FUND PARTICIPATION AGREEMENT
PIMCO Variable Insurance Trust
PARTICIPATION AGREEMENT
Among
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
PIMCO VARIABLE INSURANCE TRUST,
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC,
and
PIMCO ADVISORS DISTRIBUTORS LLC
THIS AGREEMENT, made and entered into as of this 1st day of March, 2004
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,
COLI VUL-2 Series Account (the "Account"); PIMCO VARIABLE INSURANCE TRUST, a
business trust organized under the laws of Delaware ("Trust"); PACIFIC
INVESTMENT MANAGEMENT COMPANY LLC ("Adviser"), a limited liability company
organized under the laws of Delaware; and PIMCO ADVISORS DISTRIBUTORS LLC, a
limited liability company organized under the laws of Delaware
("Distributor")(each a "Party," and collectively, the "Parties").
WHEREAS, the Trust 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 Trust 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 Trust 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 Trust 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 Trusting
Exemptive Order"); and
WHEREAS, the Trust 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 life
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,
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 Trust 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 Trust
("Unaffiliated Funds") on behalf of the Account to fund the Contracts; and
Trust
NOW, THEREFORE, in consideration of their mutual promises, the Parties
agree as follows:
ARTICLE I. Sale of Trust Shares
1.1 The Trust agrees that shares of the Trust 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 Trust 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, 3.3, 3.5,
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 Fund/SERV Networking Agreement,
entered into by and between GWL&A and PIMCO, dated March 1, 2004.
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 Trust 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 Trust is and shall remain
registered under the 1940 Act. The Trust 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 Trust 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 Trust
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 Trust are in accordance with the
requirements of the 1940 Act. To the extent that the Trust decides to finance
distribution expenses pursuant to Rule 12b-1, the Trust undertakes to have its
Board, a majority of whom are not interested persons of the Trust, formulate and
approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses.
2.4. The Trust 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 Trust 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 Trust 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 Trust agrees that, except in those circumstances where the Trust
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 Trust's
shareholders with an explanation regarding why such action is lawful, any action
required by a Law Change will be taken.
2.5. The Trust 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 Trust in compliance in all material respects
with all applicable laws. The Adviser represents and warrants that management
and any other fees paid by the Trust 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
Trust.
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 Trust in compliance in all material respects
with all applicable laws.
2.8. The Trust 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 Trust
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 Trust 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 Trust 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 Trust agrees to share equitably in expenses incurred by
GWL&A as a result of actions taken by the Trust, consistent with the allocation
of expenses contained in Schedule D hereto.
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 contracts under applicable provisions of the
Code, and that it will make every effort to maintain such treatment and that it
will notify the Trust, 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 Trust, 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 Trust 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
with as many printed copies of the current prospectus for each Designated
Portfolio as GWL&A may reasonably request for distribution to Contract owners.
If requested by GWL&A in lieu thereof, the Trust, 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 may reasonably request) and such 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 the prospectus
for the Contracts and the Trust's prospectus for the Designated Portfolio(s)
printed together in a single document or posted on a website maintained by or
for GWL&A. The Trust, 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 Trust
unless required by law. Expenses associated with providing such documentation
shall be allocated in accordance with Schedule D hereto.
3.2. If applicable laws require that the Statement of Additional
Information ("SAI") for the Trust be distributed to all Contract owners, then
the Trust, Distributor and/or the Adviser, as appropriate, shall provide GWL&A
with copies of the Trust's SAI for the Designated Portfolio(s) in such
quantities, with expenses to be borne in accordance with Schedule D hereto, as
GWL&A may reasonably require to permit timely distribution thereof to Contract
owners. If requested by GWL&A, the Trust, Distributor or Adviser shall provide
an electronic copy of the Trust SAI in a format suitable for posting on an
Internet website maintained by or on behalf of GWL&A. The Trust, Distributor
and/or the Adviser, as appropriate, shall also provide SAIs to any Contract
owner or prospective owner who requests such SAI from the Trust (although it is
anticipated that such requests will be made to GWL&A).
3.3. The Trust, Distributor and/or Adviser shall provide GWL&A with
copies of the Trust'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 D hereto, as GWL&A may
reasonably require to permit timely distribution thereof to Contract owners. If
requested by GWL&A, the Trust, 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. The Trust, 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 Trust 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 Trust 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
Trust 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 Trust will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Trust 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 Trust currently intends, comply
with Section 16(c) of the 1940 Act (although the Trust 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 Trust 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 Trust
or its designee, a copy of each piece of sales literature or other promotional
material that GWL&A develops or proposes to use and in which the Trust (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 Trust
objects to such use within five (5) Business Days after receipt of such
material. The Trust 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 Trust (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 Trust or its designee so objects.
