perform its obligations related to
the Contracts; or
(j) at the option of Schwab in the event that formal
administrative proceedings are instituted against FGWL&A by the
NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding FGWL&A's duties under this
Agreement or related to the sale of the Fund's shares or the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that Schwab determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of FGWL&A to perform its obligations related to
the Contracts; or
(k) at the option of any non-defaulting party hereto in the event
of a material breach of this Agreement by any party hereto (the
"defaulting party") other than as described in 10.1(a)-(j);
provided, that the non-defaulting party gives written notice
thereof to the defaulting party, with copies of such notice to
all other non-defaulting parties, and if such breach shall not
have been remedied within thirty (30) days after such written
notice is given, then the non-defaulting party giving such
written notice may terminate this Agreement by giving thirty (30)
days written notice of termination to the defaulting party; or
(l) at any time upon written agreement of all parties to this
Agreement.
10.2. Notice Requirement.
No termination of this Agreement shall be effective unless and until the party
terminating this Agreement gives prior written notice to all other parties of
its intent to terminate, which notice shall set forth the basis for the
termination. Furthermore,
(a) in the event any termination is based upon the provisions of Article
VII, or the provisions of Section 10.1(a), 10.1(g) or 10.1(h) of this
Agreement, the prior written notice shall be given in advance of the
effective date of termination as required by those provisions unless
such notice period is shortened by mutual written agreement of the
parties; (b) in the event any termination is based upon the provisions
of Section 10.1(d), 10.1(e), 10.1(i) or 10.1(j) of this Agreement, the
prior written notice shall be given at least sixty (60) days before the
effective date of termination; and (c) in the event any termination is
based upon the provisions of Section 10.1(b), 10.1(c) or 10.1(f), the
prior written notice shall be given in advance of the effective date of
termination, which date shall be determined by the party sending the
notice.
10.3. Effect of Termination.
Notwithstanding any termination of this Agreement, other than as a result of a
failure by either the Fund or FGWL&A to meet Section 817(h) of the Code
diversification requirements, the Fund, the Distributor and the Adviser shall,
at the option of FGWL&A or Schwab, continue to make available additional shares
of the Designated Portfolio(s) pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Designated Portfolio(s), redeem investments in the
Designated Portfolio(s) and/or invest in the Designated Portfolio(s) upon the
making of additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.3 shall not apply to any terminations under Article
VII and the effect of such Article VII terminations shall be governed by Article
VII of this Agreement.
10.4. Surviving Provisions. Notwithstanding any termination of this
Agreement, each party's obligations under Article VIII to indemnify other
parties shall survive and not be affected by any termination of this Agreement.
In addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any termination of this
Agreement.
10.5. Survival of Agreement.
A termination by Schwab shall terminate this Agreement only as to Schwab, and
this Agreement shall remain in effect as to the other parties; provided,
however, that in the event of a termination by Schwab the other parties shall
have the option to terminate this Agreement upon 60 (sixty) days notice, rather
than the six (6) months specified in Section 10.1(a).
ARTICLE XI. Notices
--------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other parties.
If to the Fund:
The Prudential Series Fund, Inc.
Gateway Center Three
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Secretary
If to the Adviser:
The Prudential Insurance Company of America
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention:Secretary
If to the Distributor:
Prudential Investment Management Services LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention:Secretary
If to FGWL&A:
First Great-West Life & Annuity Insurance Company
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention:Assistant Vice President, Savings Products
If to Schwab:
Xxxxxxx Xxxxxx & Co., Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: General Counsel
ARTICLE XII. Miscellaneous
12.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain. Without limiting the foregoing, no party hereto shall disclose
any information that another party has designated as proprietary.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the New York Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of FGWL&A are being conducted in a manner consistent with the New
York Variable Annuity Regulations and any other applicable law or regulations.
12.6. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in a forum jointly
selected by the relevant parties (but if applicable law requires some other
forum, then such other forum) in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
12.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
12.9. Schwab and FGWL&A agree that the obligations assumed by the Fund,
Distributor and the Adviser pursuant to this Agreement shall be limited in any
case to the Fund, Distributor and Adviser and their respective assets and
neither Schwab nor FGWL&A shall seek satisfaction of any such obligation from
the shareholders of the Fund, Distributor or the Adviser, the Trustees,
officers, employees or agents of the Fund, Distributor or Adviser, or any of
them.
12.10. The Fund, the Distributor and the Adviser agree that the
obligations assumed by FGWL&A and Schwab pursuant to this Agreement shall be
limited in any case to FGWL&A and Schwab and their respective assets and neither
the Fund, Distributor nor Adviser shall seek satisfaction of any such obligation
from the shareholders of FGWL&A or Schwab, the directors, officers, employees or
agents of the FGWL&A or Schwab, or any of them, except to the extent permitted
under this Agreement.
12.11. No provision of this Agreement may be deemed or construed to
modify or supersede any contractual rights, duties, or indemnifications, as
between the Adviser and the Fund, and the Distributor and the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By its authorized officer,
By:______________________________
Title:
Date:
THE PRUDENTIAL SERIES FUND, INC.
By its authorized officer,
By:______________________________
Title:
Date:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By its authorized officer,
By:____________________________
Title:
Date:
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
By its authorized officer,
By:____________________________
Title:
Date:
XXXXXXX XXXXXX & CO., INC.
By its authorized officer,
By:___________________________
Title:
Date:
Schwab Variable Annuity
SCHEDULE A
Contracts Form Numbers
First Great-West Life & Annuity Insurance Company
Group Variable/Fixed Annuity Contract J434NY
SCHEDULE B
Designated Portfolios
Prudential Series Fund Equity
SCHEDULE C
Administrative Services
To be performed by Xxxxxxx Xxxxxx & Co., Inc.
X. Xxxxxx will provide the properly registered and licensed personnel and
systems needed for all customer servicing and support - for both Fund and
Contract information and questions - including the following:
o respond to Contractowner inquiries
o mail fund and Contract prospectuses
o entry of initial and subsequent orders
o transfer of cash to FGWL&A and/or Fund
o explanations of Designated Portfolio objectives and characteristics
o entry of transfers between Unaffiliated Funds, including the Designated
Portfolios
o Contract balance and allocation inquiries
o communicate all purchase, withdrawal, and exchange orders received from
Contractowners to FGWL&A which will transmit orders to Funds
o train call center representatives to explain Fund objectives, Morningstar
categories, Fund selection data and differences between publicly traded
funds and the Funds
o provide performance data and Fund prices
o shareholder services including researching trades, resolving trade
disputes, etc.
o coordinate the writing, printing and distribution of semi-annual and annual
reports to Contract owners investing in the Designated Portfolios
o create and update Designated Portfolio profiles and other shareholder
communications o establish scheduled account rebalances
o Web trading and account servicing
o touch-tone telephone trading and account servicing
o establish dollar cost averaging o communications to Contractowners related
to product changes, including but not limited to changes in the available
Designated Portfolios
B. For the foregoing services, Schwab shall receive a monthly fee equal to_____%
per annum of the average daily value of the shares of the Designated Portfolios
listed on Schedule B attributable to Contractowners, payable by the Adviser
directly to Schwab, such payments being due and payable within 15 (fifteen) days
after the last day of the month to which such payment relates.
C. The Fund will calculate and Schwab will verify with FGWL&A the asset balance
for each day on which the fee is to be paid pursuant to this Agreement with
respect to each Designated Portfolio.
SCHEDULE D
Reports per Section 6.6
With regard to the reports relating to the quarterly testing of
compliance with the requirements of Section 817(h) and Subchapter M under the
Internal Revenue Code (the "Code") and the regulations thereunder, the Fund
shall provide within twenty (20) Business Days of the close of the calendar
quarter a report to FGWL&A in the Form D1 attached hereto and incorporated
herein by reference, regarding the status under such sections of the Code of the
Designated Portfolio(s), and if necessary, identification of any remedial action
to be taken to remedy non-compliance.
With regard to the reports relating to the year-end testing of
compliance with the requirements of Subchapter M of the Code, referred to
hereinafter as "RIC status," the Fund will provide the reports on the following
basis: (i) the last quarter's quarterly reports can be supplied within the
20-day period, and (ii) a year-end report will be provided 45 days after the end
of the calendar year. However, if a problem with regard to RIC status, as
defined below, is identified in the third quarter report, on a weekly basis,
starting the first week of December, additional interim reports will be provided
specially addressing the problems identified in the third quarter report. If any
interim report memorializes the cure of the problem, subsequent interim reports
will not be required.
A problem with regard to RIC status is defined as any violation of the
following standards, as referenced to the applicable sections of the Code:
(a) Less than ninety percent of gross income is derived from sources of
income specified in Section 851(b)(2); (b) Thirty percent or greater
gross income is derived from the sale or disposition of assets specified
in Section 851(b)(3);
(c) Less than fifty percent of the value of total assets consists of
assets specified in Section 851(b)(4)(A); and (d) No more than
twenty-five percent of the value of total assets is invested in the
securities of one issuer, as that requirement is set forth in Section
851(b)(4)(B).
FORM D1
CERTIFICATE OF COMPLIANCE
For the quarter ended:
---------------------------
The Prudential Insurance Company of America (investment adviser) for The
Prudential Series Fund, Inc. hereby notifies you that, based on internal
compliance testing performed as of the end of the calendar quarter ended
________, 19____, the Designated Portfolios were in compliance with all
requirements of Section 817(h) and Subchapter M of the Internal Revenue Code
(the "Code") and the regulations thereunder as required in the Fund
Participation Agreement among First Great-West Life & Annuity Insurance Company,
Xxxxxxx Xxxxxx & Co., Inc. and other than the exceptions discussed below:
Exceptions Remedial Action
Signed this day of , .
