Exhibit 8(k)
FUND PARTICIPATION AGREEMENT
▇▇▇▇▇▇▇▇▇▇▇ Variable Account Funds
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares.........................................3
ARTICLE II. Representations and Warranties..............................6
ARTICLE III. Prospectuses and Proxy Statements; Voting...................8
ARTICLE IV. Sales Material and Information.............................10
ARTICLE V. Fees and Expenses..........................................12
ARTICLE VI. Diversification and Qualification..........................13
ARTICLE VII. Potential Conflicts and Compliance With Mixed
and Shared Funding Exemptive Order.........................15
ARTICLE VIII. Indemnification............................................18
ARTICLE IX. Applicable Law.............................................24
ARTICLE X. Termination................................................25
ARTICLE XI. Notices....................................................29
ARTICLE XII. Miscellaneous..............................................29
SCHEDULE A Contracts
SCHEDULE B Designated Portfolios
SCHEDULE C Administrative Services
SCHEDULE D Report per Section 6.6
SCHEDULE E Expenses
PARTICIPATION AGREEMENT
Among
FIRST GREAT-WEST LIFE & ANNUITY
INSURANCE CaMP ANY
▇▇▇▇▇▇▇▇▇▇▇ VARIABLE ACCOUNT FUNDS
▇▇▇▇▇▇▇▇▇▇▇ FUNDS, INC.,
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO., INC.
THIS AGREEMENT, made and entered into as of this 2nd day of June, 2003,
by and among FIRST GREAT-WE:ST 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-l Series Ac:count (the "Account"); ▇▇▇▇▇▇▇▇▇▇▇ VARIABLE
ACCOUNT FUNDS a multi-series busines~i trust organized under the laws of
Massachusetts ("Fund"); ▇▇▇▇▇▇▇▇▇▇▇ FUNDS, INC. ("Adviser"), a corporation
organized under the laws of Colorado; and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO., INC., a
California corporation ("Schwab") (each a "Party," and collectively, the
"Parties").
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insuraJlce 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 beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC"), dated July l6, 1986 (File No. 812-6234), 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"), arid Rules 6e-:!(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares
1
of the Fund to be sold to and held by variable annuity and variable life
insurance separate accounts of life insurance companies that mayor may not be
affiliated with one another and qualified pension and retirememt 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 s:hares 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 Adviser!; Act of 1940, as amended, and any applicable state
securities laws; 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
~NHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors ofFGWL&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 re!~stered (or will register prior to sale) the
securities deemed to be issued by the Account under the 1 ~)33 Act to the extent
required; and
WHEREAS, to the extent pennitted 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 authorizc~d to sell such shares to unit
investment trusts such as the Account at net asset value; and
WHEREAS, to the extent pennitted 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 thc~ Fund
("Unaffiliated Funds") on behalf of the Account to fund the Contracts; and
WHEREAS, Schwab will perfonn certain services for the Fund in connection
with the Contracts; :r-;J;OW, THEREFORE, in consideration of their mutual
promises, the Parties agree as follows:
2
ARTICLE: Sale of Fund Shares
1.l. The Fund agrees to make shares of the Designated Portfolio(s)
available for purchasc~ at the applicable net asset value per share by FGWL&A
and the Account on those days on which tile Fund calculates its Designated
Portfolio(s)' net asset value pursuant to rules of the SEC, and the :Fund shall
c:liculate such net asset value on each day which the New York Stock Exchange is
open for regular trading. Notwithstanding the foregoing, the Board of Trustees
of the Fund (hereinafter the "Bo:ard") 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 b,y
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.
l.2. The Fund will not sell shares of the Designated Portfolio(s) to
any other Participating Insuratlce Company separate account unless an agreement
containing provisions similar in substance to Sections 2.1 and 2.11 of Article
II, Sections 3.4 and 3.5 (other than the provision requiring Ithe Fund to
provide voting standards) of Article III, and Article VII of this Agreeml~t is
in etTe:ct to govern such sales, it being understood and agreed to by FGWL&A and
Schwab this provision is not intended to prevent the Fund from selling its
shares to any potential investor whose purc:hase of shares does not render the
shares of the Fund or any Designated Portfolio ineligible for continued or
additional investment by FGWL&A and its Account, and it being further understood
and agreed to by FGWL&A and Schwab that this provision shall apply prospectively
to participation agreements that the Fund enters into on or after the date
hereof.
