EXHIBIT 10.1
DISTRIBUTION AGREEMENT BETWEEN
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
AND XXXXXXX XXXXXX & CO., INC.
DISTRIBUTION AGREEMENT
BY AND BETWEEN
XXXXXXX XXXXXX & CO., INC.
AND
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") is made as of the day of
________, 1997, by and between Xxxxxxx Xxxxxx & Co., Inc., a California
corporation ("SCHWAB"), and First Great-West Life & Annuity Insurance Company, a
New York insurance company ("FIRST GREAT-WEST"), on behalf of itself and each of
its separate accounts listed on Schedule 1 hereto, as the same may be amended
from time to time (each an "Account") (each, a "Party," collectively, the
"Parties").
RECITALS
WHEREAS, FIRST GREAT-WEST is a New York life insurance company duly licensed as
required by applicable law to issue life insurance and annuity contracts
identified on Schedule 1.1, as may be amended from time to time, (each a
"Contract," collectively, the "Contracts") in certain states and other
jurisdictions; and
WHEREAS, FIRST GREAT-WEST, has developed or is developing Contracts, some of
which shall be funded by segregated asset accounts; and
WHEREAS, SCHWAB is licensed or will become licensed as required by applicable
law to market such Contracts pursuant to applicable state law and is registered
as a broker-dealer under the Securities Exchange Act of 1934 (the "1934 Act")
and under the securities laws in all fifty (50) states, and is a member of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, FIRST GREAT-WEST has extensive experience in the operation of its
insurance business and has trained personnel, equipment, and facilities for
conducting its present and future insurance operations; and
WHEREAS, SCHWAB has extensive experience in the operation of its business as a
registered broker-dealer and has trained (and NASD-registered) personnel,
equipment, and facilities for conducting its present and future broker-dealer
operations; and
WHEREAS, certain personnel of SCHWAB may engage, or deemed to be engaged,
directly or indirectly, in the offering, selling, advertising or marketing of
certain Contracts the interests under which are required to be registered under
the Securities Act of 1933, as amended (the "1933 Act") ("registered
Contracts"); the confirming of transactions under registered Contracts as
required by the 1934 Act Rule 10b-10; the maintenance of records with respect to
registered Contracts as required by 1934 Act Rules 17a-3 and 17a-4 or other SEC
or NASD rules applicable to registered broker-dealers (all Distributor personnel
engaged in these activities, as well as all other persons whom Section 3(a)(18)
of the 1934 Act defines as associated persons of SCHWAB, are collectively
referred to herein as "Associated Persons"); and
WHEREAS, FIRST GREAT-WEST and SCHWAB desire to enter into an agreement to have
SCHWAB act as the principal underwriter and/or insurance agent, as applicable,
for the sale of the Contracts.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and of the mutual expectations of benefit occurring from the
activities herein contemplated, the Parties hereto agree as follows:
SECTION 1. AVAILABLE CONTRACTS
1.1 Availability
(a) SCHWAB shall have exclusive marketing and distribution rights for certain
Contracts specifically identified in Schedule 1.1 (hereinafter, "Exclusive
Contracts"). SCHWAB shall have non-exclusive marketing and distribution rights
for all Contracts identified in Schedule 1.1 (hereinafter, "Other Contracts").
Schedule 1.1 may be amended from time to time as mutually agreed to in writing
between the two Parties. The Parties have agreed that certain Contracts will be
designed to be sold into the Internal Revenue Code ss.ss.403(b), 457 and 401(k)
markets and made available for distribution by SCHWAB and added to Schedule 1.1
when available. SCHWAB acknowledges that FIRST GREAT-WEST is currently marketing
contracts similar to the Exclusive Contracts and may develop and market
contracts in the future with similar terms to those contained in the Contracts.
In no event may FIRST GREAT-WEST directly or indirectly develop, issue, market
or otherwise promote any Contract that bears the name SCHWAB or any other
proprietary SCHWAB tradenames, trademarks or service xxxx without the prior
written approval of SCHWAB, except as permitted by and in accordance with
Section 12.1 hereof.
1.2 Modification of Contracts; Suspension or Restriction of Sales
(a) FIRST GREAT-WEST may modify the terms of any Contract, to the extent
permitted or required by applicable law. Any modification, other than a
modification required to be made to conform the Contracts to a change in
applicable law, shall be approved by SCHWAB, which approval shall not be
unreasonably withheld. SCHWAB may, from time to time, propose modifications to
the terms of any Contract, and FIRST GREAT-WEST agrees to implement any such
modification in a timely manner, subject to FIRST GREAT-WEST's approval, which
shall not be unreasonably withheld. Prior to implementation of any modification,
the Parties must mutually agree on such change or changes and agree as to who
will bear the costs associated with such change.
(b) Upon 180 days' prior written notice, FIRST GREAT-WEST may suspend or
restrict the sale of any Contract in any state or other jurisdiction, FIRST
GREAT-WEST will effect such withdrawal in accordance with all applicable law.
FIRST GREAT-WEST reserves the right to immediately withdraw any fixed annuity
contract (or portion thereof) with respect to future sales where the declared
interest rate, as determined by FIRST GREAT-WEST's usual and customary business
practices, would be below that Contract's declared minimum guaranteed interest
rate. In addition, notwithstanding any provision herein to the contrary, FIRST
GREAT-WEST may refuse to sell any Contract to any applicant for any reason so
long as such refusal does not violate any applicable state insurance law. FIRST
GREAT-WEST shall communicate the reasons for any refusal to SCHWAB.
1.3 Reinsurance of Contracts
FIRST GREAT-WEST may reinsure any of the Contracts with a reinsurer of its
choice at any time in accordance with applicable law.
SECTION 2. CONTRACT DISTRIBUTION
2.1 Exclusive Appointments; Efforts; Independent Contractor
(a) FIRST GREAT-WEST appoints SCHWAB, and SCHWAB accepts FIRST GREAT-WEST's
appointment, as the exclusive principal underwriter, and, as applicable,
exclusive insurance agent for the offer and sale of the Exclusive Contracts and
as non-exclusive principal underwriter and insurance agent of the Other
Contracts offered by SCHWAB to the public, during the term of this Agreement, in
each state and other jurisdiction in which such Contracts may lawfully be
offered and sold. Notwithstanding anything herein to the contrary, SCHWAB shall
not act as, or be deemed to be, the principal underwriter of any Contract that
is not registered under the 1933 Act and which appears on any of the Schedules
attached hereto.
(b) SCHWAB shall use all commercially reasonable efforts to offer the Contracts
for sale and distribution, but shall be under no obligation to effectuate any
particular amount of sales of Contracts. SCHWAB shall, however, provide FIRST
GREAT-WEST in writing new product sales projections for the initial twelve (12)
month period of this Agreement and every twelve (12) month period thereafter.
The estimate should contain quarterly information for the period in question.
The estimate should also provide sales estimates on a Contract by Contract
basis, and include all projected premiums. FIRST GREAT-WEST acknowledges that
SCHWAB currently sells, and may in the future sell, annuity contracts and/or
life insurance policies issued by life insurance companies unaffiliated with
FIRST GREAT-WEST.
(c) SCHWAB shall at all times function as, and be deemed to be, an independent
contractor.