----- ---------- ------------
------------------------
(Signature)
By:
-----------------------------------------------
(Type or Print Name and Title/Position)
SCHEDULE E
EXPENSES
The Fund and/or the Distributor and/or Adviser, and FGWL&A will coordinate the
functions and pay the costs of the completing these functions based upon an
allocation of costs in the tables below. Costs shall be allocated to reflect the
Fund's share of the total costs determined according to the number of pages of
the Fund's respective portions of the documents.
------------------------- ---------------------- ---------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Prospectus Printing of combined FGWL&A Fund,
prospectuses Distributor or
Adviser, as
applicable
------------------------- ---------------------- ---------------------- ------------------
Fund, Distributor or FGWL&A Fund,
Adviser shall supply Distributor or
FGWL&A with such Adviser, as
numbers of the applicable
Designated
Portfolio(s)
prospectus(es) as
FGWL&A shall
reasonably request
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
(including postage)
to New and Inforce
Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution Schwab Schwab
(including postage)
to Prospective
Clients
------------------------- ---------------------- ---------------------- ------------------
Product Prospectus Printing for Inforce FGWL&A FGWL&A
Clients
------------------------- ---------------------- ---------------------- ------------------
Printing for FGWL&A Schwab
Prospective Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution to New FGWL&A FGWL&A
and Inforce Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution to Schwab Schwab
Prospective Clients
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Prospectus If Required by Fund, Fund, Distributor or Fund,
Update & Distribution Distributor or Adviser Distributor or
Adviser Adviser
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Product Prospectus If Required by Fund, FGWL&A Fund,
Update & Distribution Distributor or Distributor or
Adviser Adviser
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund SAI Printing Fund, Distributor or Fund,
Adviser Distributor or
Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
(including postage)
------------------------- ---------------------- ---------------------- ------------------
Product SAI Printing FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Proxy Material for Printing if proxy Fund, Distributor or Fund,
Mutual Fund: required by Law Adviser Distributor or
Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A Fund,
(including labor) if Distributor or
proxy required by Law Adviser
------------------------- ---------------------- ---------------------- ------------------
Printing & FGWL&A FGWL&A
distribution if
required by FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Printing & FGWL&A Schwab
distribution if
required by Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Annual & Printing of combined FGWL&A Fund,
Semi-Annual Report reports Distributor or
Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A and Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Other communication to If Required by the Schwab Fund,
New and Prospective Fund, Distributor or Distributor or
clients Adviser Adviser
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A Schwab FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Other communication to Distribution FGWL&A Fund,
inforce (including labor and Distributor or
printing) if Adviser required by the Fund, Distributor
or Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
(including labor and
printing)if required
by FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A Schwab
(including labor and
printing if required
by Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Errors in Share Price Cost of error to FGWL&A Fund or Adviser
calculation pursuant to participants
Section 1.10
------------------------- ---------------------- ---------------------- ------------------
Cost of reasonable FGWL&A Fund or Adviser
expenses related to
administrative work
to correct error
------------------------- ---------------------- ---------------------- ------------------
Operations of the Fund All operations and Fund, Distributor or Fund or Adviser
related expenses, Adviser
including the cost
of registration and
qualification of
shares, taxes on the
issuance or transfer
of shares, cost of
management of the
business affairs of
the Fund, and
expenses paid or
assumed by the fund
pursuant to any Rule
12b-1 plan
------------------------- ---------------------- ---------------------- ------------------
Operations of the Federal registration FGWL&A FGWL&A
Account of units of separate
account (24f-2 fees)
------------------------- ---------------------- ---------------------- ------------------
FUND PARTICIPATION AGREEMENT
Xxxxxxx Variable Life Investment Fund
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares.....................................................3
ARTICLE II. Representations and Warranties..........................................7
ARTICLE III. Prospectuses and Proxy Statements; Voting..............................11
ARTICLE IV. Sales Material and Information.........................................13
ARTICLE V. Fees and Expenses......................................................15
ARTICLE VI. Diversification and Qualification......................................16
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order ..............................20
ARTICLE VIII. Indemnification .......................................................22
ARTICLE IX. Applicable Law.........................................................37
ARTICLE X. Termination............................................................37
ARTICLE XI. Notices................................................................41
ARTICLE XII. Miscellaneous..........................................................42
SCHEDULE A Contracts..............................................................45
SCHEDULE B Designated Portfolios..................................................46
SCHEDULE C Administrative Services................................................47
SCHEDULE D Reports per Section 6.6................................................49
SCHEDULE E Expenses...............................................................52
PARTICIPATION AGREEMENT
Among
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
XXXXXXX VARIABLE LIFE INVESTMENT FUND,
XXXXXXX XXXXXX INVESTMENTS, INC.,
XXXXXXX INVESTOR SERVICES, INC.
and
XXXXXXX XXXXXX & CO., INC.
THIS AGREEMENT, made and entered into as of this 1st day of May, 1999 by
and among FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (hereinafter
"FGWL&A"), a New York life insurance company, on its own behalf and on behalf of
its Separate Account Variable Annuity-1 Series Account (the "Account"); Xxxxxxx
Variable Life Investment Fund, a Massachusetts business trust organized under
the laws of Massachusetts (hereinafter the "Fund"); Xxxxxxx Xxxxxx Investments,
Inc. (hereinafter the "Adviser"), a Delaware corporation organized under the
laws of Delaware; Xxxxxxx Investor Services, Inc., a Massachusetts corporation
organized under the laws of Massachusetts (hereinafter the "Distributor"); and
XXXXXXX XXXXXX & CO., INC., a California corporation (hereinafter "Schwab").
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies, including FGWL&A, which have entered into
participation agreements similar to this Agreement (hereinafter "Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the interest in
a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (hereinafter the "SEC"), dated October 11, 1985 (File No. 812-6082),
granting Participating Insurance Companies and variable annuity and variable
life insurance separate accounts exemptions from the provisions of sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
life insurance companies that may or may not be affiliated with one another and
qualified pension and retirement plans ("Qualified Plans") (hereinafter the
"Mixed and Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolio(s) are registered under
the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, (the "1934 Act") and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, FGWL&A has registered certain variable annuity contracts
supported wholly or partially by the Account (the "Contracts") under the 1933
Act and said Contracts are listed in Schedule A attached hereto and incorporated
herein by reference, as such Schedule may be amended from time to time by mutual
written agreement; and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of FGWL&A on
January 15, 1997, under the insurance laws of the State of New York, to set
aside and invest assets attributable to the Contracts; and
WHEREAS, FGWL&A has registered the Account as a unit investment trust
under the 1940 Act and has registered the securities deemed to be issued by the
Account under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, FGWL&A intends to purchase shares in the Portfolio(s) listed in
Schedule B attached hereto and incorporated herein by reference, as such
Schedule may be amended from time to time by mutual written agreement (the
"Designated Portfolio(s)"), on behalf of the Account to fund the Contracts, and
the Fund is authorized to sell such shares to unit investment trusts such as the
Account at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Account also intends to purchase shares in other open-end
investment companies or series thereof not affiliated with the Fund (the
"Unaffiliated Funds") on behalf of the Account to fund the Contracts; and
WHEREAS, Schwab will perform certain services for the Fund in connection
with the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, FGWL&A,
Schwab, the Fund, the Distributor and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to FGWL&A those shares of the Designated
Portfolio(s) which the Account orders, executing such orders on each Business
Day at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Designated Portfolios. For purposes
of this Section 1.1, FGWL&A shall be the designee of the Fund for receipt of
such orders and receipt by such designee shall constitute receipt by the Fund,
provided that the Fund receives notice of any such order by 10:00 a.m. Eastern
time on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which the
Designated Portfolio calculates its net asset value pursuant to the rules of the
SEC.
1.2. The Fund agrees to make shares of the Designated Portfolio(s)
available for purchase at the applicable net asset value per share by FGWL&A and
the Account on those days on which the Fund calculates its Designated
Portfolio(s)' net asset value pursuant to rules of the SEC, and the Fund shall
calculate such net asset value on each day which the New York Stock Exchange is
open for trading in accordance with its prospectus. Notwithstanding the
foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may
refuse to sell shares of any Designated Portfolio to any person, or suspend or
terminate the offering of shares of any Designated Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board acting in good faith and in light of its fiduciary
duties under federal and any applicable state laws, necessary in the best
interests of the shareholders of such Designated Portfolio.
1.3. The Fund will not sell shares of the Designated Portfolio(s) to any
other Participating Insurance Company separate account unless an agreement
containing provisions substantially the same as Sections 2.1, 3.5, 3.6, 3.7, and
Article VII of this Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on FGWL&A's request, any full
or fractional shares of the Fund held by FGWL&A, ordinarily executing such
requests on each Business Day at the net asset value next computed after receipt
by the Fund or its designee of the request for redemption, except that the Fund
reserves the right to delay payment of redemption proceeds to the extent
permitted under section 22(e) of the 1940 Act and consistent with other
applicable federal securities laws and rules thereunder and relevant
interpretations of the SEC and its staff. Requests for redemption identified by
FGWL&A, or its agent, as being in connection with surrenders, annuitizations, or
death benefits under the Contracts, upon prior written notice, may be executed
within seven (7) calendar days after receipt by the Fund or its designee of the
requests for redemption. This Section 1.4 may be amended, in writing, by the
parties consistent with the requirements of the 1940 Act and interpretations
thereof. For purposes of this Section 1.4, FGWL&A shall be the designee of the
Fund for receipt of requests for redemption and receipt by such designee shall
constitute receipt by the Fund, provided that the Fund receives notice of any
such request for redemption by 10:00 A.M. Eastern time on the next following
Business Day. The Fund shall not bear any responsibility whatsoever for the
proper disbursement or crediting of redemption proceeds by FGWL&A; FGWL&A alone
shall be responsible for such action.