1.3. The Fund agrees to (a) sell to FGWL&A those full and fractional
shares of the Designalted Portfoliol( s) that FGWL&A, on behalf of the Account,
orders, and (b) redeem for cash, on FGWL&A's order, any full or fractional
shares of the Fund held by FGWL&A, in each case executing such ordeI'S on each
Business Day at the net asset value next computed after receipt by the Func[ or
its designee of the order for the shares of the Designated Portfolios. For
purposes of this Section 1.3, FG';vL&A shall be the designee of the Fund for
receipt of such orders and receipt by such ,designee shall constitute receipt by
the Fund, provided that the Fund receives notice of any such order 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 Exchang;e 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 redemptilon requests I~omputed 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 ltime 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
3
the Fund by wire. Upon receipt by the Fund of the federal funds so wired, such
funds shall cease to be the r(:sponsibility ofFGWL&A and shall become the
responsibility of the Fund.
1.5. In tht~ event of net redemptions, the Fund shall pay and transmit
the proceeds of redemptions of FUIld 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 tr:msmitted to FGWL&A or
its designee by wire. The Fund may delay payment for Fund shares that are
redeeJned under circumstances permitted by Section 22( e) of the 1940 Act, but
in no event for more than Jive calendar days after FGWL&A requests such
redemption.
l.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 par share is callculated and
shall use its best efforts to make such net asset value per share available by
6:00 p.m. Eastern time. In the event that the Fund is unable to meet the 6:00
p.m. time stated h(~rein, the FWld 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 file correct shclfe net
asset value.
1.7. At th,e end of each Business Day, FGWL&A shall use the information
described herein 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 ftle 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 redec~med 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") 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 III a differenc:e between the
erroneous NA V and the correct NAV of less than $0.01 per share, then no
correc1ive action need be taken; (b) if the pricing error results in a
difference between the erroneous NA V ~Lt1d the correct NA V equal to or greater
than $0.01 per share, but less than 1/2 of 1 % of the Designated Portfolio's NA
V 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 NA V and
the correct NAV equal to or greater
4
than 1/2, of 1 % of tile Designated Portfolio's NA V at the time of the error,
then the Adviser shall reimburse the Desi~~ated Portfolio for any loss (without
taking into consideration any positive effect o:f such error) and shall
reimburse FGWL&A for the costs of adjustments made to correct Contract owner
acco,unts in accordance with the provisions of Schedule D hereto. If an
adjustment is necessary to correct a material error which has caused Contract
owners to receive less than the amount to which the:y are entitled, the number
of shares of the appropriate Designated Portfolio(s) attributable to the
clCCOunts 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 h:lS not been
paid to Contract owners; however, Adviser acknowledges that Schwab and FGWL4~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 Sch~rab 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 la1er 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 Designa'▇▇▇ Portfolio(s)' 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 (pound) following
Business Day of the number of shares so issued as payment of such dividends and
distributions.
1.10. ISSUaJlce 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.
5
ARTICTLE II. 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 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 represenlts and
warrants that it is an insurance company duly organized and in good standing
under applicabJe law and that it has legally and validly established the Account
prior to any issuance or sale of tmits thereof as a segregated asset account
under Section 4240 of the New York Insurance Law and has registet"ed the Account
as a unit investment trust in accordance with the provisions of the 1940 Act to
serv.~ 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 I~und represents and warrants that Designated Portfolio(s)
shares sold pursuant to this ALgreement 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 ▇▇▇▇ ▇▇▇. 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. In an:)' event, the Fund and Adviser agree to comply with applicable
provisions of the 1940 Act and the: regulations thereunder to assure that the
investment advisory or management fees paid to the Advi:5er by the Fund are in
accordance with the requirements of the 1940 Act.
2..4. The Found and Adviser each represents and warrants that it will
make every effort to ensure tllat the investment policies, fees and expenses of
the Designated Portfolio(s) are and shall at all times, remain in c:ompliance
with the insurance and other applicable laws of the State of New York alJld any
other applicable state specifically identified by FGWL&A (or by any other
Participa.ting InSuralJlCe Company) to the extent required to perfoml this
Agreement, it being understood and agre(:d to by the Parties that this provision
does not and shall not be interpreted to excuse any failure by the Fund or the
Adviser to comply with any law (federal or state, insurance or otherwise) that
the Fund or the Adviser knew or, acting reasonably and in the ordinary course of
business,. should ha've known applied to any Designated Portfolio. The Fund
represents and warrants that it will make every effort to ensure that Designated
Portfolio(s) shares will be sold in compliarlce with the insurance laws of the
State of New York and all applicable state insurance and securities laws.