(d) Except as may be necessary to comply with the requirements of any
applicable law or regulation, SCHWAB shall not, absent FIRST GREAT-WEST's
consent, actively promote the replacement of any Contract or the redirection of
the cash value of a Contract into any other product; provided, however, that
FIRST GREAT-WEST's consent shall be presumed granted (i) upon the occurrence,
with respect to FIRST GREAT-WEST, of any event described in Sections 7.2(a)(iii)
or 7.2(b) hereof only to the extent of Contract owners in those jurisdictions in
the events under 7.2(b)(ii) and (iii) or (ii) upon the failure of FIRST
GREAT-WEST to cure a default pursuant to Section 7.3 hereof. "Actively promote"
shall include, but not be limited to, mailings specifically sent to or
conversations specifically held with Contract owners or licensed agents of
SCHWAB which induce or attempt to induce a Contract owner to surrender the
Contract and replace it with another product (other than a product offered by
FIRST GREAT-WEST or it affiliates), or to direct premiums, cash values or
deposits from a Contract to any other product (other than a product offered by
FIRST GREAT-WEST or its affiliates). Notwithstanding the foregoing, in no event
shall this provision prevent SCHWAB from concurrently or subsequently offering
and selling to a Contract owner any non-insurance product, whether or not
offered by FIRST GREAT-WEST or its affiliates. This provision shall survive the
termination of this Agreement other than pursuant to Sections 7.2(a)(iii),
7.2(b) or 7.3 hereof.
2.2 Registration of Associated Persons
(a) SCHWAB shall be responsible for ensuring, at its sole cost, that each
Associated Person involved with the offer or sale of registered Contracts is
duly registered and qualified pursuant to the 1934 Act, NASD regulations, and
any other required securities regulatory body.
(b) In connection with such registration, SCHWAB shall conduct such background
investigations of the SCHWAB employees necessary to determine their
qualifications, good character and moral fitness to offer and sell the
Contracts. Such information shall be available to FIRST GREAT-WEST upon request.
(c) SCHWAB shall continuously monitor the status of SCHWAB and each of XXXXXX'x
registered employees to ensure that they are and remain properly registered and
qualified.
2.3 Insurance Agent Licensing
(a) Neither SCHWAB nor any of its employees shall engage in any activities that
would require insurance agent licensing in the state or jurisdiction where such
activities are performed, unless and until SCHWAB and its employees are properly
licensed to perform such services in the particular state or other jurisdiction.
As used herein, "properly licensed" includes the filing of an appointment by
FIRST GREAT-WEST, SCHWAB and/or other person when required by the laws or
regulations of the applicable state or jurisdiction.
(b) SCHWAB shall, from time to time, advise FIRST GREAT-WEST of the SCHWAB
employees that it wishes FIRST GREAT-WEST to appoint as FIRST GREAT-WEST
insurance agents. In that connection, SCHWAB shall conduct background
investigations of the SCHWAB employees to determine their qualifications, good
character and moral fitness to offer and sell the Contracts, and shall prepare
and submit completed agent appointment forms for FIRST GREAT-WEST's approval.
FIRST GREAT-WEST shall forward all approved agent appointment forms in a timely
manner to the appropriate state insurance departments and pay all required
appointment fees.
(c) SCHWAB shall be responsible for ensuring that all SCHWAB employees engaged
in the offer or sale of Contracts (whether or not registered with the SEC under
the 0000 Xxx) are properly licensed and remain properly licensed under the
insurance laws of the applicable states and other jurisdictions to sell the
Contracts. In furtherance of this obligation, SCHWAB shall continuously monitor
the status of XXXXXX'x and each SCHWAB employee's insurance agent license and
renewal in each state and jurisdiction in which the Contracts may be offered and
sold. SCHWAB shall notify FIRST GREAT-WEST in a timely manner of any license not
renewed.
(d) SCHWAB agrees to undertake all actions necessary and to pay all costs to
effect licensing of itself and its employees and renewals thereof as required
for the business of this Agreement. FIRST GREAT-WEST agrees to take all actions
necessary and to pay all costs to effect the appointment as insurance agents of
SCHWAB and its employees and renewals thereof as required for the business of
this Agreement.
(e) FIRST GREAT-WEST, in its sole discretion, may refuse to appoint or renew
the appointment of a SCHWAB employee as a FIRST GREAT-WEST insurance agent. In
the event FIRST GREAT-WEST refuses to renew the appointment of a SCHWAB
employee, it shall not act except upon ten (10) days prior written notice to
SCHWAB.
2.4 Sales Agreements
FIRST GREAT-WEST and SCHWAB may, from time to time, enter into separate written
agreements ("Sales Agreements"), on such terms and conditions as they may
determine to be not inconsistent with this Agreement, with one or more
organizations that agree to participate in the distribution of the Contracts,
provided, that such organizations, shall to the extent required by law, be both
registered as a broker-dealer under the 1934 Act and a member of the NASD, and
provided further, that such organizations and their agents or representatives
soliciting applications for Contracts shall be properly licensed, registered or
otherwise qualified to offer and sell the Contracts under the applicable
insurance and other laws of each state or other jurisdiction in which FIRST
GREAT-WEST is licensed to sell the Contracts. Such written agreements with other
organizations shall be subject to approval by FIRST GREAT-WEST and shall
incorporate terms and provisions establishing requirements and standards of
conduct on the sale of the Contracts by the organization.
2.5 Supervisory Responsibilities
(a) SCHWAB shall be responsible for training, monitoring and controlling the
activities of SCHWAB employees involved in the offer and sale of the Contracts.
FIRST GREAT-WEST shall participate in, and shall bear responsibility with
respect to, such training, monitoring, and control to the extent required by
applicable NASD rules, SEC laws, state insurance laws, or other applicable laws.
(b) Notwithstanding the above, FIRST GREAT-WEST shall provide adequate training
to SCHWAB supervisory personnel with respect to the Contracts.
2.6 Suitability Determinations
SCHWAB agrees to establish written procedures that will require SCHWAB
employees to review all Contract applications to determine that the Contracts
are a "suitable" investment vehicle for the applicant. While not limited to the
following, such written procedures must provide that a determination of
suitability shall be based on information furnished to a SCHWAB employee after
reasonable inquiry of such applicant concerning the applicant's investment
objectives and financial situation. In no event shall Contracts be sold
describing premiums as "vanishing" or Contracts as being paid up at a time other
than the date described in the Contract itself.
2.7 Marketing Materials
(a) SCHWAB shall have the responsibility for developing, printing, and
distributing, at its sole cost, all marketing materials to be used in connection
with the offer and sale of the Contracts. As used herein, "marketing materials"
shall mean any "advertisement" or "sales literature," as those terms are defined
in NASD Conduct Rule 2210(a), as amended from time to time, including any
so-called "dealer only" materials, and including any material intended to be
spoken in the solicitation of a Contract, such as telephone scripts, scripted
answers to questions and slide show scripts but excluding Contract Prospectuses,
registration statements, annual and semi-annual reports and other materials that
are developed by FIRST GREAT-WEST.
(b) SCHWAB shall submit definitive copies of all marketing materials to FIRST
GREAT-WEST for its written approval, which shall not be unreasonably withheld,
at least five (5) business days prior to printing or finalization.
(c) SCHWAB shall, to the extent required, file in a timely manner all marketing
materials with the NASD, the SEC, or any other securities regulatory body, as
appropriate, and shall obtain any necessary approval of these regulatory bodies
of such marketing materials.
(d) FIRST GREAT-WEST shall, to the extent required by law, file in a timely
manner all marketing materials with the various state insurance regulatory
bodies, and shall obtain any necessary approval of these regulatory bodies of
such marketing materials.
2.8 Non-Marketing Materials
(a) FIRST GREAT-WEST shall be responsible for preparing, printing in quantity
and delivering to SCHWAB, at FIRST GREAT-WEST's sole cost: (i) all Contract
forms, applications and related materials, (ii) all forms pertaining to the
processing of premium payments, refunds and other monies, and (iii) all forms
pertaining to transactions, claims, and other features available under the
Contracts, including, but not limited to, full or partial surrenders, exchanges,
transfers, loans, systematic purchases, death claims, changes in premium
allocations, and changes in beneficiary. FIRST GREAT-WEST shall submit
definitive copies of all materials to SCHWAB for its written approval, which
shall not be unreasonably withheld, at least five (5) business days prior to
printing or finalization.
