UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For The Fiscal Year Ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to _____________
Commission file number 333-25269
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (Exact
name of registrant as specified in its charter)
New York 93-1225432
(State or other jurisdiction of incorporation or organization) (I.R.S.
Employer Identification No.)
125 Wolf Road, Albany, New York 12205
(Address of principal executive offices) (Zip Code)
(518) 437-1816
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
As of March 1, 1998, the aggregate market value of the registrant's voting stock
held by non-affiliates of the registrant was $0.
As of March 1, 1998, 2,500 shares of the registrant's common stock were
outstanding, all of which were owned by the registrant's parent company.
Note: This Form 10-K is filed by the registrant only as a consequence of the
sale by the registrant of a market value adjusted annuity product.
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ii
TABLE OF CONTENTS
Page
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PART I
Item 1. Business........................................................................1
A. Organization and Corporate Structure...................................1
B. Business of the Company ...............................................1
C. Description of Business ...............................................2
Item 2. Properties......................................................................5
Item 3. Legal Proceedings...............................................................5
Item 4. Submission of Matters to a Vote of Security Holders.............................5
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.............................................................5
A. Equity Security Holders and Market Information.........................5
B. Dividends..............................................................5
Item 6. Selected Financial Data.........................................................6
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations...........................................................6
A. Results of Operations..................................................7
B. Liquidity and Capital Resources........................................7
C. Accounting Pronouncements..............................................8
D. Year 2000 .............................................................8
Item 8. Financial Statements and Supplementary Data.....................................8
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.............................................18
PART III
Item 10. Directors and Executive Officers of the Registrant..............................18
A. Identification of Directors............................................18
B. Identification of Executive Officers...................................20
Item 11. Executive Compensation..........................................................21
A. Compensation of Executive Officers.....................................21
B. Compensation of Directors..............................................21
Item 12. Security Ownership of Certain Beneficial Owners and Management..................22
A. Security Ownership of Certain Beneficial Owners........................22
B. Security Ownership of Management.......................................23
Item 13. Certain Relationships and Related Transactions..................................24
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................24
A. Index to Financial Statements..........................................24
B. Index to Exhibits......................................................25
C. Reports on Form 8-K....................................................25
Signatures................................................................................26
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<PAGE>
PART I
ITEM 1. BUSINESS
A. ORGANIZATION AND CORPORATE STRUCTURE
First Great-West Life & Annuity Insurance Company (the "Company") is a stock
life insurance company organized under the laws of the State of New York in
1996.
The Company is a wholly-owned subsidiary of Great-West Life & Annuity Insurance
Company ("GWL&A"), a life insurance company domiciled in Colorado. GWL&A is a
wholly-owned subsidiary of The Great-West Life Assurance Company ("Great-West
Life"), a Canadian life insurance company. Great-West Life is a subsidiary of
Great-West Lifeco Inc. ("Great-West Lifeco"), a Canadian holding company.
Great-West Lifeco is in turn a subsidiary of Power Financial Corporation ("Power
Financial"), a Canadian holding company with substantial interests in the
financial services industry. Power Corporation of Canada ("Power Corporation"),
a Canadian holding and management company, has voting control of Power
Financial. Mr. Paul Desmarais, through a group of private holding companies,
which he controls, has voting control of Power Corporation.
Common and preferred shares of Great-West Life, Great-West Lifeco, Power
Financial and Power Corporation are traded publicly in Canada.
B. BUSINESS OF THE COMPANY
The Company is authorized to engage in the sale of life insurance, annuities,
and accident and health insurance. The Company became licensed to do business in
New York and Iowa in 1997. The Company's business is currently limited to the
sale of individual annuity products.
The Company was capitalized on April 4, 1997. The table that follows summarizes
premiums and deposits for the period April 4, 1997 through December 31, 1997.
For further information concerning the Company, see Item 6 (Selected Financial
Data), and Item 8 (Financial Statements and Supplementary Data). For commentary
on the information in the following table, see Item 7 (Management's Discussion
and Analysis of Financial Condition and Results of Operations).
(Dollars in Thousands)
Premiums and other income $
21
Deposits for Investment-type contracts
84
Deposits to Separate Accounts
9,121
<PAGE>
C. DESCRIPTION OF BUSINESS
1. Principal Products
The Company currently sells individual fixed and variable qualified and
non-qualified deferred annuities.
The fixed annuity product is a Guarantee Period Fund which was established as a
non-unitized Separate Account in which the owner does not participate in the
performance of the assets. The assets accrue solely to the benefit of the
Company and any gain or loss in the Guarantee Period Fund is borne entirely by
the Company. Guarantee period durations of one to ten years are currently being
offered by the Company. Distributions from the amounts allocated to a Guarantee
Period Fund more than six months prior to the maturity date results in a market
value adjustment ("MVA"). The MVA reflects the relationship as of the time of
its calculation between the current U.S. Treasury Strip ask side yield and the
U.S. Treasury Strip ask side yield at the inception of the contract.
The variable annuity product offers 25 investment options. This product provides
the opportunity for contractholders to assume the risks of, and receive all the
benefits from, the investment of retirement assets. The variable product assets
are invested, as designated by the participant, in a Separate Account which in
turn invests in shares of underlying funds managed by selected external fund
managers.
The fixed annuity product generates earnings from the investment spreads on
guaranteed investment returns. The variable annuity product generates earnings
from the fees collected for mortality and expense risks associated with the
variable options.
The amount of annuities in force is measured by account balances. At December
31, 1997 the annuity account balances were $84 thousand for fixed annuities and
$9.0 million for variable annuities.
2. Method of Distribution
The Company distributes its annuity products through Charles Schwab and Co.,
Inc. pursuant to a distribution agreement (see Exhibit 10.1 attached).
3. Competition
The annuity marketplace is highly competitive. The Company's competitors include
mutual fund companies, insurance companies, banks, investment advisors, and
certain service and professional organizations. No one competitor or small
number of competitors is dominant. Competition focuses on service, technology,
cost, variety of investment options, investment performance, product features,
price and financial strength as indicated by ratings issued by nationally
recognized agencies. For more information on the Company's ratings see Item
1(C)(7) (Business - Description of Business - Ratings).
4. Reserves
Reserves for deferred annuities are equal to cumulative deposits plus credited
interest less withdrawals and other charges. With additions from deposits to be
received and interest, such reserves are expected to be sufficient to meet the
Company's contract obligations at their maturities, and pay expected death or
retirement benefits or surrender requests.
5. Investments
GWL&A manages the Company's general and Separate Account funds. Investments
under management at year-end 1997 totaled $14.4 million, comprised of $5.4
million of general funds and $9.0 million of Separate Account assets.
The limited size of the Company's investment portfolio makes it difficult to
diversify and avoid industry concentration at this time. At December 31, 1997,
$5.0 million of the Company's general funds were invested in a U.S. Treasury
Note with a maturity date of May 31, 1998, and the remainder in short term
investments.
6. Regulation
General
The Company must comply with the insurance laws of New York and Iowa.
This includes regulations governing rates, solvency, standards of business
conduct and various insurance and investment products. The form and content of
statutory financial reports and the type and concentration of investments are
also regulated.
The Company's operations and accounts are subject to examination by the New York
Insurance Division at specified intervals.
Solvency Regulation
The National Association of Insurance Commissioners has adopted risk-based
capital rules for life insurance companies. These rules recommend a specified
level of capital depending upon the types and quality of investments held, the
types of business written, and the types of liabilities maintained. Depending on
the ratio of the insurer's adjusted capital to its risk based capital, the
insurer could be subject to various regulatory actions ranging from increased
scrutiny to conservatorship. Based on the Company's December 31, 1997 statutory
financial reports, the Company was well within these rules.
The National Association of Insurance Commissioners Insurance Regulatory
Information System ratios are another set of tools used by regulators to provide
an "early warning" as to when a company may require special attention. There are
twelve categories of financial data with defined usual ranges for each. For
1997, the Company anticipates that it will fall outside of the usual ranges for
several categories due to the start-up nature of its operations.
Insurance Holding Company Regulations
The Company is subject to and complies with insurance holding company
regulations in New York. These regulations contain certain restrictions and
reporting requirements for transactions between an insurer and its affiliates,
including the payments of dividends. They also regulate changes in control of an
insurance company.
Securities Laws
The Company is subject to various levels of regulation under federal securities
laws. The Company's Separate Accounts and annuity products are registered under
the Investment Company Act of 1940 and the Securities Act of 1933.
7. Ratings
The Company is rated by a number of nationally recognized rating agencies. The
ratings represent the opinion of the rating agencies on the financial strength
of the Company and its ability to meet the obligations of its insurance
policies. The ratings take into account an agreement whereby GWL&A has
undertaken to provide the Company with certain financial support related to
maintaining required statutory surplus and liquidity (see Exhibit 10.3
attached).
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Rating Agency Measurement Rating
- - ----------------------------- ------------------------------------------ ------------
A.M. Best Company Financial Condition and Operating AA+ *
Performance
Duff & Phelps Corporation Claims Paying Ability AAA *
Standard & Poor's Claims Paying Ability AA **
Corporation
Moody's Investors Service Insurance Financial Strength Aa3 ***
</TABLE>
* Highest ratings available.
** Third highest rating out of 19 rating categories.
*** Fourth highest rating out of 19 rating categories.
<PAGE>
8. Miscellaneous
No customer accounted for 10% or more of the Company's consolidated revenues in
1997. The Company's business is not dependent on a single customer or a few
customers, the loss of which would have a significant effect on the Company.
As mentioned, the Company distributes its annuity products through Charles
Schwab and Co., Inc. pursuant to a marketing agreement. The loss of business
from this agent would have a material effect on the Company's distribution
process.
The Company and GWL&A have an administration service agreement whereby GWL&A
administers, distributes, and underwrites business for the Company and
administers the Company's investment portfolio (see Exhibit 10.2 attached).
ITEM 2. PROPERTIES
The Company leases its home office in Albany, New York.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or any of
its subsidiaries is a party or of which any of their property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of 1997 to a vote of security
holders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
A. EQUITY SECURITY HOLDERS AND MARKET INFORMATION
All of the Company's outstanding common shares are owned by GWL&A. Accordingly,
there is no established public trading market for the Company's common equity.
B. DIVIDENDS
The Company has not paid dividends on its common shares.
Under New York law, the Company cannot, without the approval of the New York
Superintendent of Insurance, pay a dividend if, as a result of such payment, the
total of all dividends paid in the preceding twelve months would exceed the
lesser of (i) 10% of the Company's surplus as regards policyholders as at the
preceding December 31; or (ii) the Company's adjusted net investment income as
at the preceding December 31.
ITEM 6. SELECTED FINANCIAL DATA
The following is a summary of certain financial data of the Company. This
summary has been derived in part from, and should be read in conjunction with,
the financial statements of the Company included in Item 8 (Financial Statements
and Supplementary Data).
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(Dollars in Thousands) For
the Period from
April 4, 1997
(Inception) through
December 31, 1997
INCOME STATEMENT DATA
Premiums and other $ 21
income
Net investment income 243
Total Revenues 264
Total benefits and expenses 213
Income tax expense 18
===============
Net Income $ 33
===============
BALANCE SHEET DATA
Investment assets $ 5,381
Separate account assets 9,045
Total assets 16,154
Total policyholder liabilities 84
Total shareholder's equity 6,538
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's discussion and analysis of financial condition and results of
operations of the Company for the period from April 4, 1997 (inception) to
December 31, 1997 follows. In connection with, and because it desires to take
advantage of, the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, the Company cautions readers regarding certain
forward-looking statements contained in the following discussion and elsewhere
in this report and in any other statements made by, or on behalf of, the
Company, whether or not in future filings with the SEC. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results, or other developments. In
particular, statements using verbs such as "expect," "anticipate," "believe," or
words of similar import generally involve forward-looking statements. Without
limiting the foregoing, forward-looking statements include statements which
represent the Company's beliefs concerning future or projected levels of sales
of the Company's products, investment spreads or yields, or the earnings or
profitability of the Company's activities.
Forward-looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which, with respect to future business decisions, are subject to
change. These uncertainties and contingencies can affect actual results and
could cause actual results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company. Whether or not
actual results differ materially from forward-looking statements may depend on
numerous foreseeable and unforeseeable events or developments, some of which may
be national in scope, such as general economic conditions and interest rates,
some of which may be related to the insurance industry generally, such as
pricing competition, regulatory developments and industry consolidation, and
others of which may relate to the Company specifically, such as credit,
volatility and other risks associated with the Company's investment portfolio,
and other factors. Readers are also directed to consider other risks and
uncertainties discussed in documents filed by the Company with the SEC.
A. RESULTS OF OPERATIONS
The Company's operations during the period April 4, 1997 (inception) to December
31, 1997 were focused on obtaining a New York insurance license (which occurred
May 28, 1997), and preliminary marketing activities.
Sales have been limited to individual fixed and variable qualified and
non-qualified deferred annuities marketed through Charles Schwab & Co., Inc.
Although sales of fixed annuities have been minimal ($84 thousand),
contributions received for variable annuities were $9.1 million for the period
the Company has been licensed.
The net income of $33 thousand was the result of investment income on surplus
less operating expenses associated with establishing the Company.
It is expected that the sale of individual annuities will continue and increase
during 1998. The Company will continue to focus its efforts on individual
annuity sales while continuing to develop other products for submission to the
New York Department of Insurance for approval.
The Company's investment strategies and portfolios are intended to match the
duration of the related liabilities and provide sufficient cash flow to meet
obligations while maintaining a competitive rate of return. At December 31,
1997, $5.0 million of the Company's general funds were invested in a U.S.
Treasury Note with a maturity date of May 31, 1998, and the remainder in short
term investments.
B. LIQUIDITY AND CAPITAL RESOURCES
The Company meets its operating requirements by maintaining appropriate levels
of liquidity in its investment portfolio. Liquidity for the Company is strong,
as evidenced by significant amounts of short-term investments and cash, which
totaled $2.0 million as of December 31, 1997. As discussed above, the Company
and GWL&A have an agreement whereby GWL&A has undertaken to provide the Company
with certain financial support related to maintaining required statutory surplus
and liquidity.
C. ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company will implement SFAS No. 130, "Reporting
Comprehensive Income", which requires the disclosure of comprehensive income and
its components. The Company recognizes unrealized gains and losses, net of
adjustments, on its investments available for sale portfolio. These items are
considered to be comprehensive income.
Effective October 1, 1998, the Company will implement the disclosure
requirements of SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information". SFAS No. 131 redefines how operating segments are
determined and requires disclosure of certain financial and descriptive
information about a company's operating segments. The Company anticipates, with
the adoption of SFAS No. 131, that it will incorporate segment disclosures of
its current operating units. The Company believes the segment information
required to be disclosed under SFAS No. 131 will be more comprehensive than
previously provided, including expanded disclosures of income statement and
balance sheet items for each of its reportable operating segments.
D. YEAR 2000
As mentioned, GWL&A provides administrative services to the Company. GWL&A has a
number of existing computer programs that use only two digits to identify a year
in the date field, which creates a problem with the upcoming change in the
century. GWL&A has developed detailed plans to rectify the year 2000 issue.
These plans include modifying programs where necessary, replacing certain
programs with year 2000 compliant software, and working with vendors and
business partners who need to become year 2000 compliant. Management of GWL&A
estimates that the total cost to implement these plans will not be material, and
has budgeted the expense as part of its computer systems operating costs in 1998
and early 1999.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following are the Company's Financial Statements for the period April 4,
1997 (inception) to December 31, 1997 and the Independent Auditors' Report
thereon.
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (A wholly-owned
subsidiary of Great-West Life and Annuity Insurance Company)
Financial Statements for the period from April 4, 1997
[Inception] to December 31, 1997 and Independent Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
Tothe Board of Directors and Stockholder of First Great-West Life & Annuity
Insurance Company:
We have audited the accompanying balance sheet of First Great-West Life &
Annuity Insurance Company (a wholly-owned subsidiary of Great-West Life and
Annuity Insurance Company) as of December 31, 1997, and the related statements
of income, stockholder's equity, and cash flows for the period from April 4,
1997 [inception] to December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of First Great-West Life & Annuity Insurance
Company as of December 31, 1997, and the results of its operations and its cash
flows for the period from April 4, 1997 [inception] to December 31, 1997 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
January 23, 1998
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
BALANCE SHEET
DECEMBER 31, 1997
- - ---------------------------------------------------
[Dollars in thousands except for share information.]
ASSETS
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INVESTMENTS:
Fixed maturities, available-for-sale, at fair value (amortized cost $4,987) $ 4,995
Short-term investments, available-for-sale (cost approximates fair value) 386
--------------
Total Investments 5,381
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Cash 1,648
Investment income due and accrued 24
Other assets 6
Deferred income taxes 50
Separate account assets 9,045
--------------
TOTAL ASSETS $ 16,154
==============
LIABILITIES AND STOCKHOLDER'S EQUITY
POLICY BENEFIT LIABILITIES:
Policy reserves $ 84
GENERAL LIABILITIES:
Due to Parent Corporation 155
Other liabilities 332
Separate account liabilities 9,045
--------------
Total Liabilities 9,616
--------------
STOCKHOLDER'S EQUITY:
Common stock, $1,000 par value, 2,500 shares authorized,
issued and outstanding 2,500
Additional paid-in capital 4,000
Net unrealized gain on securities available-for-sale 5
Retained earnings 33
--------------
Total Stockholder's Equity 6,538
--------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 16,154
==============
</TABLE>
See notes to financial statements.
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
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STATEMENT OF INCOME
FOR THE PERIOD APRIL 4, 1997 [INCEPTION] TO DECEMBER 31, 1997
- - -----------------------------------------------------------------------------------------------
[Dollars in Thousands]
REVENUES:
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Annuity contract charges and premiums $ 21
Net investment income 243
---------------
264
---------------
EXPENSES:
Commissions 9
Operating expenses 204
---------------
213
---------------
INCOME BEFORE INCOME TAXES 51
PROVISION FOR INCOME TAXES:
Current 71
Deferred (53)
---------------
18
---------------
NET INCOME $ 33
===============
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See notes to financial statements.
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE PERIOD APRIL 4, 1997 [INCEPTION] TO DECEMBER 31, 1997
- - -----------------------------------------------------------------------------------------------------------------------------------
[Dollars in Thousands]
Additional Net
Paid-in Unrealized Retained
Shares Amount Capital Gains Earnings Total
------------- ------------ ------------- ------------- ------------- -------------
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Capital contribution 2,500 $ 2,500 $ 4,000 $ $ $ 6,500
Change in net unrealized gains 5 5
Net income 33 33
------------- ------------ ------------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1997 2,500 $ 2,500 $ 4,000 $ 5 $ 33 $ 6,538
============= ============ ============= ============= ============= =============
</TABLE>
See notes to financial statements.
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
STATEMENT OF CASH FLOWS
FOR THE PERIOD APRIL 4, 1997 [INCEPTION] TO DECEMBER 31, 1997
- - -----------------------------------------------------------------------------------------------
[Dollars in Thousands]
OPERATING ACTIVITIES:
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Net income $ 33
Adjustments to reconcile net income to
net cash provided by operating activities -
Amortization of investments (19)
Deferred income taxes (53)
Changes in assets and liabilities:
Investment income due and accrued (24)
Other, net 326
-------------
Net cash provided by operating activities 263
-------------
INVESTING ACTIVITIES:
Purchases of fixed maturity investments -
Available-for-sale (5,354)
-------------
Net cash used in investing activities (5,354)
-------------
FINANCING ACTIVITIES:
Contract deposits 84
Due to Parent Corporation 155
Capital contributions 6,500
-------------
Net cash provided by financing activities 6,739
-------------
NET INCREASE IN CASH 1,648
CASH, BEGINNING OF PERIOD 0
-------------
CASH, END OF PERIOD $ 1,648
=============
</TABLE>
See notes to financial statements.
<PAGE>
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 4, 1997 [INCEPTION] TO DECEMBER 31,1997
- - ----------------------------------------------------------------------
[Dollars in Thousands, except Share Amounts]
1. ORGANIZATION
Organization - First Great-West Life & Annuity Insurance Company (the
Company) is a wholly-owned subsidiary of Great-West Life & Annuity
Insurance Company (the Parent Corporation). The Company was incorporated
as a stock life insurance company in the State of New York and was
capitalized on April 4, 1997, through a $6,000 cash investment from the
Parent Corporation for 2,000 shares of common stock. On December 29,
1997, the Company issued an additional 500 shares of common stock to the
Parent Corporation for $500. The Company was licensed as an insurance
company in the State of New York on May 28, 1997.
Basis of Presentation - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. SIGNIFICANT ACCOUNTING PRINCIPLES
Cash - Cash includes only amounts in demand deposit accounts.
Investments - Fixed maturity investments available-for-sale are carried
at fair value, with the net unrealized gain or loss included as a
component of stockholder's equity. If a decline in fair value is
determined to be other than temporary, the investment will be written
down and a realized loss recognized. The fair values of publicly traded
fixed maturities are obtained from an independent pricing service.
The amortized cost of fixed maturities available-for-sale is adjusted
for the amortization of premium and accretion of discounts using the
effective interest method over the estimated life of the related bonds.
Such amortization is included in net investment income.
At December 31, 1997, the fixed maturity investment consisted of one
U.S. Treasury Note with a maturity date of May 31, 1998.
<PAGE>
Short-term investments include securities purchased with initial
maturities of one year or less and are carried at amortized cost. The
Company considers short-term investments to be available-for-sale and
amortized cost approximates fair value.
At December 31, 1997, the short-term investment consisted of one
commercial paper with a maturity date of August 17, 1998.
Separate Account - Separate Account assets and related liabilities are
carried at fair value. The Company's Separate Accounts invest in shares
of various external mutual funds.
Due to Parent Corporation - Due to Parent Corporation includes amounts
due on demand.
Policy Reserves - Annuity contract reserves without life contingencies
of $84 are carried at contractholders' account value. The carrying value
of policy reserves is a reasonable estimate of fair value.
Recognition of Premium Income and Expenses - Revenues for annuity and
other contracts without significant life contingencies are recognized as
received. They consist of contract charges for the cost of insurance,
contract administration, and surrender fees that have been assessed
against the contract account balance during the period.
Income Taxes - Income taxes are recorded using an asset and liability
approach which requires, among other provisions, the recognition of
deferred tax assets and liabilities for expected future tax consequences
of events that have been recognized in the Company's financial
statements or tax returns. In estimating future tax consequences, all
expected future events (other than the enactments or changes in the tax
laws or rules) are considered.
Temporary differences which give rise to the deferred tax assets and
liabilities as of December 31, 1997, are as follows:
<TABLE>
Deferred Deferred Tax
Tax Asset Liability
----------------- ----------------
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Deferred acquisition cost proxy tax $ 53 $
Investment assets 3
----------------- ----------------
Total deferred taxes $ 53 $ 3
================= ================
</TABLE>
Amounts related to investment assets above include $3 related to the
unrealized gains on the Company's fixed maturities available-for-sale at
December 31, 1997.
The Company and its Parent have entered into an income tax allocation
agreement whereby the Parent could file a consolidated federal income
tax return. Under the agreement the Company is responsible for and will
receive the benefits of any income tax liability or benefit computed on
a separate basis. In 1997 the Company will not file on a consolidated
basis with its Parent.
3. RELATED-PARTY TRANSACTIONS
The Company and the Parent Corporation have service agreements whereby
the Parent Corporation administers, distributes, and underwrites
business for the Company and administers the Company's investment
portfolio and the Company provides services for the Parent Corporation.
