Exhibit 8
EXECUTION COPY
FUND PARTICIPATION AGREEMENT
PIMCO Variable Insurance Trust
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares.................................................... 3
ARTICLE II. Representations and Warranties......................................... 5
ARTICLE III. Prospectuses and Proxy Statements; Voting.............................. 7
ARTICLE IV. Sales Material and Information......................................... 9
ARTICLE V. Fees and Expenses......................................................11
ARTICLE VI. Diversification and Qualification......................................11
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order ..............................13
ARTICLE VIII. Indemnification .......................................................15
ARTICLE IX. Applicable Law.........................................................23
ARTICLE X. Termination............................................................23
ARTICLE XI. Notices................................................................27
ARTICLE XII. Miscellaneous..........................................................28
SCHEDULE A Contracts
SCHEDULE B Designated Portfolios
SCHEDULE C Reports per Section 6.6
SCHEDULE D Expenses
PARTICIPATION AGREEMENT
Among
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
PIMCO VARIABLE INSURANCE TRUST,
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC,
PIMCO FUNDS DISTRIBUTORS LLC
and
XXXXXXX XXXXXX & CO., INC.
THIS AGREEMENT, made and entered into as of this 18th day of September,
2002 by and among GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY ("GWL&A"), a
Colorado life insurance company, on its own behalf and on behalf of its Separate
Account Variable Annuity-1 Series Account (the "Account"); PIMCO VARIABLE
INSURANCE TRUST, a business trust organized under the laws of Delaware ("Fund");
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC ("Adviser"), a limited liability
company organized under the laws of Delaware; PIMCO FUNDS DISTRIBUTORS LLC, a
limited liability company organized under the laws of Delaware ("Distributor");
and XXXXXXX XXXXXX & CO., INC., a California corporation ("Schwab") (each a
"Party," and collectively, the "Parties").
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies, including GWL&A, which have entered into
participation agreements similar to this Agreement ("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 ("SEC"), dated February 9, 1998 (File No. 812-10822), 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 ("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") ("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 ("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, ("1934 Act") and is a member in
good standing of the National Association of Securities Dealers, Inc. ("NASD");
and
WHEREAS, GWL&A has registered interests under certain variable annuity
contracts that are supported wholly or partially by the Account under the 1933
Act and that are listed in Schedule A hereto ("Contracts"); and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of GWL&A on
July 24, 1995, under the insurance laws of the State of Colorado, to set aside
and invest assets attributable to the Contracts; and
WHEREAS, GWL&A has registered the Account as a unit investment trust
under the 1940 Act and has registered (or will register prior to sale) the
securities deemed to be issued by the Account under the 1933 Act to the extent
required; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, GWL&A intends to purchase Administrative Class shares in the
Portfolio(s) listed in Schedule B hereto (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
("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, the Parties
agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to make shares of the Designated Portfolio(s)
available for purchase at the applicable net asset value per share by GWL&A and
the Account on 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 regular 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.
1.2. The Fund and Distributor 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, 2.4 and 2.11 of Article II, Sections 3.4, 3.5 and 3.6 of Article III,
Section 5.1 of Article V, Section 6.5 of Article VI, and Article VII of this
Agreement is in effect to govern such sales.
1.3. The Fund agrees to (a) sell to GWL&A those full and fractional
shares of the Designated Portfolio(s) that GWL&A, on behalf of the Account,
orders, and (b) redeem for cash, on GWL&A's order, any full or fractional shares
of the Fund held by GWL&A, in each case 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 1.3, GWL&A shall be the designee of the Fund for receipt of such
orders and receipt by such designee shall constitute receipt by the Fund,
provided that the Fund receives notice of any such order by9:00 a.m. Eastern
time on the next following Business Day or later time permitted by Section 1.6
hereof. "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. GWL&A shall provide the Fund with
net purchase and redemption requests computed in accordance with Section 1.7
hereof.
1.4. In the event of net purchases, GWL&A shall use its best efforts to
pay for Fund shares by 1:00 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 1.3 hereof. Payment shall be in federal funds transmitted to the Fund by
wire. Upon receipt by the Fund of the federal funds so wired, such funds shall
cease to be the responsibility of GWL&A and shall become the responsibility of
the Fund.
1.5. In the event of net redemptions, the Fund shall pay and transmit
the proceeds of redemptions of Fund shares by 1:00 p.m. Eastern Time on the next
Business Day after a redemption order is received in accordance with Section 1.3
hereof. Payment shall be in federal funds transmitted to GWL&A or its designee
by wire.
1.6. The Fund shall make the net asset value per share for each
Designated Portfolio available to GWL&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 that the Fund is unable to meet the 7:00 p.m.
time stated herein, the Fund shall provide additional time for GWL&A to place
orders for the purchase and redemption of shares equal to the additional time it
takes the Fund to make the net asset value available to GWL&A. However, if net
asset values are not available for inclusion in the next business cycle and
purchase orders/redemptions are not able to be calculated and available for
GWL&A to execute within the time frame identified in Section 1.3 hereof, GWL&A
on behalf of the Account, shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct share net asset value.
