FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the ___ day of ________,, by and between
OFFITBANK VARIABLE INSURANCE FUND, INC. ("FUND"), a Maryland corporation,
OFFIT FUNDS DISTRIBUTOR, INC. ("DISTRIBUTOR"), a Massachusetts corporation,
OFFITBANK ("ADVISER"), a New York trust company, and GREAT AMERICAN RESERVE
INSURANCE COMPANY ("COMPANY"), a life insurance company organized under the
laws of the State of Texas and GARCO EQUITY SALES, INC. ("UNDERWRITER"), a
Texas corporation.
WHEREAS, FUND is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the " 40 Act"),
as an open-end, diversified management investment company; and
WHEREAS, FUND is organized as a series fund comprised of several
Portfolios ("Portfolios"), those currently available are listed on Appendix A
hereto; and
WHEREAS, FUND was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable
Contracts") offered by life insurance companies through separate accounts of
such life insurance companies ("Participating Insurance Companies"); and
WHEREAS, FUND has received an order from the SEC, granting Participating
Insurance Companies and their separate accounts exemptions from the provisions
of Sections 9(a), 13(a), 15(a) and 15(b) of the 40 Act, and Rules 6e-2(b)(15)
and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios of the FUND to be sold to and held by variable annuity and variable
life insurance separate accounts of both affiliated and unaffiliated
Participating Insurance Companies ("Exemptive Order"); and
WHEREAS, the COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having FUND as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, the UNDERWRITER is registered with the SEC as a broker-dealer
under the Securities Exchange Act of 1934, as amended and acts as the FUND's
principal underwriter;
WHEREAS, DISTRIBUTOR is registered with the SEC as a broker-dealer under
the Securities Exchange Act of 1934, as amended and acts as the FUND's
principal underwriter; and
WHEREAS, ADVISER acts as the Fund's investment adviser; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the COMPANY intends to purchase shares of FUND to fund the
aforementioned Variable Contracts and FUND is authorized to sell such shares
to the COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the COMPANY,
UNDERWRITER, FUND, DISTRIBUTOR and ADVISER agree as follows:
Article I. SALE OF FUND SHARES
1.1 FUND agrees to make available to the Separate Accounts of the
COMPANY shares of the selected Portfolios as listed on Appendix B for
investment of purchase payments of Variable Contracts allocated to the
designated Separate Accounts as provided in FUND's Registration Statement.
1.2 FUND agrees to sell to the COMPANY those shares of the selected
Portfolios of FUND which the COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by FUND or its
designee of the order for the shares of FUND. For purposes of this Section
1.2, the COMPANY shall be the designee of FUND for receipt of such orders from
the designated Separate Account and receipt by such designee shall constitute
receipt by FUND; provided that the COMPANY receives the order by 4:00 p.m. New
York time and FUND receives notice from the COMPANY by telephone or facsimile
(or by such other means as FUND and the COMPANY may agree in writing) of such
order by 9:00 a.m. New York time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which FUND calculates its net asset value pursuant to the
rules of the SEC.
1.3 FUND agrees to redeem on the COMPANY's request, any full or
fractional shares of FUND held by the COMPANY, executing such requests on a
daily basis at the net asset value next computed after receipt by FUND or its
designee of the request for redemption, in accordance with the provisions of
this agreement and FUND's Registration Statement. For purposes of this
Section 1.3, the COMPANY shall be the designee of FUND for receipt of requests
for redemption from the designated Separate Account and receipt by such
designee shall constitute receipt by FUND; provided that the COMPANY receives
the request for redemption by 4:00 p.m. New York time and FUND receives notice
from the COMPANY by telephone or facsimile (or by such other means as FUND and
the COMPANY may agree in writing) of such request for redemption by 9:00 a.m.
New York time on the next following Business Day.
1.4 FUND shall furnish, on or before the ex-dividend date, notice to the
COMPANY of any income dividends or capital gain distributions payable on the
shares of any Portfolio of FUND. The COMPANY hereby elects to receive all such
income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. FUND shall notify
the COMPANY or its designee of the number of shares so issued as payment of
such dividends and distributions.
1.5 FUND shall make the net asset value per share for the selected
Portfolio(s) available to the COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use
its best efforts to make such net asset value available by 6:30 p.m. New York
time. In the event that FUND is unable to meet the 6:30 p.m. time stated
herein, it shall provide additional time for the COMPANY to place orders for
the purchase and redemption of shares. Such additional time shall be equal to
the additional time which FUND takes to make the net asset value available to
the COMPANY. If FUND provides the COMPANY with materially incorrect share net
asset value information through no fault of the COMPANY, the COMPANY on behalf
of the Separate Accounts, shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct share net asset value.
