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EXHIBIT 3 (a)
FORM OF PROMOTIONAL AGENT DISTRIBUTION AGREEMENT
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PROMOTIONAL AGENT DISTRIBUTION AGREEMENT
THIS AGREEMENT, made this ____ day of __________, 1993 is among CANADA LIFE OF
AMERICA FINANCIAL SERVICES, INC., a Georgia corporation ("CLAFS"), CANADA LIFE
INSURANCE COMPANY OF New York, a New York Corporation ("CLNY"), and ▇▇▇▇▇▇▇▇
FINANCIAL SERVICES, INC., a Delaware Corporation ("▇▇▇▇▇▇▇▇ Financial").
WHEREAS, CLNY has determined to issue certain contracts or subsequent
variations thereof, such contracts are described in Exhibit A hereto (the
"Contracts"), which Contracts shall be funded either through a separate account
known as CLNY Variable Annuity Account 2 ("Separate Account") and/or through
CLNY's General Account; and
WHEREAS, a Registration Statement on Form N-4 including a Prospectus and
Statement of Additional Information relating to the Separate Account and units
of interest under the Contracts (Registration Statement") have been or will be
filed with the Securities and Exchanged Commission ("SEC") to register the
Separate Account as a unit investment trust under the Investment Company Act of
1940 ("1940 Act") and to register the units of interest under the Contracts
funded through the Separate Account under the Securities Act of 1933 ("1933
Act") and
WHEREAS, CLNY and CLAFS have entered into an agreement pursuant to which CLAFS
will serve as principal underwriter for the Contracts funded through the
Separate Account, it being the intention of CLNY and CLAFS that such Contracts
be offered to the public on a continuous basis; and
WHEREAS, ▇▇▇▇▇▇▇▇ Financial is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "1934 Act") and is a member of the
National Association of Securities Dealers, Inc.("NASD"); and
WHEREAS, CLAFS desires to appoint ▇▇▇▇▇▇▇▇ Financial as the promotional
distributing agent for the Contracts and ▇▇▇▇▇▇▇▇ Financial desires to act as
such promotional distributing agent.
In consideration of the mutual agreements herein made and intending to be
legally bound hereby, the parties agree as follows:
1. Promotional Distributing Agent. CLNY and CLAFS hereby appoint
▇▇▇▇▇▇▇▇ Financial, and ▇▇▇▇▇▇▇▇ Financial hereby accepts appointment, as the
promotional distributing agent ("Promotional Agent") for the Contracts within
the United States and its territories. CLAFS agrees that during the term of
the Agreement, except in its capacity as a Selling Firm, as hereinafter
defined, it will not distribute the Contracts, will not reallow any in
compensation it receives to any broker-dealer firm unaffiliated with it and
will not be entitled to compensation with respect to distribution of the
Contracts to purchasers thereof. As Promotional Agent, ▇▇▇▇▇▇▇▇ Financial
undertakes to make best efforts consistent with market conditions to actively
market the Contracts through Selling Firms in those states in which it is so
authorized pursuant to applicable law, including, among other things,
advertising, visits to brokerage firms, and development of sales literature
As Promotional Agent, ▇▇▇▇▇▇▇▇ Financial may enter into written agreements
("Selling Agreements") with such brokerage firms ("Selling Firms") as it may
from time to time select subject to Section 10 (D) below. The form of Selling
Agreement is attached hereto as Exhibit B. Any material changes to the form of
the Selling Agreement must be approved by CLNY and such approval shall not be
unreasonably withheld. CLNY and CLAFS hereby undertake and agree that during
the term of this Agreement applications to purchase the Contracts will not be
accepted or Contracts issued unless submitted by Selling Firms or ▇▇▇▇▇▇▇▇
Financial. ▇▇▇▇▇▇▇▇ Financial hereby agrees that CLAFS may become a Selling
Firm, provided however, that CLAFS enters into a Selling Agreement with
▇▇▇▇▇▇▇▇ Financial.
2. Compensation. As compensation for its services as Promotional Agent,
▇▇▇▇▇▇▇▇ Financial shall be entitled to receive compensation ("Promotional
Agent Fee") with respect to any Contract issued, as disclosed on the attached
Exhibit C, Statement of Compensation. CLNY agrees to pay to Selling Firms
compensation as set
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forth in Exhibit C which includes commissions payable to Selling Firms ("B/D
Concession"), and any potential Service Fee that might become payable to
▇▇▇▇▇▇▇▇ Financial and Selling Firm at annuitization. CLNY will pay all
compensation consistent with its regular compensation-paying schedule.
In addition, CLNY will accept purchase payments net of B/D Concession, subject
to certain conditions imposed by CLNY from time to time, from Selling Firms as
specified from time to time by ▇▇▇▇▇▇▇▇ Financial on both initial and
subsequent purchase payments. If CLNY is required to return purchase payments
because (i) a Contracts's "Free Look" provision was exercised, (ii) a Contract
was not issued as a result of a failure by a Selling Firm to submit to CLNY an
application sufficient to satisfy state insurance laws or CLNY's eligibility
requirement, or (iii) a Contract was tendered to CLNY for redemption within ten
business days of the date of activity, then (a) no B/D Concession will be
payable with respect to said purchase payments, (b) ▇▇▇▇▇▇▇▇ Financial will
refund to CLNY the Promotional Agent Fee it may have received in connection
with such purchase payments, (c) any B/D Concessions paid by CLNY for said
purchase payments may be deducted by CLNY from any B/D concession owing to the
Selling Firm, and (d) if no B/D Concession is owing to the Selling Firm,
▇▇▇▇▇▇▇▇ Financial will collect from Selling Firm such B/D Concession paid by
CLNY and will pay such amount to CLNY , it being understood that CLNY's, CLAFS'
and ▇▇▇▇▇▇▇▇ Financier's liability is limited and that Selling Firms are
responsible to Contract Owners for any loss of contract value or loss due to
reversal of trades which may occur due to wire errors, either in purchase
payment amount or investment option, failure of CLNY to receive an original
properly completed application, and/or any other failure on part of Selling
Firms to follow CLNY's administrative procedures. It is also understood that
▇▇▇▇▇▇▇▇ Financial's liability, it if is unable to collect from a Selling Firm,
is limited as provided in Section 11D.
