As filed with the Securities and Exchange Commission on May 13, 1998.
Registration No. 333-39955
Registration No. 811-8475
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
Registration Statement Under the Securities Act of 1933 X
Pre-Effective Amendment No. 1
Post-Effective Amendment No._____
Registration Statement Under the Investment Company Act of 1940 X
Amendment No. 1
GE Capital Life Separate Account II
(Exact Name of Registrant)
GE Capital Life Assurance Company of New York
(Name of Depositor)
125 Park Avenue, 6th Floor
New York, New York 10017-5529
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number: (914) 253-8822
Scott A. Curtis
GE Capital Life Assurance Company of New York
125 Park Avenue, 6th Floor
New York, New York 10017-5529
(Name and address of Agent for Service)
Copy to:
Stephen E. Roth, Esquire
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of the Registration Statement
Title of Securities Being Registered: Interests in a Separate Account under
Flexible Premium Deferred Variable
Annuity Policies
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Cross Reference Sheet
Pursuant to Rule 481
Showing Location in Part A (Prospectus) Part B (Statement of Additional
Information) and Part C (Other Information) of Registration Statement of
Information Required by Form N-4
<TABLE>
<CAPTION>
PART A
<S> <C>
Item of Form N-4 Prospectus Caption
1. Cover Page .................................. Cover Page
2. Definitions ................................. Definitions
3. Synopsis .................................... Summary, Fee Table
4. Condensed Financial Information.............. Condensed Financial Information; Total Return and Yield
5. General
(a) Depositor........................... GE Capital Life Assurance Company of New York
(b) Registrant.......................... Separate Account II
(c) Portfolio Company................... The Funds
(d) Fund Prospectus..................... The Funds
(e) Voting Rights....................... Voting Rights and Reports
(f) Administrators...................... N/A
6. Deductions and Expenses
(a) General ............................ Charges and Deductions; Summary
(b) Sales Load %........................ Surrender Charges; Summary
(c) Special Purchase Plan............... N/A
(d) Commissions......................... Distribution of the Policies
(e) Expenses-Registrant................. Charges and Deductions; Summary
(f) Fund Expenses....................... The Funds; Fund Charges
(g) Organizational Expenses............. N/A
7. Policies
(a) Persons with Rights................. Summary; The Policy; Distribution of the Policies;
Income Payments; Voting Rights and Reports;
(SAI) General Provisions
(b) (i) Allocation of Purchase Payments ... Allocating Premium Payments
(ii) Transfers ......................... Transfers; Transfer Charges
(iii) Exchanges ......................... N/A
(c) Changes ........................... Additions, Deletions or Substitutions of Investments;
Changes by the Owner
(d) Inquiries ......................... Cover page; Summary; (SAI) Written Notice
8. Annuity Period .............................. Income Payments; Transfers; (SAI) Transfer of Annuity
Units
9. Death Benefit ............................... Death Provisions; Death Benefit; Payment of Benefits
10. Purchases and Policy Value
(a) Purchases ..........................Purchasing a Policy; Accumulation of Account Value;
Value of Accumulation Units
(b) Valuation ..........................Value of Accumulation Units
(c) Daily Calculation ................. Value of Accumulation Units
(d) Underwriter ....................... Distribution of the Policies
<PAGE>
11. Redemptions
(a) By Owners ......................... Surrenders
By Annuitant ...................... Optional Payment Plans
(b) Texas ORP ......................... N/A
(c) Check Delay ....................... Payment Under The Policies
(d) Lapse ..............................N/A
(e) Free Look ..........................Canceling a Policy (Refund Privilege)
<PAGE>
Item of Form N-4 Prospectus Caption
12. Taxes ........................................Federal Tax Matters
13. Legal Proceedings ........................... Legal Proceedings
14. Table of Contents for the Statement of
Additional Information ...................... Statement of Additional Information Table of Contents
PART B
Item of Form N-4 Prospectus Caption
15. Cover Page .................................. Cover Page
16. Table of Contents ........................... Table of Contents
17. General Information and History.............. GE Capital Life Assurance Company of New York
18. Services
(a) Fees and Expenses of Registrant .... N/A
(b) Management Policies ................ N/A
(c) Custodian .......................... N/A
Independent Public Accountant ...... Experts
(d) Assets of Registrant ............... N/A
(e) Affiliated Persons ................. N/A
(f) Principal Underwriter .............. (SAI) Transfer of Annuity Units; Distribution of the
Policies
19. Purchase of Securities Being Offered ........ (Prospectus) Distribution of the Policies
Offering Sales Load ......................... N/A
20. Underwriters ................................ (Prospectus) Distribution of the Policies
21. Calculation of Performance Data ............. Calculation of Performance Data; (Prospectus) Total
Return and Yields
22. Annuity Payments ............................ (Prospectus) Income Payments
23. Financial Statements ........................ Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-4 Prospectus Caption
24. Financial Statements and Exhibits ........... Financial Statements and Exhibits
(a) Financial Statements ............... Financial Statements
(b) Exhibits ............................Exhibits
25. Directors and Officers of the Depositor ..... Directors and Officers of GE Capital Life
26. Persons Controlled By or Under Common
Control with the Depositor or Registrant .... Persons Controlled By or In Common Control with the
Depositor or Registrant
27. Number of Policy Owners...................... Number of Policy Owners
28. Indemnification.............................. Indemnification
29. Principal Underwriters....................... Principal Underwriters
30. Location of Accounts and Records............ Location of Accounts and Records
31. Management Services.......................... Management Services
32. Undertakings................................. Undertakings
Signature Page .............................. Signatures
</TABLE>
<PAGE>
PROSPECTUS
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY POLICY
offered by
GE CAPITAL LIFE SEPARATE ACCOUNT II
and
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
125 Park Avenue, 6th Floor, New York, New York 10017-5529
(914) 253-8822
Variable Annuity Service Center:
6610 West Broad Street
Richmond, VA 23230
(800) 313-5282
This Prospectus describes a flexible premium deferred variable annuity policy
(the "Policy") offered by GE Capital Life Assurance Company of New York ("GE
Capital Life" or the "Company"). The Policy provides for the accumulation of
capital on a tax-deferred basis for retirement or other long-term purposes. The
Policy may be used in connection with retirement plans, including plans that
qualify for favorable federal income tax treatment under the Internal Revenue
Code.
The Owner may allocate Premium Payments and transfer Account Value to one or
more of the Investment Subdivision(s) of GE Capital Life Separate Account II
(the "Separate Account") and to the Guarantee Account. Assets of each Investment
Subdivision of the Separate Account are invested solely in a designated
investment portfolio that is part of a series-type mutual fund (each a "Fund").
Currently, there are ten such Funds with 37 portfolios available under this
Policy. The Funds and their currently available portfolios are listed on the
following page. This Prospectus must be read along with the current prospectuses
for the Funds.
Assets allocated or transferred to the Guarantee Account are guaranteed a
minimum rate of interest for a specified period of time.
This Prospectus sets forth the basic information that a prospective investor
should know before investing. A Statement of Additional Information containing
more detailed information about the Policy and the Separate Account is available
free of charge by writing or calling us at our Variable Annuity Service Center
at the address or telephone number listed above. The Statement of Additional
Information has the same date as this Prospectus, has been filed with the
Securities and Exchange Commission, and is incorporated herein by reference. The
Table of Contents of the Statement of Additional Information is included at the
end of this Prospectus.
Please read this Prospectus carefully and retain it for future reference
INVESTMENTS IN THE POLICIES AND SHARES OF THE FUNDS ARE NOT DEPOSITS WITH,
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK, AND SUCH INVESTMENTS AND
SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. INVESTING IN THE POLICY INVOLVES
CERTAIN RISKS, INCLUDING THE RISK OF LOSS OF PREMIUM PAYMENTS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
May ____, 1998
<PAGE>
FUNDS AVAILABLE
<PAGE>
Janus Aspen Series
o Growth Portfolio
o Aggressive Growth Portfolio
o International Growth Portfolio
o Worldwide Growth Portfolio
o Balanced Portfolio
o Flexible Income Portfolio
o Capital Appreciation Portfolio
Variable Insurance Products Fund
o Equity-Income Portfolio
o Overseas Portfolio
o Growth Portfolio
Variable Insurance Products Fund II
o Asset Manager Portfolio
o Contrafund Portfolio
Variable Insurance Products Fund III
o Growth & Income Portfolio
o Growth Opportunities Portfolio
GE Investments Funds, Inc.
o S&P 500 Index Fund
o Money Market Fund
o Total Return Fund
o International Equity Fund
o Real Estate Securities Fund
o Global Income Fund
o Value Equity Fund
GE Investments Funds, Inc. (Continued)
o Income Fund
o U.S. Equity Fund
Oppenheimer Variable Account Funds
o Bond Fund
o Aggressive Growth Fund
o Growth Fund
o High Income Fund
o Multiple Strategies Fund
Federated Insurance Series
o American Leaders Fund II
o Utility Fund II
o High Income Bond Fund II
The Alger American Fund
o Growth Portfolio
o Small Capitalization Portfolio
PBHG Insurance Series Fund, Inc.
o PBHG Growth II Portfolio
o PBHG Large Cap Growth Portfolio
Goldman Sachs Variable Insurance Trust
o Mid Cap Equity Fund
o Growth & Income Fund
<PAGE>
TABLE OF CONTENTS
<PAGE>
Page
DEFINITIONS
FEE TABLE
EXAMPLES
SUMMARY
CONDENSED FINANCIAL INFORMATION
GE CAPITAL LIFE AND THE SEPARATE ACCOUNT
GE Capital Life
IMSA Disclosure
The Separate Account
Additions, Deletions, or
Substitutions of Investments
THE FUNDS
Janus Aspen Series
Variable Insurance Products Fund
Variable Insurance Products Fund II
Variable Insurance Products Fund III
GE Investments Funds, Inc.
Oppenheimer Variable Account Funds
Federated Insurance Series
The Alger American Fund
PBHG Insurance Series Fund, Inc.
Goldman Sachs Variable Insurance Trust
THE POLICY
Purchasing a Policy
Canceling the Policy (Refund
Privilege)
Allocating Premium Payments
Accumulation of Account Value
Value of Accumulation Units
Transfers
Dollar-Cost Averaging
Portfolio Rebalancing
Surrenders
Systematic Withdrawals
Death Provisions
CHARGES AND DEDUCTIONS
Surrender Charges
Mortality and Expense Risk Charge
Administrative Expense Charge
Annual Policy Maintenance Charge
Annual Death Benefit Charge(s)
Transfer Charges
Tax Charges
Fund Charges
INCOME PAYMENTS
Income Payments
Determination of Income Payments
Optional Payment Plans
TOTAL RETURN AND YIELDS
FEDERAL TAX MATTERS
Introduction
Non-Qualified Policies
Qualified Policies
IRA Policies
Simplified Employee Pension Plans
SIMPLE IRAs
Section 403(b) Annuities
Deferred Compensation Plans of State
And Local Government and Tax-
Exempt Organizations
Other Qualified Retirement Plans
Legal and Tax Advice for Qualified
Plans
Direct Rollover and Mandatory
Withholding Requirements
Federal Income Tax Withholding
GENERAL INFORMATION
The Owner
The Annuitant
The Beneficiary
Changes By the Owner
Evidence of Death, Age, Gender or
Survival
Payment under the Policies
Distribution of the Policies
Voting Rights and Reports
Year 2000 Compliance
Legal Proceedings
STATEMENT OF ADDITIONAL INFORMATION TABLE OF
CONTENTS
<PAGE>
DEFINITIONS
Account Value -- The value of the Policy equal to the account value allocated to
the Investment Subdivisions of the Separate Account and any Guarantee Account.
Accumulation Unit -- An accounting unit of measure used to calculate the Account
Value prior to the Maturity Date.
Additional Premium Payment -- Any Premium Payment made after the initial Premium
Payment.
Annuitant -- The person named in the Policy whose age (and gender where
appropriate) are used to determine Income Payments.
Annuity Unit -- An accounting unit of measure used on or after the Maturity Date
to calculate the amount of the second and each subsequent Variable Income
Payment.
Business Day -- Any day that the New York Stock Exchange is open for business
and any other day in which there is a material change in the value of the assets
in the Separate Account.
Code -- The Internal Revenue Code of 1986, as amended.
Death Benefit -- The death benefit provided under a Policy upon the death of an
Annuitant before Income Payments begin.
Designated Beneficiary(ies) -- The person(s) designated in the Policy who is
(are) alive (or in existence for non-natural designations) on the date of death
of an Owner, Joint Owner, or Annuitant and who will be treated as the sole owner
of this Policy following such a death should an Owner, Joint Owner or Annuitant
die before income payments begin and while the Policy is in force.
Due Proof of Death -- Proof of death that is satisfactory to GE Capital Life.
Such proof may consist of the following if acceptable to GE Capital Life: (a) a
certified copy of the death certificate; or (b) a certified copy of the decree
of a court of competent jurisdiction as to the finding of death.
Fixed Income Payments -- Income Payments that are fixed in amount.
Funds -- The mutual funds designated in this Prospectus as eligible investments
for the Separate Account.
General Account-- The assets of GE Capital Life that are not segregated in any
of the separate investment accounts of GE Capital Life.
Guarantee Account -The Guarantee Account is a separate investment account of GE
Capital Life under state insurance law (but not under federal securities laws)
into which Premium Payments may be allocated or Account Value may be
transferred.
Home Office -- The principal offices of GE Capital Life Assurance Company of New
York at 125 Park Avenue, 6th Floor, New York, New York 10017-5529.
Income Payment -- One of a series of payments made under one of the Optional
Payment Plans.
Investment Subdivision -- A subdivision of the Separate Account, each of which
invests exclusively in shares of a designated portfolio of one of the Funds.
IRA Policy -- An individual retirement annuity Policy that receives favorable
federal income tax treatment under Section 408 of the Code.
Joint Owner -- Joint Owners own the Policy equally. If one Joint Owner dies,
the surviving Joint Owner has a right of survivorship to the Policy.
Maturity Date -- The date stated in the Policy on which Income Payments are
scheduled to commence, if the Annuitant is living on that date.
Maturity Value -- The Surrender Value of the Policy on the day immediately
preceding the Maturity Date.
Net Investment Factor -- An index applied to measure the investment performance
of an Investment Subdivision from the beginning of a Valuation Period to the end
of that same Valuation Period.
Non-Qualified Policy-- Policies not sold or used in connection with retirement
plans receiving favorable federal income tax treatment under the Code.
Owner -- The person or persons (in the case of Joint Owners) entitled to receive
Income Payments after the Maturity Date. The Owner is also entitled to the
ownership rights stated in the Policy during the lifetime of the Annuitant. The
original Owner is named in the Policy. As used in this Prospectus, the words
"you" and "your" shall refer to the Owner.
Policy -- The flexible premium deferred variable annuity policy issued by GE
Capital Life and described in this Prospectus. The term "Policy" or "Policies"
includes the Policy described in this Prospectus, a Policy application, any
supplemental applications, any endorsements and riders.
Policy Date -- The date on which the Policy goes into effect. The Policy Date is
shown in the Policy and is used to measure Policy years and Policy
anniversaries.
Premium Payment(s) -- An amount paid to GE Capital Life by the Owner or on the
Owner's behalf as consideration for the benefits provided by the Policy.
Qualified Policies -- Policies used in connection with retirement plans which
receive favorable federal income tax treatment under the Code.
Separate Account - GE Capital Life Separate Account II.
Surrender Value -- The Account Value less any applicable surrender charge.
Valuation Period -- The period between the close of business on a Business Day
and the close of business on the next succeeding Business Day.
Variable Annuity Service Center -- The office to which all written and telephone
inquiries concerning the Policy or the Funds should be made: 6610 West Broad
Street, Richmond, VA 23230, 1-800-313-5282.
Variable Income Payments -- Payments made pursuant to an Optional Payment Plan
where such payments fluctuate based on the investment performance of Investment
Subdivisions selected by the Owner.
<PAGE>
FEE TABLE
<TABLE>
<S> <C>
Owner Transaction Expenses:
Sales Charge on Premium Payments None
Maximum Surrender Charge (Contingent Deferred Sales Charge) as a percentage of
amount surrendered 6.00%
Other surrender fees None
Transfer charge:
- First transfer each month None
- Subsequent transfers (each) $10.00
Account Annual Expenses: (as a percentage of account value)
Mortality and Expense Risk Charge 1.25%
Administrative Expense Charge 0.15%
Total Annual Expenses 1.40%
Other Annual Expenses:
Annual Policy Maintenance Charge $25.00
</TABLE>
In addition, the amount of any state and local taxes levied by any government
entity on Premium Payments may be deducted from Account Value when such taxes
are incurred. GE Capital Life reserves the right to defer the collection of this
charge and to deduct it against your Account Value on the surrender of your
Policy or on application of Account Value to provide Income Payments. GE Capital
Life refers to this as the premium payment tax charge.
Fund Annual Expenses (as a percentage of average daily net assets):
<TABLE>
<CAPTION>
Management
Fees
(after fee Other Expenses
waiver as (after reimbursement- Total Annual
Fund applicable) as applicable) Expenses
<S> <C>
Janus Aspen Series
Growth Portfolio 0.65% 0.05% 0.70%
Aggressive Growth Portfolio 0.73% 0.03% 0.76%
International Growth Portfolio 0.67% 0.29% 0.96%
Worldwide Growth Portfolio 0.66% 0.08% 0.74%
Balanced Portfolio 0.76% 0.07% 0.83%
Flexible Income Portfolio 0.65% 0.10% 0.75%
Capital Appreciation Portfolio 0.23% 1.03% 1.26%
Variable Insurance Products Fund: *
Equity-Income Portfolio 0.50% 0.08% 0.58%
Overseas Portfolio 0.75% 0.17% 0.92%
Growth Portfolio 0.60% 0.09% 0.69%
Variable Insurance Products Fund II: *
Asset Manager Portfolio 0.55% 0.10% 0.65%
Contrafund Portfolio 0.60% 0.11% 0.71%
Variable Insurance Products Fund III: *
Growth and Income Portfolio 0.49% 0.21% 0.70%
Growth Opportunities Portfolio 0.60% 0.14% 0.74%
GE Investments Funds, Inc.:
S&P 500 Index Fund 0.34% 0.12% 0.46%
Money Market Fund 0.20% 0.12% 0.32%
Total Return Fund 0.50% 0.15% 0.65%
International Equity Fund 0.98% 0.36% 1.34%
Real Estate Securities Fund 0.83% 0.12% 0.95%
Global Income Fund 0.40% 0.17% 0.57%
Value Equity Fund 0.37% 0.09% 0.46%
Income Fund 0.42% 0.17% 0.59%
U.S. Equity Fund 0.55% 0.25% 0.80%
Oppenheimer Variable Account Funds:
Oppenheimer Bond Fund 0.73% 0.05% 0.78%
Oppenheimer Aggressive Growth Fund 0.71% 0.02% 0.73%
Oppenheimer Growth Fund 0.73% 0.02% 0.75%
Oppenheimer High Income Fund 0.75% 0.07% 0.82%
Oppenheimer Multiple Strategies Fund 0.72% 0.03% 0.75%
Federated Insurance Series:
Federated American Leaders Fund II 0.66% 0.19% 0.85%
Federated Utility Fund II 0.48% 0.37% 0.85%
Federated High Income Bond Fund II 0.51% 0.29% 0.80%
The Alger American Fund:
Alger American Growth Portfolio 0.75% 0.04% 0.79%
Alger American Small Capitalization
Portfolio 0.85% 0.04% 0.89%
PBHG Insurance Series Fund, Inc.:
PBHG Growth II Portfolio 0.0% 1.20% 1.20%
PBHG Large Cap Growth Portfolio 0.0% 1.10% 1.10%
Goldman Sachs Variable Insurance
Trust Fund
Goldman Sachs Growth and Income Fund 0.75% 0.15% 0.90%
Goldman Sachs Mid Cap Equity Fund 0.80% 0.15% 0.95%
</TABLE>
*The fees and expenses reported for Variable Insurance Products Fund,
Variable Insurance Products Fund II and Variable Insurance Products Fund
III are prior to any fee waiver and/or reimbursement as applicable.
The purpose of these tables is to assist an Owner in understanding the various
costs and expenses that an Owner will bear, directly and indirectly. Except as
noted below, the Tables reflect charges and expenses of Separate Account II as
well as the underlying Funds for the most recent fiscal year. For more
information on the charges described in these Tables see Charges and Deductions
and the Prospectuses for the underlying Funds which accompany this Prospectus.
In addition to the expenses listed above, premium taxes varying from 0 to 3.5%
may be applicable.
The expense information regarding the Funds was provided by those Funds. The
Variable Insurance Products Fund, Variable Insurance Products Fund II, Variable
Insurance Products Fund III, Oppenheimer Variable Account Funds, Janus Aspen
Series, Federated Insurance Series, The Alger American Fund, PBHG Insurance
Series Fund, Inc., Goldman Sachs Variable Insurance Trust and their investment
advisers are not affiliated with GE Capital Life. While GE Capital Life has no
reason to doubt the accuracy of these figures provided by these non-affiliated
Funds, GE Capital Life has not independently verified such information. The
annual expenses listed for all the Funds except for Variable Insurance Products
Funds, Variable Insurance Products Fund II and Variable Insurance Products Fund
III are net of certain reimbursements by the Funds' investment advisers. GE
Capital Life cannot guarantee that the reimbursements will continue.
With reimbursements, the total annual expenses of the portfolios of the Variable
Insurance Products Fund during 1997 would have been .57% for VIP Equity-Income
Portfolio, .90% for VIP Overseas Portfolio and .67% for VIP Growth Portfolio.
With reimbursements, the total annual expenses of the portfolios of the Variable
Insurance Products Fund II during 1997 would have been .64% for VIP II Asset
Manager Portfolio and .68% for VIP II Contrafund Portfolio.
With reimbursements, the total annual expenses of the portfolios of the Variable
Insurance Products Fund III during 1997 would have been .73% for VIP III Growth
Opportunities Portfolio.
GE Investment Management Incorporated currently serves as investment adviser to
GE Investments Funds, Inc. (formerly Life of Virginia Series Fund, Inc.). Prior
to May 1, 1997, Aon Advisors, Inc. served as investment adviser to this Fund and
had agreed to reimburse the Fund for certain expenses of each of the Fund's
portfolios. Absent certain fee waivers or reimbursements, the total annual
expenses of the portfolios of GE Investments Funds, Inc. during 1997 would have
been .46% for S&P 500 Index Fund, .48% for Money Market Fund, .65% for Total
Return Fund, 1.43% for International Equity, .96% for Real Estate Fund, .57% for
Global Income Fund, .46% for Value Equity Fund, .76% for Income Fund and .86%
for U.S. Equity Fund.
Absent reimbursements, the total annual expenses of the portfolios of the Janus
Aspen Series during 1997 would have been .78% for Growth Portfolio, .78% for
Aggressive Growth Portfolio, 1.08% for International Growth Portfolio, .81% for
Worldwide Growth Portfolio, .83% for Balanced Portfolio and 2.19% for Capital
Appreciation Portfolio.
Absent certain fee waivers or reimbursements, the total annual expenses of the
portfolios of the Federated Insurance Series during 1997 would have been .94%
for Federated American Leaders Fund II, 1.12% for Federated Utility Fund II, and
.89% for Federated High Income Bond Fund II.
Absent certain fee waivers or reimbursements, the total annual expenses of the
portfolios of PBHG Insurance Series Funds, Inc. during 1997 would have been
4.38% for Growth II Portfolio and 5.21% for Large Cap Growth Portfolio.
Absent certain fee waivers or reimbursements, the total annual expenses of the
portfolios of Goldman Sachs Variable Insurance Trust would have been 1.51% for
Growth and Income Fund and 1.33% for Mid Cap Equity Fund.
<PAGE>
EXAMPLES: A Policyowner would pay the following expense on a $1,000 investment,
assuming a 5% annual return on assets and the charges and expenses reflected in
the Fee Table above:
1. If you surrender* your Policy at the end of the applicable period:
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
<S> <C>
Janus Aspen Series
Balanced 77.45 126.25 159.97 266.60
Flexible Income 76.65 123.82 155.91 258.49
Growth 76.14 122.30 153.37 253.39
Aggressive Growth 76.75 124.12 156.42 259.51
Worldwide Growth 76.54 123.51 155.41 257.48
Capital Appreciation 81.78 139.21 181.47 308.97
International Growth 78.76 130.18 166.52 279.62
VIPF
Equity-Income 74.92 118.64 147.24 241.04
Overseas 78.36 128.97 164.51 275.63
Growth 76.04 121.99 152.87 252.37
VIPF II
Asset Manager 75.64 120.77 150.83 248.27
Contrafund 76.24 122.60 153.88 254.42
VIPF III
Growth and Income 76.14 122.30 153.37 253.39
Growth Opportunities 76.54 123.51 155.41 257.48
GE Investments Funds, Inc.
Income Fund 75.03 118.94 147.75 242.08
S&P 500 Index 73.72 114.97 141.08 228.53
Total Return 75.64 120.77 150.83 248.27
International Equity 82.58 141.59 185.42 316.64
Real Estate Securities 78.66 129.88 166.01 278.62
Global Income 74.82 118.33 146.73 240.00
Value Equity 73.72 114.97 141.08 228.53
Money Market 72.30 110.66 133.84 213.73
U.S. Equity 77.15 125.34 158.45 263.57
Oppenheimer Variable Account Funds
Multiple Strategies 76.65 123.82 155.91 258.49
Aggressive Growth 76.44 123.21 154.89 256.46
Growth 76.65 123.82 155.91 258.49
High Income 77.35 125.94 159.46 265.59
Bond 76.95 124.73 157.44 261.54
Federated Insurance Series
High Income Bond II 77.15 125.34 158.45 263.57
Utility II 77.65 126.85 160.98 268.61
American Leaders II 77.65 126.85 160.98 268.61
The Alger American Fund
Growth 77.05 125.03 157.94 262.55
Small Capitalization 78.05 128.07 163.00 272.63
PBHG Insurance Series Fund, Inc.
Growth II 81.17 137.41 178.50 303.18
Large Cap Growth 80.17 134.41 173.53 293.43
Goldman Sachs Variable Insurance Trust Fund
Growth and Income 78.15 128.37 163.50 273.63
Mid Cap Equity 78.66 129.88 166.01 278.62
</TABLE>
*surrender includes annuitization over a period of less than 5 years
<PAGE>
2. If you annuitize at the end of the applicable period, or do not surrender*:
<TABLE>
<CAPTION>
Subdivision Investing In: 1 Year 3 Years 5 Years 10 Years
<S> <C>
Janus Aspen Series
Balanced 23.61 72.74 124.53 266.60
Flexible Income 22.81 70.33 120.49 258.49
Growth 22.31 68.82 117.96 253.39
Aggressive Growth 22.91 70.63 121.00 259.51
Worldwide Growth 22.71 70.02 119.99 257.48
Capital Appreciation 27.91 85.62 145.94 308.97
International Growth 24.91 76.65 131.05 279.62
VIPF
Equity-Income 21.10 65.18 111.86 241.04
Overseas 24.51 75.45 129.05 275.63
Growth 22.21 68.51 117.46 252.37
VIPF II
Asset Manager 21.81 67.30 115.43 248.27
Contrafund 22.41 69.12 118.47 254.42
VIPF III
Growth and Income 22.31 68.82 117.96 253.39
Growth Opportunities 22.71 70.02 119.99 257.48
GE Investments Funds, Inc.
Income Fund 21.20 65.48 112.37 242.08
S&P 500 Index 19.90 61.53 105.73 228.53
Total Return 21.81 67.30 115.43 248.27
International Equity 28.71 87.99 149.87 316.64
Real Estate Securities 24.81 76.35 130.55 278.62
Global Income 21.00 64.87 111.35 240.00
Value Equity 19.90 61.53 105.73 228.53
Money Market 18.49 57.25 98.52 213.73
U.S. Equity 23.31 71.84 123.02 263.57
Oppenheimer Variable Account Funds
Multiple Strategies 22.81 70.33 120.49 258.49
Aggressive Growth 22.61 69.72 119.48 256.46
Growth 22.81 70.33 120.49 258.49
High Income 23.51 72.44 124.03 265.59
Bond 23.11 71.23 122.01 261.54
Federated Insurance Series
High Income Bond II 23.31 71.84 123.02 263.57
Utility II 23.81 73.34 125.54 268.61
American Leaders II 23.81 73.34 125.54 268.61
The Alger American Fund
Growth 23.21 71.53 122.51 262.55
Small Capitalization 24.21 74.55 127.55 272.63
PBHG Insurance Series Fund, Inc.
Growth II 27.31 83.83 142.98 303.18
Large Cap Growth 26.31 80.85 138.03 293.43
Goldman Sachs Variable Insurance Trust Fund
Growth and Income 24.31 74.85 128.05 273.63
Mid Cap Equity 24.81 76.35 130.55 278.62
</TABLE>
* surrender includes annuitization over a period of less than 5 years
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES PAID MAY BE GREATER OR LESS THAN THOSE SHOWN. THE
ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL. PAST OR FUTURE ANNUAL RETURNS MAY BE
GREATER OR LESS THAN THE ASSUMED AMOUNT.
<PAGE>
SUMMARY
The following summary of Prospectus information should be read in conjunction
with the detailed information appearing elsewhere in this Prospectus. All
written and telephone inquiries concerning the Policy or the Funds should be
made to the Company's Variable Annuity Service Center at 6610 West Broad Street,
Richmond, VA 23230, (800) 313-5282.
The Policy
The Policy is a flexible premium deferred variable annuity issued by GE Capital
Life. The Policy allows the Owner to accumulate funds on a tax-deferred basis by
investing in the Separate Account or in the Guarantee Account. The Separate
Account is divided into 10 Investment Subdivisions. Each investment Subdivision
invests in a corresponding portfolio of the Janus Aspen Series, the Variable
Insurance Products Fund, the Variable Insurance Products Fund II, the Variable
Insurance Products Fund III, the GE Investments Funds, Inc., the Oppenheimer
Variable Account Funds, the Federated Insurance Series, the Alger American Fund,
the PBHG Insurance Series Fund, Inc. and the Goldman Sachs Variable Insurance
Trust. The accompanying prospectuses provide information about the Funds,
including the risks of investing in the portfolios of Funds. These prospectuses
should be read in conjunction with this prospectus.
The Account Value will vary daily as a function of the investment performance of
the Separte Account and any interest credited under the Guarantee Account. GE
Capital Life does not guarantee any minimum Account Value for amounts allocated
or transferred to the Separte Account. Amounts allocated or transferred to the
Guarantee Account are guaranteed a fixed rate of interest for a specified period
of time.
After the Maturity Date, either Variable Income Payments may be made based upon
the investment performance of the selected Investment Subdivisions, or Fixed
Income Payments may be made based upon the guarantees of GE Capital Life. The
payee will bear the investment risk after the Maturity Date with respect to
Variable Income Payments.
Premium Payments
The Policy requires an initial Premium Payment of at least $5,000 ($2,000 for an
IRA Policy). Additional Premium Payments of at least $500 for Non-Qualified
Policies or $100 for Qualified Policies or $50 for IRA Policies generally may be
made any time before Income Payments begin. (See "Purchasing a Policy").
Premium Payments may be allocated among up to ten Investment Subdivisions (and,
if applicable, a Guarantee Account) in accordance with your written
instructions. The minimum allocation percentage permitted is 1% of each Premium
Payment but not less than $100. You may change the allocation of subsequent
Premium Payments by written request. (See "Allocating Premium Payments").
Refund Privilege
Within 10 days after you receive the Policy, you may cancel it by delivering or
mailing it to GE Capital Life or to the agent through whom it was purchased.
Transfers
Before the Maturity Date, the Owner may transfer amounts from and among the
Investment Subdivisions of the Separate Account and the Guarantee Account
subject to certain restrictions. After the Maturity Date, the payee may transfer
Annuity Units among the available Investment Subdivisions once each calendar
year, subject to certain restrictions. (See "Transfers").
Surrenders
Full or partial surrenders of Account Value may be made any time before the
Maturity Date. Any partial surrender amount must be at least $500 and the
partial surrender must not reduce the Account Value to below $5,000. (See
"Surrenders"). Account Value surrendered will generally be subject to a
surrender charge (also known as a contingent deferred sales charge). (See
"Charges and Deductions -- Surrender Charges").
Charges and Deductions
The following charges and deductions are assessed under the Policy:
Surrender Charge. GE Capital Life does not deduct any sales charge from Premium
Payments; however, it may deduct a surrender charge (also referred to as a
contingent deferred sales charge). A surrender charge is deducted from full
surrenders and certain partial surrenders of Premium Payments made within six
years from the date such payment was received by GE Capital Life. The surrender
charge percentage is equal to 6% of the Premium Payment if surrendered within
the first four years after the Premium Payment was received, and reduces by 2%
each year for the next two years and is 0% after six full years following
receipt of the Premium Payment. The surrender charge is calculated by
multiplying (1) the surrender charge percentage and (2) the lesser of (a) the
amount surrendered and (b) the total premiums paid, less the total of all
partial surrender amounts previously allocated to that Premium Payment. (See
"Charges and Deductions -- Surrender Charges").
Transfer Charge. Before the Maturity Date, twelve transfers in a calendar year
may be made without a transfer charge. Thereafter, a $10 transfer charge will be
assessed each time a transfer is made during the calendar year. No transfer
charge will be imposed on transfers made after the Maturity Date. (See "Charges
and Deductions - Transfer Charges").
Mortality and Expense Risk Charge. GE Capital Life imposes a daily charge at an
effective annual rate of 1.25% of the average daily net assets in the Separate
Account attributable to the Policies to compensate GE Capital Life for mortality
and expense risks it assumes. (See "Charges and Deductions - Mortality and
Expense Risk Charge"). If proceeds from this charge are not needed to cover
mortality and expense risks, the Company may use proceeds to finance
distribution of the Policies. The mortality and expense risk charge is not
deducted from amounts allocated to the Guarantee Account.
Administrative Expense Charge. GE Capital Life deducts a daily charge at an
effective annual rate of 0.15% of the average daily net assets in the Separate
Account attributable to the Policies. (See Charges and Deductions -
Administrative Expense Charge).
Annual Policy Maintenance Charge. GE Capital Life deducts an annual Policy
Maintenance Charge of $25 from the Account Value attributable to each Policy.
The annual charge is made on each Policy anniversary and on surrender. (See
"Charges and Deductions-Annual Policy Maintenance Charge.)
Fund Expenses. Please read the prospectus for each of the Funds for details on
the expenses of each Fund.
Income Payments
The Owner may receive an income benefit beginning on the Maturity Date if the
Annuitant is living on that date. The income benefit will be a Variable Income
Payment. (See "Optional Payment Plans"). The payments will be made under a "Life
Income with 10 Years Certain" plan, unless the Owner chooses otherwise. The
amount of the income benefit will depend on: (1) the Maturity Value; (2) the
Annuitant's gender, where appropriate, and age on the Maturity Date; and (3) the
Optional Payment Plan chosen.
At any time while the Annuitant is living and before the Maturity Date, the
Owner may change the payment plan by written request to GE Capital Life. The
income benefit will reflect the plan chosen. Payment plans that base payment on
the life or lives of one or more individuals will base payment on the life of
the Annuitant or the Annuitant and an additional individual. The Maturity Value
may be received in a lump sum instead of an income benefit.
Death Provisions
Subject to a number of tax restrictions, certain benefits are available to
certain persons on the death of an Owner, Joint Owner or Annuitant prior to the
Maturity Date. (See "Distributions Under the Policies - Death Provisions.)
CONDENSED FINANCIAL INFORMATION
No condensed financial information is included for the Separate Account because,
as of the date of this Prospectus, the Separate Account had not commenced
operations. The financial statements for GE Capital Life (as well
as the auditors' report thereon) are in the Statement of Additional
Information.
<PAGE>
GE CAPITAL LIFE AND THE SEPARATE ACCOUNT
GE Capital Life
GE Capital Life Assurance Company of New York ("GE Capital Life") is a stock
life insurance company that was incorporated in New York on February 23, 1988.
GE Capital Life is ultimately a subsidiary of General Electric Capital
Corporation ("GE Capital"), a New York corporation that is a diversified
financial services company whose subsidiaries consist of specialty insurance,
equipment management, and commercial and consumer financing businesses. GE
Capital's ultimate parent, General Electric Company, founded more than one
hundred years ago by Thomas Edison, is the world's largest manufacturer of jet
engines, engineering plastics, medical diagnostic equipment and large electric
power generation equipment.
GE Capital Life is licensed solely in New York and specializes in writing
individual fixed-rate deferred annuities, fixed payout immediate annuities and
variable deferred annuities. GE Capital Life's principal offices are located at
125 Park Avenue, 6th Floor, New York, New York 10017-5529.
GE Capital Life is subject to regulation by the Superintendent of Insurance of
the State of New York. GE Capital Life submits annual statements on its
operations and finances to New York Insurance Department. The Policy has been
filed with the New York Insurance Department.
IMSA Disclosure
GE Capital Life is a member of the Insurance Marketplace Standards Association
("IMSA"). GE Capital Life may use the IMSA membership logo and language in its
advertisements, as outlined in IMSA's Marketing and Graphics Guidelines.
Companies that belong to IMSA subscribe to a set of ethical standards covering
the various aspects of sales and service for individually sold life insurance
and annuities.
The Separate Account
GE Capital Life Separate Account II was established by GE Capital Life as a
separate investment account on April 1, 1996. The Separate Account's assets are
the property of GE Capital Life and are held separately from GE Capital Life's
other assets. Income, gains or losses, whether or not realized, from the assets
of the Separate Account are credited to or charged against the Separate Account
without regard to the income, gains, or losses arising out of any other business
GE Capital Life may conduct. Although, the assets in the Separate Account
attributable to the Policies are not chargeable with liabilities arising out of
any other business that GE Capital Life may conduct. All obligations under the
Policies including the promise to make Income Payments are general corporate
obligations of GE Capital Life. Furthermore, the Separate Account's assets are
available to cover the liabilities of GE Capital Life's general account to the
extent that such assets exceed the Separate Account's reserves and other
liabilities.
The Separate Account is registered with the Securities and Exchange Commission
(the "Commission") as a unit investment trust under the Investment Company Act
of 1940, as amended (the "1940 Act"), and meets the definition of a "separate
account" under the federal securities laws. Registration with the Commission,
however, does not involve supervision of the management or investment practices
or policies of the Separate Account by the Commission.
The Separate Account currently has 37 Investment Subdivisions available under
the Policy. Premiums are allocated in accordance with the Owner's instructions
among up to ten of the 37 Investment Subdivisions. Assets of each Investment
Subdivision are invested exclusively in an investment portfolio of one of the
ten Funds described below under "The Funds."
Additions, Deletions, or Substitutions of Investments
GE Capital Life reserves the right, subject to compliance with applicable law,
to make additions to, deletions from, or substitutions for the shares of the
Fund portfolios that are held by the Separate Account or that the Separate
Account may purchase.
GE Capital Life reserves the right to establish additional Investment
Subdivisions of the Separate Account, each of which would invest in a separate
portfolio of a Fund, or in shares of another mutual fund, with a specified
investment objective. GE Capital Life may also eliminate one or more Investment
Subdivisions and substitute shares of another Fund portfolio if the shares of
the portfolio are no longer available for investments, or if in GE Capital
Life's sole judgment, further investment in the portfolio would be inappropriate
in view of the purposes of the Separate Account.
To the extent permitted by applicable law, GE Capital Life reserves the right:
to deregister the Separate Account under the 1940 Act; to manage the Separate
Account under the direction of a committee; to restrict or eliminate any voting
rights of Owners, or other persons having voting rights as to the Separate
Account; to combine the Separate Account with other GE Capital Life separate
accounts; to transfer the assets of the Separate Account associated with the
Policies to another separate account. GE Capital Life also reserves the right to
make any changes to the Separate Account required by the 1940 Act or other
applicable law or regulation. No such changes will be made without any necessary
approval of the Commission and the New York Insurance Department.
THE FUNDS
Separate Account II currently invests in ten mutual funds. Each of the Funds
currently available under the Policy is a registered open-end, diversified
investment company of the series-type.
Each Investment Subdivision invests exclusively in a designated investment
portfolio of one of the Funds. The assets of each such portfolio are separate
from other portfolios of that Fund and each portfolio has separate investment
objectives and policies. As a result, each portfolio operates as a separate
investment portfolio and the investment performance of one portfolio has no
effect on the investment performance of any other portfolio. Some of the Funds
may, in the future, create additional portfolios.
Each of the Funds sells its shares to Separate Account II in accordance with the
terms of a participation agreement between the Fund and GE Capital Life. The
termination provisions of those agreements vary. A summary of these termination
provisions may be found in the Statement of Additional Information. Should an
agreement between GE Capital Life and a Fund terminate, the Separate Account
will not be able to purchase additional shares of that Fund. In that event,
Owners will no longer be able to allocate Account Values or Premium Payments to
Investment Subdivisions investing in portfolios of that Fund.
Additionally, in certain circumstances, it is possible that a Fund or a
portfolio of a Fund may refuse to sell its shares to Separate Account II despite
the fact that the participation agreement between the Fund and GE Capital Life
has not been terminated. Should a Fund or a portfolio of a Fund decide not to
sell its shares to GE Capital Life, GE Capital Life will be unable to honor
Owner requests to allocate their account values or premium payments to
Investment Subdivisions investing in shares of that Fund or portfolio.
Certain Investment Subdivisions invest in portfolios that have similar
investment objectives and/or policies; therefore, before choosing Investment
Subdivisions, carefully read the individual prospectuses for the Funds, along
with this prospectus.
Janus Aspen Series
The Janus Aspen Series has seven portfolios that are available under this
Policy: Growth Portfolio, Aggressive Growth Portfolio, Worldwide Growth
Portfolio, International Growth Portfolio, Balanced Portfolio, Flexible Income
Portfolio, and Capital Appreciation Portfolio
Growth Portfolio has the investment objective of long-term capital growth in a
manner consistent with the preservation of capital. The Growth Portfolio is a
diversified portfolio that pursues its objective by investing in common stocks
of companies of any size. Generally, this Portfolio emphasizes larger, more
established issuers.
Aggressive Growth Portfolio has the investment objective of long-term growth of
capital. The Aggressive Growth Portfolio is a non-diversified portfolio that
will seek to achieve its objective by normally investing at least 50% of its
equity assets in securities issued by medium-sized companies.
Worldwide Growth Portfolio has the investment objective of long-term growth of
capital in a manner consistent with the preservation of capital. The Worldwide
Growth Portfolio will seek to achieve its objective by investing in a
diversified portfolio of common stocks of foreign and domestic issuers of all
sizes. The Portfolio normally invests in issuers from at least five different
countries including the United States.
International Growth Portfolio has the investment objective of long-term growth
of capital. The International Growth Portfolio will seek to achieve its
objective primarily through investments in common stocks of issuers located
outside the United States. The Portfolio normally invests at least 65% of its
total assets in securities of issuers from at least five different countries,
excluding the United States.
Balanced Portfolio has the investment objective of seeking long-term growth of
capital, consistent with the preservation of capital and balanced by current
income. The Portfolio normally invests 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets in
securities selected primarily for their income potential.
Flexible Income Portfolio has the investment objective of seeking to obtain
maximum total return, consistent with preservation of capital. Total return is
expected to result from a combination of income and capital appreciation. The
Portfolio pursues its objective primarily by investing in any type of
income-producing securities. This Portfolio may have substantial holdings of
lower-rated debt securities or "junk" bonds. The risks of investing in junk
bonds are described in the prospectus for Janus Aspen Series, which should be
read carefully before investing.
Capital Appreciation Portfolio has the investment objective of seeking long-term
growth of capital by investing primarily in common stocks of companies of any
size.
Janus Capital Corporation serves as investment adviser to Janus Aspen Series.
Variable Insurance Products Fund
Variable Insurance Products Fund has three portfolios that are available under
this Policy: VIP Equity-Income Portfolio, VIP Overseas Portfolio and VIP Growth
Portfolio.
VIP Equity-Income Portfolio seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities, the Portfolio
will also consider the potential for capital appreciation. The Portfolio's goal
is to achieve a yield, which exceeds the composite yield on the securities
comprising the Standard & Poor's Composite Index of 500 Stocks.
VIP Overseas Portfolio seeks long-term growth of capital primarily through
investments in foreign securities. The Portfolio provides a means for investors
to diversify their own portfolios by participating in companies and economies
outside of the United States.
VIP Growth Portfolio seeks to achieve capital appreciation. The Portfolio
normally purchases common stocks, although its investments are not restricted to
any one type of security. Capital appreciation may also be found in other types
of securities, including bonds and preferred stocks.
Fidelity Management & Research Company serves as investment adviser to Variable
Insurance Products Fund.
Variable Insurance Products Fund II
Variable Insurance Products Fund II has two portfolios that are available under
this Policy: VIP II Asset Manager Portfolio and VIP II Contrafund Portfolio.
VIP II Asset Manager Portfolio seeks high total return with reduced risk over
the long-term by allocating its assets among domestic and foreign stocks, bonds
and short-term money market instruments.
VIP II Contrafund Portfolio seeks capital appreciation by investing mainly in
equity securities of companies believed to be undervalued or out-of-favor.
Fidelity Management & Research Company serves as investment adviser to Variable
Insurance Products Fund II.
Variable Insurance Products Fund III
Variable Insurance Products Fund III has two portfolios that are available under
this Policy: VIP III Growth & Income Portfolio and VIP III Growth Opportunities
Portfolio.
VIP III Growth & Income Portfolio seeks high total return through a combination
of current income and capital appreciation by investing mainly in equity
securities.
VIP III Growth Opportunities Portfolio seeks capital growth by investing
primarily in common stock and securities convertible to common stock.
Fidelity Management & Research Company serves as investment adviser to Variable
Insurance Products Fund III.
GE Investments Funds, Inc.
GE Investments Funds, Inc. (GE Investments Funds) has nine portfolios that are
available under this Policy: S&P 500 Index Fund, Money Market Fund, Total Return
Fund, International Equity Fund, Real Estate Securities Fund, Global Income
Fund, Value Equity Fund, Income Fund and U.S. Equity Fund. THE U.S. EQUITY FUND
IS NOT AVAILABLE TO CALIFORNIA POLICYOWNERS AT THIS TIME.
S&P 500 Index Fund1 has the investment objective of providing capital
appreciation and accumulation of income that corresponds to the investment
return of the Standard & Poor's 500 Composite Stock Price Index, through
investment in common stocks traded on the New York Stock Exchange and the
American Stock Exchange, to a limited extent, in the over-the-counter markets.
Money Market Fund has the investment objective of providing the highest level of
current income as is consistent with high liquidity and safety of principal by
investing in high quality money market securities.
Total Return Fund has the investment objective of providing the highest total
return, composed of current income and capital appreciation, as is consistent
with prudent investment risk by investing in common stocks, bonds and money
market instruments, the proportion of each being continuously determined by the
investment adviser.
International Equity Fund has the investment objective of providing long-term
capital appreciation. The portfolio seeks to achieve its objective by investing
primarily in equity and equity-related securities of companies that are
organized outside of the U.S. or whose securities are principally traded outside
of the U.S.
Real Estate Securities Fund has the investment objective of providing maximum
total return through current income and capital appreciation. The portfolio
seeks to achieve its objective by investing primarily in securities of U.S.
issuers that are principally engaged in or related to the real estate industry
including those that own significant real estate assets. The portfolio will not
invest directly in real estate.
Global Income Fund has the investment objective of high total return,
emphasizing current income and, to a lesser extent, capital appreciation. The
portfolio seeks to achieve these objectives by investing primarily in
income-bearing debt securities and other income-bearing instruments of U.S. and
foreign issuers.
Value Equity Fund has the investment objective of providing long-term capital
appreciation. The portfolio seeks to achieve this objective by investing
primarily in common stock and other equity securities that are undervalued by
the market and offer above-average capital appreciation potential.
Income Fund has the investment objective or providing maximum income consistent
with prudent investment management and preservation of capital by investing
primarily in income-bearing debt securities and other income bearing
instruments.
U.S. Equity Fund has the investment objective of providing long-term growth of
capital by investing primarily in equity securities of U.S. companies.
GE Investment Management Incorporated serves as investment adviser to GE
Investments Funds.
- --------
1 "Standard & Poor's," "S&P," and S&P 500" are trademarks of Mc-Graw Hill
Companies, Inc. and have been licensed for use by GE Investment Management
Incorporated. The S&P 500 Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's, and Standard & Poor's makes no representation or
warranty, express or implied, regarding the advisability of investing in this
Fund or the Policy.
Oppenheimer Variable Account Funds
Oppenheimer Variable Account Funds has five portfolios that are available under
this Policy: Oppenheimer High Income Fund, Oppenheimer Bond Fund, Oppenheimer
Aggressive Growth Fund, Oppenheimer Growth Fund, and Oppenheimer Multiple
Strategies Fund.
Oppenheimer High Income Fund seeks a high level of current income from
investment in high yield fixed income securities, including unrated securities
or high risk securities in the lower rating categories. These securities may be
considered to be speculative. This Fund may have substantial holdings of
lower-rated debt securities or "junk" bonds. The risks of investing in junk
bonds are described in the prospectus for the Oppenheimer Variable Account
Funds, which should be read carefully before investing.
Oppenheimer Bond Fund primarily seeks a high level of current income.
Secondarily, this Fund seeks capital growth when consistent with its primary
objective. Bond Fund will, under normal market conditions, invest at least 65%
of its total assets in investment grade debt securities.
Oppenheimer Aggressive Growth Fund seeks to achieve capital appreciation by
investing in "growth-type" companies.
Oppenheimer Growth Fund seeks to achieve capital appreciation by investing in
securities of well-known established companies.
Oppenheimer Multiple Strategies Fund seeks a total investment return (which
includes current income and capital appreciation in the value of its shares)
from investments in common stocks and other equity securities, bonds and other
debt securities, and "money market" securities.
Oppenheimer Funds, Inc. serves as investment adviser to Oppenheimer Variable
Accounts Funds.
Federated Insurance Series
The Federated Insurance Series has three portfolios that are available under
this Policy: Federated Utility Fund II, Federated High Income Bond Fund II and
Federated American Leaders Fund II.
Federated Utility Fund II has the investment objective of high current income
and moderate capital appreciation. The Federated Utility Fund II will seek to
achieve its objective by investing primarily in equity and debt securities of
utility companies.
Federated High Income Bond Fund II has the investment objective of high current
income. The Federated High Income Bond Fund II will seek to achieve its
objective by investing primarily in a diversified portfolio of professionally
managed fixed-income securities. The fixed-income securities in which the Fund
intends to invest are lower-rated corporate debt obligations, commonly referred
to as "junk bonds". The risks of these securities are described in the
prospectus for the Federated Insurance Series, which should be read carefully
before investing.
Federated American Leaders Fund II has the primary investment objective of
long-term growth of capital, and a secondary objective of providing income. The
Federated American Leaders Fund II will seek to achieve its objective by
investing, under normal circumstances, at least 65% of its total assets in
common stock of "blue chip" companies.
