Exhibit 8(b)
FUND PARTICIPATION AGREEMENT
AllianceBemstem Variable Products Series Fund, Inc.
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares.....................................................3
ARTICLE II. Representations and Warranties..........................................5
ARTICLE HI. Prospectuses and Proxy Statements; Voting...............................8
ARTICLE IV. Sates Material and Information..........................................9
ARTICLE V. Fees and Expenses......................................................11
ARTICLE VI. Diversification and Qualification......................................12
ARTICLE Vn. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order...............................14
ARTICLE Vm. Indemnification........................................................16
ARTICLE IX. Applicable Law.........................................................25
ARTICLE X. Termination............................................................25
ARTICLE XI. Notices................................................................28
ARTICLE XII. Miscellaneous..........................................................29
SCHEDULE A Contracts
SCHEDULE B Designated Portfolios
SCHEDULE C Administrative Services
SCHEDULE D Reports per Section 6.6
SCHEDULE E Expenses
PARTICIPATION AGREEMENT
Among
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY ALLIANCEBERNSTEIN
VARIABLE PRODUCTS SERIES FUND, INC.,
ALLIANCE CAPITAL MANAGEMENT L.P., ALLIANCEBERNSTEIN INVESTMENT
RESEARCH AND MANAGEMENT, INC.
and XXXXXXX XXXXXX & CO., INC.
THIS AGREEMENT, made and entered into as of this 2nd day of June, 2003,
by and among FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY ("FGWL&A"), a New
York life insurance company, on its own behalf and on behalf of its Separate
Account Variable Annuity-1 Series Account (the "Account"); ALLIANCEBERNSTEIN
VARIABLE PRODUCTS SERIES FUND, INC., a corporation organized under the laws of
Maryland ("Fund"); ALLIANCE CAPITAL MANAGEMENT L.P. ("Adviser"), a limited
partnership organized under the laws of Delaware; ALLIANCEBERNSTEIN INVESTMENT
RESEARCH AND MANAGEMENT, INC., a corporation organized under the laws of
Delaware ("Distributor"); and XXXXXXX XXXXXX & CO., INC., a California
corporation ("Schwab") (each a "Party," and collectively, the "Parties").
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as ihe investment vehicle for
separate accounts established for variable life insurance policies and/or
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies, including FGWL&A, which have entered into
participation agreements similar to this Agreement ("Participating Insurance
Companies"); and
WHEREAS, the common stock of the Fund is divided into several series of
shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC"), dated November 28, 1990, (File No. 812-7585), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended
("1940 Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the
extent necessary to permit shares of the Fund to be sold to and held by
variable annuity and variable life insurance separate accounts of life
insurance companies that may or may not be affiliated with one
1
another and qualified pension and retirement plans ("Qualified Plans") ("Mixed
and Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolio(s) are registered under
the Securities Act of 1933, as amended ("1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, ("1934 Act") and is a member in
good standing of the National Association of Securities Dealers, Inc. ("NASD");
and
WHEREAS, FGWL&A has registered interests under certain variable annuity
contracts that are supported wholly or partially by the Account under the 1933
Act and that are listed in Schedule A hereto ("Contracts"); and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of FGWL&A on
January 15, 1997, under the insurance laws of the State of New York, to set
aside and invest assets attributable to the Contracts; and
WHEREAS, FGWL&A has registered the Account as a unit investment trust
under the 1940 Act and has registered (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, FGWL&A intends to purchase shares in the Portfolio(s) listed in
Schedule B hereto (the "Designated Portfolio(s)"), on behalf of the Account to
fund the Contracts, and the Fund is authorized to sell such shares to unit
investment trusts such as the Account at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Account also intends to purchase shares in other open-end
investment companies or series thereof not affiliated with the Fund
("Unaffiliated Funds") on behalf of the Account to fund the Contracts; and
WHEREAS, Schwab will perform certain services for the Fund in connection
with the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Parties
agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to make Class A shares of the Designated Portfolio(s)
available for purchase at the applicable net asset value per share by FGWL&A and
the Account on those days on which the Fund calculates its Designated
Portfolio(s)' net asset value pursuant to rules of the SEC, and the Fund shall
calculate such net asset value on each day which the New York Stock Exchange is
open for regular trading. Notwithstanding the foregoing, the Board of Directors
of the Fund (hereinafter the "Board") may refuse to sell shares of any
Designated Portfolio to any person, or suspend or terminate the offering of
shares of any Designated Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of the
Board acting in good faith and in light of its fiduciary duties under federal
and any applicable state laws, necessary in the best interests of the
shareholders of such Designated Portfolio.
1.2. The Fund and Distributor will not sell shares of the Designated
Portfolio(s) to any other Participating Insurance Company separate account
unless an agreement (which may or may not include the Fund as a party)
containing provisions substantially similar to Sections 2.1 (it being understood
that in some cases, this representation may be in the form of a representation
as to compliance with applicable law generally), 2.4 (other than the provision
on mutual cooperation) and 2.11 of Article n, Sections 3.4 and 3.5 of Article
ffl, and Article VII of this Agreement is in effect to govern such sales.
1.3. The Fund agrees to (a) sell to FGWL&A those full and fractional shares
of the Designated Portfolio(s) that FGWL&A, on behalf of the Account, orders,
and (b) redeem for cash, on FGWL&A's order on behalf of the Account, any full or
fractional shares of the Fund held by FGWL&A, in each case executing such orders
on each Business Day at the net asset value next computed after receipt by the
Fund or its designee of the order for the shares of the Designated Portfolios.
For purposes of this Section 1.3, FGWL&A shall be the designee of the Fund for
the limited purpose of receiving and accepting purchase and redemption orders
resulting from contributions and payments under the Contracts; and receipt by
such designee shall constitute receipt by the Fund, provided that the Fund
receives notice of any such order by 10:00 a.m. Eastern time on the next
following Business Day or later time permitted by Section 1.6 hereof. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which the Designated Portfolio calculates its net asset value pursuant to
the rules of the SEC. FGWL&A shall provide the Fund with net purchase and
redemption requests computed in accordance with Section 1.7 hereof.
1.4. In the event of net purchases, FGWL&A shall pay for Fund shares by
3:00 p.m. Eastern time on the next Business Day after an order to purchase Fund
shares is made in accordance with the provisions of Section 1.3 hereof. Payment
shall be in federal funds transmitted to the Fund by wire. Upon receipt by the
Fund of the federal funds so wired, such funds shall cease to be the
responsibility of FGWL&A and shall become the responsibility of the Fund.
1.5. In the event of net redemptions, the Fund shall pay and transmit the
proceeds of redemptions of Fund shares by 11:00 a.m. Eastern Time on the next
Business Day after a redemption order is received in accordance with Section 1.3
hereof. Payment shall be in federal funds transmitted to FGWL&A or its designee
by wire.
1.6. The Fund shall make the net asset value per share for each Designated
Portfolio available to FGWL&A on each Business Day as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 5:30 p.m.
Eastern time. In the event that the Fund is unable to meet the 5:30 p.m. time
stated herein, the Fund shall provide additional time for FGWL&A to place orders
for the purchase and redemption of shares equal to the additional time it takes
the Fund to make the net asset value available to FGWL&A. However, if net asset
values are not available for inclusion in the next business cycle and purchase
orders/redemptions are not able to be calculated and available for FGWL&A to
execute within the time frame identified in Section 1.3 hereof, FGWL&A on behalf
of the Account, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value.
1.7. At the end of each Business Day, FGWL&A shall use the net asset values
of the Designated Portfolios to calculate Account unit values for the day. Using
these unit values, FGWL&A shall process each such Business Day's separate
account transactions based on requests and premiums received by it by the close
of regular trading on the floor of the New York Stock Exchange (currently 4:00
p.m., Eastern time) to determine the net dollar amount of Fund shares which
shall be purchased or redeemed at that day's closing net asset value per share.