(b) SCHWAB shall be responsible for preparing, printing, and distributing, at
its sole cost, all correspondence with Contract owners, except for
correspondence or other communication prepared, printed, and distributed by
FIRST GREAT-WEST. FIRST GREAT-WEST and SCHWAB agree that SCHWAB shall submit
copies of all prototypes of correspondence, with all variations, and copies of
all materials being mass mailed to Contract owners to FIRST GREAT-WEST for its
written approval, which shall not be unreasonably withheld, at least five (5)
business days prior to printing or finalization.
(c) FIRST GREAT-WEST shall be responsible for preparing, printing, and
distributing, or causing the same to be done, at its sole cost: (i) all Contract
owner account statements, (ii) confirmations of Contract owner transactions
required to be delivered to Contract owners pursuant to Section 4.1(g), and
(iii) all documents described in Sections 4.1(b), 4.1(h) and 4.2(c)hereof. FIRST
GREAT-WEST and SCHWAB agree that FIRST GREAT-WEST shall submit the form of all
items (i) and (ii) and definitive copies of (iii) to SCHWAB for its written
approval, which shall not be unreasonably withheld, at least five (5) business
days prior to printing or finalization. FIRST GREAT-WEST acknowledges that these
materials, with the exception of 4.2(c), are marketing materials and may be used
as such by SCHWAB.
(d) SCHWAB and FIRST GREAT-WEST agree that correspondence or other
communication to any policyowner involving a complaint shall be submitted to the
other for written approval prior to mailing or communicating with the
policyowner.
2.9 Banking Arrangements
(a) SCHWAB agrees to handle all premium payments or other monies that it
receives in connection with the sale of the Contracts as a fiduciary for the
benefit of FIRST GREAT-WEST. All such premium payments shall be the property of
FIRST GREAT-WEST.
(b) Premium payments may be received by either SCHWAB or FIRST GREAT-WEST.
SCHWAB shall deposit and maintain any premium payments received by SCHWAB
(whether such premium payments are received in the form of a check, pursuant to
an authorization to wire transfer monies from a SCHWAB client's account, or in
any other manner) in one or more segregated accounts maintained by FIRST
GREAT-WEST in its name (or in the name of an Account) at one or more banks or
other financial institutions, and in connection therewith SCHWAB shall: (i) send
FIRST GREAT-WEST a copy of the deposit slip or wire transfer ticket by overnight
mail or fax, and (ii) immediately deposit any monies received with an
application into such depository account or accounts as designated from time to
time by FIRST GREAT-WEST. FIRST GREAT-WEST shall be responsible for depositing
any premium payments received at the offices of FIRST GREAT-WEST.
2.10 Limitations on Authority
(a) SCHWAB and its employees shall have no authority to, and shall not: (i)
add, alter, waive or discharge any Contract or application provision or
Prospectus provision or represent that such can be done by FIRST GREAT-WEST or
SCHWAB; (ii) extend the time of making any payments; (iii) alter or substitute
FIRST GREAT-WEST's forms in any manner; (iv) give or offer to give, on behalf of
FIRST GREAT-WEST, any tax or legal advice related to the purchase of a Contract;
(v) guarantee the issuance of any Contract or the reinstatement of any lapsed
Contract; or (vi) exercise any authority on behalf of FIRST GREAT-WEST other
than that expressly conferred on SCHWAB or its employees by this Agreement.
(b) FIRST GREAT-WEST and its employees shall have no authority to, and shall
not (i) give or offer to give on behalf of SCHWAB, any tax or legal advice
related to the purchase of a Contract, or (ii) exercise any authority on behalf
of SCHWAB other than that expressly conferred on FIRST GREAT-WEST or its
employees by this Agreement.
SECTION 3. RECORDKEEPING
3.1 Recordkeeping
(a) Each Party agrees to keep, at its principal office, all accounts, books and
other records required by and in accordance with applicable federal and state
law, including any state insurance laws, and the regulations of any regulatory
body having jurisdiction over such accounts, books, and other records, including
but not limited to Rules 31a-1 and 31a-2 under the Investment Company Act of
1940 (" 1940 Act") and Rules 17a-3 and 17a-4 under the 1934 Act.
(b) Any and all accounts, books and other records of FIRST GREAT-WEST, the
Accounts, and SCHWAB as may pertain to the Contracts and this Agreement shall be
maintained so as to clearly and accurately disclose the nature and details of
Contract transactions or any transactions related thereto.
(c) Any accounts, books, and other records maintained by FIRST GREAT-WEST, at
its expense, as agent for the benefit of SCHWAB shall conform to the
requirements of Rules 17a-3 and 17a-4 under the 1934 Act, and as further
amplified in SEC Release 34-8389. Furthermore, such accounts, books, and other
records shall remain the property of SCHWAB, shall be surrendered promptly to
SCHWAB at its request without charge, and shall at all times be subject to
inspection by SCHWAB, the SEC pursuant to Section 17(a) of the 1934 Act and any
other appropriate governmental agency. SCHWAB shall have responsibility for
maintaining the records required of it by applicable law or regulations with
respect to broker-dealer operations, although, in XXXXXX'x discretion and at
FIRST GREAT-WEST's expense, SCHWAB may use FIRST GREAT-WEST as its agent for
this purpose.
(d) Any accounts, books, and other records maintained by SCHWAB, at its
expense, as agent for the benefit of FIRST GREAT-WEST or the Accounts, shall
conform to the requirements of Rules 31a-1 and 31a-2 under the 1940 Act or such
other SEC requirement as relates to non-1940 Act products or as required by
state insurance regulators and conveyed to SCHWAB in writing. Furthermore, such
accounts, books, and records shall remain the property of FIRST GREAT-WEST or
the Accounts, shall be surrendered promptly to FIRST GREAT-WEST or the Accounts
upon request by FIRST GREAT-WEST without charge, and shall at all times be
subject to inspection by FIRST GREAT-WEST, whether acting on behalf of itself or
the Accounts, the SEC pursuant to Section 31(b) of the 1940 Act and any other
appropriate governmental agency. FIRST GREAT-WEST or the Accounts shall have
responsibility for maintaining the records required of them by applicable law or
regulations with respect to investment company operations, although, in FIRST
GREAT-WEST's discretion and at the Distributor's expense, FIRST GREAT-WEST and
the Accounts may use SCHWAB as their agent for this purpose.
(e) Upon the written request of either Party to the other, or upon termination
of this Agreement, a Party shall provide to the other without charge the
originals, if the requesting Party is required to maintain such originals, or,
at the requesting Party's cost, copies of the accounts, books and other records
or electronic information representing the accounts, books and records if that
is the format in which they are maintained.
SECTION 4. LEGAL COMPLIANCE
4.1 Securities Laws
(a) FIRST GREAT-WEST represents and warrants that:
(i) interests in each Account funding any Contract or Contracts will be
registered under the 1933 Act to the extent required by the 1933 Act,
(ii) the Contracts will be duly authorized for issuance and sale in
compliance with all applicable federal and state laws, including, without
limitation, the 1933 Act, the 1934 Act, the 1940 Act and New York law,
(iii) each Account is and will remain registered under the 1940 Act, to
the extent required by the 1940 Act,
(iv) each Account does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, to the extent required,
(v) each Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder,
(vi) FIRST GREAT-WEST will amend the registration statement for its
Contracts under the 1933 Act and for its Accounts under the 1940 Act from time
to time as required in order to effect the continuous offering of its Contracts
or as may otherwise be required by applicable law, subject to its right to
discontinue or withdraw from future sale any Contract pursuant to 1.2(b) of
this Agreement, and
(vii) each prospectus for the Contracts, including any statement of
additional information (collectively, as the context requires, "Contract
Prospectus") will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(b) FIRST GREAT-WEST represents and warrants that it will prepare, print, and
deliver, in a timely manner annual and semi-annual reports for the Accounts,
Contract Prospectuses, voting instruction forms, as required, and related
materials to all existing Contract owners, as appropriate. The costs of
preparing and delivering the foregoing materials shall be borne by FIRST
GREAT-WEST.