FG\VL&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 keeJ) each other infOmled of
any Law Change that becomes known to either Party.
In the event of a Law Change, the Fund agrees that, except in those
circumstances where the Fund has advised FGWL&A that its Board has detemlined
that implementation of a particular Law
6
Change is not in the best interest of all of the Fund's shareholders and has
provided FGWL&A with an explanation regarding such detennination, 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 tl1le applicable: laws of the State of Massachusetts
and that it does and will comply in all material respects with the 1940 Act.
2.6. The Adviser represents and warrants that it is and shall remain
duly qualified and registere:d under all applicable laws and that it shall
perfonn its obligations for the Fund in compliance in all material respects with
all applicable laws. The Adviser represents and warrants that manlagement and
any other fees paid by the Fund to Adviser or its affiliated persons (within the
meaning; of the ▇▇▇▇ ▇▇▇) are legitimate and not excessive, and are derived from
agreements that do not breal:h any fiduciary duty of Adviser to the Fund.
2.7 The Fund and Adviser each represents and warrants that sales of
shares of the Designa1ted Portfolio(s) are not sold through an "underwriter" or
"principal underwriter" within the meaning; of the fed~al securities 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 slecurities of the Fund
are, and shall continue to be at all times, covered by one or more blanket
jidelity bonds or similar coverage for the benefit of the Fund in an amount not
less than the minimal coverage required by Rule 17 g-1 under the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bonds
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.9. Schwab represents and warrants that it has completed, obtained and
performed, in all mat(:nal respects, all registrations, filings, approvals, and
authorizations, consents and examina.tions 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
tJl1e performaJlce 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 ch:mge 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 b:v
FGWL&A as a result of actions taken by the Fund, consistent with the allocatio:n
of expenses contained in Schedule D hereto.
7
2.11. FGWL&A represents and warrants, for pmposes other than
diversification under Section 817 of the hltemal Revenue Code of 1986 as amended
("the Code"), that the Contracts are currentl:v 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 and the Adviser immediately upon having a reasonable
basis for believing that the Contracts have (;eased 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 int(:rests in
the Account are offered exclusively through the purchase of or transfer into a
"variab1~ contract" 'Mthin 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 requirenlents, and it will notify Schwab, the Fund 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
d(:nved from tax-qualified retirement plans except, indirectly, through
Contracts purchased in connection with such plans.
ARTICILE III. Prospectuses and Proxy Statements; Voting
3.l. At lellSt annually, the Adviser 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 rem;onably request for distribution to Contract owners.
If requested by FGWL&A or Schwab in lieu tJ1ereof, the Fund 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
dOCumellts in the form sent to the financial printer, or an electronic copy of
the documents in a format suitable for posting on an Internet web site, all as
FGWL&A and Schwab may reasonably request) and such otJler 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 1:he prospectlls 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 and Adviser agree that
the prospectus for the Designated Portfolio(s) will describe only the Designated
Portfolio(s) and will not offer the shares of any other Portfolios or series
th;at may be in the Fund. Expenses associated with providing such documentation
shall be allocatedl in accordance with Schedule D hereto.
3.2. If applicable laws require that the Statement of Additional
Information ("SAI") for the Fundl be distribu1:ed to all Contract owners, then
the Fund and/or the Adviser, as appropriate, shall provide FGWL(~A with copies
of the Fund's SAI or the SAI for the Designated Portfolio(s) in such
qwLIltities, with expenses to be borne in accordance with Schedule D hereto, as
FGWL&A may rem;onably require to permit timely distribution thereof to Contract
owners. If requested by
8
FGWL&A or Schwab, the Fund or Adviser shall provide an electronic copy of the
Fund SAI in a fonnat suitable for posting on an Internet website maintained by
or on behalf of FGWL&A and/or Schwab. The Fund 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 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 D hereto, as FGWL&A may
reasonably require to permit timely distribution thereof to Contract owners. If
requested by FGWL&A or Schwab, the Fund or Adviser shall provide an electronic
copy of such documentation in a format suitable for posting on an Internet web
site maintained by or on behalf of FGrWL&A and/or Schwab. The Fund and Adviser
agree that the foregoing materials for the Designated Portfolio(s) will describe
only the Designated Portfolio(s) and will not name or describe any other
Portfolios or series that may be in the Fund unless required by law.
3.4. If and to the extent required by law FGWL&A shall: (i) (ii) (iii)
solicit voting instructions from Contract owners; vote the Designated
Portfolio(s) shares held in the Account in accordance with instructions received
from Contract owners; and 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. Partic:ipating 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 the Mixed and Shared
Funding Order is superseded by SEC or adminis1rative practice (including
no-action relief).