1.5. The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
Participating Insurance Companies (subject to Section 1.3 and Article VI hereof)
and the cash value of the Contracts may be invested in other investment
companies.
1.6. FGWL&A shall pay for Fund shares by 3:00 p.m. Eastern time on the
next Business Day after an order to purchase Fund shares is made in accordance
with the provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire and/or by a credit for any shares redeemed the same day as
the purchase; provided, however, for a purchase transaction of more than $1
million, FGWL&A shall use its best efforts to transmit payment by 12:00 noon
Eastern time and, further provided that FGWL&A shall use its best efforts to
provide notice as soon as practicable to the Fund upon FGWL&A's knowledge of any
large purchase transaction.
1.7. The Fund shall use its best efforts to pay and transmit the
proceeds of redemptions of Fund shares by 3:00 p.m. Eastern time on the next
Business Day after a redemption order is received in accordance with Section 1.4
hereof. Payment shall be in federal funds transmitted by wire and/or a credit
for any shares purchased the same day as the redemption provided that FGWL&A
shall use its best efforts to provide notice as soon as practicable to the Fund
upon FGWL&A's knowledge of any large redemption transaction.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to FGWL&A or the Account. Shares
ordered from the Fund will be recorded in an appropriate title for the Account
or the appropriate sub-account of the Account.
1.9. The Fund shall furnish notice (by wire or telephone, followed by
written confirmation) to FGWL&A of any income, dividends or capital gain
distribution rates on the ex-date for the Designated Portfolio(s)' shares.
FGWL&A hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Designated Portfolio shares in additional
shares of that Designated Portfolio. FGWL&A reserves the right to revoke this
election and to receive all such income dividends and capital gain distributions
in cash. The Fund shall notify FGWL&A by the end of the next following Business
Day of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall use its best efforts to make the net asset value
per share for each Designated Portfolio available to FGWL&A on each Business Day
as soon as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make such net asset value per share
available by 6:30 p.m. Eastern time. In the event of an error in the computation
of a Designated Portfolio's net asset value per share ("NAV") or any dividend or
capital gain distribution (each, a "pricing error"), the Adviser or the Fund
shall immediately notify FGWL&A as soon as possible after discovery of the
error. Such notification may be verbal, but shall be confirmed promptly in
writing in accordance with Article XI of this Agreement. A pricing error shall
be corrected in accordance with the procedures for correcting net asset value
errors adopted by the Fund's Board of Trustees and in effect at the time of the
error. The Fund represents and warrants that its procedures for correcting net
asset value errors currently comply, and will continue to comply, with the 1940
Act and generally industry-wide accepted SEC staff interpretations concerning
pricing errors in effect at the time of an error and shall reimburse FGWL&A for
the costs of adjustments made to correct Contractowner accounts in accordance
with the provisions of Schedule E. If an adjustment is necessary to correct a
material error which has caused Contractowners to receive less than the amount
to which they are entitled, the number of shares of the applicable sub-account
of such Contractowners will be adjusted and the amount of any underpayments
shall be credited by the Adviser to FGWL&A for crediting of such amounts to the
applicable Contractowners accounts. Upon notification by the Adviser of any
overpayment due to a material error, FGWL&A or Schwab, as the case may be, shall
promptly remit to Adviser any overpayment that has not been paid to
Contractowners; however, Adviser acknowledges that Schwab and FGWL&A do not
intend to seek additional payments from any Contractowner who, because of a
pricing error, may have underpaid for units of interest credited to his/her
account. In no event shall Schwab or FGWL&A be liable to Contractowners for any
such adjustments or underpayment amounts. A pricing error within categories (b)
or (c) above shall be deemed to be "materially incorrect" or constitute a
"material error" for purposes of this Agreement.
The standards set forth in this Section 1.10 are based on the Parties'
understanding of the views expressed by the staff of the SEC as of the date of
this Agreement. In the event the views of the SEC staff are later modified or
superseded by SEC or judicial interpretation, the parties shall amend the
foregoing provisions of this Agreement to comport with the appropriate
applicable standards, on terms mutually satisfactory to all Parties.
ARTICLE II. Representations and Warranties
2.1. FGWL&A represents and warrants that the Contracts and the
securities deemed to be issued by the Account under the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. FGWL&A further represents and warrants
that it is an insurance company duly organized and in good standing under
applicable law and that it has legally and validly established the Account prior
to any issuance or sale of units thereof as a segregated asset account under
Section 4240, et. seq. of the New York Insurance Law and has registered the
Account as a unit investment trust in accordance with the provisions of the 1940
Act to serve as a segregated investment account for the Contracts and that it
will maintain such registration for so long as any Contracts are outstanding as
required by applicable law.
2.2. The Fund represents and warrants that Designated Portfolio(s)
shares sold pursuant to this Agreement shall be registered under the 1933 Act,
duly authorized for issuance and sold in compliance with all applicable federal
securities laws including without limitation the 1933 Act, the 1934 Act, and the
1940 Act and that the Fund is and shall remain registered under the 1940 Act for
so long as shares are outstanding as required by applicable law. The Fund shall
amend the registration statement for its shares under the 1933 Act and the 1940
Act from time to time as required in order to effect the continuous offering of
its shares.
2.3. The Fund reserves the right to adopt a plan pursuant to Rule 12b-1
under the 1940 Act and to impose an asset-based or other charge to finance
distribution expenses as permitted by applicable law and regulation. In any
event, the Fund and Adviser agree to comply with applicable provisions and SEC
staff interpretations of the 1940 Act to assure that the investment advisory or
management fees paid to the Adviser by the Fund are in accordance with the
requirements of the 1940 Act. To the extent that the Fund decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have its
Board, a majority of whom are not interested persons of the Fund, formulate and
approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses.
2.4. The Fund and the Adviser represent and warrant that they will
cooperate with FGWL&A in ensuring that the investment policies, fees and
expenses of the Designated Portfolio(s) are and shall at all times remain in
compliance with the insurance and other applicable laws of the State of New York
and any other applicable state to the extent required to perform this Agreement,
provided that FGWL&A will be solely responsible for (i) identifying any changes
in New York and other state insurance laws, regulations or interpretations of
the foregoing that affect such compliance by the Designated Portfolio(s) (a "Law
Change") and (ii) notifying the Fund and the Adviser of (a) such Law Change and
(b) any action or implementation of any modifications necessitated by such Law
Change; provided, however, that the Fund shall not be required to take any such
action or implement any such modifications if the Fund's Board of Trustees, in
its sole discretion, determines that doing so would not be in the best interests
of the Fund's shareholders. The Fund and the Adviser will cooperate with FGWL&A
in taking such action as may be necessary to qualify the shares of the
Designated Portfolio(s) for offering and sale under the insurance, securities or
Blue Sky laws of any state or jurisdiction as FGWL&A may request.
2.5. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.6. The Adviser represents and warrants that it is and shall remain
duly registered as an investment adviser under all applicable federal and state
securities laws and that it shall perform its obligations for the Fund in
compliance in all material respects with the laws of the State of Delaware and
any applicable state and federal securities laws.
2.7. The Distributor represents and warrants that it is and shall remain
duly registered as a broker-dealer under all applicable federal and state
securities laws and that it shall perform its obligations for the Fund in
compliance in all material respects with the laws of the Commonwealth of
Massachusetts and any applicable state and federal securities laws.
2.8. The Fund and the Adviser represent and warrant that all of their respective
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Fund are, and shall continue to
be at all times, covered by one or more blanket fidelity bonds or similar
coverage for the benefit of the Fund in an amount not less than the minimal
coverage required by Rule 17g-1 under the 1940 Act or related provisions as may
be promulgated from time to time. The aforesaid bonds shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
2.9. FGLW&A represents and warrants that all of their respective
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Fund are, and shall continue to
be at all times, covered by a blanket fidelity bond which includes coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
2.10. Schwab represents and warrants that it is and shall remain duly
registered as a broker-dealer under all applicable federal and state securities
laws. Schwab represents and warrants that it has completed, obtained and
performed, in all material respects, all registrations, filings, approvals, and
authorizations, consents and examinations required by any government or
governmental authority as may be necessary to perform this Agreement. Schwab
does and will comply, in all material respects, with all applicable laws, rules
and regulations in the performance of its obligations under this Agreement.
2.11. The Fund will provide FGWL&A with as much advance notice as is
reasonably practicable of any material change affecting the Designated
Portfolio(s) (including, but not limited to, any material change in the
registration statement or prospectus affecting the Designated Portfolio(s)) and
any proxy solicitation affecting the Designated Portfolio(s) and consult with
FGWL&A in order to implement any such change in an orderly manner, recognizing
the expenses of changes and attempting to minimize such expenses by implementing
them in conjunction with regular annual updates of the prospectus for the
Contracts. The Fund agrees to share equitably in expenses incurred by FGWL&A as
a result of actions taken by the Fund, consistent with the allocation of
expenses contained in Schedule E attached hereto and incorporated herein by
reference.