1.7. At the end of each Business Day, GWL&A shall use the information
described herein to calculate Account unit values for the day. Using these unit
values, GWL&A shall process each such Business Day's separate account
transactions based on requests and premiums received by it by the close of
regular trading on the floor of the New York Stock Exchange (currently 4:00
p.m., Eastern time) to determine the net dollar amount of Fund shares which
shall be purchased or redeemed at that day's closing net asset value per share.
1.8. In the event of an error in the computation of a Designated
Portfolio's net asset value per share ("NAV") or any dividend or capital gain
distribution (each, a "pricing error"), the Adviser or the Fund shall
immediately notify GWL&A as soon as possible after 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 Contract owner 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 GWL&A for the costs of adjustments made to
correct Contract owner accounts in accordance with the provisions of Schedule E
hereto. If an adjustment is necessary to correct a material error which has
caused Contract owners to receive less than the amount to which they are
entitled, the number of shares of the appropriate Designated Portfolio(s)
attributable to the accounts of the Contract owners will be adjusted and the
amount of any underpayments shall be credited by the Adviser to GWL&A for
crediting of such amounts to the applicable Contract owners accounts. Upon
notification by the Adviser of any overpayment due to a material error, GWL&A or
Schwab, as the case may be, shall promptly remit to Adviser any overpayment that
has not been paid to Contract owners; however, Adviser acknowledges that Schwab
and GWL&A do not intend to seek additional payments from any Contract owner who,
because of a pricing error, may have underpaid for units of interest credited to
his/her account. In no event shall Schwab or GWL&A be liable to Contract owners
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 1.8 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.
1.9. The Fund shall furnish same day notice (by wire, facsimile or
telephone, followed by written confirmation) to GWL&A of any income, dividends
or capital gain distributions payable on the Designated Portfolio(s)' shares.
GWL&A hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Designated Portfolio shares in additional
shares of that Designated Portfolio. GWL&A reserves the right to revoke this
election and to receive all such income dividends and capital gain distributions
in cash. The Fund shall notify GWL&A by the end of the next following Business
Day of the number of shares so issued as payment of such dividends and
distributions.
1.10. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to GWL&A or the Account. Shares
ordered from the Fund will be recorded in an appropriate title for the Account
or the appropriate sub-account of the Account.
1.11. The Parties 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 1.2 and Article VI hereof) and the cash
value of the Contracts may be invested in other investment companies.
ARTICLE II. Representations and Warranties
2.1. GWL&A represents and warrants that the securities deemed to be
issued by the Account under the Contracts are or will be registered under the
1933 Act or exempt from registration thereunder, and that the Contracts will be
issued and sold in compliance in all material respects with all applicable laws,
rules, and regulations (collectively, "laws"). GWL&A further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established the Account
prior to any issuance or sale of units thereof as a segregated asset account
under Section 10-7-401, et. seq. of the Colorado Insurance Law 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 and Distributor each 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 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. 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 Adviser each represents and warrants that it will make
every effort to ensure that the investment policies, fees and expenses of the
Designated Portfolio(s) are and shall at all times remain in compliance with the
insurance and other applicable laws of the State of Colorado and any other
applicable state to the extent required to perform this Agreement. The Fund and
Distributor each represents and warrants that it will make every effort to
ensure that Designated Portfolio(s) shares will be sold in compliance with the
insurance laws of the State of Colorado and all applicable state insurance and
securities laws. GWL&A and the Fund will endeavor to mutually cooperate with
respect to the implementation of any modifications necessitated by any change in
state insurance laws, regulations or interpretations of the foregoing that
affect the Designated Portfolio(s) (a "Law Change"), and to keep each other
informed of any Law Change that becomes known to either Party. In the event of a
Law Change, the Fund agrees that, except in those circumstances where the Fund
has advised GWL&A that its Board 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 qualified and registered under all applicable laws and that it shall
perform its obligations for the Fund in compliance in all material respects with
all applicable laws. The Adviser represents and warrants that management and any
other fees paid by the Fund to Adviser or its affiliated persons (within the
meaning of the 0000 Xxx) are legitimate and not excessive, and are derived from
agreements that do not breach any fiduciary duty of Adviser to the Fund.
2.7. The Distributor represents and warrants that it is and shall remain
duly qualified and registered under all applicable laws and that it shall
perform its obligations for the Fund in compliance in all material respects with
all applicable laws.
2.8. The Fund and the Adviser represent and warrant that all of their
respective directors, 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 in the
performance of its obligations under this Agreement.
2.10. The Fund will provide GWL&A with as much advance notice as is
reasonably practicable of any material change affecting the Designated
Portfolio(s) (including, but not limited to, any material change in the
registration statement or prospectus affecting the Designated Portfolio(s)) and
any proxy solicitation affecting the Designated Portfolio(s) and will consult
with GWL&A in order to implement any such change in an orderly manner,
recognizing the expenses of changes and attempting to minimize such expenses by
implementing them in conjunction with regular annual updates of the prospectus
for the Contracts. The Fund agrees to share equitably in expenses incurred by
GWL&A as a result of actions taken by the Fund, consistent with the allocation
of expenses contained in Schedule E hereto.