Any material error in the calculation of net asset value per share, dividend
or capital gain information shall be reported promptly upon discovery to the
COMPANY.
1.6 At the end of each Business Day, the COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, the COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar
amount of FUND shares which shall be purchased or redeemed at that day's
closing net asset value per share. The net purchase or redemption orders so
determined shall be transmitted to FUND by the COMPANY by 9:00 a.m. New York
Time on the Business Day next following the COMPANY's receipt of such requests
and premiums in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If the COMPANY's order requests the purchase of FUND shares, the
COMPANY shall pay for such purchase by wiring federal funds to FUND or its
designated custodial account on the day the order is transmitted by the
COMPANY. If the COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to the COMPANY, FUND shall use its best efforts
to wire the redemption proceeds to the COMPANY by the next Business Day,
unless doing so would require FUND to dispose of Portfolio securities or
otherwise incur additional costs. In any event, proceeds shall be wired to
the COMPANY within three Business Days or such longer period permitted by the
'40 Act or the rules, orders or regulations thereunder and FUND shall notify
the person designated in writing by the COMPANY as the recipient for such
notice of such delay by 3:00 p.m. New York Time the same Business Day that the
COMPANY transmits the redemption order to FUND. If the COMPANY's order
requests the application of redemption proceeds from the redemption of shares
to the purchase of shares of another Portfolio as shown on Appendix B, FUND
shall so apply such proceeds the same Business Day that the COMPANY transmits
such order to FUND.
1.8 FUND agrees that all shares of the Portfolios of FUND will be sold
only to Participating Insurance Companies which have agreed to participate in
FUND to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h) of the Internal Revenue
Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of
the Portfolios of FUND will not be sold directly to the general public.
1.9 FUND may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board of Directors of the FUND (the
"Board"), acting in good faith and in light of its duties under federal and
any applicable state laws, deemed necessary, desirable or appropriate and in
the best interests of the shareholders of such Portfolios.
1.10 Issuance and transfer of Portfolio shares will be by book entry
only. Stock certificates will not be issued to the COMPANY or the Separate
Accounts. Shares ordered from Portfolio will be recorded in appropriate book
entry titles for the Separate Accounts.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 The COMPANY represents and warrants that it is an insurance company
duly organized and in good standing under the laws of Texas and that it has
legally and validly established each Separate Account as a segregated asset
account under such laws.
2.2 The COMPANY represents and warrants that it has registered or, prior
to any issuance or sale of the Variable Contracts, will register each Separate
Account as a unit investment trust ("UIT") in accordance with the provisions
of the 40 Act and cause each Separate Account to remain so registered to
serve as a segregated asset account for the Variable Contracts, unless an
exemption from registration is available.
2.3 The COMPANY represents and warrants that the Variable Contracts will
be registered under the Securities Act of 1933 (the " 33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and further that the sale of the Variable Contracts shall comply in all
material respects with state insurance law suitability requirements.
2.4 The COMPANY represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that
it will maintain such treatment and that it will notify FUND immediately upon
having a reasonable basis for believing that the Variable Contracts have
ceased to be so treated or that they might not be so treated in the future.
2.5 FUND represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the '33 Act to the
extent required by that Act and sold in accordance with all applicable federal
and state laws, and FUND shall be registered under the 40 Act to the extent
required by that Act, prior to and at the time of any issuance or sale of such
shares. FUND, subject to Section 1.9 above, shall amend its registration
statement under the 33 Act and the 40 Act from time to time as required in
order to effect the continuous offering of its shares. FUND shall register
and qualify its shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by FUND.
2.6 FUND represents and warrants that each Portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify the COMPANY immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately
diversify the Portfolio to achieve compliance.
2.7 FUND represents and warrants that each Portfolio invested in by the
Separate Account intends to elect to be treated as a "regulated investment
company" under Subchapter M of the Code, and to qualify for such treatment for
each taxable year and will notify the COMPANY immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
2.8 DISTRIBUTOR represents and warrants that it is and will be a member
in good standing of the National Association of Securities Dealers, Inc.
("NASD") and is and will be registered as a broker-dealer with the SEC.