1.8. In the event of an error in the computation of a Designated
Portfolio's net asset value per share ("NAV") or any dividend or capital gain
distribution (each, a "pricing error"), the Adviser or the Fund shall
immediately notify FGWL&A as soon as possible after discovery of the error. Such
notification may be verbal, but shall be confirmed promptly in writing in
accordance with Article XI of this Agreement. A pricing error shall be corrected
as follows: (a) if the pricing error results in a difference between the
erroneous NAV and the correct NAV of less than $0.01 per share, then no
corrective action need be taken; (b) if the pricing error results in a
difference between the erroneous NAV and the correct NAV equal to or greater
than $0.01 per share, but less than 1/2 of 1% of the Designated Portfolio's NAV
at the time of the error, then the Adviser shall reimburse the Designated
Portfolio for any loss, after taking into consideration any positive effect of
such error; however, no adjustments to Contract owner accounts need be made; and
(c) if the pricing error results in a difference between the erroneous NAV and
the correct NAV equal to or greater than 1/2 of 1% of the Designated Portfolio's
NAV at the time of the error, then the Adviser shall reimburse the Designated
Portfolio for any loss (without taking into consideration any positive effect of
such error) and shall reimburse FGWL&A for the costs of adjustments made to
correct Contract owner accounts in accordance with the provisions of Schedule E
hereto. If an adjustment is necessary to correct a material error which has
caused Contract owners to receive less than the amount to which they are
entitled, the number of shares of the appropriate Designated Portfolio(s)
attributable to the accounts of the Contract owners will be adjusted and the
amount of any underpayments shall be credited by the Adviser to FGWL&A for
crediting of such amounts to the applicable Contract owners accounts. Upon
notification by the Adviser of any overpayment due to a material error, FGWL&A
or Schwab, as the case may be, shall promptly remit to Adviser any overpayment
that has not been paid to Contract owners; however, Adviser acknowledges that
Schwab and FGWL&A do not intend to seek additional payments from any Contract
owner who, because of a pricing error, may have underpaid for units of interest
credited to his/her account. In no event shall Schwab or FGWL&A be liable to
Contract owners for any such adjustments or underpayment amounts. A pricing
error within categories (b) or (c) above shall be deemed to be "materially
incorrect" or constitute a "material error" for purposes of this Agreement.
The standards set forth in this Section 1.8 are based on the Parties'
understanding of the views expressed by the staff of the SEC as of the date of
this Agreement. In the event the views of the SEC staff are later modified or
superseded by SEC or judicial interpretation, the Parties shall amend the
foregoing provisions of this Agreement to comport with the appropriate
applicable standards, on terms mutually satisfactory to all Parties.
1.9. The Fund shall furnish same day notice (by wire or telephone, followed
by written confirmation) to FGWL&A of any income, dividends or capital gain
distributions payable on the Designated Portfolio(s)1 shares. FGWL&A hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Designated Portfolio shares in additional shares of that
Designated Portfolio. FGWL&A reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify FGWL&A by the end of the next following Business Day of the
number of shares so issued as payment of such dividends and distributions.
1.10. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to FGWL&A or the Account. Shares
ordered from the Fund will be recorded in an appropriate title for the Account
or the appropriate sub-account of the Account.
1.11. The Parties acknowledge that the arrangement contemplated by this
Agreement is not exclusive; the Fund's shares may be sold to other Participating
Insurance Companies (subject to Section 1.2 and Article VI hereof) and the cash
value of the Contracts may be invested in other investment companies.
ARTICLE n. Representations and Warranties
2.1. FGWL&A represents and warrants that the securities deemed to be issued
by the Account under the Contracts are or will at all times 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"). FGWL&A further represents
and warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established the Account
prior to any issuance or sale of units thereof as a segregated asset account
under Section 4240 of the New York Insurance Law and has registered the Account
as a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts and that it will
maintain such registration for so long as any Contracts are outstanding as
required by applicable law.
2.2. The Fund and Distributor each represents and warrants that Designated
Portfolio(s) shares sold pursuant to this Agreement shall be registered under
the 1933 Act, duly authorized for issuance and sold in compliance with all
applicable laws including without limitation the 1933 Act, the 1934 Act, and the
1940 Act, and that the Fund is and shall remain registered under the 0000 Xxx.
The Fund shall amend the registration statement for its shares under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares.
2.3. The Fund reserves the right to adopt a plan pursuant to Rule 12b-l
under the 1940 Act and to impose an asset-based or other charge to finance
distribution expenses as permitted by applicable law. In any event, the Fund and
Adviser agree to comply with applicable provisions and SEC staff interpretations
of the 1940 Act to assure that the investment advisory or management fees paid
to the Adviser by the Fund are in accordance with the requirements of the 1940
Act. To the extent that the Fund decides to finance distribution expenses
pursuant to Rule 12b-l, the Fund undertakes to have its Board, a majority of
whom are not interested persons of the Fund, formulate and approve any plan
pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses.
2.4. The Fund and Adviser each represents and warrants that it will make
every effort to ensure that the investment policies, fees and expenses of the
Designated Portfolio(s) are and shall at all times remain in compliance with all
applicable laws to the extent required to perform this Agreement. The Fund and
Distributor each represents and warrants that it will make every effort to
ensure that Designated Portfolio(s) shares will be sold in compliance with all
applicable laws. FGWL&A and the Fund will endeavor to mutually cooperate with
respect to the implementation of any modifications necessitated by any change in
state insurance laws, regulations or interpretations of the foregoing that
affect the Designated Portfolio(s) (a "Law Change"), and to keep each other
informed of any Law Change that becomes known to either Party. In the event of a
Law Change, the Distributor, Adviser and the Fund agree that, except in those
circumstances where the Fund has advised FGWL&A that its Board has determined
that implementation of a particular Law Change is not in the best interest of
all of the Fund's shareholders and has provided FGWL&A with an explanation
regarding such determination, any action required by a Law Change will be taken.
2.5. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the State of Maryland and that it does and
will comply in all material respects with the 1940 Act.
2.6. The Adviser represents and warrants that it is and shall remain duly
qualified and registered under all applicable laws and that it shall perform its
obligations for the Fund in compliance in all material respects with all
applicable laws. The Adviser represents and warrants that management and any
other fees paid by the Fund to Adviser or its affiliated persons (within the
meaning of the 0000 Xxx) are legitimate and not excessive, and are derived from
agreements that do not breach any fiduciary duty of Adviser to the Fund.
2.7. The Distributor represents and warrants that it is and shall remain
duly qualified and registered under all applicable laws and that it shall
perform its obligations for the Fund in compliance in all material respects with
all applicable laws.
2.8. The Fund and the Adviser represent and warrant that all of their
respective directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Fund
are, and shall continue to be at all times, covered by one or more blanket
fidelity bonds or similar coverage for the benefit of the Fund in an amount not
less than the minimal coverage required by Rule 17g-l under the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bonds
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.9. Schwab represents and warrants that it has completed, obtained and
performed, in all material respects, all registrations, filings, approvals, and
authorizations, consents and examinations required by any government or
governmental authority as may be necessary to perform this Agreement. Schwab
does and will comply, in all material respects, with all applicable laws in the
performance of its obligations under this Agreement.
2.10. The Fund will provide FGWL&A with as much advance notice as is
reasonably practicable of any material change affecting the Designated
Portfolio(s) (including, but not limited to, any material change in the
registration statement or prospectus affecting the Designated Portfolio(s)) and
any proxy solicitation affecting the Designated Portfolio(s) and will consult
with FGWL&A in order to implement any such change in an orderly manner,
recognizing the expenses of changes and attempting to minimize such expenses by
implementing them in conjunction with regular annual updates of the prospectus
for the Contracts. The Fund agrees to share equitably in expenses incurred by
FGWL&A as a result of actions taken by the Fund, consistent with the allocation
of expenses contained in Schedule E hereto.