Certain operating expenses represent allocations made between the Parent
Corporation and the Company for services provided pursuant to these
service agreements. These transactions are summarized as follows:
Investment management expense (included in net investment income) $ 4
Administrative and underwriting payments (included in operating expenses) (14)
The Company and the Parent Corporation have an agreement whereby the
Parent Corporation provides certain financial support related to
maintaining adequate regulatory surplus and liquidity.
4. DIVIDEND RESTRICTIONS
The Company's net income and capital and surplus, as determined in
accordance with statutory accounting principles and practices for
December 31, 1997, are as follows (unaudited):
Net Loss $ (19)
Capital and Surplus 6,469
As an insurance company domiciled in the State of New York, the Company
is required to maintain a minimum of $6,000 of capital and surplus. In
addition, the maximum amount of dividends which can be paid to
stockholders is subject to restrictions relating to statutory surplus
and statutory adjusted net investment income. The Company should be able
to pay dividends of $242 in 1998. The Company paid no dividends in 1997.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in the Company's independent accountants or resulting
disagreements on accounting and financial disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A. IDENTIFICATION OF DIRECTORS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Director Age Served as Principal Occupation(s) For
Director From Last Five Years
Marcia D. Alazraki 56 1996 Partner, Kalkines, Arky, Zall &
Bernstein LLP
since January,
1998 (a law
firm);
previously
Counsel,
Simpson Thacher
& Bartlett (a
law firm)
James Balog (1) 69 1997 Company Director
James W. Burns, O.C. 68 1997 Chairman of the Boards of Great-West
Lifeco, Great-West Life, London
Insurance Group Inc. and London Life
Insurance Company; Deputy Chairman,
Power Corporation
Paul Desmarais, Jr. 43 1997 Chairman and Co-Chief Executive
Officer, Power Corporation;
Chairman, Power Financial
Robert Gratton 54 1997 Chairman of the Board of GWL&A;
President and Chief Executive
Officer, Power Financial
N. Berne Hart (1) 68 1997 Company Director
Stuart Z. Katz 55 1997 Partner, Fried, Frank, Harris,
Shriver & Jacobson (a law firm)
William T. McCallum 55 1997 Chairman, President and Chief
Executive Officer of the Company;
President and Chief Executive
Officer, GWL&A; President and Chief
Executive Officer, United States
Operations, Great-West Life
Brian E. Walsh (1) 44 1997 Co-Founder and Managing Partner,
Veritas Capital Management, LLC
since September 1997 (a merchant
banking company); previously
Partner, Trinity L.P. from January
1996 (an investment company);
previously Managing Director and
Co-Head, Global Investment Bank,
Bankers Trust Company (an
investment/commercial bank)
</TABLE>
(1) Member of the Audit Committee
Unless otherwise indicated, all of the directors have been engaged for not less
than five years in their present principal occupations or in another executive
capacity with the companies or firms identified.
Directors are elected annually to serve until the following annual meeting of
shareholders.
The following lists directorships held by the directors of the Company, on
companies whose securities are traded publicly in the United States or that are
investment companies registered under the Investment Company Act of 1940.
J. Balog .......Elan plc
......... .......Euclid Mutual Funds
......... .......Transatlantic Holdings
......... .......Zweig Series Trust
P. Desmarais, Jr......Petrofina S.A.
<PAGE>
<TABLE>
B.......IDENTIFICATION OF EXECUTIVE OFFICERS
<S> <C> <C> <C> <C> <C> <C>
Executive Officer Age Served as Executive Principal Occupation(s) For
Officer From Last Five Years
William T. McCallum 55 1997 Chairman, President and Chief
Chairman, President and Executive Officer of the Company;
Chief Executive Officer President and Chief Executive
Officer, GWL&A; President and Chief
Executive Officer, United States
Operations, Great-West Life
Dennis Low 54 1997 Executive Vice President, Financial
Executive Vice President, Services of the Company, GWL&A and
Financial Services Great-West Life
James D. Motz 48 1997 Executive Vice President, Employee
Executive Vice President, Benefits of the Company, GWL&A and
Employee Benefits Great-West Life
Douglas L. Wooden 41 1997 Executive Vice President, Financial
Executive Vice President, Services of the Company, GWL&A and
Financial Services Great-West Life
Mitchell T.G. Graye 42 1997 Senior Vice President, Chief
Senior Vice President, Financial Officer of the Company and
Chief Financial Officer GWL&A; Senior Vice President, Chief
Financial Officer, United States,
Great-West Life
John T. Hughes 61 1997 Senior Vice President, Chief
Senior Vice President, Investment Officer of the Company
Chief Investment Officer and GWL&A; Senior Vice President,
Chief Financial Officer, United
States, Great-West Life
D. Craig Lennox 50 1997 Senior Vice President, General
Senior Vice President, Counsel and Secretary of the Company
General Counsel and and GWL&A; Senior Vice President and
Secretary Chief U.S. Legal Officer, Great-West
Life
Martin Rosenbaum 45 1997 Senior Vice President, Employee
Senior Vice President, Benefits Operations of the Company,
Employee Benefits GWL&A and Great-West Life
Operations
Robert K. Shaw 42 1997 Senior Vice President, Individual
Senior Vice President, Markets of the Company, GWL&A and
Individual Markets Great-West Life
</TABLE>
Unless otherwise indicated, all of the executive officers have been engaged for
not less than five years in their present principal occupations or in another
executive capacity with the companies or firms identified.
The appointments of executive officers are confirmed annually.
ITEM 11. EXECUTIVE COMPENSATION
A. COMPENSATION OF EXECUTIVE OFFICERS
The executive officers of the Company are not compensated for their services to
the Company. They are compensated as executive officers of GWL&A.
B. COMPENSATION OF DIRECTORS
For each director of the Company who is not also a director of GWL&A, Great-West
Life or Great-West Lifeco, the Company pays an annual fee of $10,000. For each
director of the Company who is also a director of GWL&A, Great-West Life or
Great-West Lifeco, the Company pays an annual fee of $5,000. The Company pays
each director a meeting fee of $1,000 for each meeting of the Board of Directors
or a committee thereof attended. In addition, all directors are reimbursed for
incidental expenses. The above amounts are paid in the currency of the country
of residence of the director.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
A. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 1, 1998, the following sets out the beneficial owners of more than
5% of the Company's voting securities:
(1) 100% of the Company's 2,500 outstanding common shares are owned by
Great-West Life & Annuity Insurance Company, 8515 East Orchard Road,
Englewood, Colorado 80111.
(2) 100% of GWL&A's outstanding common shares are owned by The Great-West
Life Assurance Company, 100 Osborne Street North, Winnipeg, Manitoba,
Canada R3C 3A5.
(3) 99.5% of the outstanding common shares of The Great-West Life Assurance
Company are owned by Great-West Lifeco Inc., 100 Osborne Street North,
Winnipeg, Manitoba, Canada R3C 3A5.
(4) 81.2% of the outstanding common shares of Great-West Lifeco Inc. are
controlled by Power Financial Corporation, 751 Victoria Square,
Montreal, Quebec, Canada H2Y 2J3.
(5) 67.7% of the outstanding common shares of Power Financial Corporation
are owned by 171263 Canada Inc., 751 Victoria Square, Montreal, Quebec,
Canada H2Y 2J3.
(6) 100% of the outstanding common shares of 171263 Canada Inc. are owned by
Marquette Communications Corporation, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
(7) 100% of the outstanding common shares of Marquette Communications
Corporation are owned by Power Corporation of Canada, 751 Victoria
Square, Montreal, Quebec, Canada H2Y 2J3.
(8) Mr. Paul Desmarais, 751 Victoria Square, Montreal, Quebec, Canada H2Y
2J3, through a group of private holding companies, which he controls,
has voting control of Power Corporation of Canada.
<PAGE>
B. SECURITY OWNERSHIP OF MANAGEMENT
The following table sets out the number of equity securities, and exercisable
options for equity securities, of the Company or any of its parents or
subsidiaries, beneficially owned, as of March 1, 1998, by (i) the directors of
the Company; and (ii) the directors and executive officers of the Company as a
group.
<PAGE>
<TABLE>
- - ---------------------- --------------------------------------------------------------------------
Company
--------------------------------------------------------------------------
------------- ---------------- -------------------- ----------------------
The Great-West Power Financial Power Corporation of
Great-West Lifeco Inc. Corporation Canada
Life
Assurance
Company
(1) (2) (3) (4)
------------- ---------------- -------------------- ----------------------
Directors
- - -------------------------------------------------------------------------------------------------
- - ---------------------- ------------- ---------------- -------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
M.D. Alazraki - - - -
- - ---------------------- ------------- ---------------- -------------------- ----------------------
- - ---------------------- ------------- ---------------- -------------------- ----------------------
J. Balog - - - -
- - ---------------------- ------------- ---------------- -------------------- ----------------------
- - ---------------------- ------------- ---------------- -------------------- ----------------------
J. W. Burns 50 56,000 4,000 200,320
101,750 options
- - ---------------------- ------------- ---------------- -------------------- ----------------------
- - ---------------------- ------------- ---------------- -------------------- ----------------------
P. Desmarais, Jr. 50 30,000 - 306,750 options
- - ---------------------- ------------- ---------------- -------------------- ----------------------
- - ---------------------- ------------- ---------------- -------------------- ----------------------
R. Gratton - 165,000 155,000 2,500
2,160,000 options 150,000 options
- - ---------------------- ------------- ---------------- -------------------- ----------------------
- - ---------------------- ------------- ---------------- -------------------- ----------------------
N.B. Hart - - - -
- - ---------------------- ------------- ---------------- -------------------- ----------------------
- - ---------------------- ------------- ---------------- -------------------- ----------------------
S.Z. Katz - - - -
- - ---------------------- ------------- ---------------- -------------------- ----------------------
- - ---------------------- ------------- ---------------- -------------------- ----------------------
W.T. McCallum 17 35,133 52,000 -
60,000 options
- - ---------------------- ------------- ---------------- -------------------- ----------------------
- - ---------------------- ------------- ---------------- -------------------- ----------------------
B.E. Walsh - - - 3,700
- - ---------------------- ------------- ---------------- -------------------- ----------------------
- - -------------------------------------------------------------------------------------------------
Directors and Executive
Officers as a Group
- - -------------------------------------------------------------------------------------------------
- - ---------------------- ------------- ---------------- -------------------- ----------------------
117 317,635 275,600 206,520
185,600 options 2,368,000 options 558,500 options
- - ---------------------- ------------- ---------------- -------------------- ----------------------
</TABLE>
(1) All holdings are common shares of The Great-West Life Assurance Company.
(2) All holdings are common shares, or where indicated, exercisable options
for common shares, of Great-West Lifeco Inc.
(3) All holdings are common shares, or where indicated, exercisable options
for common shares, of Power Financial Corporation.
(4) All holdings are subordinate voting shares, or where indicated,
exercisable options for subordinate voting shares, of Power Corporation
of Canada.
The number of common shares and exercisable options for common shares of Power
Financial Corporation held by R. Gratton represents 1.31% of the total number of
common shares and exercisable options for common shares of Power Financial
Corporation outstanding. The number of common shares and exercisable options for
common shares of Power Financial Corporation held by the directors and executive
officers as a group represents 1.50% of the total number of common shares and
exercisable options for common shares of Power Financial Corporation
outstanding. None of the remaining holdings set out above exceed 1% of the total
number of shares and exercisable options for shares of the class outstanding.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
M.D. Alazraki, a director of the Company, was an attorney with two law firms
which provided legal services to the Company. From January 1, 1997 through March
16, 1998, the amount of such services was approximately $218,000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The documents identified below are filed as a part of this report:
<TABLE>
Page
<S> <C> <C> <C> <C> <C> <C>
A. INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report On Financial Statements 10 for the period
April 4, 1997 (inception) to December 31, 1997.
Balance Sheet as of December 31, 1997. 11
Statement of Income for the period April 4, 1997 (inception) 12
to December 31, 1997.
Statement of Stockholder's Equity for the period April 4, 1997 (inception) 13
to December 31, 1997.
Statement of Cash Flows for the period April 4, 1997 (inception) 14
to December 31, 1997.
Notes to Financial Statements for the period April 4, 1997 (inception)
15 to December 31, 1997.
</TABLE>
All schedules and separate financial statements of the Registrant are omitted
because they are not applicable, or not required, or because the required
information is included in the financial statements or notes thereto.
<PAGE>
<TABLE>
B. INDEX TO EXHIBITS
<S> <C> <C> <C> <C> <C> <C>
Exhibit Number Title Page
3(i) Restated Charter of First Great-West Life & 28
Annuity Insurance Company
3(ii) Bylaws of First Great-West Life & Annuity 33
Insurance Company
Material Contracts
10.1 - Distribution Agreement between First 42
Great-West Life & Annuity Insurance Company
and Charles Schwab & Co., Inc.
10.2 - Administration Services Agreement between 72
First Great-West Life & Annuity Insurance
Company and Great-West Life & Annuity
Insurance Company
10.3 - Financial Support Agreement between First 109
Great-West Life & Annuity Insurance Company
and Great-West Life & Annuity Insurance
Company
24 Directors' Powers of Attorney 112
27 Financial Data Schedule 122
</TABLE>
C. REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the fourth quarter of 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By: /s/ W.T. McCallum
William T. McCallum
Chairman, President and Chief Executive Officer
Date: March 27, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature and Title Date
/s/ William T. McCallum March 27, 1998
William T. McCallum
Chairman, President and Chief Executive Officer
and a Director
/s/ Mitchell T.G. Graye March 27, 1998
Mitchell T.G. Graye
Senior Vice President, Chief Financial Officer
/s/ Glen R. Derback March 27, 1998
Glen R. Derback
Vice President and Treasurer
<PAGE>
Signature and Title Date
/s/ Marcia D. Alazraki * March 27, 1998
- - ------------------------
Marcia D. Alazraki, Director
/s/ James Balog * March 27, 1998
James Balog, Director
/s/ James W. Burns * March 27, 1998
- - --------------------
James W. Burns, Director
/s/ Paul Desmarais, Jr. * March 27, 1998
- - -------------------------
Paul Desmarais, Jr., Director
/s/ Robert Gratton * March 27, 1998
Robert Gratton, Director
/s/ N. Berne Hart * March 27, 1998
- - -------------------
N. Berne Hart, Director
/s/ Stuart Z. Katz * March 27, 1998
- - --------------------
Stuart Z. Katz, Director
/s/ Brian E. Walsh * March 27, 1998
- - --------------------
Brian E. Walsh, Director
* By: /s/ D. Craig Lennox March 27, 1998
---------------------
D. Craig Lennox
Attorney-in-fact pursuant to Powers of Attorney filed herewith.
EXHIBIT 3(i)
RESTATED CHARTER OF
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<PAGE>
RESTATED CHARTER
OF
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
The undersigned President and Secretary of First Great-West Life
& Annuity Insurance Company, pursuant to Section 1206 of the Insurance Law and
Section 807 of the Business Corporation Law of the State of New York, do hereby
certify, restate and set forth:
1......The name of the Corporation is "First Great-West Life &
Annuity Insurance Company".
2......The Corporation's Declaration of Intention and Charter was
filed by the Superintendent of Insurance on the 9th day of April, 1996.
3......The said Declaration of Intention and Charter, as now in
effect, is hereby amended to effect the following amendments authorized by the
Insurance Law and the Business Corporation Law:
a......Paragraph FIFTH is hereby amended to read in its entirety
as follows:
FIFTH: The Board of Directors of the Corporation shall consist of not more
than twenty-one directors nor less than nine directors of which at least
one-third, but not less than four, shall not be officers or employees of the
Corporation or any entity controlling, controlled by, or under common control
with the Corporation and who are not beneficial owners of a controlling interest
in the voting stock of the Corporation or any such entity. The exact number of
directors shall be determined from time to time in accordance with the
provisions of the By-Laws. In the event that the admitted assets of the
Corporation exceed one and one half billion dollars, the number of directors
shall be increased to not less than thirteen within one year following the end
of the calendar year in which the admitted assets of the Corporation exceeded
one and one half billion dollars. Directors shall be elected at each annual
meeting of stockholders, which meeting shall be held on the fourth Thursday in
the month of June. Each director so elected shall hold office until the next
annual meeting of stockholders when his or her successor is elected and
qualifies. In the event that the number of directors duly elected and serving
shall be less than the required minimum, the Corporation shall not for that
reason be dissolved, but the vacancy or vacancies shall be filled as provided in
paragraph Sixth.
b......Existing paragraph SEVENTH is deleted and subsequent paragraphs
are renumbered accordingly.
c......Existing paragraph NINTH is renumbered and amended to read in
its entirety as follows: EIGHTH: The Corporation shall have an authorized
capital of $10,000,000 consisting of 10,000 shares with a par value of
$1,000 per share. From and after the filing of this Restated Charter, no
additional shares that the Corporation has authority to issue shall be
issued without the prior written consent of the Superintendent of
Insurance.
4......The text of the Charter, as amended hereby, is hereby
restated to read in full as follows:
RESTATED CHARTER
OF
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
FIRST: The name of the corporation shall be "First Great-West Life &
Annuity Insurance Company" (hereinafter referred to as the "Corporation").
SECOND: The principal office of the Corporation shall be located in
Albany County, State of New York.
THIRD: The kinds of insurance to be transacted by the Corporation
are those specified in Paragraphs "1," "2," and "3" of Section 1113(a) of the
Insurance Law of the State of New York, as described below:
(1) "Life insurance," means every insurance upon the lives of human
beings, and every insurance appertaining thereto,including the granting
of endowment benefits, additional benefits in the event of death by
accident, additional benefits to safeguard the contract from lapse,
accelerated payments of part or all of the death benefit or a special
surrender value upon diagnosis (A) of terminal illness defined as a life
expectancy of twelve months or less, or (B) of a medical condition
requiring extraordinary medical care or treatment regardless of life
expectancy, or provide a special surrender value, upon total and
permanent disability of the insured, and optional modes of settlement of
proceeds. "Life insurance" also includes additional benefits to
safeguard the contract against lapse in the event of unemployment of the
insured. Amounts paid the insurer for life insurance and proceeds
applied under optional modes of settlement or under dividend options may
be allocated by the insurer to one or more separate accounts pursuant to
section four thousand two hundred forty of this chapter.
(2) "Annuities," means all agreements to make periodical payments for a
period certain or where the making or continuance of all or some of a
series of such payments, or the amount of any such payment, depends upon
the continuance of human life, except payments made under the authority
of paragraph one hereof. Amounts paid to the insurer to provide
annuities and proceeds applied under optional modes of settlement or
under dividend options may be allocated by the insurer to one or more
separate accounts pursuant to section four thousand two hundred forty of
this chapter.
(3) "Accident and health insurance," means (i) insurance against death
or personal injury by accident or by any specified kind or kinds of
accident and insurance against sickness, ailment or bodily injury,
including insurance providing disability benefits pursuant to article
nine of the workers' compensation law, except as specified in item (ii)
hereof; and (ii) non-cancelable disability insurance, meaning insurance
against disability resulting from sickness, ailment or bodily injury
(but excluding insurance solely against accidental injury) under any
contract which does not give the insurer the option to cancel or
otherwise terminate the contract at or after one year from the effective
date or renewal date.
The Corporation shall also have full power and authority to
effect reinsurance of the kinds of insurance business which it is licensed to do
in New York and may engage in any other kind or kinds of business to the extent
necessarily or properly incidental to the kind or kinds of business which it is
or may hereafter be authorized to do in the State of New York.
FOURTH: The corporate powers of the Corporation shall be
exercised through a Board of Directors and through such committees thereof, and
by such officers, employees and agents as the Board of Directors shall empower.
FIFTH: The Board of Directors of the Corporation shall consist of
not more than twenty-one directors nor less than nine directors of which at
least one-third, but not less than four, shall not be officers or employees of
the Corporation or any entity controlling, controlled by, or under common
control with the Corporation and who are not beneficial owners of a controlling
interest in the voting stock of the Corporation or any such entity. The exact
number of directors shall be determined from time to time in accordance with the
provisions of the By-Laws. In the event that the admitted assets of the
Corporation exceed one and one half billion dollars, the number of directors
shall be increased to not less than thirteen within one year following the end
of the calendar year in which the admitted assets of the Corporation exceeded
one and one half billion dollars. Directors shall be elected at each annual
meeting of stockholders, which meeting shall be held on the fourth Thursday in
the month of June. Each director so elected shall hold office until the next
annual meeting of stockholders when his or her successor is elected and
qualifies. In the event that the number of directors duly elected and serving
shall be less than the required minimum, the Corporation shall not for that
reason be dissolved, but the vacancy or vacancies shall be filled as provided in
paragraph Sixth.
SIXTH: (a) Each director shall be at least eighteen years of age. At
all times a majority of the directors shall be citizens and residents of
the United States and not less than three thereof shall be residents of the
State of New York. The directors need not be stockholders of the
Corporation.
(b)....If any vacancies shall occur in the Board of Directors by
death or resignation or removal or otherwise, the stockholders or by a majority
of the remaining members of the Board shall, as provided in the By-Laws, elect a
director or directors to fill the vacancy or vacancies occasioned and each
director so elected shall hold office until the next annual meeting of
stockholders.
(c) Notice of any election of a director or directors under the
provisions of this section shall be given to the Superintendent of Insurance of
the State of New York in the manner and to the extent required by law.
(d) No director shall be personally liable to the Corporation or
any of its shareholders for damages for breach of duty as a director; provided,
however, that the foregoing shall not eliminate or limit the liability of a
director if a judgment or other final adjudication adverse to him or her
establishes that his or her acts or omissions were in bad faith or involved
intentional misconduct or any violation of the Insurance Law or any knowing
violation of any other law or that he or she personally gained in fact a
financial profit or other advantage to which he or she was not legally entitled.
SEVENTH: The duration of the corporate existence of the Corporation
shall be perpetual.
EIGHTH: The Corporation shall have an authorized capital of
$10,000,000 consisting of 10,000 shares with a par value of $1,000 per share.
From and after the filing of this Restated Charter, no additional shares that
the Corporation has authority to issue shall be issued without the prior written
consent of the Superintendent of Insurance.
NINTH: No stockholder of the Corporation shall have a preemptive
right as such to have first or at any time offered to him any part of any of the
presently authorized stock of the Corporation hereinafter optioned, issued or
sold, or any part of any securities of the Corporation presently authorized,
whether or not issued.
TENTH: The Board of Directors shall adopt By-Laws for its own
regulation and that of the conduct of the business of the Corporation, which
By-Laws shall not be inconsistent with this charter or the laws of the State of
New York.
ELEVENTH: The Board of Directors shall devise and adopt a
corporate seal of and for the Corporation, and shall have power to
change and alter the same at its pleasure.
TWELFTH: This charter may be amended in accordance with the laws
of the State of New York. No amendment shall be effective until it shall have
been approved in writing by the Superintendent of Insurance of the State of New
York as provided by law.
5......This Amendment and Restatement of the Charter was
authorized by action taken by the Board of Directors of the Company on October
28, 1997 and by written action by the sole shareholder of the Company taken as
of October 28, 1997.
