Ex-99.H.3.
FUND PARTICIPATION AGREEMENT
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TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares........................................
ARTICLE II. Representations and Warranties.............................
ARTICLE III. Prospectuses and Proxy Statements; Voting..................
ARTICLE IV. Sales Material and Information.............................
ARTICLE V. Fees and Expenses..........................................
ARTICLE VI. Diversification and Qualification..........................
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order...................
ARTICLE VIII. Indemnification............................................
ARTICLE IX. Applicable Law.............................................
ARTICLE X. Termination................................................
ARTICLE XI. Notices....................................................
ARTICLE XII. Miscellaneous..............................................
SCHEDULE A Designated Portfolios......................................
SCHEDULE B Reports per Section 6.6....................................
SCHEDULE C Expenses...................................................
SCHEDULE D Administrative Services....................................
SCHEDULE E Non-Compete Provisions.....................................
FUND PARTICIPATION AGREEMENT
Among
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STI CLASSIC FUNDS,
TRUSCO CAPITAL MANAGEMENT, INC.
and
BISYS FUND SERVICES LIMITED PARTNERSHIP, INC .BISYS
THIS AGREEMENT, made and entered into as of this ____ day of December, 2004
by and among GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (hereinafter "GWL&A"),
a Colorado life insurance company, on its own behalf and on behalf of its
Separate Account, COLI VUL-7 Series Account (the "Account"); STI Classic FUNDs,
a business trust organized under the laws of Massachusetts (hereinafter the
"Fund"); TRUSCO CAPITAL MANAGEMENT, INC (hereinafter the "Adviser"), a
corporation organized under the laws of Georgia; and BISYS FUND SERVICES LIMITED
PARTNERSHIP, INC., a Limited Partnership organized under the laws of Ohio
(hereinafter the "Distributor").
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 (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
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WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (hereinafter the "SEC"), dated April 30, 1998 (File No. 812-108441),
[from VUL-2 agreement; confirm with STI] granting Participating Insurance
Companies and variable annuity and variable life insurance separate accounts
exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the
Investment Company Act of 1940, as amended, (hereinafter the "1940 Act") and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of life insurance companies that may
or may not be affiliated with one another and qualified pension and retirement
plans ("Qualified Plans") (hereinafter the "Mixed and Shared Funding Exemptive
Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolio(s) are registered under
the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
laws; and
WHEREAS, the Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, (the "1934 Act") and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, GWL&A has certain unregistered variable life contracts supported
wholly or partially by the Account (the "Contracts") to be made available to
owners thereof ("Contract owners"); and
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WHEREAS, the Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of GWL&A, under the
insurance laws of the State of Colorado, to set aside and invest assets
attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, GWL&A intends to purchase shares in the Portfolio(s) listed in
Schedule A attached hereto and incorporated herein by reference, as such
Schedule may be amended from time to time by mutual written agreement (the
"Designated Portfolio(s)"), on behalf of the Account to fund the Contracts, and
the Fund is authorized to sell such shares to unit investment trusts such as the
Account at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Account also intends to purchase shares in other open-end
investment companies or series thereof not affiliated with the Fund (the
"Unaffiliated Funds") on behalf of the Account to fund the Contracts; and
WHEREAS, GWL&A intends to utilize its NSCC member broker/dealer affiliate,
GWFS Equities, Inc. ("GWFS") to transmit instructions for the purchase,
redemption and transfer of Fund shares on behalf of the Account, and GWFS,
alone, or with the assistance of a recordkeeping affiliate, to perform certain
recordkeeping functions associated with the transfer of Fund shares into and out
of the Account in order to recognize certain organizational economies; and
NOW, THEREFORE, in consideration of their mutual promises, GWL&A, the Fund,
the Distributor and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
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1.1 The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts and to certain
Qualified Plans. No shares of any Designated Portfolio will be sold to the
general public. The Fund will not sell shares of the Designated Portfolio(s) to
any other Participating Insurance Company separate account unless an agreement
containing provisions substantially similar to Sections 2.4, 2.10, 3.5, 3.6,
5.1, and Article VII of this Agreement is in effect to govern such sales.
1.2. All purchases, redemptions and exchanges of Designated Portfolio
shares by GWL&A on behalf of the Account, in addition to the pricing and
correction thereof, of Designated Portfolio shares, shall be governed by and
subject to the terms of the Trading and NSCC Networking Agreement, entered into
by and between STI Classic Funds and GWFS Equities, Inc. (f/k/a BenefitsCorp
Equities, Inc), dated September 1, 2002.
1.3. Notwithstanding Section 1.2 hereof, if an adjustment is necessary to
correct an error by the Adviser which has caused Contract owners to receive less
than the amount to which they are entitled, the number of shares of the
applicable sub-account of such 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 an error, GWL&A shall promptly remit to
Adviser any overpayment that has not been paid to Contract owners; however,
Adviser acknowledges that GWL&A does 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 GWL&A be liable to
Contract owners for any such adjustments or underpayment amounts.