3. Recordkeeping Service Agent. The parties hereby agree that CLNY shall
be the Recordkeeping Service Agent to perform certain services in connection
with processing purchase payments, redemptions, transfers, processing of
Promotional Agent Fee and B/D Concessions and related services as agent for
itself and CLAFS. It is understood that in entering into this Agreement,
▇▇▇▇▇▇▇▇ Financial is relying upon representations by CLNY that it, CLNY, will
provide and maintain or cause to be provided and maintained, certain
administrative and other services necessary for the operation of the Separate
Account and for the benefit of the Contract Owners and ▇▇▇▇▇▇▇▇ Financial.
4. Issuance of Contracts. CLNY and CLAFS hereby undertake to use their
best efforts, subject to the standards set forth in the Registration Statement,
(i) to maintain a continuous offering of the Contracts and (ii) to ensure that
applications to purchase units of interest under the Contracts shall be
acceptable to CLNY and that the Contracts shall be issued pursuant to such
applications and (iii) to ensure that all purchase payments be processed at the
accumulation unit value determined in the manner as described in the
Registration Statement. It is understood that a Contract shall not be issued
unless and until the purchase payments and application received relating to
such Contract are sufficient to satisfy CLNY's eligibility requirements as set
forth in the Contracts and the requirements of New York insurance law.
▇▇▇▇▇▇▇▇ Financial agrees that all applications for the Contracts shall be made
on the application forms supplied by CLNY. ▇▇▇▇▇▇▇▇ Financial agrees to
instruct Selling Firms to (i) review the applications for completeness and
correctness as to form, (ii) review all applications for suitability, and (iii)
to promptly forward to CLNY all applications found to be complete together with
any purchase payments received with the applications received. Any additional
purchase payments, to the extent permitted by the Contract shall also be
remitted directly to CLNY.
5. Chargebacks. (i) In the event a Contract is returned to CLNY pursuant
to a Free Look provision, the full Promotional Agent Fee paid thereon shall be
charged back to ▇▇▇▇▇▇▇▇ Financial in accordance with Section 2 above. (ii)
Should any premium or purchase payment on any Contract issued by CLNY be
refunded for any reason, ▇▇▇▇▇▇▇▇ Financial shall repay or return Promotional
Agent Fees received by it with respect to such premium or purchase payment.
(iii) For full or partial withdrawals from the Contract: 100% of all B/D
Concessions paid to Selling Firms on amount(s) withdrawn within 6 months of
said amount(s) being paid to CLNY and 50% of all B/D concessions paid to
Selling Firms on amount(s) withdrawn from 7-12 months of such amount(s) being
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paid to CLNY shall be returned or repaid. For any premium or purchase payment
that has been in the contract for more than 12 months, there shall be no charge
back on either Promotional Agent Fee or B/D Concession. To the extent
permitted by law, the amount so charged back may, at the option of CLNY, be set
off against Promotional Agent Fees otherwise due to ▇▇▇▇▇▇▇▇ Financial . In
addition, such other compensation will be payable as are from time to time
agreed by the parties to the this Agreement and will be added to Schedule I of
the Selling Agreement in accordance therewith.
6. Plan Name. CLNY, CLAFS and ▇▇▇▇▇▇▇▇ Financial agree that the
Contracts will be sold under the name "Trillium" (Trillium) and that
communications to prospective and existing Contract Owners with respect to the
sale and servicing of the Contracts will contain prominent reference to the
aforementioned name. Property rights to the Name are owned by Canada Life
Insurance Company of America ("CLICA") an affiliated Company, which has entered
into a license agreement with ▇▇▇▇▇▇▇▇ Financial to permit the Name's use.
7. Confirmations and Prospectus Delivery.
A. CLNY and CLAFS agree that CLAFS, at its own expense and
through its agent CLNY, unless otherwise agreed in writing by ▇▇▇▇▇▇▇▇
Financial, shall issue and deliver or cause to be issued and delivered,
confirmations of transactions effected with respect to the account of any
Contract Owner for each transaction for which a confirmation is legally
required in accordance with the provisions of the 1934 Act and Rule 10b-10
thereunder. CLNY and CLAFS further agree that CLAFS, through its agent CLNY,
shall cause copies of all such confirmations to be forwarded to such Selling
Firms as agreed to, in writing, by ▇▇▇▇▇▇▇▇ Financial and CLNY.
B. CLNY agrees that it will, in accordance with the provisions of
the 1933 Act and the rules thereunder, deliver or cause to be delivered to a
Contract Owner who has made an initial purchase payment, a copy of the then
current prospectus of the Separate Account and the then current prospectus for
the Fund. Such prospectuses shall be delivered prior to or at the time the
initial premium or purchase payment is made, or with the confirmation for such
initial premium purchase payment, delivered in accordance with Section 7(A).