2.11. FGWL&A represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986 as
amended ("the Code"), that the Contracts are currently and at the time of
issuance will be treated as annuity contracts under applicable provisions of the
Code, and that it will make every effort to maintain such treatment and that it
will notify Schwab, the Fund, the Distributor and the Adviser immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future. In addition, FGWL&A
represents and warrants that the Account is a "segregated asset account" and
that interests in the Account are offered exclusively through the purchase of or
transfer into a "variable contract" within the meaning of such terms under
Section 817 of the Code and the regulations thereunder. FGWL&A will use every
effort to continue to meet such definitional requirements, and it will notify
Schwab, the Fund, the Distributor and the Adviser immediately upon having a
reasonable basis for believing that such requirements have ceased to be met or
that they might not be met in the future. FGWL&A represents and warrants that it
will not purchase Fund shares with assets derived from tax-qualified retirement
plans except, indirectly, through Contracts purchased in connection with such
plans.
ARTICLE HI. Prospectuses and Proxy Statements: Voting
3.1. At least annually, the Adviser or Distributor shall provide FGWL&A and
Schwab with as many printed copies of the current prospectus for each Designated
Portfolio as FGWL&A and Schwab may reasonably request for distribution to
Contract owners. If requested by FGWL&A or Schwab in lieu thereof, the Fund,
Distributor or Adviser shall provide such documentation (including a
camera-ready copy of each Designated Portfolio's current prospectus as set in
type, a diskette containing such documents in the form sent to the financial
printer, or an electronic copy of the documents in a format suitable for posting
on an Internet website, all as FGWL&A and Schwab may reasonably request) and
such other assistance as is reasonably necessary in order for FGWL&A and Schwab
once each year (or more frequently if the prospectuses for the Designated
Portfolio(s) are amended) to have the prospectus for the Contracts and the
Fund's prospectus for the Designated Portfolio(s) printed together in a single
document or posted on a website maintained by or for FGWL&A or Schwab. The Fund,
Distributor, and Adviser agree that the prospectus for the Designated
Portfolio(s) will describe only the Designated Portfolio(s) and will not name or
describe any other Portfolios or series that may be in the Fund unless required
by law. Expenses associated with providing such documentation shall be allocated
in accordance with Schedule E hereto.
3.2. If applicable laws require that the Statement of Additional
Information ("SAT) for the Fund be distributed to all Contract owners, then the
Fund, Distributor and/or the Adviser, as appropriate, shall provide FGWL&A with
copies of the Fund's SAI for the Designated Portfolio(s) in such quantities,
with expenses to be borne in accordance with Schedule E hereto, as FGWL&A may
reasonably require to permit timely distribution thereof to Contract owners. If
requested by FGWL&A or Schwab, the Fund, Distributor or Adviser shall provide an
electronic copy of the Fund SAI in a format suitable for posting on an Internet
website maintained by or on behalf of FGWL&A and/or Schwab. The Fund,
Distributor and/or the Adviser, as appropriate, shall also provide SAIs to any
Contract owner or prospective owner who requests such SAI from the Fund
(although it is anticipated that such requests will be made to FGWL&A or
Schwab).
3.3. The Fund, Distributor and/or Adviser shall provide FGWL&A and Schwab
with copies of the Fund's proxy material, reports to stockholders and other
communications to stockholders for the Designated Portfolio(s) in such quantity,
with expenses to be borne in accordance with Schedule E hereto, as FGWL&A may
reasonably require to permit timely distribution thereof to Contract owners. If
requested by FGWL&A or Schwab, the Fund, Distributor or Adviser shall provide an
electronic copy of such documentation in a format suitable for posting on an
Internet website maintained by or on behalf of FGWL&A and/or Schwab. The Fund,
Distributor, and Adviser agree that the foregoing materials (other than proxy
material) for the Designated Portfolio(s) will describe only the Designated
Portfolio(s) and will not name or describe any other Portfolios or series that
may be in the Fund unless required by law.
3.4. If and to the extent required by law FGWL&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. FGWL&A reserves
the right to vote Fund shares held in its general account
and in any segregated asset account in its own right, to
the extent permitted by law.
3.5. Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated Portfolio
calculates voting privileges in a manner consistent with the standards set forth
in the Mixed and Shared Funding Exemptive Order, provided however, that the Fund
shall provide FGWL&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 FGWL&A and other Participating Insurance
Companies in complying with such standards and provided further that FGWL&A
shall be free to vote Designated Portfolio shares attributable to the Account in
any manner permitted by applicable law, to the extent Ihe Mixed and Shared
Funding Order is superseded by SEC or administrative practice (including
no-action relief)- FGWL&A and Schwab shall in no way oppose or interfere with
the solicitation of proxies for Fund shares.
3.6. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or, as the Fund currently intends, comply with
Section 16(c) of the 1940 Act (although the Fund is not one of the trusts
described in Section 16(c) of that Act) as well as with Sections 16(a) and, if
and when applicable, 16(b). Further, the Fund will act in accordance with the
SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors or trustees and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. FGWL&A and Schwab shall furnish, or shall cause to be furnished, to
the Fund or its designee, a copy of each piece of sales literature or other
promotional material that FGWL&A or Schwab, respectively, develops or proposes
to use and in which the Fund (or a Designated Portfolio thereof), its Adviser,
any of its sub-advisers, or the Distributor is named in connection with the
Contracts, at least ten (10) Business Days prior to its use. No such material
shall be used if the Fund objects to such use within five (5) Business Days
after receipt of such material. The Fund or its designee reserves the right to
reasonably object to the continued use of any such sales literature or other
promotional material in which the Fund (or a Designated Portfolio thereof), its
Adviser, any of its sub-advisers, or the Distributor is named and no such
material shall be used if the Fund or its designee so objects.
4.2. FGWL&A and Schwab shall not give any information or make any
representations or statements on behalf of Ihe Fund in connection with the sale
of the Contracts other than the information or representations contained in the
registration statement, prospectus or SAI for the Fund shares, as the same may
be amended or supplemented from time to time, or in sales literature or other
promotional material approved by the Fund, Distributor or Adviser, except with
the permission of the Fund, Distributor or Adviser.
4.3. The Fund, Distributor, or the Adviser shall furnish, or shall cause to
be furnished, to FGWL&A and Schwab, a copy of each piece of sales literature or
other promotional material relating to the Fund in which FGWL&A, its separate
account(s), any Contract or Schwab is named prior to its use. No such material
shall be used until approved by FGWL&A and Schwab. FGWL&A and Schwab reserve the
right to reasonably object to the continued use of any such sales literature or
other promotional material in which FGWL&A, its separate account(s), or any
Contract, or Schwab is named, and no such material shall be used if the Company
or Schwab so objects.
4.4. The Fund, the Distributor and the Adviser shall not give any
information or make any representations on behalf of FGWL&A or concerning
FGWL&A, ihe 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 FGWL&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 FGWL&A or its
designee, except with the permission of FGWL&A.
4.5. FGWL&A, the Fund, the Distributor, and the Adviser shall not give any
information or make any representations on behalf of or concerning Schwab, or
use Xxxxxx'x name except with the permission of Schwab.
4.6. The Fund or its designee will provide to FGWL&A and Schwab at least
one complete copy of all registration statements, prospectuses, SAIs, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, that relate to the Fund or its shares (collectively, "Fund materials"),
contemporaneously with the xxxxxx of such document(s) with the SEC or NASD or
other regulatory authorities.
4.7. FGWL&A or Schwab or its designee will provide to the Fund at least one
complete copy of all registration statements, prospectuses, SAIs, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, that relate to the Contracts, (collectively, "Contract materials")
contemporaneously with the filing of such document(s) with the SEC, NASD, or
other regulatory authority.