1.4 The Adviser shall promptly reimburse GWL&A for any and all costs or
expenses which GWL&A incurs that are associated with any failure of the Fund to
settle trades by the time specified on the Business Day following the Trade
Date, as specified and defined in the Trading and NSCC Networking Agreement.
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ARTICLE II. Representations and Warranties
2.1. GWL&A 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 Colorado insurance law.
2.2. The Fund represents and warrants that Designated Portfolio(s) shares
sold pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with all applicable federal
securities laws including without limitation the 1933 Act, the 1934 Act, and the
1940 Act and that the Fund is and shall remain registered under the 0000 Xxx.
The Fund shall amend the registration statement for its shares under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares.
2.3. The Fund reserves the right to adopt a plan pursuant to Rule 12b-1
under the 1940 Act and to impose an asset-based or other charge to finance
distribution expenses as permitted by applicable law and regulation. In any
event, the Fund and Adviser agree to comply with applicable provisions and SEC
staff interpretations of the 1940 Act to assure that the investment advisory or
management fees paid to the Adviser by the Fund are in accordance with the
requirements of the 1940 Act. To the extent that the Fund decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have its
Board, a majority of whom are not interested persons of the Fund, formulate and
approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses.
2.4. The Fund represents and warrants that it will make every effort to
ensure that the investment policies, fees and expenses of the Designated
Portfolio(s) are and shall at all times remain in compliance with state
insurance and other applicable laws to the extent required to
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perform this Agreement. The Fund further represents and warrants that it will
make every effort to ensure that Designated Portfolio(s) shares will be sold in
compliance with applicable state securities and insurance laws. The Fund shall
register and qualify the shares for sale in accordance with the laws of the
various states if and to the extent required by applicable law. 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 of Directors has determined that implementation of a particular Law
Change is not in the best interest of all of the Fund's shareholders with an
explanation regarding why such action is lawful, any action required by a Law
Change will be taken.
2.5. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the State of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
2.6. The Adviser represents and warrants that it is and shall remain duly
registered under all applicable federal and state securities laws and that it
shall perform its obligations for the Fund in compliance in all material
respects with the laws of the State of Georgia and any applicable state and
federal securities laws.
2.7. The Distributor represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the Fund in compliance in all material
respects with the laws of the State of Ohio and any applicable state and federal
securities laws.
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2.8. The Fund and the Adviser represent and warrant that all of their
respective officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are, and shall
continue to be at all times, covered by one or more blanket fidelity bonds or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid bonds shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company.
2.9. 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 consult with
GWL&A in order to implement any such change in an orderly manner, recognizing
the expenses of changes. 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 C attached hereto and incorporated
herein by reference.
2.10. 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 life insurance contracts under applicable provisions
of the Code, and that it will make every effort to maintain such treatment and
that it will notify the Fund, 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
the Fund, the Distributor and the Adviser immediately upon having
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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. If applicable state or federal laws or regulations require that
prospectuses for the Fund be distributed to all Contract owners, then at least
annually, the Adviser or Distributor shall provide GWL&A with as many copies of
the Fund's current prospectus for the Designated Portfolio(s) as GWL&A may
reasonably request for marketing purposes (including distribution to Contract
owners with respect to new sales of a Contract), with expenses to be borne in
accordance with Schedule C hereof. If requested by GWL&A in lieu thereof, the
Advisor, Distributor or Fund shall provide such documentation (including a
camera-ready copy and computer diskette of the current prospectus for the
Designated Portfolio(s)) and other assistance as is reasonably necessary in
order for GWL&A once each year (or more frequently if the prospectuses for the
Designated Portfolio(s) are amended) to have any prospectus for the Contracts
and the Fund's prospectus for the Designated Portfolio(s) printed together in
one document. The Fund and Adviser agree that the prospectus (and semi-annual
and annual reports) for the Designated Portfolio(s) will describe only the
Designated Portfolio(s) and will not name or describe any other portfolios or
series that may be in the Fund unless required by law.
3.2. If applicable state or federal laws or regulations require that the
Statement of Additional Information ("SAI") for the Fund be distributed to all
Contract owners, then the Fund, Distributor and/or the Adviser shall provide
GWL&A with copies of the Fund's SAI or documentation thereof for the Designated
Portfolio(s) in such quantities, with expenses to be borne in accordance with
Schedule C hereof, as GWL&A may reasonably require to permit timely distribution
thereof to Contract owners. The Adviser, Distributor and/or the Fund shall also
provide
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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).
3.3. The Fund, Distributor and/or Adviser shall provide GWL&A 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 C hereof, as GWL&A may reasonably
require to permit timely distribution thereof to Contract owners if and as
required by applicable law.
3.4. It is understood and agreed that, except with respect to information
regarding GWL&A provided in writing by that party, GWL&A is not responsible for
the content of the prospectus or SAI for the Designated Portfolio(s).
3.5. 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 any
segregated asset account in its own right, to the extent
permitted by law.