8. Expenses. ▇▇▇▇▇▇▇▇ Financial shall be responsible for all costs
associated with the marketing and distribution of the Contracts including: (i)
the expenses of printing and distributing prospectuses, statements of
additional information and financial reports with respect to the Separate
Account and the Fund to prospective Contract Owners and of prospectuses to
persons described in Section 7(B) above; (ii) the expenses of preparing,
printing and distributing all other literature in connection with the
solicitation of applications to purchase the contracts including expenses of
filing such literature with the National Association of Securities Dealers,
Inc. provided that ▇▇▇▇▇▇▇▇ Financial may be reimbursed or otherwise paid for
any such materials by Selling Firms, and further provided that CLAFS and CLNY
will cooperate with ▇▇▇▇▇▇▇▇ Financial in the development of such materials as
reasonably requested by ▇▇▇▇▇▇▇▇ Financial; and (iii) expenses of advertising
in connection with such solicitation effort.
CLNY and CLAFS each accept responsibility for, and will bear the cost of,
ensuring that Contract Owners receive on an ongoing basis all reports, notices
and other materials required by applicable provisions of the Federal or State
securities laws, rules of the NASD or any state securities or state insurance
department, including without limitation, annual and semi-annual reports and
prospectuses and statements of additional information for the Fund and Separate
Account. The expenses relating to appointment of agents or producers of
Selling Firms are as set forth in Section III. A. of the Selling Agreement,
attached hereto as Exhibit B.
In addition to any expense hereinabove expressly mentioned, CLNY and CLAFS each
agree to pay all costs associated with the operation of the Separate Account,
including without limitations: all fees and expenses incurred in connection
with the registration of the Separate Account and all units of interest under
the Contracts issued by CLNY under the securities laws of the United States;
all fees and related expenses which may be incurred in connection with the
qualification and registration of the Separate Account and the units of
interest under the Contract for sale in New York; all expense relating to the
filing of all sales literature approved by
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▇▇▇▇▇▇▇▇ Financial with New York regulatory authorities; and any other costs
incurred by CLNY or CLAFS or their receptive employees unless otherwise agreed
upon by the parties in writing and except to the extent such costs are paid by
charges made against the Separate Account assets as set forth in the
Registration Statement.
9. Representations and Warranties of CLNY and CLAFS. CLNY and CLAFS each
hereby represent and warrant that:
A. all actions, including, without limitation, those necessary
under their articles of incorporation and by-laws and applicable federal and
state law, to authorize and establish the Separate Account have been taken;
B. each has taken all actions necessary to authorize the
execution, delivery and performance of this Agreement and all transactions
contemplated hereunder;
C. a Registration Statement relating to the Separate Account and
the Contracts has been or will be filed with the SEC under the 1933 Act and the
1940 Act and one or more amendments may be filed before the Registration
Statement becomes effective;
▇. ▇▇▇▇▇▇▇▇ Financial has been provided with a copy of the
Registration Statement and amendments thereto in the form in which it has been
filed with the Securities and Exchange Commission and is hereby authorized to
use such Registration Statement in the form in which it becomes effective and
the information contained therein (as post- effectively amended and
supplemented from time to time as provided herein) in connection with its
activities as Promotional Agent hereunder and shall be provided with such other
information relating to the Contracts or the Separate Account as it may
reasonably request;
E. such Registration Statement when it becomes effective will
conform in all material respects with he applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations thereunder, and will not
include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading;
F each of them will use their best efforts to ensure that so
long as the Separate Account and the units of interest under the Contracts are
the subject of a public offering the Prospectus will continue to conform in all
material respects with the requirements of the 1933 Act and the 1940 Act and
the rules and regulations thereunder and that at no time will the prospectus
include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading;
G. recognizing that it is the intention of the parties hereto
that CLNY engage in a continuous public offering of units of interest under the
Contracts and interests thereunder in the Separate Account, every effort will
be made of prepare and file on a timely basis with the SEC such post-effective
amendments or supplements as may be necessary to maintain a continuous public
offering of units of interest under the Contracts. ▇▇▇▇▇▇▇▇ Financial shall be
promptly advised of any proposed amendment or supplement to the Registration
Statement and shall be provided with a copy of such proposed amendment or
supplement sufficiently in advance of the filing of such amendment or
supplement with the SEC to permit its review unless legal or regulatory
requirements would make such review impracticable;
▇. ▇▇▇▇▇▇▇▇ Financial shall be notified as to the date upon which
the Registration Statement as it may be amended becomes effective and shall be
provided with a copy of such Registration Statement in the form in which it
shall become effective. All information reasonably requested by ▇▇▇▇▇▇▇▇
Financial in order to provide prospective Contract Owners with a prospectus as
contained in the initially effective Registration Statement or a subsequently
amended or supplemented Prospectus shall be promptly furnished by CLNY and
CLAFS;
▇. ▇▇▇▇▇▇▇▇ Financial shall be promptly notified of the
institution by the SEC of any stop order proceedings in respect of
Registration Statement and CLNY and CLAFS will use their best efforts to
prevent
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the issuance of any such stop order and to obtain as soon as possible its
lifting if issued;
J. each shall use its best efforts to file and secure approval
for sale of the Contracts in the State of New York, and CLNY further agrees to
maintain such approval. It is understood that each shall make every reasonable
effort to make the Contracts available in the State of New York, as soon as
practicable;
K. all sales material prepared by ▇▇▇▇▇▇▇▇ Financial and reviewed
and approved by CLNY and CLAFS, will be filed by CLNY with the New York
regulatory authorities as required and CLNY will use its best efforts to effect
prompt review of such material in New York and to provide ▇▇▇▇▇▇▇▇ Financial
with such assistance as ▇▇▇▇▇▇▇▇ Financial may reasonably require in order to
develop sales literature in compliance with the laws and regulations of New
York;
L. upon reasonable request, ▇▇▇▇▇▇▇▇ Financial shall be informed
as to the status of all such sales literature filings and shall be promptly
notified of all approvals or disapproval's of sales literature filings in New
York;
▇. ▇▇▇▇▇▇▇▇ Financial will receive full cooperation in its
efforts to assist the registered representatives of Selling Firms in meeting
the requirements for appointment as CLNY agents for the sale of the Contracts
under New York insurance laws and, upon reasonable request, ▇▇▇▇▇▇▇▇ Financial
shall be informed as to the status of applications for such appointment;
N. CLNY will use its best efforts to process all completed
applications for such appointment on a timely basis provided that it is
understood that CLNY may decline to appoint a particular registered
representative; and
▇. ▇▇▇▇▇▇▇▇ Financial may be notified in the event CLNY declines
to appoint a particular registered representative and the reason for such
action.