2.11. GWL&A represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986 as
amended ("the Code"), that the Contracts are currently 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, GWL&A
represents and warrants that the Account is a "segregated asset account" and
that interests in the Account are offered exclusively through the purchase of or
transfer into a "variable contract" within the meaning of such terms under
Section 817 of the Code and the regulations thereunder. GWL&A will use every
effort to continue to meet such definitional requirements, and it will notify
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. GWL&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 GWL&A
and Schwab with as many printed copies of the current prospectus for each
Designated Portfolio as GWL&A and Schwab may reasonably request for distribution
to Contract owners. If requested by GWL&A or Schwab in lieu thereof, the Fund,
Distributor or Adviser shall provide such documentation (including a
camera-ready copy of each Designated Portfolio's current prospectus as set in
type, a diskette containing such documents in the form sent to the financial
printer, or an electronic copy of the documents in a format suitable for posting
on an Internet website, all as GWL&A and Schwab may reasonably request) and such
other assistance as is reasonably necessary in order for GWL&A and Schwab 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 a single
document or posted on a website maintained by or for GWL&A or Schwab. The Fund,
Distributor, and Adviser agree that the prospectus 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. Expenses associated with providing such documentation shall be allocated
in accordance with Schedule E hereto.
3.2. If applicable laws require that the Statement of Additional
Information ("SAI") for the Fund be distributed to all Contract owners, then the
Fund, Distributor and/or the Adviser, as appropriate, shall provide GWL&A with
copies of the Fund's SAI for the Designated Portfolio(s) in such quantities,
with expenses to be borne in accordance with Schedule E hereto, as GWL&A may
reasonably require to permit timely distribution thereof to Contract owners. If
requested by GWL&A or Schwab, the Fund, Distributor or Adviser shall provide an
electronic copy of the Fund SAI in a format suitable for posting on an Internet
website maintained by or on behalf of GWL&A and/or Schwab. The Fund, Distributor
and/or the Adviser, as appropriate, shall also provide SAIs to any Contract
owner or prospective owner who requests such SAI from the Fund (although it is
anticipated that such requests will be made to GWL&A or Schwab).
3.3. The Fund, Distributor and/or Adviser shall provide GWL&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 hereto, as GWL&A may
reasonably require to permit timely distribution thereof to Contract owners. If
requested by GWL&A or Schwab, the Fund, Distributor or Adviser shall provide an
electronic copy of such documentation in a format suitable for posting on an
Internet website maintained by or on behalf of GWL&A and/or Schwab. The Fund,
Distributor, and Adviser agree that the foregoing materials 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.
3.4. If and to the extent required by law GWL&A shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Designated Portfolio(s) shares held in the
Account in accordance with instructions received from
Contract owners; 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 Contract owners, so
long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. GWL&A reserves
the right to vote Fund shares held in its general account
and in any segregated asset account in its own right, to
the extent permitted by law.
3.5. Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated Portfolio
calculates voting privileges in a manner consistent with the standards set forth
in the Mixed and Shared Funding Exemptive Order, provided however, that the Fund
shall provide GWL&A and each Participating Insurance Company with a written copy
of such standards and such other assistance as may be necessary to facilitate
coordination between GWL&A and other Participating Insurance Companies in
complying with such standards and provided further that GWL&A shall be free to
vote Designated Portfolio shares attributable to the Account in any manner
permitted by applicable law, to the extent the Mixed and Shared Funding Order is
superseded by SEC or administrative practice (including no-action relief).
3.6. 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. GWL&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 GWL&A or Schwab, respectively, develops or proposes to
use and in which the Fund (or a Designated Portfolio thereof), its Adviser, any
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. The Fund or its designee reserves the right to
reasonably object to the continued use of any such sales literature or other
promotional material in which the Fund (or a Designated Portfolio thereof), its
Adviser, any of its sub-advisers, or the Distributor is named and no such
material shall be used if the Fund or its designee so objects.
4.2. GWL&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, Distributor, or the Adviser shall furnish, or shall cause
to be furnished, to GWL&A and Schwab, a copy of each piece of sales literature
or other promotional material in which GWL&A, its separate account(s), any
Contract or Schwab is named, at least ten (10) Business Days prior to its use.
No such material shall be used if GWL&A or Schwab objects to such use within
five (5) Business Days after receipt of such material. GWL&A and Schwab reserve
the right to reasonably object to the continued use of any such sales literature
or other promotional material in which GWL&A, its separate account(s), or any
Contract, or Schwab is named, and no such material shall be used if the Company
or Schwab so objects.
4.4. The Fund, the Distributor and the Adviser shall not give any
information or make any representations on behalf of GWL&A or concerning GWL&A,
the Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus (which shall include an
offering memorandum, if any, if the Contracts issued by GWL&A or interests
therein are not registered under the 0000 Xxx) 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 GWL&A or its designee, except with the
permission of GWL&A.
4.5. GWL&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 or its designee will provide to GWL&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 or supplements to any of the
above, that relate to the Fund or its shares (collectively, "Fund materials"),
promptly following the filing of such document(s) with the SEC or NASD or other
regulatory authorities.