(c) SCHWAB represents and warrants that it is duly registered with the SEC as a
broker-dealer under the 1934 Act, that it is licensed as a broker-dealer in all
50 states, and that the activities of SCHWAB and its employees in connection
with the offer and sale of Contracts shall be in compliance with applicable
federal and state securities laws in all material respects.
(d) SCHWAB agrees that neither it nor its employees shall make any
representations concerning the Contracts, except those contained in or
reasonably derived from the Contract Prospectus, registration statements, annual
or semi-annual reports of the Accounts, or in other written materials prepared
by or on behalf of FIRST GREAT-WEST.
(e) SCHWAB shall reimburse FIRST GREAT-WEST for the cost of printing the
Contract Prospectuses for persons other than existing Contract owners, and
SCHWAB shall pay for all costs of delivering Contract Prospectuses to such
persons.
(f) SCHWAB agrees to execute such papers and do such acts and things as shall
from time to time be reasonably requested by FIRST GREAT-WEST for the purpose of
maintaining the registration of the Contracts under the 1933 Act and any Account
under the 1940 Act and any applicable insurance regulatory authority.
(g) SCHWAB, directly or through FIRST GREAT-WEST (at FIRST GREAT-WEST's
expense), shall, upon or prior to the completion of each Contract transaction
for which a confirmation is legally required, send a written confirmation to the
Contract owner for each such transaction, in a form and manner which complies
with the requirements of the 1934 Act, state laws and regulations, and the
disclosure requirements of the NASD. Such confirmations shall be furnished to
all Contract owners in accordance with securities laws, shall reflect the facts
of the transaction, and, if applicable, shall show that they are being sent by
FIRST GREAT-WEST on behalf of SCHWAB. The Parties agree that the form and the
manner of use of confirmations in connection with transactions occurring in
Contract accounts shall be supervised by SCHWAB. FIRST GREAT-WEST shall prepare
and distribute such confirmations in accordance with XXXXXX'x instructions.
FIRST GREAT-WEST shall make no changes or variations in either the form or the
manner of distribution of such confirmations without the written approval of
SCHWAB and shall cause such confirmations to be issued as directed by SCHWAB and
on behalf of SCHWAB.
(h) FIRST GREAT-WEST represents and warrants that it shall prepare, print,
deliver and file with the SEC or other appropriate regulatory body, or cause the
same to be done, as required by law and in a timely manner, all registration
statements, annual and semi-annual reports, proxies and related materials, and
other documents relating to all underlying investment vehicles to which Contract
owner premiums may be allocated. FIRST GREAT-WEST's obligations in this regard,
and the allocation of expenses relating thereto, shall be delineated in a
separate agreement with each underlying investment vehicle and SCHWAB, to which
FIRST GREAT-WEST shall be a party.
4.2 Tax Laws
(a) FIRST GREAT-WEST represents and warrants that the Contracts currently are
treated as annuity, endowment, or life insurance contracts under applicable
provisions of the Internal Revenue Code of 1986, as amended ("Code") and that it
will make every effort to maintain such treatment; FIRST GREAT-WEST will notify
SCHWAB immediately upon having a reasonable basis for believing that any of the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
(b) FIRST GREAT-WEST represents and warrants that each Account is a "segregated
asset account" and that interests in each 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 to the extent required by law. FIRST GREAT-WEST will make every
effort to continue to meet such definitional requirements, and it will notify
SCHWAB 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.
(c) FIRST GREAT-WEST agrees to administer the Contracts in a manner that will
comply with all federal and state tax law.
(d) FIRST GREAT-WEST agrees to prepare, print, and deliver to Contract owners,
and, to the extent required, file with the Internal Revenue Service and any
other appropriate regulatory body, all reports, forms, and other information
necessary for FIRST GREAT-WEST to comply with applicable federal and state tax
law.
4.3 Insurance Laws and Other Laws
(a) FIRST GREAT-WEST shall take all actions necessary to the extent required by
law to obtain and maintain all regulatory approvals required to issue the
Contracts for sale in any states where the contracts are being offered for sale
(b) SCHWAB shall take all actions necessary to ensure that it and its employees
are properly licensed and appointed by FIRST GREAT-WEST to sell insurance and
annuities in the jurisdictions in which they are selling and shall execute such
papers and do such acts and things as shall from time to time be reasonably
requested by FIRST GREAT-WEST for the purpose of qualifying and maintaining
qualification of the Contracts for sale under the applicable laws of any state.
(c) FIRST GREAT-WEST represents and warrants that:
(i) it is an insurance company duly organized, validly existing and in
good standing under the laws of the State of New York and has full corporate
power, authority and legal right to execute, deliver and perform its duties and
comply with its obligations under this Agreement,
(ii) it will legally and validly establish and maintain each Account as a
segregated asset account under Section 4220 of the New York Insurance Code and
the regulations thereunder, and
(iii) the Contracts comply in all material respects with all other
applicable federal and state laws and regulations.
(d) SCHWAB represents and warrants that it is a corporation duly organized,
validly existing, and in good standing under the laws of the State of California
and has full power, authority, and legal right to execute, deliver, and perform
its duties and comply with its obligations under this Agreement.
(e) SCHWAB represents and warrants that it is a member in good standing of the
NASD and that it has obtained all approvals necessary to offer the Contracts and
otherwise enter into and carry out all transactions contemplated by this
Agreement, has obtained or will obtain all approvals, licenses, authorizations,
orders or consents, and shall be duly registered and appointed or otherwise
qualified under the securities and insurance laws of any state or other
jurisdiction where offers or sales of the Contracts may be made.
(f) SCHWAB agrees that it shall be bonded as required by all applicable laws
and regulations. SCHWAB shall be responsible for carrying out its sales and
underwriting obligations hereunder in continued compliance with applicable NASD
Rules of Fair Practice and federal and state securities laws and regulations and
state insurance laws and regulations.
4.4 Notice of Certain Proceedings and Other Circumstances
(a) FIRST GREAT-WEST shall immediately notify SCHWAB of:
(i) the issuance by any court or regulatory body of any stop order, cease
and desist order, or other similar order with respect to any Contract or to any
Account's registration statement under the 1933 Act relating to the Contracts
or any Contract Prospectus,
(ii) any request by the SEC or other regulatory body for any amendment to
such registration statement or Contract Prospectus,
(iii) the initiation of any proceeding materially affecting the offering
or sale of the Contracts or the ability of FIRST GREAT-WEST to issue or sell
such Contracts,
(iv) any other actions or circumstances that may prevent the lawful offer
or sale of any of the Contracts in any state.
FIRST GREAT-WEST shall make every effort to prevent the issuance of any such
stop order, cease and desist order or similar order and, if any such order is
issued, to obtain the lifting thereof at the earliest possible time.
(b) SCHWAB shall immediately notify FIRST GREAT-WEST of:
(i) the issuance by any court or regulatory body of any order having a
material effect with respect to XXXXXX'x ability to perform its obligations
hereunder,
(ii) the initiation of any proceeding materially affecting the offering
or sale of the Contracts or the ability of SCHWAB to sell such Contracts, and
(iii) any other actions or circumstances that may prevent the lawful
offer or sale of any of the Contracts in any state.