9
3.6. The Fund will comply with all provisions of the 1940 Act requiring
voting by sharehoilders.
ARTICLE N. 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 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) Busirless 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 is nameed 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 infonnation or make any
representations or statements on behalf of the Fund in connection with the sale
of the Contracts other than the infonna1:ion or representations contained in the
registration statement, prospectus or SAI, or proxy materials 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 or Adviser,
except with the pennission of the Fund, or Adviser.
4.3. The Fund 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 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
reasonab:ly 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. Notwithstanding anything herein to the contrary, FGWL&A and Schwab
agree to review any shareholder reports received pursuant to this Section in a
timely manner so that the Fund or Adviser, as the case may be, can file and
distribute such reports within the timeframe required by applicable law.
4.4. The Fund and the Adviser shall not give any infonIlation or make
any representations on behalf of FGWL&A or concerning FGWL&A, the Account, or
the Contracts other than the information or representations contained in a
registration statement, prospectus (which shall include an offering memorandum,
if any, if the Contracts issued by FGWL&A or interests therein are not
registered under the ▇▇▇▇ ▇▇▇) or SA! 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. FGWL&A
10
agrees that the Fund and the Adviser may include in the Fund's proxy materials
information about FGWL&A and the Account required by applicable law to be
included therein.
4.5. FGWL&A, the Fund and the Adviser shall not give any information or
make any representations on behalf of or concerning Schwab, or use ▇▇▇▇▇▇'▇ name
except with the permissi.on 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, proxy
materials, 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 filing 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 authorit){.
4.8. For purposes of Articles IV and VIll, 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; ~, on-
line networks such as the Internet or other electronic media), sales literature
~, 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), telephone scripts,
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, shareholder reports, and
any other material constituting sales literature or advertising under the NASD
rules, the 1933 Act or the ▇▇▇▇ ▇▇▇.
4.9. At the request of any Party to this Agreement, each other Party will
make available to the other Party's independent auditors and/or representative
of the appropriate regulatory agencies, all records, data and access to
operating procedures that may be reasonably requested in connection with
compliance and regulatory requirements related to this Agreement or any Party's
obligations under this Agreement.
11
ARllCLE V. Fee and Expenses
5.1. The Fund 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 or Adviser under this Agreement, although the Parties hereto will
bear certain expenses in accordance with Schedule D hereto, Articles ill, V, and
other provisions of this Agreement. The Fund shall pay no fee or compensation to
any Participating Insurance Company participating in the same class of
Designated Portfolio shares as FGWL&A except on a uniform basis.
5.2. Except as otherwise provided in this Agreement, including without
limitation Schedule D hereto, each Party shall bear all expenses incident to the
perfomlance of its obligations hereunder. Notwithstanding anything herein to the
contrary or Adviser shall reimburse FGWL&A and Schwab for the costs associated
with substituting the securities of a registered investment company for the
shares of any Designated Portfolio that has discontinued or intends to
discontinue the offering of its shares to Contract owners, or that implements,
or intends to implement, a fundamental change in investment objective or policy
or other change requiring shareholder approval, or with respect to which FGWL&A
or Schwab detemlines to temlinate the Agreement pursuant to Section 10.1(b)-(I)
hereof. The costs of such substitution shall include, without limitation,
reasonable legal fees for obtaining any required SEC order approving such
substitution, and eJCpenses 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; provided,
however, that (a) the Adviser's collective reimbursement obligation under thi,g
Section 5.2 shall not exceed $20,000, and (b) the Adviser shall have no
reimbursement obligations under this Section 5.2 if the discontinuance or change
is caused by any change in laws, regulations or interpretations of the foregoing
that affect a Designated Portfolio.
5.3. The Fund 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 and the
Adviser agree to cooperate with FGWL&A and Schwab in facilitating transfers
between Unaffiliated Funds. Without limiting the generality of the foregoing,
and consistent with Section 1.5 hereof, the Fund and the Adviser agree to cause
each Designated Portfolio to fulfill redemption requests submitted by FGWL&A in
the same timely manner as it fulfills redemption requests submitted on the same
day by other Participating Insurance Companies.
5.4. Schwab shall provide such recordkeeping, shareholder communication,
and other transaction facilitation and processing, and related administrative
services, and for such compensation, as the same shall be memorialized in a
separate writing between Schwab and the Adviser. The Parties acknowledge and
agree that any such administrative services that Schwab
12
provides 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 1940 Act.