4.2. GWL&A shall not give any information or make any representations or
statements on behalf of the Trust in connection with the sale of the Contracts
other than the information or representations contained in the registration
statement, prospectus or SAI for the Trust shares, as the same may be amended or
supplemented from time to time, or in sales literature or other promotional
material approved by the Trust, Distributor or Adviser, except with the
permission of the Trust, Distributor or Adviser.
4.3. The Trust, Distributor, 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, its separate account(s), or any
Contract 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. GWL&A reserves 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, is named, and
no such material shall be used if the GWL&A so objects.
4.4. The Trust, 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. The Trust or its designee 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 or supplements to any of the
above, that relate to the Trust or its shares (collectively, "Trust materials"),
promptly following the filing of such document(s) with the SEC or NASD or other
regulatory authorities.
4.6. GWL&A or its designee will provide to the Trust 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.
4.7. 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 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.
4.8. 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. The Trust, 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 Trust, Distributor or Adviser under this Agreement, although
the Parties hereto will bear certain expenses in accordance with Schedule D
hereto, Articles III, V, and other provisions of this Agreement.
5.2. Except as otherwise provided in this Agreement, including without
limitation Schedule D 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 GWL&A 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 GWL&A 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 Trust, 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 Trust, the Distributor and the Adviser each represents and
warrants that the Trust 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 life
contracts under the Code, and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Trust, Distributor and Adviser each
represents and warrants that the Trust 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 Trust, the Trust, Distributor, and Adviser will take
all steps necessary to: (a) notify GWL&A of such breach, and (b) adequately
diversify the Trust so as to achieve compliance within the 30-day grace period
afforded by Regulation 1.817-5.
6.2. The Trust, 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 Trust will be sold to the general
public.
6.3. The Trust, the Distributor and the Adviser each represents and
warrants that the Trust 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 Trust, Distributor and Adviser each will notify GWL&A immediately
upon having a reasonable basis for believing that the Trust 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 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 Trust 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 Trust 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 Trust 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 Trust, Distributor or Adviser as a result of such a failure or
alleged failure:
(a) GWL&A shall promptly notify the Trust, the Distributor and the
Adviser of such assertion or potential claim;
(b) GWL&A shall consult with the Trust, 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
Trust, 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
Trust, 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 Trust, the Distributor and the Adviser with
such cooperation as the Trust, the Distributor and the Adviser shall
reasonably request (including, without limitation, by permitting the
Trust, the Distributor and the Adviser to review the relevant books and
records of GWL&A) in order to facilitate review by the Trust, 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 Trust, 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 Trust, 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 Trust 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 Trust, 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 Trust represents that the Board will monitor the Trust for the
existence of any material irreconcilable conflict between the interests of the
contract owners of all separate accounts investing in the Trust. 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 Trust, 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 Trust or any Designated Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another portfolio of
the Trust, 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 Trust's election, to withdraw the Account's investment in the
Trust 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 Trust gives written notice that this provision is being
implemented, and until the end of that six month period the Trust, the
Distributor and the Adviser shall continue to accept and implement orders by
GWL&A for the purchase (and redemption) of shares of the Trust. 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 Trust 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
Trust and the Distributor shall continue to accept and implement orders by GWL&A
for the purchase (and redemption) of shares of the Trust. 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 Trust 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 Trust 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 Trust 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 Trust, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Trust, 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 Trust'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
by or on behalf of the Trust, Distributor or Adviser for use in
the Contract materials or otherwise for use in connection with
the sale of the Contracts or Trust shares; or
(ii) arises out of or as a result of statements or representations
(other than statements or representations contained in Trust
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 Trust
shares; or
(iii) arises out of any untrue statement or alleged untrue statement of
a material fact contained in any Trust 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
Trust 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 Trust shares or the Contracts or the operation of
the Trust.
8.2. Indemnification by the Adviser.
8.2(a). The Adviser agrees to indemnify and hold harmless GWL&A and its
directors and officers, the Contract owners, 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 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 Trust'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 Trust
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
Trust, Distributor or Adviser, by or on behalf of GWL&A for use
in the Trust materials or otherwise for use in connection with
the sale of the Contracts or the Trust shares; or
(ii) arises out of or as a result of statements or representations
(other than statements or representations contained in Trust
materials not supplied by the Adviser or persons under its
control) or wrongful conduct of the Trust, the Distributor or the
Adviser or persons under their control, with respect to the sale
or distribution of the Contracts or Trust 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 by or on behalf of the
Trust, Distributor or Adviser; or
(iv) arises as a result of any failure by the Trust, 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 Trust, the Distributor
or the Adviser in this Agreement or arises out of or result from
any other material breach of this Agreement by the Trust, the
Distributor or the Adviser; or
(vi) arises out of or results from the incorrect or untimely
calculation or reporting by the Trust, 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 8.2(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 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). 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.