4.8. For purposes of Articles IV and Vffl, the phrase "sales literature and
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media; e.g., on
line networks such as the Internet or other electronic media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, shareholder reports, proxy materials (including
solicitations for voting instructions), and any other material constituting
sales literature or advertising under the NASD rules, the 1933 Act or the 0000
Xxx.
4.9. At the request and expense of any Party to this Agreement, each
other Party will make available to the other Party's independent auditors
and/or representative of the appropriate regulatory agencies, all records, data
and access to operating procedures that may be reasonably requested in
connection with compliance and regulatory requirements related to this
Agreement or any Party's obligations under this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund, Distributor and the Adviser shall pay no fee or other
compensation to FGWL&A under this Agreement, and FGWL&A shall pay no fee or
other compensation to the Fund, Distributor or Adviser under this Agreement,
although the Parties hereto will bear certain expenses in accordance with
Schedule E hereto, Articles HI, V, and other provisions of this Agreement. The
Fund shall pay no fee or other compensation to any other Participating Insurance
Company that invests or whose segregated asset account invests in the same class
of shares of any Designated Portfolio in which the Account or FGWL&A invests.
5.2. Except as otherwise provided in this Agreement, including without
limitation Schedule E hereto, each Party shall bear all expenses incident to the
performance of its obligations hereunder. Notwithstanding anything herein to the
contrary, the Distributor or Adviser (as they may allocate between themselves)
shall reimburse FGWL&A and Schwab for the costs (up to a maximum of $20,000)
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 FGWL&A
or Schwab determines to terminate the Agreement pursuant to Section
10.1(b),(c),(e)-(g),(i), and (1) hereof. The costs of such substitution shall
include, without limitation, reasonable legal fees for obtaining any required
SEC order approving such substitution, and expenses for printing and
distributing any prospectus supplement or other disclosure of the substitution
or elimination of the Designated Portfolio as an investment vehicle under the
Contracts.
5.3. The Fund, the Distributor and the Adviser acknowledge that a principal
feature of the Contracts is the Contract owner's ability to choose from a number
of unaffiliated mutual funds (and portfolios or series thereof), including the
Designated Portfolio(s) and the Unaffiliated Funds, and to transfer the
Contract's cash value between funds and Designated Portfolios. The Fund, the
Distributor and the Adviser agree to cooperate with FGWL&A and Schwab in
facilitating the operation of the Account and the Contracts as described in the
prospectus for the Contracts, including but not limited to cooperation in
facilitating transfers between Unaffiliated Funds.
5.4. Schwab agrees to provide certain administrative services, specified in
Schedule C hereto, in connection with the arrangements contemplated by this
Agreement. The Parties acknowledge and agree that the services referred to in
this Section 5.4 are recordkeeping, shareholder communication, and other
transaction facilitation and processing, and related administrative services
only and are not the services of an underwriter or a principal underwriter of
the Fund, and that Schwab is not an underwriter for the shares of the Designated
Portfolio(s) within the meaning of the 1933 Act or the 0000 Xxx.
5.5. As compensation for the services specified in Schedule C hereto, the
Adviser agrees to pay Schwab a monthly Administrative Service Fee based on the
percentage per annum on Schedule C hereto applied to the average daily value of
the shares of the Designated Portfolio(s) held in the Account with respect to
Contracts sold by Schwab. This monthly Administrative Service Fee is due and
payable before the 15th (fifteenth) day following the last day of the month to
which it relates.
ARTICLE VI. Diversification and Qualification.
----------------------------------
6.1. The Fund, the Distributor and the Adviser each represents and warrants
that the Fund will at all times sell its shares and invest its assets in such a
manner as to ensure that the Contracts will be treated as annuity contracts
under the Code, and the regulations issued thereunder. Without limiting the
scope of the foregoing, the Fund, Distributor and Adviser each represents and
warrants that the Fund and each Designated Portfolio thereof will at all times
comply with Section 817(h) of the Code and Treasury Regulation ss.1.817-5, as
amended from time to time, and any Treasury interpretations thereof, relating to
the diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications or successor
provisions to such Section or Regulations. In the event of a breach of this
Article VI by the Fund, the Fund, Distributor, and Adviser will take all steps
necessary to: (a) notify FGWL&A of such breach, and (b) adequately diversify the
Fund so as to achieve compliance within the 30-day grace period afforded by
Regulation 1.817-5.
6.2. The Fund, the Distributor and the Adviser each represents and warrants
that shares of the Designated Portfolio(s) will be sold only to Participating
Insurance Companies and their separate accounts and to Qualified Plans, and that
no person has or will purchase shares in any Portfolio for any purpose or under
any circumstances that would preclude FGWL&A from "looking through" to the
investments of each Designated Portfolio in which it invests, pursuant to the
"look through" rules found in Treasury Regulation 1.817-5. No shares of any
Designated Portfolio of the Fund will be sold to the general public.
6.3. The Fund, the Distributor and the Adviser each represents and warrants
that the Fund and each Designated Portfolio is currently qualified as a
"regulated investment company" under Subchapter M of the Code, and that each
Designated Portfolio will maintain such qualification (under Subchapter M or any
successor or similar provisions) as long as this Agreement is in effect.
6.4. The Fund, Distributor and Adviser each will notify FGWL&A and Schwab
immediately upon having a reasonable basis for believing that the Fund or any
Designated Portfolio has ceased to comply with the aforesaid Section 817(h)
diversification or Subchapter M qualification requirements or might not so
comply in the future.
6.5. Without in any way limiting the effect of Sections 8.3, 8.4 and 8.5
hereof and without in any way limiting or restricting any other remedies
available to FGWL&A or Schwab, the Distributor and/or Adviser will pay all costs
associated with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Fund or any Designated Portfolio to comply with
Sections 6.1, 6.2, or 6.3 hereof, including all costs associated with reasonable
and appropriate corrections or responses to any such failure; such costs may
include, but are not limited to, the costs involved in creating, organizing, and
registering a new investment company as a funding medium for the Contracts
and/or the costs of obtaining whatever regulatory authorizations are required to
substitute shares of another investment company for those of the failed
Portfolio (including but not limited to an order pursuant to Section 26(b) of
the 1940 Act); such costs are to include, but are not limited to, reasonable
fees and expenses of legal counsel and other advisors to FGWL&A and any federal
income taxes or tax penalties and interest thereon (or "toll charges" or
exactments or amounts paid in settlement) incurred by FGWL&A with respect to
itself or its Contract owners in connection with any such failure or anticipated
or reasonably foreseeable failure.
6.6. The Fund shall provide FGWL&A or its designee with reports certifying
compliance with the aforesaid Section 817(h) diversification and Subchapter M
qualification requirements, at the times provided for and substantially in the
form attached hereto as Schedule D hereto; provided, however, that providing
such reports does not relieve the Fund of its responsibility for such compliance
or of its liability for any non-compliance.