4.7. GWL&A or Schwab or its designee will provide to the Fund 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 or supplements to any of the
above, that relate to the Contracts, (collectively, "Contract materials")
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, shareholder reports, 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, Distributor and the Adviser shall pay no fee or other
compensation to GWL&A under this Agreement, and GWL&A shall pay no fee or other
compensation to the Fund, Distributor or Adviser under this Agreement, although
the Parties hereto will bear certain expenses in accordance with Schedule E
hereto, Articles III, V, and other provisions of this Agreement.
5.2. Except as otherwise provided in this Agreement, including without
limitation Schedule E hereto, each Party shall bear all expenses incident to the
performance of its obligations hereunder. Notwithstanding anything herein to the
contrary, the Distributor or Adviser (as they may allocate between themselves)
shall reimburse Great-West and Schwab for the costs associated with substituting
the securities of a registered investment company for the shares of any
Designated Portfolio that has discontinued or intends to discontinue the
offering of its shares to Contract owners, or that implements, or intends to
implement, a fundamental change in investment objective or policy or other
change requiring shareholder approval, or with respect to which Great-West or
Schwab determines to terminate the Agreement pursuant to Section 10.1(b) hereof.
The costs of such substitution shall include, without limitation, reasonable
legal fees for obtaining any required SEC order approving such substitution, and
expenses for printing and distributing any prospectus supplement or other
disclosure of the substitution or elimination of the Designated Portfolio as an
investment vehicle under the Contracts.
5.3. The Fund, the Distributor and the Adviser acknowledge that a
principal feature of the Contracts is the Contract owner'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 GWL&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.
ARTICLE VI. Diversification and Qualification.
---------------------------------
6.1. The Fund, the Distributor and the Adviser each represents and
warrants 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 each represents and warrants 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. In the event of a
breach of this Article VI by the Fund, the Fund, Distributor, and
Adviser will take all steps necessary to: (a) notify GWL&A of such
breach, and (b) adequately diversify the Fund so as to achieve
compliance within the 30-day grace period afforded by Regulation
1.817-5.
6.2. The Fund, the Distributor and the Adviser each represents and
warrants that shares of the Designated Portfolio(s) will be sold only to
Participating Insurance Companies and their separate accounts and to
Qualified Plans, and that no person has or will purchase shares in any
Portfolio for any purpose or under any circumstances that would preclude
GWL&A from "looking through" to the investments of each Designated
Portfolio in which it invests, pursuant to the "look through" rules
found in Treasury Regulation 1.817-5. 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 each represents and
warrants 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 and Adviser each will notify GWL&A and Schwab
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 GWL&A or Schwab, the Distributor and/or 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 GWL&A and any federal income taxes or tax
penalties and interest thereon (or "toll charges" or exactments or
amounts paid in settlement) incurred by GWL&A with respect to itself or
its Contract owners in connection with any such failure or anticipated
or reasonably foreseeable failure.
6.6. Upon request, the Fund shall provide GWL&A or its designee with
reports certifying compliance with the aforesaid Section 817(h)
diversification and Subchapter M qualification requirements, at the
times provided for and substantially in the form attached hereto as
Schedule D hereto; provided, however, that providing such reports does
not relieve the Fund of its responsibility for such compliance or of its
liability for any non-compliance.
6.7. GWL&A agrees that if the Internal Revenue Service ("IRS") asserts
in writing in connection with any governmental audit or review of GWL&A
or, to GWL&A's knowledge, or any Contract owner that any Designated
Portfolio has failed to comply with the diversification requirements of
Section 817(h) of the Code or GWL&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) GWL&A shall promptly notify the Fund, the Distributor and the
Adviser of such assertion or potential claim;
(b) GWL&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) GWL&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 GWL&A to the IRS, any
Contract owner or any other claimant in connection with any of the
foregoing proceedings or contests (including, without limitation, any
such materials to be submitted to the IRS pursuant to Treasury
Regulations, Section 1.817-5(a)(2)) shall be provided by GWL&A to the
Fund, the Distributor and the Adviser (together with any supporting
information or analysis) within at least two (2) business days prior to
submission;
(e) GWL&A shall provide the Fund, 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 GWL&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) GWL&A shall not with respect to any claim of the IRS or any Contract
owner 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, GWL&A shall not be required to appeal any adverse
judicial decision unless the Fund and the Adviser shall have provided an
opinion of independent counsel to the effect that a reasonable basis
exists for taking such appeal; and further provided that the Fund, the
Distributor and the Adviser shall bear the costs and expenses, including
reasonable attorney's fees, incurred by GWL&A in complying with this
clause (f).
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order
7.1. The Fund represents that 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. A material
irreconcilable conflict may arise for a variety of reasons, including: (a) an
action by any state insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretative letter, or any
similar action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of 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 GWL&A if it determines that a material
irreconcilable conflict exists and the implications thereof.