8.2(d). GWL& agrees 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.
8.3. Indemnification By the Trust.
8.3(a). The Trust agrees to indemnify and hold harmless GWL&A and its
directors and officers, the Contract owners, 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 8.3) 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 Trust and:
(i) arises as a result of any failure by the Trust 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 Trust in this
Agreement or arises out of or result from any other material
breach of this Agreement by the Trust; 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 8.3(b) and
8.3(c) hereof.
8.3(b). The Trust 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 Trust 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 Trust 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 Trust 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 Trust has been
prejudiced by such failure to give notice. In case any such action is brought
against an Indemnified Party, the Trust will be entitled to participate, at its
own expense, in the defense thereof and unless the Indemnified Parties release
the Trust from any further obligation under this Section 8.4 with respect to
such claim(s), the Trust shall also be entitled to assume the defense thereof,
with counsel satisfactory to the Party named in the action. After notice from
the Trust to such Party of the Trust'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 Trust 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 agrees promptly to notify the Trust 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 Trust.
8.4. Indemnification by the Distributor.
8.4(a).The Distributor agrees to indemnify and hold harmless GWL&A and
its directors and officers, the Contract owners, 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 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 Trust'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 Trust
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
Trust, Distributor or Adviser by or on behalf of GWL&A for use in
the Trust materials or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
(ii) arises out of or as a result of statements or representations
(other than statements or representations contained in Trust
materials not supplied by the Distributor or persons under its
control) or wrongful conduct of the Trust, the Distributor or
Adviser or persons under their control, with respect to the sale
or distribution of the Contracts or Trust 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 by or on behalf of the
Trust, Distributor or Adviser; or
(iv) arises as a result of any failure by the Trust, 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 Trust, Distributor or
Adviser in this Agreement or arises out of or results from any
other material breach of this Agreement by the Trust, 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 8.4(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 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.
8.4(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 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.
8.4(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
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 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 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 Trust, 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
Trust shares, if, in each case, the Trust, 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 Trust, 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 Trust, the
Distributor or the Adviser to perform their obligations under
this Agreement; or
(f) at the option of GWL&A 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 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 reasonably believes that the Designated
Portfolio will fail to meet such requirements or so qualify; or
(h) at the option of either the Trust, the Distributor or the
Adviser, if (i) the Trust, Distributor or Adviser, respectively,
shall determine, in its sole judgment reasonably exercised in
good faith, that since the date of this Agreement GWL&A has
suffered a material adverse change in its business or financial
condition or is the subject of material adverse publicity, (ii)
the Trust, 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 Trust, 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 GWL&A, if (i) GWL&A shall determine, in its
sole judgment reasonably exercised in good faith, that since the
date of this Agreement the Trust, 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 notifies the Trust, Distributor or Adviser, as appropriate,
of that determination and its intent to terminate this Agreement,
and (iii) after considering the actions taken by the Trust,
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
(j) 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)-(i);
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) or 10.1(e), 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 Trust or GWL&A to meet Section 817(h) of the Code
diversification requirements, the Trust, 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 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 Trust's board of Trustees from taking any actions deemed
necessary by the Board in furtherance of its fiduciary duties to the Trust 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.
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 Trust:
PIMCO Variable Insurance Trust
000 Xxxxxxx Xxxxxx Xxxxx
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 LLC
000 Xxxxxxx Xxxxxx Xxxxx,
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
If to the Distributor:
PIMCO Advisors Distributors LLC
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
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 life
operations of GWL&A are being conducted in a manner consistent with the Colorado
Variable Life 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. GWL&A is hereby expressly put on notice of the limitation of
liability as set forth in the Declarations of Trust of the Trust and agree that,
except as otherwise provided herein, the obligations assumed by the Trust
pursuant to this Agreement shall be limited in any case to the Trust and its
assets and GWL&A shall not seek satisfaction of any such obligation from the
shareholders of the Trust (solely by reason of their status as such) the
Trustees, officers, employees or agents of the Trust, or any of them.