10. Representations and Warranties of ▇▇▇▇▇▇▇▇ Financial. ▇▇▇▇▇▇▇▇
Financial hereby represents and warrants that:
A. it has taken all actions including, without limitation, those
necessary under its articles of incorporation, by-laws and applicable state
corporate law, necessary to authorize the execution, delivery and performance
of this Agreement and all transactions contemplated hereunder;
B. it is and shall remain duly registered as a broker-dealer
under the 1934 Act, is a member in good standing of the NASD, and is duly
registered under applicable state securities laws;
▇. ▇▇▇▇▇▇▇▇ Financial shall only solicit and shall instruct
Selling Firms only to solicit purchases of the Contracts in the State of New
York when the Contracts are approved for sale under applicable securities and
insurance laws;
D. it shall enter into Selling Agreements, substantially in the
Form of Exhibit B hereto, only with such Selling Firms as are duly registered
as broker dealers under the 1934 Act and are members in good standing of the
NASD properly qualified to undertake their responsibilities under the Selling
Agreements, and who represent that they are duly in compliance with applicable
state securities and insurance laws, and shall direct such Selling Firms to
sell only through those associated persons (as that term is defined in Section
3(a)(18) of the ▇▇▇▇ ▇▇▇) who are duly and appropriately licensed, registered
and otherwise qualified to sell the Contracts under the 1934 Act, applicable
rules of the NASD, applicable state and insurance law and are appointed by CLNY
as insurance agents for the sale on the Contracts.
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In connection with broker-dealers to distribute the Contracts, ▇▇▇▇▇▇▇▇
Financial will use reasonable efforts to ascertain that each broker-dealer
wishing to execute a Selling Agreement is a member firm of the NASD duly
qualified with all federal, state and other regulatory bodies, and otherwise is
a suitable entity to represent CLNY and CLAFS. CLNY and CLAFS may refuse to
enter into a Selling Agreement with a broker-dealer selected by ▇▇▇▇▇▇▇▇
Financial if such Selling Firm is deemed by CLNY or CLAFS to be unsuitable for
any reason. Neither CLNY nor CLAFS will incur any obligation to compensate, or
reimburse the expenses of ▇▇▇▇▇▇▇▇ Financial as a result of any such refusal.
E. Prior to any use with members of the public, ▇▇▇▇▇▇▇▇
Financial will provide CLNY and CLAFS copies of all sales literature developed
by ▇▇▇▇▇▇▇▇ Financial for their review and approval. Such sales literature
shall be reviewed in light of applicable federal securities laws, NASD
requirements and New York insurance laws. ▇▇▇▇▇▇▇▇ Financial shall file such
sales literature with the NASD in accordance with the rules and regulations of
the NASD. CLNY, CLAFS and ▇▇▇▇▇▇▇▇ Financial will approve the use of sales
material in New York only if CLNY notifies ▇▇▇▇▇▇▇▇ Financial that such
material has been submitted by CLNY, as required by applicable law, reviewed
and approved by New York's regulatory authorities;
F. no statement or representation concerning the Contracts shall
be made by ▇▇▇▇▇▇▇▇ Financial or any associated person thereof in connection
with the Contracts other than those contained in the then current Registration
Statement or in any other sales material released or approved by CLNY or CLAFS
as information supplemental to such Registration Statement; and
G. it shall promptly furnish to CLNY and CLAFS or their agent,
any reports and information which the other party may reasonably request for
the purpose of meeting their reporting and recordkeeping requirements under the
insurance laws of New York, and under the federal and state securities laws
and rules of the NASD.