7.2. GWL&A will report any potential or existing conflicts of which it
is aware to the Board. GWL&A will assist the Board in carrying out its
responsibilities under the 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 GWL&A to inform the Board whenever contract owner voting instructions are to
be disregarded. Such responsibilities shall be carried out by GWL&A with a view
only to the interests of its Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of
its members who are not interested persons of the Fund, the Distributor, the
Adviser or any sub-adviser to any of the Designated Portfolios (the
"Disinterested Members "), that a material irreconcilable conflict exists, and
it is a Participating Insurance Company for which a material irreconcilable
conflict is relevant, GWL&A and other Participating Insurance Companies shall,
at their expense and to the extent reasonably practicable (as determined by a
majority of the Disinterested Members), take whatever steps are necessary to
remedy or eliminate the material irreconcilable 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 GWL&A to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, GWL&A may be
required, at the Fund's election, to withdraw the Account's investment in the
Fund and terminate this Agreement; provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Disinterested
Members. 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 Fund, the
Distributor and the Adviser shall continue to accept and implement orders by
GWL&A for the purchase (and redemption) of shares of the Fund. No charge or
penalty will be imposed as a result of such withdrawal. The responsibility to
take such remedial action shall be carried out with a view only to the interest
of the Contract owners.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to GWL&A conflicts with the
majority of other state regulators, then GWL&A will withdraw the Account's
investment in the Fund and terminate this Agreement within six months after the
Board informs GWL&A in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Disinterested Members. Until the end of the foregoing six-month period, the Fund
and the Distributor shall continue to accept and implement orders by GWL&A for
the purchase (and redemption) of shares of the Fund. The responsibility to take
such action shall be carried out with a view only to the interest of the
Contract owners.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the Disinterested Members shall determine whether any proposed
action adequately remedies any material irreconcilable conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
GWL&A shall not be required by Section 7.3 to establish a new funding medium for
the Contracts if an offer to do so has been declined by vote of a majority of
Contract owners affected by the material irreconcilable conflict. In the event
that the Board determines that any proposed action does not adequately remedy
any material irreconcilable conflict, then GWL&A will withdraw the Account's
investment in the Fund and terminate this Agreement within six (6) months after
the Board informs GWL&A in writing of the foregoing determination; provided,
however, that such withdrawal and termination shall be limited to the extent
required by any such material irreconcilable conflict as determined by a
majority of the Disinterested Members.
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 3.4, 3.5, 3.6, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By GWL&A
8.1(a).GWL&A agrees to indemnify and hold harmless the Fund, 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 GWL&A) or litigation (including
reasonable legal and other expenses) (collectively, a "Loss") to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such Loss is related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arises out of or is based upon any untrue statements or alleged
untrue statements of any material fact contained in any Contract
materials, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished in writing to GWL&A
or Schwab by or on behalf of the Fund, Distributor or Adviser for
use in the Contract materials or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arises out of or as a result of statements or representations
(other than statements or representations contained in Fund
materials not supplied by GWL&A or persons under its control) or
wrongful conduct of GWL&A or persons under its control, with
respect to the sale or distribution of the Contracts or Fund
shares; or
(iii) arises out of any untrue statement or alleged untrue statement of
a material fact contained in any Fund materials, 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 and conformity with information furnished in writing to the
Fund by or on behalf of GWL&A; or
(iv) arises as a result of any failure by GWL&A to perform the
obligations, provide the services, and furnish the materials
required of it under the terms of this Agreement; or
(v) arises out of or result from any material breach of any
representation and/or warranty made by GWL&A in this Agreement or
arises out of or result from any other material breach of this
Agreement by GWL&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). GWL&A shall not be liable under this indemnification provision
with respect to any Loss to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to any of the Indemnified Parties.
8.1(c). GWL&A shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified GWL&A in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify GWL&A of any such claim shall not relieve GWL&A
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision,
except to the extent that GWL&A has been prejudiced by such failure to give
notice. In case any such action is brought against an Indemnified Party, GWL&A
shall be entitled to participate, at its own expense, in the defense of such
action, and unless the Indemnified Parties release GWL&A from any further
obligation under this Section 8.1 with respect to such claim(s), GWL&A also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the Party named in the action. After notice from GWL&A to such Party of GWL&A's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and GWL&A will not
be liable to such Party under this Agreement for any legal or other expenses
subsequently incurred by such Party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.1(d).Each Indemnified Party will promptly notify GWL&A of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
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 Loss, to
which the Indemnified Parties may become subject under any statute or
regulation, at common law or otherwise, insofar as such Loss is related to the
sale or acquisition of the Fund's shares or the Contracts and:
(i) arises out of Xxxxxx'x dissemination of information regarding the
Fund that is both (A) materially incorrect and (B) that was
neither contained in any Fund material, nor provided in writing
to Schwab, nor approved in writing by or on behalf of the Fund,
Distributor, or Adviser; or
(ii) arises out of or is 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 GWL&A or Schwab by or on behalf of the Fund,
Distributor or Adviser, or to Schwab by GWL&A for use in any
Contract materials or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(iii) arises out of or as a result of statements or representations
(other than statements or representations contained in materials
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) arises as a result of any failure by Schwab to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement; or
(v) arises out of or results 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 Loss 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 an Indemnified Party, Schwab shall be entitled to
participate, at its own expense, in the defense of such action
and unless the Indemnified Parties release Schwab from any
further obligation under Section 8.2 with respect to such
claim(s), 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). Each Indemnified Party 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 GWL&A and
Schwab and each of their directors and officers, the Contract
owners, and each person, if any, who controls GWL&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 Loss to which the Indemnified Parties may become
subject under any statute or regulation, at common law or
otherwise, insofar as such Loss is related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arises out of or is based upon any untrue statement or alleged
untrue statement of any material fact contained in any Fund
materials, 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