ARTICLE VI. Diversification and Qualification.
6.1. The Fund 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 o:f the
foregoing. the Fund 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
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 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, as amended from time
to time. No shares of any Designated Portfolio of the Fund will be sold to the
general public.
6.3. The Fund 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 F'und 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 and 8.4
hereof and without in any way limiting or restricting any other remedies
available to FGWL&A or Schwab and/or Adviser will pay all costs associated with
or arising out of any failure, or any anticipated or
13
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 1:▇▇▇▇ provided for and
substantially in the form attached hereto as Schedule C 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 ofFGWL&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 or Adviser as a result of such a failure or alleged
failure:
(a) FGWL&A shall promptly notify the Fund and the Adviser of such
assertion or potential
(b) FGWL&A shall consult with the Fund 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 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 (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
14
and the Adviser (together with any supporting infonnation or analysis)
within at least two (2) business days prior to submission;
(e) FGWL&.A shall provide the Fund and the Adviser with such
cooperation as the Fund and the Adviser shall reasonably request
(including, without limitation, by pemritting the Fund and the Adviser
to review the relevant books and records of FGWL&A) in order to
facilitate review by the Fund and the Adviser of any written
submissions provided to it or its assessment of the validity or amount
of any claim against it arising from such failure or alleged failure;
(f) FGWL&A shall not with respect to any claim of the IRS or any
Contract owner that would give rise to a claim against the Fund 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 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 and the Adviser
shall bear the costs and expenses, including reasonable attorney's
fees, incUITed by FGWL&A in complying with this clause (t).
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order
7.1. The Fund represents that the Board will monitor the Fund for the
existence of any material irreconcilable conflict between the interests of the
contract owners of all separate accounts investing in the Fund. A irreconcilable
material conflict may arise for a variety of reasons, including: (a) an action
by any state insurance regulatory authority; (b) a change in applicable federal
or state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar action
by insurance, tax, or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
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 has received a copy of the Mixed and Shared Funding Exemptive
Order, and in particular, has reviewed the conditions to the requested relief
set forth therein. FGWL&A
15
agrees to be bound by the applicable responsibilities of a participating
insurance company as set forth in the Mixed and Shared Funding Exemptive Order,
including without limitation the requirement that FGWL&A 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 obligation by FGWL&A to inform the Board whenever contract owner
voting instructions are to be disregarded and by confimling in writing, at the
Fund's request, that GLW&A is unaware of any such potential or existing material
irreconcilable conflicts. 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 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 relevant 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 ~, 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 FGWL&A and/or the Fund and the Adviser reasonably detennine that
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
tenninate this Agreement; provided, however that such withdrawal and tennination
shall be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the Disinterested Members. Any such
withdrawal and tennination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented. Until such
withdrawal and termination is implemented, the Fund 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 carried out with a view only to the interest of the Contract owners.
16
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 tenninate this Agreement within six months after the
Fund 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 such withdrawal and termination is implemented, the
Fund shall continue to accept and implement orders by FGWL&A for the purchase
(and redemption) of shares of the Fund, subject to applicable regulatory
limitation. 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 detennine 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 materially adversely affected by the irreconcilable material
conflict. In the event that the Board detennines 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 tenninate 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 (including FGWL&A), 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.
17
ARTICLE vrn. Indemnification
8.1(a). FGWL&A agrees to indemnify and hold harmless the Fund and the
Adviser and each of their respective officers and directors or trustees and each
person, if any, who controls the Fund 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
ofFG"WL&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 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 perfonn 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 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 perfonnance 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 ffidemnified 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.l(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 hannless the Fund and the
Adviser and each of their respective officers and directors or trustees and each
person, if any, who controls the Fund 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
19
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 ▇▇▇▇▇▇'▇ dissemination of infomlation regarding the
Fund that is both (A) materially incorrect and (B) that was neither
contained in any Fund materials, nor provided in writing to Schwab,
nor approved in writing by or on behalf of the Fund 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 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 perfonn the
obligations, provide the services and furnish the materials required
of it under the tenns of this Agreement; or
(v)arises out of or results from any material breach of any
representation and/or warranty made by Schwab in this Agreement or
arises 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.