12.10. The Trust, 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 their respective assets and neither the Trust, Distributor nor
Adviser shall seek satisfaction of any such obligation from the shareholders of
GWL&A, the directors, officers, employees or agents of the GWL&A, 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:/s/ Xxx Xxxxxxxxxxxx _____________
Name: Xxx Xxxxxxxxxxxx
Title:_Vice President
Date:_____________________________
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer,
By:/s/ Xxxxxxx X. Xxxxxxx ____________
-----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Date:_____________________________
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
By its authorized officer,
By:_/s/ Xxxxxxx X. Xxxxxxx ____________
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
Date:_____________________________
PIMCO ADVISORS DISTRIBUTORS LLC
By its authorized officer,
By:/s/ Xxxxxx X. Xxxxxx, Xx ___________
-------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Managing Director
Date:_____________________________
SCHEDULE A
Contracts Form Numbers
Great-West Life & Annuity Insurance Company
COLI VUL -2 Series Account J355
Established 11/25/97
SCHEDULE B
PIMCO Variable Insurance Trust Administrative Class Portfolios
All Asset
CommodityRealReturn Strategy
Emerging Markets Bond
Foreign Bond
Global Bond
High Yield
Long-Term U.S. Government
Low Duration
Money Market
Real Return
Short-Term
StocksPLUS Growth and Income
StocksPLUS Total Return
Total Return
Total Return II
As well as any other Portfolio of the Fund that are open and available to new
investors on or after the effective date of this Agreement.
Separate Accounts Date Established
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 Trust 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 Trust 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 Trust 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, and other than the exceptions discussed below:
Exceptions Remedial Action
Signed this day of , .
----- ---------- ------------
---------------------------------------------------
(Signature)
By:
-----------------------------------------------
(Type or Print Name and Title/Position)
SCHEDULE D
EXPENSES
The Trust 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
Trust's share of the total costs determined according to the number of pages of
the Trust's respective portions of the documents, except with respect to the
printing of the combined fund prospectuses. The calculation for costs associated
with the printing of the combined fund prospectuses shall be a weighted average
factoring in the percentage of assets allocated to the Fund's respective
portfolio(s) as of April 30 of each year, 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 Trust,
prospectuses Distributor or
Adviser, as
applicable
------------------------- ----------------------- --------------------- ------------------
Trust, Distributor or GWL&A Trust,
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 GWL&A GWL&A
Prospective Contract
owners
------------------------- ----------------------- --------------------- ------------------
Product Prospectus Printing for Inforce GWL&A GWL&A
Contract owners
------------------------- ----------------------- --------------------- ------------------
Printing for GWL&A GWL&A
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 GWL&A GWL&A
Prospective Contract
owners
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Mutual Fund Prospectus If Required by Trust, Trust, Distributor Trust,
Update & Distribution Distributor or Adviser or Adviser Distributor or
Adviser
------------------------- ----------------------- --------------------- ------------------
If Required by GWL&A GWL&A GWL&A
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Product Prospectus If Required by Trust, GWL&A Trust,
Update & Distribution Distributor or Adviser Distributor or
Adviser
------------------------- ----------------------- --------------------- ------------------
If Required by GWL&A GWL&A GWL&A
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Mutual Fund SAI Printing Trust, Distributor Trust,
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 Trust, Distributor Trust,
Mutual Fund: required by Law or Adviser Distributor or
Adviser
------------------------- ----------------------- --------------------- ------------------
Distribution GWL&A Trust,
(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
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Mutual Fund Annual & Printing of reports GWL&A Trust,
Semi-Annual Report Distributor or
Adviser
------------------------- ----------------------- --------------------- ------------------
Distribution GWL&A GWL&A
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Other communication to If Required by the GWL&A Trust,
New and Prospective Trust, Distributor or Distributor or
clients Adviser Adviser
------------------------- ----------------------- --------------------- ------------------
If Required by GWL&A GWL&A GWL&A
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Other communication to Distribution GWL&A Trust,
inforce (including labor and Distributor or
printing) if required Adviser by the Trust,
Distributor or Adviser
------------------------- ----------------------- --------------------- ------------------
Distribution GWL&A GWL&A
(including labor and
printing) if required
by GWL&A
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------- ----------------------- --------------------- ------------------
------------------------- ----------------------- --------------------- ------------------
Errors in Share Price Cost of error to GWL&A Trust or Adviser
calculation participants
------------------------- ----------------------- --------------------- ------------------
Cost of reasonable GWL&A Trust or Adviser
administrative work
to correct error
------------------------- ----------------------- --------------------- ------------------
Operations of the Fund All operations and Trust, Distributor Trust 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 Trust, and
expenses paid or
assumed by the Trust
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)
------------------------- ----------------------- --------------------- ------------------