Fund, Distributor or Adviser, by or on behalf of GWL&A or Schwab
for use in the Fund materials or otherwise for use in connection
with the sale of the Contracts or the Fund shares; or
(ii) arises out of or as a result of statements or representations
(other than statements or representations contained in Fund
materials 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) arises out of any untrue statement or alleged untrue statement of
a material fact contained in any Contract materials 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 and in conformity with
information furnished in writing to GWL&A or Schwab by or on
behalf of the Fund, Distributor or Adviser; or
(iv) arises as a result of any failure by the Fund, the Distributor or
the Adviser to perform the obligations, provide the services and
furnish the materials required of it 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) arises out of or results from any material breach of any
representation and/or warranty made by the Fund, the Distributor
or the Adviser in this Agreement or arises out of or result from
any other material breach of this Agreement by the Fund, the
Distributor or the Adviser; or
(vi) arises out of or results 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 Loss 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 an Indemnified Party, the Adviser
will be entitled to participate, at its own expense, in the
defense thereof and unless the Indemnified Parties release
Adviser from any further obligation under this Section 8.3 with
respect to such claim(s), 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). GWL&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 GWL&A and Schwab
and each of their respective directors and officers, the Contract
owners, and each person, if any, who controls GWL&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 Loss 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 Loss, is related to the
operations of the Fund and:
(i) arises as a result of any failure by the Fund to perform the
obligations, provide the services and furnish the materials
required of it 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) arises out of or results from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arises out of or result from any other material breach of this
Agreement by the Fund; or
(iii) arises out of or results 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 Loss 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 an Indemnified Party, the Fund will be entitled to participate, at its
own expense, in the defense thereof and unless the Indemnified Parties release
the Fund from any further obligation under this Section 8.4 with respect to such
claim(s), 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). GWL&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 GWL&A and
Schwab and each of their respective directors and officers, the Contract owners,
and each person, if any, who controls GWL&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 Loss to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such Loss is related to the sale or acquisition of the Fund's shares
or the Contracts and:
(i) arises out of or is based upon any untrue statement or alleged
untrue statement of any material fact contained in Fund
materials, 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
Fund, Distributor or Adviser by or on behalf of GWL&A or Schwab
for use in the Fund materials or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arises out of or as a result of statements or representations
(other than statements or representations contained in Fund
materials 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) arises out of any untrue statement or alleged untrue statement of
a material fact contained in any Contract materials, 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 and in conformity with
information furnished in writing to GWL&A or Schwab by or on
behalf of the Fund, Distributor or Adviser; or
(iv) arises as a result of any failure by the Fund, Distributor or
Adviser to perform the obligations, provide the services and
furnish the materials required of it 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) arises out of or result from any material breach of any
representation and/or warranty made by the Fund, Distributor or
Adviser in this Agreement or arises out of or results from any
other material breach of this Agreement by the Fund, Distributor
or Adviser; or
(vi) arises 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 Loss 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 an Indemnified Party, the Distributor will be entitled
to participate, at its own expense, in the defense thereof and unless the
Indemnified Parties release the Distributor from any further obligation under
this Section 8.5 with respect to such claim(s), 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) GWL&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
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Colorado.
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 GWL&A or Schwab by written notice to the
other Parties with respect to any Designated Portfolio based upon
GWL&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 GWL&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 law or
such law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by
GWL&A or
(d) at the option of the Fund, Distributor or Adviser in the
event that formal administrative proceedings are instituted
against GWL&A or Schwab by the NASD, the SEC, the Insurance
Commissioner or like official of any state or any other
regulatory body regarding GWL&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 GWL&A or Schwab to
perform its obligations under this Agreement; or
(e) at the option of GWL&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 GWL&A or Schwab 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 GWL&A or Schwab by written notice to the
other Parties with respect to any Designated Portfolio in the
event that such Portfolio fails to meet the requirements and
comply with the representations and warranties specified in
Article VI hereof; or
(g) at the option of GWL&A or Schwab by written notice to the
other Parties with respect to any Designated Portfolio in the
event that such Portfolio ceases to qualify as a regulated
investment company under Subchapter M of the Code or under any
successor or similar provision, or if GWL&A or Schwab reasonably
believes that the Designated Portfolio will fail to meet such
requirements or so qualify; or
(h) 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 since the date of this Agreement either GWL&A or
Schwab has suffered a material adverse change in its business or
financial condition or is the subject of material adverse
publicity, (ii) the Fund, Distributor or Adviser notifies GWL&A
or Schwab, as appropriate, of that determination and its intent
to terminate this Agreement, and (iii) after considering the
actions taken by GWL&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
(i) at the option of either GWL&A or Schwab, if (i) GWL&A or
Schwab, respectively, shall determine, in its sole judgment
reasonably exercised in good faith, that since the date of this
Agreement 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, (ii) GWL&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 GWL&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
(j) at the option of GWL&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 GWL&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
(k) at the option of Schwab in the event that formal
administrative proceedings are instituted against GWL&A by the
NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding GWL&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 GWL&A to perform its obligations related to
the Contracts; or
(l) 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)-(k);
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(h) or 10.1(i) of this
Agreement, the prior written notice shall be given in advance of the
effective date of termination as required by those provisions unless
such notice period is shortened by mutual written agreement of the
Parties;
(b) in the event any termination is based upon the provisions of Section
10.1(d), 10.1(e), 10.1(j) or 10.1(k) 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) or 10.1(g), 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 GWL&A to meet Section 817(h) of the Code
diversification requirements, the Fund, the Distributor and the Adviser shall,
at the option of GWL&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 among 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.