20
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 ▇▇▇▇▇▇'▇ 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 hannless 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 the Fund's shares or the Contracts and:
(i) arises out of or is based upon any untrue statement or alleged
untrue statement of any material fact contained in any Fund materials,
or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this Agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished in writing to the Fund or Adviser, by or on behalfofFGWL&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
21
(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 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 or Adviser; or
(iv)arises as a result of any failure by the Fund or the Adviser to
perfonn 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 or the Adviser in this
Agreement or arises out of or result from any other material breach of
this Agreement by the Fund or the Adviser; or
(vi)arises out of or results from the incorrect or untimely
calculation or reporting by the Fund or the Adviser of the daily net
asset value per share or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.3(b)
and 8.3{ c) hereof. This indemnification is in addition to and apart
from the responsibilities and obligations of the Adviser specified in
Article VI hereof.
8.3(b). The Adviser shall not be liable under this indemnification
provision with respect to any Loss to which an Indemnified Party would otherwise
be subject by reason of such Indemnified Party's willful misfeasance, bad faith,
or negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement or to any of the Indemnified Parties.
8.3(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
22
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that the Adviser
has been prejudiced by such failure to give notice. In case any such action is
brought against an Indemnified Party, the Adviser will be entitled to
participate, at its own expense, in the defense thereof and unless the
Indemnified Parties release Adviser from any further obligation under this
Section 8.3 with respect to such claim(s), the Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the Party named in the
action. After notice from the Adviser to such Party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Adviser will not be
liable to such Party under this Agreement for any legal or other expenses
subsequently incurred by such Party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3( d). 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.
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 payor
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 perfoffil the
obligations, provide the services and furnish the materials required
of it under the teffils 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;
23
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 perfonnance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to any of the Indemnified Parties.
8.4(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve it from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision, except to the extent that the Fund has been
prejudiced by such failure to give notice. In case any such action is brought
against an Indemnified Party, the Fund will be entitled to participate, at its
own expense, in the defense thereof and unless the Indemnified Parties release
the Fund from any further obligation under this Section 8.4 with respect to such
claim(s), the Fund shall also be entitled to assume the defense thereof, with
counsel satisfactory to the Party named in the action. After notice from the
Fund to such Party of the Fund's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Fund will not be liable to such Party under this
Agreement for any legal or other expenses subsequently incurred by such Party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.4(d). 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.
ARTICLE IX. Applicable Law
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York, applicable to
contracts entirely entered into and performed in New York by New York residents.
24
ARTICLE X. Tennination
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 ofFGWL&A or Schwab by written notice to the other
Parties with respect to any Designated Portfolio based upon FGWL&A's
or ▇▇▇▇▇▇'▇ detennination that shares of such Designated Portfolio are
not reasonably available to meet the requirements of the Contracts; or
(c) at the option ofFGWL&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 Con- tracts
issued or to be issued by FGWL&A; or
(d) at the option of the Fund 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 ▇▇▇▇▇▇'▇
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 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 fonnal
administrative proceedings are instituted against the Fund 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 detennines 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 or the Adviser to perfonn their
obligations under this Agreement; or
(f) at the option ofFGWL&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
25
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 or the Adviser, if (i) the Fund
or Adviser, respectively, shall detennine, 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 or Adviser notifies FGWL&A or Schwab, as appropriate, of that
determination and its intent to terminate this Agreement, ~ (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
detennination of the Fund 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 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 or Adviser, as appropriate, of that determination
and its intent to terminate this Agreement, ~ (iii) after considering
the actions taken by the Fund 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 foffilal administrative
proceedings are instituted against Schwab by the NASD, the SEC, or any
state securities or insurance department or any other regulatory body
regarding ▇▇▇▇▇▇'▇ 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
detemrines 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 perfOffil its obligations related to the
Contracts; or 26
(k) at the option of Schwab in the event that fonnal 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
detennines 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 perfonn its obligations related to the
Contracts; or 10.2.
(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
temrinating this Agreement gives prior written notice to all other Parties of
its intent to terminate, which notice shall set forth the basis for the
termination. Furthermore, (a) in the event any termination is based upon the
provisions of Article VII, or the provisions of Section 10.1
(a), 10.1 (h) or 10.1 (i) of this Agreement, the prior written notice
shall be given in advance of the effective date of termination as
required by those provisions unless such notice period is shortened by
mutual written agreement of the Parties;
(b) in the event any temlination is based upon the provisions of
Section 10.I(d), 10.I(e), 10.1 (j) or 10.1 (k) of this Agreement, the
prior written notice shall be given at least sixty (60) days before
the effective date oftennination; and
(c) in the event any tennination is based upon the provisions of
Section lO.l(b), lO.l(c) or lO.l(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.
27
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 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 vn and the effect of such Article vn terminations shall be governed by
Article vn of this Agreement.