2.12. FGWL&A represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986 as
amended ("the Code"), that the Contracts are currently and at the time of
issuance will be treated as annuity contracts under applicable provisions of the
Code, and that it will make every effort to maintain such treatment and that it
will notify Schwab, the Fund, the Distributor and the Adviser 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. In addition, FGWL&A
represents and warrants that the Account is a "segregated asset account" and
that interests in the Account are offered exclusively through the purchase of or
transfer into a "variable contract" within the meaning of such terms under
Section 817 of the Code and the regulations thereunder. FGWL&A will use every
effort to continue to meet such definitional requirements, and it will notify
Schwab, the Fund, the Distributor and the Adviser immediately upon having a
reasonable basis for believing that such requirements have ceased to be met or
that they might not be met in the future. FGWL&A represents and warrants that it
will not purchase Fund shares with assets derived from tax-qualified retirement
plans except, indirectly, through Contracts purchased in connection with such
plans.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. At least annually, the Adviser or Distributor shall provide
FGWL&A and Schwab with as many copies of the Fund's current
prospectus for the Designated Portfolio(s) as FGWL&A and Schwab
may reasonably request for marketing purposes (including
distribution to Contractowners with respect to new sales of a
Contract), with expenses to be borne in accordance with Schedule
E hereof. If requested by FGWL&A in lieu thereof, the Adviser,
Distributor or Fund shall provide such documentation (including a
camera-ready copy and computer diskette of the current prospectus
for the Designated Portfolio(s)) and other assistance as is
reasonably necessary in order for FGWL&A once each year (or more
frequently if the prospectuses for the Designated Portfolio(s)
are amended) to have the prospectus for the Contracts and the
Fund's prospectus for the Designated Portfolio(s) printed
together in one document. The Fund and Adviser agree that the
prospectus (and semi-annual and annual reports) for the
Designated Portfolio(s) will describe only the Designated
Portfolio(s) and will not name or describe any other portfolios
or series that may be in the Fund unless required by law.
3.2. If applicable state or federal laws or regulations require that
the Statement of Additional Information ("SAI") for the Fund be
distributed to all Contractowners, then the Fund, Distributor
and/or the Adviser shall provide FGWL&A with copies of the Fund's
SAI or documen-tation thereof for the Designated Portfolio(s) in
such quantities, with expenses to be borne in accordance with
Schedule E hereof, as FGWL&A may reasonably require to permit
timely distribution thereof to Contractowners. The Adviser,
Distributor and/or the Fund shall also provide SAIs to any
Contractowner or prospective owner who requests such SAI from the
Fund (although it is anticipated that such requests will be made
to FGWL&A or Schwab).
3.3. The Fund, Distributor and/or Adviser shall provide FGWL&A and
Schwab with copies of the Fund's proxy material, reports to
stockholders and other communications to stockholders for the
Designated Portfolio(s) in such quantity, with expenses to be
borne in accordance with Schedule E hereof, as FGWL&A may
reasonably require to permit timely distribution thereof to
Contractowners.
3.4. It is understood and agreed that, except with respect to
information regarding FGWL&A or Schwab provided in writing by
that party, neither FGWL&A nor Schwab are responsible for the
content of the prospectus or SAI for the Designated Portfolio(s).
It is also understood and agreed that, except with respect to
information regarding the Fund, the Distributor, the Adviser or
the Designated Portfolio(s) provided in writing by the Fund, the
Distributor or the Adviser, neither the Fund, the Distributor nor
Adviser are responsible for the content of the prospectus or SAI
for the Contracts.
3.5. If and to the extent required by law FGWL&A shall: (i) solicit
voting instructions from Contractowners;
(ii) vote the Designated Portfolio(s) shares held in the
Account in accordance with instructions received from
Contractowners: and
(iii) vote Designated Portfolio shares held in the Account for
which no instructions have been received in the same
proportion as Designated Portfolio(s) shares for which
instructions have been received from Contractowners, so
long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. FGWL&A reserves
the right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law.
3.6. FGWL&A shall be responsible for assuring that each of its separate
accounts holding shares of a Designated Portfolio calculates voting privileges
as directed by the Fund and agreed to by FGWL&A and the Fund. The Fund agrees to
promptly notify FGWL&A of any changes of interpretations or amendments of the
Mixed and Shared Funding Exemptive Order.
3.7. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders.
ARTICLE IV. Sales Material and Information.
4.1. FGWL&A and Schwab shall furnish, or shall cause to be furnished, to
the Fund or its designee, a copy of each piece of sales literature or other
promotional material that FGWL&A or Schwab, respectively, develops or proposes
to use and in which the Fund (or a Portfolio thereof), its Adviser or one of its
sub-advisers or the Distributor is named in connection with the Contracts, at
least ten (10) Business Days prior to its use. No such material shall be used if
the Fund objects to such use within five (5) Business Days after receipt of such
material.
4.2. FGWL&A and Schwab shall not give any information or make any
representations or statements on behalf of the Fund in connection with the sale
of the Contracts other than the information or representations contained in the
registration statement, prospectus or SAI for the Fund shares, as the same may
be amended or supplemented from time to time, or in sales literature or other
promotional material approved by the Fund, Distributor or Adviser, except with
the permission of the Fund, Distributor or Adviser.
4.3. The Fund or the Adviser shall furnish, or shall cause to be
furnished, to FGWL&A and Schwab, a copy of each piece of sales literature or
other promotional material in which FGWL&A and/or its separate account(s), or
Schwab is named at least ten (10) Business Days prior to its use. No such
material shall be used if FGWL&A or Schwab objects to such use within five (5)
Business Days after receipt of such material.
4.4. The Fund, the Distributor and the Adviser shall not give any
information or make any representations on behalf of FGWL&A or concerning
FGWL&A, the Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or SAI for the
Contracts, as the same may be amended or supplemented from time to time, or in
sales literature or other promotional material approved by FGWL&A or its
designee, except with the permission of FGWL&A.
4.5. FGWL&A, the Fund, the Distributor and the Adviser shall not give
any information or make any representations on behalf of or concerning Schwab,
or use Xxxxxx'x name except with the permission of Schwab.
4.6. The Fund will provide to FGWL&A and Schwab at least one complete
copy of all registration statements, prospectuses, SAIs, sales literature and
other promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Designated
Portfolio(s), contemporaneously with the filing of such document(s) with the SEC
or NASD or other regulatory authorities.
4.7. FGWL&A or Schwab will provide to the Fund at least one complete
copy of all registration statements, prospectuses, SAIs, reports, solicitations
for voting instructions, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Contracts or the Account,
contemporaneously with the filing of such document(s) with the SEC, NASD, or
other regulatory authority.
4.8. For purposes of Articles IV and VIII, the phrase "sales literature
and other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media; e.g.,
on-line networks such as the Internet or other electronic media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and shareholder reports, and proxy
materials (including solicitations for voting instructions) and any other
material constituting sales literature or advertising under the NASD rules, the
1933 Act or the 0000 Xxx.
4.9. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records, data and
access to operating procedures that may be reasonably requested in connection
with compliance and regulatory requirements related to this Agreement or any
party's obligations under this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund and the Adviser shall pay no fee or other compensation to
FGWL&A under this Agreement, and FGWL&A shall pay no fee or other compensation
to the Fund or Adviser under this Agreement, although the parties hereto will
bear certain expenses in accordance with Schedule E, Articles III, V, and other
provisions of this Agreement.
5.2. All expenses incident to performance by the Fund, the Distributor
and the Adviser under this Agreement shall be paid by the appropriate party, as
further provided in Schedule E. The Fund shall see to it that all shares of the
Designated Portfolio(s) are registered and authorized for issuance in accordance
with applicable federal law and, if and to the extent required, in accordance
with applicable state laws prior to their sale.
5.3. The parties shall bear the expenses of routine annual distribution
(mailing costs) of the Fund's prospectus and distribution (mailing costs) of the
Fund's proxy materials and reports to owners of Contracts offered by FGWL&A, in
accordance with Schedule E.
5.4. The Fund, the Distributor and the Adviser acknowledge that a
principal feature of the Contracts is the Contractowner's ability to choose from
a number of unaffiliated mutual funds (and portfolios or series thereof),
including the Designated Portfolio(s) and the Unaffiliated Funds, and to
transfer the Contract's cash value between funds and Designated Portfolios. The
Fund, the Distributor and the Adviser agree to cooperate with FGWL&A and Schwab
in facilitating the operation of the Account and the Contracts as described in
the prospectus for the Contracts, including but not limited to cooperation in
facilitating transfers between Unaffiliated Funds.
5.5. Schwab agrees to provide certain administrative services, specified
in Schedule C attached hereto and incorporated herein by reference, in
connection with the arrangements contemplated by this Agreement. The parties
acknowledge and agree that the services referred to in this Section 5.5 are
recordkeeping, shareholder communication, and other transaction facilitation and
processing, and related administrative services only and are not the services of
an underwriter or a principal underwriter of the Fund, and that Schwab is not an
underwriter for the shares of the Designated Portfolio(s), within the meaning of
the 1933 Act or the 0000 Xxx.
5.6. As compensation for the services specified in Schedule C hereto,
the Adviser agrees to pay Schwab a monthly Administrative Service Fee based on
the percentage per annum on Schedule C hereto applied to the average daily value
of the shares of the Designated Portfolio(s) held in the Account with respect to
Contracts sold by Schwab. This monthly Administrative Service Fee is due and
payable before the 15th (fifteenth) day following the last day of the month to
which it relates.
ARTICLE VI. Diversification and Qualification.
---------------------------------
6.1. The Fund, the Distributor and the Adviser represent and warrant
that the Fund will at all times sell its shares and invest its assets in
such a manner as to ensure that the Contracts will be treated as annuity
contracts under the Code, and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund, Distributor and Adviser
represent and warrant that the Fund and each Designated Portfolio
thereof will at all times comply with Section 817(h) of the Code and
Treasury Regulation ss.1.817-5, as amended from time to time, and any
Treasury interpretations thereof, relating to the diversification
requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications or successor
provisions to such Section or Regulations. The Fund, the Distributor and
the Adviser agree that shares of the Designated Portfolio(s) will be
sold only to Participating Insurance Companies and their separate
accounts and to Qualified Plans.
6.2. No shares of any Designated Portfolio of the Fund will be sold to
the general public.
6.3. The Fund, the Distributor and the Adviser represent and warrant
that the Fund and each Designated Portfolio is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that
each Designated Portfolio will maintain such qualification (under
Subchapter M or any successor or similar provisions) as long as this
Agreement is in effect.