IN WITNESS WHEREOF, the undersigned have subscribed this
Certificate and affirmed it as true under the penalties of perjury this 28th day
of October, 1997
EXHIBIT 3(ii)
BYLAWS OF FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<PAGE>
BYLAWS OF
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
ARTICLE I
SHAREHOLDERS' MEETING
SECTION 1. Annual Meeting. The Annual Meeting of the Shareholders for the
election of the Directors and for the transaction of any other business
pertaining to the corporation (whether or not stated in the notice of the
meeting) shall be held on the fourth Thursday in the month of June at such time,
and place as the Board of Directors, by resolution, shall determine.
SECTION 2. Special Meetings. Special Meetings of the Shareholders shall be
called whenever ordered by the Chairman of the Board, the President, a quorum of
the Board of Directors, or the holders of at least one-quarter (1/4) of the
total amount of stock issued and outstanding. Notice of the meeting may be
waived and neither the business to be transacted at, nor the purpose of the
meeting, need be specified in the waiver of notice. In the absence of waiver of
notice, the purposes for which the meeting is called shall be stated in the
notice and no other corporate action shall be taken without the consent of all
Shareholders entitled to vote.
SECTION 3. Place of Meetings. All meetings of the Shareholders shall be held at
the principal office of the corporation or at such other place or places, within
or without the State of New York, as shall from time to time be designated by
the Board of Directors.
SECTION 4. Notice of Meetings. Notice of all meetings, regular or special, shall
be given by mailing to each Shareholder entitled to vote thereat, directed to
his or her address as it appears on the records of the corporation, at least ten
days and not more than fifty days before such meeting, a written or printed
notice of the time, place, and purpose or purposes thereof.
SECTION 5. Quorum. The holders of a majority of the outstanding stock of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum for all purposes. In the absence of a quorum, the
Shareholders entitled to vote thereat, represented in person or by proxy, may
adjourn the meeting to a day certain.
SECTION 6. Voting. At all meetings of Shareholders each share of stock held by a
Shareholder, represented in person or by proxy, shall be entitled to one vote.
Proxies shall be in writing and shall be signed by the Shareholder or the
Shareholder's attorney-in-fact. Two inspectors of election shall be appointed by
the Chairman of the meeting at any Shareholders' Meeting at which inspectors are
required. The Directors shall be elected by ballot, and each fully-paid share of
stock shall be entitled to one vote. Shares may be voted by proxy, signed by the
person legally entitled to vote the same.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Number and Authority. The business and property of this corporation
shall be conducted and managed by a Board of Directors consisting of not more
than 21 Directors and not less than 9 Directors, the exact number thereof to be
fixed and determined by action taken from time to time by the Board of
Directors. No decrease in the number of directors shall shorten the term of any
incumbent director. All directors shall be at least 18 years of age, a majority
shall be citizens and residents of the United States and not less than three
directors shall be residents of the State of New York. Further, persons who are
not officers or salaried employees of the corporation or of any entity
controlling, controlled by or under common control with it and who are not
beneficial owners of a controlling interest in the voting stock of the a
corporation or any such entity (hereinafter referred to as "Independent
Directors") shall constitute a minimum of four and at least one-third of the
Directors and at least one-third of the membership of each Committee of the
Board of Directors.
SECTION 2. Election. At each annual meeting of Shareholders, the Shareholders
shall elect Directors to hold office until the next succeeding annual meeting.
Each Director shall hold office for the term for which he or she is elected and
until his or her successor has been elected and qualified, subject to removal as
hereinafter provided. No election of a Director pursuant to this Section shall
be valid unless a notice of election shall have been filed with the
Superintendent of Insurance of the State of New York (the "Superintendent of
Insurance") at least 10 days prior to the election date.
SECTION 3. Removal and Vacancies. Any or all Directors may be removed at any
time, with or without cause, by a majority vote of the Shareholders, who shall
thereupon elect a successor Director or Directors to fill the vacancy or
vacancies at a Special Meeting of Shareholders called for such purpose. A
vacancy in the Board of Directors, other than one occurring by reason of removal
by Shareholders, shall be filled by the Board of Directors to serve until the
next annual meeting of the Shareholders. Where the number of Directors is
increased, additional Directors may be elected by the Board of Directors to
serve until the next annual meeting of the Shareholders. No successor Directors
shall take office until 10 days after a notice of election shall have been filed
with the Superintendent of Insurance.
SECTION 4. Annual Meeting. The Annual Meeting of the Board of Directors shall be
held at the meeting next following the Annual Meeting of the Shareholders.
SECTION 5. Other Meetings. Other Meetings of the Board of Directors may be
called by order of the Chairman of the Board, the President, or the Secretary or
by a majority of the Board of Directors. There shall be at least three such
meetings held during each year.
SECTION 6. Place of Meetings. Meetings of the Board of Directors shall be held
at the principal office of the corporation or at such other place within or
without the State of New York as may be designated in the notice thereof.
SECTION 7. Notice of Meetings. Notice of meetings of the Board of Directors
shall be given by mailing to each member at least three days before such
meeting, a written or printed notice of the time and place thereof. Such notice
may also be given by telefax sent at least one day before such meeting.
SECTION 8. Business Transacted at Meetings. Any business may be transacted and
any corporate action taken at any meeting of the Board of Directors whether
stated in the notice of such meeting or not, except as otherwise expressly
required by law. One or more members of the Board or any Committee thereof may
participate in any meeting of the Board or of any such Committee by means of a
conference telephone or any similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at the meeting.
Any action required or permitted to be taken at a meeting of the Board of
Directors or any Committee thereof may be taken without a meeting if all members
of the Board or such Committee, as the case may be, consent thereto in writing
and that such writing or writings are filed with the minutes of proceedings of
the Board or such Committee.
SECTION 9. Quorum. A majority of the number of Directors fixed by Section 1
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors, provided that at least one Independent Director is present.
If a quorum is not present at a meeting, a majority of the Directors present may
adjourn the meeting from time to time without further notice, for a period not
to exceed 60 days at any one adjournment.
SECTION 10. Interest of Directors. Consistent with the requirements of Section
713 of the New York Business Corporation Law, any Director may vote or act on
behalf of the corporation in contracting with any other company although he may
be a Shareholder, Director, or Officer of such other company.
SECTION 11. Indemnification of Directors. The corporation may, by resolution of
the Board of Directors, indemnify and save harmless out of the funds of the
corporation to the extent permitted by applicable law, any Director, Officer, or
employee of the corporation or any member or officer of any Committee, and his
or her heirs, executors, and administrators, from and against all claims,
liabilities, costs, charges, and expenses whatsoever that any such Director,
Officer, employee, or any such member or officer sustains or incurs in or about
any action, suit, or proceeding that is brought, commenced, or prosecuted
against him or her for or in respect of any act, deed, matter, or thing
whatsoever, made, done, or permitted by him or her in or about the execution of
the duties of his or her office or employment with the corporation, in or about
the execution of his or her duties as a Director or Officer of another company
which he or she so serves at the request and on behalf of the corporation, or in
or about the execution of his or her duties as a member or officer of any such
Committee, and all other claims, liabilities, costs, charges, and expenses that
he or she sustains or incurs, in or about or in relation to any such duties or
the affairs of the corporation, the affairs of such other company which he or
she so serves or the affairs of such Committee, except such claims, liabilities,
costs, charges, or expenses as are occasioned by acts or omissions which were in
bad faith, involved intentional misconduct, a violation of the New York
Insurance Law or a knowing violation of any other law or which resulted in such
person personally gaining in fact a financial profit or other advantage to which
he or she was not entitled. The corporation may, by resolution of the Board of
Directors, indemnify and save harmless out of the funds of the corporation to
the extent permitted by applicable law, any Director, Officer, or employee of
any subsidiary corporation of the corporation on the same basis and within the
same constraints as described in the preceding sentence. No payment of
indemnification shall be made unless notice has been filed with the
Superintendent of Insurance pursuant to Section 1216 of the New York Insurance
Law.
ARTICLE III
COMMITTEES
SECTION 1. Appointment. The Board of Directors shall have the power to appoint
Committees and to grant them powers and duties not inconsistent with the laws of
the State of New York, its Charter and these Bylaws. All Committees shall
consist of not less than three members, provided that where the minimum required
number of Directors is increased to thirteen pursuant to the provisions of the
Charter, such Committees shall consist of at least five members.
SECTION 2. Independent Director Committees. The Board of Directors shall
establish one or more Committees composed solely of Independent Directors. Such
Committee or Committees shall have the responsibility for recommending the
selection of independent certified public accountants, reviewing the
corporation's financial condition, the scope and results of the independent
audit and any internal audit, nominating candidates for director for election by
Shareholders, evaluating performance of officers of the corporation deemed to be
principal officers and recommending to the Board of Directors their selection
and compensation and recommending any plan to issue options to officers and
employees for the purchase of shares of its stock.
SECTION 3. Other Committees. At least one-third of the membership of all other
Committees established by the Board of Directors shall be Independent Directors.
SECTION 4. Quorum. All of the members of any Committee consisting of three
Directors shall constitute a quorum for the transaction of business. In the case
of Committees consisting of more than three members, a majority shall constitute
a quorum.
<PAGE>
ARTICLE IV
OFFICERS
SECTION 1. Duties in General. All Officers of the corporation, in addition to
the duties prescribed by the Bylaws, shall perform such duties in the conduct
and management of the business and property of the corporation as may be
determined by the Board of Directors. In the case of more than one person
holding an office of the same title, any one of them may perform the duties of
the office except insofar as the Board of Directors, or the President may
otherwise direct.
SECTION 2. Number and Designation. The Officers of the corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents, one or more
Secretaries, one or more Treasurers, one or more Assistant Secretaries, one or
more Assistant Treasurers, and such other Officers and Committees as the Board
of Directors may from time to time deem advisable. It shall be permissible for
the same person to hold more than one office, except that the offices of
President and Secretary shall not be held by the same person.
SECTION 3. Election and Term of Office. The Board of Directors shall elect from
their number a President and shall appoint a Secretary, Treasurer, and such
other Officers as shall be prescribed in the Bylaws, and shall fill any vacancy
that may occur. Such persons shall hold office until the meeting of the Board of
Directors following the next annual meeting of the Shareholders. Any officer may
be removed by the Board of Directors, with or without cause.
SECTION 4. Chairman of the Board. The Chairman of the Board of Directors shall
preside at all meetings of the Shareholders and at all meetings of the Board and
shall perform such other duties as the Board of Directors may from time to time
prescribe.
SECTION 5. President. The President, in the absence of the Chairman of the
Board, shall preside at all meetings of the Shareholders and of the Board of
Directors. He shall have the powers and perform the duties usually pertaining to
the Office of President.
SECTION 6. Vice Presidents. The Vice Presidents shall have such powers and
perform such duties as may be assigned to them from time to time by the Board of
Directors or by the President. The Board of Directors or the President may from
time to time determine the order of priority as between two or more Vice
Presidents.
SECTION 7. Secretary. The Secretary shall keep the minutes of the meetings of
the Shareholders, of the Board of Directors, and of the Executive and Investment
Committees; shall issue notices of meetings; shall have custody of the
corporation's seal and corporate books and records; shall have charge of the
issuance, transfer, and cancellation of stock certificates; shall have authority
to attest and affix the corporate seal of any instruments executed on behalf of
the corporation; and shall perform such other duties as are incident to his or
her office and as are required by the Board of Directors or the President.
SECTION 8. Assistant Secretaries. The Assistant Secretaries in order of their
priority shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary, and shall have such other
powers and perform such other duties as may be assigned to them from time to
time by the Board of Directors or the President.
SECTION 9. Treasurer. The Treasurer shall have custody of the funds and
securities of the corporation and shall deposit the same in such banks or
depositories as the Board of Directors or the President may direct. The
Treasurer may, under the direction of the Board of Directors, disburse all
monies and sign checks or other instruments drawn on or payable out of the funds
of the corporation, which, however, shall be countersigned by the President, a
Vice President, the Secretary, or an Assistant Secretary, or an Assistant
Treasurer. He shall also make such transfers of the securities of the
corporation as may be ordered by the Board of Directors or the President. In
general, the Treasurer shall perform all of the duties incident to his or her
office and such other duties as are required of him by the Board of Directors or
the President.
SECTION 10. Assistant Treasurers. The Assistant Treasurers in order of their
priority shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer, and shall have such other
powers and perform such other duties as may be assigned to them from time to
time by the Board of Directors or the President.
SECTION 11. Other Officers. Other Officers who may from time to time be elected
by the Board of Directors shall have such powers and perform such duties as may
be assigned to them by the Board of Directors or the President.
SECTION 12. Compensation. The compensation of the Officers shall be fixed by the
Board.
ARTICLE V
CAPITAL STOCK
SECTION 1. Certificates. Every Shareholder shall be entitled at his or her
request to a certificate signed by the President or a Vice President, and also
by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer and under the seal of the corporation, certifying the number of shares
to which he is entitled.
SECTION 2. Transfers. Transfers of stock may be made on the books of the
corporation only by the holder thereof in person or by his or her attorney duly
authorized thereto in writing and upon surrender and cancellation of the
certificate therefor duly assigned or accompanied by a duly executed stock
power.
SECTION 3. Lost or Destroyed Certificates. The Board of Directors may order a
new certificate to be issued in place of a certificate lost or destroyed upon
proof of such loss or destruction and upon tender to the corporation by the
Shareholder of a bond in such amount and in such form and with or without surety
as may be ordered, indemnifying the corporation against any liability, claim,
loss, cost, or damage by reason of such loss or destruction and the issuance of
a new certificate.
SECTION 4. Dividends. Dividends may be declared from the legally available
surplus of the corporation at such times and in such amounts as the Board of
Directors may determine. Such dividends on the capital stock of the corporation
may not be declared by a Committee of the Board. Notice of intention to declare
a dividend shall be filed with the Superintendent of Insurance not less than 30
days in advance of the proposed declaration.
ARTICLE VI
CORPORATE FUNDS
SECTION 1. Deposits. Checks, drafts, bills, notes, negotiable instruments or any
other orders for the payment of money or evidence of indebtedness payable to and
received by the corporation may be endorsed for deposit to the credit of the
corporation by such Officers or agents of the corporation as the Board of
Directors may determine and may be endorsed for deposit to the credit of agents
of the corporation in such manner as the Board of Directors may direct.
SECTION 2. Withdrawals. All disbursements of the funds of the corporation shall
be made by check, draft, or other order signed by such Officers or other persons
as the Board of Directors may from time to time authorize to sign the same.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. Voting Stock of Other Corporations. The President, any Vice
President, or any other Officer designated by the Board of Directors may execute
in the name of the corporation and attach the corporate seal to any proxy or
power of attorney authorizing the proxy or proxies or attorney or attorneys
named therein to vote the stock of any corporation held in this corporation on
any matter on which such stock may be voted. If any stock owned by this
corporation is held in any name other than the name of this corporation,
instructions as to the manner in which such stock is to be voted on behalf of
this corporation may be given to the holder of record by the President, any Vice
President, or any other Officer designated by the Board of Directors.
SECTION 2. Notices. Any notice under these Bylaws may be given by mail by
depositing the same in a post office or postal letter box or postal mail chute
in a sealed postpaid wrapper addressed to the person entitled thereto at his or
her address as the same appears upon the books or records of the corporation or
at such other address as may be designated by such person except that notice
which may be given by telegram may be telegraphed to such person at such
address; and such notice shall be deemed to be given at the time such notice is
mailed or telegraphed.
SECTION 3. Waiver of Notice. Any Shareholder, Director, or member of the
Executive or Investment Committees may at any time waive any notice required to
be given under these Bylaws in accordance with the provisions of the New York
Business Corporation Law, including written waiver executed before, at, or after
the meeting or by presence at the meeting.
ARTICLE VIII
AMENDMENTS
The Bylaws may be amended in whole or in part by the Board of Directors. Any
such amendment shall not be effective until approved by the Superintendent of
Insurance pursuant to Section 1210 of the New York Insurance Law.
**************************
EXHIBIT 10.1
DISTRIBUTION AGREEMENT BETWEEN
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
AND CHARLES SCHWAB & CO., INC.
<PAGE>
DISTRIBUTION AGREEMENT
BY AND BETWEEN
CHARLES SCHWAB & CO., INC.
AND
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<PAGE>
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") is made as of the day of
________, 1997, by and between Charles Schwab & Co., Inc., a California
corporation ("SCHWAB"), and First Great-West Life & Annuity Insurance Company, a
New York insurance company ("FIRST GREAT-WEST"), on behalf of itself and each of
its separate accounts listed on Schedule 1 hereto, as the same may be amended
from time to time (each an "Account") (each, a "Party," collectively, the
"Parties").
RECITALS
WHEREAS, FIRST GREAT-WEST is a New York life insurance company duly licensed as
required by applicable law to issue life insurance and annuity contracts
identified on Schedule 1.1, as may be amended from time to time, (each a
"Contract," collectively, the "Contracts") in certain states and other
jurisdictions; and
WHEREAS, FIRST GREAT-WEST, has developed or is developing Contracts, some of
which shall be funded by segregated asset accounts; and
WHEREAS, SCHWAB is licensed or will become licensed as required by applicable
law to market such Contracts pursuant to applicable state law and is registered
as a broker-dealer under the Securities Exchange Act of 1934 (the "1934 Act")
and under the securities laws in all fifty (50) states, and is a member of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, FIRST GREAT-WEST has extensive experience in the operation of its
insurance business and has trained personnel, equipment, and facilities for
conducting its present and future insurance operations; and
WHEREAS, SCHWAB has extensive experience in the operation of its business as a
registered broker-dealer and has trained (and NASD-registered) personnel,
equipment, and facilities for conducting its present and future broker-dealer
operations; and
WHEREAS, certain personnel of SCHWAB may engage, or deemed to be engaged,
directly or indirectly, in the offering, selling, advertising or marketing of
certain Contracts the interests under which are required to be registered under
the Securities Act of 1933, as amended (the "1933 Act") ("registered
Contracts"); the confirming of transactions under registered Contracts as
required by the 1934 Act Rule 10b-10; the maintenance of records with respect to
registered Contracts as required by 1934 Act Rules 17a-3 and 17a-4 or other SEC
or NASD rules applicable to registered broker-dealers (all Distributor personnel
engaged in these activities, as well as all other persons whom Section 3(a)(18)
of the 1934 Act defines as associated persons of SCHWAB, are collectively
referred to herein as "Associated Persons"); and
WHEREAS, FIRST GREAT-WEST and SCHWAB desire to enter into an agreement to have
SCHWAB act as the principal underwriter and/or insurance agent, as applicable,
for the sale of the Contracts.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and of the mutual expectations of benefit occurring from the
activities herein contemplated, the Parties hereto agree as follows:
SECTION 1. AVAILABLE CONTRACTS
1.1 Availability
(a) SCHWAB shall have exclusive marketing and distribution rights for certain
Contracts specifically identified in Schedule 1.1 (hereinafter, "Exclusive
Contracts"). SCHWAB shall have non-exclusive marketing and distribution rights
for all Contracts identified in Schedule 1.1 (hereinafter, "Other Contracts").
Schedule 1.1 may be amended from time to time as mutually agreed to in writing
between the two Parties. The Parties have agreed that certain Contracts will be
designed to be sold into the Internal Revenue Code ss.ss.403(b), 457 and 401(k)
markets and made available for distribution by SCHWAB and added to Schedule 1.1
when available. SCHWAB acknowledges that FIRST GREAT-WEST is currently marketing
contracts similar to the Exclusive Contracts and may develop and market
contracts in the future with similar terms to those contained in the Contracts.
In no event may FIRST GREAT-WEST directly or indirectly develop, issue, market
or otherwise promote any Contract that bears the name SCHWAB or any other
proprietary SCHWAB tradenames, trademarks or service mark without the prior
written approval of SCHWAB, except as permitted by and in accordance with
Section 12.1 hereof.
1.2 Modification of Contracts; Suspension or Restriction of Sales
(a) FIRST GREAT-WEST may modify the terms of any Contract, to the extent
permitted or required by applicable law. Any modification, other than a
modification required to be made to conform the Contracts to a change in
applicable law, shall be approved by SCHWAB, which approval shall not be
unreasonably withheld. SCHWAB may, from time to time, propose modifications to
the terms of any Contract, and FIRST GREAT-WEST agrees to implement any such
modification in a timely manner, subject to FIRST GREAT-WEST's approval, which
shall not be unreasonably withheld. Prior to implementation of any modification,
the Parties must mutually agree on such change or changes and agree as to who
will bear the costs associated with such change.
(b) Upon 180 days' prior written notice, FIRST GREAT-WEST may suspend or
restrict the sale of any Contract in any state or other jurisdiction, FIRST
GREAT-WEST will effect such withdrawal in accordance with all applicable law.
FIRST GREAT-WEST reserves the right to immediately withdraw any fixed annuity
contract (or portion thereof) with respect to future sales where the declared
interest rate, as determined by FIRST GREAT-WEST's usual and customary business
practices, would be below that Contract's declared minimum guaranteed interest
rate. In addition, notwithstanding any provision herein to the contrary, FIRST
GREAT-WEST may refuse to sell any Contract to any applicant for any reason so
long as such refusal does not violate any applicable state insurance law. FIRST
GREAT-WEST shall communicate the reasons for any refusal to SCHWAB.
1.3 Reinsurance of Contracts
FIRST GREAT-WEST may reinsure any of the Contracts with a reinsurer of its
choice at any time in accordance with applicable law.
SECTION 2. CONTRACT DISTRIBUTION
2.1 Exclusive Appointments; Efforts; Independent Contractor
(a) FIRST GREAT-WEST appoints SCHWAB, and SCHWAB accepts FIRST GREAT-WEST's
appointment, as the exclusive principal underwriter, and, as applicable,
exclusive insurance agent for the offer and sale of the Exclusive Contracts and
as non-exclusive principal underwriter and insurance agent of the Other
Contracts offered by SCHWAB to the public, during the term of this Agreement, in
each state and other jurisdiction in which such Contracts may lawfully be
offered and sold. Notwithstanding anything herein to the contrary, SCHWAB shall
not act as, or be deemed to be, the principal underwriter of any Contract that
is not registered under the 1933 Act and which appears on any of the Schedules
attached hereto.
(b) SCHWAB shall use all commercially reasonable efforts to offer the Contracts
for sale and distribution, but shall be under no obligation to effectuate any
particular amount of sales of Contracts. SCHWAB shall, however, provide FIRST
GREAT-WEST in writing new product sales projections for the initial twelve (12)
month period of this Agreement and every twelve (12) month period thereafter.
The estimate should contain quarterly information for the period in question.
The estimate should also provide sales estimates on a Contract by Contract
basis, and include all projected premiums. FIRST GREAT-WEST acknowledges that
SCHWAB currently sells, and may in the future sell, annuity contracts and/or
life insurance policies issued by life insurance companies unaffiliated with
FIRST GREAT-WEST.
(c) SCHWAB shall at all times function as, and be deemed to be, an independent
contractor.