10.4, Surviving Provisions
Notwithstanding any temlination of this Agreement, the following provisions
shall survive: Article V, Article vll, Article VIII and Section 12.1 of Article
XII. In addition, with respect to Existing Contracts, all provisions of this
Agreement shall also survive and not be affected by any temlination of this
Agreement.
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).
28
ARTICLE XI. Notice
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:
▇▇▇▇▇▇▇▇▇▇▇ Variable Account Funds ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Treasurer
If to FGWL&A:
First Great-West Life & Annuity
Insurance Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Vice President and Counsel
If to the Adviser:
OppenheimerFunds, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General
Counsel
If to Schwab:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
ARTICLE Xll. Miscellaneous~
12.1. Subject to the requirements of leg a! 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
29
infonnation without the express written consent of such Party. Such written
consent shall specify the purposes for which such infonnation 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 otheIWise, 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 shall not be assigned by any Party hereto without
the prior written consent of all of Parties. Notwithstanding the foregoing or
anything to the contrary set forth in this Agreement, the Adviser may transfer
or assign its rights, duties, and obligations hereunder or interest herein to
any entity owned, directly or indirectly, by ▇▇▇▇▇▇▇▇▇▇▇ Acquisition Corp. (the
Adviser's parent corporation) or to a successor in interest pursuant to a
merger, reorganization, stock sale, asset sale or other transaction, without the
consent of Schwab or GL W &A, provided (i) that the assignee agrees to assume
all the duties, responsibilities and obligations imposed on the
30
Adviser by this Agreement (including, without limitation, the obligations under
Adviser's representations and warranties under this Agreement), (ii) the Fund
consents to that assignment, (iii) the financial strength of the assignee is
equal to or greater than that of the Adviser, (iv) the Adviser remains fully
liable for its duties, responsibilities, and obligations hereunder, and (v) the
shareholders of the Fund, if required by applicable law, approve the transfer or
assignment.
12.9. Schwab and FGWL&A are hereby expressly put on notice of the
limitation of liability as set forth in the Declarations of Trust of the Fund
and agree that the obligations assumed by each Designated Portfolio pursuant to
this Agreement shall be limited in any case to the Designated Portfolio and its
assets and neither Schwab nor FGWL&A shall seek satisfaction of any such
obligation from the shareholders of the Designated Portfolio (solely by reason
of their status as such) the Trustees, officers, or agents of the Designated
Portfolio, or any of them; provided that nothing herein shall excuse or protect
any Trustee or officer against any liability to which such Trustee or officer
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee or of such officer.
12.10. The Fund and the Adviser agree that the obligations assumed by
FGWL&A and Schwab pursuant to this Agreement shall be limited in any case to
FGWL&A and Schwab and their respective assets and neither the Fund nor Adviser
shall seek satisfaction of any such obligation from the shareholders of FGWL&A
or Schwab, the directors, officers, employees or agents of the FGWL&A or Schwab,
or any of them, except to the extent permitted under this Agreement.
12.11. Schedules A through D 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.
12.12 This Agreement shall be the sole and only agreement among the
Parties regarding the business contemplated hereby, and it supersedes all prior
and contemporaneous agreements among the Parties regarding the business
contemplated hereby, it being understood and agreed to by the Parties that
Schwab and the Adviser shall enter into a separate agreement for the provision
of administrative services pursuant to Section 5.4 hereof. This Agreement may
not be amended, supplemented, or modified, except as expressly permitted herein,
without the written agreement of the Parties.
31
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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title:Senior Vice President, Operations
▇▇▇▇▇▇▇▇▇▇▇ VARIABLE ACCOUNT FUNDS
By its authorized officer,
By: /s/(illegible sigature)
Name:
Title:
OPPENHEIMERFUNDS, INC,
By its authorized officer,
By: /s/(illegible sigature)
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO., INC.
By its authorized officer,
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President, Partner Relations
32
Schwab Variable Annuity
SCHEDULE A
Contracts Form Numbers
First Great-West Life & Annuity Insurance Company
Group VariablefFixed Annuity Contract J434NY
1
SCHEDULE B
Designated Portfolios
▇▇▇▇▇▇▇▇▇▇▇ Global Securities Fund/V A, a series of
▇▇▇▇▇▇▇▇▇▇▇ Variable Account Funds [excluding service share class]
2
SCHEDULE C
Reports per Section 6.6
-----------------------
With regard to the reports relating to the quarterly testing of compliance
with the requirements of Section 817(h) and Subchapter M under the Internal
Revenue Code (the "Code") and the regulations thereunder, the Fund shall provide
within twenty (20) Business Days of the close of the calendar quarter a report
to FGWL&A in the Form Cl attached hereto and incorporated herein by reference,
regarding the status under such sections of the Code of the Designated
Portfolio( s), and if necessary, identification of any remedial action to be
taken to remedy non-compliance.