DISTRIBUTOR further represents that it will sell and distribute Portfolio
shares in accordance with all applicable state and federal laws and
regulations, including without limitation the '33 Act, the '34 Act and the '40
Act. DISTRIBUTOR represents that its operations are and shall at all times
remain in material compliance with the laws of the State of Delaware to the
extent required to perform this Agreement.
2.9 DISTRIBUTOR represents and warrants that it is and will remain duly
registered and licensed in all material respects under all applicable federal
and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal
laws.
2.10 ADVISER represents and warrants that it is and will remain duly
registered and licensed in all material respects under all applicable federal
and state laws and shall perform its obligations hereunder in compliance in
all material respects with any applicable state and federal laws.
2.11 UNDERWRITER represents and warrants that it is and will be a member
in good standing of the NASD and is and will be registered as a broker-dealer
with the SEC. UNDERWRITER further represents that it will sell and distribute
the Variable Contracts in accordance with all applicable state and federal
laws and regulations, including without limitation the '33 Act, the '34 Act
and the '40 Act. UNDERWRITER represents that its operations are and shall at
all times remain in material compliance with the laws of the State of Texas to
the extent required to perform this Agreement.
2.12 UNDERWRITER represents and warrants that it is and will remain dully
registered and licensed in all material respects under all applicable federal
and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal
laws.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 FUND shall prepare and be responsible for filing with the SEC and any
state regulators requiring such filing all shareholder reports, notices, proxy
materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of FUND.
FUND shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes and filing fees to which an issuer is subject on the issuance
and transfer of its shares.
3.2 At least annually, FUND or its designee shall provide the COMPANY,
free of charge, with as many copies of the current prospectus for the shares
of the Portfolios as the COMPANY may reasonably request for distribution to
existing Variable Contract owners whose Variable Contracts are funded by such
shares. FUND or its designee shall provide the COMPANY, at the COMPANY's
expense, with as many copies of the current prospectus for the shares as the
COMPANY may reasonably request for distribution to prospective purchasers of
Variable Contracts. If requested by the COMPANY in lieu thereof, FUND or its
designee shall provide such documentation (including a "camera ready" copy of
the new prospectus as set in type or, at the request of the COMPANY, as a
diskette in the form sent to the financial printer) and other assistance as is
reasonably necessary in order for the parties hereto once a year (or more
frequently if the prospectus for the shares is supplemented or amended) to
have the prospectus for the Variable Contracts and the prospectus for the FUND
shares printed together in one document. The expenses of such printing will be
apportioned between (a) the COMPANY and (b) FUND in proportion to the number
of pages of the Variable Contract and shares' prospectus, taking account of
other relevant factors affecting the expense of printing, such as covers,
columns, graphs and charts; FUND to bear the cost of printing the shares'
prospectus portion of such document for distribution only to owners of
existing Variable Contracts funded by the FUND shares and the COMPANY to bear
the expense of printing the portion of such documents relating to the Separate
Account; provided, however, the COMPANY shall bear all printing expenses of
such combined documents where used for distribution to prospective purchasers
or to owners of existing Variable Contracts not funded by the shares. In the
event that the COMPANY requests that FUND or its designee provide FUND's
prospectus in a "camera ready" or diskette format, FUND shall be responsible
for providing the prospectus in the format in which it is accustomed to
formatting prospectuses and shall bear the expense of providing the prospectus
in such format (e.g. typesetting expenses), and the COMPANY shall bear the
expense of adjusting or changing the format to conform with any of its
prospectuses.
3.3 FUND will provide the COMPANY with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after
the filing of each such document with the SEC or other regulatory authority.
The COMPANY will provide FUND with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to a Separate Account promptly
after the filing of each such document with the SEC or other regulatory
authority.
Article IV. SALES MATERIALS
4.1 The COMPANY will furnish, or will cause to be furnished, to FUND and
DISTRIBUTOR, each piece of sales literature or other promotional material in
which FUND or DISTRIBUTOR is named, at least fifteen (15) Business Days prior
to its intended use. No such material will be used if FUND or DISTRIBUTOR
objects to its use in writing within ten (10) Business Days after receipt of
such material.
4.2 FUND and DISTRIBUTOR will furnish, or will cause to be furnished, to
the COMPANY, each piece of sales literature or other promotional material in
which the COMPANY or its Separate Accounts are named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if the
COMPANY objects to its use in writing within ten (10) Business Days after
receipt of such material.