3.6. GWL&A shall be responsible for assuring that each of its separate
accounts holding shares of a Designated Portfolio calculates voting privileges
as directed by the Fund and agreed to
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by GWL&A and the Fund. The Fund agrees to promptly notify GWL&A of any changes
of interpretations or amendments of the Mixed and Shared Funding Exemptive
Order.
3.7. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or, as the Fund currently intends, comply with
Section 16(c) of the 1940 Act (although the Fund is not one of the trusts
described in Section 16(c) of that Act) as well as with Sections 16(a) and, if
and when applicable, 16(b). Further, the Fund will act in accordance with the
SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors or trustees and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. GWL&A shall furnish, or shall cause to be furnished, to the Fund or
its designee and to the Distributor, a copy of each piece of sales literature or
other promotional material that GWL&A, respectively, develops or proposes to use
and in which the Fund (or a Portfolio thereof), its Adviser or one of its
sub-advisers or the Distributor is named in connection with the Contracts, at
least ten (10) business days prior to its use. No such material shall be used if
the Fund objects to such use within five (5) business days after receipt of such
material and without prior written approval of the Distributor
4.2. GWL&A 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 written
permission of the Fund, Distributor or Adviser.
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4.3. The Fund or the Adviser shall furnish, or shall cause to be furnished,
to GWL&A, a copy of each piece of sales literature or other promotional material
in which GWL&A and/or its separate account(s), is named at least ten (10)
business days prior to its use. No such material shall be used if GWL&A objects
to such use within five (5) business days after receipt of such material.
4.4. The Fund, the Distributor and the Adviser shall not give any
information or make any representations on behalf of GWL&A or concerning GWL&A,
the Account, or the Contracts other than the information or representations
contained in sales literature or other promotional material approved by GWL&A or
its designee, except with the permission of GWL&A.
4.5. The Fund will provide to GWL&A at least one complete copy of all
registration statements, prospectuses, SAIs, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Designated
Portfolio(s), contemporaneously with the filing of such document(s) with the SEC
or NASD or other regulatory authorities.
4.6. GWL&A will provide to the Fund at least one complete copy of any
registration statements, prospectuses, SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Account, contemporaneously with the
filing of such document(s) with the SEC, NASD, or other regulatory authority.
4.7. 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
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communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters, form
letters, seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, and shareholder reports, and proxy materials (including solicitations
for voting instructions) and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 0000 Xxx.
4.8. 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. Neither the Fund, the Distributor nor the Adviser shall pay any fee or
other compensation to GWL&A under this Agreement, other than pursuant to
Schedule D attached hereto and incorporated by reference herein. In addition,
the parties will bear certain expenses in accordance with Schedule C, Articles
III, V, and other provisions of this Agreement.
5.2. All expenses incident to performance by the Fund, the Distributor and
the Adviser under this Agreement shall be paid by the appropriate party, as
further provided in Schedule C. The Fund shall see to it that all shares of the
Designated Portfolio(s) are registered and authorized for issuance in accordance
with applicable federal law and, if and to the extent required, in accordance
with applicable state laws prior to their sale.
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5.3. The parties shall bear the expenses of any routine annual distribution
(mailing costs) of the Fund's prospectus and distribution (mailing costs) of the
Fund's proxy materials and reports to owners of Contracts offered by GWL&A, in
accordance with Schedule C.
5.4. 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 portfolios. The Fund, the Distributor
and the Adviser agree to cooperate with GWL&A 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 Adviser represents and warrants that the Fund will at all times
sell its shares and use its best efforts to invest its assets in such a manner
as to ensure that the Contracts will be treated as life insurance contracts
under the Code, and the regulations issued thereunder. Without limiting the
scope of the foregoing, the Adviser 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 Section 1.817-5, as amended from time to
time, and any Treasury interpretations thereof, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications or successor provisions to such Section or
Regulations. The Adviser agrees that shares of the Designated Portfolio(s) will
be sold only to Participating Insurance Companies and their separate accounts
and to Qualified Plans.
6.2. No shares of any Designated Portfolio of the Fund will be sold to the
general public.
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6.3. The Fund and the Adviser represent and warrant that the Fund and each
Designated Portfolio is currently qualified as a Regulated Investment Company
under Subchapter M of the Code, and that each Designated Portfolio will maintain
such qualification (under Subchapter M or any successor or similar provisions)
as long as this Agreement is in effect.
6.4. The Fund or Adviser will notify GWL&A immediately upon having a
reasonable basis for believing that the Fund or any Designated Portfolio has
ceased to comply with the aforesaid Section 817(h) diversification or Subchapter
M qualification requirements or might not so comply in the future.
6.5. Without in any way limiting the effect of Sections 8.2, 8.3 and 8.4
hereof and without in any way limiting or restricting any other remedies
available to GWL&A, the Adviser will pay all costs associated with or arising
out of any failure, or any anticipated or reasonably foreseeable failure, of the
Fund or any Designated Portfolio to comply with Sections 6.1, 6.2, or 6.3
hereof, including all costs associated with reasonable and appropriate
corrections or responses to any such failure; such costs may include, but are
not limited to, the costs involved in creating, organizing, and registering a
new investment company as a funding medium for the Contracts and/or the costs of
obtaining whatever regulatory authorizations are required to substitute shares
of another investment company for those of the failed Portfolio (including but
not limited to an order pursuant to Section 26(b) of the 1940 Act); such costs
are to include, but are not limited to, 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 owners of its Contracts in
connection with any such failure or anticipated or reasonably foreseeable
failure.