6.4. The Fund, Distributor or Adviser will notify FGWL&A immediately
upon having a reasonable basis for believing that the Fund or any
Designated Portfolio has ceased to comply with the aforesaid Section
817(h) diversification or Subchapter M qualification requirements or
might not so comply in the future.
6.5. Without in any way limiting the effect of Sections 8.3, 8.4 and 8.5
hereof and without in any way limiting or restricting any other remedies
available to FGWL&A or Schwab, the Adviser or Distributor will pay all
costs associated with or arising out of any failure, or any anticipated
or reasonably foreseeable failure, of the Fund or any Designated
Portfolio to comply with Sections 6.1, 6.2, or 6.3 hereof, including all
costs associated with reasonable and appropriate corrections or
responses to any such failure; such costs may include, but are not
limited to, the costs involved in creating, organizing, and registering
a new investment company as a funding medium for the Contracts and/or
the costs of obtaining whatever regulatory authorizations are required
to substitute shares of another investment company for those of the
failed Portfolio (including but not limited to an order pursuant to
Section 26(b) of the 1940 Act); such costs are to include, but are not
limited to, reasonable fees and expenses of legal counsel and other
advisors to FGWL&A and any federal income taxes or tax penalties and
interest thereon (or "toll charges" or exactments or amounts paid in
settlement) incurred by FGWL&A with respect to itself or owners of its
Contracts in connection with any such failure or anticipated or
reasonably foreseeable failure.
6.6. The Fund at the Fund's expense shall provide FGWL&A or its designee
with reports certifying compliance with the aforesaid Section 817(h)
diversification and Subchapter M qualification requirements, at the
times provided for and substantially in the form attached hereto as
Schedule D and incorporated herein by reference; provided, however, that
providing such reports does not relieve the Fund of its responsibility
for such compliance or of its liability for any non-compliance.
6.7. FGWL&A agrees that if the Internal Revenue Service ("IRS") asserts
in writing in connection with any governmental audit or review of FGWL&A
or, to FGWL&A's knowledge any Contractowner that any Designated
Portfolio has failed to comply with the diversification requirements of
Section 817(h) of the Code or FGWL&A otherwise becomes aware of any
facts that could give rise to any claim against the Fund, Distributor or
Adviser as a result of such a failure or alleged failure:
(a) FGWL&A shall promptly notify the Fund, the Distributor and the
Adviser of such assertion or potential claim;
(b) FGWL&A shall consult with the Fund, the Distributor and the Adviser
as to how to minimize any liability that may arise as a result of such
failure or alleged failure;
(c) FGWL&A shall use its best efforts to minimize any liability of the
Fund, the Distributor and the Adviser resulting from such failure,
including, without limitation, demonstrating, pursuant to Treasury
Regulations, Section 1.817-5(a)(2), to the commissioner of the IRS that
such failure was inadvertent;
(d) any written materials to be submitted by FGWL&A to the IRS, any
Contractowner or any other claimant in connection with any of the
foregoing proceedings or contests (including, without limitation, any
such materials to be submitted to the IRS pursuant to Treasury
Regulations, Section 1.817-5(a)(2)) shall be provided by FGWL&A to the
Fund, the Distributor and the Adviser (together with any supporting
information or analysis) within at least two (2) business days prior to
submission;
(e) FGWL&A shall provide the Fund, the Distributor and the Adviser with
such cooperation as the Fund, the Distributor and the Adviser shall
reasonably request (including, without limitation, by permitting the
Fund, the Distributor and the Adviser to review the relevant books and
records of FGWL&A) in order to facilitate review by the Fund, the
Distributor and the Adviser of any written submissions provided to it or
its assessment of the validity or amount of any claim against it arising
from such failure or alleged failure;
(f) FGWL&A shall not with respect to any claim of the IRS or any
Contractowner that would give rise to a claim against the Fund, the
Distributor and the Adviser (i) compromise or settle any claim, (ii)
accept any adjustment on audit, or (iii) forego any allowable
administrative or judicial appeals, without the express written consent
of the Fund, the Distributor and the Adviser, which shall not be
unreasonably withheld; provided that, FGWL&A shall not be required to
appeal any adverse judicial decision unless the Fund and the Adviser
shall have provided an opinion of independent counsel to the effect that
a reasonable basis exists for taking such appeal; and further provided
that the Fund, the Distributor and the Adviser shall bear the costs and
expenses, including reasonable attorney's fees, incurred by FGWL&A in
complying with this clause (f).
6.8. FGWL&A represents that the Contracts are currently, and at the time
of issuance shall be treated as, life insurance or annuity insurance
contracts, under applicable provisions of the Code, and that it will
make every effort to maintain such treatment, and that it will notify
the Fund and the underwriter immediately upon having a reasonable basis
for believing the Contracts have ceased to be so treated or that they
may not be so treated in the future.
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Designated Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners or by contract owners of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to disregard
the voting instructions of contract owners. The Board shall promptly inform
FGWL&A if it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. FGWL&A will report any potential or existing conflicts of which it
is aware to the Board. FGWL&A will assist the Board in carrying out its
responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by FGWL&A to inform the Board whenever contract owner voting instructions are to
be disregarded. Such responsibilities shall be carried out by FGWL&A with a view
only to the interests of its Contractowners.
7.3. If it is determined by a majority of the Board, or a majority of
its directors who are not interested persons of the Fund, the Distributor, the
Adviser or any sub-adviser to any of the Designated Portfolios (the "Independent
Directors"), that a material irreconcilable conflict exists, FGWL&A and other
Participating Insurance Companies shall, at their expense and to the extent
reasonably practicable (as determined by a majority of the Independent
Directors), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the separate accounts from the Fund or any
Designated Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by FGWL&A to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, FGWL&A may be
required, at the Fund's election, to withdraw the Account's investment in the
Fund and terminate this Agreement; provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent
Directors. Withdrawal and termination will be effected as soon as practicable
upon FGWL&A's receipt of all required regulatory approvals required for FGWL&A
to withdraw the Account's investment in the Fund and terminate this Agreement.
FGWL&A shall apply for all necessary regulatory approvals as soon as practicable
after receipt of such notification from the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to FGWL&A conflicts with the
majority of other state regulators, then FGWL&A will withdraw the Account's
investment in the Fund and terminate this Agreement within six months after the
Board informs FGWL&A in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until FGWL&A receives all required
regulatory approvals, the Fund shall continue to accept and implement orders by
FGWL&A for the purchase (and redemption) of shares of the Fund. FGWL&A shall
apply for all necessary regulatory approvals as soon as practicable after
receipt of such notification from the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. FGWL&A shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contractowners affected by the irreconcilable material
conflict. In the event that the Board determines that any proposed action does
not adequately remedy any irreconcilable material conflict, then FGWL&A will
withdraw the Account's investment in the Fund and terminate this Agreement after
the Board informs FGWL&A in writing of the foregoing determination; provided,
however, that such withdrawal and termination shall be limited to the extent
required by any such material irreconcilable conflict as determined by a
majority of the Independent Directors. FGWL&A shall apply for all necessary
regulatory approvals as soon as practicable after receipt of such notification
from the Fund.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable: and (b) Sections 3.5, 3.6, 3.7, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By FGWL&A
8.1(a).FGWL&A agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, Distributor or
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlement with the written consent of FGWL&A) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, expenses, damages or liabilities (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement or prospectus or SAI covering the
Contracts or contained in the Contracts or sales literature or
other promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this
Agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished in writing to FGWL&A or Schwab by or on
behalf of the Adviser, Distributor or Fund for use in the
registration statement or prospectus for the Contracts or in the
Contracts or sales literature or other promotional material (or
any amendment or supplement to any of the foregoing) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature or other
promotional material of the Fund not supplied by FGWL&A or
persons under its control) or wrongful conduct of FGWL&A or
persons under its control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI, or sales literature or other promotional
material of the Fund, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, if such a statement or
omission was made in reliance upon information furnished in
writing to the Fund by or on behalf of FGWL&A; or
(iv) arise as a result of any failure by FGWL&A to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by FGWL&A in this Agreement
or arise out of or result from any other material breach of this
Agreement by FGWL&A, including without limitation Section 2.11
and Section 6.7 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). FGWL&A shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages,
liabilities or litigation to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or negligence in the performance
of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties
under this Agreement or to any of the Indemnified Parties.
Further, FGWL&A shall not be liable under Article 8 of this
Agreement with respect to any losses, claims, expenses, damages,
liabilities or litigation (collectively, "Loss") to which an
Indemnified Party may become subject, for any Loss that results
from materially incorrect information that FGWL&A delivers in
writing (including mutually agreed upon electronic means) to any
Indemnified Party ("FGWL&A information") pursuant to this
Agreement, but only if and to the extent:
(i) FGWL&A prepared the FGWL&A information in reasonable reliance on,
and in conformity with, information provided in writing to FGWL&A
by the Indemnified Party ("Indemnified Party information") for
use in connection with the business contemplated by this
Agreement,
(ii) the Indemnified Party information was, at the time of delivery, materially
incorrect,
(iii) the Indemnified Party information caused FGWL&A information
delivered to the Indemnified Party to be materially incorrect at
the time of delivery, and
(iv) the Loss does not result, either in whole or in part, from any
fault or wrongdoing by FGWL&A.
For purposes of this paragraph, information shall be deemed to be "materially
incorrect" if it contains an untrue statement of material fact or omits to state
a material fact necessary to make the information not misleading.
8.1(c). FGWL&A shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified FGWL&A in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify FGWL&A of any such claim shall not relieve FGWL&A
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision,
except to the extent that FGWL&A has been prejudiced by such failure to give
notice. In case any such action is brought against the Indemnified Parties,
FGWL&A shall be entitled to participate, at its own expense, in the defense of
such action. FGWL&A also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from FGWL&A
to such party of FGWL&A's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and FGWL&A will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.1(d).The Indemnified Parties will promptly notify FGWL&A of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by Schwab.