4.3 FUND and its affiliates and agents shall not give any information or
make any representations on behalf of the COMPANY or concerning the COMPANY,
the Separate Accounts, or the Variable Contracts issued by the COMPANY, other
than the information or representations contained in a registration statement
or prospectus for such Variable Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in reports of
the Separate Accounts or reports prepared for distribution to owners of such
Variable Contracts, or in sales literature or other promotional material
approved by the COMPANY or its designee, except with the written permission of
the COMPANY.
4.4 The COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of FUND or concerning FUND
other than the information or representations contained in a registration
statement or prospectus for FUND, as such registration statement and
prospectus may be amended or supplemented from time to time, or in sales
literature or other promotional material approved by FUND or its designee,
except with the written permission of FUND.
4.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, 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), sales literature (such as any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters, seminar
texts, or reprints or excerpts of any other advertisement, sales literature,
or published article), educational or training materials or other
communications distributed or made generally available to some or all agents
or employees (including so-called "broker only" materials), registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under National Association of Securities Dealers,
Inc. rules, the 40 Act or the '33 Act.
Article V. POTENTIAL CONFLICTS
5.1 The FUND will not enter into a participation agreement with any other
Participating Insurance Company unless it imposes the same conditions and
undertakings as are imposed on the COMPANY under Articles V and VI hereof.
5.2 The Board will monitor FUND for the existence of any material
irreconcilable conflict between the interests of Variable Contract owners of
all separate accounts investing in FUND. An irreconcilable material conflict
may arise for a variety of reasons, which may include: (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 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 FUND are being
managed; (e) a difference in voting instructions given by variable annuity and
variable life insurance Contract owners; and (f) a decision by a Participating
Insurance Company to disregard the voting instructions of Variable Contract
owners.
5.3 The COMPANY will report any potential or existing conflicts to the
Board. The COMPANY will be responsible for assisting the Board in carrying
out its duties in this regard by providing the Board with all information
reasonably necessary for the Board to consider any issues raised. The
responsibility includes, but is not limited to, an obligation by the COMPANY
to inform the Board whenever it has determined to disregard Variable Contract
owner voting instructions. These responsibilities of the COMPANY will be
carried out with a view only to the interests of the Variable Contract owners.
5.4 If a majority of the Board or majority of its disinterested
Directors, determines that a material irreconcilable conflict exists,
affecting the COMPANY, the COMPANY, at its expense and to the extent
reasonably practicable (as determined by a majority of the Board's
disinterested Directors), will take any steps necessary to remedy or eliminate
the irreconcilable material conflict, including; (a) withdrawing the assets
allocable to some or all of the Separate Accounts from FUND or any Portfolio
thereof and reinvesting those assets in a different investment medium, which
may include another Portfolio of FUND, or another investment company; (b)
submitting the question as to whether such segregation should be implemented
to a vote of all affected Variable Contract owners and as appropriate,
segregating the assets of any appropriate group (i.e variable annuity or
variable life insurance Contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the
affected Variable Contract owners the option of making such a change; and (c)
establishing a new registered management investment company (or series
thereof) or managed separate account. If a material irreconcilable conflict
arises because of the COMPANY's decision to disregard Variable Contract owner
voting instructions, and that decision represents a minority position or would
preclude a majority vote, or because a particular state insurance regulator's
decision applicable to the Company conflicts with that of the majority of
other state regulators, the COMPANY may be required, at the election of FUND
to withdraw the Separate Account's investment in FUND, and 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
interests of the Variable Contract owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
FUND or its affiliates (including any investment adviser of FUND) be required
to establish a new funding medium for any Variable Contract. Further, the
COMPANY shall not be required by this Section 5.4 to establish a new funding
medium for any Variable Contracts if any offer to do so has been declined by a
vote of a majority of Variable Contract owners materially and adversely
affected by the irreconcilable material conflict. In the event that the Board
determines that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company shall withdraw the Separate
Account's investment in the FUND and terminate this Agreement with respect to
such Account within six (6) months after the Board informs the Company 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 of the Board.
5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to the COMPANY.
5.6 No less than annually, the COMPANY shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the
Board may fully carry out its obligations. Such reports, materials, and data
shall be submitted more frequently if deemed appropriate by the Board.