The parties acknowledge that nothing in this Agreement shall in any way preclude
or prevent the Fund's board of Trustees from taking any actions deemed necessary
by the Board in furtherance of its fiduciary duties to the Fund and its
shareholders, which, among other things, may include approval of a merger or
consolidation of any Designated Portfolio, the liquidation of any Designated
Portfolio, the refusal to sell shares of any Designated Portfolio to any person,
or to suspend or terminate the offering of the 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 Trustees, acting in good faith
and in light of the Trustees' fiduciary duties under applicable law, necessary
and in the best interest of the shareholder of any Designated Portfolio.
10.4. Surviving Provisions.
Notwithstanding any termination of this Agreement, the following provisions
shall survive: Article V, Article VIII and Section 12.1 of Article XII. 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 by the notifying Party to each other Party entitled to notice at
the addresses set forth below or at such other address as a Party may from time
to time specify in writing to the other Parties.
If to the Fund:
PIMCO Variable Insurance Trust
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000 Attention: Xxxxxxx X. Xxxxxxx
If to GWL&A:
Great-West Life & Annuity Insurance Company
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Attention: Vice President and Counsel
If to the Adviser:
Pacific Investment Management Company LLC840 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
If to the Distributor:
PIMCO Funds Distributors LLC
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
If to Schwab:
Xxxxxxx Xxxxxx & Co., Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
ARTICLE XII. Miscellaneous
12.1. Subject to the requirements of legal process and regulatory
authority, each Party hereto shall treat as confidential any "non-public
personal information" about any "consumer" of another Party as such terms are
defined in SEC Regulation S-P, and shall not disclose or use such information
without the express written consent of such Party. Such written consent shall
specify the purposes for which such information may be disclosed or used, which
disclosure or use shall be consistent with SEC Regulation S-P.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each Party hereto shall cooperate with each other Party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each Party hereto further
agrees to furnish the Colorado Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of GWL&A are being conducted in a manner consistent with the Colorado
Variable Annuity Regulations and any other applicable law.
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 GWL&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, except as otherwise provided herein, the obligations assumed by
the Fund pursuant to this Agreement shall be limited in any case to the Fund and
its assets and neither Schwab nor GWL&A shall seek satisfaction of any such
obligation from the shareholders of the Fund (solely by reason of their status
as such) the Trustees, officers, employees or agents of the Fund, or any of
them.
12.10. The Fund, the Distributor and the Adviser agree that the
obligations assumed by GWL&A and Schwab pursuant to this Agreement shall be
limited in any case to GWL&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 GWL&A or Schwab, the directors, officers, employees or
agents of the GWL&A or Schwab, or any of them, except to the extent permitted
under this Agreement.
12.11. Schedules A through E hereto, as the same may be amended from
time to time by mutual written agreement of the Parties, are attached hereto and
incorporated herein by reference.
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 as of the date specified below.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By its authorized officer,
By:_______________________________
Name: ___________________________
Title:_____________________________
Date:_____________________________
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer,
By:______________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Date:_____________________________
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
By its authorized officer,
By:______________________________
Name: Xxx Xxxxx
Title: Managing Director
Date:_____________________________
PIMCO FUNDS DISTRIBUTORS LLC
By its authorized officer,
By:______________________________
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Managing Director
Date:_____________________________
XXXXXXX XXXXXX & CO., INC.
By its authorized officer,
By:______________________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
Date:_____________________________
Schwab Variable Annuity
SCHEDULE A
Contracts Form Numbers
Great-West Life & Annuity Insurance Company
Individual Variable Annuity Contract J444
SCHEDULE B
Designated Portfolios
High Yield
SCHEDULE C
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, upon request,
the Fund shall provide a quarterly report to GWL&A in the Form D1 attached
hereto and incorporated herein by reference, regarding the status under such
sections of the Code of the Designated Portfolio(s), and if necessary,
identification of any remedial action to be taken to remedy non-compliance.
With regard to the reports relating to the year-end testing of
compliance with the requirements of Subchapter M of the Code, referred to
hereinafter as "RIC status," upon request, the Fund will provide the reports on
the following basis: (i) the last quarter's quarterly reports, and (ii) a
year-end report 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 may be requested 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) Less than fifty percent of
the value of total assets consists of assets specified in Section
851(b)(3)(A); and (c) 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)(3)(B).