8.2(a).Schwab agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, Distributor or
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlement with the written consent of Schwab) or litigation (including
reasonable legal and other expenses), to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of Xxxxxx'x dissemination of information regarding the
Fund that is both (A) materially incorrect and (B) that was
neither contained in the Fund's registration statement nor in the
Fund's sales literature and other promotional material or
provided in writing to Schwab, or approved in writing, by or on
behalf of the Fund, Distributor or Adviser; or
(ii) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in sales
literature or other promotional material prepared or approved by
Schwab for the Contracts or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this Agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in
writing to FGWL&A or Schwab by or on behalf of the Adviser,
Distributor or the Fund or to Schwab by FGWL&A for use in the
registration statement, prospectus or SAI for the Contracts or in
the Contracts or sales literature or other promotional material
(or any amendment or supplement any of the foregoing) or
otherwise for use in connection with the sale of the Contracts;
or
(iii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or
other promotional material of the Fund not supplied by Schwab or
persons under its control) or wrongful conduct of Schwab or
persons under its control, with respect to the sale or
distribution of the Contracts; or
(iv) arise as a result of any failure by Schwab to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Schwab in this Agreement
or arise out of or result from any other material breach of this
Agreement by Schwab;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). Schwab shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties. Further, Schwab shall not be liable under
Article 8 of this Agreement with respect to any losses, claims, expenses,
damages, liabilities or litigation (collectively, "Loss") to which an
Indemnified Party may become subject, for any Loss that results from materially
incorrect information that Schwab delivers in writing (including mutually agreed
upon electronic means) to any Indemnified Party ("Schwab information") pursuant
to this Agreement, but only if and to the extent:
(i) Schwab prepared the Schwab information in reasonable reliance on,
and in conformity with, information provided in writing to Schwab
by the Indemnified Party ("Indemnified Party information") for
use in connection with the business contemplated by this
Agreement,
(ii) the Indemnified Party information was, at the time of delivery,
materially incorrect,
(iii) the Indemnified Party information caused the Schwab information
delivered to the Indemnified Party to be materially incorrect at
the time of delivery, and
(iv) the Loss does not result, either in whole or in part, from any
fault or wrongdoing by Schwab.
For purposes of this paragraph, information shall be deemed to be "materially
incorrect" if it contains an untrue statement of material fact or omits to state
a material fact necessary to make the information not misleading.
8.2(c). Schwab shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified Schwab in
writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify Schwab of any such
claim shall not relieve Schwab from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision,
except to the extent that Schwab has been prejudiced by such
failure to give notice. In case any such action is brought
against the Indemnified Parties, Schwab shall be entitled to
participate, at its own expense, in the defense of such action.
Schwab also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After
notice from Schwab to such party of Xxxxxx'x election to assume
the defense thereof, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and Schwab
will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than
reasonable costs of investigation.
8.2(d). The Indemnified Parties will promptly notify Schwab of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the
Contracts or the operation of the Fund.
8.3. Indemnification by the Adviser.
8.3(a). The Adviser agrees to indemnify and hold harmless FGWL&A and
Schwab and each of their directors and officers and each person,
if any, who controls FGWL&A or Schwab within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all
losses, claims, expenses, damages, liabilities (including amounts
paid in settlement with the written consent of the Adviser) or
litigation (including reasonable legal and other expenses) to
which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
or other promotional material of the Fund prepared by the Fund,
the Distributor or the Adviser (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this Agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in
writing to the Adviser, the Distributor or the Fund by or on
behalf of FGWL&A or Schwab for use in the registration statement,
prospectus or SAI for the Fund or in sales literature or other
promotional material (or any amendment or supplement to any of
the foregoing) or otherwise for use in connection with the sale
of the Contracts or the Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or
other promotional material for the Contracts not supplied by the
Adviser or persons under its control) or wrongful conduct of the
Fund, the Distributor or the Adviser or persons under their
control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI, or sales literature or other promotional
material covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance
upon information furnished in writing to FGWL&A or Schwab by or
on behalf of the Adviser, the Distributor or the Fund; or
(iv) arise as a result of any failure by the Fund, the Distributor or
the Adviser to provide the services and furnish the materials
under the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the
diversification and other qualification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, the Distributor
or the Adviser in this Agreement or arise out of or result from
any other material breach of this Agreement by the Adviser, the
Distributor or the Fund; or
(vi) arise out of or result from the incorrect or untimely calculation
or reporting by the Fund, the Distributor or the Adviser of the
daily net asset value per share or dividend or capital gain
distribution rate;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Adviser specified in Article VI hereof.
8.3(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties. Further, the Adviser shall not be liable under
Article 8 of this Agreement with respect to any losses, claims, expenses,
damages, liabilities or litigation (collectively, "Loss") to which an
Indemnified Party may become subject, for any Loss that results from materially
incorrect information that the Adviser delivers in writing (including mutually
agreed upon electronic means) to any Indemnified Party ("Adviser information")
pursuant to this Agreement, but only if and to the extent:
(i) the Adviser prepared the Adviser information in reasonable
reliance on, and in conformity with, information provided in
writing to the Adviser by the Indemnified Party ("Indemnified
Party information") for use in connection with the business
contemplated by this Agreement,
(ii) the Indemnified Party information was, at the time of delivery,
materially incorrect,
(iii) the Indemnified Party information caused the Adviser information
delivered to the Indemnified Party to be materially incorrect at
the time of delivery, and
(iv) the Loss does not result, either in whole or in part, from any
fault or wrongdoing by the Adviser.
For purposes of this paragraph, information shall be deemed to be "materially
incorrect" if it contains an untrue statement of material fact or omits to state
a material fact necessary to make the information not misleading.
8.3(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that the Adviser
has been prejudiced by such failure to give notice. In case any such action is
brought against the Indemnified Parties, the Adviser will be entitled to
participate, at its own expense, in the defense thereof. The Adviser also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Adviser to such party of the
Adviser's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Adviser will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.3(d). FGWL&A and Schwab agree promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any
of its officers or directors in connection with the issuance or
sale of the Contracts or the operation of the Account.
8.4. Indemnification By the Fund.
8.4(a). The Fund agrees to indemnify and hold harmless FGWL&A and Schwab
and each of their respective directors and officers and each
person, if any, who controls FGWL&A or Schwab within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.4) against any and all
losses, claims, expenses, damages and liabilities (including
amounts paid in settlement with the written consent of the Fund)
or litigation (including reasonable legal and other expenses) to
which the Indemnified Parties may be required to pay or become
subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, expenses, damages,
liabilities or expenses (or actions in respect thereof) or
settlements, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund; or
(iii) arise out of or result from the incorrect or untimely calculation
or reporting of the daily net asset value per share or dividend
or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.4(b) and
8.4(c) hereof.
8.4(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties. Further, the Fund shall not be liable under
Article 8 of this Agreement with respect to any losses, claims, expenses,
damages, liabilities or litigation (collectively, "Loss") to which an
Indemnified Party may become subject, for any Loss that results from materially
incorrect information that the Fund delivers in writing (including mutually
agreed upon electronic means) to any Indemnified Party ("Fund information")
pursuant to this Agreement, but only if and to the extent:
(i) the Fund prepared the Fund information in reasonable reliance on,
and in conformity with, information provided in writing to the
Fund by the Indemnified Party ("Indemnified Party information")
for use in connection with the business contemplated by this
Agreement,
(ii) the Indemnified Party information was, at the time of delivery,
materially incorrect,
(iii) the Indemnified Party information caused the Fund information
delivered to the Indemnified Party to be materially incorrect at
the time of delivery, and
(iv) the Loss does not result, either in whole or in part, from any
fault or wrongdoing by the Fund.
For purposes of this paragraph, information shall be deemed to be "materially
incorrect" if it contains an untrue statement of material fact or omits to state
a material fact necessary to make the information not misleading.
8.4(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve it from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision, except to the extent that the Fund has been
prejudiced by such failure to give notice. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund shall also be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.4(d). FGWL&A and Schwab each agree promptly to notify the Fund of the
commencement of any litigation or proceeding against itself or any of its
respective officers or directors in connection with the Agreement, the issuance
or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
8.5. Indemnification by the Distributor.
8.5(a).The Distributor agrees to indemnify and hold harmless FGWL&A and
Schwab and each of their respective directors and officers and each person, if
any, who controls FGWL&A or Schwab within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" for purposes of this Section 8.5)
against any and all losses, claims, expenses, damages and liabilities (including
amounts paid in settlement with the written consent of the Distributor) or
litigation (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
or other promotional material of the Fund prepared by the Fund,
Adviser or Distributor (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished in writing to the
Adviser, the Distributor or Fund by or on behalf of FGWL&A or
Schwab for use in the registration statement or SAI or prospectus
for the Fund or in sales literature or other promotional material
(or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI, sales literature or
other promotional material for the Contracts not supplied by the
Distributor or persons under its control) or wrongful conduct of
the Fund, the Distributor or Adviser or persons under their
control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI, sales literature or other promotional material
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished in writing to FGWL&A or Schwab by or on behalf of the
Adviser, the Distributor or Fund; or
(iv) arise as a result of any failure by the Fund, Adviser or
Distributor to provide the services and furnish the materials
under the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the
diversification and other qualification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, Adviser or
Distributor in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund, Adviser or
Distributor; or
(vi) arise out of or result from the incorrect or untimely calculation
or reporting of the daily net asset value per share or dividend
or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.5(b) and
8.5(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Distributor specified in Article VI
hereof.