Article VI. VOTING
6.1 The COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the 40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, the COMPANY, where applicable, will vote shares of the Portfolio
held in its Separate Accounts in a manner consistent with voting instructions
timely received from its Variable Contract owners. The COMPANY will be
responsible for assuring that each of its Separate Accounts that participates
in FUND calculates voting privileges in a manner consistent with other
Participating Insurance Companies. The COMPANY will vote shares for which it
has not received timely voting instructions, as well as shares it owns, in the
same proportion as its votes those shares for which it has received voting
instructions.
6.2 The FUND will comply with all provisions of the '40 Act requiring
voting by shareholders, and in particular the FUND will either provide for
annual meetings or comply with Section 16(c) of the '40 Act (although the FUND
is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, Section 16(b). Further, the
FUND will act in accordance with the SEC's interpretation of the requirements
of Section 16(a) with respect to periodic elections of Directors and with
whatever rules the Commission may promulgate with respect thereto.
6.3 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
40 Act or the rules thereunder with respect to mixed and shared funding on
terms and conditions materially different from any exemptions granted in the
Exemptive Order, then FUND, and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule
6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent
such Rules are applicable and Articles V and VI hereof shall continue in
effect only to the extent that terms and conditions substantially similar
thereto are contained in such Rule(s) as so amended or adopted
Article VII. INDEMNIFICATION
7.1 Indemnification by the COMPANY. The COMPANY agrees to indemnify and
hold harmless FUND, DISTRIBUTOR and ADVISER and each of their respective
directors, principals, officers, employees and agents and each person, if any,
who controls FUND, DISTRIBUTOR or ADVISER within the meaning of Section 15 of
the 33 Act (collectively, the "Indemnified Parties" for purposes of this
Article VII) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the COMPANY,
which consent shall not be unreasonably withheld) or litigation (including
reasonable legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
FUND's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration Statement
or prospectus for the Variable Contracts or contained in the Variable
Contracts (or any amendment or supplement to any of the foregoing), 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 to the COMPANY by or on behalf of FUND for use in
the registration statement or prospectus for the Variable Contracts or in the
Variable Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Variable Contracts or
FUND shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the registration
statement, prospectus or sales literature of FUND not supplied by the COMPANY,
or persons under its control) or wrongful conduct of the COMPANY or the
UNDERWRITER or persons under their respective control, with respect to the
sale or distribution of the Variable Contracts or FUND shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement, prospectus, or sales
literature of FUND or any amendment thereof or supplement thereto 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 statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to FUND by or on
behalf of the COMPANY; or
(d) arise as a result of any failure by the COMPANY or the
UNDERWRITER to provide substantially the services and furnish the materials
under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the COMPANY or the UNDERWRITER in this
Agreement or arise out of or result from any other material breach of this
Agreement by the COMPANY.
7.2 The COMPANY shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross 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.
7.3 The COMPANY 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 COMPANY 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 COMPANY of
any such claim shall not relieve the COMPANY 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. In case any such action is
brought against an Indemnified Party, the COMPANY shall be entitled to
participate at its own expense in the defense of such action. The COMPANY also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the COMPANY to such party of
the COMPANY'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 COMPANY 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.
7.4 Indemnification by DISTRIBUTOR. DISTRIBUTOR agrees to indemnify and
hold harmless the COMPANY and the UNDERWRITER and each of their respective
directors, officers, employees, and agents and each person, if any, who
controls the COMPANY or the UNDERWRITER within the meaning of Section 15 of
the 33 Act (collectively, the "Indemnified Parties" for the purposes of this
Article VII) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of DISTRIBUTOR
which consent shall not be unreasonably withheld) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may
become subject under any statute, or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
FUND's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
or prospectus or sales literature of FUND (or any amendment or supplement to
any of the foregoing), 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 to DISTRIBUTOR
or FUND by or on behalf of the COMPANY for use in the registration statement
or prospectus for FUND or in sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the Variable contracts or
FUND shares; or
(b) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus or sales literature for the Variable Contracts not supplied by
DISTRIBUTOR or persons under its control) or wrongful conduct of FUND or
DISTRIBUTOR or persons under their control, with respect to the sale or
distribution of the Variable Contracts or FUND shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature covering the Variable Contracts, or any amendment thereof or
supplement thereto 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 statement or omission or such
alleged statement or omission was made in reliance upon and in conformity with
information furnished to the COMPANY for inclusion therein by or on behalf of
FUND; or
(d) except as set forth in section 7.7 below, arise out of or result
from any material breach of any representation and/or warranty made by FUND or
DISTRIBUTOR in this Agreement or arise out of or result from any other
material breach of this Agreement by FUND or DISTRIBUTOR.