(d) Except as may be necessary to comply with the requirements of any
applicable law or regulation, SCHWAB shall not, absent FIRST GREAT-WEST's
consent, actively promote the replacement of any Contract or the redirection of
the cash value of a Contract into any other product; provided, however, that
FIRST GREAT-WEST's consent shall be presumed granted (i) upon the occurrence,
with respect to FIRST GREAT-WEST, of any event described in Sections 7.2(a)(iii)
or 7.2(b) hereof only to the extent of Contract owners in those jurisdictions in
the events under 7.2(b)(ii) and (iii) or (ii) upon the failure of FIRST
GREAT-WEST to cure a default pursuant to Section 7.3 hereof. "Actively promote"
shall include, but not be limited to, mailings specifically sent to or
conversations specifically held with Contract owners or licensed agents of
SCHWAB which induce or attempt to induce a Contract owner to surrender the
Contract and replace it with another product (other than a product offered by
FIRST GREAT-WEST or it affiliates), or to direct premiums, cash values or
deposits from a Contract to any other product (other than a product offered by
FIRST GREAT-WEST or its affiliates). Notwithstanding the foregoing, in no event
shall this provision prevent SCHWAB from concurrently or subsequently offering
and selling to a Contract owner any non-insurance product, whether or not
offered by FIRST GREAT-WEST or its affiliates. This provision shall survive the
termination of this Agreement other than pursuant to Sections 7.2(a)(iii),
7.2(b) or 7.3 hereof.
2.2 Registration of Associated Persons
(a) SCHWAB shall be responsible for ensuring, at its sole cost, that each
Associated Person involved with the offer or sale of registered Contracts is
duly registered and qualified pursuant to the 1934 Act, NASD regulations, and
any other required securities regulatory body.
(b) In connection with such registration, SCHWAB shall conduct such background
investigations of the SCHWAB employees necessary to determine their
qualifications, good character and moral fitness to offer and sell the
Contracts. Such information shall be available to FIRST GREAT-WEST upon request.
(c) SCHWAB shall continuously monitor the status of SCHWAB and each of SCHWAB's
registered employees to ensure that they are and remain properly registered and
qualified.
2.3 Insurance Agent Licensing
(a) Neither SCHWAB nor any of its employees shall engage in any activities that
would require insurance agent licensing in the state or jurisdiction where such
activities are performed, unless and until SCHWAB and its employees are properly
licensed to perform such services in the particular state or other jurisdiction.
As used herein, "properly licensed" includes the filing of an appointment by
FIRST GREAT-WEST, SCHWAB and/or other person when required by the laws or
regulations of the applicable state or jurisdiction.
(b) SCHWAB shall, from time to time, advise FIRST GREAT-WEST of the SCHWAB
employees that it wishes FIRST GREAT-WEST to appoint as FIRST GREAT-WEST
insurance agents. In that connection, SCHWAB shall conduct background
investigations of the SCHWAB employees to determine their qualifications, good
character and moral fitness to offer and sell the Contracts, and shall prepare
and submit completed agent appointment forms for FIRST GREAT-WEST's approval.
FIRST GREAT-WEST shall forward all approved agent appointment forms in a timely
manner to the appropriate state insurance departments and pay all required
appointment fees.
(c) SCHWAB shall be responsible for ensuring that all SCHWAB employees engaged
in the offer or sale of Contracts (whether or not registered with the SEC under
the 1933 Act) are properly licensed and remain properly licensed under the
insurance laws of the applicable states and other jurisdictions to sell the
Contracts. In furtherance of this obligation, SCHWAB shall continuously monitor
the status of SCHWAB's and each SCHWAB employee's insurance agent license and
renewal in each state and jurisdiction in which the Contracts may be offered and
sold. SCHWAB shall notify FIRST GREAT-WEST in a timely manner of any license not
renewed.
(d) SCHWAB agrees to undertake all actions necessary and to pay all costs to
effect licensing of itself and its employees and renewals thereof as required
for the business of this Agreement. FIRST GREAT-WEST agrees to take all actions
necessary and to pay all costs to effect the appointment as insurance agents of
SCHWAB and its employees and renewals thereof as required for the business of
this Agreement.
(e) FIRST GREAT-WEST, in its sole discretion, may refuse to appoint or renew
the appointment of a SCHWAB employee as a FIRST GREAT-WEST insurance agent. In
the event FIRST GREAT-WEST refuses to renew the appointment of a SCHWAB
employee, it shall not act except upon ten (10) days prior written notice to
SCHWAB.
2.4 Sales Agreements
FIRST GREAT-WEST and SCHWAB may, from time to time, enter into separate written
agreements ("Sales Agreements"), on such terms and conditions as they may
determine to be not inconsistent with this Agreement, with one or more
organizations that agree to participate in the distribution of the Contracts,
provided, that such organizations, shall to the extent required by law, be both
registered as a broker-dealer under the 1934 Act and a member of the NASD, and
provided further, that such organizations and their agents or representatives
soliciting applications for Contracts shall be properly licensed, registered or
otherwise qualified to offer and sell the Contracts under the applicable
insurance and other laws of each state or other jurisdiction in which FIRST
GREAT-WEST is licensed to sell the Contracts. Such written agreements with other
organizations shall be subject to approval by FIRST GREAT-WEST and shall
incorporate terms and provisions establishing requirements and standards of
conduct on the sale of the Contracts by the organization.
2.5 Supervisory Responsibilities
(a) SCHWAB shall be responsible for training, monitoring and controlling the
activities of SCHWAB employees involved in the offer and sale of the Contracts.
FIRST GREAT-WEST shall participate in, and shall bear responsibility with
respect to, such training, monitoring, and control to the extent required by
applicable NASD rules, SEC laws, state insurance laws, or other applicable laws.
(b) Notwithstanding the above, FIRST GREAT-WEST shall provide adequate training
to SCHWAB supervisory personnel with respect to the Contracts.
2.6 Suitability Determinations
SCHWAB agrees to establish written procedures that will require SCHWAB
employees to review all Contract applications to determine that the Contracts
are a "suitable" investment vehicle for the applicant. While not limited to the
following, such written procedures must provide that a determination of
suitability shall be based on information furnished to a SCHWAB employee after
reasonable inquiry of such applicant concerning the applicant's investment
objectives and financial situation. In no event shall Contracts be sold
describing premiums as "vanishing" or Contracts as being paid up at a time other
than the date described in the Contract itself.
2.7 Marketing Materials
(a) SCHWAB shall have the responsibility for developing, printing, and
distributing, at its sole cost, all marketing materials to be used in connection
with the offer and sale of the Contracts. As used herein, "marketing materials"
shall mean any "advertisement" or "sales literature," as those terms are defined
in NASD Conduct Rule 2210(a), as amended from time to time, including any
so-called "dealer only" materials, and including any material intended to be
spoken in the solicitation of a Contract, such as telephone scripts, scripted
answers to questions and slide show scripts but excluding Contract Prospectuses,
registration statements, annual and semi-annual reports and other materials that
are developed by FIRST GREAT-WEST.
(b) SCHWAB shall submit definitive copies of all marketing materials to FIRST
GREAT-WEST for its written approval, which shall not be unreasonably withheld,
at least five (5) business days prior to printing or finalization.
(c) SCHWAB shall, to the extent required, file in a timely manner all marketing
materials with the NASD, the SEC, or any other securities regulatory body, as
appropriate, and shall obtain any necessary approval of these regulatory bodies
of such marketing materials.
(d) FIRST GREAT-WEST shall, to the extent required by law, file in a timely
manner all marketing materials with the various state insurance regulatory
bodies, and shall obtain any necessary approval of these regulatory bodies of
such marketing materials.
2.8 Non-Marketing Materials
(a) FIRST GREAT-WEST shall be responsible for preparing, printing in quantity
and delivering to SCHWAB, at FIRST GREAT-WEST's sole cost: (i) all Contract
forms, applications and related materials, (ii) all forms pertaining to the
processing of premium payments, refunds and other monies, and (iii) all forms
pertaining to transactions, claims, and other features available under the
Contracts, including, but not limited to, full or partial surrenders, exchanges,
transfers, loans, systematic purchases, death claims, changes in premium
allocations, and changes in beneficiary. FIRST GREAT-WEST shall submit
definitive copies of all materials to SCHWAB for its written approval, which
shall not be unreasonably withheld, at least five (5) business days prior to
printing or finalization.
(b) SCHWAB shall be responsible for preparing, printing, and distributing, at
its sole cost, all correspondence with Contract owners, except for
correspondence or other communication prepared, printed, and distributed by
FIRST GREAT-WEST. FIRST GREAT-WEST and SCHWAB agree that SCHWAB shall submit
copies of all prototypes of correspondence, with all variations, and copies of
all materials being mass mailed to Contract owners to FIRST GREAT-WEST for its
written approval, which shall not be unreasonably withheld, at least five (5)
business days prior to printing or finalization.
(c) FIRST GREAT-WEST shall be responsible for preparing, printing, and
distributing, or causing the same to be done, at its sole cost: (i) all Contract
owner account statements, (ii) confirmations of Contract owner transactions
required to be delivered to Contract owners pursuant to Section 4.1(g), and
(iii) all documents described in Sections 4.1(b), 4.1(h) and 4.2(c)hereof. FIRST
GREAT-WEST and SCHWAB agree that FIRST GREAT-WEST shall submit the form of all
items (i) and (ii) and definitive copies of (iii) to SCHWAB for its written
approval, which shall not be unreasonably withheld, at least five (5) business
days prior to printing or finalization. FIRST GREAT-WEST acknowledges that these
materials, with the exception of 4.2(c), are marketing materials and may be used
as such by SCHWAB.
(d) SCHWAB and FIRST GREAT-WEST agree that correspondence or other
communication to any policyowner involving a complaint shall be submitted to the
other for written approval prior to mailing or communicating with the
policyowner.
2.9 Banking Arrangements
(a) SCHWAB agrees to handle all premium payments or other monies that it
receives in connection with the sale of the Contracts as a fiduciary for the
benefit of FIRST GREAT-WEST. All such premium payments shall be the property of
FIRST GREAT-WEST.
(b) Premium payments may be received by either SCHWAB or FIRST GREAT-WEST.
SCHWAB shall deposit and maintain any premium payments received by SCHWAB
(whether such premium payments are received in the form of a check, pursuant to
an authorization to wire transfer monies from a SCHWAB client's account, or in
any other manner) in one or more segregated accounts maintained by FIRST
GREAT-WEST in its name (or in the name of an Account) at one or more banks or
other financial institutions, and in connection therewith SCHWAB shall: (i) send
FIRST GREAT-WEST a copy of the deposit slip or wire transfer ticket by overnight
mail or fax, and (ii) immediately deposit any monies received with an
application into such depository account or accounts as designated from time to
time by FIRST GREAT-WEST. FIRST GREAT-WEST shall be responsible for depositing
any premium payments received at the offices of FIRST GREAT-WEST.
2.10 Limitations on Authority
(a) SCHWAB and its employees shall have no authority to, and shall not: (i)
add, alter, waive or discharge any Contract or application provision or
Prospectus provision or represent that such can be done by FIRST GREAT-WEST or
SCHWAB; (ii) extend the time of making any payments; (iii) alter or substitute
FIRST GREAT-WEST's forms in any manner; (iv) give or offer to give, on behalf of
FIRST GREAT-WEST, any tax or legal advice related to the purchase of a Contract;
(v) guarantee the issuance of any Contract or the reinstatement of any lapsed
Contract; or (vi) exercise any authority on behalf of FIRST GREAT-WEST other
than that expressly conferred on SCHWAB or its employees by this Agreement.
(b) FIRST GREAT-WEST and its employees shall have no authority to, and shall
not (i) give or offer to give on behalf of SCHWAB, any tax or legal advice
related to the purchase of a Contract, or (ii) exercise any authority on behalf
of SCHWAB other than that expressly conferred on FIRST GREAT-WEST or its
employees by this Agreement.
SECTION 3. RECORDKEEPING
3.1 Recordkeeping
(a) Each Party agrees to keep, at its principal office, all accounts, books and
other records required by and in accordance with applicable federal and state
law, including any state insurance laws, and the regulations of any regulatory
body having jurisdiction over such accounts, books, and other records, including
but not limited to Rules 31a-1 and 31a-2 under the Investment Company Act of
1940 (" 1940 Act") and Rules 17a-3 and 17a-4 under the 1934 Act.
(b) Any and all accounts, books and other records of FIRST GREAT-WEST, the
Accounts, and SCHWAB as may pertain to the Contracts and this Agreement shall be
maintained so as to clearly and accurately disclose the nature and details of
Contract transactions or any transactions related thereto.
(c) Any accounts, books, and other records maintained by FIRST GREAT-WEST, at
its expense, as agent for the benefit of SCHWAB shall conform to the
requirements of Rules 17a-3 and 17a-4 under the 1934 Act, and as further
amplified in SEC Release 34-8389. Furthermore, such accounts, books, and other
records shall remain the property of SCHWAB, shall be surrendered promptly to
SCHWAB at its request without charge, and shall at all times be subject to
inspection by SCHWAB, the SEC pursuant to Section 17(a) of the 1934 Act and any
other appropriate governmental agency. SCHWAB shall have responsibility for
maintaining the records required of it by applicable law or regulations with
respect to broker-dealer operations, although, in SCHWAB's discretion and at
FIRST GREAT-WEST's expense, SCHWAB may use FIRST GREAT-WEST as its agent for
this purpose.
(d) Any accounts, books, and other records maintained by SCHWAB, at its
expense, as agent for the benefit of FIRST GREAT-WEST or the Accounts, shall
conform to the requirements of Rules 31a-1 and 31a-2 under the 1940 Act or such
other SEC requirement as relates to non-1940 Act products or as required by
state insurance regulators and conveyed to SCHWAB in writing. Furthermore, such
accounts, books, and records shall remain the property of FIRST GREAT-WEST or
the Accounts, shall be surrendered promptly to FIRST GREAT-WEST or the Accounts
upon request by FIRST GREAT-WEST without charge, and shall at all times be
subject to inspection by FIRST GREAT-WEST, whether acting on behalf of itself or
the Accounts, the SEC pursuant to Section 31(b) of the 1940 Act and any other
appropriate governmental agency. FIRST GREAT-WEST or the Accounts shall have
responsibility for maintaining the records required of them by applicable law or
regulations with respect to investment company operations, although, in FIRST
GREAT-WEST's discretion and at the Distributor's expense, FIRST GREAT-WEST and
the Accounts may use SCHWAB as their agent for this purpose.
(e) Upon the written request of either Party to the other, or upon termination
of this Agreement, a Party shall provide to the other without charge the
originals, if the requesting Party is required to maintain such originals, or,
at the requesting Party's cost, copies of the accounts, books and other records
or electronic information representing the accounts, books and records if that
is the format in which they are maintained.
SECTION 4. LEGAL COMPLIANCE
4.1 Securities Laws
(a) FIRST GREAT-WEST represents and warrants that:
(i) interests in each Account funding any Contract or Contracts will be
registered under the 1933 Act to the extent required by the 1933 Act,
(ii) the Contracts will be duly authorized for issuance and sale in
compliance with all applicable federal and state laws, including, without
limitation, the 1933 Act, the 1934 Act, the 1940 Act and New York law,
(iii) each Account is and will remain registered under the 1940 Act, to
the extent required by the 1940 Act,
(iv) each Account does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, to the extent required,
(v) each Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder,
(vi) FIRST GREAT-WEST will amend the registration statement for its
Contracts under the 1933 Act and for its Accounts under the 1940 Act from time
to time as required in order to effect the continuous offering of its Contracts
or as may otherwise be required by applicable law, subject to its right to
discontinue or withdraw from future sale any Contract pursuant to 1.2(b) of
this Agreement, and
(vii) each prospectus for the Contracts, including any statement of
additional information (collectively, as the context requires, "Contract
Prospectus") will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(b) FIRST GREAT-WEST represents and warrants that it will prepare, print, and
deliver, in a timely manner annual and semi-annual reports for the Accounts,
Contract Prospectuses, voting instruction forms, as required, and related
materials to all existing Contract owners, as appropriate. The costs of
preparing and delivering the foregoing materials shall be borne by FIRST
GREAT-WEST.
(c) SCHWAB represents and warrants that it is duly registered with the SEC as a
broker-dealer under the 1934 Act, that it is licensed as a broker-dealer in all
50 states, and that the activities of SCHWAB and its employees in connection
with the offer and sale of Contracts shall be in compliance with applicable
federal and state securities laws in all material respects.
(d) SCHWAB agrees that neither it nor its employees shall make any
representations concerning the Contracts, except those contained in or
reasonably derived from the Contract Prospectus, registration statements, annual
or semi-annual reports of the Accounts, or in other written materials prepared
by or on behalf of FIRST GREAT-WEST.
(e) SCHWAB shall reimburse FIRST GREAT-WEST for the cost of printing the
Contract Prospectuses for persons other than existing Contract owners, and
SCHWAB shall pay for all costs of delivering Contract Prospectuses to such
persons.
(f) SCHWAB agrees to execute such papers and do such acts and things as shall
from time to time be reasonably requested by FIRST GREAT-WEST for the purpose of
maintaining the registration of the Contracts under the 1933 Act and any Account
under the 1940 Act and any applicable insurance regulatory authority.
(g) SCHWAB, directly or through FIRST GREAT-WEST (at FIRST GREAT-WEST's
expense), shall, upon or prior to the completion of each Contract transaction
for which a confirmation is legally required, send a written confirmation to the
Contract owner for each such transaction, in a form and manner which complies
with the requirements of the 1934 Act, state laws and regulations, and the
disclosure requirements of the NASD. Such confirmations shall be furnished to
all Contract owners in accordance with securities laws, shall reflect the facts
of the transaction, and, if applicable, shall show that they are being sent by
FIRST GREAT-WEST on behalf of SCHWAB. The Parties agree that the form and the
manner of use of confirmations in connection with transactions occurring in
Contract accounts shall be supervised by SCHWAB. FIRST GREAT-WEST shall prepare
and distribute such confirmations in accordance with SCHWAB's instructions.
FIRST GREAT-WEST shall make no changes or variations in either the form or the
manner of distribution of such confirmations without the written approval of
SCHWAB and shall cause such confirmations to be issued as directed by SCHWAB and
on behalf of SCHWAB.
(h) FIRST GREAT-WEST represents and warrants that it shall prepare, print,
deliver and file with the SEC or other appropriate regulatory body, or cause the
same to be done, as required by law and in a timely manner, all registration
statements, annual and semi-annual reports, proxies and related materials, and
other documents relating to all underlying investment vehicles to which Contract
owner premiums may be allocated. FIRST GREAT-WEST's obligations in this regard,
and the allocation of expenses relating thereto, shall be delineated in a
separate agreement with each underlying investment vehicle and SCHWAB, to which
FIRST GREAT-WEST shall be a party.
4.2 Tax Laws
(a) FIRST GREAT-WEST represents and warrants that the Contracts currently are
treated as annuity, endowment, or life insurance contracts under applicable
provisions of the Internal Revenue Code of 1986, as amended ("Code") and that it
will make every effort to maintain such treatment; FIRST GREAT-WEST will notify
SCHWAB immediately upon having a reasonable basis for believing that any of the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
(b) FIRST GREAT-WEST represents and warrants that each Account is a "segregated
asset account" and that interests in each Account are offered exclusively
through the purchase of or transfer into a "variable contract," within the
meaning of such terms under Section 817 of the Code and the regulations
thereunder to the extent required by law. FIRST GREAT-WEST will make every
effort to continue to meet such definitional requirements, and it will notify
SCHWAB immediately upon having a reasonable basis for believing that such
requirements have ceased to be met or that they might not be met in the future.
(c) FIRST GREAT-WEST agrees to administer the Contracts in a manner that will
comply with all federal and state tax law.
(d) FIRST GREAT-WEST agrees to prepare, print, and deliver to Contract owners,
and, to the extent required, file with the Internal Revenue Service and any
other appropriate regulatory body, all reports, forms, and other information
necessary for FIRST GREAT-WEST to comply with applicable federal and state tax
law.
<PAGE>
4.3 Insurance Laws and Other Laws
(a) FIRST GREAT-WEST shall take all actions necessary to the extent required by
law to obtain and maintain all regulatory approvals required to issue the
Contracts for sale in any states where the contracts are being offered for sale
(b) SCHWAB shall take all actions necessary to ensure that it and its employees
are properly licensed and appointed by FIRST GREAT-WEST to sell insurance and
annuities in the jurisdictions in which they are selling and shall execute such
papers and do such acts and things as shall from time to time be reasonably
requested by FIRST GREAT-WEST for the purpose of qualifying and maintaining
qualification of the Contracts for sale under the applicable laws of any state.
(c) FIRST GREAT-WEST represents and warrants that:
(i) it is an insurance company duly organized, validly existing and in
good standing under the laws of the State of New York and has full corporate
power, authority and legal right to execute, deliver and perform its duties and
comply with its obligations under this Agreement,
(ii) it will legally and validly establish and maintain each Account as a
segregated asset account under Section 4220 of the New York Insurance Code and
the regulations thereunder, and
(iii) the Contracts comply in all material respects with all other
applicable federal and state laws and regulations.
(d) SCHWAB represents and warrants that it is a corporation duly organized,
validly existing, and in good standing under the laws of the State of California
and has full power, authority, and legal right to execute, deliver, and perform
its duties and comply with its obligations under this Agreement.
(e) SCHWAB represents and warrants that it is a member in good standing of the
NASD and that it has obtained all approvals necessary to offer the Contracts and
otherwise enter into and carry out all transactions contemplated by this
Agreement, has obtained or will obtain all approvals, licenses, authorizations,
orders or consents, and shall be duly registered and appointed or otherwise
qualified under the securities and insurance laws of any state or other
jurisdiction where offers or sales of the Contracts may be made.
(f) SCHWAB agrees that it shall be bonded as required by all applicable laws
and regulations. SCHWAB shall be responsible for carrying out its sales and
underwriting obligations hereunder in continued compliance with applicable NASD
Rules of Fair Practice and federal and state securities laws and regulations and
state insurance laws and regulations.
<PAGE>
4.4 Notice of Certain Proceedings and Other Circumstances
(a) FIRST GREAT-WEST shall immediately notify SCHWAB of:
(i) the issuance by any court or regulatory body of any stop order, cease
and desist order, or other similar order with respect to any Contract or to any
Account's registration statement under the 1933 Act relating to the Contracts
or any Contract Prospectus,
(ii) any request by the SEC or other regulatory body for any amendment to
such registration statement or Contract Prospectus,
(iii) the initiation of any proceeding materially affecting the offering
or sale of the Contracts or the ability of FIRST GREAT-WEST to issue or sell
such Contracts,
(iv) any other actions or circumstances that may prevent the lawful offer
or sale of any of the Contracts in any state.
FIRST GREAT-WEST shall make every effort to prevent the issuance of any such
stop order, cease and desist order or similar order and, if any such order is
issued, to obtain the lifting thereof at the earliest possible time.
(b) SCHWAB shall immediately notify FIRST GREAT-WEST of:
(i) the issuance by any court or regulatory body of any order having a
material effect with respect to SCHWAB's ability to perform its obligations
hereunder,
(ii) the initiation of any proceeding materially affecting the offering
or sale of the Contracts or the ability of SCHWAB to sell such Contracts, and
(iii) any other actions or circumstances that may prevent the lawful
offer or sale of any of the Contracts in any state.
(c) SCHWAB shall notify FIRST GREAT-WEST within three (3) business days if it
or any of its officers, directors, employees or registered representatives who
are licensed to sell insurance and are appointed by FIRST GREAT-WEST is or
becomes subject to any proceedings or is sanctioned or suspended (i) by the SEC
or NASD, (ii) by any court for securities, insurance or financial institution
law violations, or (iii) by any state regulatory authority.
(d) In the case of an oral or written consumer or regulatory agency complaint,
SCHWAB and FIRST GREAT-WEST shall notify the other within three (3) business
days of receipt and shall coordinate and fully cooperate in responding to such
complaints. SCHWAB and FIRST GREAT-WEST shall develop procedures to coordinate,
investigate and respond to such complaints.