Federated Advisers serves as investment adviser to Federated Insurance Series.
The Alger American Fund
The Alger American Fund has two portfolios that are available under this Policy:
Alger American Growth Portfolio and Alger American Small Capitalization
Portfolio.
Alger American Growth Portfolio has the investment objective of long-term
capital appreciation. Except during temporary defensive periods, this Portfolio
invests at least 65% of its total assets in equity securities of companies that,
at the time of purchase, have a total market capitalization of $1 billion or
greater.
Alger American Small Capitalization Portfolio seeks long-term capital
appreciation. Except during temporary defensive periods, the Portfolio invests
at least 65% of its total assets in equity securities of companies that, at the
time of purchase of the securities, have total market capitalization within the
range of companies included in the Russell 2000 Growth Index or the S&P Small
Cap 600 Index, updated quarterly. Both indexes are broad indexes of small
capitalization stocks. The Portfolio may invest up to 35% of its total assets in
equity securities of companies that, at the time of purchase, have total market
capitalization outside this combined range and in excess of that amount (up to
100% of its assets) during temporary defensive periods.
Fred Alger Management, Inc. serves as the investment manager to The Alger
American Fund.
PBHG Insurance Series Fund, Inc.
PBHG Insurance Series Fund, Inc. (PBHG Insurance Series Fund) has two portfolios
that are available under this Policy: Growth II Portfolio and Large Cap Growth
Portfolio.
PBHG Growth II Portfolio seeks capital appreciation by investing at least 65% of
its total assets in the equity securities of small and medium sized growth
companies (market capitalization of up to $4 billion) that, in the Adviser's
opinion, have an outlook for strong earnings growth and the potential for
significant capital appreciation.
PBHG Large Cap Growth Portfolio seeks long-term growth of capital by investing
primarily in the equity securities of large capitalization companies (market
capitalization of greater than $1 billion) that, in the Adviser's opinion, have
an outlook for strong growth in earnings and potential for capital appreciation.
Pilgrim Baxter & Associates, Ltd. serves as the Investment Adviser to PBHG
Insurance Series Fund, Inc.
Goldman Sachs Variable Insurance Trust
Goldman Sachs Variable Insurance Trust has two portfolios that are under this
Policy: Goldman Sachs Mid Cap Equity Fund and Goldman Sachs Growth and Income
Fund. GOLDMAN SACHS MID CAP EQUITY FUND AND GOLDMAN SACHS GROWTH AND INCOME FUND
ARE NOT AVAILABLE TO CALIFORNIA POLICYOWNERS AT THIS TIME.
Goldman Sachs Mid Cap Equity Fund seeks to meet its objective primarily through
investments in equity securities of companies with public stock market
capitalization within the range of the market capitalization of companies
constituting the Russell Midcap Index at the time of investment (currently
between $400 million and $16 billion).
Goldman Sachs Growth and Income Fund seeks long-term capital growth and growth
of income, primarily through equity securities that, in the management team's
view, offer favorable capital appreciation and/or dividend-paying ability.
Goldman Sachs Asset Management serves as Investment Adviser to Goldman Sachs
Variable Insurance Trust.
There is no assurance that any Fund will achieve its stated objectives and
policies.
GE Capital Life currently is compensated by an affiliate(s) of certain of the
Funds based upon an annual percentage of the average assets held in the Fund by
GE Capital Life. These percentage amounts, which vary by Fund, are intended to
reflect administrative and other services provided by GE Capital Life to the
Fund and/or affiliate(s).
Each Fund sells its shares to the Separate Account pursuant to a participation
agreement. The provisions regarding termination of each such agreement are
described in the Statement of Additional Information under "Termination of
Participation Agreements."
The Funds are used as investment vehicles for variable annuity policies issued
by GE Capital Life. Shares of the Funds are also available to registered
separate accounts of insurance companies other than GE Capital Life offering
variable annuity policies and variable life insurance policies. As a result,
there is a possibility that a material conflict may arise between the interests
of Owners owning Policies whose Policy values are allocated to the Separate
Account, and of owners of other policies whose values are allocated to one or
more other separate accounts investing in any one of the Funds. In addition,
Alger American Fund, GE Investments Funds and Janus Aspen Series may sell shares
to certain retirement plans. As a result, there is a possibility that a material
conflict may arise between the interests of Owners or owners of other policies,
and such retirement plans or participants in such retirement plans.
In the event of a material conflict, GE Capital Life will take any necessary
steps, including removing the Separate Account assets from the Fund or replacing
the Fund with another Fund, to resolve the matter. See the individual Fund
prospectuses for additional details.
The Guarantee Account
An Owner also may allocate Premium Payments and transfer Account Value to the
Guarantee Account. The Guarantee Account is a separate investment account under
state insurance law, and is not required to be registered under the Investment
Company Act of 1940. It is maintained as part of our General Account.
Each time a Policyowner allocates purchase payments or transfers Account Value
to the Guarantee Account, GE Capital Life establishes an interest rate guarantee
period. Each interest rate guarantee period is guaranteed an interest rate for a
specified period of time (the available interest rate guarantee periods are
shown in your policy form). At the end of the interest rate guarantee period, a
new interest rate will become effective, and an interest rate guarantee period
will commence for any remaining portion of that particular allocation. Interest
rates are determined by GE Capital Life in its sole discretion. The
determination made will be influenced by, but not necessarily correspond to,
interest rates available on fixed income investments which the Company may
acquire with the amounts it receives as premium payments or transfers of Account
Value under the Policies. A Policyowner will have no direct or indirect interest
in these investments. GE Capital Life will also consider other factors in
determining the interest rates, for the interest rate guarantee period,
including, but not limited to, regulatory and tax requirements, sales
commissions, and administrative expenses borne by the Company, general economic
trends, and competitive factors. Amounts allocated to the Guarantee Account will
not share in the investment performance of the General Account of GE Capital
Life, or any portion thereof. THE COMPANY'S MANAGEMENT WILL MAKE THE FINAL
DETERMINATION OF THE INTEREST RATES IT DECLARES FOR AN INTEREST RATE GUARANTEE
PERIOD. GE CAPITAL LIFE CANNOT PREDICT OR GUARANTEE THE LEVEL OF INTEREST RATES
IN FUTURE INTEREST RATE GUARANTEE PERIODS. HOWEVER, THE INTEREST RATES FOR ANY
INTEREST RATE GUARANTEE PERIOD WILL BE AT LEAST THE GUARANTEED INTEREST RATE
SHOWN IN YOUR POLICY FORM.
GE Capital Life reserves the right to credit bonus interest premium or
additional premium allocated to a Guarantee Account participating in a
Dollar-Cost Averaging program. (This may not be available to all classes of
Policies.)
The initial interest rate guarantee period for any allocation will be one year,
unless the Owner elects otherwise at the time of allocation. Subsequent interest
rate guarantee periods will each be one year, unless another period is selected
at or before the beginning of the subsequent period. During the first 10 days of
each interest rate guarantee period, the interest rate guarantee period may be
changed to any period GE Capital Life then offers. If the interest rate
guarantee period is changed, a different interest rate may apply. After the
first 10 days of an interest rate guarantee period, that interest rate guarantee
period may not be changed.
<PAGE>
THE POLICY
Purchasing a Policy
To purchase a Policy, individuals must apply through an authorized registered
agent of GE Capital Life. The minimum initial Premium Payment is $5,000 ($2,000
for an IRA Policy). GE Capital Life reserves the right to reject any request for
a Policy and any initial Premium Payment for any lawful reason and in a manner
such that does not unfairly discriminate against similarly situated purchasers.
If GE Capital Life is unable to issue a Policy due to incomplete information
regarding the applicant, the initial Premium Payment will be credited to the
Policy within two Valuation Periods after the later of receipt of the
information needed to issue the Policy or receipt of the initial Premium Payment
by GE Capital Life at its Variable Annuity Service Center. If the initial
Premium Payment cannot be credited within five Business Days after receipt by GE
Capital Life, GE Capital Life will contact the applicant, explain the reason for
the delay, and refund the initial Premium Payment immediately, unless the
applicant specifically consents to GE Capital Life retaining the initial Premium
Payment until the required information is made complete. If GE Capital Life
retains the initial Premium Payment, it will be credited within two Valuation
Periods after the necessary requirements are fulfilled.
The Owner may make Additional Premium Payments at any time before the Maturity
Date. Additional Premium Payments must be for $500 or more if the Policy is a
Non-Qualified Policy, $50 or more if the Policy is an IRA Policy, and $100 or
more if the Policy is a Qualified Policy other than an IRA Policy. Additional
Premium Payments made under Qualified Policies are limited to proceeds from
certain qualified plans. Additional Premium Payments are credited as of the next
close of business (on a Business Day) following receipt of the payment at the
Variable Annuity Service Center.
The Policy Date is the date on which the Policy becomes effective. The Policy
Date is set forth in the Policy. Policy years and anniversaries for the initial
Premium Payment are measured from the Policy Date. Years for determining charges
attributable to Additional Premium Payments are measured from the date the
Additional Premium Payment is received by GE Capital Life at its Variable
Annuity Service Center.
Canceling the Policy (Refund Privilege)
The Owner may examine and cancel the Policy by returning it to GE Capital Life
at its Variable Annuity Service Center within 10 days after the Policy is
received. Once the Policy is received by GE Capital Life, it will be canceled.
GE Capital Life will refund the Account Value (without reduction for any
surrender charges) plus any amount deducted from the Premium Payments. No
transfers or partial surrenders may be made during this 10-day refund period.
Allocating Premium Payments
The Owner, by written instructions, may allocate Premium Payments among up to
ten Investment Subdivisions of the Separate Account and to the Guarantee
Account. However, Account Value may not be invested in more than ten Investment
Subdivisions at any time. Allocations of less than 1% of any Premium Payment to
any one Investment Subdivision are not permitted.
The Owner may change the allocation of Additional Premium Payments at any time,
without charge, by sending acceptable written notice to GE Capital Life at its
Variable Annuity Service Center. The new allocation will apply to any Additional
Premium Payments received after GE Capital Life receives the notice. The Account
Value in the Separate Account will vary with the investment performance of the
Investment Subdivisions the Owner selects, and the Owner bears the entire
investment risk for the Account Value in any particular Investment Subdivision.
The allocation of Premium Payments will affect not only the Account Value prior
to the Maturity Date, but it may also affect the Death Benefit payable upon the
Annuitant's death. The Owner should periodically review his allocation of
Account Value in light of market conditions and overall financial planning
requirements.
<PAGE>
Accumulation of Account Value
The Policy provides for an accumulation of Account Value prior to the Maturity
Date. The Account Value equals the sum of the values of the amounts
allocated under the Policy to the Separate Account and the Guarantee Account.
GE Capital Life will determine Account Value in the Separate Account on a daily
basis. Account Value on the Separate Account will reflect a number of factors,
including Premium Payments, partial surrenders, transfers, charges assessed in
connection with the Policy, and the investment performance of the shares
purchased by the Investment Subdivisions to which the Account Value is
allocated. There is no guaranteed minimum Account Value for amounts in the
Separate Account.
Account Value in the Guarantee Account is the sum of all amounts allocated to
the Guarantee Account, plus any interest credited on those amounts, less any
amounts removed by transfer or surrender, and less any amounts deducted for
charges made under the terms of the Policy and any riders that may apply.
On the date the initial Premium Payment is received and accepted by GE Capital
Life, the Account Value equals the initial Premium Payment. Thereafter, at the
end of each Valuation Period, the Account Value in each Investment Subdivision
is equal to (a) plus (b) plus (c) minus (d) minus (e) minus (f) where:
(a) is the Account Value allocated to the Investment Subdivision
at the end of the preceding Valuation Period, multiplied by
the Investment Subdivision's Net Investment Factor (described
below) for the current period;
(b) is the total Premium Payments received during the current Valuation
Period;
(c) is any amounts transferred into the Investment Subdivision during
the current Valuation Period;
(d) is the Account Value transferred out of the Investment Subdivision
during the current Valuation Period;
(e) is any partial surrender made from the Investment Subdivision
during the current Valuation Period; and
(f) is any applicable premium tax deductions.
In addition, after the Policy Date whenever a Valuation Period includes the
Policy anniversary day, the Account Value at the end of such Valuation Period is
reduced by the Policy Maintenance Charge and the Annual Death Benefit Charge(s),
if any, allocated to the Account Value in the Investment Subdivision for that
Policy anniversary day. The charge(s) will be allocated among the Investment
Subdivisions in the same proportion that the Account Value in each Investment
Subdivision bears to the total Account Value in all Investment Subdivisions on
that Policy anniversary day.
Value of Accumulation Units
The Accumulation Units of each Investment Subdivision are valued separately. The
value of Accumulation Units will change each Valuation Period according to the
investment performance of the shares purchased by each Investment Subdivision
and the deduction of certain charges from the Account.
For each Investment Subdivision, the value of an Accumulation Unit for the first
Valuation Period was $10. The value of an Accumulation Unit for each subsequent
Valuation Period equals the value of the Accumulation Unit as of the immediately
preceding Valuation Period, multiplied by the Net Investment Factor for that
Investment Subdivision for that subsequent Valuation Period. The value of an
Accumulation Unit for a Valuation Period is the same for each day in the period.
The Net Investment Factor is a number representing the change in the value of
Investment Subdivision assets on successive Business Days due to investment
income, realized or unrealized capital gains or losses, deductions for taxes, if
any, and deductions for the mortality and expense risk charge and administrative
expense charge. Each Investment Subdivision has its own Net Investment Factor.
The Net Investment Factor for a Valuation Period is (a) divided by (b), minus
(c) where:
(a) is:
(1) the value of the net assets of that Investment
Subdivision at the end of the preceding Valuation
Period; plus
(2) the investment income and capital gains, realized or
unrealized, credited to the net assets of that
Investment Subdivision during the Valuation Period
for which the Net Investment Factor is being
determined; minus
(3) the capital losses, realized or unrealized, charged
against those assets during the Valuation Period;
minus
(4) any amount charged against that Investment
Subdivision for taxes, or any amount set aside during
the Valuation Period by GE Capital Life as a
provision for taxes attributable to the operation or
maintenance of that Investment Subdivision; and
(b) is the value of the net assets of that Investment Subdivision
at the end of the preceding Valuation Period; and
(c) is a charge no greater than .003857% for each day in the
Valuation Period. This corresponds to 1.25% and 0.15% per year
of the net assets of that Investment Subdivision for mortality
and expense risks, and for administrative expenses,
respectively.
When calculating the Net Investment Factor, the value of the assets in the
Account will be taken at their fair market value in accordance with generally
accepted accounting practices and applicable laws and regulations.
Transfers
Before Income Payments begin, the Owner may transfer Account Value from and
among the Guarantee Account and the Investment Subdivisions of the Separate
Account by sending a written request to the Variable Annuity Service Center. All
transfers will be effective as of the end of the Valuation Period during which
the written request is received at the Variable Annuity Service Center.
Currently, there is no limit to the number of transfers that may be made;
however, GE Capital Life reserves the right to limit, upon written notice, the
number of transfers to 12 each calendar year or a lower number if it is
necessary for the Policy to continue to receive annuity treatment by the
Internal Revenue Service. Transfers made under a Dollar Cost Averaging Program
will not count against any limit on the number of transfers available each year.
The first 12 transfers in a calendar year may be made without transfer charge.
Thereafter, each time a transfer is made during the calendar year, a transfer
charge of $10 will be deducted from the amount transferred.
Transfers Among Investment Subdivisions. If the amount of Account Value
remaining in an Investment Subdivision after a transfer is less than $100, GE
Capital Life will transfer the amount remaining in addition to the amount
requested. GE Capital Life will not allow a transfer into any Investment
Subdivision unless the Account Value in that Investment Subdivision after the
transfer is at least $100.
After Income Payments begin, if Variable Income Payments are being made, Annuity
Units may be transferred among the Investment Subdivisions at the payee's
written request once each calendar year. No transfer charge will be imposed on
such transfers. The transfer will be effective as of the end of the Valuation
Period during which GE Capital Life receives the written request at its Variable
Annuity Service Center. The Variable Income Payment amount on the date of the
transfer will not be affected by the transfer, although subsequent Variable
Income Payments will reflect the investment experience of the selected
Investment Subdivisions.
If the number of Annuity Units remaining in an Investment Subdivision after a
transfer is less than 1, then this Annuity Unit will also be transferred. In
addition, transfers are only permitted into an Investment Subdivision if, after
the transfer, the number of Annuity Units of that Investment Subdivision is at
least 1.
GE Capital Life reserves the right to refuse to execute any transfer, whether
requested before or after Income Payments, if any of the Investment Subdivisions
that would be affected by the transfer are unable to purchase or redeem shares
of the Funds in which they invest.
Transfers between the Guarantee Account and the Investment Subdivisions. The
Owner may transfer amounts between the Guarantee Account and the Investment
Subdivisions of the Separate Account. Transfers will be effective on the date
the Owner's transfer request is received by GE Capital Life. With respect to
transfers between the Guarantee Account and the Investment Subdivisions of the
Separate Account, the following restrictions may be imposed:
For each allocation to a Guarantee Account, transfers to the Investment
Subdivisions of the Separate Account may be made only during the 30 day
period following the end of that allocation's interest rate guarantee
period. GE Capital Life may limit the amount which may be transferred to
the Investment Subdivisions. For any particular allocation to a
Guarantee Account, the limit amount will not be less than (a) accrued
interest on that allocation, plus (b) 25% of the original amount of that
allocation.
No transfers from any Investment Subdivision of the Separate Account to
the Guarantee Account may be made during the six month period following
the transfer of any amount from the Guarantee Account to any Investment
Subdivisions of the Separate Account.
In all other respects, the rules and charges applicable to transfers
between the various Investment Subdivisions of the Separate Account will
apply to transfers involving a Guarantee Account.
Dollar-Cost Averaging. Owners may elect to have GE Capital Life automatically
transfer specified amounts from a Guarantee Account or one of certain designated
Investment Subdivisions of the Separate Account to any other available
Investment Subdivision(s) on a monthly or quarterly basis. This privilege is
intended to permit Owners to utilize "Dollar-Cost Averaging," a long-term
investment method that provides for regular level investments over a period of
time. GE Capital Life makes no representations or guarantees that Dollar-Cost
Averaging will result in a profit or protect against loss.
Owners must complete the Dollar-Cost Averaging section of the application or a
Dollar-Cost Averaging Agreement in order to participate in the Dollar-Cost
Averaging program. Currently, the Investment Subdivision available to allocate
money for the purpose of Dollar-Cost Averaging is the Money Market Fund of the
GE Investments Funds. Money may be allocated to this subdivision as initial
premium, additional premium or in the form of a transfer from other Investment
Subdivisions within the Account. Any amount allocated must conform to the
minimum amount and percentage requirements. (See "Allocation of Premium
Payments").
Alternatively, Owners may elect to have GE Capital Life automatically transfer
specified amounts from a Guarantee Account to any available Investment
Subdivision on a monthly or quarterly basis. Money may be allocated to the
Guarantee Account as an initial or subsequent premium or in the form of a
transfer of Account Value from one or more Investment Subdivisions. Such
allocations must comply with all applicable minimum amount and percentage
requirements (see "Purchasing A Policy" and "Allocating Premium Payments") as
well as rules applicable to transfer to the Guarantee Account. Apart from
automatic transfers under the Dollar-Cost Averaging Agreement, all rules
regarding transfers from the Guarantee Account will apply.
Owners may designate the amount of value under the Policy allocated to a
Guarantee Account that is subject to the Dollar-Cost Averaging program. GE
Capital Life reserves the right to limit the amount of each automatic transfer
to 10% per month of the amount so designated.
Automatic transfer from a Guarantee Account, as described above, will be made on
a first-in-first-out basis until the entire value of the designated amount in
the Guarantee Account is depleted. Prior to that time, an Owner may discontinue
such automatic transfers by sending GE Capital Life a written notice. GE Capital
Life reserves the right to discontinue or modify the alternative Dollar-Cost
Averaging program at any time for any reason on 30 days written notice to the
Owner.
Dollar-Cost Averaging will continue until the entire Account Value in a
Guarantee Account or the Investment Subdivision designated for Dollar-Cost
Averaging is depleted. Prior to that time, the Owner may discontinue Dollar-Cost
Averaging by sending GE Capital Life a written cancellation notice. Owners may
make changes to their Dollar-Cost Averaging program by calling GE Capital Life
at (800) 313-5282. Also, GE Capital Life reserves the right to discontinue
Dollar-Cost Averaging upon 30 days written notice to the Owner. Dollar-Cost
Averaging transfers are not included for the purpose of determining any transfer
charge.
Portfolio Rebalancing. Owners may elect to have GE Capital Life automatically
transfer amounts on a quarterly, semi-annual or annual basis to maintain a
specified percentage of Account Value in each of two or more Investment
Subdivisions of the Separate Account designated by the Owner. This privilege
permits Owners to use "Portfolio Rebalancing," a strategy that maintains over
time the Owner's desired allocation percentage in the designated Investment
Subdivisions. The percentage of Account Value in each of the Investment
Subdivisions may shift from the Portfolio Rebalancing allocation percentage due
to the performance of the Investment Subdivisions. GE Capital Life makes no
representations or guarantees that Portfolio Rebalancing will result in a profit
or protect against loss.
Owners must complete the Portfolio Rebalancing agreement to participate in the
Portfolio Rebalancing program. Owners may designate the Investment Subdivisions
and specify the rebalancing percentages in the agreement. The specified
percentages must be in whole percentages and must be at least 1%. The date that
a rebalancing transfer is effected is measured from the Policy Date, or other
date selected at GE Capital Life's sole discretion, based on the rebalancing
frequency chosen by an Owner. Account Value must be allocated to each of the
designated Investment Subdivisions for rebalancing to become effective.
Portfolio Rebalancing is offered free of charge and will continue as long as
there is Account Value in each of the designated Investment Subdivisions. Prior
to that time, Owners may discontinue Portfolio Rebalancing by sending GE Capital
Life a written cancellation notice. Owners may make changes to their Portfolio
Rebalancing program by calling GE Capital Life at (800)313-5282. Portfolio
Rebalancing transfers are not included for the purpose of determining any
transfer charge. Owners should consider the possible effects of electing other
automatic programs such as Dollar-Cost Averaging and Systematic Withdrawals
concurrent with Portfolio Rebalancing. GE Capital Life reserves the right to
exclude Investment Subdivisions from Portfolio Rebalancing. GE Capital Life also
reserves the right to discontinue Portfolio Rebalancing upon 30 days written
notice to the Owner.
Powers of Attorney. As a general rule and as a convenience to Owners, GE Capital
Life allows the use of powers of attorney whereby Owners give third parties the
right to effect Account Value transfers on behalf of the Owners. However, when
the same third party possesses powers of attorney executed by many Owners, the
result can be simultaneous transfers involving large amounts of Account Value.
Such transfers can disrupt the orderly management of the Funds, can result in
higher costs to Owners, and are generally not compatible with the long-range
goals of purchasers of the Policies. GE Capital Life believes that such
simultaneous transfers effected by such third parties are not in the best
interests of all shareholders of the Funds and this position is shared by the
managements of those Funds.
Therefore, to the extent necessary to reduce the adverse effects of simultaneous
transfers made by third parties holding multiple powers of attorney, GE Capital
Life may not honor such powers of attorney and has instituted or will institute
procedures to assure that the transfer requests that it receives have, in fact,
been made by the Owners in whose names they are submitted. However, these
procedures will not prevent Owners from making their own Account Value transfer
requests.
Surrenders
The Owner may make a full or partial surrender of the Policy at any time before
Income Payments begin by sending a written request to GE Capital Life at its
Variable Annuity Service Center. The Policy must be submitted with a request for
a full surrender.
GE Capital Life will not permit a partial surrender that is less than $500 or
that reduces the Account Value to less than $5,000. In the event that a partial
surrender request would reduce the Account Value to less than $5,000, GE Capital
Life will surrender only that amount of Account Value that would reduce the
remaining Account Value to $5,000 and deduct any surrender charge from the
amount surrendered.
Owners may specify whether the partial surrender should be made from the
Separate Account or the Guarantee Account. If the Owner does not so specify, the
surrender will be made first from Account Value in the Separate Account and then
from the Account Value in the Guarantee Account. Surrenders involving the
Guarantee Account will come from interest rate guarantee periods in the order
they were received.
The amount payable on full surrender of the Policy is the Surrender Value at the
end of the Valuation Period during which the request is received. The Surrender
Value equals the Account Value on the date GE Capital Life receives a request
for surrender less any applicable surrender charge. (See "Surrender Charges").
Any applicable Policy Maintenance Charge that has not been previously deducted
may also be deducted from the Surrender Value. The Surrender Value may be paid
in a lump sum or under one of the Optional Payment Plans specified in the
Policy. (See "Optional Payment Plans"). Proceeds from the Separate Account will
generally be paid within seven days of receipt of a request for a surrender.
Postponement of payments may occur in certain circumstances. (See "Payment Under
the Policies").
Full and partial surrenders made before age 59 1/2 may have federal tax
consequences, including the imposition of a penalty tax of 10% of the taxable
portion withdrawn. Consult your tax adviser regarding the tax consequences
associated with making withdrawals. (See "Federal Tax Matters").
Systematic Withdrawals
The Owner may elect to make a series of partial surrenders in equal
installments, adding up, in a 12 month period beginning with the date of the
first payment, to an amount not to exceed 10% of the Account Value in the
Separate Account as of the effective date of the partial surrender ("Systematic
Withdrawals"). Systematic Withdrawals will be available only if no partial
surrender has occurred during the Policy year of the election of Systematic
Withdrawals. If a Systematic Withdrawal program is discontinued, a new program
may not be instituted until the next Policy year. A surrender charge will not be
imposed on Systematic Withdrawals. A surrender charge will be applied to any
additional partial surrender(s) made during the time Systematic Withdrawal
payments are being made, unless all surrender charges have expired. (See
"Surrender Charges"). Systematic Withdrawal payments count as partial surrenders
with reduced charges and will reduce Account Value available for withdrawals
free of any surrender charge during a particular policy year. (See "Reduced
Charges on Certain Surrenders").
Systematic Withdrawals will be made from any Investment Subdivisions to which
Account Value is allocated. Withdrawals will be made from each of the designated
Investment Subdivisions in the same proportion that the Account Value in each
Investment Subdivision bears to the total Account Value in all Investment
Subdivisions from which the withdrawals are to be made. At any time while
Systematic Withdrawals are being made, each of the designated Investment
Subdivisions from which withdrawals are being made must count as one of the ten
Investment Subdivisions to which the Account Value of the Policy may be
allocated at any one time. (See "Allocating Premium Payments").
After a series of Systematic Withdrawals has begun, the frequency and/or amount
of payments may be changed upon request by the Owner, subject to the following
rules:
(1) only one such change may be requested in a calendar quarter;
(2) if the maximum amount was not elected at the time the current
series of Systematic Withdrawals was initiated, the remaining
payments may be increased;
(3) the total amount to be withdrawn during that 12-month period,
including amounts already paid, remains limited to 10% of the
Account Value at the time the current series of Systematic
Withdrawals was initiated; and
(4) if the current series of Systematic Withdrawals is
discontinued, any remaining payments in the current 12-month
period will be paid in a lump sum on request.
Systematic Withdrawals may be discontinued at any time by the Owner by notifying
GE Capital Life in writing. GE Capital Life reserves the right to discontinue
Systematic Withdrawals upon 30 days written notice to Owners. Otherwise,
payments will continue until the earlier of (i) the date on which a Systematic
Withdrawal reduces the Account Value for the entire Policy below $5,000, or (ii)
the date on which the total Account Value in all Investment Subdivisions
designated for Systematic Withdrawals is insufficient to provide further
payments on the mode in effect.
If any Systematic Withdrawal would be or becomes less than $50, GE Capital Life
reserves the right to reduce the frequency of payments to an interval that would
result in each payment being at least $50. GE Capital Life also reserves the
right to prohibit simultaneous Systematic Withdrawals and Dollar-Cost Averaging.
Additional rules regarding Systematic Withdrawals, available payment modes, and
instructions for electing this option are available upon request.
The amount of each Systematic Withdrawal should be considered as a distribution
and taxed in the same manner as a partial surrender of the Policy. However,
there is some uncertainty regarding the tax treatment of Systematic Withdrawals,
and it is possible that additional amounts may be includible in income. In
addition, a 10% penalty tax may, subject to certain exceptions, be imposed on
any amounts includible in income due to Systematic Withdrawals. For more
information, see the "Federal Tax Matters" discussion of Taxation of Systematic
Withdrawals.
Death Provisions
Before the Maturity Date. If an Owner, Joint Owner, or Annuitant dies before the
Maturity Date (including before Income Payments begin), the Designated
Beneficiary will be treated as the sole owner of the Policy, subject to the tax
restrictions set forth below. A Death Benefit may be payable to the Designated
Beneficiary upon receipt by GE Capital Life of Due Proof of Death. The
Designated Beneficiary will be the first person listed below who is alive or in
existence on the date of death:
(1) Owner
(2) Joint Owner
(3) Beneficiary
(4) Contingent Beneficiary
(5) Owner's estate
If Joint Owners both survive, they become the Designated Beneficiary together.
In such cases, for purposes of the distribution rules discussed below, each
Designated Beneficiary will be treated separately with respect to each
Designated Beneficiary's portion of the Policy.
Even if the Designated Beneficiary is treated as the sole owner of this Policy,
the death of the Designated Beneficiary will not be treated as the death of an
Owner for purposes of the Death Benefit provisions below, nor will such death
increase the time during which any required distributions from the Policy may be
made.
After the Maturity Date. If an Owner, Joint Owner, Annuitant, or Designated
Beneficiary dies after the Maturity Date (including after Income Payments
begin), payments that are already being made under the Policy will be made at
least as rapidly as under the method of distribution in effect at the time of
such death, notwithstanding any other provision of the Policy.
Death Benefit at Death of Annuitant. If the Annuitant dies before the Income
Payments begin, the Designated Beneficiary may elect to surrender the Policy for
a Death Benefit within 90 days of the date of such death. If the election is not
made within 90 days after the Annuitant's death, the Surrender Value will be
payable instead of the Death Benefit.
The Death Benefit will be the greater of: (1) the minimum death benefit
(described below); or (2) the Account Value on the date GE Capital Life receives
Due Proof of Death of the Annuitant. During the first six Policy years, and
subsequently if the Annuitant was age 81 or older on the Policy Date, the
minimum death benefit is the total Premium Payments adjusted for any partial
surrenders. During any subsequent six-year period if the Annuitant was age 80 or
younger on the Policy Date, the minimum death benefit will be the Death Benefit
on the last day of the previous six-year period plus any Premium Payments since
then, adjusted for any partial surrenders.
In lieu of payment of the Death Benefit, the Designated Beneficiary may elect to
continue the Policy after the Annuitant's death, provided that the distribution
rules (described below) do not require distribution of the entire value of the
Policy.
If the Designated Beneficiary is eligible and elects to continue the
Policy, the Account Value on the date GE Capital Life receives Due
Proof of Death will be set equal to the Death Benefit on that date. Any
increases in the Account Value will be allocated to the Investment
Subdivisions using the Premium Payment allocation in effect at that
time. If the Policy is continued after the death of the Annuitant, any
Death Benefit payable subsequently (at the death of the new Annuitant)
will be based on the new Annuitant's age on the Policy Date, rather
than the age of the previously deceased Annuitant.
If the Designated Beneficiary is not eligible to continue the Policy,
the Account Value on the date we receive Due Proof of Death of the
Annuitant will be set equal to the Death Benefit on that date and the
distribution rules will govern payment of proceeds.
Surrender charges will apply if the Policy is surrendered more than 90
days after the death of the Annuitant, without regard to whether or not
the Account Value was increased.
Distribution Rules. The Code requires that if an Owner dies before Income
Payments begin, the entire value of the Policy must generally be distributed
within five years of the date of the Owner's death. In the case of Joint Owners,
this requirement applies if either Joint Owner dies before Income Payments
begin. The following rules are designed to comply with these Code requirements,
and are applicable upon the death of an Owner or Joint Owner, including the
death of an Annuitant who is also an Owner. These rules will not apply upon the
death of an Annuitant, if the Annuitant was not also an Owner of the Policy, all
Owners of the Policy are natural persons, and a contingent Annuitant survives.
Even if no contingent Annuitant is alive on the death of the Annuitant, if the
Owner is a natural person, that Owner will be the contingent Annuitant.
Therefore, on the death of the Annuitant, the rules apply only if (1) the
Annuitant was an Owner, or (2) any Owner was not a natural person. In addition,
special rules may apply under certain qualified plans as stated in the Policy.
Before Income Payments begin, if the Designated Beneficiary is not the surviving
spouse of the deceased Owner, Joint Owner or Annuitant, then the Surrender Value
or the applicable Death Benefit will be paid in one lump sum to, or for the
benefit of, the Designated Beneficiary. Instead of receiving a lump sum
distribution, however, the Designated Beneficiary may elect: (1) to receive the
Surrender Value at any time during the five-year period following the death of
the Owner, Joint Owner, or Annuitant by partially or fully surrendering the
Policy; or (2) to apply the entire Surrender Value (or applicable Death Benefit)
under Optional Payment Plan 1 or 2 (described below under "Optional Payment
Plans"), with the first payment to the Designated Beneficiary being made within
one year after the date of death of the Owner, Joint Owner, or Annuitant, and
with payments being made over the life of the Designated Beneficiary or over a
period not exceeding the Designated Beneficiary's life expectancy.
If the entire Surrender Value has not been paid to the Designated Beneficiary by
the end of this five-year period following the date of death of the Owner, Joint
Owner, or Annuitant, and payments have not begun in accordance with (2) above,
then, in accordance with Code requirements and (1) above, GE Capital Life will
terminate the Policy at the end of that five-year period and will pay the
Account Value to, or for the benefit of, the Designated Beneficiary. After this,
there will be no remaining value in the Policy. If the Designated Beneficiary
dies before all required payments have been made, GE Capital Life will make any
remaining payments to any person named in writing by the Designated Beneficiary.
Otherwise, GE Capital Life will pay the Designated Beneficiary's estate.
Rather than the rules described above under Tax Restrictions, special rules
apply if the Designated Beneficiary is the surviving spouse of the deceased
Owner, Joint Owner, or Annuitant. In these cases, the surviving spouse may
continue the Policy as the Owner. In addition, that person will also become the
Annuitant if the deceased was the Annuitant, there is no surviving contingent
Annuitant, and the Policy has not been surrendered for one of the Death Benefits
described above available upon the Annuitant's death. On the surviving spouse's
death, the entire interest in the Policy will be paid within five years of such
spouse's death to the Designated Beneficiary named by the surviving spouse (and
if no Designated Beneficiary has been named, such payment will be made to the
surviving spouse's estate).
CHARGES AND DEDUCTIONS
Surrender Charges
GE Capital Life incurs certain sales and other expenses when the Policies are
issued. The majority of these expenses consist of commissions paid for sales of
these Policies; however, other distribution expenses are incurred in connection
with the printing of prospectuses, conducting seminars and other marketing,
sales, and promotional activities. To recover a portion of these expenses, a
surrender charge (also referred to as a contingent deferred sales charge) is
imposed on full and certain partial surrenders. Set forth below is a general
discussion of the amount and nature of the charge, followed by a more technical
explanation of how the charge is calculated.
Surrender charges will be imposed on full and partial surrenders of Premium
Payments made within six years of such payments. Surrender charges are made to
cover certain expenses relating to the sale of the Policy, including commissions
to registered representatives and other promotional expenses. Surrender charges
also apply to payments GE Capital Life makes upon maturity if the Maturity Date
occurs within six years of receipt of a Premium Payment.
Surrender charges are deducted from the amount surrendered. Premium Payments are
deemed to be surrendered before other components of Account Value. Surrender
charges are determined using the assumption that Premium Payments are
surrendered on a first-in first-out basis, up to the amount surrendered. For
each such Premium Payment, the charge is a percentage of the Premium Payment (or
portion thereof) surrendered. The charge is calculated separately for each
Premium Payment at the time it is surrendered, as specified in the table below.
Number of Full and Partially Surrender Charge
Completed Years Since Premium Payment (as a Percentage of Premium
Payment Surrendered)
1 6%
2 6%
3 6%
4 6%
5 4%
6 2%
7 and later 0%
After all Premium Payments have been surrendered, any remaining Account Value
may be surrendered without incurring surrender charges.
Reduced Charges on Certain Surrenders. No surrender charge applies to the first
surrender in any Policy year, if the amount surrendered is not more than 10% of
the Account Value at the end of the Valuation Period during which the surrender
request is received. If the first surrender in any Policy year is a full
surrender, or a partial surrender of more than 10% of the Account Value, no
surrender charge will apply to a portion of the amount surrendered equal to 10%
of the Account Value. Any remaining portion of the amount surrendered may be
subject to surrender charges, as described above. The amount subject to charge
will not exceed the amount surrendered. Our current practice is to allow
withdrawals of up to 10% of Account Value in any policy year, whether
in one or Multiple Withdrawals. We reserve the right to assess a surrender
charge on the second or subsequent withdrawals.
Waived Surrender Charges for Certain Optional Payment Plans. Surrender charges
otherwise applicable will be waived if the amount surrendered is applied to
Optional Payment Plans 1, 2 (for a period of five or more years), 3 (for a
payment period of at least 5 years based on guarantee interest) or 5. (See
"Optional Payment Plans").
Transfer Charges
The Owner may transfer amounts from and among the Investment Subdivisions of the
Separate Account and the Guarantee Account. Twelve transfers in each calendar
year will be made without charge. Thereafter, each time amounts are transferred
during that calendar year, a transfer charge of $10 will be deducted from the
amount transferred to compensate GE Capital Life for the costs in making the
transfer. No transfer charge is imposed on transfers occurring after Income
Payments begin.
Mortality and Expense Risk Charge
A charge will be deducted from each Investment Subdivision to compensate GE
Capital Life for certain mortality and expense risks assumed in connection with
the Policies. This charge is not assessed against Account Value in the Guarantee
Account. The charge will be deducted daily and equals 0.003446% for each day in
a Valuation Period. The effective annual rate of this charge, which is
compounded daily, is 1.25% of the average daily net assets of the Account. GE
Capital Life guarantees that this charge of 1.25% will never increase.
The mortality risk assumed by GE Capital Life arises from its contractual
obligation to make Income Payments to each payee regardless of how long all
Annuitants or any individual Annuitant may live. Although Variable Income
Payments will vary in accordance with the investment performance of the shares
purchased by each Investment Subdivision, they will not be affected by the
mortality experience of persons receiving such payments or of the general
population. This assures each payee that neither the longevity of Annuitants nor
an improvement in life expectancy generally will have an adverse effect on the
Variable Income Payments received under the Policy. Mortality risk also arises
from the possibility that the Death Benefit will be greater than the Account
Value.
The expense risk assumed is that expenses incurred in issuing and administering
the Policies will be greater than estimated and, therefore, will exceed the
expense charge limits set by the Policies. If proceeds from this charge are not
needed to cover mortality and expense risks, GE Capital Life may use proceeds to
finance distribution of the Policies.
Administrative Expense Charge
A charge will be deducted from each Investment Subdivision to compensate GE
Capital Life for certain administrative expenses incurred in connection with the
Policies. This charge is not assessed against Account Value in the Guarantee
Account. The charge will be deducted daily and equals 0.000411% for each day in
a Valuation Period. The effective annual rate of this charge, which is
compounded daily, is 0.15% of the average daily net assets of the Account.
Annual Policy Maintenance Charge
A charge of $25 will be deducted annually from the Account Value of each Policy
to compensate GE Capital Life for certain administrative expenses incurred in
connection with the Policies. The charge will be deducted at each anniversary
and at surrender. GE Capital Life will waive this charge if the Account Value
exceeds $75,000 at the time the charge is due. The Policy Maintenance Charge
will compensate GE Capital Life for issuance, processing, start-up and on-going
administration expenses. These expenses include the cost of processing
applications, establishing Policy records, premium collection, recordkeeping,
processing Death Benefit claims, full or partial surrenders, transfers, and
reporting and overhead costs. Once a Policy is issued, the amount of the Policy
Maintenance Charge is guaranteed for the life of the Policy.
The annual Policy Maintenance Charge will be allocated among the Investment
Subdivisions in the same proportion that the Policy's Account Value in each
Investment Subdivision bears to the total Account Value in all Investment
Subdivisions at the time the charge is made. If there is insufficient Account
Value in the Separate Account at the time the charge is deducted, the annual
Policy Maintenance Charge will be deducted from the Guarantee Account. ("See
Policy Maintenace Charge") Other allocation methods may be available upon
request.
Tax Charges
Because of its current status under the Code, GE Capital Life does not expect to
incur any federal income tax liability that would be chargeable to the Separate
Account. Based upon this expectation, no charge is being made currently to the
Separate Account for federal income taxes. If, however, GE Capital Life
determines that such taxes may be incurred, it may assess a charge for those
taxes from the Separate Account.
Fund Charges
Because the Separate Account purchases shares of the Funds, the net assets of
each Investment Subdivision will reflect the investment advisory fee and other
expenses incurred by the investment portfolio of the Fund in which the
Investment Subdivision invests. For more information concerning these charges,
read the individual Fund prospectuses.
INCOME PAYMENTS
Income Payments
GE Capital Life will pay an Income Payment to the Owner beginning on the
Maturity Date if the Annuitant is still living, or earlier, as required by some
qualified plans. The Income Payment will be paid in the form of Variable Income
Payments similar to those described in Optional Payment Plan 1, Life Income with
10 Years Certain using the gender and settlement age of the Annuitant instead of
the payee, unless the Owner elects payment under another Optional Payment Plan.
Under the Life Income with 10 Years Certain plan, if the Annuitant lives longer
than 10 years, payments will continue for his or her life. If the Annuitant dies
before the end of 10 years, the remaining payments for the 10-year period will
be discounted at the same rate used to calculate the Income Payment. This
discounted amount will be paid in one sum. Income payments under qualified plans
will follow the requirements set forth under the policy.
Unless a different date is requested, the Maturity Date shall not go beyond the
Annuitant's 90th birthday. You may change the Maturity Date to any earlier date
by sending GE Capital Life written notice before the Maturity Date then in
effect.
During the lifetime of the Annuitant and prior to the Maturity Date, however,
the Owner, or the Designated Beneficiary upon the Owner's death, may elect by
written notice to the Variable Annuity Service Center, to receive payments in a
lump sum or under one of the Optional Payment Plans described below. (If the
election is being made by the Designated Beneficiary, only available plans may
be chosen.) Plans that base payment on the life or lives of one or more
individuals will base such payment on the life of the Annuitant or the Annuitant
and an additional individual.
Income Payments will be made monthly unless the Owner elects quarterly,
semi-annual or annual payments by written request to GE Capital Life. However,
if any payment made more frequently than annually would be or becomes less than
$20, GE Capital Life reserves the right to reduce the frequency of payments to
an interval that would result in each payment being at least $20. If the annual
payment payable is less than $20, GE Capital Life will pay the Maturity Value
(described below) in a lump sum and the Policy will terminate effective as of
the Maturity Date and GE Capital Life will have no further obligation under the
Policy.
<PAGE>
Determination of Income Payments
The initial Income Payment under the Life Income with 10 Years Certain plan is
calculated by multiplying (a) times (b), divided by (c) where: (a) is the
monthly payment rate per $1,000, shown under the Policy's Optional Payment Plans
for Life Income with 10 Years Certain, using the gender and settlement age of
the Annuitant, instead of the payee, on the Maturity Date; (b) is the Maturity
Value, which equals the Surrender Value on the day immediately preceding the
Maturity Date; and (c) is $1,000.
If at the time Income Payments begin, the Owner has not provided GE Capital Life
with a written election not to have federal income taxes withheld, GE Capital
Life must by law withhold such taxes from the taxable portion of such Income
Payments and remit that amount to the federal government. Also, in some other
circumstances, GE Capital Life may withhold taxes. (See "Direct Rollover and
Mandatory Withholding Requirements, and Federal Income Tax Withholding".)
Optional Payment Plans
Death Benefit and Surrender Value payments will be paid in one lump sum, and
Income Payments will be paid as described in the Income Payment section. Subject
to the payment plan rules stated in the Policy, and to the Death Benefit and
distribution rules stated above, however, any part of Death Benefit or Surrender
Value payments can be left with GE Capital Life and paid under an Optional
Payment Plan. (For the tax treatment of Surrender Value payments and Death
Benefits, see "Taxation of Partial and Full Surrenders," and "Taxation of Death
Benefit Proceeds"). During the Annuitant's life, the Owner (or the Designated
Beneficiary at the Owner's death) may choose a plan. If a Beneficiary is
changed, then the plan selection is no longer in effect unless a request to
continue it is made in writing. The Designated Beneficiary can choose a plan at
the death of the Annuitant if one has not been chosen.
Optional Payment Plans can provide either Fixed Income Payments or Variable
Income Payments as selected by the Owner or the payee. There are currently five
plans available. Plans 1 through 5 can be used to provide Fixed Income Payments,
while only plans 1 and 5 are available to provide Variable Income Payments. A
plan and the form of the Income Payments may be designated in the application or
by notifying GE Capital Life in writing at its Variable Annuity Service Center.
If the payee is not a natural person, consent of GE Capital Life is required
prior to selecting a plan.
The effect of choosing a Fixed Income Payment is that the minimum amount of each
Income Payment will be calculated on the date the first Income Payment is made
and will not change. If Fixed Income Payments are chosen, the proceeds will be
transferred to the General Account of GE Capital Life on the date the Income
Payments begin. Benefits will not be less than those that would be provided to a
single premium immediate annuity applicant of the same class. Payments made will
equal or exceed those required by the State of New York. For further
information, you should contact GE Capital Life at its Variable Annuity Service
Center.
If the Owner, (or the Designated Beneficiary) elects to receive Variable Income
Payments under Optional Payment Plan 1 or 5, the proceeds may be allocated among
up to ten Investment Subdivisions. The first Variable Income Payment is
determined by the Optional Payment Plan chosen and the amount of proceeds
applied to the plan. The dollar amount of subsequent Income Payments will
reflect the investment experience of the selected Investment Subdivisions and is
determined by means of Annuity Units. Benefits under a variable income option
will not be less than those that would be provided to an applicant of the same
class under the corresponding option for a single premium variable immediate
annuity. Once variable income payments have commenced, neither expenses actually
incurred, other than taxes on the investment return, nor mortality actually
experienced, will adversely affect the dollar amount of variable income
payments.
The number of Annuity Units for an Investment Subdivision will be determined
when Income Payments begin and will remain fixed unless transferred. (See
"Transfers.") The number of Annuity Units for an Investment Subdivision is (a)
divided by (b) where: (a) is the portion of the first Income Payment allocated
to that Investment Subdivision; and (b) is the Annuity Unit Value for that
Investment Subdivision seven days before the first Income Payment is due. For
subsequent payments, the Income Payment amount for an Investment Subdivision is
the number of Annuity Units for that Investment Subdivision multiplied by the
Annuity Unit Value for that Investment Subdivision seven days before the payment
is due.
<PAGE>
For each Investment Subdivision, the Annuity Unit Value for the first Valuation
Period was $10. The Annuity Unit Value for each subsequent Valuation Period is
(a) times (b) times (c) where: (a) is the Net Investment Factor for that period;
(b) is the Annuity Unit Value for the immediately preceding Valuation Period;
and (c) is the investment result adjustment factor.
The investment result adjustment factor recognizes an assumed interest rate of
3% per year used in determining the amounts of the Income Payments. This means
that if the net investment experience of the Investment Subdivision to which the
Annuity Units apply for a given month exceeds the monthly equivalent of 3% per
year, the monthly payment will be greater than the previous payment. If the net
investment experience for such Subdivision is less than the monthly equivalent
of 3% per year, the monthly payment will be less than the previous monthly
payment.
Payments under Optional Payment Plans 1, 2, 3 or 5 will begin on the date we
receive proof of death, on surrender, or on the Maturity Date. Payments under
Plan 4 will begin at the end of the first interest period after the date
proceeds are otherwise payable. Plan 4 is not available under Qualified
Policies.
Under all of the Optional Payment Plans, if any payment made more frequently
than annually would be or becomes less than $100, GE Capital Life reserves the
right to reduce the frequency of payments to an interval that would result in
each payment being at least $20. If the annual payment payable is less than $20,
GE Capital Life will pay the Surrender Value in a lump sum. Upon making such a
payment, GE Capital Life will have no future obligation under the Policy.
The fixed income options are shown below. Variable income options, if
applicable, have the same initial payment as the corresponding fixed option.
Plan 1 -- Life Income with Period Certain. Equal monthly payments will
be made for a guaranteed minimum period. If the payee lives longer than
the minimum period, payments will continue for his or her life. The
minimum period can be 10, 15 or 20 years. Guaranteed amounts payable
under this plan will earn interest at 3% compounded yearly. GE Capital
Life may increase the interest rate and the amount of any payment. If
the payee dies before the end of the guaranteed period, the amount of
remaining payments for the minimum period will be discounted at the
same rate used in calculating Income Payments. "Discounted" means GE
Capital Life will deduct the amount of interest each remaining payment
would have earned had it not been paid out early. The discounted
amounts will be paid in one sum to the payee's estate unless otherwise
provided.
Plan-2 -- Income for a Fixed Period. Equal periodic payments will be
made for a fixed period not longer than 30 years. Payments can be
annual, semi-annual, quarterly, or monthly. Guaranteed amounts payable
under this plan will earn interest at 3% compounded yearly. GE Capital
Life may increase the interest and the amount of any payment. If the
payee dies, the amount of the remaining guaranteed payments will be
discounted to the date of the payee's death at the same rate used in
calculating Income Payments. The discounted amount will be paid in one
sum to the payee's estate unless otherwise provided.
Plan 3 -- Income of a Definite Amount. Equal periodic payments of a
definite amount will be paid. Payments can be annual, semi-annual,
quarterly, or monthly. The amount paid each year must be at least $120
for each $1,000 of proceeds. Payments will continue until the proceeds
are exhausted. The last payment will equal the amount of any unpaid
proceeds. If Fixed Income Payments are made under this plan, unpaid
Proceeds will earn interest at 3% compounded yearly. GE Capital Life
may increase the interest rate; if the interest rate is increased, the
payment period will be extended. If the payee dies, the amount of the
remaining proceeds with earned interest will be paid in one sum to his
or her estate unless otherwise provided.
Plan 4 -- Interest Income. Periodic payments of interest earned from
the proceeds left with GE Capital Life will be paid. Payments can be
annual, semi-annual, quarterly, or monthly, and will begin at the end
of the first period chosen. Proceeds will earn interest at 3%
compounded yearly. GE Capital Life may increase the interest rate and
the amount of any payment. If the payee dies, the amount of remaining
proceeds and any earned but unpaid interest will be paid in one sum to
his or her estate unless otherwise provided. This plan is not available
under Qualified Policies.