(c) SCHWAB shall notify FIRST GREAT-WEST within three (3) business days if it
or any of its officers, directors, employees or registered representatives who
are licensed to sell insurance and are appointed by FIRST GREAT-WEST is or
becomes subject to any proceedings or is sanctioned or suspended (i) by the SEC
or NASD, (ii) by any court for securities, insurance or financial institution
law violations, or (iii) by any state regulatory authority.
(d) In the case of an oral or written consumer or regulatory agency complaint,
SCHWAB and FIRST GREAT-WEST shall notify the other within three (3) business
days of receipt and shall coordinate and fully cooperate in responding to such
complaints. SCHWAB and FIRST GREAT-WEST shall develop procedures to coordinate,
investigate and respond to such complaints.
4.5 Parties to Cooperate
SCHWAB and FIRST GREAT-WEST shall cooperate fully in any insurance or
securities regulatory examination, investigation, or proceeding or any judicial
proceeding with respect to FIRST GREAT-WEST, SCHWAB, and their respective
affiliates, agents and representatives to the extent that such examination,
investigation, or proceeding arises in connection with Contracts distributed
under this Agreement. SCHWAB and FIRST GREAT-WEST shall furnish applicable
federal and state regulatory authorities with any information or reports in
connection with its services or sales under this Agreement, which authorities
may lawfully request in order to ascertain whether FIRST GREAT-WEST or SCHWAB
sales and operations are being conducted in a manner consistent with any
applicable law or regulations. The Parties shall, at least 10 business days
prior to provision of such information, notify the other to enable that Party,
if it so desires, to interpose any legal objections to provision of the reports
or information.
4.6 Information About FIRST GREAT-WEST and SCHWAB
(a) FIRST GREAT-WEST shall provide to SCHWAB or its designated agent at least
one complete copy of all SEC registration statements, Contract Prospectuses,
reports, any required voting instruction solicitation material, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to each Account or the Contracts, at least five (5) business
days prior to the filing of such document with the SEC or other regulatory
authorities for approval.
(b) Neither FIRST GREAT-WEST nor any of its affiliates will give any
information or make any representations or statements on behalf of or concerning
SCHWAB or its affiliates in connection with the sale of the Contracts other than
(i) the information or representations contained in the registration statement,
including the Contract Prospectus contained therein, as such registration
statement and Prospectus may be amended from time to time; or (ii) in reports or
voting instruction solicitation materials for the Accounts; or (iii) in
marketing material prepared by SCHWAB, except with the express written
permission of SCHWAB.
(c) Except with the express written permission of FIRST GREAT-WEST, neither
SCHWAB nor any of its affiliates, officers or employees will give any
information or make any representations or statements on behalf of or concerning
FIRST GREAT-WEST or its affiliates or the Contracts or Accounts, in connection
with the sale of the Contracts other than
(i) the information or representations contained in the Contracts, the
registration statement, including the Contract Prospectus contained therein, as
such registration statement and Prospectus may be amended from time to time, or
the Prospectuses of the underlying funds; or
(ii) in reports or voting instruction solicitation materials for the
Accounts; or
(iii) in marketing material or other material approved or developed by
FIRST GREAT-WEST.
SECTION 5. COSTS AND EXPENSES
5.1 FIRST GREAT-WEST to Pay Employees
FIRST GREAT-WEST shall have the responsibility for paying any compensation due
its employees. FIRST GREAT-WEST specifically agrees to indemnify, hold harmless
and defend SCHWAB against any and all expense, cost, causes of action,
liability, loss or damage, including reasonable attorneys' fees, resulting or
arising from or related to any claim against SCHWAB for compensation allegedly
owed to a FIRST GREAT-WEST employee. FIRST GREAT-WEST specifically agrees that
it shall not represent to any employee, broker-dealer, or registered
representative that any compensation or fees are payable to them from SCHWAB.
5.2 SCHWAB to Pay Employees
SCHWAB shall have the responsibility for paying any compensation due its
employees. SCHWAB specifically agrees to indemnify, hold harmless and defend
FIRST GREAT-WEST against any and all expense, cost, causes of action, liability,
loss or damage, including reasonable attorneys' fees, resulting or arising from
or related to any claim against FIRST GREAT-WEST for compensation allegedly owed
to a SCHWAB employee. SCHWAB specifically agrees that it shall not represent to
any employee, broker-dealer, or registered representative that any compensation
or fees are payable to them from FIRST GREAT-WEST.
5.3 Each Party To Bear Own Costs
Except as otherwise expressly provided, each Party to this Agreement shall bear
all expenses of fulfilling its duties and obligations hereunder.
SECTION 6. INDEMNIFICATION
6.1 Indemnification by FIRST GREAT-WEST
(a) FIRST GREAT-WEST shall indemnify and hold harmless SCHWAB against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or
expense, and reasonable counsel fees incurred in connection therewith) arising
by reason of any person's acquiring any Contract, which may be based upon any
federal or state securities act, or on any other statute or at common law,
(i) on the ground that the Contract, offering document, registration
statement or related Contract Prospectus, as from time to time amended and
supplemented, or the annual or interim reports to Contract owners, any
published marketing materials or communications with any Contract owner or
prospective Contract owner concerning the Contract, include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading, if
such statement or omission was made in reliance upon, and in conformity with,
information furnished by or on behalf of FIRST GREAT-WEST to SCHWAB; or
(ii) on the ground that FIRST GREAT-WEST, its employees, officers, or
directors, failed to comply with any applicable securities or other laws and
regulations in connection with its rendering of Contract issue, recordkeeping,
confirmation or other services under this Agreement; or
(iii) on the ground of FIRST GREAT-WEST's negligence or misconduct, or
that of FIRST GREAT-WEST's employees, officers, or directors, in the performance
of its duties hereunder, or breach by FIRST GREAT-WEST of any representation or
warranty hereunder.
The indemnities in this Section 6.1 shall, upon the same terms and conditions,
extend to and inure to the benefit of each director, officer and employee of
SCHWAB and any person controlling or controlled by SCHWAB within the meaning of
Section 15 of the 1933 Act or Xxxxxxx 00 xx xxx 0000 Xxx.
(x) In no case is the indemnity of FIRST GREAT-WEST in favor of SCHWAB and any
such controlling or controlled persons to be deemed to protect SCHWAB or any
such controlling or controlled persons thereof against any liability to FIRST
GREAT-WEST, or the Accounts or its Contract owners to which SCHWAB or any such
controlling or controlled persons would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement. In addition, in no case is FIRST GREAT-WEST to be liable under
its indemnity agreement contained in Section 6.1(a) with respect to any claim
made against SCHWAB or any such controlling or controlled persons, unless SCHWAB
or such controlling or controlled persons, as the case may be shall have
notified FIRST GREAT-WEST in writing by fax or overnight mail within two (2)
days after the summons or other first legal process giving information of the
nature of the claim shall have been served upon SCHWAB or such controlling or
controlled persons (or after SCHWAB or such controlling or controlled persons
shall have received notice of such service on any designated agent), but failure
to notify FIRST GREAT-WEST of any such claim shall not relieve FIRST GREAT-WEST
from any liability which it may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph. FIRST GREAT-WEST will be entitled to participate at its own expense
in the defense, or, if it so elects, to assume the defense of any suit brought
to enforce any such liability, but if FIRST GREAT-WEST elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to SCHWAB or such controlling or controlled person or persons,
defendant or defendants in the suit. In the event FIRST GREAT-WEST elects to
assume the defense of any such suit and retains such counsel, SCHWAB or such
controlling or controlled person or persons, defendant or defendants in the
suit, shall bear the fees and expense of any additional counsel retained by
SCHWAB or such controlling or controlled person or persons, but, in case FIRST
GREAT-WEST does not elect to assume the defense of any such suit, it will
reimburse SCHWAB or such controlling or controlled person or persons, defendant
or defendants in the suit, for the reasonable fees and expense of any counsel
retained by them. FIRST GREAT-WEST shall promptly notify SCHWAB of the
commencement of any litigation or proceedings against FIRST GREAT-WEST or any of
its officers, directors, employees or agents in connection with the issuance or
sale of the Contracts.