6.6. The Fund at the Fund's expense shall provide 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
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Schedule B and incorporated herein by reference; provided, however, that
providing such reports does not relieve the Fund of its responsibility for such
compliance or of its liability for any non-compliance.
6.7. 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;
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(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 Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
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investments of any 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 an irreconcilable material 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
directors who are not interested persons of the Fund, the Distributor, the
Adviser or any sub-adviser to any of the Designated Portfolios (the "Independent
Directors"), that a material irreconcilable conflict exists, GWL&A and other
Participating Insurance Companies shall, at their expense and to the extent
reasonably practicable (as determined by a majority of the Independent
Directors), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the separate accounts from the Fund or any
Designated Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
17
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 Independent
Directors. Any such withdrawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of that six month period the Adviser, the
Distributor and the Fund shall continue to accept and implement orders by GWL&A
for the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to 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 of the Board. Until the end of the foregoing six month
period, the Fund shall continue to accept and implement orders by GWL&A for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
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 irreconcilable material conflict. In the event
that the Board
18
determines that any proposed action does not adequately remedy any
irreconcilable material 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 Independent Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable: and (b) Sections 3.5, 3.6, 3.7, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By 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) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, expenses, damages or liabilities (or actions in respect
19
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the Contracts or sales
literature or other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this Agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished in
writing to GWL&A by or on behalf of the Adviser, Distributor or Fund
for use in the Contracts or sales literature or other promotional
material (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus or sales literature or other promotional
material of the Fund not supplied by 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) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, SAI,
or sales literature or other promotional material of the Fund, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, if
such a statement or omission was made in reliance upon information
furnished in writing to the Fund by or on behalf of GWL&A; or
(iv) arise as a result of any failure by GWL&A to provide the services and
furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any representation
and/or warranty made by GWL&A in this Agreement or arise out of or
result from any other material breach of this Agreement by GWL&A,
including without limitation Section 2.10 and Section 6.7 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
20
8.1(b). GWL&A shall not be liable under this indemnification provision with
respect to any losses, claims, expenses, damages, liabilities or litigation to
which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.1(c). 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 the Indemnified Parties,
GWL&A shall be entitled to participate, at its own expense, in the defense of
such action. 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). The Indemnified Parties 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.
21
8.2. Indemnification by the Adviser
8.2(a). The Adviser agrees to indemnify and hold harmless GWL&A and its
directors and officers and each person, if any, who controls GWL&A within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 8.2) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with the written
consent of the Adviser) or litigation (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or prospectus or SAI or sales literature or other promotional material
of the Fund prepared by the Adviser (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Adviser by or
on behalf of GWL&A for use in the registration statement, prospectus
or SAI for the Fund or in sales literature or other promotional
material (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or the
Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the sales literature
or other promotional material for the Contracts not supplied by the
Adviser or persons under its control) or wrongful conduct of the
Adviser or persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in sales literature or other promotional
material covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was
22
made in reliance upon information furnished in writing to GWL&A by or
on behalf of the Adviser; or
(iv) arise as a result of any failure by the Adviser to provide the
services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or otherwise, to comply
with the diversification and other qualification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Adviser in this Agreement or arise out of
or result from any other material breach of this Agreement by the
Adviser, the Distributor or the Fund; or
(vi) arise out of or result from the incorrect or untimely calculation or
reporting by the 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 8.2(b) and
8.2(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Adviser specified in Article VI hereof.
8.2(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.2(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
23
account of this indemnification provision, except to the extent that the Adviser
has been prejudiced by such failure to give notice. In case any such action is
brought against the Indemnified Parties, the Adviser will be entitled to
participate, at its own expense, in the defense thereof. The Adviser also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Adviser to such party of the
Adviser's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Adviser will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.2(d). GWL&A agrees to promptly 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.
8.3. Indemnification By the Fund 8.3(a). The Fund agrees to indemnify and
hold harmless GWL&A and its directors and officers and each person, if any, who
controls GWLA within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.3) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlements with the written consent of the Fund) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may be
required to pay or become subject under any statute or regulation, at common law
or otherwise, insofar as such losses, claims, expenses, damages, liabilities or
expenses (or actions in respect thereof) or settlements, are related to the
operations of the Fund and :
(i) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including
a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualifications requirements
specified in Article VI of this Agreement; or
24
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.3(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve it from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this indemnification
provision, except to the extent that the Fund has been prejudiced by such
failure to give notice. In case any such action is brought against the
Indemnified Parties, the Fund will be entitled to participate, at its own
expense, in the defense thereof. The Fund shall also be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Fund to such party of the Fund's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not
25
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 each agrees to promptly 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.