6.7. FGWL&A agrees that if the Internal Revenue Service ("IRS") asserts in
writing in connection with any governmental audit or review of FGWL&A or, to
FGWL&A's knowledge, or any Contract owner that any Designated Portfolio has
failed to comply with the diversification requirements of Section 817(h) of the
Code or FGWL&A otherwise becomes aware of any facts that could give rise to any
claim against the Fund, Distributor or Adviser as a result of such a failure or
alleged failure:
(a) FGWL&A shall promptly notify the Fund, the Distributor and the Adviser
of such assertion or potential claim;
(b) FGWL&A shall consult with the Fund, the Distributor and the Adviser as
to how to minimize any liability that may arise as a result of such
failure or alleged failure;
(c) FGWL&A shall use its best efforts to minimize any liability of the Fund,
the Distributor and the Adviser resulting from such failure, including,
without limitation, demonstrating, pursuant to Treasury Regulations,
Section 1.817-5(a)(2), to the commissioner of the IRS that such failure
was inadvertent;
(d) any written materials to be submitted by FGWL&A to the IRS, any Contract
owner or any other claimant in connection with any of the foregoing
proceedings or contests
13
(including, without limitation, any such materials to be submitted to
the IRS pursuant to Treasury Regulations, Section 1.817-5(a)(2)) shall
be provided by FGWL&A to the Fund, the Distributor and the Adviser
(together with any supporting information or analysis) within at least
two (2) business days prior to submission;
(e) FGWL&A shall provide the Fund, the Distributor and the Adviser with
such cooperation as the Fund, the Distributor and the Adviser shall
reasonably request (including, without limitation, by permitting the
Fund, the Distributor and the Adviser to review the relevant books and
records of FGWL&A) in order to facilitate review by the Fund, the
Distributor and the Adviser of any written submissions provided by
FGWL&A to it or its assessment of the validity or amount of any claim
against it arising from such failure or alleged failure;
(f) FGWL&A shall not wiih 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, FGWL&A shall not be required
to appeal any adverse judicial decision unless the Fund and the
Adviser shall have provided an opinion of independent counsel to the
effect that a reasonable basis exists for taking such appeal; and
further provided that the Fund, the Distributor and the Adviser shall
bear the costs and expenses, including reasonable attorneys fees,
incurred by FGWL&A in complying with this clause (0-
ARTICLE Vn. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptivc Order
7.1. The Fund represents that the Board will monitor the Fund for the
existence of any material irreconcilable conflict between the interests of the
contract owners of all separate accounts investing in the Fund. A material
irreconcilable conflict may arise for a variety of reasons, including: (a) an
action by any state insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretative letter, or any
similar action by insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of any Designated Portfolio are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners or by contract owners of different
Participating Insurance Companies; or (f) a decision by a Participating
Insurance Company to disregard the voting instructions of contract owners. The
Board shall promptly inform FGWL&A if it determines that a material
irreconcilable conflict exists and the implications thereof.
7.2. FGWL&A will report any potential or existing conflicts of which it is
aware to the Board. FGWL&A will assist the Board in carrying out its
responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obliga tion
by FGWL&A to inform the Board whenever contract owner voting instructions are to
be disregarded. Such responsibilities shall be carried out by FGWL&A with a view
only to the interests of its Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of its
members who are not interested persons of the Fund, the Distributor, the Adviser
or any sub-adviser to any of the Designated Portfolios (the "Disinterested
Members "), that a material irreconcilable conflict exists, and it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, FGWL&A and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority of
the Disinterested Members), take whatever steps are necessary to remedy or
eliminate the material irreconcilable conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Designated Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another portfolio of the Fund,
or submitting the question whether such segregation should be implemented to a
vote of all affected contract owners and, as appropriate, segregating the assets
of any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
FGWL&A to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, FGWL&A may be
required, at the Fund's election, to withdraw the Account's investment in the
Fund and terminate this Agreement; provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Disinterested
Members. Any such with drawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of that six month period the Fund, the
Distributor and the Adviser shall continue to accept and implement orders by
FGWL&A for the purchase (and redemption) of shares of the Fund. No charge or
penalty will be imposed as a result of such withdrawal. The responsibility to
take such remedial action shall be earned 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 FGWL&A conflicts with the
majority of other state regulators, then FGWL&A will withdraw the Account's
investment in the Fund and terminate this Agreement within six months after the
Board informs FGWL&A in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Disinterested Members. Until the end of the foregoing six month period, the Fund
and the Distributor shall continue to accept and implement orders by FGWL&A for
the purchase (and redemption) of shares of the Fund. The responsibility to take
such action shall be carried out with a view only to the interest of the
Contract owners.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the Disinterested Members shall determine whether any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the Fund be required to establish a new funding medium for the Contracts. FGWL&A
shall not be required by Section 7.3 to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority of
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 FGWL&A will withdraw the Account's
investment in the Fund and terminate this Agreement within six (6) months after
the Board informs FGWL&A in writing of the foregoing determination; provided,
however, that such withdrawal and termination shall be limited to the extent
required by any such material irreconcilable conflict as determined by a
majority of the Disinterested Members.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable: and (b) Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
ARTICLE VID. Indemnification
8.1. Indemnification By FGWL&A
8.1(a). FGWL&A agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, Distributor or
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlement with the written consent of FGWL&A) or litigation (including
reasonable legal and other expenses) (collectively, a "Loss") to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such Loss is related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arises out of or is based upon any untrue statements or alleged
untrue statements of any material fact contained in any Contract
materials, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished in writing to FGWL&A
or Schwab by or on behalf of the Fund, Distributor or Adviser for
use in the Contract materials or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arises out of or as a result of statements or representations
(other than statements or representations contained in Fund
materials not supplied by FGWL&A or persons under its control) or
wrongful conduct of FGWL&A or persons under its control, with
respect to the sale or distribution of the Contracts or Fund
shares; or
(iii) arises out of any untrue statement or alleged untrue statement of
a material fact contained in any Fund materials, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, if such a statement or omission was made in reliance
upon and conformity with information furnished in writing to the
Fund by or on behalf of FGWL&A; or
(iv) arises as a result of any failure by FGWL&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 FGWL&A in this Agreement
or arises out of or result from any other material breach of this
Agreement by FGWL&A, including without limitation Section 2.11
and Section 6.7 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). FGWL&A shall not be liable under this indemnification provision
with respect to any 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). FGWL&A shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified FGWL&A in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify FGWL&A of any such claim shall not relieve FGWL&A
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision,
except to the extent that FGWL&A has been prejudiced by such failure to give
notice. In case any such action is brought against an Indemnified Party, FGWL&A
shall be entitled to participate, at its own expense, in the defense of such
action, and unless the Indemnified Parties release FGWL&A from any further
obligation under this Section 8.1 with respect to such claim(s), FGWL&A also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the Party named in the action. After notice from FGWL&A to such Party of
FGWL&A's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and FGWL&A
will not be liable to such Party under this Agreement for any legal or other
expenses subsequently incurred by such Party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.1(d). Each Indemnified Party will promptly notify FGWL&A of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by Schwab.
8.2(a). Schwab agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, Distributor or
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any Loss, to
which the Indemnified Parties may become subject under any statute or
regulation, at common law or otherwise, insofar as such Loss is related to the
sale or acquisition of the Fund's shares or the Contracts and:
(i) arises out of Xxxxxx'x dissemination of information regarding the
Fund that is both (A) materially incorrect and (B) that was
neither contained in any Fund material, nor provided in writing
to Schwab, nor approved in writing by or on behalf of the Fund,
Distributor, or Adviser; or
(ii) arises out of or is based upon any untrue statements or alleged
untrue statements of any material fact contained in sales
literature or other promotional material prepared or approved by
Schwab for the Contracts or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this Agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in
writing to FGWL&A or Schwab by or on behalf of the Fund,
Distributor or Adviser, or to Schwab by FGWL&A for use in any
Contract materials or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(iii) arises out of or as a result of statements or representations
(other than statements or representations contained in materials
not supplied by Schwab or persons under its control) or wrongful
conduct of Schwab or persons under its control, with respect to
the sale or distribution of the Contracts; or
(iv) arises as a result of any failure by Schwab to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement; or
18
(v) arises out of or results from any material breach of any
representation and/or warranty made by Schwab in this Agreement
or arise out of or result from any other material breach of this
Agreement by Schwab;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). Schwab shall not be liable under this indemnification provision
with respect to any Loss to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to any of the Indemnified Parties.