4.5 Parties to Cooperate
SCHWAB and FIRST GREAT-WEST shall cooperate fully in any insurance or
securities regulatory examination, investigation, or proceeding or any judicial
proceeding with respect to FIRST GREAT-WEST, SCHWAB, and their respective
affiliates, agents and representatives to the extent that such examination,
investigation, or proceeding arises in connection with Contracts distributed
under this Agreement. SCHWAB and FIRST GREAT-WEST shall furnish applicable
federal and state regulatory authorities with any information or reports in
connection with its services or sales under this Agreement, which authorities
may lawfully request in order to ascertain whether FIRST GREAT-WEST or SCHWAB
sales and operations are being conducted in a manner consistent with any
applicable law or regulations. The Parties shall, at least 10 business days
prior to provision of such information, notify the other to enable that Party,
if it so desires, to interpose any legal objections to provision of the reports
or information.
4.6 Information About FIRST GREAT-WEST and SCHWAB
(a) FIRST GREAT-WEST shall provide to SCHWAB or its designated agent at least
one complete copy of all SEC registration statements, Contract Prospectuses,
reports, any required voting instruction solicitation material, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to each Account or the Contracts, at least five (5) business
days prior to the filing of such document with the SEC or other regulatory
authorities for approval.
(b) Neither FIRST GREAT-WEST nor any of its affiliates will give any
information or make any representations or statements on behalf of or concerning
SCHWAB or its affiliates in connection with the sale of the Contracts other than
(i) the information or representations contained in the registration statement,
including the Contract Prospectus contained therein, as such registration
statement and Prospectus may be amended from time to time; or (ii) in reports or
voting instruction solicitation materials for the Accounts; or (iii) in
marketing material prepared by SCHWAB, except with the express written
permission of SCHWAB.
(c) Except with the express written permission of FIRST GREAT-WEST, neither
SCHWAB nor any of its affiliates, officers or employees will give any
information or make any representations or statements on behalf of or concerning
FIRST GREAT-WEST or its affiliates or the Contracts or Accounts, in connection
with the sale of the Contracts other than
(i) the information or representations contained in the Contracts, the
registration statement, including the Contract Prospectus contained therein, as
such registration statement and Prospectus may be amended from time to time, or
the Prospectuses of the underlying funds; or
(ii) in reports or voting instruction solicitation materials for the
Accounts; or
(iii) in marketing material or other material approved or developed by
FIRST GREAT-WEST.
SECTION 5. COSTS AND EXPENSES
5.1 FIRST GREAT-WEST to Pay Employees
FIRST GREAT-WEST shall have the responsibility for paying any compensation due
its employees. FIRST GREAT-WEST specifically agrees to indemnify, hold harmless
and defend SCHWAB against any and all expense, cost, causes of action,
liability, loss or damage, including reasonable attorneys' fees, resulting or
arising from or related to any claim against SCHWAB for compensation allegedly
owed to a FIRST GREAT-WEST employee. FIRST GREAT-WEST specifically agrees that
it shall not represent to any employee, broker-dealer, or registered
representative that any compensation or fees are payable to them from SCHWAB.
5.2 SCHWAB to Pay Employees
SCHWAB shall have the responsibility for paying any compensation due its
employees. SCHWAB specifically agrees to indemnify, hold harmless and defend
FIRST GREAT-WEST against any and all expense, cost, causes of action, liability,
loss or damage, including reasonable attorneys' fees, resulting or arising from
or related to any claim against FIRST GREAT-WEST for compensation allegedly owed
to a SCHWAB employee. SCHWAB specifically agrees that it shall not represent to
any employee, broker-dealer, or registered representative that any compensation
or fees are payable to them from FIRST GREAT-WEST.
5.3 Each Party To Bear Own Costs
Except as otherwise expressly provided, each Party to this Agreement shall bear
all expenses of fulfilling its duties and obligations hereunder.
SECTION 6. INDEMNIFICATION
6.1 Indemnification by FIRST GREAT-WEST
(a) FIRST GREAT-WEST shall indemnify and hold harmless SCHWAB against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or
expense, and reasonable counsel fees incurred in connection therewith) arising
by reason of any person's acquiring any Contract, which may be based upon any
federal or state securities act, or on any other statute or at common law,
<PAGE>
(i) on the ground that the Contract, offering document, registration
statement or related Contract Prospectus, as from time to time amended and
supplemented, or the annual or interim reports to Contract owners, any
published marketing materials or communications with any Contract owner or
prospective Contract owner concerning the Contract, include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading, if
such statement or omission was made in reliance upon, and in conformity with,
information furnished by or on behalf of FIRST GREAT-WEST to SCHWAB; or
(ii) on the ground that FIRST GREAT-WEST, its employees, officers, or
directors, failed to comply with any applicable securities or other laws and
regulations in connection with its rendering of Contract issue, recordkeeping,
confirmation or other services under this Agreement; or
(iii) on the ground of FIRST GREAT-WEST's negligence or misconduct, or
that of FIRST GREAT-WEST's employees, officers, or directors, in the performance
of its duties hereunder, or breach by FIRST GREAT-WEST of any representation or
warranty hereunder.
The indemnities in this Section 6.1 shall, upon the same terms and conditions,
extend to and inure to the benefit of each director, officer and employee of
SCHWAB and any person controlling or controlled by SCHWAB within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act.
(b) In no case is the indemnity of FIRST GREAT-WEST in favor of SCHWAB and any
such controlling or controlled persons to be deemed to protect SCHWAB or any
such controlling or controlled persons thereof against any liability to FIRST
GREAT-WEST, or the Accounts or its Contract owners to which SCHWAB or any such
controlling or controlled persons would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement. In addition, in no case is FIRST GREAT-WEST to be liable under
its indemnity agreement contained in Section 6.1(a) with respect to any claim
made against SCHWAB or any such controlling or controlled persons, unless SCHWAB
or such controlling or controlled persons, as the case may be shall have
notified FIRST GREAT-WEST in writing by fax or overnight mail within two (2)
days after the summons or other first legal process giving information of the
nature of the claim shall have been served upon SCHWAB or such controlling or
controlled persons (or after SCHWAB or such controlling or controlled persons
shall have received notice of such service on any designated agent), but failure
to notify FIRST GREAT-WEST of any such claim shall not relieve FIRST GREAT-WEST
from any liability which it may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph. FIRST GREAT-WEST will be entitled to participate at its own expense
in the defense, or, if it so elects, to assume the defense of any suit brought
to enforce any such liability, but if FIRST GREAT-WEST elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to SCHWAB or such controlling or controlled person or persons,
defendant or defendants in the suit. In the event FIRST GREAT-WEST elects to
assume the defense of any such suit and retains such counsel, SCHWAB or such
controlling or controlled person or persons, defendant or defendants in the
suit, shall bear the fees and expense of any additional counsel retained by
SCHWAB or such controlling or controlled person or persons, but, in case FIRST
GREAT-WEST does not elect to assume the defense of any such suit, it will
reimburse SCHWAB or such controlling or controlled person or persons, defendant
or defendants in the suit, for the reasonable fees and expense of any counsel
retained by them. FIRST GREAT-WEST shall promptly notify SCHWAB of the
commencement of any litigation or proceedings against FIRST GREAT-WEST or any of
its officers, directors, employees or agents in connection with the issuance or
sale of the Contracts.
6.2 Indemnification by SCHWAB
(a) SCHWAB shall indemnify and hold harmless FIRST GREAT-WEST and the Accounts
against any loss, liability, claim, damage or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damage or
expense and reasonable counsel fees incurred in connection therewith) arising by
reason of any person's acquiring any Contract, which may be based upon any
federal or state securities act, or on any other statute or at common law:
(i) on the ground that the Contract, offering document, registration
statement or related Contract Prospectus, as from time to time amended and
supplemented, or the annual or interim reports to Contract owners, any
published marketing materials or communications with any Contract owner or
prospective Contract owner concerning the Contract, include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading, if
such statement or omission was made in reliance upon, and in conformity with,
information furnished in connection therewith by or on behalf of SCHWAB to
FIRST GREAT-WEST; or
(ii) on the ground that SCHWAB, its employees, officers or directors
failed to comply with any applicable securities or other laws and regulations
in connection with its rendering of Contract issue, recordkeeping, confirmation
or other services under this Agreement; or
(iii) on the ground of SCHWAB's negligence or misconduct, or that of
SCHWAB's employees, officers or directors, in the performance of its duties
hereunder, or breach of any representation or warranty hereunder.
The indemnities in this Section 6.2 shall, upon the same terms and conditions,
extend to and inure to the benefit of each director, officer and employee of
FIRST GREAT-WEST and any person controlling or controlled by FIRST GREAT-WEST
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act.
(b) In no case is the indemnity of SCHWAB in favor of FIRST GREAT-WEST and any
such controlling or controlled persons to be deemed to protect FIRST GREAT-WEST
or any such controlling or controlled persons thereof against any liability to
SCHWAB to which FIRST GREAT-WEST or any such controlling or controlled persons
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement. In addition, in no case is
SCHWAB to be liable under its indemnity agreement contained in Section 6.2(a)
with respect to any claim made against FIRST GREAT-WEST or any such controlling
or controlled persons, unless FIRST GREAT-WEST or such controlling or
controlled persons, as the case may be shall have notified SCHWAB in writing
within two (2) days after the summons or other first legal process giving
information of the nature of the claim shall have been served upon FIRST
GREAT-WEST or such controlling or controlled persons (or after FIRST GREAT-WEST
or such controlling or controlled persons shall have received notice of such
service on any designated agent), but failure to notify SCHWAB of any such
claim shall not relieve SCHWAB from any liability which it may have to the
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph. SCHWAB will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if SCHWAB
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to FIRST GREAT-WEST or such controlling or controlled
person or persons, defendant or defendants in the suit. In the event SCHWAB
elects to assume the defense of any such suit and retain such counsel, FIRST
GREAT-WEST or such controlling or controlled person or persons, defendant or
defendants in the suit, shall bear the fees and expense of any additional
counsel retained by FIRST GREAT-WEST or such controlling or controlled person
or persons, but, in case SCHWAB does not elect to assume the defense of any
such suit, it will reimburse FIRST GREAT-WEST or such controlling or controlled
person or persons, defendant or defendants in the suit, for the reasonable fees
and expense of any counsel retained by them. SCHWAB shall promptly notify FIRST
GREAT-WEST of the commencement of any litigation or proceedings against SCHWAB
or any of its officers, directors, employees or agents in connection with the
issuance or sale of the Contracts.
6.3 Limitation on Liability
In no event shall either Party under this Agreement be liable for lost profits
or for exemplary, special, punitive or consequential damages alleged to have
been sustained by the other Party, as opposed to a third party.
6.4 Injunctive Relief
The Parties each agree that monetary damages may be an inadequate remedy in the
event of a breach by either Party of any of the covenants in this Agreement, and
that any such breach by a Party may cause the other Party great and irreparable
injury and damage. Accordingly, nothing in this Agreement shall limit a Party's
right to obtain equitable relief when appropriate.
<PAGE>
SECTION 7. TERM AND TERMINATION
7.1 Term
This Agreement shall be effective as of the date first above written and shall
remain in full force and effect thereafter, subject to Section 7.2 below.
7.2 Events of Termination
(a) In addition to the provisions of Section 7.3, this Agreement shall
terminate at either Party's option, without penalty:
(i) with or without cause, on not less than 180 days written notice to the
other Party;
(ii) upon the mutual written consent of the Parties;
(iii) upon written notice of one Party to the other in the event of
bankruptcy or insolvency of the Party to which notice is given; or
(b) This Agreement shall terminate at the option of SCHWAB, in the event of
(i) fraud, misrepresentation, conversion or unlawful withholding of funds
by FIRST GREAT-WEST;
(ii) the dissolution or disqualification of FIRST GREAT-WEST to do
business under any applicable state or federal law where FIRST GREAT-WEST's
ability to perform is materially impaired; however, such termination shall
extend only to the jurisdiction(s) where FIRST GREAT-WEST is prohibited from
doing business;
(iii) the suspension or revocation of any material license or permit held
by FIRST GREAT-WEST by the appropriate governmental agency or authority;
however, such termination shall extend only to the jurisdiction(s) where FIRST
GREAT-WEST is prohibited from doing business;
(iv) the sale (without the prior written consent of SCHWAB, which consent
shall not be unreasonably withheld) of the FIRST GREAT-WEST business relating
to the Contracts, which sale is to an unaffiliated person or entity, whether by
merger, consolidation, or sale of substantially all of FIRST GREAT-WEST's
assets or stock related to the Contracts, during the term of, and any extension
of, this Agreement;
(v) upon institution of formal proceedings against FIRST GREAT-WEST by
the NASD, SEC, or any other regulatory body regarding FIRST GREAT-WEST's duties
under this Agreement, the sale of the Contracts, or the operation of any
Account, which would materially impair the marketability of the Contracts,
provided that such proceedings result in a finding of material wrongdoing by
FIRST GREAT-WEST, or which result in disqualification from continued membership
with the NASD or registration with the SEC; or
(vi) any termination at the option of SCHWAB of that certain
Administration Agreement of even date herewith between FIRST GREAT-WEST and
SCHWAB (the "Administration Agreement") pursuant to Section 7.2(a)(iii),
7.2(b)(i)-(iv), or 7.3 of the Administration Agreement.
(c) This Agreement shall terminate at the option of FIRST GREAT-WEST, in the
event of:
(i) fraud, misrepresentation, conversion or unlawful withholding of funds
by SCHWAB;
(ii) the dissolution or disqualification of SCHWAB to do business under
any applicable state or federal law where SCHWAB's ability to perform is
materially impaired; however, such termination shall extend only to the
jurisdiction(s) where SCHWAB is prohibited from doing business;
(iii) the suspension or revocation of any material license or permit held
by SCHWAB by the appropriate governmental agency or authority; however, such
termination shall extend only to the jurisdiction(s) where SCHWAB is prohibited
from doing business;
(iv) the sale (without the prior written consent of FIRST GREAT-WEST,
which consent shall not be unreasonably withheld) of SCHWAB's business to an
unaffiliated person or entity, whether by merger, consolidation, or sale of
substantially all of SCHWAB's assets or stock or otherwise, during the term of,
and any extension of, this Agreement;
(v) upon institution of formal disciplinary proceedings against SCHWAB by
the NASD, SEC, or any other regulatory body, which would materially impair the
marketability of the Contracts, provided that such proceedings result in a
finding of material wrongdoing by SCHWAB, or which result in disqualification
from continued membership with the NASD or registration with the SEC; or
(vi) any termination at the option of FIRST GREAT-WEST of the
Administration Agreement pursuant to Section 7.2(a)(iii), 7.2(c)(i)-(iv), or
7.3 of the Administration Agreement.
7.3 Events of Default
If either Party breaches this Agreement or is in default in the performance of
any of its duties and obligations hereunder (the "defaulting Party"), the
non-defaulting Party may give written notice thereof to the defaulting Party,
and if such breach or default is not remedied within 90 days after such written
notice is given, then the non-defaulting Party may terminate this Agreement by
giving 90 days written notice of such termination to the defaulting Party.
7.4 Parties to Cooperate Respecting Termination
The Parties agree to cooperate and give reasonable assistance to one another in
effecting an orderly transition following termination.
SECTION 8. CONFIDENTIALITY
Subject to the requirements of legal process and regulatory authority, each
Party shall treat as confidential (a) the identity of existing or prospective
Contract owners and the investment managers enrolled in SCHWAB's Financial
Advisor Service Program ("investment managers"), (b) any financial or other
information provided by existing or prospective Contract owners or investment
managers, and (c) any other information reasonably identified as confidential in
writing by any other Party hereto (collectively "confidential information").
Except as permitted by this Agreement, no Party shall disclose, disseminate or
utilize any confidential information without the express written consent of the
affected Party until such time as such information may come into the public
domain, except as permitted by this Agreement or as otherwise necessary to
service the Contracts and/or respond to appropriate regulatory authorities. Each
Party shall take all reasonable precautions to prevent the unauthorized
disclosure of any confidential information. Nothing in this Section 8 shall
prevent SCHWAB from using the confidential information pertaining to existing or
prospective Contract owners for marketing purposes. In no event shall
confidential information pertaining to existing or prospective Contract owners
be furnished by FIRST GREAT-WEST to any other company or person (except as
required by law or regulation) or be used to solicit sales of any kind,
including but not limited to any other products, securities or services for a
period of two years following termination of this Agreement. Without limiting
the foregoing, no Party shall disclose any information that another Party
reasonably considers to be proprietary. For purposes of this Agreement,
proprietary information includes, but is not limited to, computer system and
client information. The intent of this Section 8 is that no Party or any
affiliate thereof shall utilize, or permit to be utilized, its knowledge of the
other Party that is derived as a result of the relationship created by this
Agreement and any related agreements, except to the extent necessary by the
terms of this Agreement or the related agreements.
SECTION 9. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement, or the
breach hereof, shall be settled by arbitration under the rules of the NASD in
effect at that time. If the NASD refuses jurisdiction, or the Parties mutually
agree in writing, the arbitration procedure described herein shall be used. In
either event, the decision of the arbitrator(s) is final and judgment upon the
award rendered may be entered in any court having jurisdiction thereof.
To initiate arbitration, either FIRST GREAT-WEST or SCHWAB shall notify the
other Party in writing of its desire to arbitrate, stating the nature of its
dispute and the remedy sought. The Party to which the notice is sent shall
respond to the notification in writing within ten (10) days of its receipt.
The arbitration hearing shall be before a panel of three arbitrators, each of
whom must be (1) a present or former officer of a life insurance or reinsurance
company and/or (2) an officer and principal of a registered Broker-Dealer. The
panel must contain at least one representative from each of (1) and (2). An
arbitrator may not be a present or former director, officer, employee, attorney,
or consultant of FIRST GREAT-WEST or SCHWAB or either's affiliates.
FIRST GREAT-WEST and SCHWAB shall each name five (5) candidates to serve as an
arbitrator. FIRST GREAT-WEST and SCHWAB shall each choose one candidate from the
other Party's list, and these two candidates shall serve as the first two
arbitrators. FIRST GREAT-WEST and SCHWAB shall each present their initial lists
of five (5) candidates by written notification to the other Party within
twenty-five (25) days of the date of the mailing of the notification initiating
the arbitration. Any subsequent additions to the list which are required shall
be presented within ten (10) days of the date the naming Party receives notice
that a candidate that has been chosen declines to serve.
The two arbitrators shall then select the third arbitrator from the eight (8)
candidates remaining on the lists of FIRST GREAT-WEST and SCHWAB within fourteen
(14) days of the acceptance of their positions as arbitrators. If the two
arbitrators cannot agree on the choice of a third, then this choice shall be
referred back to the Parties. FIRST GREAT-WEST and SCHWAB shall take turns
striking the name of one of the remaining candidates from the initial eight (8)
candidates until only one candidate remains. If the candidate so chosen shall
decline to serve as the third arbitrator, the candidate whose name was stricken
last shall be nominated as the third arbitrator. This process shall continue
until a candidate has been chosen and accepted. This candidate shall serve as
the third arbitrator. The first turn at striking the name of a candidate shall
belong to the Party that is responding to the other Party's initiation of the
arbitration. Once chosen, the arbitrators are empowered to decide all
substantive and procedural issues by a majority of votes.
It is agreed that each of the three arbitrators should be impartial regarding
the dispute. Therefore, at no time will either Party contact or otherwise
communicate with any person who is to be or who has been designated as a
candidate to serve as an arbitrator concerning the dispute, except upon the
basis of jointly drafted communications provide by both Parties to inform those
candidates actually chosen as arbitrators of the nature and facts of the
dispute. Likewise, any written or oral arguments provided to the arbitrators
concerning the dispute shall be coordinated with the other Party and shall be
provided simultaneously to the other Party or shall take place in the presence
of the other Party. Further, at no time shall any arbitrator be informed that
the arbitrator has been named or chosen by one Party or the other.
The arbitration hearing shall be held on a date fixed by the arbitrators.
In no event shall this date be later than six (6) months after the appointment
of the third arbitrator. As soon as possible, the arbitrators shall establish
pre-arbitration procedures as warranted by the facts and issues of the
particular case. At least ten (10) days prior to the arbitration hearing, each
Party shall provide the other Party and the arbitrators with a detailed
statement of the facts and arguments it will present at the arbitration hearing.
The arbitrators may consider any relevant evidence; they shall give the evidence
such weight as they deem it entitled to after consideration of any objections
raised concerning it. The Party initiating the arbitrations shall have the
burden of proving its case by a preponderance of the evidence. Each Party may
examine any witnesses who testify at the arbitration hearing, the arbitrators
shall apportion the costs of arbitration, which shall include but not be limited
to their own fees and expenses, as they deem appropriate.
SECTION 10. BONDING AND INSURANCE
Each Party shall maintain sufficient fidelity bond coverage (including coverage
for larceny and embezzlement) and errors and omissions insurance coverage as may
be required by applicable law or as such Party deems necessary in light of its
obligations under this Agreement.
SECTION 11. NOTICES
Any notice required or permitted to be sent under this Agreement shall be given
to the following persons at the following addresses and facsimile numbers, or
such other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
8515 East Orchard Road
Englewood, CO 80111
303-689-4356
Dennis Low
CHARLES SCHWAB & CO., INC.
Office of Corporate Counsel
101 Montgomery Street
San Francisco, CA 94104
415-636-6100
Mary Templeton
SECTION 12. TRADEMARKS
12.1 SCHWAB owns all right, title and interest in and to the name, trademark
and service mark "SCHWAB", and SCHWAB owns (or will own prior to use) all other
tradenames, trademarks and service marks that may be used by SCHWAB in
performing SCHWAB's obligations under this Agreement (collectively with the
"SCHWAB" name, trademark and service mark, the "SCHWAB licensed marks" or the
"licensor's licensed marks"). SCHWAB hereby grants to FIRST GREAT-WEST
(including its affiliates) a non-exclusive license to use the SCHWAB licensed
marks in connection with FIRST GREAT-WEST's performance of the services
contemplated under this Agreement subject to the terms and conditions set forth
in this Section 12.
12.2 FIRST GREAT-WEST owns all right, title and interest in and to the name,
trademark and service mark "First Great-West Life & Annuity Insurance Company",
and FIRST GREAT-WEST owns (or will own prior to use) all other tradenames,
trademarks and service marks that may be used by FIRST GREAT-WEST in performing
FIRST GREAT-WEST's obligations under this Agreement (collectively with the
"First Great-West Life & Annuity Insurance Company" name, trademark and service
mark, the "FIRST GREAT-WEST licensed marks" or the "licensor's licensed marks").
FIRST GREAT-WEST hereby grants to SCHWAB (including its affiliates) a
non-exclusive license to use the FIRST GREAT-WEST licensed marks in connection
with SCHWAB's performance of the services contemplated by this Agreement,
subject to the terms and conditions set forth in this Section 12.