8.4. Indemnification by the Distributor
8.4(a). The Distributor agrees to indemnify and hold harmless GWL&A and its
directors and officers and each person, if any, who controls GWL&A within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 8.4) against any and all losses, claims, expenses,
damages and liabilities (including amounts paid in settlement with the written
consent of the Distributor) or litigation (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or prospectus or SAI or sales literature or other promotional material
of the Fund prepared by the Fund, Adviser or Distributor (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this Agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished in
writing to the Adviser, the Distributor or Fund by or on behalf of
GWL&A for use in the registration statement or SAI or prospectus for
the Fund or in sales literature or other promotional material (or any
amendment or supplement to any of the foregoing) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
26
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in sales literature or
other promotional material for the Contracts not supplied by the
Distributor or persons under its control) or wrongful conduct of the
Fund, the Distributor or Adviser or persons under their control, with
respect to the sale or distribution of the Contracts or Fund shares;
or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in sales literature or other promotional
material covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
in writing to GWL&A by or on behalf of the Adviser, the Distributor or
Fund; or
(iv) arise as a result of any failure by the Distributor to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Distributor in this Agreement or arise out
of or result from any other material breach of this Agreement by the
Distributor; or
as limited by and in accordance with the provisions of Sections 8.4(b) and
8.4(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Distributor specified in Article VI
hereof.
8.4(b). The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance or such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
8.4(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
27
the Distributor in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), but failure to
notify the Distributor of any such claim shall not relieve the Distributor from
any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision,
except to the extent that the Distributor has been prejudiced by such failure to
give notice. In case any such action is brought against the Indemnified Parties,
the Distributor will be entitled to participate, at its own expense, in the
defense thereof. The Distributor also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Distributor to such party of the Distributor's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Distributor will not
be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.4(d) GWL&A agrees to promptly notify the Distributor of the commencement
of any litigation or proceedings against it or any of its officers or directors
in connection with the issuance or sale of the Contracts or the operation of the
Account.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York,
without regard to the New York Conflict of Laws provisions.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Mixed and Shared
28
Funding Exemptive Order) and the terms hereof shall be interpreted and construed
in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with respect to some
or all Designated Portfolios, upon twelve (12) 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 by written notice to the other parties with
respect to any Designated Portfolio based upon GWL&A's 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 by written notice to the other parties with
respect to any Designated Portfolio in the event any of the Designated
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by 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 by the NASD,
the SEC, the Insurance Commissioner or like official of any state or any
other regulatory body regarding GWL&A's 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 to perform its
obligations under this Agreement; or
(e) at the option of GWL&A 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 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
29
(f) at the option of GWL&A by written notice to the Fund with respect to
any Portfolio if GWL&A reasonably believes that the Portfolio will fail to
meet the Section 817(h) diversification requirements or Subchapter M
qualifications specified in Article VI hereof; or
(g) at the option of either the Fund, the Distributor or the Adviser, if
(i) the Fund, Distributor or Adviser, respectively, shall determine, in its
sole judgment reasonably exercised in good faith, that GWL&A has suffered a
material adverse change in its business or financial condition or is the
subject of material adverse publicity and that material adverse change or
publicity will have a material adverse impact on GWL&A's ability to perform
its obligations under this Agreement, (ii) the Fund, Distributor or Adviser
notifies GWL&A of that determination and its intent to terminate this
Agreement, and (iii) after considering the actions taken by GWL&A and any
other changes in circumstances since the giving of such a notice, the
determination of the Fund, Distributor or Adviser shall continue to apply
on the sixtieth (60th) day following the giving of that notice, which
sixtieth day shall be the effective date of termination; or
(h) at the option of either GWL&A, if (i) GWL&A shall determine, in its
sole judgment reasonably exercised in good faith, that the Fund,
Distributor or Adviser has suffered a material adverse change in its
business or financial condition or is the subject of material adverse
publicity and that material adverse change or publicity will have a
material adverse impact on the Fund's, Distributor's or Adviser's ability
to perform its obligations under this Agreement, (ii) GWL&A 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
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 any non-defaulting party hereto in the event of a
material breach of this Agreement by any party hereto (the "defaulting
party") other than as described in 10.1(a)-(j); provided, that the
non-defaulting party gives written notice thereof to the defaulting party,
with copies of such notice to all other non-defaulting parties, and if such
breach shall not have been remedied within thirty (30) days after such
written notice is given, then the non-defaulting party giving such written
notice may terminate this Agreement by giving thirty (30) days written
notice of termination to the defaulting party.
30
10.2. Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties of its intent to terminate, which notice
shall set forth the basis for the termination. Furthermore,
(a) in the event any termination is based upon the provisions of Article
VII, or the provisions of Section 10.1(a), 10.1(g) or 10.1(h) of this
Agreement, the prior written notice shall be given in advance of the
effective date of termination as required by those provisions unless such
notice period is shortened by mutual written agreement of the parties; (b)
in the event any termination is based upon the provisions of Section
10.1(d), 10.1(e), 10.1(i) or 10.1(j) of this Agreement, the prior written
notice shall be given at least sixty (60) days before the effective date of
termination; and (c) in the event any termination is based upon the
provisions of Section 10.1(b), 10.1(c) or 10.1(f), the prior written notice
shall be given in advance of the effective date of termination, which date
shall be determined by the party sending the notice.