11. Indemnification.
A. CLNY and CLAFS each agree to indemnify and hold harmless
▇▇▇▇▇▇▇▇ Financial, any Selling Firm and each person who controls ▇▇▇▇▇▇▇▇
Financial or any such Selling Firm and their agents, subsidiaries and employees
against any and all losses, claims, damages, liabilities or expenses
(including, without limitation, any expenses reasonably incurred in
investigating or defending against any litigation commenced or threatened, or
any claim) arising out of or based upon: (i) any untrue statement or alleged
untrue statement of a material fact contained in (a) the Separate Account
Registration Statement; or (b) any contract, application or other document
filed in any State in order to qualify the Separate Account ins such State or
to qualify the Contracts to be issued thereby for sale in such state or to
maintain such qualifications; or (ii) the omission or alleged omission in such
Registration Statement, written material, application or other such document to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were mad; or (iii) the negligent, improper fraudulent or unauthorized acts
or omissions of CLNY or CLAFS or (iv) any breach of, or failure to comply with,
the representations and warranties made by CLNY and/or CLAFS as set forth
herein. Notwithstanding the foregoing, CLNY and CLAFS shall not indemnify
▇▇▇▇▇▇▇▇ Financial, an Selling Firm and each person who controls ▇▇▇▇▇▇▇▇
Financial or any such Selling Firm and their agents, subsidiaries and employees
under paragraphs 11(A)(i) and 11(A)(ii) hereof to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in 11(A)(i) such Registration Statement or other sales material in
conformity with written information furnished to them by ▇▇▇▇▇▇▇▇ Financial or
any of its affiliates specifically for use therein; or 11(A)(ii) in the
prospectus and statement of additional information for the Fund, except for
liability arising out or written information furnished by CLNY or CLAFS
specifically for use therein. This indemnity agreement will be in addition to
any liability which CLNY or CLAFS may otherwise have.
▇. ▇▇▇▇▇▇▇▇ Financial agrees to indemnify and hold harmless CLNY,
CLAFS, each person who controls CLNY or CLAFS and their agents, subsidiaries
and employees against any and all losses, claims, damages, liabilities, or
expenses (including, without limitation any expenses reasonably incurred in
investigating
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or defending against any litigation commenced or threatened or any claim)
arising out of or based upon: (i) any untrue or alleged untrue statement or
representation made by ▇▇▇▇▇▇▇▇ Financial in connection with its obligations as
Promotional Agent hereunder or by associated persons of ▇▇▇▇▇▇▇▇ Financial
(except to the extent that such statements may be made in reliance on any
material relating to the Separate Account or the contracts supplied by CLNY or
CLAFS), or (ii) the omission or alleged omission by ▇▇▇▇▇▇▇▇ Financial in
connection with its obligations as Promotional Agent hereunder or by associated
persons of ▇▇▇▇▇▇▇▇ Financial to state any material fact necessary to make
statements made not misleading in light of the circumstances in which they were
made (except to the extent that, in omitting to make such statement, reliance
was placed upon material relating to the Separate Account or the Contracts
supplied by CLNY or CLAFS), or (iii) use of sales literature by ▇▇▇▇▇▇▇▇
Financial and associated persons thereof which has not been approved for use by
CLNY and CLAFS and has not been, if necessary, submitted by ▇▇▇▇▇▇▇▇ Financial
on behalf of CLNY and CLAFS to the NASD; or (iv) the negligent, improper,
fraudulent or unauthorized acts or omissions of ▇▇▇▇▇▇▇▇ Financial; or (v) any
breach of, or failure to comply with, the representations and warranties made
by ▇▇▇▇▇▇▇▇ Financial as set forth herein; or (vi) any untrue statement or
alleged untrue statement of a material fact contained in the prospectus and/or
statement of additional information for the Fund; or (vii) the omission or
alleged omission of a material fact contained in the Prospectus and/or
statement of additional information for the Fund.
C. Promptly after receipt by an indemnified party under this
paragraph 11 of notice of the commencement of any action by a third party, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph 11, notify the indemnifying party of
the commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying part from liability which the indemnifying
party may have to any indemnified party otherwise than under this paragraph 11.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
▇. ▇▇▇▇▇▇▇▇ Financial and CLNY agree to share equally any losses,
including reasonable attorney cost, incurred by CLNY resulting from the breach
by Selling Firms or their associated persons of the Selling Agreements, it
being understood that CLNY and ▇▇▇▇▇▇▇▇ Financial must promptly notify the
other party upon knowledge of such breach. Notwithstanding the agreement
contained in this subsection D, CLNY may in the course of losses suffered by it
as a result of wire orders accompanied by a telephone facsimile transmission as
described in Section 4 thereof, may deduct the amount of Promotional Agent Fee
due ▇▇▇▇▇▇▇▇ Financial for sales of the Contracts hereunder. In addition, CLNY
will hold Selling Firm liable for losses under such Contracts when the (i)
allocation instructions provided in the facsimile are different from those
provided in the original application; (ii) purchase payment has been received
and invested, and prior to the Contract being issued it is turned back for
cancellation by the Selling Firm; (iii) Contract is being returned under the
Free Look provision, but more than 30 days from the wire date; and (iv)
application is not received by CLNY within five business days after the wire
date. If CLNY is unable to collect such losses from Selling Firms, then CLNY
and ▇▇▇▇▇▇▇▇ Financial agree to share equally such losses, including reasonable
attorney costs.