Plan 5 -- Joint Life and Survivor Income. Equal monthly payments will
be made to two payees for a guaranteed minimum of 10 years. Each payee
must be at least 35 years old when payments begin. Payments will
continue as long as either payee is living. If Fixed Income Payments
are made under this Plan, the guaranteed amount payable under this plan
will earn interest at 3% compounded yearly. GE Capital Life may
increase the interest rate and the amount of any payment. If both
payees die before the end of the minimum period, the amount of the
remaining payments for the 10-year period will be discounted at the
same rate used in calculating Income Payments. The discounted amount
will be paid in one sum to the survivor's estate unless otherwise
provided.
TOTAL RETURN AND YIELDS
From time to time, GE Capital Life may advertise total return and/or yield for
the Investment Subdivisions. Certain portfolios of the Funds have been in
existence prior to the commencement of the offering of the Policies. GE Capital
Life may advertise or include in sales literature the performance of the
Investment Subdivisions that invest in these portfolios for these prior periods.
The performance information of any period prior to the commencement of the
offering of the Policies is calculated as if the Policy had been offered during
those periods, using current charges and expenses. In addition, each Investment
Subdivision may, from time to time, advertise performance relative to certain
performance rankings and indices compiled by independent organizations.
Performance information discussed herein is based on historical results and does
not indicate or project future performance. More detailed information as to the
calculation of performance information appears in the Statement of Additional
Information.
Total return and yields for the Investment Subdivision are based on the
investment performance of the corresponding investment portfolios of the Funds.
Each portfolio's performance in part reflects its expenses. See the prospectuses
for the Funds for Fund expense information.
Total return for an Investment Subdivision refers to quotations made assuming
that an investment under a Policy has been held in that Investment Subdivision
for various periods of time. When an Investment Subdivision has been in
operation for one, five, and ten years, respectively, the total return for these
periods will be provided.
An average annual total return quotation represents the average annual
compounded rate of return that would equate a hypothetical initial investment of
$1,000 (as of the first day of the period for which the total return quotation
is provided) to the redemption value of that investment (as of the last day of
the period). Such quotations show the average annual percentage change in the
value of a hypothetical investment during the periods specified. The
standardized version of average annual total return reflects all historical
investment results, less all charges and deductions applied against the
Investment Subdivision (including any Surrender Charge that would apply if an
Owner terminated the Policy at the end of each period indicated and any
deductions for premium payment taxes).
In addition to the standardized version described above, total return
performance quotations computed on non-standard bases may be used in
advertisements. For example, average annual total return information may be
presented, computed on the same basis as described above, except deductions will
not include sales or administrative charges. Average annual total returns that
exclude sales or administrative expenses, or both, will be greater than
standardized average annual total returns for comparable periods. Total return
for an Investment Subdivision refers to quotations made assuming that an
investment under a Policy has been held in the Investment Subdivision for
various periods of time. Non-standard performance data will only be disclosed if
the standard performance data for the required periods is also disclosed. For
additional information regarding the calculation of performance data, please
refer to the Statement of Additional Information.
The yield of a "money market" Investment Subdivision refers to the income
generated by an investment in that Investment Subdivision over a specified
seven-day period, which is then annualized. Yield is calculated by assuming that
the income generated for that seven-day period is generated each seven-day
period over a 52-week period. The effective yield is calculated similarly but
the income earned by an investment in that money market Subdivision is assumed
to be reinvested each period. The effective yield will be slightly higher than
the yield because of the compounding effect of this assumed reinvestment.
The yield of an Investment Subdivision (other than a "money market" Subdivision)
refers to the income generated by an investment in that Investment Subdivision
over a specified 30-day (or one-month) period. The income generated over the
period is assumed to be generated and reinvested each month for six months. The
resulting semi-annual yield is then doubled.
In advertising and sales literature, the performance of each Investment
Subdivision may be compared to the performance of other variable annuity issuers
in general or to the performance of particular types of variable annuities
investing in mutual funds, or investment portfolios of mutual funds with
investment objectives similar to each of the Investment Subdivisions. Lipper
Analytical Services, Inc. ("Lipper") and the Variable Annuity Research Data
Service ("VARDS") are independent services which monitor and rank the
performance of variable annuity issuers in each of the major categories of
investment objectives on an industry-wide basis.
Lipper's rankings include variable life insurance issuers as well as variable
annuity issuers. VARDS rankings compare only variable annuity issuers. The
performance analyses prepared by Lipper and VARDS each rank such issuers on the
basis of total return, assuming reinvestment of distributions, but do not take
sales charges, redemption fees, or certain expense deductions at the separate
account level into consideration. In addition, VARDS prepares risk adjusted
rankings, which consider the effects of market risk on total return performance.
This type of ranking provides data as to which funds provide the highest total
return within various categories of funds defined by the degree of risk inherent
in their investment objectives.
Advertising and sales literature may also compare the performance of each
Investment Subdivision to various widely recognized indices. One such index is
the Standard & Poor's 500 Composite Stock Price Index, a measure of stock market
performance. This unmanaged index does not consider tax consequences or the
expense of operating or managing an investment portfolio, and may not consider
reinvestment of income dividends.
GE Capital Life may also report other information including the effect of
tax-deferred compounding on an Investment Subdivision's investment returns, or
returns in general, which may be illustrated by tables, graphs, or charts. All
income and capital gains derived from the Investment Subdivisions' investments
in the Funds are reinvested on a tax-deferred basis.
FEDERAL TAX MATTERS
Introduction
The following discussion is general in nature and is not intended as tax advice.
The federal income tax consequences associated with the purchase of a Policy are
complex, and the application of the pertinent tax rules to a particular person
may vary according to facts peculiar to that person. This discussion is based on
the law, regulations, and interpretations existing on the date of this
Prospectus. These authorities, however, are subject to change by Congress, the
Treasury Department, and judicial decisions. This discussion does not address
state or other local tax consequences associated with the purchase of a Policy.
GE CAPITAL LIFE MAKES NO GUARANTEE REGARDING ANY TAX TREATMENT -- FEDERAL,
STATE, OR LOCAL -- OF ANY POLICY OR OF ANY TRANSACTION INVOLVING A POLICY.
Non-Qualified Policies
Premium Payments. A purchaser of a Policy that does not qualify for the special
tax treatment discussed below in connection with Policies used as individual
retirement annuities or used with other qualified retirement plans may not
deduct or exclude from gross income the amount of the premiums paid. In this
discussion, such a Policy is called a "Non-Qualified Policy".
Tax Deferral During Accumulation Period. In general, until distributions are
made or deemed to be made from a Non-Qualified Policy (as discussed below), an
Owner who is a natural person is not taxed on increases in the Account Value
resulting from the investment experience of the Separate Account. However, this
rule applies only if (1) the investments of the Separate Account are "adequately
diversified" in accordance with Treasury Department regulations, and (2) GE
Capital Life, rather than the Owner, is considered the owner of the assets of
the Separate Account for federal tax purposes.
(1) Diversification Requirements. Treasury Department regulations
prescribe the manner in which the investments of a separate account such
as the Separate Account are to be "adequately diversified." Any failure
of the Separate Account to comply with the requirements of these
regulations would cause each Owner to be taxable currently on the
increase in the Account Value.
The Separate Account, through the Funds, intends to comply with the
diversification requirements prescribed by the Treasury Department
regulations. Although GE Capital Life does not control the investments of
the Funds, it has entered into agreements regarding participation in the
Funds which require the Funds to be operated in compliance with the
requirements prescribed by the Treasury Department.
(2) Ownership Treatment. In certain circumstances, variable contract
owners may be considered the owners, for federal tax purposes, of the
assets of the separate account used to support their contracts. In those
circumstances, income and gains from the separate account assets would be
includible in the variable contract owners' gross income annually as
earned. The Internal Revenue Service (the "Service") has stated in
published rulings that a variable contract owner will be considered the
owner of separate account assets if the owner possesses incidents of
ownership in those assets, such as the ability to exercise investment
control over the assets. The Treasury Department has announced, in
connection with the issuance of regulations concerning investment
diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control of the investments
of a segregated asset (i.e. separate) account may cause the investor,
rather than the insurance company, to be treated as the owner of the
assets in the separate account." This announcement also stated that
guidance would be issued by way of regulations or rulings on the "extent
to which policyholders may direct their investments to particular
sub-accounts (of a separate account) without being treated as owners of
the underlying assets." As of the date of this Prospectus, no such
guidance has been issued.
The ownership rights under the Policy are similar to, but different in
certain respects from, those addressed by the Service in rulings in which
it was determined that policy owners were not owners of separate account
assets. For example, the Owner of this Policy has the choice of more
Funds to which to allocate Premium Payments and Account Values, and may
be able to reallocate more frequently than in such rulings. These
differences could result in an Owner being considered, under the standard
of those rulings, the owner of the assets of the Separate Account.
Because GE Capital Life does not know what standards will be set forth in
regulations or revenue rulings which the Treasury Department has stated
it expects to be issued, GE Capital Life has reserved the right to modify
its practices to attempt to prevent the Owner from being considered the
owner of the assets of the Separate Account.
Frequently, if the Service or the Treasury Department sets forth a new
position which is adverse to taxpayers, the position is applied on a
prospective basis only. Thus, if the Service or the Treasury Department
were to issue regulations or a ruling which treated an Owner as the owner
of the assets of the Separate Account, that treatment might apply only on
a prospective basis. However, if the ruling or regulations were not
considered to set forth a new position, an Owner might retroactively be
determined to be the owner of the assets of the Separate Account.
An Owner who is not a natural person -- that is, an entity such as a corporation
or a trust -- generally is taxable currently on the annual increase in the
Account Value of a Non-Qualified Policy, unless an exception to this general
rule applies. Exceptions exist for, among other things, an Owner which is not a
natural person but which holds the Policy as an agent for a natural person. The
following discussion applies to Policies owned by natural persons.
In addition, if the Policy's Maturity Date occurs at a time when the Annuitant
is at an advanced age, such as over age 85, it is possible that the Owner will
be taxable currently on the annual increase in the Account Value.
Taxation of Partial and Full Surrenders. A distribution is made from a
Non-Qualified Policy upon the Policy's partial or full surrender. Any amount so
distributed upon a partial surrender is includible in income to the extent that
the Account Value immediately before the partial surrender exceeds the
"investment in the contract" at that time. The amount distributed upon a full
surrender is includible in income to the extent that the Policy's Surrender
Value exceeds the investment in the contract at the time of surrender. For these
purposes, the investment in the contract at any time equals the total of the
Premium Payments made for a Policy to that time, less any amounts previously
received from the Policy which were not included in income.
If an Owner transfers a Policy without adequate consideration to a person other
than the Owner's spouse (or to a former spouse incident to divorce), the Owner
will be taxed on the difference between his or her Account Value and the
investment in the contract at the time of transfer. In such case, the
transferee's investment in the contract will be increased to reflect the
increase in the transferor's income.
In addition, the Policy provides a Death Benefit that in certain circumstances
may exceed the greater of the Premium Payments and the Account Value. As
described elsewhere in this Prospectus, GE Capital Life imposes certain charges
with respect to the Death Benefit. It is possible that some portion of those
charges could be treated for federal tax purposes as a partial surrender of the
Policy.
All non-qualified annuity contracts which are issued by GE Capital Life or any
of its affiliates with the same person designated as the Owner within the same
calendar year will be aggregated and treated as one contract for purposes of
determining any tax on distributions.
Taxation of Annuity Payments. Amounts may be distributed from a Non-Qualified
Policy as payments under one of the five Optional Payment Plans. In the case of
Optional Payment Plans other than Plan 4 (Interest Income), typically a portion
of each payment is includible in income when it is distributed. Normally, the
portion of a payment includible in income equals the excess of the payment over
the exclusion amount. The exclusion amount, in the case of Variable Income
Payments under Plans 1 and 5, is the amount determined by dividing the
"investment in the contract" allocated to that plan for the Policy when the
payments begin to be made (as defined above), adjusted for any period-certain or
refund feature, by the number of payments expected to be made (determined by
Treasury Department regulations). Also, in the case of Fixed Income Payments
under Plans 1, 2, 3, and 5, the exclusion amount is the amount determined by
multiplying the payment by the ratio of such investment in the contract
allocated to that plan, adjusted for any period-certain or refund feature, to
the Policy's "expected return" (determined under Treasury Department
regulations). However, payments which are received after the investment in the
contract has been fully recovered -- i.e., after the sum of the excludable
portions of the payments equals the investment in the contract -- will be fully
includible in income. On the other hand, should the payments cease because of
the death of the Annuitant before the investment in the contract has been fully
recovered, the Annuitant (or, in certain cases, the Designated Beneficiary) is
allowed a deduction for the unrecovered amount.
If certain amounts, such as the Death Benefit, become payable in a lump sum from
a Policy, it is possible that such amounts might be viewed as constructively
received and thus subject to tax, even though not actually received. A lump sum
will not be constructively received if it is applied under an Optional Payment
Plan within 60 days after the date on which it becomes payable. (Any Optional
Payment Plan selected must comply with applicable minimum distribution
requirements imposed by the Code.)
In the case of Optional Payment Plan 4, the proceeds left with GE Capital Life
are considered distributed for tax purposes at the time Plan 4 takes effect, and
are taxed in the same manner as a full surrender of the Policy, as described
above. The periodic interest payments are includible in the recipient's income
when they are paid or made available. In addition, if amounts are applied under
Plan 3 when the payee is at an advanced age, such as age 80 or older, it is
possible that such amounts would be treated in a manner similar to that under
Plan 4.
Taxation of Systematic Withdrawals. In the case of Systematic Withdrawals, the
amount of each withdrawal should be considered as a distribution and taxed in
the same manner as a partial surrender of the Policy, as described above.
However, there is some uncertainty regarding the tax treatment of Systematic
Withdrawals, and it is possible that additional amounts may be includible in
income.
Taxation of Death Benefit Proceeds. Amounts may be distributed before the
Maturity Date from a Non-Qualified Policy because of the death of the Owner, a
Joint Owner, or the Annuitant. Such Death Benefit proceeds are includible in the
income of the recipient as follows: (1) if distributed in a lump sum, they are
taxed in the same manner as a full surrender of the Policy, as described above
(substituting the Death Benefit Proceeds for the Surrender Value), or (2) if
distributed under an Optional Payment Plan, they are taxed in the same manner as
annuity payments, as described above.
Penalty Tax on Premature Distributions. Subject to certain exceptions, a penalty
tax is also imposed on the foregoing distributions from a Non-Qualified Policy,
equal to 10 percent of the amount of the distribution that is includible in
income. The exceptions provide, however, that this penalty tax does not apply to
distributions made (1) on or after the recipient attains age 59 1/2, (2) because
the recipient has become disabled (as defined in the tax law), (3) on or after
the death of the Owner, or if such Owner is not a natural person, on or after
the death of the primary Annuitant under the Policy (as defined in the tax law),
or (4) as part of a series of substantially equal periodic payments over the
life (or life expectancy) of the recipient or the joint lives (or life
expectancies) of the recipient and his or her designated beneficiary (as defined
in the tax law). In the case of Systematic Withdrawals, it is uncertain whether
such withdrawals will qualify for exception (4) above. If Systematic Withdrawals
did qualify for this exception, any modification of the systematic withdrawals
could result in certain adverse tax consequences. In addition, a transfer
between Investment Subdivisions may result in payments not qualifying for
exception (4) above.
<PAGE>
Assignments. An assignment or pledge of (or an agreement to assign or pledge) a
Non-Qualified Policy is taxed in the same manner as a partial surrender, as
described above, to the extent of the value of the Policy so assigned or
pledged. The investment in the contract is increased by the amount includible as
income with respect to such assignment or pledge, though it is not affected by
any other amount in connection with the assignment or pledge (including its
release).
Loss of Interest Deduction Where Policies are Held by or for the Benefit of
Certain Non-Natural Persons. In the case of Policies issued after June 8, 1997
to a non-natural taxpayer (such as a corporation or a trust), or held for the
benefit of such an entity, otherwise deductible interest may no longer be
deductible by the entity, regardless of whether the interest relates to debt
used to purchase or carry the Policy. However, this interest deduction
disallowance does not affect Policies where the income on such Policies is
treated under section 72(u) of the Code as ordinary income that is received or
accrued by the Owner during the taxable year. Entities that are considering
purchasing the Policy, or entities that will be beneficiaries with respect to a
Policy, should consult a tax advisor.
Qualified Policies
The following sections describe tax considerations of Policies used as
Individual Retirement Annuities or other qualified retirement plans ("Qualified
Policies"). GE Capital Life does not currently offer all of the types of
Qualified Policies described, and may not offer them in the future. Prospective
purchasers of Qualified Policies should therefore contact GE Capital Life's
Variable Annuity Service Center to ascertain the availability of Qualified
Policies at any given time.
IRA Policies
Premium Payments. A Policy that meets certain requirements set forth in the tax
law may be used as an individual retirement annuity (i.e., an "IRA Policy").
Both the amount of the Premium Payments that may be paid, and the tax deduction
that the Owner may claim for such Premium Payments, are limited under an IRA
Policy.
In general, the Premium Payments that may be made for any IRA Policy for any
year are limited to the lesser of $2,000 or 100 percent of the individual's
earned income for the year. Also, with respect to an individual who has less
income than his or her spouse, Purchase Payments may be made by that individual
to an IRA Policy to the extent of the lesser of (1) $2,000, or (2) the sum of
(i) the compensation includible in such individual's gross income for the
taxable year and (ii) the compensation includible in the gross income of the
individual's spouse for the taxable year reduced by the amount allowed as a
deduction for IRA contributions to such spouse. An excise tax is imposed on IRA
contributions that exceed the law's limits.
The deductible amount of the Premium Payments made for an IRA Policy for any
taxable year is limited to the amount of the Premium Payments that may be paid
for the Policy for that year. Furthermore, a single person who is an active
participant in a qualified retirement plan (that is, a qualified pension,
profit-sharing, or annuity plan, a simplified employee pension plan, a "SIMPLE"
retirement account, or a "section 403(b)" annuity plan, as discussed below) and
who has adjusted gross income in excess of $35,000 may not deduct Premium
Payments, and such a person with adjusted gross income between $25,000 and
$35,000 may deduct only a portion of such payments. Also, married persons who
file a joint return, one of whom is an active participant in a qualified
retirement plan, and who have adjusted gross income in excess of $50,000 may not
deduct Premium Payments, and those with adjusted gross income between $40,000
and $50,000 may deduct only a portion of such payments. Married persons filing
separately may not deduct Premium Payments if either the taxpayer or the
taxpayer's spouse is an active participant in a qualified retirement plan.
In applying these and other rules applicable to an IRA Policy, all individual
retirement accounts and annuities owned by an individual are treated as one
Policy, and all amounts distributed during any taxable year are treated as one
distribution.
Tax Deferral During Accumulation Period. Until distributions are made from an
IRA Policy, increases in the Account Value of the Policy are not taxed.
IRA Policies generally may not provide life insurance coverage, but they may
provide a death benefit that equals the greater of the premiums paid and the
contract value. The Policy provides a Death Benefit that in certain
circumstances may exceed the greater of the Premium Payments and the Account
Value. It is possible that the Policy's Death Benefit provisions could be viewed
as violating the prohibition on investment in life insurance contracts with the
result that the Policy would be not be viewed as satisfying the requirements of
an IRA Policy.
Taxation of Distributions and Rollovers. If all Premium Payments made to an IRA
Policy were deductible, all amounts distributed from the Policy are included in
the recipient's income when distributed. However, if nondeductible Premium
Payments were made to an IRA Policy (within the limits allowed by the tax law),
a portion of each distribution from the Policy typically is included in income
when it is distributed. In such a case, any amount distributed as an annuity
payment or in a lump sum upon death or a full surrender is taxed as described
above in connection with such a distribution from a Non-Qualified Policy,
treating as the investment in the contract the sum of the nondeductible Premium
Payments at the end of the taxable year in which the distribution commences or
is made (less any amounts previously distributed that were excluded from
income). Also in such a case, any amount distributed upon a partial surrender is
partially includible in income. The includible amount is the excess of the
distribution over the exclusion amount which in turn equals the distribution
multiplied by the ratio of the investment in the contract to the Account Value.
In any event, subject to the direct rollover and mandatory withholding
requirements (discussed below) amounts may be "rolled over" from a qualified
retirement plan to an IRA Policy (or from one individual retirement annuity or
individual retirement account to an IRA Policy) without incurring tax if certain
conditions are met. Only certain types of distributions from qualified
retirement plans or individual retirement annuities may be rolled over.
Penalty Taxes. Subject to certain exceptions, a penalty tax is also imposed on
distributions from an IRA Policy equal to 10 percent of the amount of the
distribution includible in income. (Amounts rolled over from an IRA Policy
generally are excludable from income.) The exceptions provide, however, that
this penalty tax does not apply to distributions made (1) on or after age 59
1/2, (2) on or after death or because of disability (as defined in the tax law),
or (3) as part of a series of substantially equal periodic payments over the
life (or life expectancy) of the recipient or the joint lives (or joint life
expectancies) of the recipient and his or her designated beneficiary (as defined
in the tax law). In addition to the foregoing, failure to comply with a minimum
distribution requirement will result in the imposition of a penalty tax of 50
percent of the amount by which a minimum required distribution exceeds the
actual distribution from an IRA Policy. Under this requirement, distributions of
minimum amounts from an IRA Policy as specified in the tax law must commence by
April 1 of the calendar year following the calendar year in which the Annuitant
attains age 70 1/2, or when he or she retires, whichever is later. Further,
after 1988, such distributions generally must begin by April 1 of the calendar
year in which the employee attains age 70 1/2 regardless of whether he or she
has retired.
Roth IRAs
Recently enacted Section 408A of the Code permits eligible individuals to
contribute to a type of IRA Policy known as a "Roth IRA." Roth IRAs differ from
other IRA Policies in several respects. Among the differences is that, although
Premium Payments to a Roth IRA are not tax deductible, "qualified distributions"
from a Roth IRA will be excludable from income. Additionally, the eligibility
and mandatory distribution requirements for Roth IRAs differ from non-Roth IRA
Policies.
Premium Payments. The maximum amount of contributions allowable for any
taxable year to all Roth IRAs maintained for an individual (the "contribution
limit") generally is the lesser of $2,000 and 100% of compensation for the
taxable year. The contribution limit is reduced by the amount of any deductible
and non-deductible contributions to a non-Roth IRA Policy. For individuals who
file a joint return and receive less compensation for the taxable year than
their spouse, special rules apply.
For taxpayers with adjusted gross incomes in excess of certain limits, no
contribution (or only a reduced contribution) to a Roth IRA is allowed. For
married individuals filing a joint return, the contribution limit is phased out
for adjusted gross incomes between $150,000 and $160,000. (Special rules apply
to married individuals filing separate returns.) For single individuals, the
contribution limit is phased out for adjusted gross incomes between $95,000 and
$110,000.
Rollovers. A rollover may be made to a Roth IRA only if it is a "qualified
rollover contribution." A "qualified rollover contribution" is a rollover
contribution to a Roth IRA from another Roth IRA or from a non-Roth IRA Policy,
but only if such rollover contribution meets the rollover requirements for IRA
Policies under section 408(d)(3) of the Code. In addition, a transfer may be
made to a Roth IRA directly from another Roth IRA or from a non-Roth IRA Policy.
Persons with adjusted gross incomes in excess of $100,000 or who are married and
file a separate return are not eligible to make a qualified rollover
contribution or a transfer in a taxable year from a non-Roth IRA Policy to a
Roth IRA.
In the case of a qualified rollover contribution or a transfer from a non-Roth
IRA Policy to a Roth IRA, any portion of the amount rolled over which would be
includible in gross income were it not part of a qualified rollover contribution
or a nontaxable transfer will be includible in gross income. However, the 10
percent penalty tax on premature distributions generally will not apply. If such
a rollover occurs before January 1, 1999, any portion of the amount rolled over
which is required to be included in gross income must be included ratably over
the 4-taxable year period beginning with the taxable year in which the rollover
is made.
Conversions. All or part of amounts in a non-Roth IRA Policy may be converted
into a Roth IRA. Such a conversion can be made without taking an actual
distribution from the IRA Policy. For example, an individual may make a
conversion by notifying the IRA Policy issuer or trustee, whichever is
applicable. The conversion of an IRA Policy to a Roth IRA is a special type of
qualified rollover contribution. Hence, the IRA Policy participant must be
eligible to make a qualified rollover contribution in order to convert an IRA
Policy to a Roth IRA. A conversion typically will result in the inclusion of
some or all of the IRA Policy value in gross income, as described above.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLLOVER, TRANSFER, OR
CONVERT ALL OR PART OF A NON-ROTH IRA POLICY TO A ROTH IRA. WHETHER AN OWNER
SHOULD DO SO WILL DEPEND ON THE IRA POLICY OWNER'S PARTICULAR FACTS AND
CIRCUMSTANCES, INCLUDING, BUT NOT LIMITED TO, SUCH FACTORS AS WHETHER THE OWNER
IS QUALIFIED TO MAKE SUCH A ROLLOVER, TRANSFER, OR CONVERSION, HIS OR HER
FINANCIAL SITUATION, AGE, CURRENT AND FUTURE INCOME NEEDS, YEARS TO RETIREMENT,
CURRENT AND FUTURE TAX RATES, AND ABILITY AND DESIRE TO PAY CURRENT INCOME TAXES
WITH RESPECT TO AMOUNTS ROLLED OVER, TRANSFERRED, OR CONVERTED, AND WHETHER SUCH
TAXES MIGHT NEED TO BE PAID WITH WITHDRAWALS FROM THE OWNER'S ROTH IRA (SEE
DISCUSSION BELOW OF "NONQUALIFIED DISTRIBUTIONS" AND "PENDING LEGISLATION").
PERSONS CONSIDERING A ROLLOVER, TRANSFER, OR CONVERSION SHOULD CONSULT A
QUALIFIED TAX ADVISOR.
<PAGE>
Qualified Distributions. Any "qualified distribution" from a Roth IRA is
excludible from gross income. A "qualified distribution" is a payment or
distribution which satisfies two requirements. First, the payment or
distribution must be (a) made after the Owner attains age 59 1/2, (b) made after
the Owner's death, (c) attributable to the Owner being disabled, or (d) a
qualified first-time homebuyer distribution within the meaning of section
72(t)(2)(F) of the Code. Second, the payment or distribution must be made in a
taxable year that is at least five years after (a) the first taxable year for
which a contribution was made to any Roth IRA established for the Owner, or (b)
in the case of a payment or distribution properly allocable to a qualified
rollover contribution from a non-Roth IRA Policy (or income allocable thereto),
the taxable year in which the rollover contribution was made.
Nonqualified Distributions. A distribution from a Roth IRA which is not a
qualified distribution is generally taxed in the same manner as a distribution
from a non-Roth IRA Policy. However, such a distribution will be treated as made
first from contributions to the Roth IRA to the extent that such distribution,
when added to all previous distributions from the Roth IRA, does not exceed the
aggregate amount of contributions to the Roth IRA. Generally, all Roth IRAs are
aggregated to determine the tax treatment of distributions.
Mandatory Distributions. Distributions of minimum amounts from a Roth IRA need
not commence at age 70 1/2. However, if the Owner dies before the entire
interest in a Roth IRA is distributed, any remaining interest in the Policy must
be distributed by December 31 of the calendar year containing the fifth
anniversary of the Owner's death, subject to certain exceptions.
As described in "Federal Tax Matters," there is some uncertainty regarding the
proper characterization of the Policy's death benefit for purposes of the tax
rules governing IRA Policies (which include Roth IRAs). Additionally, the
foregoing discusses the federal income tax consequences surrounding Roth IRAs
and does not address any state income tax consequences that may apply. Persons
intending to use the Policy in connection with a Roth IRA should seek competent
advice regarding these issues.
Pending Legislation. Pending legislation may modify these rules retroactively
to January 1, 1998
Simplified Employee Pension Plans
An employer may use a Policy to establish for an employee an individual
retirement annuity plan known as a "simplified employee pension plan" (or
"SEP"), if certain requirements set forth in the tax law are satisfied. Premium
Payments may be made into a Policy used in a SEP generally in accordance with
the rules applicable to individual retirement annuities, though with expanded
contribution limits. Such payments are deductible by the employer and are not
includible in the income of the employee. The taxation of distributed amounts
generally follows the rules applicable to individual retirement annuities. As
discussed above (see "IRA Policies"), there is some uncertainty regarding the
proper characterization of the Policy's Death Benefit provisions for purposes of
certain tax rules governing IRAs (which would include SEP IRAs). Employers
intending to use the Policy in connection with a SEP should seek competent tax
advice.
SIMPLE IRAs
Section 408(p) of the Code permits certain small employers to establish "SIMPLE
retirement accounts," including SIMPLE IRAs, for their employees. Under SIMPLE
IRAs, certain deductible contributions are made by both employees and employers.
SIMPLE IRAs are subject to various requirements, including limits on the amounts
that may be contributed, the persons who may be eligible, and the time when
distributions may commence. As discussed above (see "IRA Policies"), there is
some uncertainty regarding the proper characterization of the Policy's Death
Benefit provisions for purposes of certain tax rules governing IRAs (which would
include SIMPLE IRAs). Employers intending to use the Policy in connection with a
SIMPLE retirement account should seek competent tax advice.
Section 403(b) Annuities
Premium Payments. Premiums paid for a Policy on behalf of an employee by a
public educational institution or certain other tax-exempt employers are not
included in the employee's income if the Policy meets certain requirements set
forth in the tax law. There are a number of limitations on contributions to a
"Section 403(b) Policy". For example, Premium Payments made as elective
deferrals through a salary reduction agreement with an employee generally are
limited to $9,500 per year (or, if greater, $7,000 per year as adjusted by the
Service for cost of living increases). (Note that contributions to certain other
qualified retirement plans, such as Section 401(k) plans or to SEP plans, by the
Owner may reduce these limits on elective deferrals.) Other limitations may be
more restrictive.
In applying these and other rules applicable to a Section 403(b) Policy, that
Policy and all similar contracts purchased by the same employer for the same
employee are treated as one contract.
Tax Deferral During Accumulation Period. Until distributions are made from a
Section 403(b) Policy, increases in the Account Value are not taxed.
Purchasers should consider that the Policy provides a Death Benefit that in
certain circumstances may exceed the greater of the Premium Payments and the
Account Value. It is possible that such Death Benefit could be characterized as
an incidental death benefit. If the Death Benefit were so characterized, this
could result in currently taxable income to purchasers. In addition, there are
limitations on the amount of incidental death benefits that may be provided
under a Section 403(b) Policy. Even if the Death Benefit under the Policy were
characterized as an incidental death benefit, it is unlikely to violate those
limits unless the purchaser also purchases a life insurance contract as part of
his or her Section 403(b) Policy.
Taxation of Distributions and Rollovers. If no portion of the premiums paid into
a Section 403(b) Policy were includible in the employee's income, all amounts
distributed from the Policy are included in the recipient's income when
distributed. However, if Premium Payments were made to a Section 403(b) Policy
which were includible in the employee's income, a portion of each distribution
from the Policy typically is included in income when it is distributed. In such
a case, any amount distributed as an annuity payment or in a lump sum upon death
or a full surrender is taxed as described above in connection with such a
distribution from a Non-Qualified Policy, treating as the investment in the
contract the sum of the Premium Payments made into the Policy which were not
excluded from income as of the time the distribution commences or is made (less
any amounts previously distributed that were excluded from income). Also in such
a case, any amount distributed upon a partial surrender is partially includible
in income. The includible amount is the excess of the distribution over the
exclusion amount, which in turn equals the distribution multiplied by the ratio
of the investment in the contract to the Account Value.
In any event, subject to the direct rollover and mandatory withholding
requirements (discussed below), amounts may be rolled over from a Section 403(b)
Policy (or similarly qualifying contract) to another Section 403(b) Policy (or
similarly qualifying contract) or to an individual retirement account or
individual retirement annuity without incurring tax if certain conditions are
met. Only certain types of distributions may be rolled over.
A Section 403(b) Policy generally is required to prohibit distributions of
amounts attributable to elective deferrals and earnings thereon (made under a
salary reduction agreement) prior to age 59 1/2, separation from service, death
or disability. Distributions of elective deferrals (but not any income earned
thereon) may nonetheless be permitted in the case of hardship.
Penalty Taxes. Subject to certain exceptions, a penalty tax is also imposed on
distributions from a Section 403(b) Policy equal to 10 percent of the amount of
the distribution includible in income. (Amounts rolled over from a Section
403(b) Policy generally are excludable from income, although various withholding
requirements may nonetheless apply to such amounts, as discussed below). The
exceptions provide, however, that this penalty tax does not apply to
distributions made (1) on or after age 59 1/2, (2) on or after death or because
of disability (as defined in the tax law), (3) as part of a series of
substantially equal periodic payments beginning after the employee separates
from service and made over the life (or life expectancy) of the employee or the
joint lives (or joint life expectancies) of the employee and his or her
designated beneficiary (as defined in the tax law), or (4) after separation from
service after attainment of age 55.
In addition to the foregoing, failure to comply with a minimum distribution
requirement will result in the imposition of a penalty tax of 50 percent of the
amount by which a minimum required distribution exceeds the actual distribution
from a Section 403(b) Policy. Under this requirement, distributions of minimum
amounts specified by the tax law must commence by April 1 of the calendar year
following the calendar year in which the employee attains age 70 1/2, or when he
retires, whichever is later.
Deferred Compensation Plans of State and Local Government and Tax-Exempt
Organizations
Section 457 of the Code permits employees of state and local governments and
tax-exempt organization to defer a portion of their compensation without paying
current taxes. The employees must be participants in an eligible deferred
compensation plan. Generally, a Policy purchased by a state or local government
or a tax-exempt organization will not be treated as an annuity contract for
federal income tax purposes. Those who intend to use the Policies in connection
with such plans should seek competent tax advice.
<PAGE>
Other Qualified Retirement Plans
Premium Payments. Premium Payments made by an employer for a Policy used in
connection with a pension, profit-sharing, or annuity plan qualified under
section 401 or 403(a) of the Code are deductible by the employer within certain
limits. Such payments are also excludable from the income of the employee within
certain limits.
Tax Deferral and Taxation of Distributions. The deferral of taxation on Account
Value increases and the tax treatment of distributed amounts (including the
penalty tax) described above in the case of IRA Policies and Section 403(b)
Policies generally applies with respect to amounts held under or distributed
from Policies used in connection with other qualified retirement plans. For
Policies and amounts distributed therefrom to be eligible for such treatment,
certain requirements specified in the tax law must be satisfied.
The Policy provides a Death Benefit that in certain circumstances may exceed the
greater of the Premium Payments and the Account Value. It is possible that such
Death Benefit could be characterized as an incidental death benefit. There are
limitations on the amount of incidental death benefits that may be provided
under pension and profit sharing plans. In addition, the provision of such
benefits may result in currently taxable income.
Legal and Tax Advice for Qualified Plans
The requirements of the tax law applicable to qualified retirement plans, and
the tax treatment of amounts held and distributed under such plans, are quite
complex. Accordingly, a prospective purchaser of a Policy to be used in
connection with any such plan should seek competent legal and tax advice
regarding the suitability of the Policy for the situation involved, the
applicable requirements, and the treatment of the rights and benefits under a
Policy so used.
Direct Rollover and Mandatory Withholding Requirements
If a Policy is used in connection with a pension, profit-sharing, or annuity
plan qualified under sections 401(a) or 403(a) of the Code, or is a Section
403(b) Policy, any "eligible rollover distribution" from the Policy will be
subject to the new direct rollover and mandatory withholding requirements. An
eligible rollover distribution generally is any taxable distribution from a
qualified pension plan under section 401(a) of the Code, qualified annuity plan
under section 403(a) of the Code, or section 403(b) annuity or custodial
account, excluding certain amounts (such as minimum distributions required under
section 401(a)(9) of the Code and distributions which are part of a "series of
substantially equal periodic payments" made for the life or a specified period
of 10 years or more). Under these requirements, withholding at a rate of 20
percent will be imposed on any eligible rollover distribution received from the
Policy. Unlike withholding on certain other amounts distributed from the Policy,
discussed below, the recipient cannot elect out of withholding with respect to
an eligible rollover distribution. However, this 20 percent withholding will not
apply if, instead of receiving the eligible rollover distribution, the plan
participant elects to have it directly transferred to certain qualified
retirement plans. Prior to receiving an eligible rollover distribution, the plan
participant will receive notice (from the plan administrator or GE Capital Life)
explaining generally the direct rollover and mandatory withholding requirements
and how to avoid the 20 percent withholding by electing a direct transfer.
Federal Income Tax Withholding
Amounts distributed from a Policy, to the extent includible in income under the
federal tax laws, are subject to federal income tax withholding. GE Capital Life
will withhold and remit a portion of such amounts to the U.S. Government unless
properly notified by the Owner or other payee, at or before the time of the
distribution, that he or she chooses not to have any amounts withheld. In some
instances, however, GE Capital Life may be required to withhold amounts. (See
the discussion above regarding withholding requirements applicable to
distributions from various qualified retirement plans including Section 403(b)
policies.)
<PAGE>
GENERAL INFORMATION
The Owner
The Owner or Joint Owners are designated in the Policy. (Joint Owners own the
Policy equally with the right of survivorship.) The Owner or Joint Owners may
exercise all of the rights and privileges under the Policy, subject to the
rights of any beneficiary named irrevocably, and any assignee under an
assignment filed with GE Capital Life. Disposition of the Policy is subject to
the Policy's death provisions. (See "Death Provisions"). If the Owner dies
before the Annuitant, the Designated Beneficiary will become the sole owner of
the Policy following such a death, subject to the distribution rules in the
Policy's death provisions. If the Owner does not name a Joint Owner or a primary
beneficiary or contingent beneficiary, or if a Joint Owner or primary
beneficiary or contingent beneficiary is not living (or in existence for
purposes of non-natural designations) at the Owner's death, ownership will pass
to the Owner's estate. The Designated Beneficiary, for purposes of the required
distribution rules of Section 72(s) of the Code, will receive the required
distribution if the Owner dies prior to the Maturity Date. The required
distribution is more fully described in Death Provisions.
The Annuitant
The Policy names the Owner or someone else as the Annuitant. A contingent
Annuitant also may be named. If no contingent Annuitant has been named, the
Owner shall be treated as the contingent Annuitant at the death of the
Annuitant. GE Capital Life reserves the right to restrict the election of the
contingent Annuitant to conform to its administrative procedures and within the
restrictions of federal and state law. At the death of the Annuitant prior to
the Maturity Date, the contingent Annuitant, if any, may become the Annuitant in
certain circumstances. (See "Death Provisions").
The Beneficiary
One or more primary and contingent beneficiary(ies) may be designated by the
Owner in an application or in a written request. If changed, the primary
beneficiary or contingent beneficiary is as shown in the latest change filed
with GE Capital Life.
Changes by the Owner
Prior to the Maturity Date and during the Annuitant's life, the Owner or Joint
Owner may be changed if this right is reserved. Such changes may give rise to
taxable income and a 10% penalty tax. (See Taxation of Partial and Full
Surrenders.) The primary beneficiary, contingent beneficiary and contingent
Annuitant may also be changed if this right is reserved.
To make a change, a written request must be sent to GE Capital Life at its
Variable Annuity Service Center. The request and the change must be in a form
satisfactory to GE Capital Life and must actually be received by GE Capital
Life. The change will take effect as of the date the request is signed by the
Owner. The change will be subject to any payment made before the change is
recorded by GE Capital Life.
Evidence of Death, Age, Gender or Survival
GE Capital Life will require proof of death before it acts on Policy provisions
relating to the death of the Owner or other person(s). GE Capital Life may also
require proof of the age, gender or survival of any person or persons before
acting on any applicable Policy provision.
Payment under the Policies
GE Capital Life will usually pay any amounts payable as a result of full or
partial surrender within seven days after it receives a written request at its
Variable Annuity Service Center in a form satisfactory to it. GE Capital Life
will usually pay any Death Benefit within seven days after it receives Due Proof
of Death. Amounts payable as a result of full or partial surrender, death of the
Annuitant or the Maturity Date may be postponed whenever: (i) the New York Stock
Exchange is closed other than customary weekend and holiday closings, or trading
on the New York Stock Exchange is restricted as determined by the Securities and
Exchange Commission; or (ii) the Commission by order permits postponement for
the protection of Owners; or (iii) an emergency exists, as determined by the
Securities and Exchange Commission, as the result of which disposal of
securities is not reasonably practicable or it is not reasonably practicable to
determine the value of the net assets of the Separate Account.
Payments under a Policy which are derived from any amount paid to GE Capital
Life by check or draft may be postponed until such reasonable time as GE Capital
Life is satisfied that the check or draft has cleared the bank upon which it is
drawn.
If, at the time the Owner makes a full or partial surrender request, he or she
has not provided GE Capital Life with a written election not to have federal
income taxes withheld, GE Capital Life must by law withhold such taxes and remit
that amount to the federal government. Moreover, the Code provides that a 10%
penalty will be imposed on certain early surrenders. (See "Federal Tax
Matters").
Any Death Benefit proceeds that are paid in one lump sum will include interest
from the date of receipt of Due Proof of Death to the date of payment. Interest
will be paid at a rate set by GE Capital Life, or by law if greater. The minimum
interest rate which will be paid is 2.5%. Interest will not be paid beyond one
year or any longer time set by applicable law.
Distribution of the Policies
The Policies will be sold by individuals who, in addition to being licensed to
sell variable annuity policies for GE Capital Life, are also registered
representatives of Capital Brokerage Corporation, the principal underwriter of
the Policies, or of broker-dealers who have entered into written sales
agreements with the principal underwriter. Capital Brokerage Corporation, an
affiliate of GE Capital Life, is a Virginia corporation located at 6610 W. Broad
St., Richmond, Virginia 23230, and is registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 as a broker-dealer
and is a member of the National Association of Securities Dealers, Inc.
Writing agents of GE Capital Life will receive commissions based on a commission
schedule and rules. Commissions depend on the premiums paid. The agent will
receive a commission of 3% of the initial premium paid and any Additional
Premium Payments.
Agents may also be eligible to receive certain bonuses and allowances, as well
as retirement plan credits, based on commissions earned. Field management of GE
Capital Life receives compensation which may be based in part on the level of
agent commissions in their management units. Broker-dealers and their registered
agents will receive first-year and subsequent year commissions equivalent to the
total commissions and benefits received by the field management and writing
agents of GE Capital Life.
Voting Rights and Reports
To the extent required by law, GE Capital Life will vote the Funds' shares held
in the Separate Account at regular and special shareholder meetings of the
Funds, in accordance with instructions received from persons having voting
interests in the Separate Account. If, however, the 1940 Act or any regulation
thereunder should be amended, and as a result, GE Capital Life determines that
it is permitted to vote Fund shares in its own right, it may elect to do so.
Before Income Payments begin, the Owner exercises the voting rights under the
Policy. After Income Payments begin, the person receiving the Income Payments
has the voting interests. Before Income Payments begin, the number of votes
which each Owner has the right to instruct will be determined for a portfolio by
dividing a Policy's Account Value in the Investment Subdivision investing in
that portfolio by the net asset value per share of the portfolio. Fractional
shares will be counted. After Income Payments begin, the number of votes after
the first Income Payment is received will be determined by dividing the reserve
for such Policy allocated to the Investment Subdivision by the net asset value
per share of the corresponding portfolio. After Income Payments begin, the
reserves attributable to a Policy decrease as the reserves allocated to the
Investment Subdivision decrease. Fractional shares will be counted.
The number of votes which the Owner has the right to instruct will be determined
as of the date coincident with the date established by a particular Fund for
determining shareholders eligible to vote at the meeting of that Fund. Voting
instructions will be solicited by written communications prior to such meeting
in accordance with procedures established by that Fund.
<PAGE>
GE Capital Life will vote Fund shares held in the Separate Account as to which
no timely instructions are received, and Fund shares held in the Separate
Account that it owns as a consequence of accrued charges under the Policies and
other variable annuity policies supported by the Separate Account, in proportion
to the voting instructions which are received with respect to all policies
funded through the Separate Account. Each person having a voting interest will
receive proxy materials, reports and other materials relating to the appropriate
portfolio.
Year 2000 Compliance
Like other financial services providers, GE Capital Life utilizes computer
systems that may be affected by Year 2000 date data processing issues and it
also relies on services providers, including banks, custodians, administrators,
and investment managers that also may be affected. GE Capital Life is engaged in
a process to evaluate and develop plans to have its computer systems and
critical applications ready to process Year 2000 date data. It is also
confirming that its service providers are also so engaged. The resources that
are being devoted to this effort are substantial. Remedial actions include
inventorying the company's computer systems, applications and interfaces,
assessing the impact of the Year 2000 date data on them, developing a range of
solutions specific to particular situations and implementing appropriate
solutions. Some systems, applications and interfaces will be replaced or
upgraded to new software or new releases of existing software which are Year
2000 ready. Others will be modified as necessary to become ready. It is
difficult to predict with precision whether the amount of resources ultimately
devoted, or the outcome of these efforts, will have any negative impact on GE
Capital Life and Separate Account II. However, as of the date of this
prospectus, it is not anticipated that Owners will experience negative effects
on their investment, or on the services provided in connection therewith, as a
result of Year 2000 readiness implementation. GE Capital Life's target dates for
completion of these activities depend upon the particular situation. The
Company's goal is to be substantially Year 2000 ready for critical applications
by mid-1999, but there can be no assurance that GE Capital Life will be
successful in meeting its goal, or that interaction with other service providers
will not impair GE Capital Life's services at that time.
Legal Proceedings
GE Capital Life, like all other companies, is involved in lawsuits, including
class action lawsuits. In some class action and other lawsuits involving
insurance companies, substantial damages have been sought and/or material
settlement payments have been made. Although the outcome of any litigation
cannot be predicted with certainty, the Company believes that at the present
time there are not pending or threatened lawsuits that are reasonably likely to
have a material adverse impact on it or the Separate Account.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
Page
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
THE POLICIES
Transfer of Annuity Units After Income Payments Begin
TERMINATION OF PARTICIPATION AGREEMENTS
CALCULATION OF PERFORMANCE DATA
Money Market Investment Subdivisions
Other Investment Subdivisions
Other Performance Data
FEDERAL TAX MATTERS
Taxation of GE Capital Life
IRS Required Distributions
GENERAL PROVISIONS
Using the Policies as Collateral
Non-Participating
Misstatement of Age or Gender
Incontestability
Statement of Values
Written Notice
DISTRIBUTION OF THE POLICIES
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS
ADDITIONS, DELETIONS, OR SUBSTITUTIONS OF INVESTMENTS
STATE REGULATION OF GE CAPITAL LIFE
LEGAL MATTERS
EXPERTS
FINANCIAL STATEMENTS
<PAGE>
Part B
GE CAPITAL LIFE SEPARATE ACCOUNT II
STATEMENT OF ADDITIONAL INFORMATION
for the
FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY POLICY
offered by
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
125 Park Avenue, 6th Floor
New York, New York 10017-5529
(914) 253-8822
Variable Annuity Service Center
6610 West Broad Street
Richmond, VA 23230
(800) 313-5282
This Statement of Additional Information expands upon subjects discussed in the
current Prospectus for the flexible premium deferred variable annuity policy
("Policy") offered by GE Capital Life Assurance Company of New York ("GE Capital
Life" or the "Company"). You may obtain a copy of the Prospectus dated ______,
1998 by writing or calling us at our Variable Annuity Service Center at the
address or telephone number listed above. Terms used in the current Prospectus
for the Policy are incorporated in this Statement of Additional Information.
THIS STATEMENT OF ADDITIONAL INFORMATION IS
NOT A PROSPECTUS AND SHOULD BE READ ONLY
IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACT.
May ____, 1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS
Page
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
THE POLICIES
Transfer of Annuity Units After Income Payments Begin
TERMINATION OF PARTICIPATION AGREEMENTS
CALCULATION OF PERFORMANCE DATA
Money Market Investment Subdivisions
Other Investment Subdivisions
Other Performance Data
FEDERAL TAX MATTERS
Taxation of GE Capital Life
IRS Required Distributions
GENERAL PROVISIONS
Using the Policies as Collateral
Non-Participating
Misstatement of Age or Gender
Incontestability
Statement of Values
Written Notice
DISTRIBUTION OF THE POLICIES
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS
ADDITIONS, DELETIONS, OR SUBSTITUTIONS OF INVESTMENTS
STATE REGULATION OF GE CAPITAL LIFE
LEGAL MATTERS
EXPERTS
FINANCIAL STATEMENTS
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
GE Capital Life Assurance Company of New York (known as First GNA Life Insurance
Company of New York until February 1, 1996) is a stock life insurance company
that was incorporated in New York on February 23, 1988. GE Capital Life is
ultimately a subsidiary of General Electric Capital Corporation ("GE Capital"),
a New York corporation that is a diversified financial services company whose
subsidiaries consist of specialty insurance, equipment management, and
commercial and consumer financing businesses. GE Capital's ultimate parent,
General Electric Company, founded more than one hundred years ago by Thomas
Edison, is the world's largest manufacturer of jet engines, engineering
plastics, medical diagnostic equipment and large electric power generation
equipment.
GE Capital Life is licensed solely in New York and specializes in writing
individual fixed-rate deferred annuities, fixed payout immediate annuities and
variable deferred annuities. GE Capital Life's principal offices are located at
124 Park Avenue, 6th Floor, New York, NY 10017-5529
THE POLICIES
Transfer of Annuity Units After Income Payments Begin
After Income Payments begin, upon the payee's written request Annuity Units may
be transferred once per calendar year from the Investment Subdivision in which
they are currently held. GE Capital Life reserves, however, the right to refuse
to execute any transfer if any of the Investment Subdivisions that would be
affected by the transfer are unable to purchase or redeem shares of the mutual
funds in which the Investment Subdivisions invest. The amount of the increase in
the number of Annuity Units for the Investment Subdivision to which the transfer
is made is (a) times (b), divided by (c) where: (a) is the number of Annuity
Units for the Investment Subdivision in which the Annuity Units are currently
held; (b) is the Annuity Unit Value for the Investment Subdivision in which the
Annuity Units are currently held; and (c) is the Annuity Unit Value for the
Investment Subdivision to which the transfer is made.
If the number of Annuity Units remaining in an Investment Subdivision after the
transfer is less than 1, GE Capital Life will transfer the amount remaining in
addition to the amount requested. GE Capital Life will not transfer into any
Investment Subdivision unless the number of Annuity Units of that Investment
Subdivision after the transfer is at least 1. The amount of the Income Payment
as of the date of the transfer will not be affected by the transfer.
TERMINATION OF PARTICIPATION AGREEMENTS
The participation agreements pursuant to which the Funds sell their shares to
the Separate Account contain varying provisions regarding termination. The
following summarizes those provisions:
Janus Aspen Series. This agreement may be terminated by the parties on six
months' advance written notice.