10.3. Effect of Termination. Notwithstanding any termination of this
Agreement, other than as a result of a failure by either the Fund or 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, continue to make
available additional shares of the Designated Portfolio(s) pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Designated
Portfolio(s), redeem investments in the Designated Portfolio(s) and/or invest in
the Designated Portfolio(s) upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.3 shall not
apply to any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement.
31
10.4. Surviving Provisions. Notwithstanding any termination of this
Agreement, each party's obligations under Article VIII to indemnify other
parties shall survive and not be affected by any termination of this Agreement.
In addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any termination of this
Agreement.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
[insert notice information]
STI Classic Variable Trust
Xxx Xxxxxxx Xxxxxx Xxxxx
Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Vice President
If to GWL&A:
Great-West Life & Annuity Insurance Company
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxxxx, Vice President, Life Insurance Markets
PC: Xxxxxxx Xxxxx, Vice President and Counsel
If to the Adviser:
[insert notice information]
Trusco Capital Management, Inc.
00 Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxxxx, Managing Director
If to the Distributor:
BISYS FUND SERVICES LIMITED PARTNERSHIP, INC
000 Xxxxxx Xxxxxx-Xxxxx 0000
Xxxxxx, XX 00000
32
Attention: Broker Dealer Compliance
ARTICLE XII. Miscellaneous
12.1. The parties hereto acknowledge that any nonpublic personal
information (as defined by applicable law or regulation promulgated under Title
V of the Xxxxx-Xxxxx-Xxxxxx Act of 1999 (the "Act")) of Contract owners (and any
participants thereof, as applicable) will be disclosed or utilized solely to
carry out the terms of this Agreement or pursuant to an exception contained in
any applicable law or regulation promulgated under the Act. Further, Fund,
Distributor and Adviser agree to maintain and enforce procedures for the
safeguarding and protection of such nonpublic personal information at least as
rigorous as those required to be used by GWL&A under applicable law. Without
limiting the foregoing, no party hereto shall disclose any information that
another party has designated as proprietary.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in
33
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
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. GWL&A is hereby expressly put on notice of the limitation of
liability as set forth in the Declaration of Trust of the Fund and agree that
the obligations assumed by the Fund, Distributor and the Adviser pursuant to
this Agreement shall be limited in any case to the Fund, Distributor and Adviser
and their respective assets and GWL&A shall not seek satisfaction of any such
obligation from the shareholders of the Fund, Distributor or the Adviser, the
Trustees, officers, employees or agents of the Fund, Distributor or Adviser, or
any of them.
12.10. The Fund, the Distributor and the Adviser agree that the obligations
assumed by GWL&A pursuant to this Agreement shall be limited in any case to
GWL&A and its assets and neither the Fund, Distributor nor Adviser shall seek
satisfaction of any such obligation from the shareholders of GWL&A, the
directors, officers, employees or agents of GWL&A, or any of them, except to the
extent permitted under this Agreement.
34
12.11. No provision of this Agreement may be deemed or construed to modify
or supersede any contractual rights, duties, or indemnifications, as between the
Adviser and the Fund, and the Distributor and the Fund.
12.12. None of the parties hereto shall be liable to the other for any and
all losses, damages, costs, charges, counsel fees, payments, expenses or
liability due to any failure, delay or interruption in performing its
obligations under this Agreement, and without the fault or negligence of such
party, due to causes or conditions beyond its control including, without
limitation, labor disputes, strikes (whether legal or illegal), lock outs
(whether legal or illegal), civil commotion, riots, war and war-like operations
including acts of terrorism, embargoes, epidemics, invasion, rebellion,
hostilities, insurrections, explosions, floods, unusually severe weather
conditions, earthquakes, military power, sabotage, governmental regulations or
controls, failure of power, fire or other casualty, accidents, national or local
emergencies, boycotts, picketing, slow-downs, work stoppages, acts of God or
natural disasters.
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 specified below.
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By its authorized officer,
By:
-----------------------------------------
Title:
Date:
STI CLASSIC FUNDS
By its authorized officer,
By:
-----------------------------------------
Title:
Date:
35
TRUSCO CAPITAL MANAGEMENT, INC.
By its authorized officer,
By:
-----------------------------------------
Title:
Date:
BISYS FUND SERVICES LIMITED PARTNERSHIP, INC.