6.2 Indemnification by SCHWAB
(a) SCHWAB shall indemnify and hold harmless FIRST GREAT-WEST and the Accounts
against any loss, liability, claim, damage or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damage or
expense and reasonable counsel fees incurred in connection therewith) arising by
reason of any person's acquiring any Contract, which may be based upon any
federal or state securities act, or on any other statute or at common law:
(i) on the ground that the Contract, offering document, registration
statement or related Contract Prospectus, as from time to time amended and
supplemented, or the annual or interim reports to Contract owners, any
published marketing materials or communications with any Contract owner or
prospective Contract owner concerning the Contract, include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading, if
such statement or omission was made in reliance upon, and in conformity with,
information furnished in connection therewith by or on behalf of SCHWAB to
FIRST GREAT-WEST; or
(ii) on the ground that SCHWAB, its employees, officers or directors
failed to comply with any applicable securities or other laws and regulations
in connection with its rendering of Contract issue, recordkeeping, confirmation
or other services under this Agreement; or
(iii) on the ground of XXXXXX'x negligence or misconduct, or that of
XXXXXX'x employees, officers or directors, in the performance of its duties
hereunder, or breach of any representation or warranty hereunder.
The indemnities in this Section 6.2 shall, upon the same terms and conditions,
extend to and inure to the benefit of each director, officer and employee of
FIRST GREAT-WEST and any person controlling or controlled by FIRST GREAT-WEST
within the meaning of Section 15 of the 1933 Act or Xxxxxxx 00 xx xxx 0000 Xxx.
(x) In no case is the indemnity of SCHWAB in favor of FIRST GREAT-WEST and any
such controlling or controlled persons to be deemed to protect FIRST GREAT-WEST
or any such controlling or controlled persons thereof against any liability to
SCHWAB to which FIRST GREAT-WEST or any such controlling or controlled persons
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement. In addition, in no case is
SCHWAB to be liable under its indemnity agreement contained in Section 6.2(a)
with respect to any claim made against FIRST GREAT-WEST or any such controlling
or controlled persons, unless FIRST GREAT-WEST or such controlling or
controlled persons, as the case may be shall have notified SCHWAB in writing
within two (2) days after the summons or other first legal process giving
information of the nature of the claim shall have been served upon FIRST
GREAT-WEST or such controlling or controlled persons (or after FIRST GREAT-WEST
or such controlling or controlled persons 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
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph. SCHWAB will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if SCHWAB
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to FIRST GREAT-WEST or such controlling or controlled
person or persons, defendant or defendants in the suit. In the event SCHWAB
elects to assume the defense of any such suit and retain such counsel, FIRST
GREAT-WEST or such controlling or controlled person or persons, defendant or
defendants in the suit, shall bear the fees and expense of any additional
counsel retained by FIRST GREAT-WEST or such controlling or controlled person
or persons, but, in case SCHWAB does not elect to assume the defense of any
such suit, it will reimburse FIRST GREAT-WEST or such controlling or controlled
person or persons, defendant or defendants in the suit, for the reasonable fees
and expense of any counsel retained by them. SCHWAB shall promptly notify FIRST
GREAT-WEST of the commencement of any litigation or proceedings against SCHWAB
or any of its officers, directors, employees or agents in connection with the
issuance or sale of the Contracts.
6.3 Limitation on Liability
In no event shall either Party under this Agreement be liable for lost profits
or for exemplary, special, punitive or consequential damages alleged to have
been sustained by the other Party, as opposed to a third party.
6.4 Injunctive Relief
The Parties each agree that monetary damages may be an inadequate remedy in the
event of a breach by either Party of any of the covenants in this Agreement, and
that any such breach by a Party may cause the other Party great and irreparable
injury and damage. Accordingly, nothing in this Agreement shall limit a Party's
right to obtain equitable relief when appropriate.
SECTION 7. TERM AND TERMINATION
7.1 Term
This Agreement shall be effective as of the date first above written and shall
remain in full force and effect thereafter, subject to Section 7.2 below.
7.2 Events of Termination
(a) In addition to the provisions of Section 7.3, this Agreement shall
terminate at either Party's option, without penalty:
(i) with or without cause, on not less than 180 days written notice to the
other Party;
(ii) upon the mutual written consent of the Parties;
(iii) upon written notice of one Party to the other in the event of
bankruptcy or insolvency of the Party to which notice is given; or
(b) This Agreement shall terminate at the option of SCHWAB, in the event of
(i) fraud, misrepresentation, conversion or unlawful withholding of funds
by FIRST GREAT-WEST;
(ii) the dissolution or disqualification of FIRST GREAT-WEST to do
business under any applicable state or federal law where FIRST GREAT-WEST's
ability to perform is materially impaired; however, such termination shall
extend only to the jurisdiction(s) where FIRST GREAT-WEST is prohibited from
doing business;
(iii) the suspension or revocation of any material license or permit held
by FIRST GREAT-WEST by the appropriate governmental agency or authority;
however, such termination shall extend only to the jurisdiction(s) where FIRST
GREAT-WEST is prohibited from doing business;
(iv) the sale (without the prior written consent of SCHWAB, which consent
shall not be unreasonably withheld) of the FIRST GREAT-WEST business relating
to the Contracts, which sale is to an unaffiliated person or entity, whether by
merger, consolidation, or sale of substantially all of FIRST GREAT-WEST's
assets or stock related to the Contracts, during the term of, and any extension
of, this Agreement;
(v) upon institution of formal proceedings against FIRST GREAT-WEST by
the NASD, SEC, or any other regulatory body regarding FIRST GREAT-WEST's duties
under this Agreement, the sale of the Contracts, or the operation of any
Account, which would materially impair the marketability of the Contracts,
provided that such proceedings result in a finding of material wrongdoing by
FIRST GREAT-WEST, or which result in disqualification from continued membership
with the NASD or registration with the SEC; or
(vi) any termination at the option of SCHWAB of that certain
Administration Agreement of even date herewith between FIRST GREAT-WEST and
SCHWAB (the "Administration Agreement") pursuant to Section 7.2(a)(iii),
7.2(b)(i)-(iv), or 7.3 of the Administration Agreement.
(c) This Agreement shall terminate at the option of FIRST GREAT-WEST, in the
event of:
(i) fraud, misrepresentation, conversion or unlawful withholding of funds
by SCHWAB;
(ii) the dissolution or disqualification of SCHWAB to do business under
any applicable state or federal law where XXXXXX'x ability to perform is
materially impaired; however, such termination shall extend only to the
jurisdiction(s) where SCHWAB is prohibited from doing business;
(iii) the suspension or revocation of any material license or permit held
by SCHWAB by the appropriate governmental agency or authority; however, such
termination shall extend only to the jurisdiction(s) where SCHWAB is prohibited
from doing business;
(iv) the sale (without the prior written consent of FIRST GREAT-WEST,
which consent shall not be unreasonably withheld) of XXXXXX'x business to an
unaffiliated person or entity, whether by merger, consolidation, or sale of
substantially all of XXXXXX'x assets or stock or otherwise, during the term of,
and any extension of, this Agreement;
(v) upon institution of formal disciplinary proceedings against SCHWAB by
the NASD, SEC, or any other regulatory body, which would materially impair the
marketability of the Contracts, provided that such proceedings result in a
finding of material wrongdoing by SCHWAB, or which result in disqualification
from continued membership with the NASD or registration with the SEC; or
(vi) any termination at the option of FIRST GREAT-WEST of the
Administration Agreement pursuant to Section 7.2(a)(iii), 7.2(c)(i)-(iv), or
7.3 of the Administration Agreement.