Variable Insurance Products Fund, Variable Insurance Products Fund II and
Variable Insurance Products Fund III. ("the Fund") These agreements provide for
termination (1) on one year's advance notice by either party, (2) at GE Capital
Life's option if shares of the Fund are not reasonably available to meet
requirements of the Policies, (3) at the option of either party if certain
enforcement proceedings are instituted against the other, (4) upon vote of the
policyowners to substitute shares of another mutual fund, (5) at GE Capital
Life's option if shares of the Fund are not registered, issued, or sold in
accordance with applicable laws, if the Fund ceases to qualify as a regulated
investment company under the Code, (6) at the option of the Fund or its
principal underwriter if it determines that GE Capital Life has suffered
material adverse changes in its business or financial condition or is the
subject of material adverse publicity, (7) at the option of GE Capital Life if
the Fund has suffered material adverse changes in its business or financial
condition or is the subject of material adverse publicity, or (8) at the option
of the Fund or its principal underwriter if GE Capital Life decides to make
another mutual fund available as a funding vehicle for its Policies.
Oppenheimer Variable Account Funds. This agreement may be terminated by the
parties on six months' advance written notice.
Federated Insurance Series. This agreement may be terminated by any of the
parties on 180 days written notice to the other parties.
Alger American Fund. This agreement may be terminated at the option of any party
upon six months' written notice to the other parties, unless a shorter time is
agreed to by the parties.
PBHG Insurance Series Fund, Inc. This agreement may be terminated at the option
of any party upon six months' written notice to the other parties, unless a
shorter time is agreed to by the parties.
Goldman Sachs Variable Insurance Trust. This agreement may be terminated at the
option of any party upon six months' written notice to the other parties, unless
a shorter time is agreed to by the parties.
GE Investments Funds, Inc. has entered into a Stock Sale Agreement with GE
Capital Life pursuant to which the Fund sells its shares to Separate Account II.
CALCULATION OF PERFORMANCE DATA
From time to time, GE Capital Life may disclose total return, yield, and other
performance data for the Investment Subdivisions pertaining to the Policies.
Such performance data will be computed, or accompanied by performance data
computed, in accordance with the standards defined by the Securities and
Exchange Commission.
The calculations of yield, total return, and other performance data do not
reflect the effect of any premium tax.
Money Market Investment Subdivisions
From time to time, advertisements and sales literature may quote the yield of
the "money market" Investment Subdivision for a seven-day period, in a manner
which does not take into consideration any realized or unrealized gains or
losses on shares of the corresponding money market investment portfolio or on
its portfolio securities. This current annualized yield is computed by
determining the net change (exclusive of unrealized gains and losses on the sale
of securities and unrealized appreciation and depreciation and income other than
investment income) at the end of the seven-day period in the value of a
hypothetical account under a Policy having a balance of one unit in that "money
market" Investment Subdivision at the beginning of the period, dividing such net
change in Account Value by the value of the account at the beginning of the
period to determine the base period return, and annualizing the result on a
365-day basis. The net change in Account Value reflects: (1) net income from the
investment portfolio attributable to the hypothetical account; and (2) charges
and deductions imposed under the Policy which are attributable to the
hypothetical account. The charges and deductions include the per unit charges
for the annual Policy Maintenance Charge, Administrative Expense Charge, and the
Mortality and Expense Risk Charge. For purposes of calculating current yields
for a Policy, an average per unit annual Policy Maintenance Charge is used.
Current Yield will be calculated according to the following formula:
Current Yield = ((NCP - ES)/UV) X (365/7)
where:
NCP = the net change in the value of the investment portfolio (exclusive of
realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment income) for
the seven-day period attributable to a hypothetical account having a
balance of one Investment Subdivision unit.
ES = per unit expenses of the hypothetical account for the seven-day period.
UV = the unit value on the first day of the seven-day period.
The effective yield of a "money market" Investment Subdivision determined on a
compounded basis for the same seven-day period may also be quoted. The effective
yield is calculated by compounding the base period return according to the
following formula:
Effective Yield = (1 + ((NCP - ES)/UV))365/7 - 1
<PAGE>
where:
NCP = the net change in the value of the investment portfolio (exclusive of
realized gains or losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment income) for
the seven-day period attributable to a hypothetical account having a
balance of one Investment Subdivision unit.
ES = per unit expenses of the hypothetical account for the seven-day period.
UV = the unit value for the first day of the seven-day period.
The yield on amounts held in a "money market" Investment Subdivision normally
will fluctuate on a daily basis. Therefore, the disclosed yield for any given
past period is not an indication or representation of future yields or rates of
return. A "money market" Investment Subdivision's actual yield is affected by
changes in interest rates on money market securities, average portfolio maturity
of the Investment Subdivision's corresponding money market investment portfolio,
the types and quality of portfolio securities held by that investment portfolio,
and that investment portfolio's operating expenses. Because of the charges and
deductions imposed under the Policy, the yield for a "money market" Investment
Subdivision will be lower than the yield for its corresponding "money market"
investment portfolio.
Yield calculations do not take into account the Surrender Charge under the
Policy, a maximum of 6% of each Premium Payment made during the six years prior
to a full or partial surrender.
Other Investment Subdivisions
Total Return. Sales literature or advertisements may quote total return,
including average annual total return for one or more of the Investment
Subdivisions for various periods of time including 1 year, 5 years and 10 years,
or from inception if any of those periods are not available.
Average annual total return for a period represents the average annual
compounded rate of return that would equate an initial investment of $1,000
under a Policy to the redemption value of that investment as of the last day of
the period. The ending date for each period for which total return quotations
are provided will be for the most recent practicable, considering the type and
media of the communication, and will be stated in the communication.
Average annual total return will be calculated using Investment Subdivision unit
values and deductions for the annual Policy Maintenance Charge, and the
Surrender Charge as described below:
1. GE Capital Life calculates unit value for each Valuation Period based on the
performance of the Investment Subdivision's underlying investment portfolio
(after deductions for Fund expenses, the Administrative Expense Charge, and
the Mortality and Expense Risk Charge).
2. The Policy Maintenance Charge is $25 per year, deducted at the beginning of
each Policy Year after the first. For purposes of calculating average annual
total return, an average Policy Maintenance Charge (currently 0.1% of Account
Value attributable to the hypothetical investment) is used.
3. The Surrender Charge will be determined by assuming a surrender of the Policy
at the end of the period. Average annual total return for periods of six
years or less will therefore reflect the deduction of a Surrender Charge.
4. Total return does not consider Annual Death Benefit Charges.
5. Total return will then be calculated according to the following formula:
TR = (ERV/P)1/N - 1
where:
TR = The average annual total return for the period.
ERV = The ending redeemable value (reflecting deductions as described above)
of the hypothetical investment at the end of the period.
P = A hypothetical single investment of $1,000.
N = The duration of the period (in years).
Other Performance Data
GE Capital Life may disclose cumulative total return in conjunction with the
standard format described above. The cumulative total return will be calculated
using the following formula:
CTR = (ERV/P) - 1
where:
CTR = the cumulative total return for the period.
ERV = the ending redeemable value (reflecting deductions as described above)
of the hypothetical investment at the end of the period.
P = a hypothetical single investment of $1000.
Sales literature may also quote cumulative and/or average annual total return
that does not reflect the Surrender Charge. This is calculated in exactly the
same way as average annual total return, except that the ending redeemable value
of the hypothetical investment is replaced with an ending value for the period
that does not take into account any charges on withdrawn amounts.
In addition, GE Capital Life may present historic performance data for the
Investment Subdivisions since their inception reduced by some or all of the fees
and charges under the Policy. Such adjusted historic performance includes data
that precedes the inception dates of the Investment Subdivisions. This data is
designed to show the performance that would have resulted if the Policy had been
in existence during that time.
Other non-standard quotations of Investment Subdivision performance may also be
used in sales literature. Such quotations will be accompanied by a description
of how they were calculated.
FEDERAL TAX MATTERS
Taxation of GE Capital Life
GE Capital Life does not expect to incur any federal income tax liability
attributable to investment income or capital gains retained as part of the
reserves under the Policies. (See "Federal Tax Matters" in the Prospectus.)
Based upon these expectations, no charge is being made currently to the Separate
Account for federal income taxes which may be attributable to the Separate
Account. GE Capital Life will periodically review the question of a charge to
the Separate Account for federal income taxes related to the Separate Account.
Such a charge may be made in future years if GE Capital Life believes that it
may incur federal income taxes. This might become necessary if the tax treatment
of GE Capital Life is ultimately determined to be other than what GE Capital
Life currently believes it to be, if there are changes made in the federal
income tax treatment of annuities at the corporate level, or if there is a
change in GE Capital Life's tax status. In the event that GE Capital Life should
incur federal income taxes attributable to investment income or capital gains
retained as part of the reserves under the Policies, the Account Value would be
correspondingly adjusted by any provision or charge for such taxes.
If there is a material change in applicable state or local tax laws causing an
increase in taxes other than premium taxes (for which GE Capital Life currently
may impose a charge), charges for such taxes attributable to the Separate
Account may be made.
IRS Required Distributions
In order to be treated as an annuity contract for federal income tax purposes,
section 72(s) of the Code requires any Non-Qualified Policy to provide that (a)
if any Owner dies on or after the Maturity Date but prior to the time the entire
interest in the Policy has been distributed, the remaining portion of such
interest will be distributed at least as rapidly as under the method of
distribution being used as of the date of that Owner's death; and (b) if any
Owner dies prior to the Maturity Date, the entire interest in the Policy will be
distributed (1) within five years after the date of that Owner's death, or (2)
as Income Payments which will begin within one year of that Owner's death and
which will be made over the life of the Owner's "designated beneficiary" or over
a period not extending beyond the life expectancy of that beneficiary. The
"designated beneficiary" generally is the person who will be treated as the sole
owner of the Policy following the death of the Owner, Joint Owner or, in certain
circumstances, the Annuitant. However, if the "designated beneficiary" is the
surviving spouse of the decedent, these distribution rules will not apply until
the surviving spouse's death (and this spousal exception will not again be
available). If any Owner is not an individual, the death of the Annuitant will
be treated as the death of an Owner for purposes of these rules.
The Non-Qualified Policies contain provisions which are intended to comply with
the requirements of section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. GE Capital Life intends to
review such provisions and modify them if necessary to assure that they comply
with the requirements of Code section 72(s) when clarified by regulation or
otherwise.
Other rules may apply to Qualified Policies.
GENERAL PROVISIONS
Using the Policies as Collateral
A Non-Qualified Policy can be assigned as collateral security. GE Capital Life
must be notified in writing if a Policy is assigned. Any payment made before the
assignment is recorded at GE Capital Life's Home Office will not be affected. GE
Capital Life is not responsible for the validity of an assignment. An Owner's
rights and the rights of a Beneficiary may be affected by an assignment.
A Qualified Policy may not be sold, assigned, transferred, discounted, pledged
or otherwise transferred except under such conditions as may be allowed under
applicable law.
Non-Participating
The Policy is non-participating. No dividends are payable.
Misstatement of Age or Gender
If an Annuitant's age or gender was misstated on the Policy data page, any
Policy benefits or proceeds, or availability thereof, will be determined using
the correct age and gender. If any overpayment has been made, an adjustment
including interest on the amount of the overpayment will be made to the next
payment(s). Any underpayments will be credited with interest on the amount of
the underpayment and will be paid in full with the next payment. The interest
rate used will be 3% per annum, unless otherwise required by law.
Incontestability
GE Capital Life will not contest the Policy.
Statement of Values
At least once each year, GE Capital Life will send the Owner a statement of
values within 30 days after each report date. The statement will show Account
Value, Premium Payments and charges made during the report period.
Written Notice
Any written notice should be sent to GE Capital Life at its Home Office at 125
Park Avenue, 6th Floor, New York, NY 10017-5529 or to its Variable Annuity
Service Center at 6610 West Broad Street Richmond, VA 23230.
The Policy number and the Annuitant's full name must be included.
GE Capital Life will send all notices to the Owner at the last known address on
file with GE Capital Life.
DISTRIBUTION OF THE POLICIES
Capital Brokerage Corporation, the principal underwriter of the Policies, is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as a broker-dealer and is member of the National
Association of Securities Dealers, Inc.
The Policies are offered to the public through brokers licensed under the
federal securities laws and state insurance laws that have entered into
agreements with Capital Brokerage Corporation. The offering is continuous and
Capital Brokerage Corporation does not anticipate discontinuing the offering of
the Policies. However, GE Capital Life does reserve the right to discontinue the
offering of the Policies.
LEGAL DEVELOPMENTS REGARDING EMPLOYMENT-RELATED BENEFIT PLANS
On July 6, 1983, the Supreme Court held in Arizona Governing Committee for Tax
Deferred Annuity v. Norris, 463 U.S. 1073 (1983), that optional annuity benefits
provided under an employee's deferred compensation plan could not, under Title
VII of the Civil Rights Act of 1964, vary between men and women on the basis of
sex. The Policy contains guaranteed annuity purchase rates for certain optional
payment plans that distinguish between men and women. Accordingly, employers and
employee organizations should consider, in consultation with legal counsel, the
impact of Norris, and Title VII generally, on any employment-related insurance
or benefit program for which a Policy may be purchased.
ADDITIONS, DELETIONS, OR SUBSTITUTIONS OF INVESTMENTS
GE Capital Life reserves the right, subject to compliance with applicable law,
to make additions to, deletions from, or substitutions for the shares of the
Fund portfolios that are held by the Separate Account or that the Separate
Account may purchase. If the shares of a portfolio are no longer available for
investment or if in its judgment further investment in any portfolio should
become inappropriate in view of the purposes of the Separate Account, GE Capital
Life reserves the right to eliminate the shares of any of the portfolios of the
Funds and to substitute shares of another portfolio or of another open-end,
registered investment company. GE Capital Life will not substitute any shares
attributable to an Owner's Account Value in the Separate Account without notice
and prior approval of the Securities and Exchange Commission, to the extent
required by the 1940 Act or other applicable law. Nothing contained herein shall
prevent the Separate Account from purchasing other securities for other series
or classes of policies or from permitting a conversion between portfolios or
classes of policies on the basis of requests made by Owners.
GE Capital Life also reserves the right to establish additional Investment
Subdivisions of the Separate Account, each of which would invest in a separate
portfolio of a Fund, or in shares of another investment company, with a
specified investment objective. New Investment Subdivisions may be established
when, in the sole discretion of GE Capital Life, marketing, tax or investment
conditions warrant, and any new Investment Subdivisions may be made available to
existing Owners on a basis to be determined by GE Capital Life. One or more
Investment Subdivisions may also be eliminated if, in the sole discretion of GE
Capital Life, marketing, tax, or investment conditions warrant.
In the event of any such substitution or change, GE Capital Life may, by
appropriate endorsement, make such changes in these and other policies as may be
necessary or appropriate to reflect such substitution or change. If deemed by GE
Capital Life to be in the best interests of persons having voting rights under
the Policies, and, if permitted by law, GE Capital Life may deregister the
Separate Account under the 1940 Act in the event such registration is no longer
required; manage the Separate Account under the direction of a committee; or
combine the Separate Account with other GE Capital Life separate accounts. To
the extent permitted by applicable law, GE Capital Life may also transfer the
assets of the Separate Account associated with the Policies to another separate
account. In addition, GE Capital Life may, when permitted by law, restrict or
eliminate any voting rights of Owners or other persons who have voting rights as
to the Separate Account.
STATE REGULATION OF GE CAPITAL LIFE
GE Capital Life, a stock life insurance company organized under the laws of New
York, is subject to regulation by the New York Insurance Department. An annual
statement is filed with the New York Superintendent of Insurance each year
covering the operations and reporting on the financial condition of GE Capital
Life as of December 31 of the preceding year. Periodically, the Superintendent
of Insurance examines the liabilities and reserves of GE Capital Life and the
Separate Account and certifies their adequacy, and a full examination of GE
Capital Life's operations is conducted by the New York Insurance Department at
least once every five years.
LEGAL MATTERS
Sutherland, Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain legal matters relating to federal securities laws applicable to the
issue and sale of the Policies described in this Prospectus. All matters of New
York law pertaining to the Policy, including the validity of the Policy and GE
Capital Life's right to issue the Policies under New York insurance law, have
been passed upon by Michael J. Furney, Assistant Vice President of GE Capital
Life.
EXPERTS
The financial statements of GE Capital Life Assurance Company of New York as of
December 31, 1997 and 1996, and for each of the years in the three-year period
ended December 31, 1997, have been included herein in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein and in the registration statement, upon the authority of said
firm as experts in accounting and auditing.
FINANCIAL STATEMENTS
No financial statements are presented for the Separate Account because the
Separate Account has not yet commenced operations.
The financial statements of GE Capital Life Assurance Company of New York
included herein should be distinguished from the financial statements of the
Separate Account (when presented) and should be considered only as bearing on
the ability of GE Capital Life to meet its obligations under the Policy.
Such financial statements of GE Capital Life Assurance Company of New York
should not be considered as bearing on the investment performance of the assets
held in the Separate Account.
<PAGE>
GE CAPITAL LIFE ASSURANCE
COMPANY OF NEW YORK
Financial Statements
December 31, 1997 and 1996
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
The Board of Directors
GE Capital Life Assurance Company of New York:
We have audited the accompanying balance sheets of GE Capital Life Assurance
Company of New York as of December 31, 1997 and 1996, and the related statements
of income, shareholders' interest, and cash flows for each of the years in the
three-year period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GE Capital Life Assurance
Company of New York as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1997 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
January 23, 1998
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
Balance Sheets
December 31, 1997 and 1996
(Dollar amounts in millions, except per share amounts)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Assets 1997 1996
<S> <C>
- -------------------------------------------------------------------------------------------------------------------------
Investments:
Fixed maturities available-for-sale, at fair value (amortized cost of $1,468.2 in 1997
and $1,395.0 in 1996) $ 1,490.2 1,389.9
Mortgage loans, (net of valuation allowance of $.5 in 1997 and $.2 in 1996) 173.5 142.4
Policy loans 1.4 1.3
Short-term investments 2.5 20.5
- -------------------------------------------------------------------------------------------------------------------------
Total investments 1,667.6 1,554.1
Cash 1.9 1.2
Accrued investment income 30.3 28.9
Deferred acquisition costs 42.7 32.0
Intangible assets 56.9 74.1
Other assets 8.1 18.7
- -------------------------------------------------------------------------------------------------------------------------
Total assets $ 1,807.5 1,709.0
- -------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Interest
- -------------------------------------------------------------------------------------------------------------------------
Liabilities:
Future annuity and contract benefits $ 1,446.4 1,365.1
Unearned premiums 10.5 6.8
Liability for policy and contract claims 6.4 7.0
Other policyholder liabilities 34.3 14.6
Accounts payable and accrued expenses 46.5 66.1
Deferred income tax liability 3.1 0.2
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,547.2 1,459.8
- -------------------------------------------------------------------------------------------------------------------------
Shareholders' interest:
Common stock ($1,000 par value, 2,000 shares authorized, issued 2.0 2.0
and outstanding)
Additional paid-in capital 259.4 259.4
Net unrealized investment gains (losses) 7.3 (1.3)
Accumulated deficit (8.4) (10.9)
- -------------------------------------------------------------------------------------------------------------------------
Total shareholders' interest 260.3 249.2
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' interest $ 1,807.5 1,709.0
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
Statements of Income
Years ended December 31, 1997, 1996 and 1995
(Dollar amounts in millions)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1997 1996 1995
<S> <C>
- ---------------------------------------------------------------------------------------------
Revenues:
Net investment income $ 111.6 102.4 91.6
Net realized investment gains (losses) 2.2 (0.4) (1.9)
Premiums 46.9 57.2 7.4
Other income 3.7 4.1 4.9
- ---------------------------------------------------------------------------------------------
Total revenues 164.4 163.3 102.0
Benefits and expenses:
Interest credited 71.7 67.1 63.3
Benefits and other changes in policy reserves 42.5 54.7 10.0
Commissions 17.6 11.0 4.1
General expenses 11.0 9.3 4.6
Amortization of intangibles, net 8.2 7.1 6.1
Increase in deferred acquisition costs, net (15.6) (11.6) (4.0)
- ---------------------------------------------------------------------------------------------
Total benefits and expenses 135.4 137.6 84.1
- ---------------------------------------------------------------------------------------------
Income before income taxes 29.0 25.7 17.9
Provision for income taxes 11.5 9.8 8.4
- ---------------------------------------------------------------------------------------------
Net income $ 17.5 15.9 9.5
- ---------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
Statements of Shareholders' Interest
Years ended December 31, 1997, 1996 and 1995
(Dollar amounts in millions)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Unrealized
Common stock Additional investment Retained Total
---------------------- paid-in gains earnings shareholders'
Shares Amount capital (losses) (deficit) interest
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1994 2,000 $ 2.0 257.8 (69.7) (5.8) 184.3
Net income - - - - 9.5 9.5
Purchase price adjustments - - 3.0 - - 3.0
Net unrealized investment gains - - - 74.8 - 74.8
Dividend - - - - (14.8) (14.8)
- --------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1995 2,000 2.0 260.8 5.1 (11.1) 256.8
Net income - - - - 15.9 15.9
Other - - (1.4) - - (1.4)
Net unrealized investment losses - - - (6.4) - (6.4)
Dividend - - - - (15.7) (15.7)
- --------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1996 2,000 2.0 259.4 (1.3) (10.9) 249.2
Net income - - - - 17.5 17.5
Net unrealized investment gains - - - 8.6 - 8.6
Dividend - - - - (15.0) (15.0)
- --------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1997 2,000 $ 2.0 259.4 7.3 (8.4) 260.3
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
Statements of Cash Flows
Years ended December 31, 1997, 1996 and 1995
(Dollar amounts in millions)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
1997 1996 1995
<S> <C>
- ----------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 17.5 15.9 9.5
Adjustments to reconcile net income to net cash provided by
operating activities:
Increase in future policy benefits 106.1 108.3 69.3
Assumptive reinsurance premiums - (23.0) -
Net realized investment losses (gains) (2.2) 0.4 1.9
Amortization of investment premiums and discounts 4.7 7.7 7.1
Amortization of intangibles 8.2 7.1 6.1
Deferred income tax benefit (1.7) (3.1) (3.5)
Change in certain assets and liabilities:
Decrease (increase) in:
Accrued investment income (1.4) (4.8) (0.9)
Deferred acquisition costs (15.6) (11.6) (4.0)
Other assets, net 10.6 (14.6) 9.4
Increase (decrease) in:
Other policy related balances 22.8 17.9 5.2
Accounts payable and accrued expenses (19.6) 45.4 6.8
- ---------------------------------------------------------------------------------------------------------
Total adjustments 111.9 129.7 97.4
- ---------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 129.4 145.6 106.9
- ---------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from investments in fixed maturities and real estate 264.9 228.6 372.6
Purchases of fixed maturities (340.4) (183.6) (413.6)
Mortgage and policy loan originations (40.6) (112.1) (33.8)
Mortgage and policy loan repayments 9.2 3.2 0.1
- ---------------------------------------------------------------------------------------------------------
Net cash used in investing activities (106.9) (63.9) (74.7)
- ---------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issue of investment contracts 151.1 121.6 186.0
Redemption and benefit payments on investment contracts (175.9) (181.7) (188.3)
Dividends paid (15.0) (15.7) (14.8)
- ---------------------------------------------------------------------------------------------------------
Net cash used in financing activities (39.8) (75.8) (17.1)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (17.3) 5.9 15.1
Cash and cash equivalents at beginning of year 21.7 15.8 0.7
- ---------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 4.4 21.7 15.8
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
Notes to Financial Statements
December 31, 1997, 1995 and 1996
(Dollar amounts in millions)
- -------------------------------------------------------------------------------
(1) Basis of Presentation and Summary of Significant Accounting Policies
The accompanying financial statements include the historical operations
and accounts of GE Capital Life Assurance Company of New York (GECLA-NY
or the Company).
GE Capital Life Assurance Company of New York is a majority-owned
subsidiary of General Electric Capital Assurance Company (GE Capital
Assurance), which, in turn, is wholly-owned by GE Financial Assurance
Holdings, Inc. (GE Financial Assurance). The remaining minority
interest is owned by Great Northern Insurance Annuity Corporation
(GNIAC), which is also a wholly-owned subsidiary of GE Capital
Assurance.
Basis of Presentation
These financial statements have been prepared on the basis of generally
accepted accounting principles (GAAP) for stock life insurance
companies, which vary in several respects from accounting practices
prescribed or permitted by the Department of Insurance of the State of
New York where the Company is domiciled. The preparation of financial
statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts and related
disclosures. Actual results could differ from those estimates.
Certain reclassifications have been made to the 1996 and 1995 financial
statements to conform to the 1997 presentation. These reclassifications
have no effect on reported net income or shareholders' interest.
Products
The Company markets and sells products in the State of New York through
financial institutions and various agencies. The primary products of
the Company are investment type deferred annuities, structured
settlements, immediate annuities, and long-term care policies. During
1997, five financial institutions accounted for 77% of product sales;
of that 77%, one financial institution accounted for 55% of total
product sales.
<PAGE>
(1) Continued
Revenues
Investment income is recorded when earned. Investment gains and losses
are calculated on the basis of specific identification. Premiums on
long-duration insurance products are recognized as earned when due or,
in the case of life contingent immediate annuities, when the contracts
are issued. Premiums received under annuity contracts without
significant mortality risk are not reported as revenues but as future
annuity and contract benefits liability. Other income consists
primarily of surrender charges on certain policies. Surrender charges
are recognized as income when the policy is surrendered.
Statements of Cash Flows
Certificates and other time deposits are classified as short-term
investments on the balance sheets and considered cash equivalents in
the statements of cash flows.
Investments
The Company has designated its fixed maturities as available-for-sale.
The fair value for fixed maturities is based on quoted market prices,
where available. For fixed maturities not actively traded, fair values
are estimated using values obtained from independent pricing services
or, in the case of private placements, are estimated by discounting
expected future cash flows using a current market rate applicable to
the credit quality, call features and maturity of the investments, as
applicable.
Changes in the market values of investments available-for-sale, net of
the effect on deferred policy acquisition costs, present value of
future profits and deferred federal income taxes, are reflected as
unrealized investment gains or losses in a separate component of
shareholders' interest and, accordingly, have no effect on net income.
Unrealized losses that are considered other than temporary are
recognized in earnings through an adjustment to the amortized cost
basis of the underlying securities.
<PAGE>
(1) Continued
Investment income on mortgage-backed securities is initially based upon
yield, cash flow and prepayment assumptions at the date of purchase.
Subsequent revisions in those assumptions are recorded using the
retrospective method, whereby the amortized cost of the securities is
adjusted to the amount that would have existed had the revised
assumptions been in place at the date of purchase. The adjustments to
amortized cost are recorded as a charge or credit to investment income.
The Company does not engage in derivatives trading, market-making or
other speculative activities. The Company has no significant open or
outstanding derivative transactions during the years 1997, 1996 or
1995.
Mortgage and policy loans are stated at the unpaid principal balance of
such loans, net of allowances for estimated uncollectible amounts.
Deferred Acquisition Costs
Deferred acquisition costs include costs and expenses which vary with
and are primarily related to the acquisition of insurance and
investment contracts, such as commissions, direct advertising and
printing, and certain support costs such as underwriting and policy
issue expenses. Deferred acquisition costs capitalized are determined
by actual costs and expenses incurred by product in the year of issue.
For investment contracts, the amortization of deferred acquisition
costs is based on the present value of the anticipated gross profits
resulting from investments, interest credited, surrender charges,
mortality and maintenance expenses. As actual gross profits vary from
projected, the impact on amortization is included in net income. For
insurance contracts, the acquisition costs are amortized in relation to
the benefit payments or the present value of expected future premiums.
Recoverability of deferred acquisition costs is evaluated periodically
by comparing the current estimate of expected future gross profits to
the unamortized asset balances. If such comparison indicates that the
expected gross profits will not be sufficient to recover the asset, the
difference will be charged to expense.
<PAGE>
(1) Continued
Intangible Assets
Present Value of Future Profits - In conjunction with the acquisition
of the Company, a portion of the purchase price was assigned to the
right to receive future gross profits arising from existing insurance
and investment contracts. This intangible asset, called the present
value of future profits (PVFP), represents the actuarially determined
present value of the projected future cash flows from the acquired
policies.
Goodwill - Goodwill is amortized over its estimated period of 25 years
of benefit on the straight-line method. Goodwill in excess of
associated expected operating cash flows is considered to be impaired
and is written down to fair value.
Federal Income Taxes
The Company is included with GE Capital Assurance in a life insurance
consolidated federal income tax return. Deferred taxes are allocated by
applying the asset and liability method of accounting for deferred
income taxes to members of the group as if each member was a separate
taxpayer. Intercompany balances are settled annually.
Reinsurance
Premium revenue, benefits, underwriting, acquisition and insurance
expenses are reported net of the amounts relating to reinsurance ceded
to other companies, except for reinsurance costs for universal life
products. Amounts due from reinsurers for incurred and estimated future
claims are reflected in the reinsurance recoverable asset which is
included in other assets on the balance sheet. The cost of reinsurance
is accounted for over the terms of the related treaties using
assumptions consistent with those used to account for the underlying
reinsured policies.
<PAGE>
(1) Continued
Future Annuity and Contract Benefits
Future annuity and contract benefits consists of the liabilities for
life insurance policies, accident and health, and deferred annuity
contracts. The liability for insurance and accident and health
contracts is calculated based upon actuarial assumptions as to
mortality, morbidity, interest, expense and withdrawals, with
experience adjustments for adverse deviation where appropriate. The
liability for deferred annuity contracts is generally equal to the
policyholder's current account value.
Liability for Policy and Contract Claims
The liability for policy and contract claims represents the amount
needed to provide for the estimated ultimate cost of settling claims
relating to insured events that have occurred on or before the end of
the respective reporting period. The estimated liability includes
requirements for future payments of (a) claims that have been reported
to the insurer, (b) claims related to insured events that have occurred
but that have not been reported to the insurer as of the date the
liability is estimated, and (c) claim adjustment expenses. Claim
adjustment expenses include costs incurred in the claim settlement
process such as legal fees and costs to record, process, and adjust
claims.
(2) Investments
General
For the years ended December 31, the sources of investment income of
the Company were as follows:
1997 1996 1995
- ------------------------------------------------------------------
Fixed maturities $ 99.1 95.6 91.4
Mortgage loans 13.6 8.4 0.8
- ------------------------------------------------------------------
Gross investment income 112.7 104.0 92.2
Investment expenses (1.1) (1.6) (0.6)
- ------------------------------------------------------------------
Net investment income $ 111.6 102.4 91.6
- ------------------------------------------------------------------
<PAGE>
(2) Continued
For the years ended December 31, sales proceeds and gross realized
investment gains and losses resulting from the sales of investment
securities available-for-sale were as follows:
1997 1996 1995
- ------------------------------------------------------------------------------
Sales proceeds $ 88.0 58.4 248.3
Gross realized investments:
Gains 2.6 0.9 2.5
Losses (0.4) (1.3) (4.4)
- ------------------------------------------------------------------------------
Net realized investment gains (losses) $ 2.2 (0.4) (1.9)
- ------------------------------------------------------------------------------
The additional proceeds from investments presented in the statements of
cash flows result from principal collected on mortgage-backed
securities, maturities, calls and sinking payments.
Net unrealized gains and losses on investment securities classified as
available-for-sale are reduced by deferred income taxes and adjustments
to the present value of future profits and deferred acquisition costs
that would have resulted had such gains and losses been realized. Net
unrealized gains and losses on available-for-sale investment securities
reflected as a separate component of shareholders' interest are
summarized as follows:
<TABLE>
<CAPTION>
1997 1996
<S> <C>
- ----------------------------------------------------------------------------------------------------------
Net unrealized gains (losses) on fixed maturities available-for-sale
before adjustments $ 22.0 (5.1)
Adjustments to the present value of future profits and deferred (10.8) 3.1
acquisition costs
Deferred income taxes (3.9) 0.7
- ----------------------------------------------------------------------------------------------------------
Net unrealized gains (losses) on available-for-sale investment securities $ 7.3 (1.3)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(2) Continued
At December 31, the amortized cost, gross unrealized gains and losses,
and fair values of the Company's fixed maturities available-for-sale
were as follows:
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
1997 cost gains losses value
<S> <C>
- ------------------------------------------------------------------------------------------
Fixed maturities:
U.S. government and agency $ 34.5 0.5 _ 35.0
Non U.S. government 5.2 0.1 _ 5.3
Non U.S. corporate 54.3 1.0 (0.2) 55.1
U.S. corporate 899.8 14.7 (1.5) 913.0
Mortgage-backed 474.4 9.4 (2.0) 481.8
- ------------------------------------------------------------------------------------------
Total fixed maturities $ 1,468.2 25.7 (3.7) 1,490.2
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
1996 cost gains losses value
<S> <C>
- ------------------------------------------------------------------------------------------
Fixed maturities:
U.S. government and agency $ 48.8 0.8 _ 49.6
Non U.S. government 5.2 0.6 (0.1) 5.7
Non U.S. corporate 47.2 _ _ 47.2
U.S. corporate 876.7 10.4 (21.5) 865.6
Mortgage-backed 417.1 7.0 (2.3) 421.8
- ------------------------------------------------------------------------------------------
Total fixed maturities $ 1,395.0 18.8 (23.9) 1,389.9
- ------------------------------------------------------------------------------------------
<PAGE>
(2) Continued
The scheduled maturity distribution of the fixed maturity portfolio at
December 31 follows. Expected maturities may differ from scheduled
contractual maturities because issuers of securities may have the right
to call or prepay obligations with or without call or prepayment
penalties.
1997
---------------------------
Amortized Fair
cost value
- -----------------------------------------------------------------------------
Due in one year or less $ 129.9 130.9
Due after one year through five years 476.8 482.2
Due after five years through ten years 317.2 324.1
Due after ten years 69.9 71.2
- -----------------------------------------------------------------------------
Subtotals 993.8 1,008.4
Mortgage-backed securities 474.4 481.8
- -----------------------------------------------------------------------------
Totals $ 1,468.2 1,490.2
- -----------------------------------------------------------------------------
As required by law, the Company has investments on deposit with
governmental authorities and banks for the protection of policyholders
of $0.1 at December 31, 1997 and 1996.
At December 31, 1997, approximately 20.4%, 11.0% and 16.3% of the
Company's investment portfolio is comprised of securities issued by the
manufacturing, utility and financial industries, respectively, the vast
majority of which are rated investment grade, and which are senior
secured bonds. This portfolio is widely diversified among various
geographic regions in the United States, and is not dependent on the
economic stability of one particular region.
At December 31, 1997, the Company did not hold any fixed maturity
securities, other than securities issued or guaranteed by the U.S.
government, which exceeded 10% of shareholders' interest.
<PAGE>
(2) Continued
The credit quality of the fixed maturity portfolio at December 31
follows. The categories are based on the higher of the ratings
published by Standard & Poors or Moody's.
</TABLE>
<TABLE>
<CAPTION>
1997 1996
----------------------- ---------------------
Fair Fair
value Percent value Percent
<S> <C>
- -------------------------------------------------------------------------------
Agencies and treasuries $ 317.9 21.3% $ 368.7 26.5%
AAA/Aaa 162.9 10.9 75.7 5.5
AA/Aa 94.5 6.4 65.7 4.7
A/A 419.1 28.1 411.5 29.6
BBB/Baa 425.8 28.6 425.1 30.6
BB/Ba 35.4 2.4 15.2 1.1
B/B 3.6 0.2 1.5 0.1
Not rated 31.0 2.1 26.5 1.9
- ------------------------------------------------------------------------------
Totals $ 1,490.2 100.0% $ 1,389.9 100.0%
- ------------------------------------------------------------------------------
Bonds with ratings ranging from AAA/Aaa to BBB-/Baa3 are generally
regarded as investment grade securities. Some agencies and treasuries
(that is, those securities issued by the United States government or an
agency thereof) are not rated, but all are considered to be investment
grade securities. Finally, some securities, such as private placements,
have not been assigned a rating by any rating service and are therefore
categorized as "not rated." This has neither positive nor negative
implications regarding the value of the security.
At December 31, 1997 and 1996, there were no fixed maturities in
default as to principal and interest.
Mortgage Loans
At December 31, 1997 and 1996, the Company's mortgage loan portfolio
consisted of 115 and 97, respectively, first mortgage loans on
commercial real estate properties. The loans, which are originated by
the Company through a network of mortgage bankers, are made only on
completed, leased properties and have a maximum loan-to-value ratio of
75% at the date of origination.
<PAGE>
(2) Continued
At December 31, 1997 and 1996, respectively, the Company held $35.1 and
$24.6 in mortgages secured by real estate in California, comprising
20.2% and 17.2% of the respective total mortgage portfolio. For the
years ended December 31, 1997, 1996 and 1995, respectively, the Company
originated $11.4, $21.8 and $3.2 of mortgages secured by real estate in
California, which represent 28.0%, 20.0% and 9.5% and of the respective
total originations for those years.
"Impaired" loans are defined under generally accepted accounting
principles as loans for which it is probable that the lender will be
unable to collect all amounts due according to the original contractual
terms of the loan agreement. That definition excludes, among other
things, leases, or large groups of smaller-balance homogeneous loans,
and therefore applies principally to the Company's commercial loans.
There were no impaired loans at December 31, 1997 and 1996.
(3) Deferred Acquisition Costs
Activity impacting deferred acquisition costs for the years ended
December 31, was as follows:
</TABLE>
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C>
- --------------------------------------------------------------------------------------------------
Unamortized balance at January 1 $ 31.2 17.4 13.4
Transfers in of AMEX reinsurance - 2.2 -
Costs deferred 18.5 12.7 5.6
Amortization, net (2.9) (1.1) (1.6)
- --------------------------------------------------------------------------------------------------
Unamortized balance at December 31 46.8 31.2 17.4
- --------------------------------------------------------------------------------------------------
Cumulative effect of net unrealized investment (gains) losses (4.1) 0.8 (2.5)
- --------------------------------------------------------------------------------------------------
Recorded balance $ 42.7 32.0 14.9
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(4) Intangible Assets
Present Value of Future Profits (PVFP)
The method used by the Company to value PVFP is summarized as follows:
(1) identify the future gross profits attributable to certain lines of
business, (2) identify the risks inherent in realizing those gross
profits, and (3) discount these gross profits at the rate of return
that the Company must earn in order to accept the inherent risks.
After PVFP is determined, the amount is amortized, net of accreted
interest, in a manner similar to the amortization of deferred
acquisition costs. Interest accretes at rates credited to policyholders
on underlying contracts. As actual results vary from projected amounts,
the impact on amortization is included in net income.
Recoverability of PVFP is evaluated periodically by comparing the
current estimate of expected future gross profits to the unamortized
asset balance. If such comparison indicates that the expected gross
profits will not be sufficient to recover PVFP, the difference is
charged to expense.
The following table presents the activity in PVFP for the years ended
December 31:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C>
- -----------------------------------------------------------------------------------------------------------------
Unamortized balance at January 1 $ 38.9 34.5 38.8
Transfers of AMEX reinsurance - 10.0 -
Interest accrued at 5.6% in 1997, 5.4% in 1996 and 1995 1.4 1.9 2.2
Amortization (8.1) (7.5) (6.5)
- -----------------------------------------------------------------------------------------------------------------
Unamortized balance at December 31 32.2 38.9 34.5
- -----------------------------------------------------------------------------------------------------------------
Cumulative effect of net unrealized investment (gains) losses (6.7) 2.3 (11.5)
- -----------------------------------------------------------------------------------------------------------------
Recorded balance $ 25.5 41.2 23.0
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(4) Continued
The estimated percentage of the December 31, 1997 balance, before the
effect of unrealized investment gains or losses, to be amortized over
each of the next five years is as follows:
1998 14%
1999 12%
2000 10%
2001 7%
2002 6%
Goodwill
At December 31, 1997 and 1996, total unamortized goodwill was $31.4 and
$33.0, respectively, which is shown net of accumulated amortization of
$7.0 and $5.4, respectively. Goodwill amortization was $1.6, $1.6 and
$1.8 for the years ended December 31, 1997, 1996 and 1995,
respectively. Goodwill in excess of associated expected operating cash
flows is considered to be impaired and is written down to fair value
(no such charges have been made).
(5) Reinsurance
In order to limit the amount of loss retention, certain policy risks
are reinsured with other insurance companies. The maximum amount of
life insurance retained on any one life may not exceed $150,000.
Reinsurance contracts do not relieve the Company of its obligations to
policyholders. In the unlikely event that the reinsurers would be
unable to meet their obligations, the Company is liable for the
reinsured claims. The Company monitors both the financial condition of
individual reinsurers and risk concentrations arising from similar
geographic regions, activities and economic characteristics of
reinsurers to lessen the risk of default by such reinsurers.
During 1995, the Company entered into a reinsurance agreement with an
affiliated company, PHF Life Insurance Company (PHF). Effective
December 31, 1995, the
<PAGE>
(5) Continued
Company assumed all liabilities and future premiums related to PHF's
New York universal life, whole life, structured settlement, accident
and health, and deferred annuity business. The transaction involved
transferring reserves valued at $83.1 and fixed maturities of $82.5,
resulting in a loss of $0.6. These investments were placed in a trust
account with Bankers Trust for the benefit of PHF policyholders
allowing PHF to take the reserve credit on this block of business. The
trust totaled $73.3 at December 31, 1997.
Effective April 1, 1996 the accidental death and dismemberment and
long-term care business written by AMEX Assurance Company (AMEX), an
acquired affiliated company, in the state of New York was ceded
directly to the Company on an assumptive basis. Significant assets and
liabilities transferred include investments valued at $23 and reserves
valued at $23 and recorded as assumed premiums and change in policy
reserves, respectively. No gain or loss was recognized as a result of
this transaction.
The effects of reinsurance on premiums written and earned for the years
ended December 31 were as follows:
<TABLE>
<CAPTION>
Written Earned
--------------------------------------- ---------------------------------
1997 1996 1995 1997 1996 1995
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
Direct $ 48.2 30.4 3.2 44.5 28.6 3.2
Assumed 3.6 33.8 4.2 3.6 28.8 4.2
Ceded (1.1) (0.4) - (1.2) (0.2) -
- -------------------------------------------------------------------------------------------------------------------
Net Premiums $ 50.7 63.8 7.4 46.9 57.2 7.4
- -------------------------------------------------------------------------------------------------------------------
Percentage of amount assumed to net 7.1 53.0 57.0 7.7 50.0 57.0%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Reinsurance recoveries recognized as a reduction of benefits amounted
to $11.2, $18.5, and $30.5 during 1997, 1996 and 1995, respectively.
These recoveries were partially offset by certain changes in benefits
and other policy reserves.
<PAGE>
(6) Future Annuity and Contract Benefits
Investment Contracts
Investment contracts are broadly defined to include contracts without
significant mortality or morbidity risk. Payments received from sales
of investment contracts are recognized by providing a liability equal
to the current account value of the policyholders' contracts. Interest
rates credited to investment contracts are guaranteed for the initial
policy term with renewal rates determined as necessary by management.
At December 31, 1997 and 1996, investment contracts comprised $1,314.5
and $1,267.1, respectively.
Insurance Contracts
Insurance contracts are broadly defined to include contracts with
significant mortality and/or morbidity risk. The liability for future
benefits of insurance contracts is the present value of such benefits
based on mortality, morbidity, and other assumptions which were
appropriate at the time the policies were issued or acquired. These
assumptions are periodically evaluated for potential premium
deficiencies. Reserves for cancelable accident and health insurance
contracts are based upon unearned premiums, claims incurred but not
reported, and claims in the process of settlement. This estimate is
based on the experience of the insurance industry and the Company,
adjusted for current trends. Any changes in the estimated liability are
reflected in income as the estimates are revised. At December 31, 1997
and 1996, insurance contracts comprised $131.9 and $98.0, respectively.
Interest rate assumptions used in calculating the present value of
future annuity and contract benefits range from 5.9% to 9.9%.
(7) Related-Party Transactions
The Company receives administrative services from certain affiliates
for which progress payments for these services are made monthly. For
the years ended December 31, 1997, 1996 and 1995, these services were
valued at $9.8, $6.1, and $3.5, respectively.
<PAGE>
(8) Income Taxes
The total provision for income taxes for the years ended December 31
consisted of the following components:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C>
- ------------------------------------------------------------------------------------------------
Current federal income tax provision $ 13.2 13.1 8.8
Deferred federal income tax benefit (1.7) (2.8) (2.6)
- ------------------------------------------------------------------------------------------------
Subtotal federal provision 11.5 10.3 6.2
Current state income tax provision (benefit) - (0.2) 3.1
Deferred state income tax benefit - (0.3) (0.9)
- ------------------------------------------------------------------------------------------------
Subtotal state provision (benefit) - (0.5) 2.2
- ------------------------------------------------------------------------------------------------
Total income tax provision $ 11.5 9.8 8.4
- ------------------------------------------------------------------------------------------------
</TABLE>
The reconciliation of the federal statutory tax rate to the effective
income tax rate is as follows:
1997 1996 1995
- ------------------------------------------------------------------------------
Statutory U.S. federal income tax rate 35.0 35.0 35.0%
State income tax - (1.3) 7.8
Goodwill amortization 1.9 2.0 3.4
Other, net 2.8 2.4 0.8
- ------------------------------------------------------------------------------
Effective rate 39.7 38.1 47.0%
- ------------------------------------------------------------------------------
<PAGE>
(8) Continued
The components of the net deferred income tax benefit at December 31
are as follows:
1997 1996
- ------------------------------------------------------------------------------
Assets:
Future annuity and contract benefits $ 25.6 20.9
Net unrealized losses on investment securities - 0.7
Other - 1.8
- ------------------------------------------------------------------------------
Total deferred tax assets 25.6 23.4
- ------------------------------------------------------------------------------
Liabilities:
Net unrealized gains on investment securities (3.9) -
Investments (5.1) (10.3)
Present value of future profits (8.2) (5.7)
Deferred acquisition costs (10.5) (5.4)
Other, net (1.0) (2.2)
- ------------------------------------------------------------------------------
Total deferred tax liabilities (28.7) (23.6)
- ------------------------------------------------------------------------------
Net deferred income tax liability $ (3.1) (0.2)
- ------------------------------------------------------------------------------
The Company paid $12.1, $14.3 and $3.6, for federal and state income
taxes during the years 1997, 1996 and 1995, respectively.
Based on an analysis of the Company's tax position, management believes
it is more likely than not that the results of future operations and
implementation of tax planning strategies will generate sufficient
taxable income enabling the Company to realize remaining deferred tax
assets. Accordingly, no valuation allowance for deferred tax assets is
deemed necessary.
<PAGE>
(9) Commitments and Contingencies
Mortgage Loan Commitments
As of December 31, 1997 and 1996, the Company was committed to
fund $0 and $8.2, respectively, in mortgage loans.
Guaranty Association Assessments
The Company is required to participate in the guaranty association of
the state of New York. The state guaranty association ensures payment
of guaranteed benefits, with certain restrictions to policyholders of
impaired or insolvent insurance companies, by assessing all other
companies involved in similar lines of business. The insolvency of a
major insurer that wrote significant business in New York could have an
adverse impact on the profitability of the Company.
Litigation
There is no material pending litigation to which the Company is a party
or of which any of the Company's property is the subject, and there are
no legal proceedings contemplated by any governmental authorities
against the Company of which management has any knowledge.
(10) Fair Value of Financial Instruments
The fair values of financial instruments presented in the applicable
notes to the Company's financial statements are estimates of the fair
values at a specific point in time using available market information
and valuation methodologies considered appropriate by management. These
estimates are subjective in nature and involve uncertainties and
significant judgment in the interpretation of current market data.
Therefore, the fair values presented are not necessarily indicative of
amounts the Company could realize or settle currently. The Company does
not necessarily intend to dispose of or liquidate such instruments
prior to maturity.
<PAGE>
(10) Continued
Financial instruments that, as a matter of accounting policy, are
reflected in the accompanying financial statements at fair value are
not included in the following disclosures. Such items include fixed
maturities. The carrying value of policy loans, short-term investments
and accrued investment income approximates fair value at December 31,
1997 and 1996, respectively.
At December 31, the carrying amounts and fair values of the Company's
financial instruments were as follows:
1997 1996
-------------------------------------------
Amortized Fair Amortized Fair
cost value cost value
- -------------------------------------------------------------------------------
Mortgage loans $ 173.5 179.7 142.4 145.2
Investment contracts 1,306.3 1,297.5 1,256.7 1,206.9
- -------------------------------------------------------------------------------
The fair value of mortgage loans is estimated by discounting the
estimated future cash flows using interest rates applicable to current
loan origination adjusted for credit risks.
The estimated fair value of investment contracts is the amount payable
on demand (cash surrender value) for deferred annuities and the net
present value based on interest rates currently offered on similar
contracts for non-life contingent immediate annuities. Fair value
disclosures are not required for insurance contracts.
(11) Restrictions on Dividends
Insurance companies are restricted by states as to the aggregate amount
of dividends they may pay to their parent in any consecutive twelve
month period without regulatory approval. Generally, dividends may be
paid out of earned surplus without approval with thirty days prior
written notice within certain limits. The limits are generally based on
10% of the prior year surplus (net of adjustments in some cases) and
prior year statutory income (net gain from operations, net income
adjusted for realized capital gains, or net investment income).
Dividends in excess of the prescribed limits or the company's earned
<PAGE>
(11) Continued
surplus are deemed extraordinary and require formal state insurance
commission approval. Based on statutory results as of December 31,
1997, the Company is able to pay $16.1 in dividends in 1998 without
obtaining regulatory approval.
(12) Supplementary Financial Data
The Company files financial statements with state insurance regulatory
authorities and the National Association of Insurance Commissioners
(NAIC) that are prepared on an accounting basis prescribed by such
authorities (statutory basis). Statutory accounting practices differ
from GAAP in several respects, causing differences in reported net
income and shareholders' interest. Permitted statutory accounting
practices encompass all accounting practices not so prescribed but that
have been specifically allowed by state insurance authority. The
Company has no significant permitted accounting practices.
Statutory net income for the years ended December 31, 1997, 1996 and
1995 was $13.7, $16.5 and $25.8, respectively. Statutory capital and
surplus as of December 31, 1997 and 1996 was $162.6 and $158.1,
respectively.
The NAIC has adopted Risk-Based Capital (RBC) requirements to evaluate
the adequacy of statutory capital and surplus in relation to risks
associated with: (i) asset quality, (ii) insurance risk, (iii) interest
rate risk, and (iv) other business factors. The RBC formula is
designated as an early warning tool for the states to identify possible
under-capitalized companies for the purpose of initiating regulatory
action. In the course of operations, the Company periodically monitors
its level of RBC. At December 31, 1997 and 1996, the Company exceeded
the minimum required RBC levels.