8.5(b).The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance or such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties. Further, the Distributor shall not be liable
under Article 8 of this Agreement with respect to any losses, claims, expenses,
damages, liabilities or litigation (collectively, "Loss") to which an
Indemnified Party may become subject, for any Loss that results from materially
incorrect information that the Distributor delivers in writing (including
mutually agreed upon electronic means) to any Indemnified Party ("Distributor
information") pursuant to this Agreement, but only if and to the extent:
(i) the Distributor prepared the Distributor information in
reasonable reliance on, and in conformity with, information
provided in writing to the Distributor by the Indemnified Party
("Indemnified Party information") for use in connection with the
business contemplated by this Agreement,
(ii) the Indemnified Party information was, at the time of delivery, materially
incorrect,
(iii) the Indemnified Party information caused the Distributor
information delivered to the Indemnified Party to be materially
incorrect at the time of delivery, and
(iv) the Loss does not result, either in whole or in part, from any
fault or wrongdoing by the Distributor.
For purposes of this paragraph, information shall be deemed to be "materially
incorrect" if it contains an untrue statement of material fact or omits to state
a material fact necessary to make the information not misleading.
8.5(c) The Distributor shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Distributor in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Distributor of
any such claim shall not relieve the Distributor from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision, except to the extent that the
Distributor has been prejudiced by such failure to give notice. In case any such
action is brought against the Indemnified Parties, the Distributor will be
entitled to participate, at its own expense, in the defense thereof. The
Distributor also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Distributor
to such party of the Distributor's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Distributor will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.5(d) FGWL&A and Schwab agree to promptly notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York,
without regard to the New York Conflict of Laws provisions.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with
respect to some or all Designated Portfolios, upon six (6) months
advance written notice delivered to the other parties; provided,
however, that such notice shall not be given earlier than six (6)
months following the date of this Agreement; or
(b) at the option of FGWL&A or Schwab by written notice to the
other parties with respect to any Designated Portfolio based upon
FGWL&A's or Xxxxxx'x determination that shares of such Designated
Portfolio are not reasonably available to meet the requirements
of the Contracts; or
(c) at the option of FGWL&A or Schwab by written notice to the
other parties with respect to any Designated Portfolio in the
event any of the Designated Portfolio's shares are not
registered, issued or sold in accordance with applicable state
and/ or federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued or to
be issued by FGWL&A; or
(d) at the option of the Fund, Distributor or Adviser in the
event that formal administrative proceedings are instituted
against FGWL&A or Schwab by the NASD, the SEC, the Insurance
Commissioner or like official of any state or any other
regulatory body regarding FGWL&A's or Xxxxxx'x duties under this
Agreement or related to the sale of the Contracts, the operation
of any Account, or the purchase of the Fund shares, if, in each
case, the Fund, Distributor or Adviser, as the case may be,
reasonably determines in its sole judgment exercised in good
faith, that any such administrative proceedings will have a
material adverse effect upon the ability of FGWL&A or Schwab to
perform its obligations under this Agreement; or
(e) at the option of FGWL&A or Schwab in the event that formal
administrative proceedings are instituted against the Fund, the
Distributor or the Adviser by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body,
if Schwab or FGWL&A reasonably determines in its sole judgment
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Fund,
the Distributor or the Adviser to perform their obligations under
this Agreement; or
(f) at the option of FGWL&A by written notice to the Fund with
respect to any Designated Portfolio if FGWL&A reasonably believes
that the Designated Portfolio will fail to meet the Section
817(h) diversification requirements or Subchapter M
qualifications specified in Article VI hereof; or
(g) at the option of either the Fund, the Distributor or the
Adviser, if (i) the Fund, Distributor or Adviser, respectively,
shall determine, in its sole judgment reasonably exercised in
good faith, that either FGWL&A or Schwab has suffered a material
adverse change in its business or financial condition or is the
subject of material adverse publicity and that material adverse
change or publicity will have a material adverse impact on
FGWL&A's or Xxxxxx'x ability to perform its obligations under
this Agreement, (ii) the Fund, Distributor or Adviser notifies
FGWL&A or Schwab, as appropriate, of that determination and its
intent to terminate this Agreement, and (iii) after considering
the actions taken by FGWL&A or Schwab and any other changes in
circumstances since the giving of such a notice, the
determination of the Fund, Distributor or Adviser shall continue
to apply on the sixtieth (60th) day following the giving of that
notice, which sixtieth day shall be the effective date of
termination; or
(h) at the option of either FGWL&A or Schwab, if (i) FGWL&A or
Schwab, respectively, shall determine, in its sole judgment
reasonably exercised in good faith, that the Fund, Distributor or
Adviser has suffered a material adverse change in its business or
financial condition or is the subject of material adverse
publicity and that material adverse change or publicity will have
a material adverse impact on the Fund's, Distributor's or
Adviser's ability to perform its obligations under this
Agreement, (ii) FGWL&A or Schwab notifies the Fund, Distributor
or Adviser, as appropriate, of that determination and its intent
to terminate this Agreement, and (iii) after considering the
actions taken by the Fund, Distributor or Adviser and any other
changes in circumstances since the giving of such a notice, the
determination of FGWL&A or Schwab shall continue to apply on the
sixtieth (60th) day following the giving of that notice, which
sixtieth day shall be the effective date of termination; or
(i) at the option of FGWL&A in the event that formal
administrative proceedings are instituted against Schwab by the
NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding Xxxxxx'x duties under this
Agreement or related to the sale of the Fund's shares or the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that FGWL&A determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of Schwab to perform its obligations related to
the Contracts; or
(j) at the option of Schwab in the event that formal
administrative proceedings are instituted against FGWL&A by the
NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding FGWL&A's duties under this
Agreement or related to the sale of the Fund's shares or the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that Schwab determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of FGWL&A to perform its obligations related to
the Contracts; or
(k) at the option of any non-defaulting party hereto in the event
of a material breach of this Agreement by any party hereto (the
"defaulting party") other than as described in 10.1(a)-(j);
provided, that the non-defaulting party gives written notice
thereof to the defaulting party, with copies of such notice to
all other non-defaulting parties, and if such breach shall not
have been remedied within thirty (30) days after such written
notice is given, then the non-defaulting party giving such
written notice may terminate this Agreement by giving thirty (30)
days written notice of termination to the defaulting party.
10.2. Notice Requirement.
No termination of this Agreement shall be effective unless and until the party
terminating this Agreement gives prior written notice to all other parties of
its intent to terminate, which notice shall set forth the basis for the
termination. Furthermore,
(a) in the event any termination is based upon the provisions of Article
VII, or the provisions of Section 10.1(a), 10.1(g) or 10.1(h) of this
Agreement, the prior written notice shall be given in advance of the
effective date of termination as required by those provisions unless
such notice period is shortened by mutual written agreement of the
parties; (b) in the event any termination is based upon the provisions
of Section 10.1(d), 10.1(e), 10.1(i) or 10.1(j) of this Agreement, the
prior written notice shall be given at least sixty (60) days before the
effective date of termination; and (c) in the event any termination is
based upon the provisions of Section 10.1(b), 10.1(c) or 10.1(f), the
prior written notice shall be given in advance of the effective date of
termination, which date shall be determined by the party sending the
notice.
10.3. Effect of Termination.
Notwithstanding any termination of this Agreement, other than as a result of a
failure by either the Fund or FGWL&A to meet Section 817(h) of the Code
diversification requirements, the Fund, the Distributor and the Adviser shall,
at the option of FGWL&A or Schwab, continue to make available additional shares
of the Designated Portfolio(s) pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Designated Portfolio(s), redeem investments in the
Designated Portfolio(s) and/or invest in the Designated Portfolio(s) upon the
making of additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.3 shall not apply to any terminations under Article
VII and the effect of such Article VII terminations shall be governed by Article
VII of this Agreement.
10.4. Surviving Provisions. Notwithstanding any termination of this
Agreement, each party's obligations under Article VIII to indemnify other
parties shall survive and not be affected by any termination of this Agreement.
In addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any termination of this
Agreement.
10.5. Survival of Agreement.
A termination by Schwab shall terminate this Agreement only as to Schwab, and
this Agreement shall remain in effect as to the other parties; provided,
however, that in the event of a termination by Schwab the other parties shall
have the option to terminate this Agreement upon 60 (sixty) days notice, rather
than the six (6) months specified in Section 10.1(a).
ARTICLE XI. Notices
--------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Xxxxxxx Variable Life Investment Fund
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, President
If to the Adviser:
Xxxxxxx Xxxxxx Investments, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx
If to the Distributor:
Xxxxxxx Investor Services, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxx, President
If to FGWL&A:
First Great-West Life & Annuity Insurance Company
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention:Assistant Vice President, Savings Products
If to Schwab:
Xxxxxxx Xxxxxx & Co., Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: General Counsel
ARTICLE XII. Miscellaneous
12.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain. Without limiting the foregoing, no party hereto shall disclose
any information that another party has designated as proprietary.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the New York Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of FGWL&A are being conducted in a manner consistent with the New
York Variable Annuity Regulations and any other applicable law or regulations.
12.6. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in a forum jointly
selected by the relevant parties (but if applicable law requires some other
forum, then such other forum) in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
12.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto.
12.9. Schwab and FGWL&A are hereby expressly put on notice of the
limitation of liability as set forth in the Declarations of Trust of the Fund
and agree that the obligations assumed by the Fund, Distributor and the Adviser
pursuant to this Agreement shall be limited in any case to the Fund, Distributor
and Adviser and their respective assets and neither Schwab nor FGWL&A shall seek
satisfaction of any such obligation from the shareholders of the Fund,
Distributor or the Adviser, the Trustees, officers, employees or agents of the
Fund, Distributor or Adviser, or any of them.