12. Opinion of Counsel; Opinion of Auditors; Opinion of Officers.
A. Prior to the date first above written (the "Closing Date"),
CLNY and CLAFS will provide to ▇▇▇▇▇▇▇▇ Financial in a form acceptable to it,
an opinion of counsel from ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Assistant Secretary, to be dated
the Closing Date, to the effect that: (i) CLNY and CLAFS are duly incorporated
and are existing corporations in good standing under their respective state
laws of incorporations; (ii) CLAFS is duly registered as a broker-dealer under
the 1934 Act and is a member in good standing of the NASD; (iii) CLNY and
CLAFS may execute, deliver and perform their respective obligations hereunder
without, as a result, breaching or violating any provision of their
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respective corporate charters or by-laws, the provisions of any statute, rule,
regulation or order to which either is subject or to which any subsidiary is
subject or any agreement or instrument to which either is a party or by which
either is bound; (iv) CLNY has taken all actions, including, without
limitation, those necessary under its articles of incorporation and by-laws and
applicable state laws, to authorize and establish the Separate Account; (v)
such counsel has no reason to believe that either the Registration Statement or
any amendment or supplement thereto as of the date of the opinion contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; the descriptions in the Registration Statement of statutes, legal
and governmental proceedings and contracts and other documents are accurate and
fairly present the information required to be shown; and such counsel does not
know of any legal or governmental proceedings required to be descried in the
Registration Statement which are not described as required or of any contracts
or documents of a character required to be described in the Registration
Statement or to be filed as exhibits to the Registration Statement which are
not described and filed as required, it being understood that such counsel need
express no opinion as to the financial statement or other financial data
contained in the Registration Statement or on information contained in the
Registration Statement based on written information furnished by ▇▇▇▇▇▇▇▇
Financial or any of its affiliates specifically for use therein; and (vi) this
Agreement has been duly authorized, executed and delivered by CLNY and CLAFS .
B. On or before the Closing Date, CLNY will provide to ▇▇▇▇▇▇▇▇
Financial a copy of the most recent Report of Independent Auditor prepared by
Ernst & Young to the effect that: (i) Ernst & Young are independent certified
public accountants with respect to CLNY as defined in the Code of Professional
Ethics of the American Institute of Certified Public Accountants and (ii) Ernst
& Young have issued their opinion on the financial statements of CLNY, copies
of which have been furnished to ▇▇▇▇▇▇▇▇ Financial.
C. On the Closing Date, ▇▇▇▇▇▇▇▇ Financial will have received a
certificate, dated as of the Closing Date, of the President or any Vice
President, and Secretary or Assistant Secretary of CLNY in which such officers,
to the best of their knowledge after reasonable investigation, shall state that
the representations and warranties of CLNY in this Agreement are true and
current, that CLNY has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
the execution of this Agreement, that subsequent to the date(s) of the most
recent financial statements in the Prospectus, there has been no material
adverse change in the financial position or results or operation of CLNY and
its subsidiaries except as set for in or contemplated by the Prospectus or as
described in such certificate.
D. Prior to the Closing Date, ▇▇▇▇▇▇▇▇ Financial will provide to
CLNY and CLAFS in a form acceptable to them, an opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Senior Vice President and General Counsel of J. & ▇. ▇▇▇▇▇▇▇▇ and Company,
Inc., to be dated as of the Closing Date, to the effect that: (i) ▇▇▇▇▇▇▇▇
Financial is duly incorporated and is an existing corporation in good standing
under the laws of the state in which it is incorporated; (ii) ▇▇▇▇▇▇▇▇
Financial is duly registered as a broker-dealer under the 1934 Act and is a
member in good standing of the NASD; (iii) ▇▇▇▇▇▇▇▇ Financial may execute,
deliver and perform its obligations hereunder without, as a result, breaching
or violating any provision of its corporate charter or by-laws, any provision
of the federal securities laws, rules and regulations, or the NASD Rules of
Fair Practice, applicable to ▇▇▇▇▇▇▇▇ Financial, or any judicial or
administrative orders in which it or any subsidiary is named or any material
Agreement or instrument to which it is a party or by which it is bound; and
(iv) this Agreement has been duly authorized, executed and delivered by
▇▇▇▇▇▇▇▇ Financial.
E. On the Closing Date, ▇▇▇▇▇▇▇▇ Financial shall provide to CLNY
and CLAFS in a form acceptable to them a certificate, dated as of the Closing
Date, of the President or any Vice President, and a principal financial or
accounting officer of ▇▇▇▇▇▇▇▇ Financial in which such officers, to the best of
their knowledge after reasonable investigation, shall state that the
representations and warranties of ▇▇▇▇▇▇▇▇ Financial in this Agreement are true
and current, that ▇▇▇▇▇▇▇▇ Financial has complied with all Agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to execution of this Agreement.
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F. CLNY agrees that, so long as this Agreement is in effect, it
will furnish to ▇▇▇▇▇▇▇▇ Financial, as soon as practicable after the end of
each fiscal year, a copy of its annual report to policyholders for such year,
and CLNY will furnish to ▇▇▇▇▇▇▇▇ Financial (a) as soon as available, a copy of
each report of CLNY to be mailed to policyholders, and (b) from time to time,
such other financial information concerning CLNY as ▇▇▇▇▇▇▇▇ Financial may
reasonably request.
13. Term of Agreement. This Agreement may not be assigned by any of the
parties hereto. This Agreement shall continue in full force and effect for a
period of 5 years from the effective date of this Agreement, unless otherwise
mutually agreed upon by the parties to terminate sooner or if terminated for
such reasons as set forth in paragraph 14 below. After such 5 year period, it
will be deemed extended thereafter from year to year subject to termination at
will by any party hereto upon 60 days prior written notice to the other, it
being understood and agreed that the right to terminate this Agreement upon 60
days notice may be exercised for any reason or for no reason.