12.3 The grant of license by SCHWAB and FIRST GREAT-WEST (each, a "licensor")
to the other and affiliates thereof (the "licensees") shall terminate
automatically when the Contracts cease to be outstanding or by either Party at
its election upon termination of this Agreement. Upon automatic termination,
each licensee shall cease to use a licensor's licensed marks. Upon FIRST
GREAT-WEST's elective termination of this license, SCHWAB (including its
affiliates) shall immediately cease to distribute promotional, sales or
advertising material relating to any Contract and shall likewise cease any
activity that suggests that it has any right under the FIRST GREAT-WEST licensed
marks or that it has any association with FIRST GREAT-WEST or any affiliate of
FIRST GREAT-WEST in connection with any such Contracts. Similarly, upon SCHWAB's
elective termination of this license, FIRST GREAT-WEST (including its
affiliates) shall cease to issue as soon as reasonably practicable, any new
Contracts bearing any of the SCHWAB licensed marks and shall likewise cease any
activity which suggests that it has any right under any of the SCHWAB licensed
marks or that it has any association with SCHWAB or any affiliate of SCHWAB,
except that FIRST GREAT-WEST shall have the right to administer any outstanding
Contracts bearing any of the SCHWAB licensed marks and in connection therewith
to use the SCHWAB licensed marks.
12.4 Notwithstanding any provision in this Agreement to the contrary, a
licensee shall obtain the prior written approval of the licensor for the public
release by such licensee of any materials bearing the licensor's licensed marks.
The licensor's approval shall not be unreasonably withheld.
12.5 During the term of this grant of license, a licensor may request that a
licensee submit samples of any materials bearing any of the licensor's licensed
marks that were previously approved by the licensor but, due to changed
circumstances, the licensor may wish to reconsider, or that were not previously
approved in the manner set forth above. If, on the reconsideration or on initial
review, respectively, any such samples fail to meet with the written approval of
the licensor, then the licensee shall immediately cease distributing such
disapproved materials. The licensor's approval shall not be unreasonably
withheld. The licensee shall obtain the prior written approval of the licensor
for the use of any new materials developed to replace the disapproved materials,
in the manner set forth above.
12.6 Each licensee hereunder: (i) acknowledges and stipulates that the
licensor's licensed marks are valid and enforceable trademarks and/or service
marks and that such licensee does not own the licensor's licensed marks and
claims no rights therein other than as a licensee under this Agreement; (ii)
agrees never to contend otherwise in legal proceedings or in other
circumstances; and (iii) acknowledges and agrees that the use of the licensor's
licensed marks pursuant to this grant of license shall inure to the benefit of
the licensor.
SECTION 13. MISCELLANEOUS
13.1 Amendment
This Agreement may be amended at any time by a writing executed by the Parties.
13.2 Non-Assignment
This Agreement shall not be assigned by either Party without the prior written
consent of the other Party, provided, however, that FIRST GREAT-WEST or SCHWAB
may subcontract or assign provision of services to affiliates or subsidiaries,
including Financial Administrative Services Corporation. Such assignment or
subcontracting does not relieve FIRST GREAT-WEST or SCHWAB of any responsibility
with regard to its obligations under this Agreement for such services.
13.3 Governing Law
This Agreement shall be interpreted in accordance with and governed by the laws
of the State of New York.
13.4 Survival of Provisions
Sections 2.1(d), 3.1, 4.4, 4.5, 4.6, 5, 6, 8, 9, 10, 12, and 13.7 shall survive
termination of this Agreement.
13.5 Severability
Should any provision of this Agreement be held or made invalid by a court
decision, statute, rule, or otherwise, the remainder of this Agreement shall not
be affected thereby.
<PAGE>
13.6 Waiver
Any failure or delay by either Party to enforce at any time any of the
provisions of this Agreement, or to exercise any right or option which is herein
provided, or to require at any time the performance of any of the provisions
hereof, shall in no way be construed to be a waiver of such provision of this
Agreement.
13.7 Right to Audit
FIRST GREAT-WEST, its employees or authorized representatives may audit,
inspect and examine at reasonable times, during regular business hours and with
at least 24 hours prior notice, all books and records of SCHWAB and its agents
of all transactions arising under this Agreement. FIRST GREAT-WEST agrees to
limit its review of the books and records to the extent necessary and as often
as necessary to fulfill all contractual obligations to the holders of Contracts,
to comply with all legal and regulatory requirements, to meet the requirements
of FIRST GREAT-WEST auditors and to ensure compliance with this Agreement.
SCHWAB, its employees or authorized representatives may audit, inspect and
examine at reasonable times, during regular business hours and with at least 24
hours prior notice, all books and records of FIRST GREAT-WEST and its agents of
all transactions arising under this Agreement. SCHWAB agrees to limit its review
of the books and records to the extent necessary and as often as necessary to
fulfill all contractual obligations to the holders of Policies, to comply with
all legal and regulatory requirements, to meet the requirements of SCHWAB
auditors and to ensure compliance with this Agreement.
13.8 Force Majeure
Neither Party shall be liable for damages due to delay or failure to perform
any obligation under this Agreement where such delay or failure results directly
or indirectly from circumstances beyond the control and without the fault or
negligence of such Party.
13.9 Entire Agreement
This Agreement shall be the sole and only agreement between FIRST GREAT-WEST
and SCHWAB regarding the distribution of the Contracts, and it supersedes all
prior and contemporaneous agreements regarding the distribution of the
Contracts. This Agreement may not be amended, supplemented, or modified, except
as expressly permitted herein, without the written agreement of the Parties.
IN WlTNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day and year first written above.
<PAGE>
SCHEDULE 1
SEPARATE ACCOUNTS OF
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Variable Annuity-1 Series Account, a separate account established under New York
law on January 15, 1997.
Fixed Annuity Account, a separate account established under New York law on
January 15, 1997.
<PAGE>
SCHEDULE 1.1
CONTRACTS AVAILABLE FOR OFFER AND SALE
1. The Schwab Variable Annuity. Form J434. Exclusive marketing. Registered with
SEC. Contributions may be allocated among a number of investment options. The
value of the contributions allocated to the variable annuity option will vary
according to the investment experience of the investment options. Also,
contributions may be allocated to one or more guaranteed certificate periods.
If, prior to maturity of a certificate, the Contract is surrendered in full or
in part or amounts allocated to a certificate are transferred, a market value
adjustment to the Contract value will be made. The market value adjustment may
be a positive or negative adjustment based on the results of an indexed
calculation. This product may be issued as an IRA or non-qualified contract.
2. The Schwab Fixed Annuity. Form J424. Flexible Premium Deferred Market Value
Adjusted Annuity. Exclusive marketing. Registered with SEC. Contributions may be
allocated to one or more guaranteed certificate periods. If, prior to maturity
of a certificate, the Contract is surrendered in full or in part or amounts
allocated to a certificate are transferred, a market value adjustment to the
Contract value will be made. The market value adjustment may be a positive or
negative adjustment based on the results of an indexed calculation. This product
may be issued as an IRA or non-qualified contract.
3. Single Premium Immediate Annuity. Non-exclusive marketing. Not registered
with SEC. Form numbers J260, J261.
schwab1stgwl&a
EXHIBIT 10.2
ADMINISTRATION SERVICES AGREEMENT BETWEEN
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY AND
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<PAGE>
ADMINISTRATION SERVICES AGREEMENT
between
First Great-West Life & Annuity Insurance Company
and
Great-West Life & Annuity Insurance Company
AGREEMENT made as of the 15th day of May, 1997 by and between First Great-West
Life & Annuity Insurance Company ("FGWL"), a New York corporation, with
principal offices at 125 Wolf Road, Albany, New York 12205, and Great-West Life
& Annuity Insurance Company ("GWL&A"), a Colorado corporation, with principal
offices at 8515 East Orchard Road, Englewood, Colorado 80111.
WHEREAS, FGWL desires GWL&A to perform on its behalf, certain corporate support
services, investment services, marketing administrative services and other back
office administrative services with respect to FGWL's insurance business and
operations (collectively called "services"); and further FGWL desires to make
use of certain property, equipment, personnel and facilities (collectively
called "facilities") of GWL&A in the day-to-day operations of FGWL, to the
extent requested from time to time by FGWL; and
WHEREAS, FGWL and GWL&A contemplate that such an arrangement will achieve
certain operating economies and improve services to the benefit of GWL&A, FGWL
and FGWL's insureds; and
WHEREAS, FGWL AND GWL&A wish to assure that all charges for services and the use
of facilities incurred hereunder are reasonable and in accordance with the
applicable laws and regulations of the State of New York (collectively the "New
York Insurance Laws"), including without limitation, New York Insurance
Department Regulation No.33, and to the extent practicable, reflect actual costs
and are determined in a fair and equitable manner.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
SECTION 1 Terms of Appointment
1.01 Subject to the conditions set forth in this Agreement, FGWL
hereby appoints GWL&A as Administrative Services Agent to
perform the services described herein in the name of and on
behalf of FGWL. By way of example and without limiting the
foregoing (i) all forms utilized in connection with FGWL's
business and all correspondence with policyholders shall bear
its name and contain its New York home office address; (ii)
all communications with policyholders shall be in FGWL's name;
(iii) all toll free numbers maintained for policyholder
service shall be used solely for FGWL business; and (iv) all
bank accounts into which its funds are deposited or from which
its funds are withdrawn shall be FGWL accounts.
1.02 In accordance with the terms of this Agreement and upon mutual
and written agreement between both parties, FGWL may appoint
GWL&A as Administrative Services Agent for other insurance
business of FGWL and GWL&A may accept such appointments. FGWL
acknowledges that GWL&A may subcontract its rights and
responsibilities enumerated in this Agreement to its
wholly-owned subsidiary, FASCorp. FASCorp shall observe and be
bound by all terms and conditions of this Agreement in
performing such services. However, GWL&A shall remain liable
to FGWL for the performance of said services by FASCorp as if
they had been performed by GWL&A. The charges for such
services shall be determined in a manner consistent with
Section 3 of this Agreement and shall be included in the
statement provided to FGWL by GWL&A with respect thereto.
Services which may be assigned to FASCorp are those services
provided under Exhibit E.
1.03 GWL&A agrees to perform its duties and obligations hereunder
in accordance with accepted industry practice, and in full
compliance with the rules and regulations of state insurance
departments and other regulatory bodies with jurisdiction of
FGWL.
1.04 GWL&A agrees that it will perform, at the direction of FGWL,
those Administrative Services as set forth in Exhibit A, B, C,
D and E attached, which may be amended by mutual agreement.
GWL&A shall have only the authority necessary or incident to
the performance of those services expressly set forth in this
Agreement or in the Exhibits and shall have no other express
or implied authority or right to act on behalf of FGWL or to
bind FGWL with regard to any statement, presentation or
undertaking. GWL&A shall have no authority to alter, amend, or
waive any contractual provision on behalf of FGWL without
FGWL's express written authorization.
1.05 The performance of services by GWL&A with respect to the
business and operations of FGWL shall at all times be subject
to the direction and control of the Board of Directors of
FGWL. Subject to the terms, conditions and limitations of this
Agreement, GWL&A agrees to perform diligently and in a
professional manner the services set forth in this Agreement,
and such other services as FGWL determines to be reasonably
necessary in the conduct of its insurance operations.
1.06 In providing any services hereunder which require the exercise
of judgment by GWL&A, GWL&A shall perform its services in
accordance with any standards, guidelines and procedures FGWL
develops and communicates to GWL&A.
1.07 The performance of services by GWL&A for FGWL shall in no way
impair the absolute control of the business and operations of
GWL&A or FGWL by their respective Board of Directors. GWL&A
shall act hereunder so as to assure the separate operating
identify of FGWL.
1.08 All books, records, and files established and maintained by
GWL&A with respect to its performance of services under this
Agreement which, absent this Agreement, would have been held
by FGWL, are the property of FGWL, shall be subject to
examination during all reasonable business hours by FGWL,
persons authorized by FGWL or any regulatory agency having
jurisdiction over FGWL, and shall be delivered to FGWL at
least quarterly.
SECTION 2 Term
Subject to termination as provided in Section 8 hereof, this
Agreement shall remain in full force and effect for the
initial term of the Agreement, which shall be from the
effective date hereof to April 30, 2000, and this Agreement
shall continue in full force and effect from year to year
thereafter until such termination, each such additional year
being an additional term of this Agreement.
SECTION 3 Fees and Expenses
3.01 FGWL will pay GWL&A the actual cost incurred for the services
provided by GWL&A on a quarterly basis. GWL&A shall submit to
FGWL within thirty (30) days of the end of each calendar
quarter a written statement of the amount be owed by Company
for services and the use of facilities pursuant to this
Agreement in that calendar quarter, and, in the absence of any
dispute with respect thereto, FGWL shall pay to GWL&A within
fifteen (15) days following receipt of such written statement
the amount set forth in the statement. Actual cost will be
calculated based upon the expenses (direct and indirect
including overhead) incurred by GWL&A on behalf of FGWL. For
investment services related to the management of assets,
actual cost will be calculated based upon actual cost incurred
for the various asset categories of investments.
3.02 Subject to New York Insurance Regulation 33, the bases for
determining such charges to FGWL shall be those used by GWL&A
for internal cost distribution, and shall include, where
appropriate, records prepared at least annually for this
purpose. Such bases shall be modified and adjusted by mutual
agreement where necessary or appropriate to fairly and
equitably reflect the actual incidence of cost incurred by
GWL&A on behalf of FGWL.
3.03 GWL&A shall be responsible for maintaining full and accurate
accounts and records of the services rendered by GWL&A, the
facilities used pursuant to this Agreement and such other
additional information as FGWL may reasonably request for
purposes of its internal bookkeeping and accounting
operations. To the extent such accounts and records pertain to
GWL&A's computation of charge, GWL&A shall keep such accounts
and records available at its home offices for audit,
inspection, and copying during reasonable business hours by
FGWL, persons authorized by FGWL or any regulatory agency
having jurisdiction over FGWL.
3.04 At least ninety (90) days prior to the end of any term hereof,
GWL&A shall give FGWL written notice of any increase in the
cost of providing services or charges to FGWL or to change the
manner of payment. If GWL&A and FGWL do not agree to changes
in such costs and charges before the end of the term during
which such notice is given by GWL&A, this issue shall be
submitted to an independent certified public accountant
acceptable to both parties, whose determination shall be
binding.
SECTION 4 Representations and Warranties of GWL&A
GWL&A represents and warrants to FGWL as follows:
4.01 It is a corporation duly organized and in good standing under
the laws of the State of Colorado.
4.02 It is empowered under applicable laws to enter into and
perform the services contemplated in this Agreement.
4.03 All requisite corporate proceedings have been taken to
authorize it to enter into and perform the services
contemplated in the Agreement.
SECTION 5 Representations and Warranties of FGWL
FGWL represents and warrants to GWL&A as follows:
5.01 It is a corporation duly organized and in good standing under
the laws of the State of New York.
5.02 It is empowered under the applicable laws to enter into and
perform this Agreement.
5.03 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
5.04 All of the policies and other forms provided by FGWL shall
have been duly filed as necessary and approved by all rules
and regulations of each state insurance department, and other
regulatory bodies with jurisdiction over FGWL.
SECTION 6 Indemnification
6.01 GWL&A shall not be responsible for and FGWL shall indemnify
and hold GWL&A harmless from and against, any and all costs,
expenses, losses, damages, charges, reasonable attorney's
fees, payments and liability, which may be asserted against
GWL&A or for which it may be held to be liable, arising out of
or attributable to:
a. Any actions taken by GWL&A in good faith and with due
care in compliance with the terms of this Agreement;
b. FGWL's refusal or failure to comply with the terms
of this Agreement, or which arise out of FGWL's
negligence or misconduct or which arise out of
breach of any representation or warranty of FGWL
hereunder;
c. Reliance on or use by GWL&A in accordance with the
terms of this Agreement such information and
materials provided by or at the direction of FGWL
and instructions or directions given by the
authorized individuals described in Exhibit F;
d. The offer or sale of the contracts, unless as provided
to the contrary or otherwise agreed upon in any other
agreements between FGWL and GWL&A; or
e. Any failure by FGWL to comply with Federal, state
or local laws or regulations with respect to the
offering and/or sale of any insurance products or
securities.
6.02 FGWL shall not be responsible for and GWL&A shall indemnify
and hold FGWL harmless from and against, any and all costs,
expenses, losses, damages, charges, reasonable attorney's
fees, payments and liability, which may be asserted against
FGWL or for which it may be held to be liable, arising out of
or attributable to:
a. Any actions taken by FGWL in good faith and with due
care in compliance with the terms of this Agreement;
b. GWL&A's refusal or failure to comply with the terms
of this Agreement, or which arise out of GWL&A's
negligence or misconduct or which arise out of the
breach of any representation or warranty of GWL&A
hereunder;
c. Any failure by GWL&A to comply with Federal, state
or local laws or regulations with respect to the
offering and/or sale of any insurance products or
securities.
6.03 Neither FGWL nor GWL&A shall be liable for damages due to
delay or failure to perform any obligation under this
Agreement where such delay or failure results directly or
indirectly from circumstances beyond the control and without
the fault or negligence of such Party.
6.04 At any time GWL&A may apply to a person indicated on FGWL's
"Schedule of Authorized Personnel" set forth in Exhibit F
attached hereto and incorporated herein by reference as a
person authorized to give instructions under this section with
respect to any matter arising in connection with this
Agreement. GWL&A shall not be liable for, and shall be
indemnified by FGWL, against any action taken or omitted by
GWL&A in good faith and in the exercise of due care and
diligence in reliance upon such written instructions.
6.05 FGWL shall immediately provide GWL&A with written notice of
any change of authority of persons authorized and enumerated
in Exhibit F to provide GWL&A with instructions or directions
relating to services to be performed by GWL&A under this
Agreement.
6.06 If either party believes it is entitled to indemnification
hereunder, it shall, within five business (5) days of its
discovery of the commencement of any action or threat of any
action, give written notice to the other party of any claim
for which it believes it is entitled to indemnification;
provided, however, that the failure to provide timely notice
shall not relieve the indemnifying party of any liability
which it may have to the other party as long as such notice is
not unreasonably withheld or delayed.
6.07 The provisions of this Section shall survive termination of this
Agreement.
6.08 The provisions of this Section shall not be deemed to be a
limitation on a party's right to injunction, specific
performance or any other legal or equitable remedy to which
either party may be entitled by virtue of this Agreement or to
prevent any breach or threatened breach of this Agreement.
6.09 In no event and under no circumstances, however, shall any
party under this agreement be liable to the other parties
under any provision of this agreement for lost profits or for
exemplary, special, punitive or consequential damages.
SECTION 7 Duties of FGWL and GWL&A
7.01 FGWL shall, from time to time, provide GWL&A with current
forms of policies and applications, names and states of
license of all insurance and/or broker-dealer agents and
representatives authorized to sell the contracts.
7.02 FGWL shall have full and free access, during ordinary business
hours, to all documents, records (including all bank records),
reports, books, files and other materials relative to this
Agreement and maintained by GWL&A.
7.03 Any advertising in connection with the Contracts utilized by
GWL&A must be approved in writing by FGWL prior to such
advertising.
7.04 GWL&A shall establish and maintain facilities and procedures
for the safekeeping of check forms and facsimile signature
imprinting devices, if any, and all other documents, reports,
records, books, files and other materials relative to this
Agreement.
7.05 It is expressly understood and agreed that all documents,
reports, records, books, files and other materials relative to
this Agreement shall be the sole property of FGWL and that
such property shall be held by GWL&A, as agent, during the
effective terms of this Agreement. Application software and
all copies thereof developed by GWL&A (or by FASCorp., in
providing services as set forth in Exhibit E) for FGWL's use
shall become, and that developed by FGWL and provided to GWL&A
shall remain, the property of the Company in perpetuity. To
the extent permitted by any applicable law, FGWL shall have
the same rights as GWL&A in any other software or copies
thereof obtained by GWL&A under license from third party
vendors. FGWL may purchase other software or copies thereof
from third party vendors for its exclusive use of GWL&A's
equipment if FGWL so desires. GWL&A agrees that any software
or copies thereof purchased by FGWL and used by GWL&A in
connection with this Agreement shall remain the property of
the Company.
7.06 GWL&A shall maintain back-up computer tape files on a daily
basis. The purpose of back-up and recovery is to permit file
recovery in the event of destruction of normal processing
files. GWL&A shall maintain such records, and shall retain
those records for three years after the duration of this
Agreement, FGWL may review the procedures in effect and
inspect the storage facility upon demand.
7.07 GWL&A shall use its best efforts to continue in effect the
insurance coverages described in Exhibit G attached hereto
provided that such coverage is available from an insurance
carrier at a reasonable cost to GWL&A. GWL&A shall not
voluntarily cause any termination, reduction, or alteration of
these coverages without the consent of FGWL.
7.08 All charges or premiums received by GWL&A shall be held by
GWL&A on behalf of FGWL and shall be promptly remitted to the
person entitled to it or deposited in a FGWL account. Any
payments received by GWL&A for insurance on behalf of FGWL
shall be deemed received by FGWL.
7.09 If GWL&A receives any notice from any source (including, but
not limited to, the policy owner or regulatory agency) of a
lawsuit or other legal or administrative hearing or proceeding
being brought against FGWL and involving the business
administered for FGWL by GWL&A, or the threat of any such
lawsuit, hearing or proceeding, GWL&A shall immediately notify
FGWL and send a copy of all legal documents, correspondence
and other material relevant thereto to which GWL&A reasonably
has access. GWL&A agrees to cooperate fully with FGWL in
connection with any suit, hearing or proceeding and shall
provide FGWL with all books, records, documents and data
requested by FGWL in connection therewith; provided, however,
GWL&A shall be entitled to review such request with its
counsel prior to furnishing FGWL with such materials so long
as such review is done in a timely manner.
7.10 GWL&A will conduct its business and performance obligations in
accordance with all applicable federal and state laws, rules
and regulations and in a manner which will not put FGWL
registrations and licenses in any jeopardy of revocation or
suspension or cause FGWL or any of its affiliates to sustain
any disciplinary action of any nature.
7.11 GWL&A acknowledges and agrees that all books and records
maintained by GWL&A in connection with the Contracts shall be
maintained and preserved in conformity with the requirements
of Rules 17a-3 and 17a-4 of the Securities Exchange Act of
1934 (the "1934 Act"), to the extent that such requirements
are applicable to the Contracts, and that all such books and
records are maintained and held by GWL&A on behalf of FGWL,
whose property they are and shall remain. GWL&A further
acknowledges and agrees that applicable books and records are
at all times subject to inspection by the Securities and
Exchange Commission ("SEC") in accordance with Section 17(a)
of the 1934 Act, and undertakes to permit examination of such
books and records at any time during business hours by
representatives or designees of the SEC or National
Association of Securities Dealers, Inc.
7.12 GWL&A acknowledges, covenants and agrees that it shall issue
payments, including commission payments to retail
broker-dealers, on behalf of and on the account(s) of FGWL, as
a purely ministerial service for and on behalf of FGWL, and
that the records in respect of such payments shall be properly
reflected by GWL&A on the books and records maintained by it
for FGWL.
7.13 GWL&A acknowledges, covenants and agrees that it will send
-confirmations as required by law for transactions which
constitutes the sale of securities to the contract owner in
such form as required by applicable law, regulation or rule.
7.14 GWL&A shall provide FGWL with full and free access as
reasonably requested, during ordinary business hours, to all
documents, records, reports, books, files and other materials
relative to this Agreement and maintained by GWL&A.
SECTION 8 Termination of Agreement
8.01 a) This Agreement may be terminated by either party hereto upon 90
days written notice to the other party.
b) This Agreement may be terminated immediately upon
written notice of one party to the other hereto in the
event of bankruptcy or insolvency of such party to
which notice is given.
c) This Agreement may be terminated immediately at any
time upon the mutual written consent of the parties
hereto.
d) This Agreement shall automatically be terminated in
the event of its assignment, subject to the provisions
of Section 9.01.