7.5 DISTRIBUTOR shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement.
7.6 DISTRIBUTOR shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified DISTRIBUTOR in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify DISTRIBUTOR of
any such claim shall not relieve DISTRIBUTOR from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, DISTRIBUTOR shall be entitled to
participate at its own expense in the defense thereof. DISTRIBUTOR also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from DISTRIBUTOR to such party of
DISTRIBUTOR's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
DISTRIBUTOR will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.7 In no event shall the DISTRIBUTOR be liable under the indemnification
provisions contained in this agreement to any individual or entity, including
without limitation, the COMPANY, the UNDERWRITER, or any Contract owner, with
respect to any losses, claims, damages, liabilities or expenses that arise out
of or result from (i) the failure by the FUND or any Portfolio to qualify or
maintain its qualification as a regulated investment company under Subchapter
M of the Code, or (ii) the failure by the FUND or any Portfolio to comply with
the diversification requirements of Section 817(h) of the Code.
7.8 Indemnification by ADVISER. ADVISER agrees to indemnify and hold
harmless the COMPANY and the UNDERWRITER and each of their directors,
officers, employees, and agents and each person, if any, who controls the
COMPANY or the UNDERWRITER within the meaning of Section 15 of the 33 Act
(collectively, the "Indemnified Parties" for the purposes of this Article VII)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement) or litigation (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any
statute, or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of FUND's shares or the
Variable Contracts and arise as a result of (a) a failure by a Portfolio(s)
invested in by the Separate Account to comply with the diversification
requirements of Section 817(h) of the Code; or (b) a failure by a Portfolio(s)
invested in by the Separate Account to qualify as a "regulated investment
company" under Subchapter M of the Code.
7.9 ADVISER shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
7.10 ADVISER shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party under Section
7.8(b), unless such Indemnified Party shall have notified ADVISER in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify ADVISER of any
such claim shall not relieve 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. In case any such action is brought
against the Indemnified Parties, ADVISER shall be entitled to participate at
its own expense in the defense thereof. ADVISER also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from ADVISER to such party of 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 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.
7.11 The COMPANY agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review of the
COMPANY or, to the COMPANY's knowledge, of any Contract owner, annuitant,
beneficiary or participant under a group Contract (collectively,
"Participants"), that any Portfolio has failed to comply with the
diversification requirements of section 817(h) of the Code or the COMPANY
otherwise becomes aware of any facts that could give rise to any claim against
the FUND or its affiliates as a result of such a failure or alleged failure:
(a) the COMPANY shall promptly notify the ADVISER and FUND of such
assertion or potential claim;
(b) the COMPANY shall consult with the ADVISER and FUND as to how to
minimize any liability that may arise as a result of such failure or alleged
failure;
(c) the COMPANY shall use its best efforts to minimize any liability of
the FUND or its affiliates resulting from such failure, including, without
limitation, demonstrating, pursuant to Treasury Regulations Section
1.817-5(a)(2), that such failure was inadvertent;
(d) the COMPANY shall permit the FUND, ADVISER, their respective
affiliates and legal and accounting advisors to participate in any
conferences, settlement discussions or other administrative or judicial
proceedings or contests (including judicial appeals thereof) with the IRS, any
Participant or any other claimant regarding any claims that could give rise to
liability to the FUND or its affiliates as a result of such a failure or
alleged failure;
(e) any written materials to be submitted by the COMPANY to the IRS, any
Participant 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)), (a) shall be provided by the COMPANY to the ADVISER (together
with any supporting information or analysis) at least ten (10) business days
prior to the day on which such proposed materials are to be submitted and (b)
such materials (other than books and records of the COMPANY) shall not be
submitted by the COMPANY to any such person without the express written
consent of the ADVISER which shall not be unreasonably withheld;
(f) the COMPANY shall provide the FUND, ADVISER, or their respective
affiliates and legal and accounting advisors with such cooperation as the
ADVISER shall reasonably request (including, without limitation, by permitting
the FUND, ADVISER and their respective legal and accounting advisors to review
the relevant books and records of the COMPANY) in order to facilitate review
by the FUND, ADVISER or their respective advisors of any written submissions
provided to it pursuant to the preceding clause or its assessments of the
validity or amount of any claim against the FUND or its affiliates arising
from such a failure or alleged failure;
(g) the COMPANY shall not with respect to any claim of the IRS or any
Participant that would give rise to a claim against the FUND or its affiliates
(a) compromise or settle any claim, (b) accept any adjustment on audit, or (c)
forego any allowable administrative or judicial appeals, without the express
written consent of the FUND, ADVISER or their respective affiliates, which
shall not be unreasonably withheld, provided that the COMPANY shall not be
required to appeal any adverse judicial decision unless the FUND, ADVISER or
their respective affiliates shall have provided an opinion of independent
counsel to the effect that a reasonable basis exists for taking such appeal;
and
(h) the FUND, ADVISER and their respective affiliates shall have no
liability as a result of such failure or alleged failure if the COMPANY fails
to comply with any of the foregoing clauses (a) through (g), and such failure
could be shown to have materially contributed to the liability.