(13) Business Segments
The Company conducts its operations through two business segments: (1)
Wealth Accumulation and Transfer, comprised of products intended to
increase the policyholder's wealth, transfer wealth to beneficiaries or
provide for a means for
<PAGE>
(13) Continued
replacing the income of the insured in the event of premature death,
and (2) Wealth and Lifestyle Protection, comprised of products intended
to protect accumulated wealth and income from the financial drain of
unforeseen events.
The following is a summary of industry segment activity for 1997 and
1996:
<TABLE>
<CAPTION>
1997 1996
---------------------------------------- ---------------------------------------
Wealth Wealth
Accumu- Wealth & Accumu- Wealth &
lation and Lifestyle Consoli- lation and Lifestyle Consoli-
Transfer Protection dated Transfer Protection dated
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
Net investment income $ 107.5 4.1 111.6 99.9 2.5 102.4
Net unrealized investment
gains (losses) 2.2 - 2.2 (0.4) - (0.4)
Premiums 20.5 26.4 46.9 18.5 38.7 57.2
Other revenues 3.7 - 3.7 4.1 - 4.1
- ------------------------------------------------------------------------------------------------------------------
Total revenues 133.9 30.5 164.4 122.1 41.2 163.3
- ------------------------------------------------------------------------------------------------------------------
Interest credited, benefits
and other changes in
policy reserves 99.1 15.1 114.2 90.1 31.7 121.8
Commissions 8.9 8.7 17.6 6.2 4.8 11.0
Amortization of intangibles 7.4 0.8 8.2 6.2 0.9 7.1
Other operating costs
and expenses (0.1) (4.5) (4.6) 1.5 (3.8) (2.3)
- -----------------------------------------------------------------------------------------------------------------
Total benefits and expenses 115.3 20.1 135.4 104.0 33.6 137.6
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes $ 18.6 10.4 29.0 18.1 7.6 25.7
- -----------------------------------------------------------------------------------------------------------------
Total assets $ 1,711.9 95.6 1,807.5 1,628.6 80.4 1,709.0
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Wealth and Lifestyle Protection was not a reportable segment until 1996
due to the acquisition of AMEX, a primary issuer of Wealth and
Lifestyle Protection products, in October 1995.
<PAGE>
PART C
OTHER INFORMATION
<TABLE>
<CAPTION>
Item 24. Financial Statements and Exhibits
<S> <C>
(a) Financial Statements
All required financial statements are included in Part B of this
Registration Statement or will be included in a pre-effective amendment.
(b) Exhibits
(1) Resolution of Board of Directors of GE Capital Life Assurance
Company of New York ("GE Capital Life") authorizing the
establishment of the GE Capital Life Separate Account II (the
"Separate Account"). 1/
(2) Not Applicable
(3) Underwriting Agreement between GE Capital Life and Capital Brokerage Corporation 2/
(3)(i) Dealer Sales Agreement 2/
(4)(i) Form of Policy 2/
(4)(ii) Endorsements to Policy
(a) Guarantee Account Rider 1/
(b) Trust Endorsement 1/
(c) Pension Endorsement2/
(d) Individual Retirement Annuity Endorsement 2/
(e) 403(b) Annuity Endorsement 2/
(5) Form of Application 2/
(6)(i) Certificate of Incorporation of GE Capital Life 1/
(6)(ii) By-Laws of GE Capital Life 1/
(7) Not Applicable
(8)(i) Form of Participation Agreement regarding Alger American Fund
(8)(ii) Form of Participation Agreement regarding Federated Insurance Series
(8)(iii) Form of Participation Agreement regarding GE Investments Funds, Inc.
(8)(iv) Form of Participation Agreement regarding Janus Aspen Series
(8)(v) Form of Participation Agreement regarding Oppenheimer Variable Account Funds
(8)(vi) Form of Participation Agreement regarding PBHG Insurance Series Fund
(8)(vii) Form of Participation Agreement regarding Variable Insurance Products Fund VIPF
(8)(viii) Form of Participation Agreement regarding Variable Insurance Products Fund II VIPF II
(8)(ix)) Form of Participation Agreement regarding Variable Insurance Products Fund III VIPF III
(8)(x) Form of Participation Agreement regarding Goldman Sachs Variable Insurance Trust
(9) Opinion and Consent of Counsel
(10)(i) Consent of Sutherland, Asbill & Brennan LLP
(10)(ii) Consent of Independent Auditors
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Power of Attorney 1/
</TABLE>
1/ Incorporated herein by reference to initial filing of the registration
statement on Form N-4 File No. 333-39955, filed with the Securities and
Exchange Commission on September 10, 1997.
2/ Incorporated herein
- ---------------------------
<TABLE>
<CAPTION>
Item 25. Directors and Officers of GE Capital Life
<S> <C>
Name Address Positions and Offices with Depositor
Barry J. Grossman American Mayflower President and Chief Executive Officer
2 Penn Plaza
New York, NY 10121
Marshall S. Belkin 345 Kear Street Director
Yorktown Heights, NY 10598
Donald W. Britton First Colony Life Director
700 Main Street
Lynchburg, VA 24505
Richard I. Byer Clark & Pope, Inc. Director
317 Madison Avenue
New York, NY 10017
Ronald V. Dolan First Colony Life Chairman of the Board
700 Main Street
Lynchburg, VA 24505
Bernard M. Eiber 55 Northern Blvd. Director
Room 302
Great Neck, NY 11021
Jerry S. Handler Handro Properties Director
151 West 40th St.
New York, NY 10018
Stephen P. Joyce GE Financial Assurance Director
777 Long Ridge Rd., Bldg. "B"
Stamford, CT 06927
Ray M. Perisho Union Fidelity Life Director
4850 Street Rd.
Trevose, PA 19049
Leon E. Roday GE Financial Assurance Senior Vice President & General Counsel
6604 West Broad St.
Richmond, VA 23230
Ididore Sapir Granit Apartments at the Granit Director
Apt. 756, P.O. Box 657
Kernonkson, NY 12446
Thomas A. Skiff GE Financial Assurance Director
1650 Los Gamos DR.
San Rafael, CA 94903
First Colony Life Director
Steven A. Smith 700 Main Street
Lynchburg, VA 24505
George T. Stewart First Colony Life Director
700 Main Street
Lynchburg, VA 24505
Geoffrey S. Stiff First Colony Life Director
700 Main Street
Lynchburg, VA 24505
Gerald A. Kaufman 33 Walt Whitman Rd., Suite 233 Director
Huntrington Station, NY 11746
Thomas W. Casey GE Financial Assurance Vice President and Chief Financial Officer
6604 W. Broad St.
Richmond, VA23230
Stephen N. DeVos GE Financial Assurance Vice President and Controller
6604 W. Broad St.
Richmond, VA 23230
</TABLE>
Item 26. Persons Controlled by or Under Common Control With the Depositor or
Registrant
The following chart identifies the persons controlled by or under common control
with the Depositor or the Registrant.
<PAGE>
ORGANIZATIONAL CHART
GENERAL ELECTRIC
COMPANY
|
(100%)
|
GENERAL ELECTRIC
CAPITAL SERVICES, INC.
|
(100%)
|
GENERAL ELECTRIC
CAPITAL CORPORATION
|
(100%)
|
GE FINANCIAL ASSURANCE
HOLDINGS, INC.
|
(100%)
|
GNA CORPORATION
|
(100%)
|
GENERAL ELECTRIC
CAPITAL ASSURANCE COMPANY
|
(100%)
|
GREAT NORTHERN
INSURED ANNUITY CORPORATION
|
(48%)
|
GE CAPITAL LIFE
ASSURANCE COMPANY OF NEW YORK
(52% owned by General Electric Capital
Assurance Company)
Item 27. Number of Policyowners
Not applicable
Item 28. Indemnification
The Bylaws of GE Capital Life provides that:
(a) See Exhibit (6)(ii) - Article VIII
* * *
<PAGE>
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
depositor pursuant to the foregoing provisions, or otherwise, the depositor has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the depositor of expenses incurred
or paid by a director, officer or controlling person of the depositor in
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the depositor will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 29. Principal Underwriters
(a) Capital Brokerage Corporation is the principal underwriter of the Policies
as defined in the Investment Company Act of 1940.
(b)
<TABLE>
<CAPTION>
Name Address Positions and Offices with Depositor
<S> <C>
Scott A. Curtis GE Financial Assurance President and Chief Executive Officer
6610 W. Broad St.
Richmond, VA 23230
Stephen P. Joyce GE Financial Assurance Senior Vice President
777 Long Ridge Rd., Bldg. "B"
Stamford, CT 06927
Charles A. Kaminski GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Victor C. Moses GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Geoffrey S. Stiff First Colony Life Senior Vice President
700 Main St.
Lynchburg, VA 23219
Mary Catherine Yeagley GE Financial Assurance Senior Vice President
601 Union St., Ste. 5600
Seattle, WA 98101
Jeffrey I. Hugunin GE Financial Assurance Treasurer
6604 W. Broad St.
Richmond, VA 23230
John W. Attey GE Financial Assurance Vice President, Counsel & Assistant
7125 W. Jefferson Ave., Ste. 200 Secretary
Lakewood, CO 80235
Thomas W. Casey GE Financial Assurance Vice President & Chief Financial Officer
6604 W. Broad St.
Richmond, VA 23230
Stephen N. DeVos GE Financial Assurance Vice President & Controller
6604 W. Broad St.
Richmond, VA 23230
Scott A. Reeks GE Financial Assurance Vice President & Assistant Treasurer
6610 W. Broad St.
Richmond, VA 23230
Edward J. Wiles, Jr. GE Financial Assurance Vice President, Counsel & Secretary
777 Long Ridge Rd., Bldg. "B"
Stamford, CT 06927
</TABLE>
Item 30. Location of Accounts and Records
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules under it are maintained by GE
Capital Life at its executive offices.
Item 31. Management Services
All management Policies are discussed in Part A or Part B of this Registration
Statement.
Item 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment to this
Registration Statement as frequently as necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the variable annuity Policies may be accepted.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
(c) Registrant undertakes to deliver any Statement of Additional Information and
any financial statements required to be made available under this Form promptly
upon written or oral request to GE Capital Life at the address or phone number
listed in the Prospectus.
SECTION 403(b) REPRESENTATIONS
GE Capital Life represents that in connection with its offering of Policies as
funding vehicles for retirement plans meeting the requirements of Section 403(b)
of the Internal Revenue Code of 1986, it is relying on a no-action letter dated
November 28, 1988, to the American Council of Life Insurance (Ref. No. IP-6-88)
regarding Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act of
1940, and that paragraphs numbered (1) through (4) of that letter will be
complied with.
SECTION 26(e)(2)(A) REPRESENTATION
GE Capital Life hereby represents that the fees and charges deducted under the
Policy, in the aggregate, are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by GE Capital Life.
<PAGE>
EXHIBIT LIST
<TABLE>
<CAPTION
<S> <C>
3 Underwriting Agreement between GE Capital Life and
Capital Brokerage Corporation
3(i) Dealer Sales Agreement
4 Form of Policy
4(ii)(c) Pension Endorsement
4(ii)(d) Individual Retirement Annuity Endorsement
(4)(ii)(e) 403(b) Annuity Endorsement
5 Policy Application
(8)(i) Form of Participation Agreement regarding Alger American Fund
(8)(ii) Form of Participation Agreement regarding Federated Insurance Series
(8)(iii) Form of Participation Agreement regarding GE Investments Funds, Inc.
(8)(iv) Form of Participation Agreement regarding Janus Aspen Series
(8)(v) Form of Participation Agreement regarding Oppenheimer Variable Account Funds
(8)(vi) Form of Participation Agreement regarding PBHG Insurance Series Fund
(8)(vii) Form of Participation Agreement regarding Variable Insurance Products Fund VIPF
(8)(viii) Form of Participation Agreement regarding Variable Insurance Products Fund II VIPF II
(8)(ix)) Form of Participation Agreement regarding Variable Insurance Products Fund III VIPF III
(8)(x) Form of Participation Agreement regarding Goldman Sachs Variable Insurance Trust
(9) Opinion and Consent of Counsel
(10)(i) Consent of Sutherland, Asbill & Brennan LLP
(10)(ii) Consent of Independent Auditors
</TABLE>
EXHIBIT 3
UNDERWRITING AGREEMENT BETWEEN
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
AND CAPITAL BROKERAGE CORPORATION
<PAGE>
UNDERWRITING AGREEMENT
AGREEMENT dated ___________________________________, 1998, by and
between GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK ("GE Capital Life"), a New
York corporation, on its own behalf and on behalf of GE Capital Life Separate
Account II (the "Separate Account"), and CAPITAL BROKERAGE CORPORATION ("CBC"),
a Washington corporation with its principal office at 6630 West Broad Street,
Post Office Box 26266, Richmond, VA 23261.
W I T N E S S E T H:
WHEREAS, the Separate Account is a segregated asset account established
and maintained by GE Capital Life pursuant to the laws of the State of New York
for certain variable annuities policies to be issued by GE Capital Life
(hereinafter referred to as the "Variable Contracts"), under which income, gains
and losses, whether or not realized, from assets allocated to such Separate
Account, will be, in accordance with the Variable Contracts, credited to or
charged against such Separate Account without regard to other income, gains or
losses of GE Capital Life;
WHEREAS, GE Capital Life has registered the Separate Account as a unit
investment trust-type investment companies under the Investment Company Act of
1940 (the"1940 Act");
WHEREAS, CBC has registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "1934 Act") and is a member firm of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, GE Capital Life has registered the Variable Contracts under
Securities Act of 1933 (the "1933 Act") and proposes to issue and sell the
Variable Contracts to the public through CBC, acting as the principal
underwriter of the Variable Contracts;
NOW, THEREFORE, in consideration of the mutual agreements made herein,
GE Capital Life and CBC hereby agree as follows:
1. Underwriter.
(a) GE Capital Life grants to CBC the exclusive right, during the term
of this Agreement, subject to the registration requirements of the 1933 Act and
the 1940 Act and the provisions of the 1934 Act, to be the principal underwriter
of the Variable Contracts. CBC agrees to use its best efforts to distribute the
Variable Contracts, and to undertake to provide sales and services relative to
the Variable Contracts and otherwise to perform all duties and functions
necessary and proper for the distribution of the Variable Contracts. It is the
intent of the parties hereto that substantially similar successor variable
deferred annuity contracts hereafter issued by GE Capital Life in addition to or
in substitution for the Variable Contracts shall be covered by this Agreement so
long as this Agreement has not been previously terminated prior to date of
introduction thereof.
(b) To the extent necessary to offer the Variable Contracts, CBC shall
be duly registered or otherwise qualified under the securities laws of any state
or other jurisdiction. All registered representatives of CBC soliciting
applications for the Variable Contracts shall be duly and appropriately
licensed, registered or otherwise qualified for the sale of such Variable
Contracts (and the riders offered in connection therewith) under the federal
securities laws, the New York state insurance laws and the New York state
securities laws, if applicable. CBC shall be responsible for the training,
supervision, and control of its own registered representatives for purposes of
the Rules of the NASD and federal and state securities law requirements
applicable to them in connection with the offer and sale of the Variable
Contracts.
(c) CBC agrees to offer the Variable Contracts for sale in accordance
with the prospectuses therefor then in effect. CBC is not authorized to give any
information or to make any representations concerning the Variable Contracts
other than those contained in the current prospectuses therefor filed with the
Securities and Exchange Commission ("Commission") or in such sales literature as
may be authorized by GE Capital Life.
(d) Payments made in connection with the Variable Contracts whether
premium or otherwise are the exclusive property of GE Capital Life. Such
payments received by CBC shall be held in a fiduciary capacity and shall be
transmitted immediately to GE Capital Life or its designated servicing agent in
accordance with the administrative procedures of GE Capital Life. GE Capital
Life will credit all payments made by or on behalf of Policyowners to their
respective accounts, and will allocate amounts to the investment subdivisions of
the Separate Account in accordance with the instructions of Policyowners and the
provisions of the Variable Contracts.
2. Sales and Services Agreement.
CBC is hereby authorized to enter into separate written sales or
services agreements, on such terms and conditions as CBC may determine not
inconsistent with this Agreement, with broker-dealers that are registered as
such under the Securities Exchange Act and are members of the NASD and that
agree to participate in the distribution of the Variable Contracts. All
broker-dealers that agree to participate in the distribution of the Variable
Contracts shall act as independent contractors and nothing herein contained
shall constitute the directors, officers, employees, agents, or registered
representatives of such broker-dealers as employees of CBC or GE Capital Life
for any purpose whatsoever.
3. Suitability.
GE Capital Life and CBC each wish to ensure that the Variable Contracts
distributed by CBC will be issued to purchasers for whom the Variable Contracts
will be suitable. CBC shall take reasonable steps to ensure that its own
registered representatives shall not make recommendations to an applicant to
purchase a Variable Contract in the absence of reasonable grounds to believe
that the purchase of the Variable Contract is suitable for such applicant under
the NASD Conduct Rules regarding Recommendations to Customers. While not limited
to the following, a determination of suitability shall be based on information
furnished to a registered representative after reasonable inquiry of such
applicant concerning the applicant's financial status, tax status and insurance
and investment objectives and needs.
4. Prospectuses and Promotional Material.
GE Capital Life shall furnish CBC with copies of all prospectuses,
statements of additional information, financial statements and other documents
and materials which CBC reasonably requests for use in connection with the
distribution of the Variable Contracts. GE Capital Life shall have
responsibility for the preparation, filing and printing of all required
prospectuses and/or registration statements in connection with the Variable
Contracts, and the payment of all related expenses. CBC and GE Capital Life
shall cooperate fully in the design, drafting and review of sales promotion
materials, and with respect to the preparation of individual sales proposals
related to the sale of the Variable Contracts. CBC shall not use or distribute
any such materials not provided or approved by GE Capital Life.
5. Records and Reports.
CBC shall have the responsibility for maintaining records relating to
its registered representatives that are licensed, registered and otherwise
qualified to sell the Variable Contracts and relating to broker-dealers engaged
in the distribution of the Variable Contracts, and shall provide periodic
reports thereof to GE Capital Life as requested.
6. Administrative Services.
GE Capital Life agrees to maintain all required books of account and
related financial records on behalf of CBC. All such books of account and
recorded shall be maintained and preserved pursuant to Rule 17a-3 and 17a-4
under the 1934 Act (or the corresponding provisions of any future Federal
securities laws or regulations). In addition, GE Capital Life will maintain
records of all sales commissions paid to registered representatives of CBC in
connection with the sale of the Variable Contracts. All such books and records
shall be maintained by GE Capital Life on behalf of and as agent for CBC, whose
property they are and shall remain for all purposes, and shall at all times be
subject to reasonable periodic, special, or other examination by the Commission
and all other regulatory bodies having jurisdiction. GE Capital Life also agrees
to send to CBC's customers all required confirmations on customer transactions
relating to Variable Contracts. GE Capital Life shall also make commission and
such other disbursements as may be requested by CBC, in connection with the
operations of CBC, for the account and risk of CBC.
7. Compensation.
(a) For the sale of the Variable Contracts, unless otherwise expressly
agreed to in writing by the parties, sales commissions shall be paid by GE
Capital Life, and CBC authorizes such payment, directly to those registered
representatives of CBC who are also agents of GE Capital Life and to those
broker-dealers (or their affiliated insurance agencies) who have entered into
sales agreements with CBC. Such payment shall be made pursuant to the insurance
agent/agency agreement between the agent/agency and GE Capital Life, and CBC
shall not pay any sales commissions itself to such persons upon their sale of
the Variable Contracts.
(b) In recognition of the administrative services to be rendered by CBC
in coordinating the distribution activities required by this Agreement, GE
Capital Life shall pay to CBC such administrative fees as may be mutually agreed
upon in separate writings exchanged from time to time between GE Capital Life
and CBC.
8. Investigation and Proceedings.
(a) CBC and GE Capital Life agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Variable Contracts distributed under this Agreement. CBC and
GE Capital Life further agree to cooperate fully in any securities regulatory
inspection, inquiry, investigation or proceeding or any judicial proceeding with
respect to GE Capital Life or CBC to the extent that such inspection, inquiry,
investigation or proceeding is in connection with the Variable Contracts
distributed under this Agreement. Without limiting the foregoing:
(i) CBC will be notified promptly of any customer complaint or
notice of any regulatory inspection, inquiry, investigation or
proceeding or judicial proceeding received by GE Capital Life
with respect to GE Capital Life or CBC or any broker-dealer in
connection with any Variable Contracts distributed under this
Agreement or any activity in connection with any Variable
Contracts.
(ii) CBC will promptly notify GE Capital Life of any customer
complaint or notice of any regulatory inspection, inquiry,
investigation or proceeding received by CBC with respect to GE
Capital Life or CBC or any broker-dealer in connection with
any Variable Contracts distributed under this Agreement or any
activity in connection with any such Variable Contracts.
(b) In the case of any such customer complaint, CBC and GE Capital Life
will cooperate in investigating such complaint and arrive at a mutually
satisfactory response.
9. Termination.
This Agreement shall be effective upon its execution and shall remain
in force for a term of one (1) year from the date hereof, and shall
automatically renew from year to year thereafter, unless either party notifies
the other in writing six (6) months prior to the expiration of an annual period.
This Agreement may not be assigned and shall automatically terminate if it is
assigned. Upon termination of this Agreement all authorizations, rights and
obligations shall cease except (i) the obligation to settle accounts hereunder,
including commissions due or to become due and payable on Variable Contracts in
effect at the time of termination or issued pursuant to applications received by
GE Capital Life prior to termination, and (ii) the obligations contained in
Paragraph 8 hereof.
<PAGE>
10. Exclusivity.
The services of CBC hereunder are not to be deemed exclusive and CBC
shall be free to render similar services to others so long as its services
hereunder are not impaired or interfered with thereby.
11. Regulation.
This Agreement shall be subject to the provisions of the 1940 Act and
the 1934 Act and the rules, regulation, and rulings thereunder and of the NASD,
from time to time in effect, including such exemptions from 1940 Act as the
Securities and Exchange Commission may grant. CBC shall submit to all regulatory
and administrative bodies having jurisdiction over the operations of CBC, GE
Capital Life or the Separate Account, any information, reports or other material
which any such body by reason of this Agreement may request or require pursuant
to applicable laws or regulations. Without limiting the generality of the
foregoing, CBC shall furnish the New York State Corporation Commission or the
new York State Department of Insurance with any information or reports which the
Commission or the Department of Insurance may request in order to ascertain
whether the variable annuity operations of GE Capital Life are being conducted
in an manner consistent with the Commission's variable annuity contract
regulations and any other applicable law or regulations.
12. Indemnities.
(a) GE Capital Life agrees to indemnify and hold harmless CBC and each
person who controls or is associated with CBC within the meaning of the 1933 Act
or the 1934 Act against any losses, claims, damages or liabilities, joint or
several, to which CBC or such controlling or associated person may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact,
required to be stated therein or necessary to make the statements therein not
misleading, contained:
(i) in the 1933 Act Registration Statements covering the Variable
Contracts or in any related Prospectuses included thereunder,
or
(ii) in any written information or sales material authorized for,
and supplied or furnished by GE Capital Life to CBC and its
sales representatives.
GE Capital Life will reimburse CBC and each such controlling person, for any
legal or other expenses reasonably incurred by CBC or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action covered by this Paragraph 12(a); provided that GE Capital
Life will not be liable in any such case to the extent that such loss, claim,
damage or liability arises out of, or is based upon, an untrue statement or
omission or alleged untrue statement or omission made in reliance upon
information (including, without limitation, negative responses to inquiries)
furnished to GE Capital Life by or on behalf of CBC or its affiliates
specifically for use in the preparation of the said Registration Statements or
any related Prospectuses included therein or any amendment thereto or supplement
thereto. This indemnity agreement will be in addition to any liability which GE
Capital Life may otherwise have, the premises considered.
(b) CBC agrees to indemnify and hold harmless GE Capital Life and each
of its directors (including any person named in the 1933 Act Registration
Statements covering the Variable Contracts, with his/her consent, as nominee for
directorship), each of its officers who signed a Registration Statement and each
person, if any, who controls GE Capital Life within the meaning of the 1933 Act
or the 1934 Act, against any losses, claims, damages or liabilities to which GE
Capital Life and any such director or officer or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon:
(i) any untrue statement or alleged untrue statement of
a material fact or omission or alleged omission to
state a material fact required to be stated therein
or necessary in order to make the statements therein,
in light of the circumstances under which they were
made, not misleading, contained in the Registration
Statements or in any related Prospectuses included
therein, to the extent, but only to the extent, that
such untrue statement or omission or alleged untrue
statement or omission was made in reliance upon
information (including, without limitation, negative
responses to inquiries) furnished to GE Capital Life
by or on behalf of CBC or its affiliates as the case
may be, specifically for use in the preparation of
the Registration Statements or related Prospectuses
included therein or any amendment thereto or
supplement thereto; or
(ii) any unauthorized use of sales materials or any verbal
or written misrepresentations or any unlawful sales
practices concerning the Variable Contracts by CBC.
CBC will reimburse GE Capital Life and any director or officer or controlling
person GE Capital Life for any legal or other expenses reasonably incurred by GE
Capital Life or such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action
covered by this Paragraph 12(b). This indemnity agreement will be in addition to
any liability which CBC may otherwise have, the premises considered.
(c) After receipt by a party entitled to indemnification ("indemnified
party") under this Section 12 of notice of the commencement of any action, if a
claim in respect thereof is to be made against any person obligated to provide
indemnification under this Section 12 ("indemnifying party"), such indemnified
party will notify the indemnifying party in writing of the commencement thereof
as soon as practicable thereafter, and the omission so to notify the
indemnifying party will not relieve it from any liability under this Section 12,
except to the extent that the omission results in a failure of actual notice to
the indemnifying party and such indemnifying party is damaged solely as a result
of the failure to give such notice. In case any such action is brought against
any indemnified party and it notifies an indemnifying party of the commencement
thereof, the indemnified party shall be entitled, to the extent it may wish,
jointly with any other indemnified party similarly notified, to participate in
the defense thereof, with separate counsel. Such participation shall not relieve
such indemnifying party of the obligation to reimburse the indemnified party for
reasonable legal and other expenses incurred by such indemnified party in
defending itself or himself, except for such expenses incurred after the
indemnifying party deposited funds sufficient to effect the settlement, with
prejudice, of the claim in respect of which indemnity is sought. Any such
indemnifying party shall not be liable to any such indemnified party on account
of any settlement of any claim or action effected without the consent of such
indemnifying party.
The indemnity agreements contained in this Section 12 shall remain
operative and in full force and effect, regardless of (i) any investigation made
by or on behalf of CBC or any controlling person thereof or by or on behalf of
GE Capital Life, (ii) delivery of any Variable Contracts and payments therefor,
or (iii) any termination of this Agreement. A successor by law of CBC or of any
the parties to this Agreement, as the case may be, shall be entitled to the
benefits of the indemnity agreements contained in this Section 12.
13. Severability.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise the remainder of this Agreement shall
not be affected thereby.
14. Applicable Law.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
Attest: By: ____________________________________
_______________________________ Title: _________________________________
Secretary
Date: ___________________________________
CAPITAL BROKERAGE CORPORATION
Attest: By: _____________________________________
_______________________________ Title: ___________________________________
Secretary
Date: ___________________________________
Dealer Sales Agreement
Capital Brokerage Corporation
- --------------------------
6630 West Broad Street
Post Office Box 26266
Richmond, VA 23261
- ------------------------------------------------------------------------------
GE Capital Life Assurance Company of New York
BROKER-DEALER SALES AGREEMENT
Name of Broker-Dealer: Address of Broker-Dealer:
- -------------------------------------------------------------------------------
This Agreement is made this ___________ day of ___________________, 19___, by
and between Capital Brokerage Corporation, a Washington corporation with its
principal office as listed above ("Capital Brokerage"), and __________
___________________________________________________________________________, a
_________________ corporation with its principal office as listed above
("Broker-Dealer").
In consideration of the mutual benefits to be derived and intending to be
legally bound the parties hereby agree to the following terms and conditions:
SECTION I - DEFINITIONS
1.1 GE Capital Life Assurance Company of New York ("GE Capital Life") is a
New York corporation which has developed certain variable annuity
contracts (hereafter referred to as "Annuities", listed in Schedule B,
which is attached hereto and made part of this Agreement) registered
with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933 (the "1933 Act").
1.2 Capital Brokerage is a Broker-Dealer registered as such under the
Securities Exchange Act of 1934 (the "1934 Act") and a member of the
National Association of Securities Dealers, Inc. ("NASD"). GE Capital
Life has appointed Capital Brokerage as principal underwriter for the
Policies and Annuities.
1.3 Broker-Dealer is registered as a Broker-Dealer under the 1934 Act, is a
member of the NASD and is properly licensed and appointed to promote,
offer and sell the Policies and Annuities.
1.4 Registered Representatives are employees of the Broker-Dealer whom
Broker-Dealer wishes to have appointed by GE Capital Life to sell
Policies and Annuities.
2. REPRESENTATIONS AND WARRANTIES OF CAPITAL BROKERAGE
2.1 Capital Brokerage represents and warrants that:
a. it has full power and authority to enter into this Agreement
and that it has all appropriate licenses to carry on its
business and to market the Policies and the Annuities;
<PAGE>
b. the 1933 Act Registration Statements pertaining to the
Policies and the Annuities filed with the SEC have been
declared effective;
c. the 1933 Act Registration Statements pertaining to the
Policies and the Annuities comply or will comply in all
material respects with the provisions of the 1933 Act, the
1934 Act, the Investment Company Act of 1940 (the "1940 Act")
and the rules and regulations of the SEC; and
d. the 1933 Act Registration Statements do not contain an untrue
statement of a material fact or fail to state a material fact
required to be stated.
2.2 Section 2.1c. shall not apply to statements made in or omissions from
Registration Statements and any related materials, which statements or
omissions were made in reliance upon written statements furnished by
Broker-Dealer.
2.3 Capital Brokerage represents and warrants that it, or an affiliate of
Capital Brokerage, will use its best efforts to obtain insurance
licenses and appointments to allow Registered Representatives to sell
the Policies or the Annuities provided Broker-Dealer cooperates in
obtaining such licenses.
3. REPRESENTATIONS OF BROKER-DEALER
3.1 Broker-Dealer represents and warrants that it has full power and
authority to enter into this Agreement and that it has all appropriate
licenses to carry on its business and to market the Policies and the
Annuities.
3.2 Broker-Dealer represents and warrants that it is registered as a
Broker-Dealer under the 1934 Act, is a member in good standing of the
NASD, is bonded as required by all applicable laws and regulations, and
that it, or a subsidiary or affiliate, has all insurance licenses
required by the states in which the Broker-Dealer intends to market the
Policies and the Annuities.
3.3 Broker-Dealer represents and warrants that all individuals recommended
for licensing and appointment to sell the Policies and Annuities will
be Registered Representatives who are appropriately registered with the
NASD and who possess or can obtain all required insurance licenses.
3.4 Broker-Dealer further represents and warrants that:
a. it made or will make a thorough and diligent inquiry and
investigation relative to each Registered Representative it
seeks to have appointed to sell the Policies and Annuities
including an investigation of the Registered Representative's
identity and business reputation;
b. all Registered Representatives are or will be personally known
to Broker-Dealer, are of good moral character, reliable,
financially responsible and worthy of an insurance license;
c. all examinations, training, and continuing educational
requirements have been or will be met for the NASD and the
specific state(s) in which Registered Representative is
requesting an insurance license;
d. if Registered Representative is required to submit to GE
Capital Life a picture or a signature in conjunction with an
application for an insurance license, that any such items
forwarded to GE Capital Life will be those of Registered
Representative and any evidence of a securities registration
forwarded to GE Capital Life will be a true copy of the
original;
e. no Registered Representatives will apply for insurance
licenses with GE Capital Life in order to place insurance on
their life or property, the lives or property of their
relatives, or property or lives of their associates;
<PAGE>
f. each Registered Representative will receive close and adequate
supervision consistent with the requirements of the NASD, and
Broker-Dealer will review, when necessary, any Policies or
Annuities written by Registered Representative;
g. Broker-Dealer will be responsible for all acts and omissions
of its Registered Representatives within the scope of their
appointment with GE Capital Life or as Registered
Representatives;
h. Broker-Dealer will not permit its Registered Representatives
to act as insurance agents until properly trained (including
training in the Policies and Annuities), licensed and
appointed nor will Broker-Dealer pay compensation to any
Registered Representative not properly licensed and appointed
to sell the Policies and Annuities;
i. Broker-Dealer will immediately notify Capital Brokerage and GE
Capital Life of any change in the NASD registration or
insurance licensing status of any Registered Representative
and will maintain a list of all Registered Representatives
authorized to sell the Policies or the Annuities;
j. Broker-Dealer agrees to indemnify, defend and hold GE Capital
Life and Capital Brokerage harmless against any losses,
claims, damages, liabilities or expenses, including reasonable
attorneys fees, to which Capital Brokerage or GE Capital Life
may be liable to the extent that the losses, claims, damages,
liabilities or expenses, including reasonable attorneys fees,
arise out of allegations that Broker-Dealer or any of its
Registered Representatives did not have the right or authority
to make discretionary purchases or to make or change a
client's asset allocation; and
k. Broker-Dealer, in the conduct of its business selling Policies
and the Annuities, shall observe high standards of commercial
honor and just and equitable principles of trade consistent
with the Conduct Rules of the NASD.
4. SALE OF POLICIES AND ANNUITIES
4.1 Soliciting Applications.
a. Broker-Dealer is hereby authorized by Capital Brokerage to
solicit applications for the purchase of Policies and
Annuities through its Registered Representatives in states
where the Broker-Dealer and its Registered Representatives are
appropriately licensed and appointed. This authorization is
non-exclusive and is limited to the states in which Policies
and Annuities have been approved for sale.
b. Broker-Dealer shall have no authority on behalf of Capital Brokerage
or GE Capital Life to:
(1) make, alter or discharge any contract;
(2) waive or modify any terms, conditions or limitations
of any Policy or Annuity;
(3) extend the time for payment of any premiums, bind GE
Capital Life to the reinstatement of any terminated
Policy, or accept notes for payment of premiums;
(4) adjust or settle any claim or commit GE Capital Life
with respect thereto;
(5) incur any indebtedness or liability, or expend or
contract for the expenditure of funds; or
(6) enter into legal proceedings in connection with any
matter pertaining to Capital Brokerage 's or GE
Capital Life's business without the prior consent of
Capital Brokerage or GE Capital Life, unless
Broker-Dealer is named as a party to the proceedings.
<PAGE>
c. Broker-Dealer acknowledges that only applications bearing the
signature of a Registered Representative who is on the list of
properly licensed Registered Representatives provided by
Broker-Dealer, according to this Agreement, will be processed
by GE Capital Life.
4.2 Suitability.
a. Capital Brokerage wishes to ensure that the Policies and
Annuities solicited by Broker-Dealer through Registered
Representatives will be issued to persons for whom they will
be suitable.
b. Broker-Dealer shall take reasonable steps to ensure that none
of its Registered Representatives makes recommendations to any
applicant to purchase a Policy or Annuity in the absence of
reasonable grounds to believe that the purchase is suitable
for the applicant under the NASD Conduct Rules regarding
Recommendations to Customers.
c. A determination of suitability for the purchase of a Policy or
Annuity shall include, but not be limited to, a reasonable
inquiry of each applicant concerning the applicant's financial
status, tax status, and insurance and investment objectives
and needs.
4.3 Delivery of Prospectus(es) by Broker-Dealer.
a. The current Prospectus(es), the Statement(s) of Additional
Information where required by law, and all Supplements
relating to the Policies and the Annuities shall be delivered
by Broker-Dealer to every applicant seeking to purchase a
Policy or Annuity prior to the completion of an application.
b. Broker-Dealer shall not give any information or make any
representations concerning the Policies or the Annuities, GE
Capital Life or Capital Brokerage unless the information or
representations are contained in the current Prospectus(es) or
are contained in sales literature or advertisements furnished
or approved in writing by GE Capital Life and Capital
Brokerage.
4.4 Issuance of Policies or Annuities.
a. GE Capital Life, at its sole discretion, will determine
whether to issue a Policy or an Annuity.
b. Once a Policy or Annuity has been issued:
(1) GE Capital Life will mail it promptly, accompanied by
any required notice of withdrawal rights and any
additional required documents to the individual or
entity designated by the Broker-Dealer;
(2) GE Capital Life will confirm to the owner, with a
copy to Broker-Dealer, the allocation of the initial
premium under the Policy or the Annuity; and
(3) GE Capital Life will also notify the owner of the
name of the Broker-Dealer through whom the Policy or
the Annuity was solicited.
4.5 GE Capital Life will administer all Policies and Annuities issued
according to the terms and conditions set forth in the Policy or
Annuity.
4.6 Capital Brokerage or GE Capital Life, at their own expense, will
furnish to Broker-Dealer, in reasonably sufficient quantities, the
following materials:
a. The current Prospectus(es) for the Policies and Annuities and
any underlying mutual funds;
b. Any Prospectus Supplement for the Policies and Annuities and
any underlying mutual funds, including any Statement(s) of
Additional Information if requested by client or required by
law;
<PAGE>
c. Advertising materials and sales literature approved for use by
Capital Brokerage and GE Capital Life; and
d. Applications for Policies and Annuities.
4.7 Money due GE Capital Life or Capital Brokerage.
a. All money payable in connection with the Policies or the
Annuities whether as premium or otherwise is the property of
GE Capital Life.
b. Money due GE Capital Life and received by the Broker-Dealer
under this Agreement shall be held in a fiduciary capacity and
shall be transmitted immediately to GE Capital Life in
accordance with the administrative procedures of GE Capital
Life.
c. Unless express prior written consent to the contrary is given
to Broker-Dealer by GE Capital Life, money due GE Capital Life
shall be forwarded without any deduction or offset for any
reason, including by example, but not limitation, any
deduction or offset for compensation claimed by Broker-Dealer.
d. Unless express prior written consent to the contrary is given
to Broker-Dealer by GE Capital Life, checks or money orders in
payment for Policies or Annuities, shall be drawn to the order
of "The Life Insurance Company of Virginia" or "GE Capital
Life."
e. Checks drawn by or money orders purchased by the Registered
Representative will not be accepted by GE Capital Life or
Capital Brokerage.
5. INDEMNIFICATION
5.1 Capital Brokerage agrees to indemnify and hold harmless Broker-Dealer
against any losses, claims, damages, liabilities or expenses, including
reasonable attorneys fees, to which Broker-Dealer may be liable to the
extent that the losses, claims, damages, liabilities or expenses,
including reasonable attorneys fees, arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact or
omission or alleged omission of material fact contained in the 1933 Act
Registration Statement covering the Policies or the Annuities or in the
Prospectuses for the Policies or the Annuities or in any written
information or sales materials authorized and furnished to
Broker-Dealer by Capital Brokerage or GE Capital Life.
5.2 Capital Brokerage will not be liable to the extent that such loss,
claim, damage, liability or expense, including reasonable attorneys'
fees, arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon
information provided by Broker-Dealer, including, without limitation,
negative responses to inquiries furnished to Capital Brokerage or GE
Capital Life by or on behalf of Broker-Dealer, specifically for use in
the preparation of the 1933 Act Registration Statement covering the
Policies or the Annuities or in any related Prospectuses.
5.3 Broker-Dealer agrees to indemnify and hold harmless Capital Brokerage
and GE Capital Life, against any losses, claims, damages, liabilities
or expenses, including reasonable attorney's fees, to which Capital
Brokerage, GE Capital Life and any affiliate, parent, officer,
director, employee or agent may be liable to the extent that the
losses, claims, damages, liabilities or expenses, including reasonable
attorneys fees, arise out of or are based upon:
a. Any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission of a material fact
contained in the Registration Statement covering the Policies
or the Annuities or related Prospectuses but only to the
extent, that such untrue statement or alleged untrue statement
or omission or alleged omission is made in reliance upon
information, including, without limitation, negative responses
to inquiries, furnished to Capital Brokerage or GE Capital
Life by or on behalf of Broker-Dealer specifically for use in
the preparation of the 1933 Act Registration Statement
covering the Policies or the Annuities or in any related
Prospectuses;
<PAGE>
b. Any unauthorized use of advertising materials or sales
literature or any verbal or written misrepresentations or any
unlawful sales practices concerning the Policies or the
Annuities by Broker-Dealer, its Registered Representatives or
its affiliates; and
c. Claims by Registered Representatives or employees of
Broker-Dealer for commissions or other compensation or
remuneration of any type.
5.4 The party seeking indemnification agrees to notify the indemnifying
party within a reasonable time of receipt of a claim or demand. In the
case of a lawsuit, the party seeking indemnification must notify the
indemnifying party within ten (10) calendar days of receipt of written
notification that a lawsuit has been filed.
5.5 Broker-Dealer agrees that GE Capital Life or Capital Brokerage may
negotiate, settle and or pay any claim or demand against them which
arises from:
a. any wrongful act or transaction of Broker-Dealer or its
Registered Representatives. Wrongful act or transaction
includes, but is not limited to, fraud, misrepresentation,
deceptive practices, negligence, errors or omissions;
b. the breach of any provision of this Agreement; or
c. the violation or alleged violation of any insurance or
securities laws.
Upon sufficient proof that the claim or demand arose from the
occurrences listed above, Capital Brokerage or GE Capital Life may
request reimbursement for any amount paid plus any reasonable expenses
incurred in investigating, defending against and/or settling the claim
or demand. Broker-Dealer agrees to reimburse Capital Brokerage or GE
Capital Life for these expenses.
5.6 Broker-Dealer shall immediately notify Capital Brokerage and GE Capital
Life, in writing of any complaint or grievance relating to the Policies
or the Annuities, including, but not limited to any complaint or
grievance arising out of or based on advertising or sales literature
approved by GE Capital Life or the marketing or sale of the Policies or
Annuities.
5.7 Broker-Dealer shall promptly furnish all written materials requested by
Capital Brokerage or GE Capital Life in connection with the
investigation of any such complaint and will cooperate in the
investigation. GE Capital Life or Capital Brokerage will notify in a
timely manner the Broker-Dealer of any complaint.
5.8 Broker-Dealer shall immediately notify Capital Brokerage and GE Capital
Life, in writing of any state, federal, or self regulatory organization
investigation or examination regarding the marketing and sales
practices relating to the Policies or Annuities or any pending or
threatened litigation regarding the marketing and sales practices
relating to the Policies or Annuities.
6. TERMINATION
6.1 This Agreement may be terminated by either Capital Brokerage or
Broker-Dealer at any time, for any reason, upon thirty (30) calendar
days advance written notice delivered to the other party under the
terms of Section 10.10 of this Agreement.
6.2 This Agreement will terminate immediately:
a. If the Broker-Dealer is dissolved, liquidated, or otherwise
ceases business operations;
<PAGE>
b. If the Broker-Dealer fails, in Capital Brokerage's sole
judgment, to comply with any of its obligations under this
Agreement;
c. If the Broker-Dealer ceases to be registered under the 1934
Act or a member in good standing of the NASD; or
d. In the event one party assigns or transfers its rights or
liabilities under this Agreement to any third party without
the prior written consent of the other party.
6.3 The following provisions of the Agreement shall survive termination:
a. Section One - Definitions
b. Section Two - Representations
c. Section Five - Indemnification
d. Section Nine - Recordkeeping
e. Section Ten - General Provisions, Sub-Section 10 - Notices
7. COMPENSATION
7.1 Unless otherwise expressly agreed to in writing by the parties, no
compensation shall be payable to Broker-Dealer for its services under
this Agreement. All compensation payable with respect to sales of the
Policies and the Annuities by Broker-Dealer shall be paid in accordance
with the terms of the General Agent Agreement in effect between GE
Capital Life and Broker-Dealer, or a duly licensed subsidiary or
affiliate thereof.
8. ADVERTISEMENTS
8.1 Broker-Dealer shall not use any advertisements or sales literature for
the Policies or the Annuities or any advertisements or sales literature
referencing GE Capital Life or Capital Brokerage without prior written
approval of GE Capital Life or Capital Brokerage. This includes
brochures, letters, illustrations, training materials, materials
prepared for oral presentations and all other similar materials.
9. RECORDKEEPING
9.1 Each party agrees to keep all records required by federal and state
laws, to maintain its books, accounts, and records so as to clearly and
accurately disclose the precise nature and details of transactions, and
to assist one another in the timely preparation of records.
9.2 Each party grants to the other and/or its representatives the right and
power at reasonable times to inspect, check, make extracts from, and
audit each of its books, accounts and records as they relate to this
Agreement, including, but not limited to advertisements and sales
materials, for the purpose of verifying adherence to each of the
provisions of this Agreement.
10. GENERAL PROVISIONS
10.1 Effective. This Agreement shall be effective upon execution by both
parties and will remain in effect unless terminated as provided in
Section Six.
10.2 Assignment. This Agreement may not be assigned or transferred to any
third party by either Capital Brokerage or Broker-Dealer without the
other party's prior written consent.
<PAGE>
10.3 Governing Law. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Virginia.
10.4 Severability. If any provision of this Agreement shall be held or
rendered invalid by a court decision, state or federal statute,
administrative rule or otherwise, the remainder of this Agreement shall
not be rendered invalid.
10.5 Complete Agreement. The parties declare that, other than the General
Agent's Agreement between Broker-Dealer (or its affiliated insurance
agency) and GE Capital Life (or its affiliated marketing company) there
are no oral or other agreements or understandings between them
affecting this Agreement or relating to the offer or sale of the
Policies or the Annuities and that this constitutes the entire
Agreement between the parties.
10.6 Waiver. Forbearance by Capital Brokerage to enforce any of the terms of
this Agreement shall not constitute a waiver of such terms.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.8 Independent contractors. Broker-Dealer is an independent contractor.
Nothing contained in this Agreement shall create, or shall be construed
to create, the relationship of employer and employee between Capital
Brokerage and Broker-Dealer or Broker-Dealer's directors, officers,
employees, agents or Registered Representatives.
10.9 Cooperation. Each party to this Agreement shall cooperate with the
other and with all governmental authorities, including, without
limitation, the SEC, the NASD and any state insurance or securities
regulators, and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated under this
Agreement.
10.10 Notices. All notices, requests, demands and other communications which
must be provided under this Agreement shall be in writing and shall be
deemed to have been given on the date of service if served personally
on the party to whom notice is to be given or on the date of mailing if
sent by United States registered or certified mail, postage prepaid.
Notices should be sent to the parties at the addresses first listed in
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
representatives.
CAPITAL BROKERAGE CORPORATION _______________________________
(Name of Broker-Dealer)
- -------------------------------------- -------------------------------
(Signature) (Signature)
- -------------------------------------- -------------------------------
(Name) (Name)
- -------------------------------------- -------------------------------
(Title) (Title)
Date: ________________________________ Date: _________________________
<PAGE>
SCHEDULE A
to
BROKER-DEALER SALES AGREEMENT
VARIABLE ANNUITY CONTRACTS:
EXHIBIT 4
POLICY FORM
<PAGE>
INDIVIDUAL DEFERRED VARIABLE
ANNUITY POLICY
FLEXIBLE PURCHASE PAYMENTS
GE Capital Life Assurance Company of New York ("GE Capital
Life") agrees to pay annuity benefits as provided in this
policy.
This policy is a legal contract between you and GE Capital
Life. The Owner should hold the original of this policy.
Please read this policy carefully.
TEN DAY FREE LOOK: Within 10 days of the date of receipt of
this policy by the Owner, it may be canceled by delivering
or mailing it to GE Capital Life at its Home Office or to
the agent through whom it was purchased. GE Capital Life
will refund the Account Value (without reduction for any
surrender charges) plus any amount deducted from the premium
payments. No transfers or partial surrenders may be made
during the Free-Look period.
INCOME PAYMENTS, SURRENDER VALUES AND THE DEATH BENEFIT
DESCRIBED IN THIS POLICY, WHEN BASED ON INVESTMENT
EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
For GE Capital Life Assurance Company of New York
-------------------------------- -------------------------------
PRESIDENT SECRETARY
o Individual Deferred Variable Annuity Policy
o Income payments beginning at maturity
o Nonparticipating
o Some values and benefits reflect investment results
GE CAPITAL LIFE ASSURANCE OF NEW YORK
A GE Financial Assurance Company
GE Capital Life Assurance Company of New York
125 Park Avenue, Sixth Floor
New York, NY 10017-5529
<PAGE>
POLICY DATA
SCHEDULE OF BENEFITS SCHEDULE OF PREMIUMS
AMOUNT PAYABLE
ANNUITY $[10,000.00] INITIAL PREMIUM
INITIAL PREMIUM: $[10,000.00]
MINIMUM ADDITIONAL PREMIUM: $ [1,000.00]
MINIMUM PORTION OF PREMIUM ALLOCATED
TO EACH INVESTMENT SUBDIVISION: [1]%
CHARGES:
ANNUAL POLICY MAINTENANCE CHARGE: $25.00
MORTALITY AND EXPENSE CHARGE: 1.25% ANNUALLY (.003446% DAILY)
ADMINISTRATIVE EXPENSE CHARGE: 0.15% ANNUALLY (.000411% DAILY)
TRANSFER CHARGE: $10.00
[ANNUAL DEATH BENEFIT CHARGE:] 0.10%
OWNER [JOHN DOE]
JOINT OWNER [N/A]
ANNUITANT [JOHN DOE] [MALE] [35-AGE LAST BIRTHDAY]
POLICY NUMBER [00000000]
POLICY DATE [OCTOBER 1, 1996]
THE SMALLEST ANNUAL INVESTMENT RETURN ON ASSETS OF THE SEPARATE ACCOUNT REQUIRED
TO MAINTAIN NONDECREASING VARIABLE INCOME PAYMENTS IS 4.47%, FOR PAYMENTS WITH
AN ASSUMED INTEREST RATE OF 3%.
<PAGE>
<TABLE>
<S> <C>
POLICY NUMBER [00000000]
GE CAPITAL LIFE SEPARATE ACCOUNT II
INVESTMENT SUBDIVISIONS ARE INVESTED IN
THE ALGER AMERICAN FUND
AAF SMALL CAPITALIZATION ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
AAF GROWTH ALGER AMERICAN GROWTH PORTFOLIO
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
FID EQUITY - INCOME EQUITY - INCOME PORTFOLIO
FID GROWTH GROWTH PORTFOLIO
FID OVERSEAS OVERSEAS PORTFOLIO
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
FID ASSET MANAGER ASSET MANAGER PORTFOLIO
FID CONTRAFUND CONTRAFUND PORTFOLIO
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
FID GROWTH AND INCOME GROWTH & INCOME PORTFOLIO
FID GROWTH OPPORTUNITIES GROWTH OPPORTUNITIES PORTFOLIO
FEDERATED INSURANCE SERIES
FED UTILITY II FEDERATED UTILITY FUND II
FED HIGH INCOME BOND II FEDERATED HIGH INCOME BOND FUND II
FED AMERICAN LEADERS II FEDERATED AMERICAN LEADERS FUND II
JANUS ASPEN SERIES
JAN BALANCED BALANCED PORTFOLIO
JAN FLEXIBLE INCOME FLEXIBLE INCOME PORTFOLIO
JAN GROWTH GROWTH PORTFOLIO
JAN AGGRESSIVE GROWTH AGGRESSIVE GROWTH PORTFOLIO
JAN WORLDWIDE GROWTH WORLDWIDE GROWTH PORTFOLIO
JAN INTERNATIONAL GROWTH INTERNATIONAL GROWTH PORTFOLIO
JAN CAPITAL APPRECIATION CAPITAL APPRECIATION PORTFOLIO
GE INVESTMENTS FUNDS INC.