8.2(c) Schwab shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified Schwab in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify Schwab of any such claim shall not relieve Schwab
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision,
except to the extent that Schwab has been prejudiced by such failure to give
notice. In case any such action is brought against an Indemnified Party, Schwab
shall be entitled to participate, at its own expense, in the defense of such
action and unless the Indemnified Parties release Schwab from any further
obligation under Section 8.2 with respect to such claim(s), Schwab also shall be
entitled to assume the defense thereof, with counsel satisfactory to the Party
named in the action. After notice from Schwab to such Party of Xxxxxx'x election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and Schwab will not be liable
to such Party under this Agreement for any legal or other expenses subsequently
incurred by such Party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.2(d). Each Indemnified Party will promptly notify Schwab of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
8.3. Indemnification by the Adviser.
8.3(a). The Adviser agrees to indemnify and hold harmless FGWL&A and Schwab
and each of their directors and officers, the Contract owners, and each person,
if any, who controls FGWL&A or Schwab within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8
3) against any 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 (he Fund's shares or the Contracts and:
(i) arises out of or is based upon any untrue statement or alleged
untrue statement of any material fact contained in any Fund
materials, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished in writing to the
Fund, Distributor or Adviser, by or on behalf of FGWL&A or Schwab
for use in the Fund materials or otherwise for use in connection
with the sale of the Contracts or the Fund shares; or
(ii) arises out of or as a result of statements or representations
(other than statements or representations contained in Fund
materials not supplied by the Adviser or persons under its
control) or wrongful conduct of the Fund, the Distributor or the
Adviser or persons under their control, with respect to the sale
or distribution of the Contracts or Fund shares; or
(iii) arises out of any untrue statement or alleged untrue statement of
a material fact contained in any Contract materials or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or
omission was made in reliance upon and in conformity with
information furnished in writing to FGWL&A or Schwab by or on
behalf of the Fund, Distributor or Adviser; or
(iv) arises as a result of any failure by the Fund, the Distributor or
the Adviser to perform the obligations, provide the services and
furnish the materials required of it under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(v) arises out of or results from any material breach of any
representation and/or warranty made by the Fund, the Distributor
or the Adviser in this Agreement or arises out of or result from
any other material breach of this Agreement by the Fund, the
Distributor or the Adviser; or
(vi) arises out of or results from the incorrect or untimely
calculation or reporting by the Fund, the Distributor or the
Adviser of the daily net asset value per share or dividend or
capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Adviser specified in Article VI hereof.
8.3(b). The Adviser shall not be liable under this indemnification
provision with respect to any Loss to which an Indemnified Party would otherwise
be subject by reason of such Indemnified Parry's willful misfeasance, bad faith,
or negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement or to any of the Indemnified Parties.
8.3(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that ihe Adviser
has been prejudiced by such failure to give notice. In case any such action is
brought against an Indemnified Party, the Adviser will be entitled to
participate, at its own expense, in the defense thereof and unless the
Indemnified Parties release Adviser from any further obligation under this
Section 8.3 with respect to such claim(s), the Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the Party named in the
action. After notice from the Adviser to such Party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Adviser will not be
liable to such Party under this Agreement for any legal or other expenses
subsequently incurred by such Party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). FGWL&A and Schwab agree promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.4. Indemnification By the Fund.
8.4(a). The Fund agrees to indemnify and hold harmless FGWL&A and Schwab
and each of their respective directors and officers, the Contract owners, and
each person, if any, who controls FGWL&A or Schwab within the meaning of Section
15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.4) against any Loss to which the Indemnified Parties may be required
to pay or become subject under any statute or regulation, at common law or
otherwise, insofar as such Loss, is related to the operations of the Fund and:
(i) arises as a result of any failure by the Fund to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement (including a
failure, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification
requirements specified in Article VI of this Agreement); or
(ii) arises out of or results from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arises out of or result from any other material breach of this
Agreement by the Fund; or
(iii) arises out of or results from the incorrect or untimely
calculation or reporting of the daily net asset value per share
or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.4(b) and
8.4(c) hereof.
8.4(b). The Fund shall not be liable under this indemnification provision
with respect to any Loss to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to any of the Indemnified Parties.
8.4(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall not
relieve it from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this indemnification
provision, except to the extent that the Fund has been prejudiced by such
failure to give notice. In case any such action is brought against an
Indemnified Party, the Fund will be entitled to participate, at its own expense,
in the defense thereof and unless the Indemnified Parties release the Fund from
any further obligation under this Section 8.4 with respect to such claim(s), the
Fund shall also be entitled to assume (he defense thereof, with counsel
satisfactory to the Party named in the action. After notice from the Fund to
such Party of the Fund's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Fund will not be liable to such Party under this Agreement for any legal
or other expenses subsequently incurred by such Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.4(d). FGWL&A and Schwab each agree promptly to notify the Fund of the
commencement of any litigation or proceeding against itself or any of its
respective officers or directors in connection with the Agreement, the issuance
or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
8.5. Indemnification by the Distributor.
8.5(a). The Distributor agrees to indemnify and hold harmless FGWL&A and
Schwab and each of their respective directors and officers, the Contract owners,
and each person, if any, who controls FGWL&A or Schwab within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Section 8.5) against any Loss to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such Loss is related to the sale or acquisition of the Fund's shares
or the Contracts and:
(i) arises out of or is based upon any untrue statement or alleged
untrue statement of any material fact contained in Fund
materials, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance
upon and in conformity with information furnished in writing to
the Fund, Distributor or Adviser by or on behalf of FGWL&A or
Schwab for use in the Fund materials or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arises out of or as a result of statements or representations
(other than statements or representations contained in Fund
materials not supplied by the Distributor or persons under its
control) or wrongful conduct of the Fund, the Distributor or
Adviser or persons under their control, with respect to the sale
or distribution of the Contracts or Fund shares; or
(iii) arises out of any untrue statement or alleged untrue statement of
a material fact contained in any Contract materials, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or
omission was made in reliance upon and in conformity with
information furnished in writing to FGWL&A or Schwab by or on
behalf of the Fund, Distributor or Adviser; or
(iv) arises as a result of any failure by the Fund, Distributor or
Adviser to perform the obligations, provide the services and
furnish the materials required of it under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(v) arises out of or result from any material breach of any
representation and/or waLTranty made by the Fund, Distributor or
Adviser in this Agreement or arises out of or results from any
other material breach of this Agreement by the Fund, Distributor
or Adviser; or
(vi) arises out of or result from the incorrect or untimely
calculation or reporting of the daily net asset value per share
or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.5(b) and
8.5(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Distributor specified in Article VI
hereof.
8.5(b). The Distributor shall not be liable under this indemnification
provision with respect to any Loss to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful misfeasance,
bad faith, or negligence in the performance or such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to any of the Indemnified Parties.
8.5(c) The Distributor shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Distributor in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Distributor of
any such claim shall not relieve the Distributor from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision, except to the extent that the
Distributor has been prejudiced by such failure to give notice. In case any such
action is brought against an Indemnified Party, the Distributor will be entitled
to participate, at its own expense, in the defense thereof and unless the
Indemnified Parties release the Distributor from any further obligation under
this Section 8.5 with respect to such claim(s), the Distributor also shall be
entitled to assume the defense thereof, with counsel satisfactory to the Party
named in the action. After notice from the Distributor to such Party of the
Distributor's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Distributor will not be liable to such Party under this Agreement for any
legal or other expenses subsequently incurred by such Party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.5(d) FGWL&A and Schwab agree lo 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 Contracls or the
operation of the Account.