14. Termination. This Agreement shall terminate:
A. at the option of CLNY or CLAFS upon the institution of formal
proceedings against ▇▇▇▇▇▇▇▇ Financial or an affiliate by the NASD, the SEC, or
any state securities or insurance department or any other regulatory body
provided that CLNY or CLAFS determines in good faith in either's sole judgment,
that such institution will have a material adverse impact on ▇▇▇▇▇▇▇▇ Financial
or the affiliate's ability to perform its obligations under this Agreement; or
B. at the option of ▇▇▇▇▇▇▇▇ upon the institution of formal
proceedings against The Canada Life Assurance Company ("CLA"), CLNY or CLAFS
brought by any Canadian legal or regulatory authority, the NASD, SEC, or any
formal proceedings involving a material matter brought by any state securities
or state insurance department or any other regulatory body regarding CLA, CLNY
or CLAFS provided that ▇▇▇▇▇▇▇▇ Financial determines in good faith in its sole
judgment that such institution will have a material adverse impact on CLNY's
Financial or CLAFS' ability to perform its obligations under this Agreement or
▇▇▇▇▇▇▇▇ Financial's ability to distribute the Contracts; or
C. at the option of ▇▇▇▇▇▇▇▇ Financial or CLNY upon any material
adverse change in the financial condition of one or the other; or
D. at the option of ▇▇▇▇▇▇▇▇ Financial, CLNY or CLAFS if the
Buy-Sell Agreement among the Fund, the Separate Account, CLNY and J. & ▇.
▇▇▇▇▇▇▇▇ & Co., Inc. ("JWSI"), the Investment Adviser is terminated.
E. at the option of ▇▇▇▇▇▇▇▇ Financial, CLNY or CLAFS, mutually
and equally, if senior management of any of the parties to this Agreement so
determines. In that event, termination of the Agreement will occur 30 days
after written notice to that effect has been received by the non-terminating
party(ies).
15. Provisions Surviving Termination. Notwithstanding termination of this
Agreement, and regardless of the cause or reason for such termination, the
provisions of Paragraph 11 (Indemnification) shall survive and be binding upon
the parties for a period of 10 years following such termination.
16. Notices. Any notice required under this Agreement shall be deemed to
have been given to CLNY and CLAFS if mailed to either, sent to the attention of
the Assistant Secretary, Canada Life Insurance Company of New York, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and notice is deemed given to
▇▇▇▇▇▇▇▇ Financial if mailed to ▇▇▇▇▇▇▇▇ Financial Services, Inc. with a copy
to Senior Vice President and General Counsel, JWSI, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other address furnished to the other party pursuant
hereto.
17. Nature and Survival of Representations and Warranties. All statements
contained in this Agreement or in connection with the transactions contemplated
hereby shall be deemed representations and warranties by the
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parties hereunder. All representations and warranties of the parties made in
this Agreement or as provided herein shall survive, regardless of any
investigation made by or on behalf of the parties hereto, until the applicable
statutes of limitations have run, and except if a claim arises under a
representation or warranty and a notice of claim is given prior to the
expiration of the survival period, then such representation or warranty shall
not terminate with respect to such claim until indemnification thereof shall
have been made in accordance with the provisions of this Agreement.
18. Exclusivity of Agreement.
A. CLNY and CLAFS hereby agree not to develop, market or
otherwise engage in the sale of other individual or group variable annuities
distributed through selling agreements with NYSE member firms or other
broker-dealers as agreed to by the parties from time to time, for five years
from the effective date of this Agreement, without prior written consent of
▇▇▇▇▇▇▇▇ Financial subject to the following: (i) This provision is not
applicable to and will in no way limit the further development and distribution
of CLNY's existing individual (VariFund) and group (The Canada Life 401(k))
variable annuity products or amendments thereto; (ii) The exclusive nature of
this Agreement will be reassessed by the parties and the exclusive nature of
this Agreement may be terminated by either CLNY or ▇▇▇▇▇▇▇▇ Financial, upon 180
days notice, if this venture is not successful in achieving the total assets
under management through individual and group annuity sales by the end of the
year specified below.
Year End
1994 $ 50 million
1995 $100 million
1996 $150 million
1997 $250 million
CLNY and ▇▇▇▇▇▇▇▇ Financial believe that these levels of production are
achievable and will work together in a spirit of cooperation to achieve the
success of this venture.
▇. ▇▇▇▇▇▇▇▇ Financial agrees during the term of this Agreement
not to enter into any distribution agreement with any other insurance company
unaffiliated with CLNY for the development, distribution, marketing or sale of
any other individual or group variable annuity or similar annuity, so long as
Section 18A of this Agreement is in effect, without the express prior written
consent of CLNY or CLAFS.
C. This Section 18 A and B shall be of no effect if this
Agreement is terminated pursuant to Section 14.
19. Miscellaneous
A. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon, either of the parties to do anything in violation of
any applicable laws or regulations, and CLNY and ▇▇▇▇▇▇▇▇ Financial shall each
comply with all applicable Federal and State laws, rules and regulations;
B. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original; and
C. If any provisions of this Agreement shall be held or made
invalid by court decision, statute, rule or otherwise the remainder of this
Agreement shall not be affected thereby.
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20. Headings: The descriptive headings of this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
21. Waivers. The waiver by any party of a breach by any other party of
any of the provisions of this Agreement shall not operate or be deemed as a
waiver of any other provision of this Agreement or of any subsequent breach
thereof by any party.
22. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and may not be modified except in a written
instrument executed by all parties hereto.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ Financial, CLNY and CLAFS have
caused this Agreement to be executed by their duly authorized officers as of
the date first above written.
CANADA LIFE INSURANCE COMPANY OF NEW YORK
BY __________________________________________________
BY __________________________________________________
CANADA LIFE OF AMERICA FINANCIAL SERVICES, INC.
BY __________________________________________________
BY __________________________________________________
▇▇▇▇▇▇▇▇ FINANCIAL SERVICES, INC.