GEI MONEY MARKET MONEY MARKET FUND
GEI INCOME INCOME FUND
GEI S&P 500 INDEX * S&P 500 INDEX FUND
GEI TOTAL RETURN TOTAL RETURN FUND
GEI INTERNATIONAL EQUITY INTERNATIONAL EQUITY FUND
GEI REAL ESTATE SECURITIES REAL ESTATE SECURITIES FUND
GEI GLOBAL INCOME GLOBAL INCOME FUND
GEI VALUE EQUITY VALUE EQUITY FUND
GEI U.S.EQUITY FUND U.S. EQUITY FUND
OPPENHEIMER VARIABLE ACCOUNT FUNDS
OPP HIGH INCOME OPPENHEIMER HIGH INCOME FUND
OPP BOND OPPENHEIMER BOND FUND
OPP AGGRESSIVE GROWTH OPPENHEIMER AGGRESSIVE GROWTH FUND
OPP GROWTH OPPENHEIMER GROWTH FUND
OPP MULTI STRATEGIES OPPENHEIMER MULTIPLE STRATEGIES FUND
PBHG INSURANCE SERIES FUND, INC.
PIL GROWTH II GROWTH II PORTFOLIO
PIL LARGE CAP GROWTH LARGE CAP GROWTH PORTFOLIO
GOLDMAN SACHS ASSET MANAGEMENT, INC.
GSF GROWTH & INCOME GOLDMAN SACHS GROWTH AND INCOME FUND
GSF MID CAP EQUITY GOLDMAN SACHS MID CAP EQUITY FUND
GUARANTEE ACCOUNT FOR ONE YEAR
</TABLE>
YOU MAY ALLOCATE YOUR ACCOUNT VALUE TO AS MANY AS TEN INVESTMENT SUBDIVISIONS.
CONSULT THE PROSPECTUS FOR INVESTMENT DETAILS.
* "STANDARD & POOR'S," "S&P," "S&P 500," "STANDARD & POOR'S 500," AND "500" ARE
TRADEMARKS OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY
GE INVESTMENT MANAGEMENT INCORPORATED. THE S&P 500 INDEX FUND IS NOT SPONSORED,
ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND STANDARD & POOR'S MAKES NO
REPRESENTATION REGARDING THE ADVISABILITY OF INVESTING IN THE FUND.
NY1066-S1 6/97 POLICY DATA PAGE - 2
POLICY NUMBER: [00000000]
TABLE OF SURRENDER CHARGES
YEARS SURRENDER CHARGE PERCENTAGE
1 6%
2 6%
3 6%
4 6%
5 4%
6 2%
7 AND LATER 0%
NY1066-S1 6/97 POLICY DATA PAGE - 3
<PAGE>
TABLE OF CONTENTS
Policy Data 3
Introduction 4
Owner, Annuitant and Beneficiary Provisions 5
Death Provisions 6
Premium Payments 7
Income Benefit 8
Account Value Benefits 8
Guarantee Account 11
Separate Account 11
General Information 14
Optional Payment Plans 15
Copies of any application, riders and endorsements follow on page 18.
Word Index
Account Value 8 Optional Payment Plans 15-18
Allocation of Premiums 8 Owner 5
Statement of Values 13 Ownership Change 5
Beneficiary 5 Premiums 7
Beneficiary Change 5 Separate Account 11
Death Benefit 6 Surrender 9
Investment Subdivisions 11 Surrender Value 10
Misstatement of Age or Gender 14 Transfers 13
Notices 14 Unit Value 12
INTRODUCTION
This is a flexible premium variable deferred annuity policy. In return for
premium payments and any application, we provide certain benefits.
As used in this policy, you or yours refers to the Owner or Owners. We, us or
ours refers to GE Capital Life Assurance Company of New York. The Owner and the
Annuitant are shown on the policy data page.
Person, as used in this policy is a human being, a trust, a corporation or any
other legally recognized entity.
This policy provides an income benefit beginning on the maturity date. The
amount of income benefit will depend on:
The maturity value;
The amount of any applicable premium tax;
The Annuitant's gender and settlement age on the maturity date; and
The payment plan chosen.
Depending upon the conditions described in the Death Provisions section, this
policy provides for either the payment of a death benefit or the continuation of
this policy at the death of the Owner, Joint Owner or Annuitant prior to the
maturity date.
This Policy and Its Parts
This policy is a legal contract. It is the entire contract between you and us.
An agent cannot change this contract. Any change to it must be in writing and
approved by us. Only our President or one of our Vice Presidents can give our
approval. PLEASE READ YOUR POLICY CAREFULLY.
Policy means this policy with any attached application and any riders and
endorsements. All statements in any application are considered representations
and not warranties.
We reserve the right to amend this policy as needed to maintain its status as an
annuity under the Internal Revenue Code. If the policy is amended, we will send
you a copy of the amendment, together with the applicable regulation, ruling or
other requirement imposed by the Internal Revenue Service which requires such
amendment.
Age
Age on the policy date or on a policy anniversary prior to the date payments
begin means the person's age on his or her last birthday.
Policy Date
This policy goes into effect on the policy date shown on the policy data page.
Policy years and anniversaries for the initial premium are measured from this
date. Years for determining charges related to additional premiums are measured
from the date of receipt of each additional premium.
Maturity Date
The maturity date is the date on which we start payment of income benefits if
the Annuitant is still living. The normal maturity date shall not go beyond the
Annuitant's 90th birthday. You may select an earlier maturity date by sending us
written notice.
If you change the maturity date, maturity date will then be the maturity date
you selected.
OWNER, ANNUITANT AND BENEFICIARY PROVISIONS
The Owner
The Owner or Joint Owners are shown in this policy. Joint Owners own the policy
equally with the right of survivorship. Right of survivorship means that if a
Joint Owner dies, his or her interest in this policy will pass to the surviving
Joint Owners. Disposition of this policy upon death of an Owner is subject to
the Death Provisions.
An Owner or Joint Owner has rights while this policy is in force, subject to the
rights of any beneficiary named irrevocably, and any assignee under an
assignment filed with us.
The Annuitant
The Annuitant is the person upon whose age and gender guaranteed income benefits
are determined. This policy names you or someone else as the Annuitant. The
Contingent Annuitant, if any, is shown in the application if attached to this
policy. If an application is not attached and you wish to name a Contingent
Annuitant, you may do so by sending a written request to our home office. At the
death of the Annuitant prior to the maturity date, the Cxontingent Annuitant, if
any, may become the Annuitant in certain circumstances, (see Death Provisions).
If no Contingent Annuitant is alive, the Owner (if a natural person, otherwise,
the Joint Owner, if a natural person) will be the Contingent Annuitant.
The Beneficiary
The Primary Beneficiary and any Contingent Beneficiaries are shown in the
application if attached to this policy. If an application is not attached and
you wish you wish to name a Primary or Contingent Beneficiary(ies), you may do
so by sending a written request to our home office.
Changing the Owner, Contingent Annuitant or Beneficiary
During the Annuitant's life, you can change an Owner, the Contingent Annuitant
and any Beneficiary if you reserved this right. A person named irrevocably may
be changed only with that person's written consent. To make a change, send a
written request to our home office. The request and the change must be in a form
satisfactory to us. The change will take effect as of the date you sign this
request. The change will be subject to any payment we make before we receive the
change. Except as described above, the Annuitant cannot be changed.
<PAGE>
DEATH PROVISIONS
Designated Beneficiary
If the Owner, Joint Owner or the Annuitant dies while this policy is in force
and before income payments begin, the Designated Beneficiary will be treated as
the sole owner of this policy following such a death, subject to the
distribution rules set forth below. The Designated Beneficiary will be the
person first listed below who is alive or in existence on the date of the death
of the Owner, Joint Owner or the Annuitant:
(1) Owner
(2) Joint Owner
(3) Primary Beneficiary
(4) Contingent Beneficiary
(5) Owner's Estate
If Joint Owners both survive, they will become the Designated Beneficiary
together.
Distribution Rules
The following distribution rules will apply if the Owner, Joint Owner or the
Annuitant dies before income payments begin.
If the Designated Beneficiary is someone other than the surviving spouse of the
deceased Owner, Joint Owner or Annuitant, no further premium payments will be
accepted and we will pay the Surrender Value to, or for the benefit of, the
Designated Beneficiary. That payment will be made in one lump sum upon receipt
of due proof of death. Instead or receiving that distribution, the Designated
Beneficiary may elect:
(a) to receive the Surrender Value at any time during the five year period
following the date of death of the Owner, Joint Owner or Annuitant by
partially or totally surrendering the policy during that period; or
(b) to apply the entire Surrender Value under Optional Payment Plan 1 or 2 with
the first payment to the Designated Beneficiary being made no later than
one year after the date of death of the Owner, Joint Owner or Annuitant,
and with payment being made over the life of the Designated Beneficiary or
over a period not exceeding the Designated Beneficiary's life expectancy.
If the entire Surrender Value has not been paid to the Designated Beneficiary by
the end of the five year period following the date of death of the Owner, Joint
Owner or Annuitant and payments have not begun in accordance with (b) above,
this policy will terminate at the end of that five-year period, and we will pay
any remaining Surrender Value to, or for the benefit of, the Designated
Beneficiary. If the Designated Beneficiary dies before the required payments
have been made, the Designated Beneficiary will not be treated as an Owner of
the policy for purposes of these Death Provisions, and any remaining payments we
make will be made to the person named by the Designated Beneficiary in writing
or, if no person is so named, the estate of the Designated Beneficiary.
If the Designated Beneficiary is the surviving spouse of the deceased Owner,
Joint Owner or Annuitant, the surviving spouse may continue this policy as the
Owner. In addition, that person will also become the Annuitant if the deceased
was the Annuitant, there is no surviving Contingent Annuitant and this policy
has not been surrendered for the death benefit which is available at the
Annuitant's death under the conditions set forth below. On the surviving
spouse's death, the entire interest in the policy will be paid within 5 years of
such spouse's death to the Beneficiary named by the surviving spouse (and if no
Beneficiary is named, such payment will be made to the surviving spouse's
estate).
If there is more than one Designated Beneficiary, each Designated Beneficiary
will be treated separately according to that Designated Beneficiary's portion of
this policy for purposes of this Death Provisions section.
<PAGE>
These Distribution Rules will not apply at the death of the Annuitant if all of
the following conditions exist:
o the Annuitant was not also an Owner of this policy;
o all owners of this policy are natural persons; and
o a Contingent Annuitant survives.
The Death Benefit will be the greater of:
The minimum death benefit described below; or
The Account Value of the policy on the date we receive proof of the Annuitant's
death.
During the first six policy years, and subsequently if the Annuitant was age 81
or older on the policy date, the minimum death benefit is the total premiums
paid reduced for any partial surrenders.
During the subsequent six-year period, if the Annuitant was age 80 or younger on
the policy date, the minimum death benefit will be the Death Benefit on the last
day of the previous six-year period plus any premium paid since then, reduced
for any partial surrenders since then.
If the surrender occurs more than 90 days after the Annuitant's death, the
Surrender Value will be payable instead of the Death Benefit. If this policy is
not surrendered, it will remain in force subject to the preceding provisions.
Payment of Benefits
Instead of receiving payment in a lump sum, the Designated Beneficiary may elect
to receive proceeds under Optional Payments Plan 1 or 2 with the first payment
to the Designated Beneficiary being made no later than one year after the date
of death of the Owner, Joint Owner or Annuitant. Payments will be made over the
life of the Designated Beneficiary or over a period not exceeding the Designated
Beneficiary's life expectancy.
Payment of Benefits After Income Payments Have Begun
If the Owner, Joint Owner, or the Annuitant dies while this policy is in force
and after income payments have begun, or if a Designated Beneficiary receiving
income payments dies after the date income payments have begun, payments made
under this policy will be made at least as rapidly as under the method of
distribution in effect at the time of such death, notwithstanding any other
provision of this policy.
PREMIUM PAYMENTS
The initial premium is due on the policy date.
Additional Premium Payments
You may make additional premium payments at any time before the maturity date.
The minimum amount of each additional premium payment is shown on the policy
data page.
When and Where to Pay Premiums
Each premium is payable in advance. Pay each premium to our home office. Make
any checks or money orders payable to GE Capital Life Assurance Company of New
York.
<PAGE>
Allocation of Premiums
You may allocate premiums to the Guarantee Account and/or to one or more
Investment Subdivisions of the Separate Account, up to the maximum number shown
in the policy data page. The portion of each premium that must be allocated to
any particular Investment Subdivision is also shown on the policy data page.
Premiums will initially be allocated in accordance with the allocations
requested by you. You may change the allocation of later premiums at any time,
without charge, by sending a written notice to us at our home office. The
allocation will apply to premiums received after we record the change.
INCOME BENEFITS
We will pay you an income benefit for a guaranteed minimum period beginning on
the maturity date if the Annuitant is still living. The income benefit will be a
variable income payment similar to that described in the provision titled
"Variable Income Options" under the Optional Payment Plans section. Payments
will be made under a Life Income with 10 Years Certain plan, unless you choose
otherwise.
Under the Life Income with 10 Years Certain plan, if the Annuitant lives longer
than 10 years, payments will continue for his or her life. If the Annuitant dies
before the end of ten years, the remaining payments for the ten year period will
be discounted at the same rate used to calculate the income benefit. The
discounted amount will be paid in one lump sum to you.
At any time, while the Annuitant is living, and before the maturity date, you
may choose to change the payment plan by written request. If you do choose a
different plan, the income benefit will reflect the plan chosen. Payment plans
which base payments on the life or lives of one or more individuals will base
such payment on the life of the Annuitant or the Annuitant and an additional
individual. You may elect to receive the maturity value in a lump sum instead of
receiving an income benefit. If we pay the maturity value, we will have no
further obligation under this policy.
The maturity value is equal to the Surrender Value on the day immediately
preceding the maturity date.
The initial income payment under a Life Income with 10 Years Certain plan,
payable monthly, is calculated by multiplying (a) times (b), divided by (c)
where:
is the monthly payment rate per $1000, shown under the Optional Payment Plans
for Life Income with 10 years Certain, using the gender and settlement age of
the Annuitant, instead of the payee, on the maturity date; is the maturity
value; and is $1,000.
Annuity payments will be made monthly unless quarterly, semi-annual or annual
payments are chosen by written request. However, if any payment made more
frequently than annually would be or becomes less than $20, we reserve the right
to reduce the frequency of payments to an interval that would result in each
payment being at least $20. If the annual payment payable at maturity is less
than $20, we will pay the maturity value and the policy will terminate effective
as of the maturity date.
ACCOUNT VALUE BENEFITS
The Account Value of this policy is equal to the account value allocated to the
Investment Subdivisions of the Separate Account and any Guarantee Account. On
the date the initial premium is received and accepted, the Account Value equals
the initial premium.
Account Value of the Separate Account
At the end of each valuation period after such date, the Account Value allocated
to each Investment Subdivision of the Separate Account is (a) plus (b) plus (c)
minus (d) minus (e) minus (f), where:
(a) is the Account Value allocated to the Investment Subdivision at the end
of the preceding valuation period, multiplied by the Investment
Subdivision's Net Investment Factor for the current period;
(b) is premium payments received during the current valuation period;
(c) is any other amounts transferred into the Investment Subdivision during
the current valuation period;
(d) is Account Value transferred out of the Investment Subdivision during
the current valuation period;
(e) is any partial surrender made from the Investment Subdivision during the
current valuation period;
(f) is any applicable premium tax deductions.
<PAGE>
In addition, after the policy date whenever a valuation period includes the
policy anniversary day, the Account Value at the end of such period is reduced
by the Annual Policy maintenance Charge allocated to the Account Value in the
Investment Subdivision for that policy anniversary day. This charge will be
allocated among the Investment Subdivisions of the Separate Account in the same
proportion that this policy's Account Value in each Investment Subdivision bears
to the total Account Value in all Investment Subdivisions at the beginning of
the policy year.
Account Value of the Guarantee Account
The account value of the Guarantee Account is the sum of all amounts allocated
to it, plus any interest credited on those amounts, less any amounts removed by
transfer or surrender, and less any amounts deducted for charges made under the
terms of the policy and any rider that may apply.
Any allocation of premium to the Guarantee Account will take effect immediately,
regardless of whether or not the initial investment period (if any) has expired.
Amounts allocated to the Guarantee Account earn interest at the rate applicable
to the particular allocation. With respect to each allocation, the applicable
rate will remain in effect for one year (the interest rate guarantee period). At
the end of each interest rate guarantee period, a new rate will apply to the
allocation and a new interest rate guarantee period will commence for that
allocation.
Interest rate applicable to allocations to the Guarantee Account are determined
by us in our sole discretion. No such rate will ever be less than 3% per year.
The initial interest rate guarantee period for any allocation will be one year.
Subsequent interest rate guarantee periods will each be one year.
Deductions from the policy's Account Value for the annual policy maintenance
charge and any other charges that may apply are made first from the account
value of the Guarantee Account. No such deduction will occur if it would reduce
the policy's Surrender Value below any minimum value that might be required by
applicable state law.
Annual Policy Maintenance Charge
There will be a charge made each year for maintenance of this policy. This
charge is made once each policy year against the Account Value allocated to the
Separate Account. The charge for a policy year will be made at the earlier of
the next policy anniversary or the date this policy is surrendered. The amount
of this charge is shown on the policy data page. We will waive this charge if
the Account Value exceeds $75,000 at the time the charge is due.
Surrender
You can fully or partially surrender this policy by sending a written request to
our home office. We must receive the request before income benefit payments
begin. You may be required to pay a surrender charge, this charge will be
deducted from the amount surrendered.
Full Surrender. You must send us your policy with your request for a full
surrender. The amount payable is the Surrender Value. The Surrender Value of
this policy is the Account Value on the date we receive your written request for
surrender in our home office, less any surrender charge.
Partial Surrender. You may make a partial surrender from the Account Value of
this policy at any time. The amount of a partial surrender may not be less than
$500 or reduce the Account Value to less than $5000. The amount payable will be
the amount of the partial surrender less any surrender charge.
With regard to partial surrenders, you may specify whether the surrender should
be made from the Guarantee Account or the Separate Account. If you do not, the
surrender will be made first from the account value of the Separate Account,
then from the account value of the Guarantee Account. Surrenders involving the
Guarantee Account will come from allocations in the order they were received.
Surrender Charge
All or part of the amount surrendered may be subject to a surrender charge. The
amount subject to a charge is the lesser of (a) or (b), where: is the amount
surrendered is the total premiums, less the total of all surrender amounts
previously allocated to premium payments.
The surrender charge will be the applicable percentage(s) of the amounts subject
to a charge. For purposes of determining the applicable percentage(s), surrender
amounts that are subject to charge will be allocated to remaining premium
payments in the order that the premium payments were received. Remaining premium
payments are the premium payments, less the amount of any surrenders previously
allocated to them. The applicable percentage for each premium payment is found
on the policy data pages in the Table of Surrender Charges next to the number
representing the number of full and partially completed years since the premium
payment.
Reduced Charges on Certain Surrenders. Surrender charges will be reduced for the
first surrender in each policy year. If the first surrender of the policy year
is a partial surrender of 10% of the Account Value, or less, the amount
surrendered will not be subject to a charge.
If the first surrender of the policy year is a full surrender, or a partial
surrender of more than 10% of the Account Value, the amount of the surrender
that is subject to a charge will be reduced by 10% of the Account Value.
There will be no surrender charge if you chose one of the following Optional
Payments Plans:
o Plan 1;
o Plan 2 for a period of 5 or more years;
o or Plan 5
<PAGE>
Postponement of Payments
We will usually pay any amounts payable as a result of full or partial
surrenders within seven days after we receive written request in our home
office, in a form satisfactory to us. We will usually pay any proceeds payable
as a result of death within seven days after we receive due proof of death.
Payment of any amount payable on surrender, partial surrender or death may be
postponed whenever:
o the New York Stock Exchange is closed other than customary weekend and
holiday closings or trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission; or
o the Securities and Exchange Commission by order permits postponement for
the protection of policyowners; or
o an emergency exists, as determined by the Securities and Exchange
Commission, as a result of which disposal of securities is not reasonably
practical or it is not reasonably practical to determine the value of net
assets of the Separate Account.
We reserve the right to defer payment of any surrender proceeds from the
Guarantee Account for up to six months. We will not defer payment if we are
required by law to pay earlier, or if the amount payable is used to pay premiums
on policies with us.
We have the right to defer payment which is derived from any amount recently
paid to us by check or draft, until we are satisfied the check or draft has been
paid by the bank on which it is drawn.
GUARANTEE ACCOUNT
You may allocate premiums and/or transfer account value amounts to the Guarantee
Account, and make transfers or surrenders from the Guarantee Account as
described in this policy.
Amounts allocated to the Guarantee Account are held in, and are part of, our
General Account, which consists of the assets of GE Capital Life other than
those allocated to our Separate Accounts. Subject to statutory authority, we
have sole discretion over the investment of the assets of the General Account,
and those assets may be chargeable with liabilities arising out of any business
we may conduct.
SEPARATE ACCOUNT
The Separate Account named in the policy data pages will be used to support the
operation of this policy and certain other variable annuity policies we may
offer. We will not allocate assets to the Separate Account to support the
operation of any policy or policies that are not variable annuities.
We own assets in the Separate Account. However, these assets are not part of our
general account. Income, gains or losses, whether or not realized, from assets
allocated to the Separate Account will be credited to or charged against the
Separate Account without regard to our other income, gains or losses.
The Separate Account is registered with the Securities and Exchange Commission
as a unit investment trust under the Investment Company Act of 1940. The
Separate Account is also subject to laws of the State of New York which
regulates the operations of insurance companies incorporated in New York. The
investment policy of the Separate Account will not be changed without the
approval of the Insurance Commissioner of the State of New York
The Separate Account is divided into Investment Subdivisions. The Investment
Subdivisions are named in the policy data pages. We reserve the right to remove
any Investment Subdivisions of the Separate Account, or to add new Investment
Subdivisions, subject to the approval of the New York Insurance Department. Each
Investment Subdivision of the Separate Account will invest in shares of a mutual
fund, or of a portfolio of a series type of mutual fund named in the data pages.
You determine the percentage of premiums which will be allocated to each
Investment Subdivision.
You will share only the income, gains and losses of the Investment Subdivisions
to which your premium payments have been allocated.
The portion of the assets of the Separate Account which equal the reserves and
other policy liabilities of the policies which are supported by the Separate
Account will not be charged with liabilities arising from any other business we
conduct. We have the right to transfer to our general account any assets of the
Separate Account which are in excess of such reserves and other policy
liabilities.
We also have the right, subject to the approval of the New York Insurance
Department, to make additions to, deletions from, or substitutions for the
shares or a mutual fund portfolio that are held by the Separate Account or that
the Separate Account may purchase. We reserve the right, subject to the approval
of the New York Insurance Department, to eliminate the shares of any portfolio
named in the data pages, and to substitute shares of another portfolio, if the
shares of the portfolio are no longer available for investment or if in our
judgement further investment in the portfolio should become inappropriate in
view of the purposes of the Separate Account. In the event of any substitution
or change, we may, by appropriate endorsement, make such changes in this and
other policies as may be necessary or appropriate to reflect the substitution or
change.
We also reserve the right to transfer assets of the Separate Account, which we
determine to be associated with the class of policies to which this policy
belongs, to another separate account. If this type of transfer is made, the term
Separate Account, as used in this policy, shall then mean the Separate Account
to which the assets were transferred.
When permitted by law, we also reserve the right to:
(a) deregister the Separate Account under the Investment Company Act of 1940;
(b) manage the Separate Account under the direction of a committee;
(c) restrict or eliminate any voting rights of Owners, or other persons who have
voting rights as to the Separate Account; and
(d) combine the Separate Account with other accounts, subject to the approval of
the New York Insurance Department.
We will value the assets of Separate Account each business day.
We will value the assets in the Separate Account at their fair market value in
accordance with accepted accounting practices and applicable laws and
regulations.
Unit Value
Each Investment Subdivision has a Unit Value. When premiums or other amounts are
transferred into an Investment Subdivision, a number of Units are purchased
based on the subdivision's Unit Value for the valuation period during which the
transfer is made. When amounts are transferred out of an Investment Subdivision,
Units are redeemed in a similar manner. The Unit Value for a valuation period
applies to each day in the period. Before income payments begin, Unit Values are
referred to as Accumulation Unit Values. Once income payments have begun, they
are referred to as Annuity Unit Values.
For each Investment Subdivision, the Accumulation Unit Value for the first
valuation period was $10. The Accumulation Unit Value for each subsequent period
is the Net Investment Factor for that period, multiplied by the Accumulation
Unit Value for the immediately preceding period.
For each Investment Subdivision, the Annuity Unit Value for the first valuation
period was $10. The Annuity Unit Value for each subsequent period is (a) times
(b) times (c), where:
(a) result adjustment the Net Investment Factor for that period;
(b) is the Annuity Unit Value for the preceding period; and
(c) is the investment factor for that period.
The investment result adjustment factor recognizes the assumed interest rate
used in determining the income payment amounts. The payment rates in the Plan 1
Table are based on an assumed interest rate of 3% per annum.
Annuity Unit Values are determined separately for each assumed interest rate
available under this policy. You can select the assumed interest rate used to
provide variable income payments from any that are available on the policy date.
If you do not choose an assumed interest rate, 3% will be used. Only one assumed
interest rate can be elected. You can change the assumed interest rate before
the time income payments begin to any assumed interest rate available at the
time you make the change.
Each valuation period includes a business day and any non-business day or
consecutive non-business days immediately preceding it. Assets are valued at the
close of the business day. A business day is any day the New York Stock Exchange
is open for trading, or any day in which there is a material change in the value
of the assets in the Separate Account.
Each Investment Subdivision has its own Net Investment Factor. In the following
definition, "assets" refers to the assets in each Investment Subdivision. "Any
amount charged against the Separate Account" refers to those amounts that are
allocated to each Investment Subdivision.
The Net Investment Factor for a valuation period is (a) divided by (b), minus
(c), where:
(a) is:
(1) the value of the assets at the end of the preceding valuation period; plus
(2) the investment income and capital gains, realized or unrealized, credited
to those assets at the end of the valuation period for which the Net Investment
Factor is being determined; minus
(3) the capital losses, realized or unrealized, charged against those assets
during the valuation period; minus
(4) any amount charged against the Separate Account for taxes, or any amount we
set aside during the valuation period as a provision for taxes attributable to
the operation or maintenance of the Separate Account; and
(b) is the value of the assets at the end of the preceding valuation period; and
(c) is a factor representing the charge for mortality and expense risks we
assume and for administrative expenses. The annual rate for these charges is
shown on the policy data page.
Transfers Before Income Payments Begin
You may transfer amounts among any Guarantee Account and the Investment
Subdivisions of the Separate Account be sending a written request to us at our
home office. The first twelve transfer in each calendar year will be made
without a transfer charge. A transfer charge will be imposed for each subsequent
transfer in a calendar month. The amount of the transfer is shown on the policy
data page. When we make transfers, the Account Value on the date of the transfer
will not be affected by the transfer except to the extent of the transfer
charge. The transfer charge will be taken from the amount transferred.
Transfers involving the Guarantee Account will be effective on the date we
receive your request at our home office. With respect to transfers between the
Guarantee Account and the Separate Account, we reserve the right to impose the
restriction that no transfers from the Separate Account to the Guarantee Account
may be made during the six month period following the transfer of any amount
from the Guarantee Account to the Separate Account.
We reserve the right to limit, upon written notice, the number of transfer to
twelve each calendar a year or, if it is necessary for this policy to continue
to be treated as an annuity policy by the IRS, a lower number. Also, we reserve
the right to refuse to execute any transfer if any of the Investment
Subdivisions which would be affected by the transfer is unable to purchase or
redeem shares of the mutual fund in which the Investment Subdivision invests.
The transfer will be effective as of the end of the valuation period during
which we receive your request at our home office. If the amount of your Account
Value remaining in any Guarantee Account or in an Investment Subdivision after
the transfer is less than $100, we will transfer the amount remaining in
addition to the amount requested. We will not allow a transfer into any
Investment Subdivision or any Guarantee Account unless the Account Value of that
Investment Subdivision or Guarantee Account after the transfer is at least $100.
Transfers After Variable Income Payments Begin
If income payments are made under one of the Variable Income Options you may
transfer Annuity Units among the Investment Subdivisions of the Separate Account
by sending a written request to us at our home office. You may make one transfer
in each calendar year. We reserve the right to limit the number of transfers if
it is necessary for this policy to continue to be treated as an annuity policy
by the IRS. Also, we reserve the right to refuse to execute any transfer if any
of the Investment Subdivisions that would be affected by the transfer is unable
to purchase or redeem shares of the mutual fund in which the Investment
Subdivision invests. If the number of annuity units remaining in an Investment
Subdivision after the transfer is less than 1, we will transfer the amount
remaining in addition to the amount requested. We will not allow a transfer into
any Investment Subdivision unless the number of annuity units of that Investment
Subdivision after the transfer is at least 1. No transfer charge is imposed for
transfers of annuity units. The amount of the income payment as of the date of
the transfer will not be affected by the transfer.
GENERAL INFORMATION
Statement of Values
At least once each year, we will send you a policy statement. The statement
will show the Account Value, Surrender Value and Death Benefit as of the
statement date. The statement will also show premiums paid and charges made
during the statement period. Calculation of Values
The Surrender Value and Death Benefit in this policy are not less than the
minimum benefits required by the laws of the state in which the policy is
delivered.
A detailed statement of how we calculate the values in this policy has been
filed with the New York Insurance Department.
Evidence of Death, Age, Gender or Survival
We will require proof of death before we act on policy provisions relating to
death of any person or persons. We may also require proof of the age, gender or
survival of any person or persons before we act on any policy provisions
dependent upon age, gender or survival.
Incontestability
We will not contest this policy.
Misstatement of Age or Gender
If the Annuitant's age or gender is misstated on the policy data page, any
policy benefits or proceeds, or the availability thereof, will be determined
using the correct age and gender. If any overpayments have been made, an
adjustment including interest on the amount of the overpayment will be made to
the next payment(s). Any underpayments will be credited with interest on the
amount of the underpayment and will be paid in full with the next payment. The
interest rate used will be 3% per annum, unless otherwise required by law.
Nonparticipating
This policy is nonparticipating. No dividends are payable.
Written Notice
Any written notice to us should be sent to our home office at the address shown
on the cover of this policy. Please include the policy number and the
Annuitant's full name.
Any notice we send you will be sent to the last known address on file with us.
You should request an address change form if you move.
<PAGE>
OPTIONAL PAYMENT PLANS
Death benefit and Surrender Value proceeds will be paid in one lump sum, and
maturity proceeds will be paid as described in the Income Benefit section.
Subject to the rules stated below, however, any part of the death or surrender
proceeds can be left with us and paid under a payment plan. If you choose to
leave the proceeds with us and received payments under a payment plan, the
proceeds less any applicable premium tax will be applied to calculate income.
During the Annuitant's life you (or the Designated Beneficiary at your death)
can choose a plan. If a plan has not been chosen at the death of the Annuitant,
the Designated Beneficiary can choose a plan if the death benefit is to be paid.
There are several import payment plan rules:
o Our consent must be obtained prior to selecting an optional payment plan
if the payee is not a natural person.
o Payment made under an Optional Payment Plan at the death of the Owner,
Joint Owner or Annuitant must conform with the rules in the Death
Provisions, including the Payment of Benefits section.
o If you change a beneficiary, your Plan selection will no longer be in
effect unless you request that it continue.
o Any choice or change of a Plan must be sent in writing to our home office.
o The amount of each payment under a plan must be at lest $20.
o Payments under a Fixed Income option will begin on the date we receive
proof of the Annuitant's death, on surrender, or on the policy's maturity
date.
o Payments under a Variable Income option will begin within seven days after
the date payments would begin under the corresponding fixed option.
o Payments under Plan 4 will begin at the end of the first interest period
after the date proceeds are otherwise payable.
Fixed Income Options
Optional Payment Plans 1 through 5 are available as Fixed Income Options. Any
amount left with us under a Fixed Income option will be transferred to our
general account. Benefits will not be less than those that would be provided to
a single premium immediate annuity applicant of the same class.
Variable Income Options
Optional Payment Plans 1 through 5 are available as Variable Income Options.
This means that income payments, after the first, will reflect the investment
experience of the Investment Subdivisions of the Separate Account. Benefits
under a variable income option will not be less than those that would be
provided to an applicant of the same class under the corresponding option for a
single premium variable immediate annuity. Once variable income payments have
commenced, neither expenses actually incurred, other than taxes on the
investment return, nor mortality actually experienced, will adversely affect the
dollar amount of variable income payments.
Proceeds may be allocated to one or more Investment Subdivisions of the Separate
Account. The first income payment is determined by the Plan chosen and the
amount of proceeds applied to the Plan. The dollar amount of subsequent income
payments is determined by means of Annuity Units.
The number of Annuity Units for an Investment Subdivision will be determined at
the time income payments begin and will remain fixed unless transferred (as
shown below). The number of Annuity Units for an Investment Subdivision is (a)
divided by (b), where:
(a) is the portion of the first income payment allocated to that Investment
Subdivision; and
(b) is the applicable Annuity Unit Value for that Investment Subdivision seven
days before the income payment is due.
After the first income payment, each subsequent income payment is a dollar
amount equal to the sum of the income payments amounts for each Investment
Subdivision. The income payment amount for an Investment Subdivision is the
number of Annuity Units for that Investment Subdivisions times the applicable
Annuity Unit Values for that Investment Subdivision times the applicable Annuity
Unit Value for that Investment Subdivision seven days before the payment is due.
Annuity Units may be transferred upon request. The number of Annuity Units for
the new Investment Subdivision is (a) times (b), divided by (c), where:
(a) is the number of Annuity Units for the current Investment Subdivision;
(b) is the applicable Annuity Unit Value for the current Investment
Subdivision; and
(c) is the applicable Annuity Unit Value for the new
Investment Subdivision.
<PAGE>
Payments Plans
The fixed income options are shown below. Variable income options with an
assumed interest rate of 3% have the same initial payment as the corresponding
fixed option. The monthly payment rate per $1000, as shown in the Plan 1 and
Plan 5 Tables, is based on the 1983 Table `a', using 3% interest. Variable
income monthly payment rates based on other assumed interest rates are available
on request.
Plan 1 Life Income with Period Certain. We will make equal monthly payments for
a guaranteed minimum period. If the payee lives longer than the minimum period,
payments will continue for his or her life. The minimum period can be 10, 15 or
20 years. Payments will be according to the table below. Guaranteed accounts
payable under this plan will earn interest at 3% compounded yearly. We may
increase the interest rate and the amount of any payment. If the payee dies
before the end of the guaranteed period, the amount of remaining payment for the
minimum period will be the discounted at the same rate used in calculating
income payments. Discounted means we will deduct the amount of interest each
remaining payment would have earned had it not been paid out early. The
discounted amounts will be paid in one lump sum to the payee's estate unless
otherwise provided.
Plan 1 Table
Monthly payments rates for each $1,000 of proceeds under Plan 1.
<TABLE>
<CAPTION>
Settlmt Male Payee Female Payee Settlmt. Male Payee Female Payee
Age Age
- -------------------------------------------------------------- -------------------------------------------------------------
10 yr 15 yr 20 yr 10 yr 15 yr 20 yr 10 yr 15 yr 20 yr 10 yr 15 yr 20 yr
| |Certain | Certain|Certain| Certain| Certain |Certain| | Certain|Certain| Certain|Certain |Certain|Certain
- -------------------------------------------------------------- -------------------------------------------------------------
<S> <C>
- -------------------------------------------------------------- -------------------------------------------------------------
20 2.90 2.89 2.89 2.80 2.80 2.80 65 5.44 5.17 4.83 4.85 4.72 4.54
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
25 2.99 2.98 2.98 2.88 2.87 2.87 66 5.58 5.28 4.89 4.97 4.83 4.62
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
30 3.10 3.10 3.09 2.96 2.96 2.96 67 5.74 5.38 4.96 5.10 4.93 4.69
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
35 3.24 3.24 3.23 3.08 3.07 3.07 68 5.89 5.49 5.02 5.24 5.04 4.77
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
40 3.43 3.41 3.39 3.22 3.21 3.20 69 6.05 5.60 5.08 5.39 5.16 4.84
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
45 3.66 3.64 3.60 3.40 3.39 3.37 70 6.22 5.70 5.13 5.55 5.28 4.92
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
50 3.95 3.91 3.85 3.63 3.61 3.59 71 6.39 5.81 5.18 5.71 5.39 4.99
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
51 4.02 3.97 3.91 3.68 3.66 3.63 72 6.57 5.91 5.23 5.88 5.51 5.05
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
52 4.09 4.04 3.96 3.74 3.72 3.68 73 6.75 6.01 5.27 6.06 5.63 5.12
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
53 4.16 4.11 4.02 3.80 3.77 3.74 74 6.93 6.10 5.31 6.25 5.75 5.17
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
54 4.24 4.18 4.08 3.86 3.83 3.79 75 7.12 6.19 5.35 6.44 5.87 5.22
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
55 4.32 4.25 4.15 3.93 3.90 3.85 76 7.30 6.28 5.38 6.64 5.98 5.27
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
56 4.41 4.33 4.21 4.00 3.96 3.91 77 7.49 6.35 5.40 6.85 6.09 5.31
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
57 4.50 4.41 4.28 4.07 4.03 3.97 78 7.67 6.43 5.42 7.06 6.19 5.35
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
58 4.60 4.49 4.34 4.15 4.10 4.03 79 7.85 6.49 5.44 7.27 6.28 5.38
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
59 4.70 4.58 4.41 4.23 4.18 4.10 80 8.02 6.55 5.46 7.48 6.37 5.41
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
60 4.81 4.67 4.48 4.32 4.26 4.17 81 8.18 6.61 5.47 7.68 6.45 5.43
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
61 4.92 4.77 4.55 4.42 4.35 4.24 82 8.34 6.65 5.48 7.88 6.52 5.45
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
62 5.04 4.86 4.62 4.52 4..43 4.31 83 8.49 6.69 5.49 8.08 6.58 5.47
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
63 5.17 4.96 4.69 4.62 4.53 4.39 84 8.63 6.73 5.50 8.26 6.63 5.48
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
64 5.30 5.06 4.76 4.73 4.62 4.46 85& 8.76 6.76 5.50 8.43 6.68 5.49
over
- --------- -------- -------- -------- ------- -------- -------- -------- -------- -------- ------- -------- -------- --------
</TABLE>
Values for ages not shown will be furnished upon request.
Plan 2. Income for a Fixed Period. We will make equal periodic payments for a
fixed period, not longer than 30 years. Payments can be annual, semi-annual,
quarterly or monthly. Payments will be made according to the table below.
Guaranteed amounts payable under this plan will earn interest at 3% compounded
yearly. We may increase the interest and the amount of any payment. If the payee
dies, the amount of the remaining guaranteed payments will be discounted to the
date of the payee's death at the same rate used in calculating income payments.
The discounted amount will be paid in one sum to the payee's estate unless
otherwise provided.
<PAGE>
Plan 2 Table
Monthly payment rates for each $1,000 of proceeds under Plan 2.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Years 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Payable
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Mthly 84.47 42.68 28.99 22.06 17.91 15.14 $13.16 $11.68 $10.53 $9.61 $8.86 $8.24 $7.71 $7.26 $6.87
Paymnt
- ----------------------------------------------------------------------------------------------------------------------------------
Years 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Payable
- ----------------------------------------------------------------------------------------------------------------------------------
Mnthly $6.53 $6.23 $5.96 $5.73 $5.51 $5.32 $5.15 $4.99 $4.84 $4.71 $4.59 $4.47 $4.37 $4.27 $4.18
Paymnt
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Annual, semi-annual or quarterly payments are determined by multiplying the
monthly payment by 11.838, 5.963 or 2.992, respectively.
Plan 3. Income of a Definite Amount. We will make equal periodic payments of a
definite amount. Payments can be annual, semi-annual, quarterly or monthly. The
amount paid each year must be at least $120 for each $1,000 or proceeds.
Payments will continue until the proceeds are exhausted. The last payment will
equal the amount of any unpaid proceeds. Unpaid proceeds will earn interest at
3% compounded yearly. We may increase the interest rate. If we do, the payment
period will be extended. If the payee dies, the amount of the remaining proceeds
with earned interest will be paid in one sum to his or her estate unless
otherwise provided.
Plan 4. Interest Income. We will make periodic payments of interest earned from
the proceeds left with us. Payments can be annual, semi-annual, quarterly or
monthly, and will begin at the end of the first period chosen. Proceeds left
under this plan will earn interest at 3% compounded yearly. We may increase the
interest rate and the amount of any payment. If the payee dies, the amount of
remaining proceeds and any earned but unpaid interest will be paid in one sum to
his or her estate unless otherwise provided.
Plan 5. Joint Life and Survivor Income. We will make equal monthly payments to
two payees for a guaranteed minimum of 10 years. Each payee must be at least 35
years old when payments begin. The guaranteed amount payable under this plan
will earn interest at 3% compounded yearly. We may increase the interest rate
and the amount of any payment. Payments will continue as long as either payee is
living. If both payees die before the end of the minimum period, the amount of
the remaining payments for the 10 year period will be discounted at the same
rate used in calculating the monthly income. The discounted amount will be paid
in one sum to the survivor's estate unless otherwise provided.
Plan 5 Table
<TABLE>
<CAPTION>
Monthly payment rates for each $1,000 of proceeds under Plan 5.
- ----------------- -------------------------------------------------------------------------------------------
Male Settlement Female Settlement Age
-------------------------------------------------------------------------------------------
Age
35 40 45 50 55 60 65 70 75 80 85 & over
- ----------------- ------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
<S> <C>
35 $2.95 $3.00 $3.06 $3.11 $3.15 $3.18 $3.20 $3.22 $3.23 $3.24 $3.24
------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
40 2.98 3.06 3.13 3.20 3.26 3.31 3.35 3.38 3.40 3.41 3.42
------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
45 3.01 3.10 3.20 3.30 3.39 3.46 3.53 3.58 3.61 3.64 3.65
------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
50 3.03 3.14 3.25 3.38 3.51 3.63 3.73 3.38 3.87 3.91 3.93
------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
55 3.04 3.16 3.30 3.45 3.62 3.79 3.94 4.08 4.18 4.25 4.29
------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
60 3.05 3.18 3.33 3.51 3.72 3.94 4.16 4.37 4.55 4.67 4.75
------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
65 3.06 3.19 3.36 3.56 3.79 4.07 4.37 4.68 4.96 5.18 5.32
------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
70 3.07 3.20 3.37 3.59 3.85 4.17 4.55 4.97 5.39 5.75 6.00
------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
75 3.07 3.21 3.38 3.61 3.89 4.24 4.68 5.20 5.78 6.32 6.73
------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
80 3.07 3.21 3.39 3.62 3.91 4.28 4.76 5.37 6.08 6.81 7.40
------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
85 & over 3.07 3.22 3.39 3.62 3.92 4.31 4.81 5.47 6.28 7.15 7.91
- ----------------- ------- ------- ------- -------- ------- ------- -------- ------- ------ ------- ----------
</TABLE>
Figures for intermediate ages, for two males or two females
<PAGE>
Settlement Age: The settlement age is the payee's age nearest birthday on the
date payments begin, minus an age adjustment from the table below. The age
adjustment cannot exceed the age of the payee.
- ----------------------------------------------------------
YEAR Payments Begin AGE
AFTER PRIOR TO ADJUSTMENT
- ----------------------------------------------------------
- ----------------------------------------------------------
---- 2001 0
2000 2026 3
2025 2051 7
2050 ----- 10
- ----------------------------------------------------------
<PAGE>
Individual Deferred Variable
Annuity Policy
Flexible Purchase Payments
Income payments beginning at maturity
Nonparticipating
Some values and benefits reflect investment results
GE CAPITAL LIFE ASSURANCE
COMPANY OF NEW YORK
(4)(ii)(c)
PENSION ENDORSEMENT
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
PENSION ENDORSEMENT
In order to use this contract under Section 401(a) of the Internal Revenue Code
of 1986, as amended, (hereafter referred to as The Code), the following
provisions and restrictions are hereby made applicable, notwithstanding any
provisions to the contrary contained in the policy. The contract is issued to a
custodian or trustee of a qualified retirement plan under Section 401(a) of The
Code maintained on behalf of the participants for whom the contract is
purchased. Such custodian or trustee must be the owner and beneficiary.
Unisex Policy
All references to gender in the policy are deleted. Values and rates ar unisex.
Non-Transferability
The owner may not change the ownership of the policy and the policy may not be
sold, assigned or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose to anyone other than GE
Capital Life Assurance Company of New York unless the owner is the trustee of an
employee trust qualified under The Code. The purpose of this provision is to
qualify the annuity under Section 401(g) of The Code, and it shall be so
construed.
Additional Premium Payments
Each additional premium payment must be at least $100.00.
Distributions
All distributions made under the policy to which the endorsement is attached
shall be made in accordance with the minimum distribution requirements of
Section 401(a)(9) of the Internal Revenue Code, including the incidental-death
benefit requirements of Section 401(a)(9)(G) of The Code, and the regulations
thereunder, including the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Income Benefit
We will make monthly payments to the annuitant under a life income payment plan
for a guaranteed minimum period as shown in the tables below. If the annuitant
dies before the end of the guaranteed minimum period, the remaining payments
will be discounted at the same interest rate used to calculate the monthly
income. The discounted amount will be paid in one sum to the annuitant's estate
unless otherwise provided.
Optional Payment Plans
We will make payments that do not depend on the gender of the annuitant. New
monthly payment rates for the Life Income plan or the Joint Life and Survivor
Income plan are contained in this endorsement.
Settlement Age: The settlement age is the payee's age last birthday on the date
payments begin, minus an age adjustment from the table below. The age
adjustment cannot exceed the age of the payee.
- -------------------------------------------------------------------
Year Payments Begin
Age
After Prior to Adjustment
- -------------------------------------------------------------------
----- 2001 0
2000 2026 3
2025 2051 7
2050 ----- 1
- -------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Life Income Plan Table
Monthly Payment Rates for each $1,000 of proceeds
- ------- ------- ------- -------- ----- -------- ------- ------- ------- ------- ------- ------- ------ ------- ------- -------
10 15 20 10 15 20 10 15 20 10 15 20
Age* Years Years Years Age* Years Years Years Age* Years Years Years Age* Years Years Years
Cert. Cert. Cert. Cert. Cert. Cert. Cert. Cert. Cert. Cert. Cert. Cert.
- ------- ------- ------- -------- ----- -------- ------- ------- ------- ------- ------- ------- ------ ------- ------- -------
<S><C>
20 $2.83 $2.83 $2.82 55 $4.04 $3.99 $3.93 66 $5.14 $4.96 $4.70 77 $7.05 $6.18 $5.35
25 2.90 2.90 2.90 56 4.11 4.06 3.99 67 5.28 5.07 4.78 78 7.26 6.27 5.38
30 3.00 3.00 2.99 57 4.19 4.14 4.06 68 5.43 5.18 4.85 79 7.46 6.36 5.40
35 3.12 3.12 3.11 58 4.27 4.21 4.12 69 5.58 5.29 4.92 80 7.66 6.44 5.43
40 3.27 3.26 3.25 59 4.36 4.29 4.19 70 5.74 5.41 4.99 81 7.86 6.51 5.45
45 3.47 3.45 3.43 60 4.46 4.38 4.26 71 5.91 5.52 5.05 82 8.05 6.57 5.46
50 3.71 3.69 3.66 61 4.56 4.46 4.33 72 6.09 5.64 5.11 83 8.23 6.62 5.48
51 3.77 3.75 3.71 62 4.66 4.56 4.41 73 6.27 5.75 5.17 84 8.40 6.67 5.49
52 3.83 3.80 3.76 63 4.77 4.65 4.48 74 6.46 5.87 5.22 85 & 8.55 6.71 5.49
53 3.90 3.86 3.82 64 4.89 4.75 4.55 75 6.65 5.98 5.27 Over
54 3.96 3.93 3.87 65 5.01 4.85 4.63 76 6.85 6.08 5.31
- ------- ------- ------- -------- ----- -------- ------- ------- ------- ------- ------- ------- ------ ------- ------- -------
</TABLE>
*Age means Settlement Age
<TABLE>
<CAPTION>
Joint Life and Survivor Income Plan Table
Monthly Payment Rates for each $1000 of proceeds
- ---------------------- -------- ------- ------- ------- ------- -------- ------- ------- ------- -------- --------------------
Settlement
Age 35 40 45 50 55 60 65 70 75 80 85&over
- ---------------------- -------- ------- ------- ------- ------- -------- ------- ------- ------- -------- --------------------
<S> <C>
35 $2.93 $2.98 $3.01 $3.04 $3.07 $3.08 $3.10 $3.11 $3.11 $3.12 $3.12
40 2.98 3.04 3.10 3.14 3.18 3.21 3.23 3.25 3.26 3.27 3.27
45 3.01 3.10 3.18 3.25 3.31 3.36 3.40 3.43 3.44 3.46 3.46
50 3.04 3.14 3.25 3.35 3.45 3.53 3.59 3.64 3.67 3.69 3.71
55 3.07 3.18 3.31 3.45 3.58 3.71 3.82 3.90 3.96 4.00 4.02
60 3.08 3.21 3.36 3.53 3.71 3.89 4.06 4.21 4.31 4.39 4.43
65 3.10 3.23 3.40 3.59 3.82 4.06 4.31 4.55 4.74 4.87 4.95
70 3.11 3.25 3.43 3.64 3.90 4.21 4.55 4.90 5.22 5.46 5.62
75 3.11 3.26 3.44 3.67 3.96 4.31 4.74 5.22 5.70 6.11 6.40
80 3.12 3.27 3.46 3.69 4.00 4.39 4.87 5.46 6.11 6.73 7.20
85&over 3.12 3.27 3.46 3.71 4.02 4.43 4.95 5.62 6.40 7.20 7.86
- ---------------------- -------- ------- ------- ------- ------- -------- ------- ------- ------- -------- --------------------
</TABLE>
For GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
President
(4)(ii)(d)
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
INDIVIDUAL RETIREMENT ANNUITY ENDORSEMENT
The policy or contract ("Contract") to which this Endorsement is attached is
issued as an individual retirement annuity ("IRA") described in Section 408(b)
of the Internal Revenue Code of 1986 (the "Code"), and all provisions of the
Contract, as endorsed, shall be interpreted in accordance with the requirements
of that Section. Notwithstanding any provision contained therein to the
contrary, the Contract to which this Endorsement is attached is amended as
follows:
Article 1 - Owner and Annuitant
The Owner must be the sole Owner of the Contract. Also, the Owner and the
Annuitant must be the same individual. A Joint Owner or Contingent Annuitant
cannot be named. Also, except as otherwise permitted under the Code and
applicable regulations, neither the Owner nor the Annuitant can be changed.