8.02 If either of the parties hereto shall breach this Agreement or
be in default in the performance of any of its duties and
obligations hereunder ("the defaulting party"), the other
party hereto may give written notice thereof to the defaulting
party and if such default or breach shall not have been
remedied within thirty (30) days after such written notice is
given, then the party giving such written notice may terminate
this Agreement by giving thirty (30) days written notice of
such termination to the defaulting party; provided, however,
if GWL&A elects to terminate this Agreement for other than
non-payment of fees and charges and if FGWL shall so request
in writing, GWL&A shall continue to provide the services
described herein to FGWL for a period of six (6) month
following such termination, such services to be provided in
accordance with the terms of this Agreement and at the fees in
effect for the term immediately preceding such six (6) month
period. Termination of this Agreement by default or breach by
FGWL shall not constitute a waiver of any rights of GWL&A in
reference to services performed prior to such termination of
rights of GWL&A to be reimbursed for out-of-pocket
expenditures; termination of this Agreement by default or
breach by GWL&A shall not constitute a waiver by FGWL of any
other rights it might have under this Agreement.
8.03 In the event of a termination, GWL&A will make its computer
record formats and other relevant systems information
available to FGWL for a machine conversion. In connection
therewith, GWL&A agrees that it will offer reasonable
assistance to FGWL in converting the records of FGWL from the
GWL&A system to whatever service or system is selected by FGWL
(subject to reimbursement by FGWL for such assistance at
reasonable rates and fees mutually agreed to at that time). As
described in Section 7.05, all data contained in the computer
files is the exclusive property of FGWL. In addition, GWL&A
will provide FGWL with such data processing services and
facilities as FGWL may request for a period of 180 days
following such termination.
SECTION 9 Assignment
9.01 This Agreement shall not be assignable by either party without
the prior written consent of the other, except where such
assignment is by operation of law or is specifically provided
for by this Agreement.
9.02 This Agreement shall inure to the benefit of and be binding
upon the parties hereto, and their respective successors and
assigns, provided that any assignment is performed in
accordance with paragraph 9.01 above.
SECTION 10 Arbitration
Any unresolved dispute or difference between the parties
arising out of or relating to this Agreement, or the breach
thereof, except as provided in Section 3.04, shall be settled
by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association and the
Expedited Procedures thereof. The award rendered by the
Arbitrator shall be final and binding upon the parties, and
judgment upon the award rendered by the Arbitrator may be
entered in any Court having jurisdiction thereof. The
arbitration shall take place in the State of New York
SECTION 11 Miscellaneous
11.01 FGWL or its duly authorized independent and/or internal
auditors will have the right under this Agreement to perform
on-site audits of records and accounts directly pertaining to
the policies serviced by GWL&A hereunder at GWL&A's facilities
in accordance with reasonable procedures and at any time, upon
one (1) week prior notice. At the request of FGWL, GWL&A will
make available to FGWL's auditors and to representatives of
the appropriate regulatory agencies all reasonably requested
records, data and access to operating procedures.
11.02 The parties hereto agree that all tapes, books, reference
manuals,instructions, records, information and data pertaining
to the business of the other party, GWL&A's systems, and the
policyowners serviced by GWL&A hereunder, which are exchanged
or received pursuant to the negotiation of and/or the carrying
out of this Agreement, shall remain confidential and shall not
be voluntarily disclosed to any other person. All such tapes,
books, reference manuals, instructions, records, information
and data in the possession of each of the parties hereto shall
be returned to the party from whom it was obtained upon the
termination or expiration of this Agreement.
11.03 This Agreement constitutes the entire agreement between the
parties hereto and may not be modified except in a written
instrument executed by both parties hereto, and except that if
any section herein contained shall be found to be
unenforceable as contrary to the current law, that section
shall be severed and the remaining sections of this Agreement
shall continue to be enforceable.
11.04 This Agreement shall take effect as of the date set forth in
the caption hereof.
11.05 This Agreement shall be governed by the laws of the State of
New York.
11.06 Any amendment to this Agreement or to the services set
forth in Exhibit A through E hereto shall be filed for review
pursuant to Section 1505 of the New York Insurance Law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate, in their names and on their behalf, by and through their duly
authorized officers as of the day and year first above written.
<PAGE>
EXHIBIT A
CORPORATE SUPPORT SERVICES
GWL&A shall provide the following services:
A. Human Resources, Payroll and Benefits
1. Manage and administer a centralized payroll system.
2. Prepare and distribute employee paychecks or electronic funds
transfers (EFT).
3. Assist with, maintain and monitor the compensation system and
policies for FGWL.
4. Make all necessary employment filings, deposits and withholding on
behalf of FGWL.
5. Provide all accounting services related to payroll and compensation
functions; prepare, conduct and analyze salary and compensation
surveys; and assist with the management of human resources.
6. Cover the employees of FGWL under GWL&A's benefit plans (including
Retirement and Health and Welfare plans). GWL&A will be responsible
for performing all accounting and administrative services related to
the maintenance and administration of these employees under the
various plans.
7. Make all disbursements for these procedures on FGWL's behalf and
shall be made from a FGWL bank account.
B. Treasury
1. Provide cash management and other necessary treasury services to
FGWL, and provide assistance with respect to various banking services
and liquidity needs as requested from time to time by FGWL.
2. Assist FGWL in maintaining or establishing any bank accounts and
processing any and all disbursements on such accounts, including
claims-related disbursements, as required by FGWL.
C. Accounts Payable
1. Manage and administer a centralized accounts payable system
2. Process invoices and requests for disbursements approved by FGWL
personnel and issue checks/EFT as requested by FGWL.
D. Accounting Services
1. FGWL will retain control over all FGWL accounting matters.
2. At the initiation of FGWL and for such time as agreed upon by both
parties, GWL&A shall provide the following back-end financial
accounting services
a. Prepare and maintain financial statements and reports, including,
annual quarterly and monthly statements on both statutory and
generally accepted accounting principles (GAAP) bases.
b. Prepare and disseminate information filings with regulatory
entities and rating agencies.
c. Prepare and disseminate federal, state, and local payroll tax and
premium tax returns and other related matters.
d. Process cash receipts, cash disbursements and escheat items.
E. Corporate Systems and Technology
1. Provide access to and use of a central accounting computer system.
2. Provide programming/support personnel to maintain, administer and
operate the central accounting computer system; and provide requested
assistance to FGWL in connection with its use of the central
accounting computer.
F. Corporate Tax
1. Prepare and coordinate consolidated federal and state income tax
returns and other necessary tax documentation.
2. Provide necessary assistance with corporate tax issues that may arise
from time to time.
G. Risk Management Services
1. Provide risk management services to FGWL and assist FGWL in obtaining
any necessary or requested corporate insurance coverages.
H. Audit Services
1. Provide internal audit services to assist FGWL in confirming
compliance with laws, regulations, policies and procedures applicable
to FGWL.
2. At the request of FGWL, GWL&A shall make available to FGWL's external
auditors and to representatives of appropriate regulatory agencies
all reasonably requested records, data and access to operating
procedures.
I. Legal Services
1. At the request of FGWL, provide legal services, including, but not
limited to, the negotiation, preparation and review of contracts; the
rendering of legal advice on regulatory compliance, governmental
relations and various other legal matters; and the representation in,
or management of outside counsel retained for the purpose of,
prosecution, defense or resolution of legal actions with respect to
FGWL business being administrated at the home office of GWL&A.
J. Actuarial Services
1. Provide actuarial services for FGWL, including reserve calculations
and valuations, calculation and revision of rate tables, product
development and implementation, and cash flow testing and any other
actuarial services as requested by FGWL.
2. Provide actuarial services for the preparation of regulatory filings;
prepare the actuarial component of annual, quarterly and monthly
statements, financial projections and experience studies.
3. Assist in reinsurance treaty negotiations and maintenance.
4. Prepare the year end actuarial opinion and memorandum.
K. Other Services
1. Provide office space, furniture and supplies to FGWL employees or
officers located in Colorado, as necessary or as requested by FGWL
employees.
<PAGE>
EXHIBIT B
INVESTMENT SERVICES
GWL&A shall provide the following services:
A. Investment Services
1. Provide investment management services to FGWL's general account and
separate accounts in accordance with policies and procedures
established by the FGWL Board of Directors and Investment Committee.
2. Provide assistance in the execution and performance of investment
decisions (including, but not limited to, purchases, sales, exchanges
and collection of matured investments) in accordance with FGWL
policies and procedures and at the direction of FGWL management.
3. Manage all investments and assets held by FGWL or custodied in a
custodial account in the name of FGWL at a bank or trust company
selected by FGWL, consistent with the New York Insurance Laws. In
addition, deposit all monies collected by GWL&A on behalf of FGWL in
a bank account in the name of FGWL.
4. Maintain all investment related records and databases. Provide
reports to FGWL on a quarterly and annual basis detailing investments
held and transactions made as well as any other reports or
information requested by FGWL or by the New York Insurance
Department.
5. Assure that all investments and investment practices made on behalf
of FGWL are consistent with the New York Insurance Laws, including
but not limited to, Section 1405 of the Insurance Law and New York
Insurance Department Regulation 130.
To facilitate the delivery of securities held by GWL&A, FGWL does hereby
appoint GWL&A as its true and lawful attorney and authorizes it, in FGWL's name,
place and stead to register all securities from time to time managed by GWL&A
pursuant to this Agreement, other than securities in bearer form, in FGWL's name
and to execute endorsements, assignments, or other instruments of transfer of
securities so registered and due bills and dividend orders as GWL&A may deem
proper in connection with the transfer of any such securities, GWL&A being
expressly authorized to execute any such instruments, either by signing FGWL's
name alone without any designation of itself as attorney-in-fact or by signing
FGWL's name as such attorney.
Whenever GWL&A receives and collects monies for the account of FGWL, it
will not commingle such monies with its own, but will deposit such monies in an
appropriate separate account in the name of FGWL.
B. Investment Objectives, Policies and Restrictions
The parties acknowledge that FGWL has furnished GWL&A with written
investment guidelines. In providing investment services pursuant to this
agreement, GWL&A will observe the following general investment objectives,
policies and restrictions, except that no investment which is inconsistent with
FGWL's written investment guidelines shall be made pursuant thereto.
GWL&A will have full discretion to invest and reinvest the funds made
available to it for that purpose by FGWL as follows:
Investment Objectives
FGWL's investment objective is to obtain as high a level of current
interest income as is consistent, in the view of GWL&A, with preservation of
invested capital. There are market risks inherent in all investments in
securities, and there can be no assurance that GWL&A will achieve this
objective. The primary objective of preserving capital will preclude realization
of the highest available income yields.
Investment Policies
GWL&A will seek to achieve the above-stated objective by investing in a
diversified portfolio of securities. In selecting securities for this portfolio,
GWL&A will seek the highest available yields consistent with the rating
standards and other policies stated herein.
Portfolio securities will be selected pursuant to the following
fundamental investment policies:
1. CASH BALANCES. Cash balances occurring pending permanent investment
will be invested in high grade, corporate commercial paper. The corporate paper
must have the highest rating by one or more of the nationally recognized rating
organizations. Other acceptable short-term investments include U.S. Treasury
bills and notes, certificates of deposit, time deposits, bankers acceptances and
money market funds.
2. CORPORATE BONDS. The purchases of corporate bonds will include bonds,
notes, debentures and other evidences of indebtedness issued, assumed or
guaranteed by a corporation incorporated under the laws of the United States of
America, of any state, district or territorial possession thereof or of the
Dominion of Canada or any province thereof; provided that the bonds are rated
class 1 or 2 by the Securities Valuation Office ("SVO") of the National
Association of Insurance Commissioners ("NAIC").
3. GOVERNMENT OBLIGATIONS. The purchase of government obligations will
include bonds, notes, bills and other evidences of indebtedness issued, assumed
or guaranteed by the U.S. Government, its agencies or instrumentalities or of
any state or municipality thereof; or of the Dominion of Canada or any province
thereof; provided the bonds are rated class 1 or 2 by the Securities Valuation
Office ("SVO") of the National Association of Insurance Commissioners ("NAIC").
4. MORTGAGE-BACKED SECURITIES. The purchase of mortgage-backed
securities will include obligations issued by:
A. The Government National Mortgage Association (GNMA)
B. The Federal National Mortgage Association (FNMA)
C. The Federal Home Loan Mortgage Corporation (FHLMC)
D. FHA and VA insured or guaranteed loans, or any other government
guaranteed loans.
5. EQUITY SECURITIES. Equity securities are defined to include preferred
stocks, mutual fund shares or common stocks which are traded on a national stock
exchange, provided that the preferred stocks are rated class 1 or 2 by the SVO
of the NAIC.
Investment Restrictions
In the course of its investment management activity for FGWL, GWL&A MAY
NOT engage in or execute transactions in any of the following:
1. Borrow money for any purpose on behalf of FGWL.
2. Pledge, mortgage or hypothecate the assets of FGWL.
3. Purchase the securities or any non-government issuer if, as a result,
more than 10% of the total assets of the portfolio would be invested in the
securities of the issuer.
4. Invest more than 25% of the portfolio, measured at the time of
investment, in a single industry. For the purpose of this restriction,
mortgage-backed securities do not constitute an industry.
5. Enter into any investment which would violate the New York Insurance
Law.
6. Purchase or sell investments, other than portfolio investments listed
in policies 1 through 5 under Investment Policies above, without prior written
approval of FGWL.
<PAGE>
EXHIBIT C
BACK OFFICE POLICYOWNER SERVICES
SCHWAB VARIABLE AND FIXED ANNUITIES
GWL&A shall provide the following services:
A. Contract Issue
1. Provide access to and use of central accounting computer systems for
establishing and maintaining annuitant and contract owner records.
2. Provide programming/support personnel to maintain, administer and
operate the central accounting computer systems; and provide
requested assistance to FGWL in connection with its use of the
central accounting computers.
3. Generate the contract data pages, issue contracts for paid business
and mail to contract owners or agents. System will produce contract
data pages.
4. Notify FGWL and/or its agent of any error or missing data needed for
annuitant or contract owner records.
5. Produce and mail required confirmation statements.
B. Collection Processing
1. Process payments received by FGWL to customer accounts on the System.
2. Prepare and mail required confirmation of transactions.
3. Deposit any cash received directly by GWL&A under the policies into a
FGWL designated bank account.
4. Transmit daily accounting to FGWL general ledger.
5. Prepare and mail refunds as appropriate (declines, free look).
C. Banking
1. Maintain all funds for FGWL in a depository account.
2. Be responsible for reconciling the daily deposits to cash processed
to customer accounts.
3. Transfer funds from the depository account to one of the following as
appropriate:
a. General Account of FGWL
b. Mutual Fund Custodian Account(s)
c. Disbursement Account of FGWL
d. Separate Accounts of FGWL
Bank accounts and mutual fund accounts to be established by FGWL with
appropriate signing and trading authorizations established for GWL&A
personnel.
4. Generate from the system daily cash journal summary reports and
maintain details of activity.
5. Process disbursement transactions for policyowner or beneficiary,
surrenders, withdrawals, loans and death claims.
6. Produce checks for annuitants in the payout phase.
7. FGWL will maintain balances in the appropriate FGWL bank accounts
necessary to meet administrative needs identified in the contract.
8. FGWL will obtain the appropriate authorizations to allow GWL&A to
transfer funds amongst FGWL accounts.
9. Reprocess dishonored items.
10.Provide check production for systematic payouts.
D. Accounting/Auditing
1. Generate daily accounting extracts for policies maintained on the
system.
2. Generate accounting information necessary to post entries to ledgers.
3. Retain system generated reports in accordance with a retention
schedule as mutually agreed upon and as required by regulatory
authorities. GWL&A will provide access to such reports for internal
and external reporting.
4. Determine the "Net Amount Available for Investment" in mutual fund
and places fund purchase/redemption orders with the appropriate
mutual funds. GWL&A will receive confirmation of mutual fund
investments.
5. Maintain an inventory of all mutual fund shares owned, including the
date purchased and sold, cost, book value, gain, loss, and other
relevant information.
6. Reconcile the inventory of mutual fund shares owned to reports which
have been supplied by mutual funds of mutual fund shares owned.
7. Cooperate in annual audit of general account and separate account
financials conducted for purposes of financial statement
certification and publication and accommodate FGWL or regulatory
audits, as required.
E. Pricing/Valuation
1. Collect information needed in determining variable account unit
values from the mutual fund. This information includes the daily net
asset value of the underlying mutual funds, any capital gains or
dividend distribution made by the mutual funds and the number of
mutual fund shares acquired or sold during the immediate preceding
valuation date.
2. Enter required information into system for unit value calculation to
be performed.
3. Generate separate account ledger activity associated with unit
values.
F. Contract Owner Service/Record Maintenance
1. As requested by FGWL, receives and implements contract owner service
requests including information requests, beneficiary changes,
transfer of funds between eligible mutual funds, payout requests,
exchange of policies and changes of any other information maintained
on the system.
2. Research contract owner inquiries using both data stored in the
system and manual records.
3. Generate a set of daily journals confirming financial changes made to
annuity or life accounts.
4. Address name and contract changes will be coordinated between GWL&A
and FGWL.
5. Produce tax reporting.
6. Maintain policyowner records at the home offices of both FGWL and
GWL&A. Information shall be maintained either on-line, on microfilm,
or in hard copy.
G. Disbursements
1. Receive contractowner requests for systematic, partial and full
surrenders from FGWL. Retain and account for any contract
administrative charges.
2. Process all surrender requests against policyowner files. Generate
related separate account ledger accounting.
3. Contact policyowner regarding tax withholding procedures, if
necessary.
4. Subject to FGWL approval, generate FGWL checks and forward to
contract owner in accordance with applicable law. Deducts all tax
withholding necessary.
5. Prepare and mail confirmation statements of disbursement transactions
to contract owners.
6. Generate a report on surrenders, if required.
H. Claims
1. Receive requests for and process claims examination of death claims.
Submit to FGWL for approval.
2. Upon approval by FGWL, generate disbursement of funds (from a FGWL
bank account) and generated related accounting.
3. Make changes to owner and/or annuitant information as directed by
FGWL where no payout is required.
I. Annuity Benefit Processing
1. FGWL or its agent notifies owner of approaching annuitization
approximately 90 days before annuitization date.
2. Receive information regarding annuitants going into the annuity
(payout) phase.
3. Calculate the amount of the initial annuity payment for variable
payout based on tables supplied by FGWL. Calculation of fixed payout
based on information supplied by FGWL.
4. Generate checks or electronic fund transfer for payment of amount due
to annuitant in accordance with applicable law. Deduct applicable
premium taxes and withholding taxes.
5. Update annuitant records.
6. Generate accounting entries to record disbursements.
7. Generate premium tax and withholding reporting. GWL&A will make all
payments to the appropriate regulatory agencies for any taxes
withheld and will effect all necessary associated reports. Generate
accounting entries to record transactions.
J. Proxy processing
1. Receive record date information from the underlying mutual funds.
Receive proxy solicitation material from underlying mutual funds.
2. Prepare proxy cards, if applicable.
3. Mail solicitation and resolicitations, if necessary.
4. Maintain all proxy registers and other required proxy material.
5. Tabulate returned proxy cards and transmits results to underlying
mutual funds.
K. Period Reports to Policyowners
1. Prepare and mail statement of account to each policyowner. Mail on
scheduled supplied by FGWL.
2. Insert and mail semi-annual and annual reports to policyowners, as
required, both underlying mutual fund and Separate Account reports.
Filing of reports with NASD and SEC will be done by FGWL. Printing of
reports will be done by GWL&A.
L. Regulatory Statement Reports
1. Prepare IRS reports for contract owners who received annuity payments
or distributions. Mails to contract owners and transmits to IRS.
2. Prepare other IRS reports, as required.
3. Respond to requests for calculations applicable to annuity payments
as may be necessary to tax calculations.
M. Product Development and Pricing
1. Actuarial product pricing support for new investment options
including determination of rates, policy load structures and
development of actuarial documents for filing with state insurance
departments.
2. Providing information to First GWL&A to enable First GWL&A to set
rates for inforce policies.
3. Calculation of historic rates of return for portfolios in First GWL&A
Series Accounts.
4. Consulting with FASCorp personnel regarding maintenance of market
value adjustment and other pricing formulas on the administrative
system.
<PAGE>
EXHIBIT D
CORPORATELY-OWNED LIFE INSURANCE
SINGLE PREMIUM WHOLE LIFE
GWL&A shall provide the following services:
A. Contract Issue
1. Provide access to and use of central accounting computer
systems for establishing and maintaining insured and contract
owner records.
2. Provide programming/support personnel to maintain, administer
and operate the central accounting computer systems; and provide
requested assistance to FGWL in connection with its use of the
central accounting computers.
3. Review application &/or enrollment forms, apply issue criteria
developed by FGWL to application for life insurance contract.
Verify license status of brokers/agents based on information
supplied by FGWL. FGWL to provide a written set of issue criteria
to GWL&A.
4. Prepare contract data pages, issue specimen contracts for paid
business and mail to contract owners or agents.
5. Establish and maintain insured and contract owner records, as
applicable, on computer and manual systems.
6. Notify dealer/agent of any error or missing data needed for
insured or contract owner records.
7. Produce and mail required confirmation statements.
8. Deposits monies received with application into FGWL depository
account.
9. Maintain inventory of all issue-related forms, contracts, and
endorsements based on updates provided by FGWL.
10. For policies being exchanged from another company, GWL&A will
request the funds from the other insurance company using forms
supplied by FGWL. FGWL will establish signing authority for GWL&A
personnel.
B. Collection Processing
1. Process payments received by FGWL to customer accounts on the System.
2. Prepare and mail required confirmation of transactions.
3. Deposit any cash received directly by GWL&A under the policies
into a FGWL designated bank account.
4. Transmit daily accounting to FGWL general ledger.
5. Prepare and mail refunds as appropriate (declines, free look).
C. Banking
1. Records wire transfers received directly by GWL&A and assigns
them a control number.
2. Deposits are placed into a FGWL depository account.
3. Transfer funds from the depository account to:
General Account of FGWL
Bank accounts to be established by FGWL with appropriate signing
and trading authorizations established for GWL&A personnel.
4. Generate from the system daily cash journal summary reports and
maintain details of activity.
5. Process disbursement transactions for policyowner or beneficiary,
surrenders, withdrawals, loans and death claims.
6. FGWL will maintain balances in the appropriate FGWL bank accounts
necessary to meet administrative needs identified in the
contract.
7. FGWL will obtain the appropriate authorizations to allow GWL&A to
transfer funds amongst FGWL accounts.
D. Accounting/Auditing
1. Generate daily accounting extracts for policies maintained on the system.
2. Generate accounting information necessary to post entries to ledgers.
3. Retain system generated reports in accordance with a retention
schedule as mutually agreed upon and as required by regulatory
authorities. GWL&A will provide access to such reports for
internal and external reporting.
4. Cooperate in annual audit of general account and separate account
financials conducted for purposes of financial statement
certification and publication and accommodate FGWL or regulatory
audits, as required.
E. Contract Owner Service/Record Maintenance
1. As requested by FGWL, receives and implements contract owner
service requests including information requests, beneficiary
changes, payout requests, exchange of policies and changes of any
other information maintained on the system.
2. Research contract owner inquiries using both data stored in the
system and manual records.