7.3 Events of Default
If either Party breaches this Agreement or is in default in the performance of
any of its duties and obligations hereunder (the "defaulting Party"), the
non-defaulting Party may give written notice thereof to the defaulting Party,
and if such breach or default is not remedied within 90 days after such written
notice is given, then the non-defaulting Party may terminate this Agreement by
giving 90 days written notice of such termination to the defaulting Party.
7.4 Parties to Cooperate Respecting Termination
The Parties agree to cooperate and give reasonable assistance to one another in
effecting an orderly transition following termination.
SECTION 8. CONFIDENTIALITY
Subject to the requirements of legal process and regulatory authority, each
Party shall treat as confidential (a) the identity of existing or prospective
Contract owners and the investment managers enrolled in XXXXXX'x Financial
Advisor Service Program ("investment managers"), (b) any financial or other
information provided by existing or prospective Contract owners or investment
managers, and (c) any other information reasonably identified as confidential in
writing by any other Party hereto (collectively "confidential information").
Except as permitted by this Agreement, no Party shall disclose, disseminate or
utilize any confidential information without the express written consent of the
affected Party until such time as such information may come into the public
domain, except as permitted by this Agreement or as otherwise necessary to
service the Contracts and/or respond to appropriate regulatory authorities. Each
Party shall take all reasonable precautions to prevent the unauthorized
disclosure of any confidential information. Nothing in this Section 8 shall
prevent SCHWAB from using the confidential information pertaining to existing or
prospective Contract owners for marketing purposes. In no event shall
confidential information pertaining to existing or prospective Contract owners
be furnished by FIRST GREAT-WEST to any other company or person (except as
required by law or regulation) or be used to solicit sales of any kind,
including but not limited to any other products, securities or services for a
period of two years following termination of this Agreement. Without limiting
the foregoing, no Party shall disclose any information that another Party
reasonably considers to be proprietary. For purposes of this Agreement,
proprietary information includes, but is not limited to, computer system and
client information. The intent of this Section 8 is that no Party or any
affiliate thereof shall utilize, or permit to be utilized, its knowledge of the
other Party that is derived as a result of the relationship created by this
Agreement and any related agreements, except to the extent necessary by the
terms of this Agreement or the related agreements.
SECTION 9. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement, or the
breach hereof, shall be settled by arbitration under the rules of the NASD in
effect at that time. If the NASD refuses jurisdiction, or the Parties mutually
agree in writing, the arbitration procedure described herein shall be used. In
either event, the decision of the arbitrator(s) is final and judgment upon the
award rendered may be entered in any court having jurisdiction thereof.
To initiate arbitration, either FIRST GREAT-WEST or SCHWAB shall notify the
other Party in writing of its desire to arbitrate, stating the nature of its
dispute and the remedy sought. The Party to which the notice is sent shall
respond to the notification in writing within ten (10) days of its receipt.
The arbitration hearing shall be before a panel of three arbitrators, each of
whom must be (1) a present or former officer of a life insurance or reinsurance
company and/or (2) an officer and principal of a registered Broker-Dealer. The
panel must contain at least one representative from each of (1) and (2). An
arbitrator may not be a present or former director, officer, employee, attorney,
or consultant of FIRST GREAT-WEST or SCHWAB or either's affiliates.
FIRST GREAT-WEST and SCHWAB shall each name five (5) candidates to serve as an
arbitrator. FIRST GREAT-WEST and SCHWAB shall each choose one candidate from the
other Party's list, and these two candidates shall serve as the first two
arbitrators. FIRST GREAT-WEST and SCHWAB shall each present their initial lists
of five (5) candidates by written notification to the other Party within
twenty-five (25) days of the date of the mailing of the notification initiating
the arbitration. Any subsequent additions to the list which are required shall
be presented within ten (10) days of the date the naming Party receives notice
that a candidate that has been chosen declines to serve.
The two arbitrators shall then select the third arbitrator from the eight (8)
candidates remaining on the lists of FIRST GREAT-WEST and SCHWAB within fourteen
(14) days of the acceptance of their positions as arbitrators. If the two
arbitrators cannot agree on the choice of a third, then this choice shall be
referred back to the Parties. FIRST GREAT-WEST and SCHWAB shall take turns
striking the name of one of the remaining candidates from the initial eight (8)
candidates until only one candidate remains. If the candidate so chosen shall
decline to serve as the third arbitrator, the candidate whose name was stricken
last shall be nominated as the third arbitrator. This process shall continue
until a candidate has been chosen and accepted. This candidate shall serve as
the third arbitrator. The first turn at striking the name of a candidate shall
belong to the Party that is responding to the other Party's initiation of the
arbitration. Once chosen, the arbitrators are empowered to decide all
substantive and procedural issues by a majority of votes.
It is agreed that each of the three arbitrators should be impartial regarding
the dispute. Therefore, at no time will either Party contact or otherwise
communicate with any person who is to be or who has been designated as a
candidate to serve as an arbitrator concerning the dispute, except upon the
basis of jointly drafted communications provide by both Parties to inform those
candidates actually chosen as arbitrators of the nature and facts of the
dispute. Likewise, any written or oral arguments provided to the arbitrators
concerning the dispute shall be coordinated with the other Party and shall be
provided simultaneously to the other Party or shall take place in the presence
of the other Party. Further, at no time shall any arbitrator be informed that
the arbitrator has been named or chosen by one Party or the other.
The arbitration hearing shall be held on a date fixed by the arbitrators.
In no event shall this date be later than six (6) months after the appointment
of the third arbitrator. As soon as possible, the arbitrators shall establish
pre-arbitration procedures as warranted by the facts and issues of the
particular case. At least ten (10) days prior to the arbitration hearing, each
Party shall provide the other Party and the arbitrators with a detailed
statement of the facts and arguments it will present at the arbitration hearing.
The arbitrators may consider any relevant evidence; they shall give the evidence
such weight as they deem it entitled to after consideration of any objections
raised concerning it. The Party initiating the arbitrations shall have the
burden of proving its case by a preponderance of the evidence. Each Party may
examine any witnesses who testify at the arbitration hearing, the arbitrators
shall apportion the costs of arbitration, which shall include but not be limited
to their own fees and expenses, as they deem appropriate.
SECTION 10. BONDING AND INSURANCE
Each Party shall maintain sufficient fidelity bond coverage (including coverage
for larceny and embezzlement) and errors and omissions insurance coverage as may
be required by applicable law or as such Party deems necessary in light of its
obligations under this Agreement.
SECTION 11. NOTICES
Any notice required or permitted to be sent under this Agreement shall be given
to the following persons at the following addresses and facsimile numbers, or
such other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
000-000-0000
Xxxxxx Low
XXXXXXX XXXXXX & CO., INC.
Office of Corporate Counsel
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
000-000-0000
Xxxx Xxxxxxxxx
SECTION 12. TRADEMARKS
12.1 SCHWAB owns all right, title and interest in and to the name, trademark
and service xxxx "SCHWAB", and SCHWAB owns (or will own prior to use) all other
tradenames, trademarks and service marks that may be used by SCHWAB in
performing XXXXXX'x obligations under this Agreement (collectively with the
"SCHWAB" name, trademark and service xxxx, the "SCHWAB licensed marks" or the
"licensor's licensed marks"). SCHWAB hereby grants to FIRST GREAT-WEST
(including its affiliates) a non-exclusive license to use the SCHWAB licensed
marks in connection with FIRST GREAT-WEST's performance of the services
contemplated under this Agreement subject to the terms and conditions set forth
in this Section 12.