FORM C1
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 ________, 20____, 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 Great-West Life & Annuity Insurance
Company, Xxxxxxx Xxxxxx & Co., Inc. and other than the exceptions discussed
below:
Exceptions Remedial Action
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
______________________ ______________________
If no exception to report, please indicate "None."
Signed this day of , .
----- ---------- ------------
-----------------------------------------------------------
(Signature)
By:
-------------------------------------------------------
(Type or Print Name and Title/Position)
SCHEDULE D
EXPENSES
The Fund and/or the Distributor and/or Adviser, and GWL&A will coordinate the
functions and pay the costs of completing these functions based upon an
allocation of costs in the tables below. Costs shall be allocated to reflect the
Fund's share of the total costs determined according to the number of pages of
the Fund's respective portions of the documents, except with respect to the
printing of the combined prospectuses. The calculation for costs associated with
the printing of the combined prospectuses shall be a weighted average factoring
in the number of contracts with assets allocated to the Fund's respective
portfolio(s) and the actual number of pages in that portfolio's prospectus.
------------------------- ----------------------- --------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ----------------------- --------------------- ------------------
Mutual Fund Prospectus Printing of combined GWL&A Fund,
prospectuses Distributor or
Adviser, as
applicable
------------------------- ----------------------- --------------------- ------------------
Fund, Distributor or GWL&A Fund,
Adviser shall supply Distributor or
GWL&A with such Adviser, as
numbers of the applicable
Designated
Portfolio(s)
prospectus(es) as
GWL&A shall
reasonably request
------------------------- ----------------------- --------------------- ------------------
Distribution to New GWL&A GWL&A
and Inforce Contract
owners
------------------------- ----------------------- --------------------- ------------------
Distribution to Schwab Schwab
Prospective Contract
owners
------------------------- ----------------------- --------------------- ------------------
Product Prospectus Printing for Inforce GWL&A GWL&A
Contract owners
------------------------- ----------------------- --------------------- ------------------
Printing for GWL&A Schwab
Prospective Contract
owners
------------------------- ----------------------- --------------------- ------------------
Distribution to New GWL&A GWL&A
and Inforce Contract
owners
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Distribution to Schwab Schwab
Prospective Contract
owners
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Mutual Fund Prospectus If Required by Fund, Fund, Distributor Fund,
Update & Distribution Distributor or Adviser or Adviser Distributor or
Adviser
------------------------- ----------------------- --------------------- ------------------
If Required by GWL&A GWL&A GWL&A
------------------------- ----------------------- --------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ----------------------- --------------------- ------------------
Product Prospectus If Required by Fund, GWL&A Fund,
Update & Distribution Distributor or Adviser Distributor or
Adviser
------------------------- ----------------------- --------------------- ------------------
If Required by GWL&A GWL&A GWL&A
------------------------- ----------------------- --------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ----------------------- --------------------- ------------------
Mutual Fund SAI Printing Fund, Distributor Fund,
or Adviser Distributor or
Adviser
------------------------- ----------------------- --------------------- ------------------
Distribution GWL&A GWL&A
------------------------- ----------------------- --------------------- ------------------
Product SAI Printing GWL&A GWL&A
------------------------- ----------------------- --------------------- ------------------
Distribution GWL&A GWL&A
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Proxy Material for Printing if proxy Fund, Distributor Fund,
Mutual Fund: required by Law or Adviser Distributor or
Adviser
------------------------- ----------------------- --------------------- ------------------
Distribution GWL&A Fund,
(including labor) if Distributor or
proxy required by Law Adviser
------------------------- ----------------------- --------------------- ------------------
Printing & GWL&A GWL&A
distribution if
required by GWL&A
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Printing & GWL&A Schwab
distribution if
required by Schwab
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Mutual Fund Annual & Printing of reports GWL&A Fund,
Semi-Annual Report Distributor or
Adviser
------------------------- ----------------------- --------------------- ------------------
Distribution GWL&A GWL&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 GWL&A Schwab GWL&A
------------------------- ----------------------- --------------------- ------------------
If Required by Schwab Schwab Schwab
------------------------- ----------------------- --------------------- ------------------
Other communication to Distribution GWL&A Fund,
inforce (including labor and Distributor or
printing) if required Adviser by the Fund, Distributor
or Adviser
------------------------- ----------------------- --------------------- ------------------
Distribution GWL&A GWL&A
(including labor and
printing) if required
by GWL&A
------------------------- ----------------------- --------------------- ------------------
Distribution GWL&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 GWL&A Fund or Adviser
calculation pursuant to participants
Section 1.8
------------------------- ----------------------- --------------------- ------------------
Cost of reasonable GWL&A Fund or Adviser
administrative work
to correct error
------------------------- ----------------------- --------------------- ------------------
Operations of the Fund All operations and Fund, Distributor Fund or Adviser
related expenses, or 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 GWL&A GWL&A
Account of units of separate
account (24f-2 fees)
------------------------- ----------------------- --------------------- ------------------