ARTICLE DC. Applicable Law
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York, applicable to
contracts entirely entered into and performed in New York by New York
residents.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any Party, with or without cause, with respect
to some or all Designated Portfolios, upon six (6) months advance
written notice delivered to the other Parties; provided, however,
that such notice shall not be given earlier than six (6) months
following the date of this Agreement; or
(b) at the option of FGWL&A or Schwab by written notice to the other
Parties with respect to any Designated Portfolio based upon
FGWL&A's or Xxxxxx'x determination that shares of such Designated
Portfolio are not reasonably available to meet the requirements
of the Contracts; or
(c) at the option of FGWL&A or Schwab by written notice to the other
Parties with respect to any Designated Portfolio in the event any
of the Designated Portfolio's shares are not registered, issued
or sold in accordance with applicable law or such law precludes
the use of such shares as the underlying investment media of the
Contracts issued or to be issued by FGWL&A; or
(d) at the option of the Fund, Distributor or Adviser in the event
that formal administrative proceedings are instituted against
FGWL&A or Schwab by the NASD, the SEC, the Insurance Commissioner
or like official of any state or any other regulatory body
regarding FGWL&A's or Xxxxxx'x duties under this Agreement or
related to the sale of the Contracts, the operation of any
Account, or the purchase of the Fund shares, if, in each case,
the Fund, Distributor or Adviser, as the case may be, reasonably
determines in its sole judgment exercised in good faith, that any
such administrative proceedings will have a material adverse
effect upon the ability of FGWL&A or Schwab to perform its
obligations under this Agreement; or
(e) at the option of FGWL&A or Schwab in the event that formal
administrative proceedings are instituted against the Fund, the
Distributor or the Adviser by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body,
if FGWL&A or Schwab reasonably determines in its sole judgment
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Fund,
the Distributor or the Adviser to perform their obligations under
this Agreement; or
(f) at the option of FGWL&A or Schwab by written notice to the other
Parties with respect to any Designated Portfolio in the event
that such Portfolio fails to meet the requirements and comply
with the representations and warranties specified in Article VI
hereof; or
(g) at the option of FGWL&A or Schwab by written notice to the other
Parties with respect to any Designated Portfolio in the event
that such Portfolio ceases to qualify as a regulated investment
company under Subchapter M of the Code or under any successor or
similar provision, or if FGWL&A or Schwab reasonably believes
that the Designated Portfolio will fail to meet such requirements
or so qualify; or
(h) at the option of either the Fund, the Distributor or the Adviser,
if (i) the Fund, Distributor or Adviser, respectively, shall
determine, in its sole judgment reasonably exercised in good
faith, that either FGWL&A or Schwab has suffered a material
adverse change in its business or financial condition or is the
subject of material adverse publicity, (ii) the Fund, Distributor
or Adviser notifies FGWL&A or Schwab, as appropriate, of that
determination and its intent to terminate this Agreement, and
(iii) after considering the actions taken by FGWL&A or Schwab and
any other changes in circumstances since the giving of such a
notice, the determination of the Fund, Distributor or Adviser
shall continue to apply on the sixtieth (60th) day following the
giving of that notice, which sixtieth day shall be the effective
date of termination; or
(i) at the option of either FGWL&A or Schwab, if (i) FGWL&A or
Schwab, respectively, shall determine, in its sole judgment
reasonably exercised in good faith, that the Fund, Distributor or
Adviser has suffered a material adverse change in its business or
financial condition or is the subject of material adverse
publicity, (ii) FGWL&A or Schwab notifies the Fund, Distributor
or Adviser, as appropriate, of that determination and its intent
to terminate this Agreement, and (iii) after considering the
actions taken by the Fund, Distributor or Adviser and any other
changes in circumstances since the giving of such a notice, the
determination of FGWL&A or Schwab shall continue to apply on the
sixtieth (60th) day following the giving of that notice, which
sixtieth day shall be the effective date of termination; or
(j) at the option of FGWL&A in the event that formal
administrative proceedings are instituted against Schwab by the
NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding Xxxxxx'x duties under this
Agreement or related to the sale of the Fund's shares or the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that FGWL&A determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of Schwab to perform its obligations related to
the Contracts; or
(k) at the option of Schwab in the event that formal
administrative proceedings are instituted against FGWL&A by the
NASD, the SEC, or any state securities or insurance department or
any other regulatory body regarding FGWL&A's duties under this
Agreement or related to the sale of the Fund's shares or the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that Schwab determines in its
sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of FGWL&A to perform its obligations related to
the Contracts; or
(1) at the option of any non-defaulting Party hereto in the event
of a material breach of this Agreement by any Party hereto (the
"defaulting Party") other than as described in 10.1(a)-(k);
provided, that the non-defaulting Party gives written notice
thereof to the defaulting Party, with copies of such notice to
all other non-defaulting Parties, and if such breach shall not
have been remedied within thirty (30) days after such written
notice is given, then the non-defaulting Party giving such
written notice may terminate this Agreement by giving thirty (30)
days written notice of termination to the defaulting Party.
10.2. Notice Requirement.
No termination of this Agreement shall be effective unless and until the Party
terminating this Agreement gives prior written notice to all other Parties of
its intent to terminate, which notice shall set forth the basis for the
termination. Furthermore,
(a) in the event any termination is based upon the provisions of
Article VII, or the provisions of Section 10.l(a), 10.1(h) or
10.1(i) of this Agreement, the prior written notice shall be
given in advance of the effective date of termination as required
by those provisions unless such notice period is shortened by
mutual written agreement of the Parties;
(b) in the event any termination is based upon the provisions of
Section 10.1(d), 10.1(e), 10.l(j) or 10.1(k) of this Agreement,
the prior written notice shall be given at least sixty (60) days
before the effective date of termination; and
(c) in the event any termination is based upon the provisions of
Section 10.1(b), 10.1(c) or 10.1(f) or 10.1(g), the prior written
notice shall be given in advance of the effective date of
termination, which date shall be determined by the Party sending
the notice.
10.3. Effect of Termination
Notwithstanding any termination of this Agreement, other than as a result of a
failure by either the Fund or FGWL&A to meet Section 817(h) of the Code
diversification requirements, the Fund, the Distributor and the Adviser shall,
at the option of FGWL&A or Schwab, continue to make available additional shares
of the Designated Portfolio(s) pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments 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.
10.4. Surviving Provisions.
Notwithstanding any termination of this Agreement, the following provisions
shall survive: Article V, Article Vffl and Section 12.1 of Article XII. In
addition, with respect to Existing Contracts, all provisions of this Agreement
shall also survive and not be affected by any termination of this Agreement.
10.5. Survival of Agreement.
A termination by Schwab shall terminate this Agreement only as to Schwab, and
this Agreement shall remain in effect as to the other Parties; provided,
however, that in the event of a termination by Schwab the other Parties shall
have the option to terminate this Agreement upon 60 (sixty) days notice, rather
than the six (6) months specified in Section 10.1(a).
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail by the notifying Party to each other Party entitled to notice at
the addresses set forth below or at such other address as a Party may from time
to time specify in writing to the other Parties.
If to the Fund:
AllianceBemstein Variable Products Series Fund, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
If to FGWL&A:
First Great-West Life & Annuity Insurance Company
0000 Xxxx Xxxxxxx Xxxx Xxxxxxxxx Xxxxxxx, XX 00000
Attention: Vice President and Counsel
If to the Adviser:
Alliance Capital Management, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx Xxx
Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
If to the Distributor:
AllianceBemstein Investment Research and Management, Inc. 0000
Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Xx.
If to Schwab:
Xxxxxxx Xxxxxx & Co., Inc.
000 Xxxxxxxxxx Xxxxxx Xxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
ARTICLE XH. 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 New York Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of FGWL&A are being conducted in a manner consistent with the New
York Variable Annuity Regulations and any other applicable law.
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. Each Parry agrees that the obligations assumed by each other Party
pursuant to this Agreement shall be limited in any case to that other Party and
its respective assets and agrees not to seek satisfaction of any such obligation
from the shareholders of the other Party, the directors, officers, employees or
agents of the other Party, or any of them, except to the extent permitted under
this Agreement.
12.10. 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.
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By its authorized officer,
By: /s/ Xxxxxx X. Xxxx
Title: Senior Vice President, Operations
Date: June 16, 2003
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. By
its authorized officer
/s/ Xxxxxx X. Xxxxxx, Xx
Secretary
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management Corporation,
- its General Partner
By its authorized officer,
/s/ Xxxxxx X. Xxxxxx, Xx.