By its authorized officer,
By:
-----------------------------------------
Title:
Date:
36
SCHEDULE A
Designated Portfolios
STI Classic Capital Appreciation, Variable Trust shares
STI Classic Growth & Income Fund, Variable Trust shares
STI Classic International Equity Fund, Variable Trust shares
STI Classic Investment Grade Bond Fund, Variable Trust shares
STI Classic Mid Cap Equity Fund, Variable Trust shares
STI Classic Small Cap Value Fund, Variable Trust shares
STI Classic Value Income Fund, Variable Trust shares
37
SCHEDULE B
Reports per Section 6.6
With regard to the reports relating to the quarterly testing of compliance
with the requirements of Section 817(h) and Subchapter M under the Internal
Revenue Code (the "Code") and the regulations thereunder, the Fund shall provide
within twenty (20) business days of the close of the calendar quarter a report
to GWL&A in the Form B1 attached hereto and incorporated herein by reference,
regarding the status under such sections of the Code of the Designated
Portfolio(s), and if necessary, identification of any remedial action to be
taken to remedy non-compliance.
With regard to the reports relating to the year-end testing of compliance
with the requirements of Subchapter M of the Code, referred to hereinafter as
"RIC status," the Fund will provide the reports on the following basis: (i) the
last quarter's quarterly reports can be supplied within the 20-day period, and
(ii) a year-end report will be provided 45 business days after the end of the
calendar year. However, if a problem with regard to RIC status, as defined
below, is identified in the third quarter report, on a weekly basis, starting
the first week of December, additional interim reports will be provided
specially addressing the problems identified in the third quarter report. If any
interim report memorializes the cure of the problem, subsequent interim reports
will not be required.
A problem with regard to RIC status is defined as any violation of the
following standards, as referenced to the applicable sections of the Code:
(a) Less than ninety percent of gross income is derived from sources of
income specified in Section 851(b)(2);
(b) 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).
38
FORM B1
CERTIFICATE OF COMPLIANCE
For the quarter ended:
I, ______________________, a duly authorized officer, director or agent of
_______________ Fund hereby swear and affirm that ______________________________
Fund is 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, _________________________________ 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 C
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.
Party Responsible Party Responsible
Item Function for Coordination for Expense
---- -------- ----------------- -----------------
Fund Prospectus Printing of prospectuses, or GWL&A Fund, Distributor or Adviser,
compiling of electronic as applicable
prospectus, if needed in the
future
Fund, Distributor or Adviser GWL&A Fund, Distributor or Adviser,
shall supply with GWL&A such- as applicable
numbers of the Designated
Portfolio(s) prospectus(es) as
GWL&A shall reasonably request
Distribution to New and GWL&A GWL&A
Inforce Clients
Distribution to Prospective GWL&A GWL&A
Clients
Distribution to Clients in GWL&A Fund, Distributor or Adviser,
connection with initial as applicable
rollout of Fund in connection
with the Contracts
Fund Prospectus Update & If Required by Fund, Fund, Distributor or Adviser Fund, Distributor or Adviser
Distribution Distributor or Adviser
If Required by GWL&A GWL&A GWL&A
Fund SAI Printing Fund, Distributor or Adviser Fund, Distributor or Adviser
Distribution GWL&A GWL&A
Proxy Material for Fund: Printing if proxy required Fund, Distributor or Adviser Fund, Distributor or Adviser
by Law
Distribution (including labor) GWL&A Fund, Distributor or Adviser
if proxy required
40
by Law
Printing & distribution if GWL&A GWL&A
required by GWL&A
41
Party Responsible Party Responsible
Item Function for Coordination for Expense
---- -------- ----------------- -----------------
Fund Annual & Semi-
Annual Report Printing of reports GWL&A Fund, Distributor or Adviser
Distribution GWL&A GWL&A
Other communication to If Required by the Fund, GWL&A Fund, Distributor or Adviser
New and Prospective clients Distributor or Adviser
If Required by GWL&A GWL&A GWL&A
Other communication to Distribution (including labor GWL&A Fund, Distributor or Adviser
inforce and printing) if required by
the Fund, Distributor or
Adviser
Distribution (including labor GWL&A GWL&A
and printing) if required by
GWL&A
Errors in Share Price Cost of error to Contract GWL&A Fund or Adviser
calculation owners/participants
Cost of administrative work to GWL&A Fund or Adviser
correct error
Substitution Orders Application for, and GWL&A Fund or Adviser
implementation of (including
necessary printing and
mailings), substitution orders
required as a result of Fund
action
Operations of the Fund All operations and related Fund, Distributor or Adviser Fund or Adviser
expenses, including the cost
of registration and
qualification of shares, taxes
on the issuance or transfer of
shares, cost of management of
the business affairs of the
Fund, and expenses paid or
assumed by the fund pursuant
to any Rule 12b-1 plan
42
SCHEDULE D
ADMINISTRATIVE SERVICES
A. GWL&A, or an affiliate, will provide the properly registered and licensed
personnel and systems needed for all customer servicing and support - for
both Designated Portfolio and life insurance information and questions -
including:
responding to Contract owner inquiries;
delivery of prospectus - Designated Portfolio(s);
entry of initial and subsequent orders;
transfer of cash to GWL&A and/or Designated Portfolio(s);
explanations of Designated Portfolio objectives and characteristics;
entry of transfers between funds;
Designated Portfolio balance and allocation inquiries;
mail Designated Portfolio prospectus.
B. GWL&A, or an affiliate, will communicate all purchase, withdrawal, and
exchange orders it receives from its customers to each Designated
Portfolio.