Should the FUND, ADVISER or any of their respective affiliates refuse to
give its written consent to any compromise or settlement of any claim or
liability hereunder, the COMPANY may, in its discretion, authorize the FUND,
ADVISER or their respective affiliates to act in the name of the COMPANY in,
and to control the conduct of, such conferences, discussions, proceedings,
contests or appeals and all administrative or judicial appeals thereof, and in
that event the FUND, ADVISER or their respective affiliates shall bear the
fees and expenses associated with the conduct of the proceedings that it is so
authorized to control. As used in this Agreement, the term "affiliates" shall
have the same meaning as "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
7.12 In no event shall the DISTRIBUTOR or the ADVISER be liable under
the indemnification provisions contained in this agreement to any individual
or entity, including without limitation, the COMPANY, the UNDERWRITER, or any
Contract owner, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any representation,
warranty, and/or covenant made by any Participating Insurance Company under an
agreement containing substantially similar representations, warranties and
covenants; (ii) the failure by the COMPANY or any Participating Insurance
Company to maintain its segregated asset account (which invests in any
Portfolio) as a legally and validly established segregated asset account under
applicable state law and as a duly registered unit investment trust under the
provisions of the 1940 Act (unless exempt therefrom); or (iii) the failure by
the COMPANY or any Participating Insurance Company to maintain its variable
annuity and/or variable life insurance contracts (with respect to which any
Portfolio serves as an underlying funding vehicle) as life insurance,
endowment or annuity contracts under applicable provisions of the Code.
7.13 The indemnification undertakings set forth in this Article VII are
in addition to (but not duplicative of) any other liability the parties may
have under this Agreement.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of the COMPANY, FUND, DISTRIBUTOR, ADVISER or
UNDERWRITER, at any time from the date hereof upon 180 days' notice, unless a
shorter time is agreed to by the parties;
(b) At the option of the COMPANY, if FUND shares are not reasonably
available to meet the requirements of the Variable Contracts as determined by
the COMPANY. Prompt notice of election to terminate shall be furnished by the
COMPANY, said termination to be effective ten days after receipt of notice
unless FUND makes available a sufficient number of shares to reasonably meet
the requirements of the Variable Contracts within said ten-day period;
(c) At the option of the COMPANY, upon the institution of formal
proceedings against FUND by the SEC, the NASD, or any other regulatory body,
the expected or anticipated ruling, judgment or outcome of which would, in the
COMPANY's reasonable judgment, materially impair FUND's ability to meet and
perform FUND's obligations and duties hereunder. Prompt notice of election to
terminate shall be furnished by the COMPANY with said termination to be
effective upon receipt of notice;
(d) At the option of FUND or the DISTRIBUTOR, upon the institution of
formal proceedings against the COMPANY by the SEC, the National Association of
Securities Dealers, Inc., or any other regulatory body, the expected or
anticipated ruling, judgment or outcome of which would, in FUND's reasonable
judgment, materially impair the COMPANY's ability to meet and perform its
obligations and duties hereunder. Prompt notice of election to terminate
shall be furnished by FUND with said termination to be effective upon receipt
of notice;
(e) In the event FUND's shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law precludes the use
of such shares as the underlying investment medium of Variable Contracts
issued or to be issued by the COMPANY. Termination shall be effective upon
such occurrence without notice;
(f) At the option of FUND if the Variable Contracts cease to qualify as
annuity contracts or life insurance contracts, as applicable, under the Code,
or if FUND reasonably believes that the Variable Contracts may fail to so
qualify. Termination shall be effective upon receipt of notice by the
COMPANY;
(g) At the option of the COMPANY, upon FUND's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of the COMPANY within ten days after written notice of such
breach is delivered to FUND;
(h) At the option of FUND, upon the COMPANY's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of FUND within ten days after written notice of such breach is
delivered to the COMPANY;
(i) At the option of FUND, if the Variable Contracts are not registered,
issued or sold in accordance with applicable federal and/or state law.