Furthermore, all distributions made while the Owner is alive must be made to the
Owner.
Article 2 - Joint Annuitant
The Joint Annuitant, if one is named, must be either the Owner's spouse or an
individual who is not more than 10 years younger than the Owner. All payments
made under a joint and survivor optional payment plan after the Owner's death
while the Joint Annuitant is alive must be made to the Joint Annuitant.
Article 3 - Nontransferable and Nonforfeitable
The Contract is established for the exclusive benefit of the Owner and his or
her beneficiaries. The interest of the Owner in this Contract is nontransferable
and, except as provided by law, is nonforfeitable. In particular, the Contract
may not be sold, assigned, discounted, or pledged as collateral for a loan or as
security for the performance of an obligation or for any other purpose to any
person other than to the Company.
Article 4 - Premium Payments
Except in the case of a rollover contribution (as permitted by Sections 402(c),
403(a)(4), 403(b)(8), or 408(d)(3) of the Code) or a contribution made in
accordance with the terms of a Simplified Employee Pension (SEP) as described in
Section 408(k) of the Code, or a nontaxable transfer from an individual
retirement account under Section 408(a) of the Code or another IRA under Section
408(b) of the Code, contributions must be paid in cash and the total of such
contributions shall not exceed $2,000 for any taxable year.
No contribution will be accepted under a SIMPLE plan established by any employer
pursuant to Code Section 408(p). No transfer or rollover of funds attributable
to contributions made by a particular employer under its SIMPLE plan will be
accepted from a SIMPLE IRA, that is, an IRA used in conjunction with a SIMPLE
plan, prior to the expiration of the 2-year period beginning on the date the
individual first participated in that employer's SIMPLE plan.
The minimum additional premium is $50.00, if additional premium payments are
allowed under the Contract.
Any refund of premiums (other than those attributable to excess contributions)
will be applied, before the close of the calendar year following the year of the
refund, toward the payment of future premiums or the purchase of additional
benefits.
<PAGE>
Article 5 - Required Distributions Generally
The Owner's entire interest in this Contract shall be distributed as
required under Section 408(b) of the Code and applicable regulations.
Article 6 - Required Beginning Date
As used in this Endorsement, the term "required beginning date" means April
1 of the calendar year following the calendar year in which the Owner attains
age 70 1/2.
Article 7 - Distributions During Owner's Life
Unless otherwise permitted under applicable law, the Owner's entire interest in
the Contract shall be distributed no later than the required beginning date, or
commence to be distributed beginning no later than the required beginning date,
over (a) the life of the Owner, or the lives of the Owner and his or her
designated beneficiary (within the meaning of Section 401(a)(9) of the Code), or
(b) a period certain not extending beyond the life expectancy of the Owner, or
the joint and last survivor expectancy of the Owner and his or her designated
beneficiary, as required by law. Payments must be made in periodic payments at
intervals of no longer than one year. In addition, payments must be either
nonincreasing or they may increase only as provided in Q&A F-3 of Section
1.401(a)(9)-1 of the Proposed Income Tax Regulations.
If the Owner's interest is to be distributed over a period greater than one
year, the amount to be distributed by December 31 of each year (including the
year in which the required beginning date occurs) will be made in accordance
with the requirements of Section 401(a)(9) of the Code, including the incidental
death benefit requirements of Section 401(a)(9)(G) of the Code, and the
regulations thereunder, including the minimum distribution incidental benefit
requirement of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Article 8 - Distributions After Owner's Death
Unless otherwise permitted under applicable law, if the Owner dies on or after
the required beginning date (or if distributions have begun before the required
beginning date as irrevocable annuity payments), any remaining portion of the
Owner's interest shall be distributed at least as rapidly as under the method of
distribution in effect as of the Owner's death.
Unless otherwise permitted under applicable law, if the Owner dies before the
required beginning date and an irrevocable annuity distribution has not begun,
the entire interest will be distributed by December 31 of the calendar year
containing the fifth anniversary of the Owner's death, except that:
(a) if the interest is payable to an individual who is the Owner's
designated beneficiary, the designated beneficiary may elect to receive
the entire interest over the life of the designated beneficiary or over
a period not extending beyond the life expectancy of the designated
beneficiary, commencing on or before December 31 of the calendar year
immediately following the calendar year in which the Owner died; or
(b) if the designated beneficiary is the Owner's surviving spouse, the
surviving spouse may elect to receive the entire interest over the life
of the surviving spouse or over a period not extending beyond the life
expectancy of the surviving spouse, commencing at any date on or before
the later of:
(i) December 31 of the calendar year immediately following
the calendar year in which the Owner died, and
(ii) December 31 of the calendar year in which the Owner would
have attained age 70 1/2.
<PAGE>
If the surviving spouse dies before distributions begin, the
limitations of this Article 8 (without regard to this paragraph (b))
will be applied as if the surviving spouse were the Owner.
An irrevocable election of the method of distribution by a designated
beneficiary who is the surviving spouse must be made no later than the
earlier of December 31 of the calendar year containing the fifth
anniversary of the Owner's death or the date distributions are required
to begin pursuant to this paragraph (b).
If the designated beneficiary is the Owner's surviving spouse, the
spouse may irrevocably elect to treat the Contract as his or her own
IRA. This election will be deemed to have been made if such surviving
spouse, subject to the requirements of Article 4 of this Endorsement:
(i) makes a regular IRA contribution to the Contract;
(ii) makes a rollover to or from the Contract; or
(iii) fails to elect that his or her interest will be
distributed in accordance with one of the preceding
provisions of this paragraph
An irrevocable election of the method of distribution by a designated
beneficiary who is not the surviving spouse must be made no later than December
31 of the calendar year immediately following the calendar year in which the
Owner died. If no such election is made, the entire interest will be distributed
by December 31 of the calendar year containing the fifth anniversary of the
Owner's death.
Distributions under this Article 8 are considered to have begun if distributions
are made on account of the individual reaching his or her required beginning
date or if prior to the required beginning date distributions irrevocably
commence to the individual over a period permitted and in an annuity form
acceptable under Section 1.401(a)(9) of the Proposed Income Tax Regulations.
Article 9 - Life Expectancy Calculations
Life Expectancy is computed by use of the expected return multiples in Tables V
and VI of Section 1.72-9 of the Income Tax Regulations.
Life expectancies shall be recalculated annually provided that annual
recalculation is elected by the time distributions are required to begin (a) by
the Owner, or (b) for purposes of distributions beginning after the Owner's
death, by the surviving spouse. Such an election shall be irrevocable as to the
Owner and the surviving spouse, and will apply to all subsequent years.
The life expectancy of a non-spouse designated beneficiary (a) may not be
recalculated, and (b) shall be calculated using the attained age of such
designated beneficiary during the calendar year in which distributions are
required to begin pursuant to this Endorsement. Payments for any subsequent
calendar year will be calculated based on such life expectancy reduced by one
for each calendar year which has elapsed since the calendar year in which life
expectancy was first calculated.
Article 10 - Optional Payment Plans
All optional payment plans under the Contract must meet the requirements of
Section 408(b) of the Code and applicable regulations. The provisions of this
Endorsement reflecting the requirements of Code Sections 401(a)(9) and 408(b)
override any optional payment plan inconsistent with such requirements.
<PAGE>
If a guaranteed period of payments is chosen under an optional payment plan, the
length of the period must not exceed the shorter of (1) the Owner's life
expectancy, or if a Joint Annuitant is named, the joint and last survivor
expectancy of the Owner and the Joint Annuitant, and (2) the applicable maximum
period under Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Article 11 - Annual Reports
The Company will furnish annual calendar year reports concerning the status of
this Contract.
Article 12 - Code Requirements
The provisions of this Endorsement are intended to comply with the requirements
of the Code and applicable regulations for IRAs under Section 408(b) of the
Code. The Company reserves the right to amend the Contract and this Endorsement
from time to time, without the Owner's consent, when such amendment is necessary
to assure continued qualification of this Contract as an IRA under Section
408(b) of the Code (and any successor provision) as in effect from time to time.
The Owner has the right to refuse to accept any such amendment; however, we
shall not be held liable for any tax consequences incurred by the Owner as a
result of such refusal.
For GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
(4)(ii)(e)
403(b) ANNUITY ENDORSEMENT
<PAGE>
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
SECTION 403(b) ANNUITY ENDORSEMENT
The Policy to which this Endorsement is attached is issued as an annuity
described in Section 403(b) of the Internal Revenue Code of 1986 (the "Code")
and all provisions shall be interpreted in accordance with qualification as a
Section 403(b) annuity. Notwithstanding any provision contained therein to the
contrary, the Policy, as endorsed, to which this Endorsement is attached is
amended as follows:
Article 1 - Owner and Annuitant
The Owner must be either an organization described in Section 403(b)(1)(A) of
the Code or an individual employee of such an organization. If the Owner is an
organization described in Section 403(b)(1)(A) of the Code, the term "Employee"
as used in this Endorsement shall mean the individual employee, or former
employee, for whose benefit the organization has established an annuity program
under Section 403(b) of the Code. Such employee shall be the Annuitant under the
Policy. If the Owner is an employee of an organization described in Section
403(b)(1)(A) of the Code, the term "Employee" as used in this Endorsement shall
mean such employee, and the Annuitant under the Policy shall be that employee.
If this Policy is used as a funding mechanism for a rollover under Sections
403(b)(8) or 408(d)(3) of the Code or a nontaxable transfer from another
contract qualifying under Section 403(b) of the Code or from a custodial account
qualifying under Section 403(b)(7) of the Code, the Owner shall be one
individual, the same individual shall be the Annuitant, and the term "Employee"
shall mean that individual.
A Joint Owner cannot be named.
Article 2 - Joint Annuitant
The Joint Annuitant, if one is named, must be either the Owner's spouse or an
individual who is not more than 10 years younger than the Owner. All payments
made under a joint and survivor annuity payment option after the Owner's death
while the Joint Annuitant is alive must be made to the Joint Annuitant.
Article 3 - Nontransferable and Nonforfeitable
The interest of the Employee in this Policy is nontransferable within the
meaning of Section 401(g) of the Code and applicable regulations and, except as
provided by law, is nonforfeitable. In particular, this Policy may not be sold,
assigned, discounted, or pledged as collateral for a loan or as security for the
performance of any obligation or for any other purpose, to any person other than
to the Company.
Article 4 - Unisex Rates
All references to gender in the Policy are deleted. Values and rates are
unisex. Unisex rates are as follows:
<PAGE>
<TABLE>
<CAPTION>
Life Income Plan Table
Monthly Payment Rates for each $1,000 of proceeds
- ------- ------- ------- -------- ----- -------- ------- ------- ------- ------- ------- ------- ------ ------- ------- -------
10 15 20 10 15 20 10 15 20 10 15 20
Age* Years Years Years Age* Years Years Years Age* Years Years Years Age* Years Years Years
Cert. Cert. Cert. Cert. Cert. Cert. Cert. Cert. Cert. Cert. Cert. Cert.
- ------- ------- ------- -------- ----- -------- ------- ------- ------- ------- ------- ------- ------ ------- ------- -------
<S> <C>
20 $2.83 $2.83 $2.82 55 $4.04 $3.99 $3.93 66 $5.14 $4.96 $4.70 77 $7.05 $6.18 $5.35
25 2.90 2.90 2.90 56 4.11 4.06 3.99 67 5.28 5.07 4.78 78 7.26 6.27 5.38
30 3.00 3.00 2.99 57 4.19 4.14 4.06 68 5.43 5.18 4.85 79 7.46 6.36 5.40
35 3.12 3.12 3.11 58 4.27 4.21 4.12 69 5.58 5.29 4.92 80 7.66 6.44 5.43
40 3.27 3.26 3.25 59 4.36 4.29 4.19 70 5.74 5.41 4.99 81 7.86 6.51 5.45
45 3.47 3.45 3.43 60 4.46 4.38 4.26 71 5.91 5.52 5.05 82 8.05 6.57 5.46
50 3.71 3.69 3.66 61 4.56 4.46 4.33 72 6.09 5.64 5.11 83 8.23 6.62 5.48
51 3.77 3.75 3.71 62 4.66 4.56 4.41 73 6.27 5.75 5.17 84 8.40 6.67 5.49
52 3.83 3.80 3.76 63 4.77 4.65 4.48 74 6.46 5.87 5.22 85 & 8.55 6.71 5.49
53 3.90 3.86 3.82 64 4.89 4.75 4.55 75 6.65 5.98 5.27 Over
54 3.96 3.93 3.87 65 5.01 4.85 4.63 76 6.85 6.08 5.31
- ------- ------- ------- -------- ----- -------- ------- ------- ------- ------- ------- ------- ------ ------- ------- -------
</TABLE>
*Age means Settlement Age
Joint Life and Survivor Income Plan Table
<TABLE>
<CAPTION>
Monthly Payment Rates for each $1000 of proceeds
- ---------------------- -------- ------- ------- ------- ------- -------- ------- ------- ------- -------- --------------------
Settlement
Age 35 40 45 50 55 60 65 70 75 80 85&over
- ---------------------- -------- ------- ------- ------- ------- -------- ------- ------- ------- -------- --------------------
<S> <C>
35 $2.93 $2.98 $3.01 $3.04 $3.07 $3.08 $3.10 $3.11 $3.11 $3.12 $3.12
40 2.98 3.04 3.10 3.14 3.18 3.21 3.23 3.25 3.26 3.27 3.27
45 3.01 3.10 3.18 3.25 3.31 3.36 3.40 3.43 3.44 3.46 3.46
50 3.04 3.14 3.25 3.35 3.45 3.53 3.59 3.64 3.67 3.69 3.71
55 3.07 3.18 3.31 3.45 3.58 3.71 3.82 3.90 3.96 4.00 4.02
60 3.08 3.21 3.36 3.53 3.71 3.89 4.06 4.21 4.31 4.39 4.43
65 3.10 3.23 3.40 3.59 3.82 4.06 4.31 4.55 4.74 4.87 4.95
70 3.11 3.25 3.43 3.64 3.90 4.21 4.55 4.90 5.22 5.46 5.62
75 3.11 3.26 3.44 3.67 3.96 4.31 4.74 5.22 5.70 6.11 6.40
80 3.12 3.27 3.46 3.69 4.00 4.39 4.87 5.46 6.11 6.73 7.20
85&over 3.12 3.27 3.46 3.71 4.02 4.43 4.95 5.62 6.40 7.20 7.86
- ---------------------- -------- ------- ------- ------- ------- -------- ------- ------- ------- -------- --------------------
</TABLE>
Article 5 - Premium Payments
Premium payments must be made by an organization described in Section
403(b)(1)(A), except in the case of rollover contributions under Section
403(b)(8) and 408(d)(3) of the Code, or a nontaxable transfer from another
contract qualifying under Section 403(b) of the Code or from a custodial account
qualifying under Section 403(b)(7) of the Code.
Premium payments made pursuant to a salary reduction agreement will be limited
to the extent provided in Section 402(g) of the Code. As provided by law,
premium payments must not exceed the limitations on contributions under Section
415 or 403(b)(2) of the Code.
To the extent premium payments are in excess of the amounts permitted under
Sections 402(g), 415 or 403(b) of the Code, the Company may distribute amounts
equal to such excess as permitted by applicable law.
Article 6 - Required Distributions Generally
The Employee's entire interest in this Policy shall be distributed as required
under Section 403(b)(10) of the Code and applicable regulations, including the
requirement that payments to persons other than the Employee are incidental.
Article 7 - Required Beginning Date
For years beginning before 1997, the term "required beginning date" means April
1 of the calendar year following the calendar year the Employee attains age 70
1/2. To the extent provided by law, for an Employee who attains age 70 1/2
before January 1, 1988, or for an Employee in a governmental plan or a church
plan (as defined in Section 401(a)(9)(C) of the Code), the required beginning
date means April 1 of the calendar year following the later of (i) the calendar
year in which the Employee attains age 70 1/2, or (ii) the calendar year in
which the Employee retires.
For years beginning after December 31, 1996, the term "required beginning date"
means April 1 of the calendar year following the later of (1) the calendar year
in which the Employee attains age 70 1/2, or (2) the calendar year in which the
Employee retires. However, to the extent required by law, the required beginning
date means April 1 of the calendar year following the calendar year in which the
Employee attains age 70 1/2 for an Employee who:
(a) is a 5-percent owner (as defined in IRC Section 416) of the
organization described in Article 1 of this Endorsement with
respect to the plan year ending in the calendar year in which
the Employee attains age 70 1/2; and
(b) is not in a governmental plan or a church plan (as
defined in IRC Section 401(a)(9)(C)).
Article 8 - Distributions During Employee's Life
Unless otherwise permitted under applicable law, the Employee's entire interest
shall be distributed no later than the required beginning date, or shall
commence to be distributed, beginning no later than the required beginning date,
over (a) the life of the Employee, or the lives of the Employee and his or her
designated beneficiary (within the meaning of Section 401(a)(9) of the Code), or
(b) a period certain not extending beyond the life expectancy of the Employee or
the joint and last survivor expectancy of the Employee and his or her designated
beneficiary, as required by law.
If the Employee's entire interest is to be distributed over a period greater
than one year, the amount to be distributed by December 31 of each year
(including the year in which the required beginning date occurs) shall be made
in accordance with the requirements of Section 401(a)(9) of the Code and the
regulations thereunder, including the incidental death benefit requirements of
Section 401(a)(9)(G) of the Code and the regulations thereunder, including the
minimum distribution incidental benefit requirement of Proposed Treasury
Regulation Section 1.401(a)(9)-2.
Article 9 - Distributions After Employee's Death
Unless otherwise permitted under applicable law, if the Employee dies on or
after the required beginning date (or if distributions have begun before the
required beginning date as irrevocable annuity payments), the remaining portion
of the Employee's interest (if any) shall be distributed at least as rapidly as
under the method of distribution in effect as of the Employee's death.
Unless otherwise permitted under applicable law, if the Employee dies before the
required beginning date and an irrevocable annuity distribution has not begun,
the entire interest will be distributed by December 31 of the calendar year
containing the fifth anniversary of the Employee's death, except that:
(a) if the interest is payable to an individual who is the
Employee's designated beneficiary, the designated beneficiary
may elect to receive the entire interest over the life of the
designated beneficiary or over a period not extending beyond
the life expectancy of the designated beneficiary, commencing
on or before December 31 of the calendar year immediately
following the calendar year in which the Employee died; or
(b) if the designated beneficiary is the Employee's surviving
spouse, the surviving spouse may elect to receive the entire
interest over the life of the surviving spouse or over a period
not extending beyond the life expectancy of the surviving
spouse, commencing at any date on or before the later of:
(i) December 31 of the calendar year immediately following the
calendar year in which the Employee died; and
(ii) December 31 of the calendar year in which the Employee
would have attained age 70 1/2.
If the surviving spouse dies before distributions begin, the
limitations of this Article 9 (without regard to this paragraph (b))
will be applied as if the surviving spouse were the Employee.
An irrevocable election of the method of distribution by a designated
beneficiary who is the surviving spouse must be made no later than the
earlier of December 31 of the calendar year containing the fifth
anniversary of the Employee's death or the date distributions are
required to begin pursuant to this paragraph (b). If no election is
made, the entire interest will be distributed by December 31 of the
calendar year containing the fifth anniversary of the Employee's death.
An irrevocable election of the method of distribution by a designated
beneficiary who is not the surviving spouse must be made no later than December
31 of the calendar year immediately following the calendar year in which the
Employee died. If no such election is made, the entire interest will be
distributed by December 31 of the calendar year containing the fifth anniversary
of the Employee's death.
Article 10 - Life Expectancy Calculations
Life expectancy is computed by use of the expected return multiples in Tables V
and VI of Treasury Regulation Section 1.72-9.
Life expectancies shall be recalculated annually provided that annual
recalculation is elected by the time distributions are required to begin (a) by
the Employee, or (b) for purposes of distributions beginning after the
Employee's death, by the surviving spouse. Such an election shall be irrevocable
as to the Employee and the surviving spouse, and will apply to all subsequent
years.
The life expectancy of a non-spouse designated beneficiary (a) may not be
recalculated, and (b) shall be calculated using the attained age of such
designated beneficiary during the calendar year in which distributions are
required to begin pursuant to this Endorsement. Payments for any subsequent
calendar year will be calculated based on such life expectancy reduced by one
for each calendar year which has elapsed since the calendar year in which life
expectancy was first calculated.
Article 11 - Annuity Options
All annuity payment options under the Policy must meet the requirements of
Section 403(b)(10) of the Code and the applicable regulations, including the
requirement that payments to persons other than the Employee are incidental. The
provisions of this Endorsement reflecting the requirements of Section 401(a)(9)
and 403(b)(10) of the Code override any annuity payment option which is
inconsistent with such requirements.
If a guaranteed period of payments is chosen under an annuity option, the length
of the period must not exceed the shorter of (1) the Employee's life expectancy,
or if a Joint Annuitant is named, the joint and last survivor expectancy of the
Employee and the Joint Annuitant, and (2) the applicable maximum period under
Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations.
Payments must be made in periodic payments at intervals of no longer than one
year. In addition, payments must be either nonincreasing or may increase only as
provided in Q&A F-3 of Section 1.401(a)(9)-1 of the Proposed Income Tax
Regulations.
Article 12 - Distribution of Salary Reduction Contributions
Any amounts attributable to contributions made pursuant to a salary reduction
agreement after December 31, 1988, and the earnings on such contributions and on
amounts held on December 31, 1988, may not be distributed unless the Employee
has reached age 59 1/2, separated from service, died, become disabled (within
the meaning of Section 72(m)(7) of the Code) or incurred a hardship; provided
that amounts permitted to be distributed in the event of hardship shall be
limited to actual elective deferral contributions (excluding earnings thereon);
and provided further that amounts may be distributed pursuant to a qualified
domestic relations order to the extent permitted by Section 414(p) of the Code.
Article 13 - Distribution of Custodial Account Contributions
Premium payments made by a nontaxable transfer from a custodial account
qualifying under Section 403(b)(7) of the Code (or amounts attributable to such
an account), and earnings on such amounts, will not be paid or made available
before the Employee dies, attains age 59 1/2, separates from service, becomes
disabled (within the meaning of Section 72(m)(7) of the Code), or in the case of
such amounts attributable to contributions made pursuant to a salary reduction
agreement, encounters financial hardship; provided, that amounts permitted to be
paid or made available in the event of hardship will be limited to actual
elective deferral contributions made under the custodial account (excluding
earnings thereon); and provided further, that amounts may be distributed
pursuant to a qualified domestic relations order to the extent permitted by
Section 414(p) of the Code. Article 12 above shall not apply to premium payments
or earnings subject to this Article 13 which shall instead govern.
Article 14 - Tax-Free Direct Transfers
Direct transfers to another contract qualifying under Section 403(b) of the Code
or to a custodial account qualifying under Section 403(b)(7) of the Code may be
made only as permitted by applicable law. Amounts subject to withdrawal
restrictions under the Code may only be transferred to such a contract or
account with the same or more stringent restrictions.
Article 15 - Direct Rollovers
A distributee may elect, at the time and in the manner prescribed by the
Company, to have any portion of an eligible rollover distribution paid directly
to an eligible retirement plan specified by the distributee in a direct
rollover.
Employee's surviving spouse, and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a A distributee, within the
meaning of this Article 15, includes an Employee or former Employee. In
addition, the Employee's or former qualified domestic relations order (as
defined in Section 414(p) of the Code), are distributees within the meaning of
this Article 15 with regard to the interest of the spouse or former spouse.
An eligible rollover distribution is any distribution of all or any portion of
the balance to the credit of the distributee, except that an eligible rollover
distribution does not include (1) any distribution that is one of a series of
substantially equal periodic payments made (not less frequently than annually)
for the life (or life expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; (2) any
distribution to the extent such distribution is required under Sections
403(b)(10) and 401(a)(9) of the Code; and (3) the portion of any distribution
that is not includable in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer securities).
An eligible retirement plan is an annuity described in Section 403(b) of the
Code, an individual retirement account described in Section 408(a) of the Code,
or an individual retirement annuity described in Section 408(b) of the Code,
that accepts eligible rollover distributions. However, in the case of an
eligible rollover distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or an individual retirement annuity.
A direct rollover is a plan payment by the plan administrator or the Company to
the eligible retirement plan specified by the distributee.
This Article 15 applies to all eligible rollover distributions made after
December 31, 1992.
Article 16 - ERISA
If this Policy is subject to the requirements of the Employee Retirement Income
Security Act of 1974 (ERISA), the following provisions shall also apply:
(a) In the event of the Employee's death prior to the date on
which the Company will start to pay a monthly income to the
Annuitant, if still alive, the Death Benefit (if any) shall be
paid to (1) the surviving spouse of the Employee in the form
required by Section 205 of ERISA, unless the spouse elects
otherwise in accordance with the requirements of such Section
205 or applicable regulations, or (2) if there is no surviving
spouse, or if the surviving spouse has consented in the manner
required by Section 205 of ERISA, or if ERISA otherwise
permits, to the designated beneficiary under the Policy.
(b) Except as otherwise permitted, only a pure joint and survivor
annuity option with no guaranteed period is available to a
married Employee, and the Joint Annuitant must be the
Employee's spouse. A married Employee may elect another
annuity payment option or designate another Joint Annuitant,
provided his or her spouse consents in accordance with the
requirements of Section 205 of ERISA (and applicable
regulations), or provided such election is otherwise permitted
under such applicable regulations. An unmarried Employee will
be deemed to have elected a straight life annuity option with
no guaranteed period unless he or she makes a different
election in the manner required under Section 205 of ERISA
(and applicable regulations).
(c) Elections and consents required by ERISA, including a change
of beneficiary, may be revoked in the form, time and manner
prescribed in Section 205 of ERISA (and applicable
regulations). All elections and consents required by ERISA
shall adhere to the requirements of the applicable regulations
interpreting Section 205 of ERISA (or any other applicable
law), including the requirements as to the timing of any
elections or consents.
(d) No withdrawal, partial or total, may be made without the
consent of the Employee and the Employee's spouse in the
manner required by Section 205 of ERISA (and applicable
regulations), except to the extent that such consent is not
required under such applicable regulations. Any withdrawal
must be made in the form required under Section 205 of ERISA
(and applicable regulations), unless the Employee (and spouse,
if applicable) makes an election in the form and manner
permitted under such regulations, to receive the benefit in
another form.
Article 17 - Internal Revenue Code and Erisa Requirements
The provisions of this Endorsement are intended to comply with the requirements
of the Code, applicable regulations and, if applicable, ERISA, for Section
403(b) annuity contracts. The Company reserves the right to amend the Policy or
Certificate and this Endorsement from time to time, without the Owner's consent,
when such amendment is necessary to assure (1) continued qualification of this
Policy as a tax sheltered annuity under Section 403(b) of the Code (and any
successor provision) as in effect from time to time, and (2) continued
compliance of this Policy with the applicable provisions of ERISA (and
applicable regulations) as in effect from time to time.
For GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
President
(5)
FORM OF APPLICATION
<PAGE>
<TABLE>
<CAPTION>
Variable Annuity Application
GE Capital Life Assurance Company of New York
<S> <C>
1. Owner: Name (if no middle name, use "NMN)/Name of Trust Social Security No. or Taxpayer ID DOB of Date of Trust (Mo./Day/Yr)
Street Address City State Zip Telephone Number Age Sex __M __F
------------------------------------------------------------------------------------------------------------------
1a. Joint Owner: Name (if no middle name, use "NMN") Social Security No. DOB (Mo./Day/Yr)
(Optional)
Street Address City State Zip Telephone Number Age Sex __M __F
------------------------------------------------------------------------------------------------------------------
2. Proposed Annuitant: Name (if no middle name, use "NMN") Social Security No. DOB (Mo./Day/Yr)
(If other than Owner)
Street Address City State Zip Telephone Number Age Sex __M __F
------------------------------------------------------------------------------------------------------------------
2a. Contingent Annuitant: Name (if no middle name, use "NMN") Social Security No. DOB (Mo./Day/Yr)
(Optional)
Street Address City State Zip Telephone Number Age Sex __M __F
------------------------------------------------------------------------------------------------------------------
3. Beneficiary: Name (If no middle name, use "NMN")/Name of Trust Social Security No.
Date of Trust
__Primary
Street Address City State Zip Relationship to Owner
Beneficiary: Name (if no middle name, use "NMN")/Name of Trust Social Securtiy No. Date of Trust
__Contingent
Street Address City State Zip Relationship to Owner
CHANGES IN DESIGNATIONS
The following designations may be changed by the Owner at any time, unless they are made irrevocable. Check the appropriate boxes
below ONLY if a designation is to become irrevocable: ____Primary Beneficiary ____Contingent Beneficiary ___Contingent Annuitant
4. Type of Plan: __Nonqualified __Qualified (Regular payment included, please apply to ____year.) ____Custodial IRA
__IRA (circle one): Rollover Direct Transfer Direct Rollover from Pension Qualified Plan
__Simplified Employee Pension __TSA/403(b) ___Other________________
Owner __Does __Does not wish to have Federal Income Tax withheld from surrenders or annuity payments
5. Allocation with Application (Initial Minimum:$5,000) Estimated Amount of 1035 Exchanger or Direct Transfer
$ $
------------------------------------------------------------------------------------------------------------------------
)
------------------------------------------------------------------------------------------------------------------------
GE Capital Assurance Company of New York - 125 Park Avenue, Sixth Floor -New York, NY 10017-5529
</TABLE>
<PAGE>
Variable Annuity Application
Continued
6. Dollar- Cost Averaging: (Optional) You may elect a series of automated
scheduled transfers referred to as Dollar-Cost Averaging (DCA). DCA is
a method of transferring specified amounts from one designated
Investment Subdivision(s), or the Guarantee Account to any other
available Investment Subdivision(s), or the Guarantee Account on a
monthly or quarterly basis. Funds will remain in the DCA transfer
accounts until the entire account is depleted. DCA is available for
initial premium, additional premium or transfer from other Investment
Subdivisions. This option provides regular level investments over a
period of time. DCA is subject to the provisions of the policy. We
reserve the right to discontinue DCA upon 30 days written notice to
you.
<TABLE>
<CAPTION>
TRANSFER DOLLAR AMOUNTS from TRANSFER FREQUENCY
(Optional) __Money Market Subdivision or __ Guarantee Account __Monthly __Quarterly
<S> <C>
Amounts: (must be $100 or More) TRANSFER TO INVESTMENT SUBDIVISIONS
$----------------------------------------------------|------------------------------------------------------------
$----------------------------------------------------|------------------------------------------------------------
$----------------------------------------------------|------------------------------------------------------------
$----------------------------------------------------|------------------------------------------------------------
$----------------------------------------------------|------------------------------------------------------------
$----------------------------------------------------|------------------------------------------------------------
</TABLE>
I/we understand that the account value in my elected Subdivision must be kept at
or above the amount which will permit the dollar -cost averaging transfers
requested; otherwise these transfers will end. This request is in lieu of the
requirement for individual written transfer requests. I/we may also change or
terminate these transfers by written notice to GE Capital Life Assurance, or by
telephone if a Personal Identification Number (PIN) has been issued (See Section
9)
7. Allocation of Purchase Payments: Enter at least 1% for each Investment
Subdivision selected. Percentages must total 100%. You may select as
many as 10 investment subdivisions.
Investment Subdivisions
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------ --------------------------------------------------
The Alger American Fund GE Investments Funds, Inc.
<S> <C>
- ------------------------------------------------------------------------ --------------------------------------------------
____% Alger American Small Capitalization Portfolio ____% Money Market Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% Alger American Growth Portfolio ____% Income Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% S&P 500 Index Fund
- ------------------------------------------------------------------------ --------------------------------------------------
Fidelity Variable Insurance Products Fund ____% Total Return Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% Equity Income Portfolio ____% International Equity Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% Growth Portfolio ____% Real Estate Securities Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% Overseas Portfolio ____% Global Income Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% Value Equity Fund
- ------------------------------------------------------------------------ --------------------------------------------------
Fidelity Variable Insurance Products Fund II ____% U.S. Equity Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% Asset Manager Portfolio
- ------------------------------------------------------------------------ --------------------------------------------------
____% Contrafund Portfolio Oppenheimer Variable Account Funds
- ------------------------------------------------------------------------ --------------------------------------------------
____% Oppenheimer High Income Fund
- ------------------------------------------------------------------------ --------------------------------------------------
Fidelity Variable Insurance Products Fund III ____% Oppenheimer Bond Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% Growth & Income Portfolio ____% Oppenheimer Aggressive Growth Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% Growth Opportunities Portfolio ____% Oppenheimer Growth Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% Oppenheimer Multiple Strategies Fund
- ------------------------------------------------------------------------ --------------------------------------------------
Federated Insurance Series
- ------------------------------------------------------------------------ --------------------------------------------------
____% Federated Utility Fund II PBHG Insurance Series Fund, Inc.
- ------------------------------------------------------------------------ --------------------------------------------------
____% Federated High Income Bond Fund II ____% Growth II Portfolio
- ------------------------------------------------------------------------ --------------------------------------------------
____% Federated American Leaders Fund II ____% Large Cap Growth Portfolio
- ------------------------------------------------------------------------ --------------------------------------------------
- ------------------------------------------------------------------------ --------------------------------------------------
Janus Aspen Series Goldman Sachs Asset Management , Inc..
- ------------------------------------------------------------------------ --------------------------------------------------
____% Balanced Portfolio ____% Goldman Sachs Growth & Income Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% Flexible Income Portfolio ____% Goldman Sachs Mid Cap Equity Fund
- ------------------------------------------------------------------------ --------------------------------------------------
____% Growth Portfolio
- ------------------------------------------------------------------------ --------------------------------------------------
____%Aggressive Growth Portfolio
- ------------------------------------------------------------------------ --------------------------------------------------
____% Worldwide Growth Portfolio l
- ------------------------------------------------------------------------ --------------------------------------------------
____% International Growth Portfolio
- ------------------------------------------------------------------------ --------------------------------------------------
____% Capital Appreciation Portfolio
- ------------------------------------------------------------------------ --------------------------------------------------
- ------------------------------------------------------------------------ --------------------------------------------------
Guarantee Account
- ------------------------------------------------------------------------ --------------------------------------------------
____% Guarantee Account for one year
- ------------------------------------------------------------------------ --------------------------------------------------
* "Standard & Poor's," "S&P," S&P 500," "Standard & Poor's 500," and "500"
are trademarks of the McGraw Hill Companies, Inc. and have been licensed
for use by GE Investment Management Incorporated. The S&P 500 Index Fund is
not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard
& Poor's makes no representation regarding the advisability of investing in
the fund.
8. Systematic Withdrawals: (Optional) You may elect to receive a partial
surrender as a series of systematic withdrawals, taken in equal
installments in a 12 month period. The commencement date may be no
sooner than 30 days after the policy date. The amount of each
withdrawal mist not exceed 10% of the account value on the effective
date of the withdrawal. The program is allowable only if there are no
other partial withdrawals elected in the same policy year. A surrender
charge is waived on systematic withdrawals. A surrender charge is
applied to any additional surrender taken during the policy year the
systematic withdrawals are in effect unless all surrender charges have
expired. Systematic withdrawals end on the policy maturity date. We
reserve the right to discontinue systematic withdrawals upon 30 days
written notice to you.
I(we) wish to start a series of partial surrenders from the policy
issued pursuant to this application. The total amount of these partial
surrenders during a twelve month period should equal: (check one in
each line)
___10% of the Account Value __% of the account value (cannot exceed 10%). ___$(cannot exceed 10% of the account
value)
Payments should be made: ___Monthly ___Quarterly ___Semi-Annually ___Annually
Payments should begin: ___As soon as possible ___Month ___Year
Check one: ___I/we am subject to backup withholding __I/we am not subject to backup withholding
If you are NOT subject to backup withholding, but wish to have Federal Income Tax withheld, please check here_____.
- ---------------------------------------------------------------------------------------------------------------------------------
9. Death Benefit Option: Optional Death Benefit Rider ___ Yes ___No
- ---------------------------------------------------------------------------------------------------------------------------------
10. Replacement: Will the proposed contract replace any existing
annuity or insurance contract? __Yes ___No If `Yes" list
company name, plan and year of issue
- ---------------------------------------------------------------------------------------------------------------------------------
11. Additional Remarks
- ---------------------------------------------------------------------------------------------------------------------------------
12. Signatures: IMPORTANT INFORMATION. PLEASE READ CAREFULLY
All statements made in this application are true to the best of my/our
knowledge and belief and the answers to these questions, together with this
agreement, are the basis for issuing the policy. I/we agree to all terms and
conditions as shown on the front and back. I/we further agree that this
application shall be a part of the annuity contract, and verify our
understanding that ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED
ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND NOT
GUARANTEED AS TO DOLLAR AMOUNT. THE OWNER ACKNOWLEDGES RECEIPT OF PROSPECTUSES
FOR THE SEPARATE ACCOUNT AND ALL MUTUAL FUNDS APPLICABLE TO THE POLICY AND
APPLICABLE AMENDMENTS DATED WITHIN 13 MONTHS OF THIS APPLICATION. I/we agree
that no one, except the President, the Secretary, or a Vice President of the
Company can make or change any annuity. Under penalty of perjury, each Owner
certifies that his/her Social Security (or taxpayer identification) number is
correct as it appears in this application.
Signed at (City/State) On (Month/Day/Year)
Owner (Sign as "Trustee: if Owner if a Trustee) Joint Owner
Proposed Annuitant (Signature Required if Other than Owner) Contingent Annuitant (Signature Required if Designated as Irrevocable)
- ---------------------------------------------------------------------------------------------------------------------------------
13. Representative's Information and Signature: Representative's Statement - Do
you have knowledge or reason to believe that replacement of insurance is
involved? ___Yes __No (If "Yes", explain and submit a completed replacement form
where required.) the representative hereby certifies that he/she witnessed the
signature(s) in Section 13 and that all information contained in this
application is true to the best of his/her knowledge and belief.
Signature of Licensed Resident Agent/Broker
- ---------------------------------------------------------------------------------------------------------------------------------
Agency/Brokerage and Code (Print) Agent/Broker and Code (print) Agent/Broker and Code (Print) Brokerage Account Number
Agent/Broker Social Security/Tax ID No. Agent Broker Address Telephone No.
</TABLE>
PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 29th day of May, 1998, by and among The
Alger American Fund (the "Trust"), an open-end management investment company
organized as a Massachusetts business trust, G.E. Capital Life Assurance Company
of New York, a company organized as a corporation under the laws of the State of
New York, (the "Company"), on its own behalf and on behalf of each segregated
asset account of the Company set forth in Schedule A, as may be amended from
time to time (the "Accounts"), and Fred Alger and Company, Incorporated, a
Delaware corporation, the Trust's distributor (the "Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has an
effective registration statement relating to the offer and sale of the various
series of its shares under the Securities Act of 1933, as amended (the "1933
Act");
WHEREAS, the Trust and the Distributor desire that Trust shares be used
as an investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements with
the Trust (the "Participating Insurance Companies");
WHEREAS, shares of beneficial interest in the Trust are divided into
the following series which are available for purchase by the Company for the
Accounts: Alger American Small Capitalization Portfolio, Alger American Growth
Portfolio, Alger American Income & Growth Portfolio, Alger American Balanced
Portfolio, Alger American MidCap Growth Portfolio, and Alger American Leveraged
AllCap Portfolio;
WHEREAS, the Trust has received an order from the Commission, dated
February 17, 1989 (File No. 812-7076), granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios of the Trust to be sold to and held by variable annuity and variable
life insurance separate accounts of both affiliated and unaffiliated life
insurance companies (the "Shared Funding Exemptive Order");
WHEREAS, the Company has registered or will register under the 1933 Act
certain variable life insurance policies and variable annuity contracts to be
issued by the Company under which the Portfolios are to be made available as
investment vehicles (the "Contracts");
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act unless an exemption from registration
under the 1940 Act is available and the Trust has been so advised;
<PAGE>
WHEREAS, the Company desires to use shares of one or more Portfolios
indicated on Schedule A as investment vehicles for the Accounts;
NOW THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I.
Purchase and Redemption of Trust Portfolio Shares
1.1. For purposes of this Article I, the Company shall be the Trust's agent
for the receipt from each account of purchase orders and requests for
redemption pursuant to the Contracts relating to each Portfolio,
provided that the Company notifies the Trust of such purchase orders
and requests for redemption by 9:30 a.m. Eastern time on the Business
Day as defined in Section 1.3, next following the day of receipt by the
Company of the purchase order or redemption request.
1.2. The Trust shall make shares of the Portfolios available to the
Accounts at the net asset value next computed after receipt of a
purchase order by the Trust (or its agent), as established in
accordance with the provisions of the then current prospectus of
the Trust describing Portfolio purchase procedures. The Company
will transmit orders from time to time to the Trust for the
purchase and redemption of shares of the Portfolios. The Trustees
of the Trust (the "Trustees") may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole
discretion of the Trustees acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, such
action is deemed in the best interests of the shareholders of such
Portfolio.
1.3. The Company shall pay for the purchase of shares of a Portfolio on
behalf of an Account with federal funds to be transmitted by wire to
the Trust, with the reasonable expectation of receipt by the Trust by
2:00 p.m. Eastern time on the next Business Day after the Trust (or its
agent) receives the purchase order. Upon receipt by the Trust of the
federal funds so wired, such funds shall cease to be the responsibility
of the Company and shall become the responsibility of the Trust for
this purpose. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Trust calculates
its net asset value pursuant to the rules of the Commission.
1.4. The Trust will redeem for cash any full or fractional shares of any
Portfolio, when requested by the Company on behalf of an Account, at
the net asset value next computed after receipt by the Trust (or its
agent) of the request for redemption, as established in accordance
with the provisions of the then current prospectus of the Trust
describing Portfolio redemption procedures. The Trust shall make
payment for such shares in the manner established from time to
time by the Trust. Proceeds of redemption with respect to a
Portfolio will normally be paid to the Company for an Account in
federal funds transmitted by wire to the Company by order of the
Trust with the reasonable expectation of receipt by the Company
by 2:00 p.m. Eastern time on the next Business Day after the
receipt by the Trust (or its agent) of the request for redemption.
Such payment may be delayed if, for example, the Portfolio's cash
position so requires or if extraordinary market conditions exist, but
in no event shall payment be delayed for a greater period than is
permitted by the 1940 Act. The Trust reserves the right to suspend
the right of redemption, consistent with Section 22(e) of the
1940 Act and any rules thereunder.
<PAGE>
1.5. Payments for the purchase of shares of the Trust's Portfolios by the
Company under Section 1.3 and payments for the redemption of shares of
the Trust's Portfolios under Section 1.4 on any Business Day may be
netted against one another for the purpose of determining the amount of
any wire transfer.
1.6. Issuance and transfer of the Trust's Portfolio shares will be by book
entry only. Stock certificates will not be issued to the Company or the
Accounts. Portfolio Shares purchased from the Trust will be recorded in
the appropriate title for each Account or the appropriate subaccount of
each Account.
1.7. The Trust shall furnish, on or before the ex-dividend date, notice to
the Company of any income dividends or capital gain distributions
payable on the shares of any Portfolio of the Trust. The Company hereby
elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional
shares of that Portfolio. The Trust shall notify the Company of the
number of shares so issued as payment of such dividends and
distributions.
1.8. The Trust shall calculate the net asset value of each Portfolio on each
Business Day, as defined in Section 1.3. The Trust shall make the net
asset value per share for each Portfolio available to the Company or
its designated agent on a daily basis as soon as reasonably practical
after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available to the
Company by 6:30 p.m. Eastern time each Business Day.
1.9. The Trust agrees that its Portfolio shares will be sold only to
Participating Insurance Companies and their segregated asset accounts,
to the Fund Sponsor or its affiliates and to such other entities as may
be permitted by Section 817(h) of the Code, the regulations hereunder,
or judicial or administrative interpretations thereof. No shares of any
Portfolio will be sold directly to the general public. The Company
agrees that it will use Trust shares only for the purposes of funding
the Contracts through the Accounts listed in Schedule A, as amended
from time to time.
1.10. The Trust agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding materially to those contained in
Section 2.9 and Article IV of this Agreement.
<PAGE>
ARTICLE II.
Obligations of the Parties
2.1. The Trust shall prepare and be responsible for filing with the
Commission and any state regulators requiring such filing all
shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials), prospectuses and
statements of additional information of the Trust. The Trust shall bear
the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this
Section 2.1 and all taxes to which an issuer is subject on the issuance
and transfer of its shares.
2.2. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Trust to the Contract owners as required to be
distributed to such Contract owners under applicable federal or state
law.
2.3. The Trust shall provide such documentation (including a final copy
of the Trust's prospectus as set in type or in camera-ready copy)
and other assistance as is reasonably necessary in order for the
Company to print together in one document the current prospectus for
the Contracts issued by the Company and the current prospectus for
the Trust or to print together in one document the prospectuses of
all open-end management investment companies that serve as
underlying investment vehicles for the Contracts. The Trust shall
bear the expense of printing copies of its current prospectus that
will be distributed to existing Contract owners, and the Company
shall bear the expense of printing copies of the Trust's prospectus
that are used in connection with offering the Contracts issued by the
Company.
2.4. The Trust and the Distributor shall provide (1) at the Trust's expense,
one copy of the Trust's current Statement of Additional Information
("SAI") to the Company and to any Contract owner who requests such SAI,
(2) at the Company's expense, such additional copies of the Trust's
current SAI as the Company shall reasonably request and that the
Company shall require in accordance with applicable law in connection
with offering the Contracts issued by the Company.
2.5. The Trust, at its expense, shall provide the Company with copies of
its proxy material, periodic reports to shareholders and other
communications to shareholders in such quantity as the Company
shall reasonably require for purposes of distributing to Contract
owners. The Trust, at the Company's expense, shall provide the
Company with copies of its periodic reports to shareholders and
other communications to shareholders in such quantity as the
Company shall reasonably request for use in connection with
offering the Contracts issued by the Company. If requested by
the Company in lieu thereof, the Trust shall provide such
documentation (including a final copy of the Trust's proxy
materials, periodic reports to shareholders and other communications
to shareholders, as set in type or in camera-ready copy) and other
assistance as reasonably necessary in order for the Company to print
such shareholder communications for distribution to Contract owners.
<PAGE>
2.6. The Company agrees and acknowledges that the Distributor is the sole
owner of the name and mark "Alger" and that all use of any designation
comprised in whole or part of such name or mark under this Agreement
shall inure to the benefit of the Distributor. Except as provided in
Section 2.7, the Company shall not use any such name or mark on its own
behalf or on behalf of the Accounts or Contracts in any registration
statement, advertisement, sales literature or other materials relating
to the Accounts or Contracts without the prior written consent of the
Distributor. Upon termination of this Agreement for any reason, the
Company shall cease all use of any such name or mark as soon as
reasonably practicable.
2.7. The Company shall furnish, or cause to be furnished, to the
Trust or its designee a copy of each Contract prospectus and/or
statement of additional information describing the Contracts, each
report to Contract owners, proxy statement, application for exemption
or request for no-action letter in which the Trust or the Distributor
is named contemporaneously with the filing of such document
with the Commission. The Company shall furnish, or shall cause to
be furnished, to the Trust or its designee each piece of sales
literature or other promotional material in which the Trust or the
Distributor is named, at least five Business Days prior to its use.
No such material shall be used if the Trust or its designee reasonably
objects to such use within three Business Days after receipt of such
material.
2.8. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the
Trust or the Distributor in connection with the sale of the Contracts
other than information or representations contained in or accurately
derived from the registration statement or prospectus for the Trust
shares (as such registration statement and prospectus may be
amended or supplemented from time to time), annual and semi-annual
reports of the Trust, Trust-sponsored proxy statements, or in sales
literature or other promotional material approved by the Trust or its
designee, except as required by legal process or regulatory
authorities or with the prior written permission of the Trust, the
Distributor or their respective designees. The Trust and the
Distributor agree to respond to any request for approval on a prompt
and timely basis. The Company shall adopt and implement procedures
reasonably designed to ensure that "broker only" materials
including information therein about the Trust or the Distributor are
not distributed to existing or prospective Contract owners.
2.9. The Trust shall use its best efforts to provide the Company, on a
timely basis, with such information about the Trust, the Portfolios and
the Distributor, in such form as the Company may reasonably require, as
the Company shall reasonably request in connection with the preparation
of registration statements, prospectuses and annual and semi-annual
reports pertaining to the Contracts.
2.10. The Trust and the Distributor shall not give, and agree that no
affiliate of either of them shall give, any information or make any
representations or statements on behalf of the Company or concerning
the Company, the Accounts or the Contracts other than information
or representations contained in and accurately derived from the
registration statement or prospectus for the Contracts (as such
registration statement and prospectus may be amended or supplemented
from time to time), or in materials approved by the Company for
distribution including sales literature or other promotional
materials, except as required by legal process or regulatory
authorities or with the prior written permission of the Company.
The Company agrees to respond to any request for approval on a prompt
and timely basis.
<PAGE>
2.11. So long as, and to the extent that, the Commission interprets the
1940 Act to require pass-through voting privileges for Contract
owners, the Company will provide pass-through voting privileges
to Contract owners whose cash values are invested, through the
registered Accounts, in shares of one or more Portfolios of the
Trust. The Trust shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the
Company shall be responsible for assuring that the Accounts calculate
voting privileges in the manner established by the Trust. With
respect to each registered Account, the Company will vote shares of
each Portfolio of the Trust held by a registered Account and for
which no timely voting instructions from Contract owners are
received in the same proportion as those shares for which voting
instructions are received. The Company and its agents will in no way
recommend or oppose or interfere with the solicitation of proxies for
Portfolio shares held to fund the Contacts without the prior written
consent of the Trust, which consent may be withheld in the Trust's
sole discretion. The Company reserves the right, to the extent
permitted by law, to vote shares held in any Account in its sole
discretion.
2.12. The Company and the Trust will each provide to the other information
about the results of any regulatory examination relating to the
Contracts or the Trust, including relevant portions of any "deficiency
letter" and any response thereto.
2.13. No compensation shall be paid by the Trust to the Company, or by the
Company to the Trust, under this Agreement (except for specified
expense reimbursements). However, nothing herein shall prevent the
parties hereto from otherwise agreeing to perform, and arranging for
appropriate compensation for, other services relating to the Trust, the
Accounts or both.
ARTICLE III.