Administrative Service Fee
For the services, GWL&A or its affiliate shall receive a fee of 0.35% per annum
of the average aggregate monthly net asset value of shares of the Designated
Portfolio(s) held in the Account, including through Profile or other fund of
funds arrangements, payable by the Adviser directly to GWL&A or its affiliate.
Such fee shall be paid in arrears quarterly. Each quarter's fee shall be
determined based on assets in the Account at the end of each quarter and each
quarterly fee will be independent of every other quarterly fee. Such fee shall
be due and payable automatically within 30 (thirty) days after the last day of
the quarter to which such payment relates. In the event such fee is not paid by
such time, interest, in addition to the amount due, at the rate of six (6)%
annually (or 1/2 of one (1) percent per month outstanding pro rated for any
applicable period if less than one year) shall be payable and owed until payment
is made.
The Fund will calculate the asset balance for each day on which the fee is to be
paid pursuant to this Amendment with respect to each applicable portfolio of the
Fund. GWL&A shall have the right to reasonably audit the preparation of such
calculation.
The administrative service fee described herein shall remain payable and due so
long as there remain any assets invested in the Fund, regardless of any
termination of the Agreements, in any manner by the Accounts as contemplated by
the Agreements, as amended herein. The Fund may modify the rate of the
administrative service fee only with
43
120 days' written notice to GWL&A prior to the end of any calendar year, with
any such revised rate becoming effective as of the 1st of January following any
such calendar year.
44
Marketing and Advertising Fees
The Adviser, or its designee, agrees to pay GWFS an annual fee per fund as
itemized below. Such flat fee shall be paid in quarterly installments
Fundserve Trading Costs: $1125/fund/year
Electronic Prospectus Maintenance: $220/fund/year
Prospectus fulfillment: $260/fund/year
Fund Sheet Maintenance: $115/fund/year
Total $1720/fund/year
Electronic Prospectus Services
The Adviser, or its designee, agrees to pay GWFS an annual fee of $2.00 per
individual Account maintained by GWFS . Such fee shall paid in quarterly
installments, in arrears, based upon the most recent quarter's number of
actively funded Accounts.
45
SCHEDULE E
NON-COMPETE PROVISIONS
GWL&A intends to offer Fund, Adviser and Distributor, as applicable, access to
its, or its affiliates' or its parent company's (each, a "Company,"
collectively, the "Companies") current and prospective customers (hereinafter
"Customers") so that Customers will have the option of purchasing the Designated
Portfolio shares of the Fund. Fund, Adviser and Distributor, as applicable,
desires to make the Designated Portfolio(s) available to Customers, yet
acknowledges that under certain circumstances, the ability of Fund, Adviser or
Distributor, as applicable, to solicit business from Customers should be subject
to special limitations in exchange for the increased ability to offer its
product through a Company's introduction. An introduction will consist of a
Company's inclusion of the Designated Portfolio(s) in the Retirement Plan
Product offered to a Customer for that Customer's consideration.
1. In the scenario where any one of the Companies introduces Fund, Adviser or
Distributor, as applicable, in any manner to a Customer which ultimately
purchases a Retirement Plan Product from one of the Companies, and one of
the Companies includes the Designated Portfolio(s) in the products offered
to that Customer, Fund, Adviser and Distributor, as applicable, agree not
to utilize any confidential information (which shall include, but not be
limited to, all facts, circumstances, information, data, plans, projects
and technical or commercial knowledge gained in relation to a Company, or
received from a Company, including, but not limited to, information
regarding customers (such as retirement plans and plan participants),
employees, suppliers servicing methods, programs, fees, strategies and
related information) received in connection with offering its product to
Customer in any solicitation of Retirement Plan Product Business from that
Customer. Further, Fund, Adviser and Distributor, as applicable, will not
attempt to contact Customers regularly nor attempt to sell its mutual funds
directly to Customer on a stand-alone basis while the Designated
Portfolio(s) are included in a Company's arrangement with the Customer. For
purposes of this Amendment "Retirement Plan Product" includes, but is not
limited to, group or individual annuity contracts, GIC's, separate accounts
and wrapped or unwrapped mutual funds whether sold separately or in
conjunction-with each other.
2. In the scenario where any one of the Companies introduces the Fund, Adviser
or Distributor in any manner to a Customer which ultimately purchases a
Retirement Plan Product from a Company and the Customer does not select the
Fund, the Fund, Adviser or Distributor may directly communicate with
Customer about Retirement Plan Product business and may sell product
directly to Customer provided it does not utilize the confidential
information referred to above.
46
3. In the scenario where any one of the Companies introduces Fund, Adviser or
Distributor in any manner to a Customer which does not purchase a
Retirement Plan Product from a Company, the Fund, Adviser and Distributor
are not subject to any prohibitions regarding sales to and communications
with that Customer. Likewise, there are no prohibitions where none of the
Companies provides an introduction.
A Company may decide in its discretion when it desires to provide an
introduction to one of its Customers. A Company has no obligation to provide
introductions to its Customers.
47