12.2 FIRST GREAT-WEST owns all right, title and interest in and to the name,
trademark and service xxxx "First Great-West Life & Annuity Insurance Company",
and FIRST GREAT-WEST owns (or will own prior to use) all other tradenames,
trademarks and service marks that may be used by FIRST GREAT-WEST in performing
FIRST GREAT-WEST's obligations under this Agreement (collectively with the
"First Great-West Life & Annuity Insurance Company" name, trademark and service
xxxx, the "FIRST GREAT-WEST licensed marks" or the "licensor's licensed marks").
FIRST GREAT-WEST hereby grants to SCHWAB (including its affiliates) a
non-exclusive license to use the FIRST GREAT-WEST licensed marks in connection
with XXXXXX'x performance of the services contemplated by this Agreement,
subject to the terms and conditions set forth in this Section 12.
12.3 The grant of license by SCHWAB and FIRST GREAT-WEST (each, a "licensor")
to the other and affiliates thereof (the "licensees") shall terminate
automatically when the Contracts cease to be outstanding or by either Party at
its election upon termination of this Agreement. Upon automatic termination,
each licensee shall cease to use a licensor's licensed marks. Upon FIRST
GREAT-WEST's elective termination of this license, SCHWAB (including its
affiliates) shall immediately cease to distribute promotional, sales or
advertising material relating to any Contract and shall likewise cease any
activity that suggests that it has any right under the FIRST GREAT-WEST licensed
marks or that it has any association with FIRST GREAT-WEST or any affiliate of
FIRST GREAT-WEST in connection with any such Contracts. Similarly, upon XXXXXX'x
elective termination of this license, FIRST GREAT-WEST (including its
affiliates) shall cease to issue as soon as reasonably practicable, any new
Contracts bearing any of the SCHWAB licensed marks and shall likewise cease any
activity which suggests that it has any right under any of the SCHWAB licensed
marks or that it has any association with SCHWAB or any affiliate of SCHWAB,
except that FIRST GREAT-WEST shall have the right to administer any outstanding
Contracts bearing any of the SCHWAB licensed marks and in connection therewith
to use the SCHWAB licensed marks.
12.4 Notwithstanding any provision in this Agreement to the contrary, a
licensee shall obtain the prior written approval of the licensor for the public
release by such licensee of any materials bearing the licensor's licensed marks.
The licensor's approval shall not be unreasonably withheld.
12.5 During the term of this grant of license, a licensor may request that a
licensee submit samples of any materials bearing any of the licensor's licensed
marks that were previously approved by the licensor but, due to changed
circumstances, the licensor may wish to reconsider, or that were not previously
approved in the manner set forth above. If, on the reconsideration or on initial
review, respectively, any such samples fail to meet with the written approval of
the licensor, then the licensee shall immediately cease distributing such
disapproved materials. The licensor's approval shall not be unreasonably
withheld. The licensee shall obtain the prior written approval of the licensor
for the use of any new materials developed to replace the disapproved materials,
in the manner set forth above.
12.6 Each licensee hereunder: (i) acknowledges and stipulates that the
licensor's licensed marks are valid and enforceable trademarks and/or service
marks and that such licensee does not own the licensor's licensed marks and
claims no rights therein other than as a licensee under this Agreement; (ii)
agrees never to contend otherwise in legal proceedings or in other
circumstances; and (iii) acknowledges and agrees that the use of the licensor's
licensed marks pursuant to this grant of license shall inure to the benefit of
the licensor.
SECTION 13. MISCELLANEOUS
13.1 Amendment
This Agreement may be amended at any time by a writing executed by the Parties.
13.2 Non-Assignment
This Agreement shall not be assigned by either Party without the prior written
consent of the other Party, provided, however, that FIRST GREAT-WEST or SCHWAB
may subcontract or assign provision of services to affiliates or subsidiaries,
including Financial Administrative Services Corporation. Such assignment or
subcontracting does not relieve FIRST GREAT-WEST or SCHWAB of any responsibility
with regard to its obligations under this Agreement for such services.
13.3 Governing Law
This Agreement shall be interpreted in accordance with and governed by the laws
of the State of New York.
13.4 Survival of Provisions
Sections 2.1(d), 3.1, 4.4, 4.5, 4.6, 5, 6, 8, 9, 10, 12, and 13.7 shall survive
termination of this Agreement.
13.5 Severability
Should any provision of this Agreement be held or made invalid by a court
decision, statute, rule, or otherwise, the remainder of this Agreement shall not
be affected thereby.
13.6 Waiver
Any failure or delay by either Party to enforce at any time any of the
provisions of this Agreement, or to exercise any right or option which is herein
provided, or to require at any time the performance of any of the provisions
hereof, shall in no way be construed to be a waiver of such provision of this
Agreement.
13.7 Right to Audit
FIRST GREAT-WEST, its employees or authorized representatives may audit,
inspect and examine at reasonable times, during regular business hours and with
at least 24 hours prior notice, all books and records of SCHWAB and its agents
of all transactions arising under this Agreement. FIRST GREAT-WEST agrees to
limit its review of the books and records to the extent necessary and as often
as necessary to fulfill all contractual obligations to the holders of Contracts,
to comply with all legal and regulatory requirements, to meet the requirements
of FIRST GREAT-WEST auditors and to ensure compliance with this Agreement.
SCHWAB, its employees or authorized representatives may audit, inspect and
examine at reasonable times, during regular business hours and with at least 24
hours prior notice, all books and records of FIRST GREAT-WEST and its agents of
all transactions arising under this Agreement. SCHWAB agrees to limit its review
of the books and records to the extent necessary and as often as necessary to
fulfill all contractual obligations to the holders of Policies, to comply with
all legal and regulatory requirements, to meet the requirements of SCHWAB
auditors and to ensure compliance with this Agreement.
13.8 Force Majeure
Neither Party shall be liable for damages due to delay or failure to perform
any obligation under this Agreement where such delay or failure results directly
or indirectly from circumstances beyond the control and without the fault or
negligence of such Party.
13.9 Entire Agreement
This Agreement shall be the sole and only agreement between FIRST GREAT-WEST
and SCHWAB regarding the distribution of the Contracts, and it supersedes all
prior and contemporaneous agreements regarding the distribution of the
Contracts. This Agreement may not be amended, supplemented, or modified, except
as expressly permitted herein, without the written agreement of the Parties.
IN WlTNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day and year first written above.
SCHEDULE 1
SEPARATE ACCOUNTS OF
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Variable Annuity-1 Series Account, a separate account established under New York
law on January 15, 1997.
Fixed Annuity Account, a separate account established under New York law on
January 15, 1997.
SCHEDULE 1.1
CONTRACTS AVAILABLE FOR OFFER AND SALE
1. The Schwab Variable Annuity. Form J434. Exclusive marketing. Registered with
SEC. Contributions may be allocated among a number of investment options. The
value of the contributions allocated to the variable annuity option will vary
according to the investment experience of the investment options. Also,
contributions may be allocated to one or more guaranteed certificate periods.
If, prior to maturity of a certificate, the Contract is surrendered in full or
in part or amounts allocated to a certificate are transferred, a market value
adjustment to the Contract value will be made. The market value adjustment may
be a positive or negative adjustment based on the results of an indexed
calculation. This product may be issued as an XXX or non-qualified contract.
2. The Schwab Fixed Annuity. Form J424. Flexible Premium Deferred Market Value
Adjusted Annuity. Exclusive marketing. Registered with SEC. Contributions may be
allocated to one or more guaranteed certificate periods. If, prior to maturity
of a certificate, the Contract is surrendered in full or in part or amounts
allocated to a certificate are transferred, a market value adjustment to the
Contract value will be made. The market value adjustment may be a positive or
negative adjustment based on the results of an indexed calculation. This product
may be issued as an XXX or non-qualified contract.
3. Single Premium Immediate Annuity. Non-exclusive marketing. Not registered
with SEC. Form numbers J260, J261.
schwab1stgwl&a