Termination shall be effective immediately upon such occurrence without
notice;
(j) In the event this Agreement is assigned without the prior written
consent of the COMPANY, FUND, DISTRIBUTOR, ADVISER and UNDERWRITER,
termination shall be effective immediately upon such occurrence without
notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, FUND at the option of the COMPANY will continue to make
available additional FUND shares, as provided below, pursuant to the terms and
conditions of this Agreement, for all Variable 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 or the COMPANY, whichever shall have legal authority to do
so, shall be permitted to reallocate investments in FUND, redeem investments
in FUND and/or invest in FUND upon the payment of additional premiums under
the Existing Contracts. This section 8.3 shall not apply to any termination
under Article V and the effect of such termination shall be governed by
Article V of this Agreement.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail
return receipt requested to the other party at the address of such party set
forth below or at such other address as such party may from time to time
specify in writing to the other party.
If to FUND, ADVISER or DISTRIBUTOR.
OFFITBANK Variable Insurance Fund, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Att: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
If to the COMPANY or UNDERWRITER:
Great American Reserve Insurance Company
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 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.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland.
It shall also be subject to the provisions of the federal securities laws and
the rules and regulations thereunder and to any orders of the SEC granting
exemptive relief therefrom and the conditions of such orders.
10.5 (a) The FUND and DISTRIBUTOR shall pay no fee or other compensation
to the COMPANY under this Agreement, except that if the FUND or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the DISTRIBUTOR may make payments to the COMPANY or to the
underwriter for the Variable Contracts if and in amounts agreed to by the
DISTRIBUTOR in writing and such payments will be made out of existing fees
otherwise payable to the DISTRIBUTOR, past profits of the DISTRIBUTOR or other
resources available to the DISTRIBUTOR. The FUND currently does not intend to
make any payments to finance distribution expenses pursuant to Rule 12b-1
under the 1940 Act or otherwise, although it may make such payments in the
future. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the FUND undertakes to have a Board of Directors, a
majority of whom are not interested persons of the FUND, formulate and approve
any plan under Rule 12b-1 to finance distribution expenses.
(b) Except as otherwise provided herein, or in any agreement
supplementary hereto, each party hereto shall bear all expenses incident to
its performance under this Agreement.
10.6 It is understood and expressly stipulated that neither the
shareholders of shares of any Portfolio nor the Directors or officers of FUND
or any Portfolio shall be personally liable hereunder. No Portfolio shall be
liable for the liabilities of any other Portfolio. All persons dealing with
FUND or a Portfolio must look solely to the property of FUND or that
Portfolio, respectively, for enforcement of any claims against FUND or that
Portfolio. It is also understood that each of the Portfolios shall be deemed
to be entering into a separate Agreement with the COMPANY so that it is as if
each of the Portfolios had signed a separate Agreement with the COMPANY and
that a single document is being signed simply to facilitate the execution and
administration of the Agreement.
10.7 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the National
Association of Securities Dealers, Inc. 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.
10.8 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.
10.9 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by
COMPANY, FUND, DISTRIBUTOR, ADVISER and UNDERWRITER.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
OFFITBANK Variable Insurance Fund, Inc.
By:_____________________________
Name:
Title:
Great American Reserve Insurance
Company OFFIT Fund Distributors, Inc.
By:_____________________________ By:_____________________________
Name: Name:
Title: Title:
GARCO Equity Sales, Inc. OFFITBANK
By:_____________________________ By:______________________________
Name: Name:
Title: Title:
APPENDIX A
Fund and its Portfolios
OFFITBANK VIF - High Yield Fund
OFFITBANK VIF - Investment Grade Global Debt Fund
OFFITBANK VIF - Emerging Markets Fund
OFFITBANK VIF - Total Return Fund
OFFITBANK VIF - Global Convertible Fund
APPENDIX B
Separate Accounts Selected Portfolios
Great American Reserve OFFITBANK VIF - Investment Grade
Variable Account G Global Debt Fund
OFFITBANK VIF - Total Return
Fund