With regard to the reports relating to the year-end testing of
compliance with the requirements of Subchapter M of the Code, referred to
hereinafter as "RIC status," the Fund will provide the reports on the following
basis: (i) the last quarter's quarterly reports can be supplied within the
20-day period, and (ii) a year-end report will be provided 45 days after the end
of the calendar year. However, if a problem with regard to RIC status, as
defined below, is identified in the third quarter report, on a weekly basis,
starting the first week of December, additional interim reports will be provided
specially addressing the problems identified in the third quarter report.
If any interim report memorializes the cure of the problem, subsequent interim
reports will not be required.
A problem with regard to RIC status is defined as any violation of the
following standards, as referenced to the applicable sections of the Code:
(a) Less than ninety percent of gross income is derived from sources of
income specified in Section 851(b)(2); (b) Less than fifty percent of the
value of total assets consists of assets specified in Section 851
(b )(3)(A); and (c) No more than twenty-five percent of the value of total
assets is invested in the securities of one issuer, as that requirement is
set forth in Section 851 (b )(3)(B).
3
FORM CCI
CERTIFICATE OF COMPLIANCE
For the quarter ended:
▇▇▇▇▇▇▇▇▇▇▇ Funds, Inc. (investment advisor) for ▇▇▇▇▇▇▇▇▇▇▇ Variable
Account Funds 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, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. and
▇▇▇▇▇▇▇▇▇▇▇ Funds, Inc., other than the exceptions discussed below:
Exceptions Remedial Action
If no exception to report, please
indicate "None."
Signed this -day of
▇▇▇▇▇▇▇▇▇▇▇ Funds, Inc.
(Signature) By:
(Type or Print Name and Title/Position)
4
SCHEDULE D
EXPENSES
The Fund and/or Adviser, and FGWL&A will coordinate the functions and pay the
costs of completing these functions based upon an allocation of costs in the
tables below. Costs shall be allocated to reflect the Fund's share of the total
costs determined according to the number of pages of the Fund's respective
portions of the documents, except with respect to the printing of 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 pages in that portfolio's prospectus.
------------------------------------------------------------------------------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Mutual Fund Printing Designated FGWL&A Fund
Prospectus Portfolio's
prospectuses to be
delivered to
Contract owners
investing in the Fund
Printing of Designated FGWL&A Adviser
Portfolio(s)
prospectus(es) to be
delivered to prospective
investors in the Fund
Distribution to New Schwab Schwab
and In-force Contract
owners
Distribution to
Prospective Contract
owners
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Product Prospectus Printing for In-force FGWL&A FGWL&A
Contract owners
Printing for FGWL&A Schwab
Prospective Contract
owners
Distribution to New FGWL&A FGWL&A
and In-force Contract
owners
------------------------------------------------------------------------------------------
5
------------------------------------------------------------------------------------------
Item Function Party Responsible Party
for Coordination Responsible for
Expense
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution to Schwab Schwab
Prospective
Contract owners
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Mutual Fund If Required by Fund Fund
Prospectus Update & Fund 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 or
Update & Fund Adviser
Distribution or Adviser
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
If Required FGWL&A FGWL&A
by FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
If Required Schwab Schwab
by Schwab
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Mutual Fund SAI Printing Fund or Fund or
Adviser Adviser
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution FGWL&A FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Product SAI Printing FGWL&A FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution FGWL&A FGWL&A
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Proxy Material for Printing if Fund Fund
Mutual Fund: proxy required or Adviser or Adviser
by Law
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution FGWL&A Fund
(including labor) or
if proxy required Adviser
by Law
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Printing & FGWL&A FGWL&A
distribution
if required
by FGWL&A
------------------------------------------------------------------------------------------
6
------------------------------------------------------------------------------------------
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 or
Adviser
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Distribution FGWL&A FGWL&A and
Schwab
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Other communication to If Required by the Schwab Fund,
New and Prospective Fund 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 or
and printing) if Adviser
required by the
Fund
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
------------------------------------------------------------------------------------------
7
------------------------------------------------------------------------------------------
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 or Fund or Adviser
Fund related expenses, Adviser
including the cost of
registration and
qualification 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)
------------------------------------------------------------------------------------------