BY __________________________________________________
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EXHIBIT C
STATEMENT OF COMPENSATION
As of May, 1993
Subject to the terms and conditions of this Agreement, CLAFS will pay
to ▇▇▇▇▇▇▇▇ Financial compensation based upon the premiums and
purchase payments received from Selling Firms having a Selling
Agreement with CLAFS as a direct result of ▇▇▇▇▇▇▇▇ Financial's
efforts. Promotional Agent Fees will be paid to ▇▇▇▇▇▇▇▇ Financial in
accordance with applicable law, in the percentages shown below: Form
30099
FOR PRE-AUTHORIZED CHECK CASES
------------------------------
Promotional Agent Fee
B/D Concession Paid Paid to ▇▇▇▇▇▇▇▇ Financial
To Selling Firms as as Master General Agent
Agent General Agent
Policy Years Commission Override Override
------------ ---------- -------- --------
1-10 3.5% 2.5% 1%
11-15 3.5% 2.5% 0.5%
16+ 1.5% -0- 0.5%
For Other than Pre-Authorized Check Cases
-----------------------------------------
B/D Concession Paid Paid to ▇▇▇▇▇▇▇▇ Financial
To Selling Firms as as Master General Agent
Agent General Agent
Policy Years Commission Expense Allowance Expense Allowance
------------ ---------- ----------------- -----------------
1-10 3.5% 2.5% 1%
11-15 3.5% 2.5% 0.5%
16+ 1.5% -0- 0.5%
To B/D To ▇▇▇▇▇▇▇▇ Financial
------ ---------------------
Service Fee at Annuit-
ization if "internal"
annuity rates are used. 3.5% if payout 3.0% .50%
Service Fee is only paid = or > 10 years
on annuitized proceeds that or a life annuity
are past any applicable and amount $0-1
surrender charge/periods. million
1.5% if amount over 1.25% .25%
$1 million
2.35% if payout 2.0% .35%
<10 yrs and
not a life annuity
and amount $0-1
million
1.5% if amount over 1.25% .25%
$1 million
Promotional Agent Fees will be paid to ▇▇▇▇▇▇▇▇ Financial based on
premiums or purchase payments paid in cash or check and accepted by
CLNY on contracts specified above, in accordance with the provisions
of this Agreement. The Gross payout above represents total payout
from CLNY, including Selling Concessions paid to Selling Firms.
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Chargebacks: (i) In the event a contract is returned to CLNY pursuant to a
"Free Look" provision, the full Promotional Agent Fee paid thereon shall be
charged back to ▇▇▇▇▇▇▇▇ Financial. (ii) Should any premium or purchase
payment on any contract issued by CLNY be refunded for any reason, ▇▇▇▇▇▇▇▇
Financial shall repay or return Promotional Agent Fees received by it with
respect to such premium or purchase payment. (iii) If a Contract was not
issued as a result of failure by Selling Firm to submit to CLNY an application
sufficient to satisfy state insurance laws or CLNY eligibility requirements
then amounts paid to ▇▇▇▇▇▇▇▇ Financial shall be returned or repaid. (iv) If a
Contract was tendered to CLNY for redemption within ten business days of the
date of activity then amounts paid to ▇▇▇▇▇▇▇▇ Financial shall be returned or
repaid. (v) For full or partial withdrawals from the contract: 100% of all
Promotional Agent Fees and B/D Concessions paid to Selling Firms on amount(s)
withdrawn within 6 months of such amount(s) being paid to CLNY and 50% of all
Promotional Agent Fees and B/D Concessions paid to Selling Firm on amount(s)
withdrawn from 7 - 12 months of such amount(s) being paid to CLNY shall be
returned or repaid. For any premium or purchase payment that has been in the
contract for more than 12 months, there shall be no charge back on either
Promotional Agent Fee or B/D Concession. To the extent permitted by law, the
amount so charged back may, at the option of CLNY, be set off against
Promotional Agent Fees otherwise due to ▇▇▇▇▇▇▇▇ Financial. In addition, such
other compensation will be payable as are from time to time agreed by the
parties to the foregoing Agreement and which is in accordance with applicable
law, and will be added to this Schedule.
EXPENSE ALLOWANCE
Expense Allowances: The company will pay expense allowances to the general
agent for business effected by or through the general agency based on the
formulas in the Schedule of Expense Allowance Payments.
Conditions and Limitations: The payment of all expense allowances to the
general agent is subject to the following conditions and limitations:
1. Lapses and surrenders in the first policy year, and any refunds
of first year premium made by the company, will result in proportionate
chargebacks of any expense allowances paid to the general agent for
said premiums.
2. No expense allowance will be used by the general agent of the
company to effect compensation in excess of the limits of Section 4228
of the Insurance Law of New York.
3. No expense allowance will be due or payable after the
termination of this contract except for first year expense allowances
for policies written prior to such termination.
4. Notwithstanding any of the other terms and conditions governing
payment of expense allowances in this contract, and to conform with the
requirements of Section 4228 of the Insurance Law and the applicable
regulations resulting therefrom and other governing sections of the
law, the following will apply:
a. The maximum expense allowance payments to a general agent
shall be such that when added to first year commissions,
exclusive of overriding commissions not exceeding
5% of first year premiums, the total shall not exceed 91% of
first year premiums for ordinary life and annuity policies and
contracts other than single premium policies and contracts.
b. The maximum expense allowance shall not exceed 100% of the
commissions payable on single premium policies and
contracts, or the overall 7% of premium limit.
In monitoring the maximum allowances rules in this paragraph 4, the
company will apply those in a and b above on a "per-policy" basis.