12.10. The Fund, the Distributor and the Adviser agree that the
obligations assumed by FGWL&A and Schwab pursuant to this Agreement shall be
limited in any case to FGWL&A and Schwab and their respective assets and neither
the Fund, Distributor nor Adviser shall seek satisfaction of any such obligation
from the shareholders of FGWL&A or Schwab, the directors, officers, employees or
agents of the FGWL&A or Schwab, or any of them, except to the extent permitted
under this Agreement.
12.11. No provision of this Agreement may be deemed or construed to
modify or supersede any contractual rights, duties, or indemnifications, as
between the Adviser and the Fund, and the Distributor and the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the date specified below.
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By its authorized officer,
By:______________________________
Title:
Date:
XXXXXXX VARIABLE LIFE INVESTMENT FUND
By its authorized officer,
By:__/s/ Xxxxxxx X. Thomas__________
---------------------
Title: President
Date:
XXXXXXX XXXXXX INVESTMENTS, INC.
By its authorized officer,
By:_ /s/ Xxxxxxx X. Xxxxxx ___________
-----------------------
Title:
Date:
XXXXXXX INVESTOR SERVICES, INC.
By its authorized officer,
By:___ /s/ Xxxxxxx X. Xxxxxx ______
-----------------------
Title: President
Date:
XXXXXXX XXXXXX & CO., INC.
By its authorized officer,
By:___/s/ Xxxxxx Sarinske__________
Title:
Date:
Schwab Variable Annuity
SCHEDULE A
Contracts Form Numbers
First Great-West Life & Annuity Insurance Company
Group Variable/Fixed Annuity Contract J434NY
SCHEDULE B
Designated Portfolios
Xxxxxxx Variable Life Investment Fund - Capital Growth Portfolio (Class A)
Xxxxxxx Variable Life Investment Fund - Growth & Income Portfolio (Class A)
SCHEDULE C
Administrative Services
To be performed by Xxxxxxx Xxxxxx & Co., Inc.
X. Xxxxxx will provide the properly registered and licensed personnel and
systems needed for all customer servicing and support - for both Fund and
Contract information and questions - including the following:
o respond to Contractowner inquiries
o mail fund and Contract prospectuses
o entry of initial and subsequent orders
o transfer of cash to FGWL&A and/or Fund
o explanations of Designated Portfolio objectives and characteristics
o entry of transfers between Unaffiliated Funds, including the Designated
Portfolios
o Contract balance and allocation inquiries
o communicate all purchase, withdrawal, and exchange orders received from
Contractowners to FGWL&A which will transmit orders to Funds
o train call center representatives to explain Fund objectives, Morningstar
categories, Fund selection data and differences between publicly traded
funds and the Funds
o provide performance data and Fund prices
o shareholder services including researching trades, resolving trade
disputes, etc.
o coordinate the writing, printing and distribution of semi-annual and annual
reports to Contract owners investing in the Designated Portfolios
o create and update Designated Portfolio profiles and other shareholder
communications
o establish scheduled account rebalances
o Web trading and account servicing
o touch-tone telephone trading and account servicing
o establish dollar cost averaging o communications to Contractowners related
to product changes, including but not limited to changes in the available
Designated Portfolios
B. For the foregoing services, Schwab shall receive a monthly fee equal to ____%
per annum of the average daily value of the shares of the Designated Portfolios
listed on Schedule B attributable to Contractowners, payable by the Adviser
directly to Schwab, such payments being due and payable within 15 (fifteen) days
after the last day of the month to which such payment relates.
C. The Fund will calculate and Schwab will verify with FGWL&A the asset balance
for each day on which the fee is to be paid pursuant to this Agreement with
respect to each Designated Portfolio.
SCHEDULE D
Reports per Section 6.6
With regard to the reports relating to the quarterly testing of
compliance with the requirements of Section 817(h) and Subchapter M under the
Internal Revenue Code (the "Code") and the regulations thereunder, the Fund
shall provide within twenty (20) Business Days of the close of the calendar
quarter a report to FGWL&A in the Form D1 attached hereto and incorporated
herein by reference, regarding the status under such sections of the Code of the
Designated Portfolio(s), and if necessary, identification of any remedial action
to be taken to remedy non-compliance.
With regard to the reports relating to the year-end testing of
compliance with the requirements of Subchapter M of the Code, referred to
hereinafter as "RIC status," the Fund will provide the reports on the following
basis: (i) the last quarter's quarterly reports can be supplied within the
20-day period, and (ii) a year-end report will be provided 45 days after the end
of the calendar year. However, if a problem with regard to RIC status, as
defined below, is identified in the third quarter report, on a weekly basis,
starting the first week of December, additional interim reports will be provided
specially addressing the problems identified in the third quarter report. If any
interim report memorializes the cure of the problem, subsequent interim reports
will not be required.
A problem with regard to RIC status is defined as any violation of the
following standards, as referenced to the applicable sections of the Code:
(a) Less than ninety percent of gross income is derived from sources of
income specified in Section 851(b)(2); (b) Thirty percent or greater
gross income is derived from the sale or disposition of assets specified
in Section 851(b)(3);
(c) Less than fifty percent of the value of total assets consists of
assets specified in Section 851(b)(4)(A); and (d) No more than
twenty-five percent of the value of total assets is invested in the
securities of one issuer, as that requirement is set forth in Section
851(b)(4)(B).
FORM D1
CERTIFICATE OF COMPLIANCE
For the quarter ended:
---------------------------
___________________ (investment advisor) for Fund hereby notifies you
that, based on internal compliance testing performed as of the end of the
calendar quarter ended ________, 19____, the Designated Portfolios were in
compliance with all requirements of Section 817(h) and Subchapter M of the
Internal Revenue Code (the "Code") and the regulations thereunder as required in
the Fund Participation Agreement among First Great-West Life & Annuity Insurance
Company, Xxxxxxx Xxxxxx & Co., Inc. and other than the exceptions discussed
below:
Exceptions Remedial Action
Signed this day of , .
----- ---------- ------------
------------------------
(Signature)
By:
-----------------------------------------------
(Type or Print Name and Title/Position)
SCHEDULE E
EXPENSES
The Fund and/or the Distributor and/or Adviser, and FGWL&A will coordinate the
functions and pay the costs of the completing these functions based upon an
allocation of costs in the tables below. Costs shall be allocated to reflect the
Fund's share of the total costs determined according to the number of pages of
the Fund's respective portions of the documents.
------------------------- ---------------------- ---------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Prospectus Printing of combined FGWL&A Fund,
prospectuses Distributor or
Adviser, as
applicable
------------------------- ---------------------- ---------------------- ------------------
Fund, Distributor or FGWL&A Fund,
Adviser shall supply Distributor or
FGWL&A with such Adviser, as
numbers of the applicable
Designated
Portfolio(s)
prospectus(es) as
FGWL&A shall
reasonably request
------------------------- ---------------------- ---------------------- ------------------
Distribution to New FGWL&A FGWL&A
and Inforce Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution to Schwab Schwab
Prospective Clients
------------------------- ---------------------- ---------------------- ------------------
Product Prospectus Printing for Inforce FGWL&A FGWL&A
Clients
------------------------- ---------------------- ---------------------- ------------------
Printing for FGWL&A Schwab
Prospective Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution to New FGWL&A FGWL&A
and Inforce Clients
------------------------- ---------------------- ---------------------- ------------------
Distribution to Schwab Schwab
Prospective Clients
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Prospectus If Required by Fund, Fund, Distributor or Fund,
Update & Distribution Distributor or Adviser Distributor or
Adviser Adviser
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Product Prospectus If Required by Fund, FGWL&A Fund,
Update & Distribution Distributor or Distributor or
Adviser Adviser
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund SAI Printing Fund, Distributor or Fund,
Adviser Distributor or
Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Product SAI Printing FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Proxy Material for Printing if proxy Fund, Distributor or Fund,
Mutual Fund: required by Law Adviser Distributor or
Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A Fund,
(including labor) if Distributor or
proxy required by Law Adviser
------------------------- ---------------------- ---------------------- ------------------
Printing & FGWL&A FGWL&A
distribution if
required by FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Printing & FGWL&A Schwab
distribution if
required by Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Mutual Fund Annual & Printing of combined FGWL&A Fund,
Semi-Annual Report reports Distributor or
Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A and Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Other communication to If Required by the Schwab Fund,
New and Prospective Fund, Distributor or Distributor or
clients Adviser Adviser
------------------------- ---------------------- ---------------------- ------------------
If Required by FGWL&A Schwab FGWL&A
------------------------- ---------------------- ---------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ---------------------- ---------------------- ------------------
Other communication to Distribution FGWL&A Fund,
inforce (including labor and Distributor or
printing) if Adviser required by the Fund, Distributor
or Adviser
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A FGWL&A
(including labor and
printing)if required
by FGWL&A
------------------------- ---------------------- ---------------------- ------------------
Distribution FGWL&A Schwab
(including labor and
printing if required
by Schwab
------------------------- ---------------------- ---------------------- ------------------
------------------------- ---------------------- ---------------------- ------------------
Errors in Share Price Cost of error to FGWL&A Fund or Adviser
calculation pursuant to participants
Section 1.10
------------------------- ---------------------- ---------------------- ------------------
Cost of FGWL&A Fund or Adviser
administrative work
to correct error
------------------------- ---------------------- ---------------------- ------------------
Operations of the Fund All operations and Fund, Distributor or Fund or Adviser
related expenses, Adviser
including the cost
of registration and
qualification of
shares, taxes on the
issuance or transfer
of shares, cost of
management of the
business affairs of
the Fund, and
expenses paid or
assumed by the fund
pursuant to any Rule
12b-1 plan
------------------------- ---------------------- ---------------------- ------------------
Operations of the Federal registration FGWL&A FGWL&A
Account of units of separate
account (24f-2 fees)
------------------------- ---------------------- ---------------------- ------------------