3. Generate a set of daily journals confirming financial changes
made to life accounts.
4. Address name and contract changes will be coordinated between GWL&A
and FGWL.
5. Produce tax reporting.
6. Maintain policyowner records at the home offices of both FGWL and
GWL&A. Information shall be maintained either on-line, on
microfilm, or in hard copy.
F. Disbursements
1. Receive contract owner requests for partial and full surrenders
from FGWL. Retain and account for any contract administrative
charges.
2. Process all surrender requests against policyowner files.
3. Contact policyowner regarding tax withholding procedures, if
necessary.
4. Subject to FGWL approval, generate FGWL checks and forward to
contract owner in accordance with applicable law. Deducts all tax
withholding necessary.
5. Prepare and mail confirmation statements of disbursement
transactions to contract owners.
6. Generate a report on surrenders, if required.
<PAGE>
G. Claims
1. Receive requests for and process claims examination of death
claims. Submit to FGWL for approval.
2. Upon approval by FGWL, generate disbursement of funds (from a
FGWL bank account) and generated related accounting.
3. Make changes to owner and/or insured information as directed by
FGWL where no payout is required.
H. Agents/Commissions
1. Verifies license status of brokers/agents based on information
supplied by FGWL.
2. Produces detailed commission transactions for each policy
financial transaction processed including premium application or
reversal, cancellation, etc. for which a commission is required.
3. Prepares commission statements for broker/dealer firms. Provides
check production extract file for any required checks. Check
production will be through a GWL&A checkwriting system.
4. Creates tax reporting forms, if required.
I. Period Reports to Policyowners
1. Prepare and mail statement of account to each policyowner. Mail
on scheduled supplied by FGWL.
J. Product Development and Pricing
1. Actuarial product pricing support options including determination
of rates, policy load structures and development of actuarial
documents for filing with state insurance departments.
2. Provide information to FGWL to enable it to set rates for inforce
policies.
<PAGE>
EXHIBIT E
BACK OFFICE POLICYOWNER SERVICES
GROUP DEFINED CONTRIBUTION PLANS
GWL&A shall provide the following services:
A. Contract Issue
1. Provide access to and use of central accounting computer systems
for establishing and maintaining annuitant and contract owner
records.
2. Provide programming/support personnel to maintain, administer and
operate the central accounting computer systems; and provide
requested assistance to FGWL in connection with its use of the
central accounting computers.
3. Review application, apply issue criteria developed by FGWL to
application for annuity contract. Verify license status of
brokers/agents based on information supplied by FGWL. FGWL to
provide a written set of issue criteria to GWL&A.
4. Prepare contract data pages, issue contracts for paid business
and mail to contract owners or agents. System will produce
contract data pages.
5. Establish and maintain annuitant and contract owner records, as
applicable, on computer and manual systems.
6. Notify dealer/agent of any error or missing data needed for
annuitant or contract owner records.
7. Produce and mail required confirmation statements.
8. Deposits monies received with application into FGWL depository
account.
9. Maintain inventory of all issue-related forms, contracts, and
endorsements based on updates provided by FGWL.
10. For policies being exchanged from another company or IRA funds
being transferred, GWL&A will request the funds from the other
insurance company using forms supplied by FGWL. FGWL will
establish signing authority for GWL&A personnel.
B. Collection Processing
1. Receive from lockbox the remittance information in accordance
with processing requirements.
2. Process payments received by FGWL to customer accounts on the System.
3. Prepare and mail required confirmation of transactions.
4. Deposit any cash received directly by GWL&A under the policies
into a FGWL designated bank account.
5. Transmit daily accounting to FGWL general ledger.
6. Prepare and mail refunds as appropriate (declines, free look).
C. Banking
1. Photocopies checks received directly by GWL&A and assigns them a
control number. Balances, edits, endorses and prepares daily
deposit. Reconciles bank lockbox deposits to applications
received.
2. Deposits are placed into a FGWL depository account.
3. Transfer funds from the depository account to one of the
following as appropriate:
a. General Account of FGWL
b. Mutual Fund Custodian Account(s)
c. Disbursement Account of FGWL
d. Separate Accounts of FGWL
Bank accounts and mutual fund accounts to be established by FGWL
with appropriate signing and trading authorizations established
for GWL&A personnel.
4. Generate from the system daily cash journal summary reports and
maintain details of activity.
5. Process disbursement transactions for policyowner or beneficiary,
surrenders, withdrawals, loans and death claims.
6. Produce checks for annuitants in the payout phase.
7. FGWL will maintain balances in the appropriate FGWL bank accounts
necessary to meet administrative needs identified in the
contract.
8. FGWL will obtain the appropriate authorizations to allow GWL&A to
transfer funds amongst FGWL accounts.
9. Reprocess dishonored items.
10. Provide check production for systematic payouts.
D. Accounting/Auditing
1. Generate daily accounting extracts for policies maintained on the
system.
2. Generate accounting information necessary to post entries to ledgers.
3. Retain system generated reports in accordance with a retention
schedule as mutually agreed upon and as required by regulatory
authorities. GWL&A will provide access to such reports for
internal and external reporting.
4. Determine the "Net Amount Available for Investment" in mutual
fund and places fund purchase/redemption orders with the
appropriate mutual funds. GWL&A will receive confirmation of
mutual fund investments.
5. Maintain an inventory of all mutual fund shares owned, including
the date purchased and sold, cost, book value, gain, loss, and
other relevant information.
6. Reconcile the inventory of mutual fund shares owned to reports
which have been supplied by mutual funds of mutual fund shares
owned.
7. Cooperate in annual audit of general account and separate account
financials conducted for purposes of financial statement
certification and publication and accommodate FGWL or regulatory
audits, as required.
E. Pricing/Valuation
1. Collect information needed in determining variable account unit
values from the mutual fund. This information includes the daily
net asset value of the underlying mutual funds, any capital gains
or dividend distribution made by the mutual funds and the number
of mutual fund shares acquired or sold during the immediate
preceding valuation date.
2. Enter required information into system for unit value calculation
to be performed.
3. Generate separate account ledger activity associated with unit
values.
<PAGE>
F. Contract Owner Service/Record Maintenance
1. As requested by FGWL, receives and implements contract owner
service requests including information requests, beneficiary
changes, transfer of funds between eligible mutual funds, payout
requests, exchange of policies and changes of any other
information maintained on the system.
2. Research contract owner inquiries using both data stored in the
system and manual records.
3. Generate a set of daily journals confirming financial changes
made to annuity or life accounts.
4. Address name and contract changes will be coordinated between GWL&A
and FGWL.
5. Produce tax reporting.
6. Maintain policyowner records at the home offices of both FGWL and
GWL&A. Information shall be maintained either on-line, on
microfilm, or in hard copy.
G. Disbursements
1. Receive contractowner requests for systematic, partial and full
surrenders from FGWL. Retain and account for any contract
administrative charges.
2. Process all surrender requests against policyowner files.
Generate related separate account ledger accounting.
3. Contact policyowner regarding tax withholding procedures, if
necessary.
4. Subject to FGWL approval, generate FGWL checks and forward to
contract owner in accordance with applicable law. Deducts all tax
withholding necessary.
5. Prepare and mail confirmation statements of disbursement
transactions to contract owners.
6. Generate a report on surrenders, if required.
H. Claims
1. Receive requests for and process claims examination of death
claims. Submit to FGWL for approval.
2. Upon approval by FGWL, generate disbursement of funds (from a
FGWL bank account) and generated related accounting.
3. Make changes to owner and/or annuitant information as directed by
FGWL where no payout is required.
I. Agents/Commissions
1. Verifies license status of brokers/agents based on information
supplied by FGWL.
2. Produces detailed commission transactions for each policy
financial transaction processed including premium application or
reversal, cancellation, etc. for which a commission is required.
3. Prepares commission statements for broker/dealer firms. Provides
check production extract file for any required checks. Check
production will be through a GWL&A checkwriting system.
4. Creates tax reporting forms, if required.
J. Annuity Benefit Processing
1. Notifies owner of approaching annuitization approximately 90 days
before annuitization date.
2. Receive information regarding annuitants going into the annuity
(payout) phase.
3. Calculate the amount of the initial annuity payment for variable
payout based on tables supplied by FGWL. Calculation of fixed
payout based on information supplied by FGWL.
4. Generate checks or electronic fund transfer for payment of amount
due to annuitant in accordance with applicable law. Deduct
applicable premium taxes and withholding taxes.
5. Create and maintain annuitant records.
6. Generate accounting entries to record disbursements.
7. Generate premium tax and withholding reporting. GWL&A will make
all payments to the appropriate regulatory agencies for any taxes
withheld and will effect all necessary associated reports.
Generate accounting entries to record transactions.
<PAGE>
K Proxy processing
1. Receive record date information from the underlying mutual funds.
Receive proxy solicitation material from underlying mutual funds.
2. Prepare proxy cards, if applicable.
3. Mail solicitation and resolicitations, if necessary.
4. Maintain all proxy registers and other required proxy material.
5. Tabulate returned proxy cards and transmits results to underlying
mutual funds.
L. Period Reports to Policyowners
1. Prepare and mail statement of account to each policyowner. Mail
on scheduled supplied by FGWL.
2. Insert and mail semi-annual and annual reports to policyowners,
as required, both underlying mutual fund and Separate Account
reports. Filing of reports with NASD and SEC will be done by
GWL&A. Printing of reports will be done by GWL&A.
M. Regulatory Statement Reports
1. Prepare IRS reports for contract owners who received annuity
payments or distributions. Mails to contract owners and transmits
to IRS.
2. Prepare other IRS reports, as required.
3. Respond to requests for calculations applicable to annuity
payments as may be necessary to tax calculations.
N. Product Development and Pricing
1. Actuarial product pricing support for new investment options
including determination of rates, policy load structures and
development of actuarial documents for filing with state
insurance departments.
2. Provide information to First GWL&A to enable it to set rates for
inforce policies.
3. Calculation of historic of return for portfolios in First GWL&A
Series Accounts.
4. Consulting with FASCorp personnel regarding maintenance of market
value adjustment and other pricing formulas on the administrative
system.
5. Monitoring performance of portfolios with the series accounts of
FGWL&A. When performance is inadequate, recommending replacement
funds.
6. Case specific pricing per the guidelines in the Statement of
Variability for the 457 market product.
O. Underwriting
1. Responding to request for Proposals (RFP's) including
coordinating price quotes, responding to specific questions and
determining strategy for quoting.
2. Provide information to enable FGWL&A to establish prices for inforce
cases
3. Contract negotiations for specifically priced cases per the
Statement of Variability.
4. Working with FASCorp to establish administrative procedures once
cases are awarded to First GWL&A.
<PAGE>
EXHIBIT F
SCHEDULE OF AUTHORIZED PERSONNEL
The following individuals are authorized by First Great-West Life & Annuity
Insurance Company to give instructions or direction to Great-West Life & Annuity
Insurance Company with respect to matters arising in connection with the
servicing to be performed under this Agreement:
W.T. McCallum - Chairman of the Board, President and Chief Executive Officer
D. Low - Executive Vice President, Financial Services
J.D. Motz - Executive Vice President, Employee Benefits
R.D. Bond - Senior Vice President, Financial Services
J.T. Hughes - Senior Vice President, Chief Investment Officer
D.C. Lennox - Senior Vice President, General Counsel and Secretary
M. Rosenbaum - Senior Vice President, Employee Benefits Operations
W.K. Adam - Vice President, Counsel and Associate Secretary
J.N. Clayton, Vice President and Treasurer
G.R. Derback - Vice President and Treasurer
M.S. Hollen - Vice President, Investment Administration
J.L. McCallen - Vice President and Actuary
J.D. Roeske - Vice President, Individual Financial Services
G.E. Seller - Vice President, Major Accounts, Financial Services
R.K. Shaw - Vice President, Financial Services
D.E. Cunningham - Assistant Vice President, Savings Products
B.A. Byrne, Assistant Counsel and Assistant Secretary
M.J. Pavlik - Assistant Treasurer
R.G. Schultz - Assistant Counsel and Assistant Secretary
<PAGE>
EXHIBIT G
INSURANCE COVERAGE
The following insurance coverages are maintained by Great-West Life & Annuity
Insurance Company:
<TABLE>
Fidelity Bond Insurance
<S> <C> <C>
4831996 American Home Assurance Company $15,000,000
4832000 American Home Assurance Company Add'l $15 mil
81247717G Chubb Insurance Company of Canada $20,000,000
81469435A Chubb Insurance Company of Canada Add'l $20 mil
Liability Insurance
TGL0000967 Reliance Insurance Company $5,000,000
CBPo84869C Lombard General $10,000,000
TXL00000958 Reliance Insurance Company $15,000,000
(96)7928-42-47 Chubb Insurance Company of Canada $25,000,000
XCP 373842 CIGNA Insurance Company of Canada $30,000,000
XXX-000-6787-5872 Allenz Insurance Company of Canada $15,000,000
</TABLE>
All amounts are in Canadian dollars.
<PAGE>
EXHIBIT 10.3
FINANCIAL SUPPORT AGREEMENT BETWEEN
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY AND
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<PAGE>
AGREEMENT BETWEEN
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
AND
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Whereas, First Great-West Life & Annuity Insurance Company ("First GWL&A") is
wholly owned by Great-West & Annuity Insurance Company ("Great-West"); and
Whereas, Great-West sells life insurance and annuity policies in all states
except New York, and has incorporated First GWL&A as the vehicle for selling
certain of those life insurance and annuity policies in New York (subject to New
York law, the First GWL&A life insurance and annuity policies will be identical
or similar to certain life insurance and annuity policies sold by Great-West in
the other states); and
Whereas, Great-West receives ratings from the following rating agencies: A.M.
Best Company, Duff & Phelps, Moody's Investors Service and Standard & Poor's
Corporation ("the rating agencies"); and
Whereas, it is desirable that First GWL&A be in a position to market the
policies with ratings reflecting the financial support of its parent,
Great-West, and Great-West wishes to enhance and maintain the financial
condition of First GWL&A so that the rating agencies consider providing First
GWL&A with identical ratings as the current ratings given to Great-West; and
Whereas, it is in the interests of Great-West and First GWL&A that the aforesaid
ratings be obtained, and that Great-West confirm its financial support of First
GWL&A; and
Whereas, Great-West intends to maintain a majority ownership position in First
GWL&A;
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties hereto agree as follows:
1. Great-West undertakes to invest in shares of First GWL&A in order to
maintain the capital and surplus of First GWL&A at the greater of
$6,000,000 or the following percentage of the New York Insurance
Department's risk based minimum capital requirements on a statutory
basis; i) if First GWL&A's total assets are less than $3 billion--200%,
ii) if First GWL&A's total assets are $3 billion or more--175%. Any
investments in First GWL&A will be subject to applicable statutory and
regulatory restrictions.
2. Great-West undertakes to ensure that First GWL&A has adequate liquidity
to meet its obligations. If First GWL&A needs funds not otherwise
available to it to make timely payment of its obligations under the
policies or otherwise, Great-West shall provide such funds in cash on a
timely basis - provided that such payment shall be in accordance with
applicable law.
3. Great-West undertakes to assume by reinsurance all of the book of
business of First GWL&A if First GWL&A is sold, subject to applicable
law and mutually acceptable terms. Great-West undertakes to assume by
reinsurance up to all of the book of business of First GWL&A if
requested to do so by the Audit Committee of First GWL&A, subject to
applicable law and mutually acceptable terms.
4. Great-West may amend or terminate this Agreement by giving 90 days prior
written notice to First GWL&A and the rating agencies. Notwithstanding
the foregoing, Great-West shall not terminate this Agreement until:
(a) First GWL&A receives ratings from the rating agencies, without
consideration of the support described in this Agreement, which are not
more than one rating level below the ratings of First GWL&A as supported
by this Agreement; or
(b) substantially all of the book of business of First GWL&A is
transferred to another insurance company, by coinsurance or assumption
reinsurance, provided that the book of business is transferred to an
entity with ratings from each of the rating agencies which are not more
than one rating level below First GWL&A's then current rating or rating
as supported by this Agreement at the time of such transfer (it being
understood that, after such transfer, First GWL&A may then be sold
without restriction); or
(c) First GWL&A is transferred or sold, provided it is sold to an entity
with ratings from each of the rating agencies which are not more than
one rating level below First GWL&A's then current rating or rating as
supported by this Agreement at the time of such transfer or sale and
such entity provides First GWL&A with a capital support arrangement.
5. First GWL&A undertakes to pursue all remedies (as might be required in
the future) to legally enforce the terms and conditions of this
Agreement.
6. During the period that the financial support provided under this
Agreement is a material matter with respect to its financial condition,
First GWL&A undertakes to reference this Agreement in the footnotes to
any statement of its financial position.
7. This Agreement shall be governed by the laws of the State of New York.
Dated as of the 2nd day of September, 1997.
EXHIBIT 24
DIRECTORS' POWERS OF ATTORNEY
<PAGE>
POWER OF ATTORNEY
RE
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, Marcia D. Alazraki, a Member of the
Board of Directors of First Great-West Life & Annuity Insurance Company, a New
York corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to, individually and without the concurrence of the other attorney and
agent, sign my name, in my capacity as a Member of the Board of Directors of
First Great-West Life & Annuity Insurance Company, on Form 10-K Annual Reports
of First Great-West Life & Annuity Insurance Company to be filed with the
Securities and Exchange Commission from time to time, and to any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of March, 1998.
/s/ Marcia D. Alazraki
Member, Board of Directors of
First Great-West Life & Annuity Insurance Company
Witness:
/s/ Rose-Mary Rudden
Signature
Rose-Mary Rudden
Name Printed
<PAGE>
POWER OF ATTORNEY
RE
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, James Balog, a Member of the Board of
Directors of First Great-West Life & Annuity Insurance Company, a New York
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to, individually and without the concurrence of the other attorney and
agent, sign my name, in my capacity as a Member of the Board of Directors of
First Great-West Life & Annuity Insurance Company, on Form 10-K Annual Reports
of First Great-West Life & Annuity Insurance Company to be filed with the
Securities and Exchange Commission from time to time, and to any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1998.
/s/ James Balog
Member, Board of Directors of
First Great-West Life & Annuity Insurance Company
Witness:
/s/ Alvina B. Balog
Signature
Alvina B. Balog
Name Printed
<PAGE>
POWER OF ATTORNEY
RE
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, James W. Burns, a Member of the Board of
Directors of First Great-West Life & Annuity Insurance Company, a New York
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to, individually and without the concurrence of the other attorney and
agent, sign my name, in my capacity as a Member of the Board of Directors of
First Great-West Life & Annuity Insurance Company, on Form 10-K Annual Reports
of First Great-West Life & Annuity Insurance Company to be filed with the
Securities and Exchange Commission from time to time, and to any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of March, 1998.
/s/ James W. Burns
Member, Board of Directors of
First Great-West Life & Annuity Insurance Company
Witness:
- - -------------------------------
Signature
- - -------------------------------
Name Printed
<PAGE>
POWER OF ATTORNEY
RE
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, Paul Desmarais, Jr., a Member of the
Board of Directors of First Great-West Life & Annuity Insurance Company, a New
York corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to, individually and without the concurrence of the other attorney and
agent, sign my name, in my capacity as a Member of the Board of Directors of
First Great-West Life & Annuity Insurance Company, on Form 10-K Annual Reports
of First Great-West Life & Annuity Insurance Company to be filed with the
Securities and Exchange Commission from time to time, and to any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of March, 1998.
/s/ Paul Desmarais, Jr.
Member, Board of Directors of
First Great-West Life & Annuity Insurance Company
Witness:
/s/ Lucie Filteau
Signature
Lucie Filteau
Name Printed
<PAGE>
POWER OF ATTORNEY
RE
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, Robert Gratton, a Member of the Board of
Directors of First Great-West Life & Annuity Insurance Company, a New York
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to, individually and without the concurrence of the other attorney and
agent, sign my name, in my capacity as a Member of the Board of Directors of
First Great-West Life & Annuity Insurance Company, on Form 10-K Annual Reports
of First Great-West Life & Annuity Insurance Company to be filed with the
Securities and Exchange Commission from time to time, and to any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of March, 1998.
/s/ Robert Gratton
Member, Board of Directors of
First Great-West Life & Annuity Insurance Company
Witness:
/s/ Nicole Barolet
Signature
Nicole Barolet
Name Printed
<PAGE>
POWER OF ATTORNEY
RE
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, N. Berne Hart, a Member of the Board of
Directors of First Great-West Life & Annuity Insurance Company, a New York
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to, individually and without the concurrence of the other attorney and
agent, sign my name, in my capacity as a Member of the Board of Directors of
First Great-West Life & Annuity Insurance Company, on Form 10-K Annual Reports
of First Great-West Life & Annuity Insurance Company to be filed with the
Securities and Exchange Commission from time to time, and to any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of March, 1998.
/s/ Norman B. Hart
Member, Board of Directors of
First Great-West Life & Annuity Insurance Company
Witness:
/s/ Wilma J. Hart
Signature
Wilma J. Hart
Name Printed
<PAGE>
POWER OF ATTORNEY
RE
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, Stuart Z. Katz, a Member of the Board of
Directors of First Great-West Life & Annuity Insurance Company, a New York
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to, individually and without the concurrence of the other attorney and
agent, sign my name, in my capacity as a Member of the Board of Directors of
First Great-West Life & Annuity Insurance Company, on Form 10-K Annual Reports
of First Great-West Life & Annuity Insurance Company to be filed with the
Securities and Exchange Commission from time to time, and to any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of March, 1998.
/s/ Stuart Z. Katz
Member, Board of Directors of
First Great-West Life & Annuity Insurance Company
Witness:
/s/ Linda Hudec
Signature
Linda Hudec
Name Printed
<PAGE>
POWER OF ATTORNEY
RE
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, William T. McCallum, a Member of the
Board of Directors of First Great-West Life & Annuity Insurance Company, a New
York corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to, individually and without the concurrence of the other attorney and
agent, sign my name, in my capacity as a Member of the Board of Directors of
First Great-West Life & Annuity Insurance Company, on Form 10-K Annual Reports
of First Great-West Life & Annuity Insurance Company to be filed with the
Securities and Exchange Commission from time to time, and to any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of March, 1998.
/s/ W.T. McCallum
Member, Board of Directors of
First Great-West Life & Annuity Insurance Company
Witness:
/s/ Joan Preyer
Signature
Joan Preyer
Name Printed
<PAGE>
POWER OF ATTORNEY
RE
FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Know all men by these presents, that I, Brian E. Walsh, a Member of the Board of
Directors of First Great-West Life & Annuity Insurance Company, a New York
corporation, do hereby constitute and appoint each of D.C. Lennox and G.R.
Derback as my true and lawful attorney and agent for me and in my name and on my
behalf to, individually and without the concurrence of the other attorney and
agent, sign my name, in my capacity as a Member of the Board of Directors of
First Great-West Life & Annuity Insurance Company, on Form 10-K Annual Reports
of First Great-West Life & Annuity Insurance Company to be filed with the
Securities and Exchange Commission from time to time, and to any and all
amendments thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of March, 1998.
/s/ Brian E. Walsh
Member, Board of Directors of
First Great-West Life & Annuity Insurance Company
Witness:
/s/ D.C. Lennox
Signature
D.C. Lennox
Name Printed
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
</LEGEND>
<CIK> 0001036213
<NAME> FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
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<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
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0
0
<COMMON> 2500
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21
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</TABLE>