Vice President
ALLIANCEBERNSTEIN INVESTMENT RESEARCH AND
MANAGEMENT, INC.
By its authorized officer,
Rkmard X. Xxxxx
Managing Director and Senior Vice-president
XXXXXXX XXXXXX & CO., INC.
By its authorized officer,
By:/s/ (illegible signature)
Title: Vlce President, Partner Relations
Date:
Schwab Variable Annuity
SCHEDULE A
Contracts Form Numbers
First Great-West Life & Annuity Insurance Company
Group Variable/Fixed Annuity Contract J434NY
SCHEDULE B
Designated Portfolios
AllianceBernstein Utility Income Portfolio
SCHEDULE C
Administrative Services
To be performed by Xxxxxxx Xxxxxx & Co., Inc.
X. Xxxxxx will provide, or cause to be provided, the properly registered and
licensed personnel and systems needed for all customer servicing and support -
for both Fund and Contract information and questions - including the following:
o respond to Contract owner inquiries
o mail fund and Contract prospectus to prospects
o entry of initial and subsequent orders
o transfer of cash to FGWL&A and/or Fund
o explanations of Designated Portfolio objectives and characteristics
o entry of transfers between Unaffihated Funds, including the
Designated Portfolios
o Contract balance and allocation inquiries
o communicate all purchase, withdrawal, and exchange orders received from
Contract owners to FGWL&A which will transmit orders to Funds
o train call center representatives to explain Fund objectives, Morningstar
categories, Fund selection data and differences between publicly traded
funds and the Designated Portfolios
o provide performance data and fund prices
o shareholder services including researching trades, resolving trade disputes,
etc.
o coordinate the writing, printing and distribution of semi-annual and annual
reports to Contract owners investing in the Designated Portfolios
o create and update Designated Portfolio profiles and other shareholder
communications
o establish scheduled account rebalances
o web trading and account servicing
o touch-tone telephone trading and account servicing
o establish dollar cost averaging
o communications to Contract owners related to product changes, including but
not limited to changes in the available Designated Portfolios
B. For the services, Schwab shall receive a fee of ____% per annum applied to
the average daily value of the shares of the Fund held by Xxxxxx'x customers,
payable by the Adviser directly to Schwab, such payments being due and payable
within 15 (fifteen) days after the last day of the month to which such payment
relates.
C. The Fund will calculate and Schwab will verify with FGWL&A the asset balance
for each day on which the fee is to be paid pursuant to this Agreement with
respect to each Designated Portfolio.
X. Xxxxxx will communicate all purchase, withdrawal, and exchange orders it
receives from its customers to FGWL&A who will retransmit them to the Fund.
SCHEDULE D
Reports per Section 6.6
With regard to the reports relating to the quarterly testing of
compliance with the requirements of Section 817(h) and Subchapter M under the
Internal Revenue Code (the "Code") and the regulations thereunder, the Fund
shall provide within twenty (20) Business Days of the close of the calendar
quarter a report to FGWL&A in the Form Dl 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 (li) a year-end report will be provided 45 days after the end
of the calendar year. However, if a problem with regard to RIC status, as
defined below, is identified in the third quarter report, on a weekly basis,
starting the first week of December, additional interim reports will be provided
specially addressing the problems identified in the third quarter report. If any
interim report memorializes the cure of the problem, subsequent interim reports
will not be required.
A problem with regard to RIC status is defined as any violation of the
following standards, as referenced to the applicable sections of the Code:
(a) Less than ninety percent of gross income is derived from sources of
income specified in Section 85l(b)(2);
(b) Less than fifty percent of the value of total assets consists of assets
specified in Section 85l(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).
FORMD1
CERTIFICATE OF COMPLIANCE
For the quarter ended:_______________
Alliance Capital Management, L.P. (investment advisor) for
AllianceBernstein Variable Products Series Fund, Inc., 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 First Great-West Life & Annuity Insurance Company,
Xxxxxxx Xxxxxx & Co., Inc. and Alliance Capital Management, L.P., other than the
exceptions discussed below:
Exceptions Remedial Action
If no exception to report, please indicate "None."
Signed this____day of.
Alliance Capital Management, L.P.
(Signature)
By:___________________________________
(Type or Print Name and Title/Position)
SCHEDULE E
EXPENSES
The Fund and/or the Distributor and/or Adviser, and FGWL&A will coordinate the
functions and pay the costs of the completing these functions based upon an
allocation of costs in the tables below. Costs shall be allocated to reflect
the Fund's share of the total costs determined according to the number of
pages of the Fund's respective portions of the documents, except with respect
to the printing of combined fund prospectuses. The calculation for costs
associated with the printing of 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 Printing of combined FGWL&A Fund,
Prospectus prospectuses Distributor or
Adviser, as
applicable
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Fund, Distributor FGWL&A Fund,
or Adviser shall Distributor or
supply FGWL&A with Adviser, as
such numbers of the applicable
Designated
Portfoho(s) pro spec
tus(es) as FGWL&A
shall reasonably
request
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution to FGWL&A FGWL&A
New and Inforce
Contract owners
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution to Schwab Schwab
Prospective
Contract owners
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Product Prospectus Printing for FGWL&A FGWL&A
Inforce Contract
owners
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Printing for FGWL&A Schwab
Prospective
Contract owners
------------------------------------------------------------------------------------------
Distribution to New FGWL&A FGWL&A
and Inforce
Contract owners
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution to Schwab Schwab
Prospective Contract
owners
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Mutual Fund If Required by Fund, Dlstnbutor Fund, Distnbutor
Prospectus Update & Fund, Distributor or Adviser or Adviser
Distribution or Adviser
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
If Required FGWL&A FGWL&A
by FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
If Required Schwab Schwab
by Schwab
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Product Prospectus If Required by FGWL&A Fund,
Update & Fund, Distributor Distributor or
Distribution or Adviser Adviser
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
If Required FGWL&A FGWL&A
by FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
If Required Schwab Schwab
by Schwab
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Mutual Fund SA1 Printing Fund, Distnbutor or Fund,
Adviser Distributor or
Adviser
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution FGWL&A FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Product SAI Printing FGWL&A FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution FGWL&A FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Proxy Material for Printing if Fund, Distributor Fund, Distnbutor
Mutual Fund: proxy required or Adviser or Adviser
by Law
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution FGWL&A Fund,
(including labor) Distributor or
if proxy required Adviser
by Law
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Printing & FGWL&A FGWL&A
distribution
if required
by FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Printing & FGWL&A Schwab
distribution if
required by Schwab
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Mutual Fund Annual & Printing of combined FGWL&A Fund,
Semi-Annual Report reports Distributor or
Adviser
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution FGWL&A FGWL&A and
Schwab
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Other communication to If Required by the Schwab Fund,
New and Prospective Fund, Distributor Distributor or
clients or Adviser Adviser
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
If Required Schwab FGWL&A
by FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
If Required Schwab Schwab
by Schwab
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Other communication to Distribution FGWL&A Fund,
in force (including labor Distributor or
and printing) if Adviser
required by the
Fund, Distributor
or Adviser
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution FGWL&A FGWL&A
(including labor
and printing)if
required by FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution FGWL&A Schwab
(including labor
and printing if
required by Schwab
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Errors in Share Price Cost of error to FGWL&A Fund or Adviser
calculation pursuant participants
to Section 1.8
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Cost of FGWL&A Fund or Adviser
administrative work
to correct error
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Operations of the All operations and Fund, Distributor or Fund or Adviser
Fund related expenses, Adviser
including the cost of registration and qualification of
shares, taxes on the issuance or transfer of shares,
cost of management of the business affairs of the Fund,
and expenses paid or assumed by the Fund pursuant to
any Rule 12b-l plan
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Operations of the Federal registration FGWL&A FGWL&A
Account of units of separate
account (24f-2 fees)
------------------------------------------------------------------------------------------