Representations and Warranties
3.1. The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of New
York and that it has legally and validly established each Account as a
segregated asset account under such law as of the date set forth in
Schedule A, and that Capital Brokerage Corporation, the principal
underwriter for the Contracts, is registered as a broker-dealer under
the Securities Exchange Act of 1934 and is a member in good standing of
the National Association of Securities Dealers, Inc.
<PAGE>
3.2. The Company represents and warrants that it has registered or, prior to
any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act
and cause each Account to remain so registered to serve as a segregated
asset account for the Contracts, unless an exemption from registration
is available.
3.3. The Company represents and warrants that the Contracts will be
registered under the 1933 Act unless an exemption from registration is
available prior to any issuance or sale of the Contracts; the Contracts
will be issued and sold in compliance in all material respects with all
applicable federal and state laws; and the sale of the Contracts shall
comply in all material respects with state insurance law suitability
requirements.
3.4. The Trust represents and warrants that it is duly organized and validly
existing under the laws of the Commonwealth of Massachusetts and that
it does and will comply in all material respects with the 1940 Act and
the rules and regulations thereunder.
3.5. The Trust and the Distributor represent and warrant that the Portfolio
shares offered and sold pursuant to this Agreement will be registered
under the 1933 Act and sold in accordance with all applicable federal
and state laws, and the Trust shall be registered under the 1940 Act
prior to and at the time of any issuance or sale of such shares. The
Trust shall amend its registration statement under the 1933 Act and the
1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Trust shall register and qualify
its shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by the Trust.
3.6. The Trust represents and warrants that the investments of each
Portfolio will comply with the diversification requirements for
variable annuity, endowment or life insurance contracts set forth in
Section 817(h) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the rules and regulations thereunder, including without
limitation Treasury Regulation 1.817-5, and will notify the Company
immediately upon having a reasonable basis for believing any Portfolio
has ceased to comply or might not so comply and will immediately take
all reasonable steps to adequately diversify the Portfolio to achieve
compliance within the grace period afforded by Regulation 1.817-5.
3.7. The Trust represents and warrants that it is currently qualified as a
"regulated investment company" under Subchapter M of the Code, that it
will make every effort to maintain such qualification and will notify
the Company immediately upon having a reasonable basis for believing it
has ceased to so qualify or might not so qualify in the future.
3.8. The Trust represents and warrants that it, its directors, officers,
employees and others dealing with the money or securities, or both, of
a Portfolio shall at all times be covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust in an amount not less
than the minimum coverage required by Rule 17g-1 or other applicable
regulations under the 1940 Act. Such bond shall include coverage for
larceny and embezzlement and be issued by a reputable bonding company.
<PAGE>
3.9. The Distributor represents that it is duly organized and validly
existing under the laws of the State of Delaware and that it is
registered, and will remain registered, during the term of this
Agreement, as a broker-dealer under the Securities Exchange Act of 1934
and is a member in good standing of the National Association of
Securities Dealers, Inc.
ARTICLE IV.
Potential Conflicts
4.1. The parties acknowledge that a Portfolio's shares may be made
available for investment to other Participating Insurance
Companies. In such event, the Trustees will monitor the Trust for the
existence of any material irreconcilable conflict between the
interests of the contract owners of all Participating Insurance
Companies. A material irreconcilable conflict may arise for a
variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal
or state insurance, tax or securities laws or regulations, or a
public ruling, private letter ruling, no-action or interpretative
letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in
voting instructions given by variable annuity contract and variable
life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of contract owners. The Trust
shall promptly inform the Company of any determination by the
Trustees that a material irreconcilable conflict exists and of the
implications thereof.
4.2. The Company agrees to report promptly any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist
the Trustees in carrying out their responsibilities under the Shared
Funding Exemptive Order by providing the Trustees with all information
reasonably necessary for and requested by the Trustees to consider any
issues raised including, but not limited to, information as to a
decision by the Company to disregard Contract owner voting
instructions. All communications from the Company to the Trustees may
be made in care of the Trust.
4.3. If it is determined by a majority of the Trustees, or a majority of
the disinterested Trustees, that a material irreconcilable conflict
exists that affects the interests of contract owners, the Company
shall, in cooperation with other Participating Insurance
Companies whose contract owners are also affected, at its own
expense and to the extent reasonably practicable (as determined by
the Trustees) take whatever steps are necessary to remedy or
eliminate the material irreconcilable conflict, which steps could
include: (a) withdrawing the assets allocable to some or all of the
Accounts from the Trust or any Portfolio and reinvesting such
assets in a different investment medium, including (but not limited
to) another Portfolio of the Trust, or submitting the question
of whether or not such segregation should be implemented to a
vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity
contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Insurance Companies)
that votes in favor of such segregation, or offering to the
affected Contract owners the option of making such a change; and (b)
establishing a new registered management investment company or managed
separate account.
<PAGE>
4.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority
vote, the Company may be required, at the Trust's election, to
withdraw the affected Account's investment in the Trust and
terminate this Agreement with respect to such Account; provided,
however that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees. Any such
withdrawal and termination must take place within six (6) months
after the Trust gives written notice that this provision is being
implemented. Until the end of such six (6) month period, the Trust
shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the
Company will withdraw the affected Account's investment in the Trust
and terminate this Agreement with respect to such Account within
six (6) months after the Trustees inform the Company in writing that
the Trust has determined that such decision has created a material
irreconcilable conflict; provided, however, that such withdrawal
and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a
majority of the disinterested Trustees. Until the end of such six
(6) month period, the Trust shall continue to accept and implement
orders by the Company for the purchase and redemption of shares of the
Trust.
4.6. For purposes of Section 4.3 through 4.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any
proposed action adequately remedies any material irreconcilable
conflict, but in no event will the Trust be required to establish a
new funding medium for any Contract. The Company shall not be
required to establish a new funding medium for the Contracts if an
offer to do so has been declined by vote of a majority of Contract
owners materially adversely affected by the material irreconcilable
conflict. In the event that the Trustees determine that any
proposed action does not adequately remedy any material
irreconcilable conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within
six (6) months after the Trustees inform the Company in writing of
the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required
by any such material irreconcilable conflict as determined by a
majority of the disinterested Trustees.
<PAGE>
4.7. The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so
that the Trustees may fully carry out the duties imposed upon them by
the Shared Funding Exemptive Order, and said reports, materials and
data shall be submitted more frequently if reasonably deemed
appropriate by the Trustees.
4.8. If and to the extent that Rule 6e-3(T) is amended, or Rule 6e-3 is
adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared
Funding Exemptive Order, then the Trust and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with Rule 6e-3(T), as amended, or Rule 6e-3, as
adopted, to the extent such rules are applicable.
ARTICLE V.
Indemnification
5.1. Indemnification By the Company. The Company agrees to indemnify and
hold harmless the Distributor, the Trust and each of its Trustees,
officers, employees and agents and each person, if any, who controls
the Trust within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this
Section 5.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Company, which consent shall not be unreasonably
withheld) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or
regulation, or at common law or otherwise, insofar as such Losses
are related to the sale or acquisition of the Contracts or Trust shares
and:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in a registration statement or prospectus for the Contracts
or in the Contracts themselves or in sales literature
generated or approved by the Company with respect to the
Contracts or Accounts (or any amendment or supplement
to any of the foregoing) (collectively, "Company
Documents" for the purposes of this Article V), or arise out
of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
provided that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and
was accurately derived from written information furnished to
the Company by or on behalf of the Trust for use in Company
Documents or otherwise for use in connection with the sale of
the Contracts or Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and
accurately derived from Trust Documents as defined in Section
5.2(a)) or wrongful conduct of the Company or persons under
its control, with respect to the sale or acquisition of the
Contracts or Trust shares; or
<PAGE>
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading if such statement or omission was made in
reliance upon or accurately derived from written information
furnished to the Trust by or on behalf of the Company; or
(d) arise out of or result from any failure by the Company to
provide the services or furnish the materials required under
the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company; or
(f) arise out of or result from the provision by the Company to
the Trust of insufficient or incorrect information regarding
the purchase or sale of shares of any Portfolio, or the
failure of the Company to provide such information on a timely
basis.
5.2. Indemnification by the Distributor. The Distributor agrees to
indemnify and hold harmless the Company and each of its directors,
officers, employees, and agents and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for the purposes of this
Section 5.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Distributor, which consent shall not be unreasonably
withheld) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or
regulation, or at common law or otherwise, insofar as such Losses
are related to the sale or acquisition of the Contracts or Trust shares
and:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the registration statement or prospectus for the Trust
(or any amendment or supplement thereto) (collectively,
"Trust Documents" for the purposes of this Article V), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading, provided that this indemnity shall not
apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and was accurately derived from written
information furnished to the Distributor or the Trust by or
on behalf of the Company for use in Trust Documents or
otherwise for use in connection with the sale of the
Contracts or Trust shares and; or
<PAGE>
(b) arise out of or result from statements or representations
(other than statements or representations contained in or
accurately derived from Company Documents) or wrongful conduct
of the Distributor or persons under its control, with respect
to the sale or acquisition of the Contracts or Portfolio
shares; or
(c) arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading if such statement
or omission was made in reliance upon or accurately derived
from written information furnished to the Company by or on
behalf of the Trust; or
(d) arise out of or result from any failure by the Distributor or
the Trust to provide the services or furnish the materials
required under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor or the
Trust in this Agreement or arise out of or result from any
other material breach of this Agreement by the Distributor or
the Trust.
5.3. None of the Company, the Trust or the Distributor shall be liable under
the indemnification provisions of Sections 5.1 or 5.2, as applicable,
with respect to any Losses incurred or assessed against an Indemnified
Party that arise from such Indemnified Party's willful misfeasance, bad
faith or negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations or duties under this Agreement.
5.4. None of the Company, the Trust or the Distributor shall be liable
under the indemnification provisions of Sections 5.1 or 5.2, as
applicable, with respect to any claim made against an Indemnified
party unless such Indemnified Party shall have notified the other
party in writing within a reasonable time after the summons, or
other first written notification, giving information of the nature
of the claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have
received notice of service upon or other notification to any
designated agent), but failure to notify the party against whom
indemnification is sought of any such claim shall not relieve that
party from any liability which it may have to the Indemnified Party
in the absence of Sections 5.1 and 5.2.
5.5. In case any such action is brought against an Indemnified Party,
the indemnifying party shall be entitled to participate, at its own
expense, in the defense of such action. The indemnifying party also
shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to the party named in the action. After
notice from the indemnifying party to the Indemnified Party of an
election to assume such defense, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and
the indemnifying party will not be liable to the Indemnified Party
under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation.
<PAGE>
ARTICLE VI.
Termination
6.1. This Agreement shall terminate:
(a) at the option of any party upon 6 months advance written
notice to the other parties, unless a shorter time is agreed
to by the parties;
(b) at the option of the Trust or the Distributor if the Contracts
issued by the Company cease to qualify as annuity contracts or
life insurance contracts, as applicable, under the Code or if
the Contracts are not registered, issued or sold in accordance
with applicable state and/or federal law; or
(c) at the option of any party upon a determination by a majority
of the Trustees of the Trust, or a majority of its
disinterested Trustees, that a material irreconcilable
conflict exists; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust or the Distributor by the NASD,
the SEC, or any state securities or insurance department or
any other regulatory body regarding the Trust's or the
Distributor's duties under this Agreement or related to the
sale of Trust shares or the operation of the Trust; or
(e) at the option of the Company if the Trust or a Portfolio fails
to meet the diversification requirements specified in Section
3.6 hereof; or
(f) at the option of the Company if shares of the Series are not
reasonably available to meet the requirements of the Variable
Contracts issued by the Company, as determined by the Company,
and upon prompt notice by the Company to the other parties; or
(g) at the option of the Company in the event any of the shares of
the Portfolio are not registered, issued or sold in accordance
with applicable state and/or federal law, or such law
precludes the use of such shares as the underlying investment
media of the Variable Contracts issued or to be issued by the
Company; or
<PAGE>
(h) at the option of the Company, if the Portfolio fails to
qualify as a Regulated Investment Company under Subchapter M
of the Code; or
(I) at the option of the Distributor if it shall determine in its
sole judgment exercised in good faith, that the Company and/or
its affiliated companies has suffered a material adverse
change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject
of material adverse publicity.
(j) at the option of the Company if it shall determine in its sole
judgement exercised in good faith that the Trust, the
Distributor and/or their affiliated companies has suffered a
material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is
the subject of material adverse
publicity.
6.2. Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional shares
of any Portfolio and redeem shares of any Portfolio pursuant to the
terms and conditions of this Agreement for all Contracts in effect on
the effective date of termination of this Agreement.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.9 shall
survive the termination of this Agreement as long as shares of the
Trust are held on behalf of Contract owners in accordance with Section
6.2.
ARTICLE VII.
Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust or its Distributor:
Fred Alger Management, Inc.
30 Montgomery Street
Jersey City, NJ 07302
Att.: Gregory S. Duch
<PAGE>
If to the Company:
GE Capital Life Assurance Company of New York
6610 W. Broad Street
Richmond, VA 23230
Att..: Linda L. Lanam
ARTICLE VIII.
Miscellaneous
8.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
8.2. This Agreement may be executed in two or more counterparts, each of
which taken together shall constitute one and the same instrument.
8.3. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
8.4. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York. It
shall also be subject to the provisions of the federal securities laws
and the rules and regulations thereunder and to any orders of the
Commission granting exemptive relief therefrom and the conditions of
such orders. Copies of any such orders shall be promptly forwarded by
the Trust to the Company.
8.5. All liabilities of the Trust arising, directly or indirectly, under
this Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Trust and no Trustee, officer, agent or
holder of shares of beneficial interest of the Trust shall be
personally liable for any such liabilities.
8.6. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Commission,
the National Association of Securities Dealers, Inc. and state
insurance regulators) and shall permit such authorities reasonable
access to its books and records in connection with any investigation or
inquiry relating to this Agreement or the transactions contemplated
hereby.
<PAGE>
8.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled
to under state and federal laws.
8.8. This Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the
other party.
8.10. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
by both parties.
8.11. Each party hereto shall, except as required by law or otherwise
permitted by this Agreement, treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto, and
shall not disclose such confidential information without the written
consent of the affected party unless such information has become
publicly available.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
Fred Alger & Company, Incorporated
By:________________________________
Name: Gregory S. Duch
Title: Executive Vice President
The Alger American Fund
By:_________________________________
Name: Gregory S. Duch
Title: Treasurer
G.E. Capital Life Assurance Company of New York
By:___________________________________
Name: Barry J. Grossman
Title: President
<PAGE>
SCHEDULE A
Account Date Eastablished
G.E. Capital Life Separate April 1, 1996
Account II
FUND PARTICIPATION AGREEMENT
This AGREEMENT is made this day of , 199_, by and between G.E. Capital
Life Assurance Company of New York (the "Insurer"), a life insurance company
domiciled in New York, on its behalf and on behalf of the segregated asset
accounts of the Insurer listed on Exhibit A to this Agreement (the "Separate
Accounts"); Federated Insurance Series (the "Fund"), a Massachusetts business
trust; and Federated Securities Corp. (the "Distributor"), a Pennsylvania
corporation.
W I T N E S S E T H
WHEREAS, the Fund is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended ("1940 Act") and the Fund is
authorized to issue separate classes of shares of beneficial interest
("shares"), each representing an interest in a separate portfolio of assets
known as a "portfolio" and each portfolio has its own investment objective,
policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its
portfolios to separate accounts of insurance companies that fund variable
annuity contracts ("Variable Contracts") and to serve as an investment medium
for Variable Contracts offered by insurance companies that have entered into
participation agreements substantially similar to this agreement ("Participating
Insurance Companies"), and the Fund will be made available in the future to
offer shares of one or more of its portfolios to separate accounts of insurance
companies that fund variable life insurance policies (at which time such
policies would also be "Variable Contracts" hereunder), and
WHEREAS, the Fund is currently comprised of eight separate portfolios,
and other portfolios may be established in the future; and
<PAGE>
WHEREAS, the Fund has obtained an order from the SEC dated December 29,
1993 (File No. 812-8620), granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts exemptions from
the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of life insurance companies that may
or may not be affiliated with one another (hereinafter the "Mixed and Shared
Funding Exemptive Order"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended ("1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Insurer wishes to purchase shares of one or more of the Fund's
portfolios on behalf of its Separate Accounts to serve as an investment medium
for Variable Contracts funded by the Separate Accounts, and the Distributor is
authorized to sell shares of the Fund's portfolios;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants hereinafter set forth, the parties hereby agree as
follows:
ARTICLE I. Sale of Fund Shares
1.1 The Distributor agrees to sell to the Insurer those shares of the
portfolios offered and made available by the Fund and identified on Exhibit B
("Portfolios") that the Insurer orders on behalf of its Separate Accounts, and
agrees to execute such orders on each day on which the Fund calculates its net
asset value pursuant to rules of the SEC ("business day") at the net asset value
next computed after receipt and acceptance by the Fund or its agent of the order
for the shares of the Fund.
<PAGE>
1.2 The Fund agrees to make available on each business day shares of
the Portfolios for purchase at the applicable net asset value per share by the
Insurer on behalf of its Separate Accounts; provided, however, that the Board of
Trustees of the Fund may refuse to sell shares of any Portfolio to any person,
or suspend or terminate the offering of shares of any Portfolio, if such action
is required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Trustees, acting in good faith and in light of the
Trustees' fiduciary duties under applicable law, necessary in the best interests
of the shareholders of any Portfolio.
1.3 The Fund and the Distributor agree that shares of the Portfolios of
the Fund will be sold only to Participating Insurance Companies, their separate
accounts, and to the extent permitted by the Shared Funding Exemptive Order,
other persons consistent with each Portfolio being adequately diversified
pursuant to Section 817(h) of the Internal Revenue Code of 1986, as amended
("Code"), and the regulations thereunder. No shares of any Portfolio will be
sold directly to the general public to the extent not permitted by applicable
tax law.
1.4 The Fund and the Distributor will not sell shares of the Portfolios
to any insurance company or separate account unless an agreement containing
provisions substantially the same as the provisions in Article IV of this
Agreement is in effect to govern such sales.
1.5 Upon receipt of a request for redemption in proper form from the
Insurer, the Fund agrees to redeem any full or fractional shares of the
Portfolios held by the Insurer, ordinarily executing such requests on each
business day at the net asset value next computed after receipt and acceptance
by the Fund or its agent of the request for redemption, except that the Fund
reserves the right to suspend the right of redemption, consistent with Section
22(e) of the 1940 Act and any rules thereunder. Such redemption shall be paid
consistent with applicable rules of the SEC and procedures and policies of the
Fund as described in the current prospectus.
<PAGE>
1.6 For purposes of Sections 1.2 and 1.5, the Insurer shall be the
agent of the Fund for the limited purpose of receiving and accepting purchase
and redemption orders from each Separate Account and receipt of such orders by
4:00 p.m. Eastern time by the Insurer shall be deemed to be receipt by the Fund
for purposes of Rule 22c-1 of the 1940 Act; provided that the Fund receives
notice of such orders on the next following business day prior to 4:00 p.m.
Eastern time on such day, although the Insurer will use its best efforts to
provide such notice by 9:00 a.m. Eastern time.
1.7 The Insurer agrees to purchase and redeem the shares of each
Portfolio in accordance with the provisions of the current prospectus for the
Fund.
1.8 The Insurer shall pay for shares of the Portfolio on the next
business day after it places an order to purchase shares of the Portfolio.
Payment shall be in federal funds transmitted by wire.
1.9 Issuance and transfer of shares of the Portfolios will be by book
entry only unless otherwise agreed by the Fund. Stock certificates will not be
issued to the Insurer or the Separate Accounts unless otherwise agreed by the
Fund. Shares ordered from the Fund will be recorded in an appropriate title for
the Separate Accounts or the appropriate subaccounts of the Separate Accounts.
1.10 The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Insurer of any income dividends or
capital gain distributions payable on the shares of the Portfolios. The Insurer
hereby elects to reinvest in the Portfolio all such dividends and distributions
as are payable on a Portfolio's shares and to receive such dividends and
distributions in additional shares of that Portfolio. The Insurer reserves the
right to revoke this election in writing and to receive all such dividends and
distributions in cash. The Fund shall notify the Insurer of the number of shares
so issued as payment of such dividends and distributions.
<PAGE>
1.11 The Fund shall instruct its recordkeeping agent to advise the
Insurer on each business day of the net asset value per share for each Portfolio
as soon as reasonably practical after the net asset value per share is
calculated and shall use its best efforts to make such net asset value per share
available by 7:00 p.m. Eastern time.
ARTICLE II. Representations and Warranties
2.1 The Insurer represents and warrants that it is an insurance company
duly organized and in good standing under applicable law and that it is taxed as
an insurance company under Subchapter L of the Code.
2.2 The Insurer represents and warrants that it has legally and validly
established each of the Separate Accounts as a segregated asset account under
the New York Law, and that each of the Separate Accounts is a validly existing
segregated asset account under applicable federal and state law.
2.3 The Insurer represents and warrants that the Variable Contracts
issued by the Insurer or interests in the Separate Accounts under such Variable
Contracts (1) are or, prior to issuance, will be registered as securities under
the Securities Act of 1933 ("1933 Act") or, alternatively, (2) are not
registered because they are properly exempt from registration under the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under the 1933 Act.
2.4 The Insurer represents and warrants that each of the Separate
Accounts (1) has been registered as a unit investment trust in accordance with
the provisions of the 1940 Act or, alternatively, (2) has not been registered in
proper reliance upon an exclusion from registration under the 1940 Act.
<PAGE>
2.5 The Insurer represents that it believes, in good faith, that the
Variable Contracts issued by the Insurer are currently treated as annuity
contracts or life insurance policies (which may include modified endowment
contracts), whichever is appropriate, under applicable provisions of the Code.
2.6 The Fund represents and warrants that it is duly organized as a
business trust under the laws of the Commonwealth of Massachusetts, and is in
good standing under applicable law.
2.7 The Fund represents and warrants that the shares of the Portfolios
are duly authorized for issuance in accordance with applicable law and that the
Fund is registered as an open-end management investment company under the 1940
Act.
2.8 The Fund represents that it believes, in good faith, that the
Portfolios currently comply with the diversification provisions of Section
817(h) of the Code and the regulations issued thereunder relating to the
diversification requirements for variable life insurance policies and variable
annuity contracts.
2.9 The Distributor represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
ARTICLE III. General Duties
3.1 The Fund shall take all such actions as are necessary to permit the
sale of the shares of each Portfolio to the Separate Accounts, including
maintaining its registration as an investment company under the 1940 Act, and
registering the shares of the Portfolios sold to the Separate Accounts under the
1933 Act for so long as required by applicable law. The Fund shall amend its
Registration Statement filed with the SEC under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of the
shares of the Portfolios. The Fund shall register and qualify the shares for
sale in accordance with the laws of the various states to the extent deemed
necessary by the Fund or the Distributor.
<PAGE>
3.2 The Fund shall make every effort to maintain qualification of each
Portfolio as a Regulated Investment Company under Subchapter M of the Code (or
any successor or similar provision) and shall notify the Insurer immediately
upon having a reasonable basis for believing that a Portfolio has ceased to so
qualify or that it might not so qualify in the future.
3.3 The Fund shall make every effort to enable each Portfolio to comply
with the diversification provisions of Section 817(h) of the Code and the
regulations issued thereunder relating to the diversification requirements for
variable life insurance policies and variable annuity contracts and any
prospective amendments or other modifications to Section 817 or regulations
thereunder, and shall notify the Insurer immediately upon having a reasonable
basis for believing that any Portfolio has ceased to comply.
3.4 The Insurer shall take all such actions as are necessary under
applicable federal and state law to permit the sale of the Variable Contracts
issued by the Insurer, including registering each Separate Account as an
investment company to the extent required under the 1940 Act, and registering
the Variable Contracts or interests in the Separate Accounts under the Variable
Contracts to the extent required under the 1933 Act, and obtaining all necessary
approvals to offer the Variable Contracts from state insurance commissioners.
3.5 The Insurer shall make every effort to maintain the treatment of
the Variable Contracts issued by the Insurer as annuity contracts or life
insurance policies, whichever is appropriate, under applicable provisions of the
Code, and shall notify the Fund and the Distributor immediately upon having a
reasonable basis for believing that such Variable Contracts have ceased to be so
treated or that they might not be so treated in the future.
<PAGE>
3.6 The Insurer shall offer and sell the Variable Contracts issued by
the Insurer in accordance with applicable provisions of the 1933 Act, the 1934
Act, the 1940 Act, the NASD Rules of Fair Practice, and state law respecting the
offering of variable life insurance policies and variable annuity contracts.
3.7 The Distributor shall sell and distribute the shares of the
Portfolios of the Fund in accordance with the applicable provisions of the 1933
Act, the 1934 Act, the 1940 Act, the NASD Rules of Fair Practice, and state law.
3.8 During such time as the Fund engages in Mixed Funding or Shared
Funding, a majority of the Board of Trustees of the Fund shall consist of
persons who are not "interested persons" of the Fund ("disinterested Trustees"),
as defined by Section 2(a)(19) of the 1940 Act and the rules thereunder, and as
modified by any applicable orders of the SEC, except that if this provision of
this Section 3.8 is not met by reason of the death, disqualification, or bona
fide resignation of any Trustee or Trustees, then the operation of this
provision shall be suspended (a) for a period of 45 days if the vacancy or
vacancies may be filled by the Fund's Board; (b) for a period of 60 days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
3.9 The Insurer and its agents will not in any way recommend any
proposal or oppose or interfere with any proposal submitted by the Fund at a
meeting of owners of Variable Contracts or shareholders of the Fund, and will in
no way recommend, oppose, or interfere with the solicitation of proxies for Fund
shares held by Contract Owners, without the prior written consent of the Fund,
which consent may be withheld in the Fund's sole discretion.
<PAGE>
3.10 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having jurisdiction (including, without
limitation, the SEC, the NASD, and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
ARTICLE IV. Potential Conflicts
4.1 During such time as the Fund engages in Mixed Funding or Shared
Funding, the parties hereto shall comply with the conditions in this Article IV.
4.2 The Fund's Board of Trustees shall monitor the Fund for the
existence of any material irreconcilable conflict (1) between the interests of
owners of variable annuity contracts and variable life insurance policies, and
(2) between the interests of owners of Variable Contracts ("Variable Contract
Owners") issued by different Participating Life Insurance Companies that invest
in the Fund. A material irreconcilable conflict may arise for a variety of
reasons, including: (a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or securities laws
or regulations, or a public ruling, private letter ruling, no-action or
interpretive letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio of
the Fund are being managed; (e) a difference in voting instructions given by
variable annuity and variable life insurance contract owners; or (f) a decision
by a Participating Insurance Company to disregard the voting instructions of
Variable Contract Owners.
4.3 The Insurer agrees that it shall report any potential or existing
conflicts of which it is aware to the Fund's Board of Trustees. The Insurer will
be responsible for assisting the Board of Trustees of the Fund in carrying out
its responsibilities under the Mixed and Shared Funding Exemptive Order, or, if
the Fund is engaged in Mixed Funding or Shared Funding in reliance on Rule 6e-2,
6e-3(T), or any other regulation under the 1940 Act, the Insurer will be
responsible for assisting the Board of Trustees of the Fund in carrying out its
responsibilities under such regulation, by providing the Board with all
information reasonably necessary for the Board to consider any issues raised.
This includes, but is not limited to, an obligation by the Insurer to inform the
Board whenever Variable Contract Owner voting instructions are disregarded. The
Insurer shall carry out its responsibility under this Section 4.3 with a view
only to the interests of the Variable Contract Owners.
<PAGE>
4.4 The Insurer agrees that in the event that it is determined by a
majority of the Board of Trustees of the Fund or a majority of the Fund's
disinterested Trustees that a material irreconcilable conflict exists, the
Insurer shall, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested Trustees of the Board of the
Fund), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the Separate Accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including another portfolio of the Fund, or submitting the question as to
whether such segregation should be implemented to a vote of all affected
Variable Contract Owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners or life insurance contract
owners of contracts issued by one or more Participating Insurance Companies),
that votes in favor of such segregation, or offering to the affected Variable
Contract Owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account. If a
material irreconcilable conflict arises because of the Insurer's decision to
disregard Variable Contract Owners' voting instructions and that decision
represents a minority position or would preclude a majority vote, the Insurer
shall be required, at the Fund's election, to withdraw the Separate Accounts'
investment in the Fund, provided, however, that such withdrawal and termination
shall be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees, and no
charge or penalty will be imposed as a result of such withdrawal. These
responsibilities shall be carried out with a view only to the interests of the
Variable Contract Owners. A majority of the disinterested Trustees of the Fund
shall determine whether or not any proposed action adequately remedies any
material irreconcilable conflict, but in no event will the Fund or its
investment adviser or the Distributor be required to establish a new funding
medium for any Variable Contract. The Insurer shall not be required by this
Section 4.4 to establish a new funding medium for any Variable Contract if any
offer to do so has been declined by vote of a majority of Variable Contract
Owners materially adversely affected by the material irreconcilable conflict.
<PAGE>
4.5 The Insurer, at least annually, shall submit to the Fund's Board of
Trustees such reports, materials, or data as the Board reasonably may request so
that the Trustees of the Fund may fully carry out the obligations imposed upon
the Board by the conditions contained in the application for the Mixed and
Shared Funding Exemptive Order and said reports, materials, and data shall be
submitted more frequently if deemed appropriate by the Board.
4.6 All reports of potential or existing conflicts received by the
Fund's Board of Trustees, and all Board action with regard to determining the
existence of a conflict, notifying Participating Insurance Companies of a
conflict, and determining whether any proposed action adequately remedies a
conflict, shall be properly recorded in the minutes of the Board of Trustees of
the Fund or other appropriate records, and such minutes or other records shall
be made available to the SEC upon request.
4.7 The Board of Trustees of the Fund shall promptly notify the
Insurer in writing of its determination of the existence of an irreconcilable
material conflict and its implications.
ARTICLE V. Prospectuses and Proxy Statements; Voting
5.1 The Insurer shall distribute such prospectuses, proxy statements
and periodic reports of the Fund to the owners of Variable Contracts issued by
the Insurer as required to be distributed to such Variable Contract Owners under
applicable federal or state law.
5.2 The Distributor shall provide the Insurer with as many copies of
the current prospectus of the Fund as the Insurer may reasonably request. If
requested by the Insurer in lieu thereof, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in type or
in camera-ready copy) and other assistance as is reasonably necessary in order
for the Insurer to either print a stand-alone document or print together in one
document the current prospectus for the Variable Contracts issued by the Insurer
and the current prospectus for the Fund, or a document combining the Fund
prospectus with prospectuses of other funds in which the Variable Contracts may
be invested. The Fund shall bear the expense of printing copies of its current
prospectus that will be distributed to existing Variable Contract Owners, and
the Insurer shall bear the expense of printing copies of the Fund's prospectus
that are used in connection with offering the Variable Contracts issued by the
Insurer.
5.3 The Fund and the Distributor shall provide, at the Fund's expense,
such copies of the Fund's current Statement of Additional Information ("SAI") as
may reasonably be requested, to the Insurer and to any owner of a Variable
Contract issued by the Insurer who requests such SAI.
<PAGE>
5.4 The Fund, at its expense, shall provide the Insurer with copies of
its proxy materials, periodic reports to shareholders, and other communications
to shareholders in such quantity as the Insurer shall reasonably require for
purposes of distributing to owners of Variable Contracts issued by the Insurer.
The Fund, at the Insurer's expense, shall provide the Insurer with copies of its
periodic reports to shareholders and other communications to shareholders in
such quantity as the Insurer shall reasonably request for use in connection with
offering the Variable Contracts issued by the Insurer. If requested by the
Insurer in lieu thereof, the Fund shall provide such documentation (including a
final copy of the Fund's proxy materials, periodic reports to shareholders, and
other communications to shareholders, as set in type or in camera-ready copy)
and other assistance as reasonably necessary in order for the Insurer to print
such shareholder communications for distribution to owners of Variable Contracts
issued by the Insurer.
5.5 For so long as the SEC interprets the 1940 Act to require
pass-through voting by Participating Insurance Companies whose Separate Accounts
are registered as investment companies under the 1940 Act, the Insurer shall
vote shares of each Portfolio of the Fund held in a Separate Account or a
subaccount thereof, whether or not registered under the 1940 Act, at regular and
special meetings of the Fund in accordance with instructions timely received by
the Insurer (or its designated agent) from owners of Variable Contracts funded
by such Separate Account or subaccount thereof having a voting interest in the
Portfolio. The Insurer shall vote shares of a Portfolio of the Fund held in a
Separate Account or a subaccount thereof that are attributable to the Variable
Contracts as to which no timely instructions are received, as well as shares
held in such Separate Account or subaccount thereof that are not attributable to
the Variable Contracts and owned beneficially by the Insurer (resulting from
charges against the Variable Contracts or otherwise), in the same proportion as
the votes cast by owners of the Variable Contracts funded by that Separate
Account or subaccount thereof having a voting interest in the Portfolio from
whom instructions have been timely received. The Insurer shall vote shares of
each Portfolio of the Fund held in its general account, if any, in the same
proportion as the votes cast with respect to shares of the Portfolio held in all
Separate Accounts of the Insurer or subaccounts thereof, in the aggregate.
<PAGE>
5.6 During such time as the Fund engages in Mixed Funding or Shared
Funding, the Fund shall disclose in its prospectus that (1) the Fund is intended
to be a funding vehicle for variable annuity and variable life insurance
contracts offered by various insurance companies, (2) material irreconcilable
conflicts possibly may arise, and (3) the Board of Trustees of the Fund will
monitor events in order to identify the existence of any material irreconcilable
conflicts and to determine what action, if any, should be taken in response to
any such conflict. The Fund hereby notifies the Insurer that prospectus
disclosure may be appropriate regarding potential risks of offering shares of
the Fund to separate accounts funding both variable annuity contracts and
variable life insurance policies and to separate accounts funding Variable
Contracts of unaffiliated life insurance companies.
ARTICLE VI. Sales Material and Information
6.1 The Insurer shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund (or any Portfolio thereof) or its investment adviser
or the Distributor is named at least 15 days prior to the anticipated use of
such material, and no such sales literature or other promotional material shall
be used unless the Fund and the Distributor or the designee of either approve
the material or do not respond with comments on the material within 10 days from
receipt of the material.
<PAGE>
6.2 The Insurer agrees that neither it nor any of its affiliates or
agents shall give any information or make any representations or statements on
behalf of the Fund or concerning the Fund other than the information or
representations contained in the Registration Statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee and by the Distributor or its designee, except with the permission of
the Fund or its designee and the Distributor or its designee.
6.3 The Fund or the Distributor or the designee of either shall furnish
to the Insurer or its designee, each piece of sales literature or other
promotional material in which the Insurer or its Separate Accounts are named at
least 15 days prior to the anticipated use of such material, and no such
material shall be used unless the Insurer or its designee approves the material
or does not respond with comments on the material within 10 days from receipt of
the material.
6.4 The Fund and the Distributor agree that each and the affiliates and
agents of each shall not give any information or make any representations on
behalf of the Insurer or concerning the Insurer, the Separate Accounts, or the
Variable Contracts issued by the Insurer, other than the information or
representations contained in a registration statement or prospectus for such
Variable Contracts, as such registration statement and prospectus may be amended
or supplemented from time to time, or in reports for the Separate Accounts or
prepared for distribution to owners of such Variable Contracts, or in sales
literature or other promotional material approved by the Insurer or its
designee, except with the permission of the Insurer.
<PAGE>
6.5 The Fund will provide to the Insurer at least one complete copy of
the Mixed and Shared Funding Exemptive Application and any amendments thereto,
all prospectuses, Statements of Additional Information, reports, proxy
statements and other voting solicitation materials, and all amendments and
supplements to any of the above, that relate to the Fund or its shares, promptly
after the filing of such document with the SEC or other regulatory authorities.
6.6 The Insurer will provide to the Fund all prospectuses (which shall
include an offering memorandum if the Variable Contracts issued by the Insurer
or interests therein are not registered under the 1933 Act), Statements of
Additional Information, reports, solicitations for voting instructions relating
to the Fund, and all amendments or supplements to any of the above that relate
to the Variable Contracts issued by the Insurer or the Separate Accounts which
utilize the Fund as an underlying investment medium, promptly after the filing
of such document with the SEC or other regulatory authority.
6.7 For purposes of this Article VI, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use, in a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, computerized media, or other
public media), sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees.
<PAGE>
ARTICLE VII. Indemnification
7.1 Indemnification by the Insurer
7.1(a) The Insurer agrees to indemnify and hold harmless the
Fund, each of its Trustees and officers, any affiliated person of the Fund
within the meaning of Section 2(a)(3) of the 1940 Act, and the Distributor
(collectively, the "Indemnified Parties" for purposes of this Section 7.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Insurer) or litigation expenses
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or litigation expenses are
related to the sale or acquisition of the Fund's shares or the Variable
Contracts issued by the Insurer and:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the registration statement or prospectus (which
shall include an offering memorandum) for the Variable
Contracts issued by the Insurer or sales literature for such
Variable Contracts (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Insurer by or on behalf of the
Fund for use in the registration statement or prospectus for
the Variable Contracts issued by the Insurer or sales
literature (or any amendment or supplement) or otherwise for
use in connection with the sale of such Variable Contracts or
Fund shares; or
(ii) arise out of or as a result of any statement or
representation (other than statements or representations
contained in the registration statement, prospectus or sales
literature of the Fund not supplied by the Insurer or persons
under its control) or wrongful conduct of the Insurer or any
of its affiliates, employees or agents with respect to the
sale or distribution of the Variable Contracts issued by the
Insurer or the Fund shares; or
<PAGE>
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature of the
Fund or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance upon information furnished to
the Fund by or on behalf of the Insurer; or
(iv) arise out of or result from any material breach
of any representation and/or warranty made by the Insurer in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Insurer;
except to the extent provided in Sections 7.1(b) and 7.1(c) hereof.
7.1(b) The Insurer shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation expenses to which an Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of the Indemnified Party's duties or by reason of
the Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Fund.
7.1(c) The Insurer shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Party shall have notified the Insurer in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Party shall have received notice of such
service on any designated agent), but failure to notify the Insurer of any such
claim shall not relieve the Insurer from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, the Insurer shall be entitled to participate, at its
own expense, in the defense of such action. The Insurer also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the Insurer to such party of the Insurer's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Insurer
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
<PAGE>
7.1(d) The Indemnified Parties shall promptly notify the
Insurer of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund shares or the Variable
Contracts issued by the Insurer or the operation of the Fund.
7.2 Indemnification By the Distributor
7.2(a) The Distributor agrees to indemnify and hold harmless
the Insurer, its affiliated principal underwriter of the Variable Contracts,
and each of their directors and officers and any affiliated person of the
Insurer within the meaning of Section 2(a)(3) of the 1940 Act (collectively,
the "Indemnified Parties" for purposes of this Section 7.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Distributor) or litigation expenses (including legal
and other expenses) to which the Indemnified Parties may become subject under
any statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or litigation expenses are related to the sale or
acquisition of the Fund's shares or the Variable Contracts issued by the
Insurer and:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the registration statement or prospectus or sales
literature of the Fund (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Distributor or the Fund or the
designee of either by or on behalf of the Insurer for use in
the registration statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or otherwise
for use in the registration statement or prospectus for the
Fund or in sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the
Variable Contracts issued by the Insurer or Fund shares; or
<PAGE>
(ii) arise out of or as a result of any statement or
representations (other than statements or representations
contained in the registration statement, prospectus or sales
literature for the Variable Contracts not supplied by the
Distributor or any employees or agents thereof) or wrongful
conduct of the Fund or Distributor, or the affiliates,
employees, or agents of the Fund or the Distributor with
respect to the sale or distribution of the Variable Contracts
issued by the Insurer or Fund shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the Variable Contracts issued by the Insurer, or any
amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to
the Insurer by or on behalf of the Fund; or
(iv) arise out of or result from any material breach
of any representation and/or warranty made by the Distributor
in this Agreement or arise out of or result from any other
material breach of this Agreement by the Distributor;
except to the extent provided in Sections 7.2(b) and 7.2(c) hereof.
7.2(b) The Distributor shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation expenses to which an Indemnified Party would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of the Indemnified Party's duties or by reason of the
Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Insurer or the Separate Accounts.
<PAGE>
7.2(c) The Distributor shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Party shall have notified the Distributor in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Party shall have received notice of such
service on any designated agent), but failure to notify the Distributor of any
such claim shall not relieve the Distributor from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Distributor will be entitled to
participate, at is own expense, in the defense thereof. The Distributor also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Distributor to such party
of the Distributor's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Distributor will not be liable to such party under this Agreement for
any legal or other expense subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.2(d) The Insurer shall promptly notify the Distributor of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Variable
Contracts issued by the Insurer or the operation of the Separate Accounts.
<PAGE>
7.3 Indemnification by the Fund
7.3(a) The Fund agrees to indemnify and hold harmless the
Insurer, its affiliated principal underwriter of the Variable Contracts, and
each of their directors and officers and any affiliated person of the Insurer
within the meaning of Section 2(a)(3) of the 1940 Act (collectively, the
"Indemnified Parties" for purposes of this Section 7.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or litigation expenses (including legal and
other expenses) to which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or litigation expenses are related to the sale or
acquisition of the Fund's shares or the Variable Contracts issued by the Insurer
and:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the registration statement or prospectus or sales
literature of the Fund (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Distributor or the Fund or the
designee of either by or on behalf of the Insurer for use in
the registration statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Variable Contracts
issued by the Insurer or Fund shares; or
(ii) arise out of or as a result of any statement or
representation (other than statements or representations
contained in the registration statement, prospectus or sales
literature for the Variable Contracts not supplied by the
Distributor or any employees or agents thereof) or wrongful
conduct of the Fund, or the affiliates, employees, or agents
of the Fund, with respect to the sale or distribution of the
Variable Contracts issued by the Insurer or Fund shares; or
<PAGE>
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus or sales literature
covering the Variable Contracts issued by the Insurer, or any
amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to
the Insurer by or on behalf of the Fund; or
(iv) arise out of or result from any material breach
of any representation and/or warranty made by the Fund in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Fund;
except to the extent provided in Sections 7.3(b) and 7.3(c) hereof.
7.3(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of the
Indemnified Party's duties or by reason of the Indemnified Party's reckless
disregard of obligations or duties under this Agreement or to the Insurer or the
Separate Accounts.
7.3(c) The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such party shall have notified the Fund in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Party shall have received notice of such service on any designated agent), but
failure to notify the Fund of any such claim shall not relieve the Fund from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Fund will be
entitled to participate, at its own expense, in the defense thereof. The Fund
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the Fund to such party of
the Fund's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Fund will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
<PAGE>
7.3(d) The Insurer shall promptly notify the Fund of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Variable Contracts
issued by the Insurer or the sale of the Fund's shares.
ARTICLE VIII. Applicable Law
8.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Pennsylvania.
8.2 This Agreement shall be subject to the provisions of the 1933,
1934, and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, the Mixed and Shared Funding Exemptive
Order), and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE IX. Termination
9.1 This Agreement shall terminate:
<PAGE>
(a) at the option of any party upon 180 days advance written
notice to the other parties; or
(b) at the option of the Insurer if shares of the Portfolios
are not reasonably available to meet the requirements of the Variable Contracts
issued by the Insurer, as determined by the Insurer, and upon prompt notice by
the Insurer to the other parties; or
(c) at the option of the Fund or the Distributor upon
institution of formal proceedings against the Insurer or its agent by the NASD,
the SEC, or any state securities or insurance department or any other regulatory
body regarding the Insurer's duties under this Agreement or related to the sale
of the Variable Contracts issued by the Insurer, the operation of the Separate
Accounts, or the purchase of the Fund shares; or
(d) at the option of the Insurer upon institution of formal
proceedings against the Fund or the Distributor by the NASD, the SEC, or any
state securities or insurance department or any other regulatory body; or
(e) upon requisite vote of the Variable Contract Owners having
an interest in the Separate Accounts (or any subaccounts thereof) to substitute
the shares of another investment company for the corresponding shares of the
Fund or a Portfolio in accordance with the terms of the Variable Contracts for
which those shares had been selected or serve as the underlying investment
media; or
(f) in the event any of the shares of a Portfolio are not
registered, issued or sold in accordance with applicable state and/or federal
law, or such law precludes the use of such shares as the underlying investment
media of the Variable Contracts issued or to be issued by the Insurer; or
(g) by any party to the Agreement upon a determination by a
majority of the Trustees of the Fund, or a majority of its disinterested
Trustees, that an irreconcilable conflict, as described in Article IV hereof,
exists; or
<PAGE>
(h) at the option of the Insurer if the Fund or a Portfolio
fails to meet the requirements under Subchapter M of the Code for qualification
as a Regulated Investment Company specified in Section 3.2 hereof or the
diversification requirements specified in Section 3.3 hereof.
9.2 Each party to this Agreement shall promptly notify the other
parties to the Agreement of the institution against such party of any such
formal proceedings as described in Sections 9.1(c) and (d) hereof. The Insurer
shall give 60 days prior written notice to the Fund of the date of any proposed
vote of Variable Contract Owners to replace the Fund's shares as described in
Section 9.1(e) hereof.
9.3 Except as necessary to implement Variable Contract Owner initiated
transactions, or as required by state insurance laws or regulations, the Insurer
shall not redeem Fund shares attributable to the Variable Contracts issued by
the Insurer (as opposed to Fund shares attributable to the Insurer's assets held
in the Separate Accounts), and the Insurer shall not prevent Variable Contract
Owners from allocating payments to a Portfolio, until 60 days after the Insurer
shall have notified the Fund or Distributor of its intention to do so.
9.4 Notwithstanding any termination of this Agreement, the Fund and the
Distributor shall at the option of the Insurer continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Variable Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, based upon instructions from the owners of the
Existing Contracts, the Separate Accounts shall be permitted to reallocate
investments in the Portfolios of the Fund and redeem investments in the
Portfolios, and shall be permitted to invest in the Portfolios in the event that
owners of the Existing Contracts make additional purchase payments under the
Existing Contracts. If this Agreement terminates, the parties agree that
Sections 3.10, 7.1, 7.2, 7.3, 8.1, and 8.2, and, to the extent that all or a
portion of the assets of the Separate Accounts continue to be invested in the
Fund or any Portfolio of the Fund, Articles I, II, and IV and Sections 5.5 and
5.6 will remain in effect after termination.
<PAGE>
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Federated Insurance Series
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
Attn.: John W. McGonigle
If to the Distributor:
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
Attn.: John W. McGonigle
If to the Insurer:
G.E. Capital Life Assurance Company of New York
6610 West Broad Street
Richmond, VA 23230
Attn: Linda L. Lanam
<PAGE>
ARTICLE XI: Miscellaneous
11.1 The Fund and the Insurer agree that if and to the extent Rule 6e-2
or Rule 6e-3(T) under the 1940 Act is amended or if Rule 6e-3 is adopted in
final form, to the extent applicable, the Fund and the Insurer shall each take
such steps as may be necessary to comply with the Rule as amended or adopted in
final form.
11.2 A copy of the Fund's Agreement and Declaration of Trust is on file
with the Secretary of the Commonwealth of Massachusetts and notice is hereby
given that any agreements that are executed on behalf of the Fund by any Trustee
or officer of the Fund are executed in his or her capacity as Trustee or officer
and not individually. The obligations of this Agreement shall only be binding
upon the assets and property of the Fund and shall not be binding upon any
Trustee, officer or shareholder of the Fund individually.
11.3 Nothing in this Agreement shall impede the Fund's Trustees or
shareholders of the shares of the Fund's Portfolios from exercising any of the
rights provided to such Trustees or shareholders in the Fund's Agreement and
Declaration of Trust, as amended, a copy of which will be provided to the
Insurer upon request.
11.4 Administrative services to Variable Contract Owners shall be the
responsibility of Insurer. Insurer, on behalf of its separate accounts will be
the sole shareholder of record of Fund shares. Fund and Distributor recognize
that they will derive a substantial savings in administrative expense by virtue
of having a sole shareholder rather than multiple shareholders. In consideration
of the administrative savings resulting from having a sole shareholder rather
than multiple shareholders, Distributor agrees to pay to Insurer an amount
computed at an annual rate of .25 of 1% of the average daily net asset value of
shares held in subaccounts for which Insurer provides administrative services.
Distributor's payments to Insurer are for administrative services only and do
not constitute payment in any manner for investment advisory services.
<PAGE>
11.5 It is understood that the name "Federated" or any derivative
thereof or logo associated with that name is the valuable property of the
Distributor and its affiliates, and that the Insurer has the right to use such
name (or derivative or logo) only so long as this Agreement is in effect. Upon
termination of this Agreement the Insurer shall forthwith cease to use such name
(or derivative or logo).
11.6 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
11.7 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.8 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
11.9 This Agreement may not be assigned by any party to the Agree-ment
except with the written consent of the other parties to the Agreement.
11.10 The Insurer shall have the right, at all reasonable times, to
inspect, audit and copy all records of the Fund and/or the Distributor that
pertain to the Fund's or the Distributor's performance of its obligations under
this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
FEDERATED INSURANCE SERIES
ATTEST: ____________________ By _______________________
Name: ____________________ Name: ____________________
Title: ____________________ Title:____________________
FEDERATED SECURITIES CORP.
ATTEST: ____________________ By: _______________________
Name: ____________________ Name: ____________________
Title: ____________________ Title: ____________________
G.E. CAPITAL LIFE
ASSURANCE COMPANY
OF NEW YORK
ATTEST: ____________________ By: ______________________
Name: ____________________ Name: ____________________
Title: ____________________ Title:____________________
8 (iii)
PARTICIPATION AGREEMENT
By and Among
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
And
GE INVESTMENTS FUNDS, INC.
And
GE INVESTMENT MANAGEMENT INCORPORATED
THIS AGREEMENT, made and entered into this ___ day of ____________,
1997, by and among GE Capital Life Assurance Company of New York, organized
under the laws of the State of New York (the "Company"), on its own behalf and
on behalf of each segregated asset account of the Company named in Schedules 1
and 2 to this Agreement as may be amended from time to time (each account
referred to as the "Account"), GE Investments Funds, Inc., an open-end
management investment company organized under the laws of New York (the "Fund")
on its own behalf and on behalf of the Portfolios named in Schedule 3 to this
Agreement (the "Portfolios"); and GE Investment Management Incorporated, a
corporation organized under the laws of the State of Delaware (the "Adviser").
WHEREAS, the Fund engages in business as an open-end management
investment fund and was established for the purpose of serving as the investment
vehicle for separate accounts established for variable life insurance contracts
and variable annuity contracts to be offered by insurance companies have entered
into participation agreements similar to this Agreement (the "Participating
Insurance Companies") and for qualified pension and retirement plans; and
WHEREAS, the Fund has received an order from the Securities & Exchange
Commission (the "SEC") granting Participating Insurance Companies and variable
annuity separate accounts and variable life insurance separate accounts relief
from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios to be sold to and held by variable annuity separate accounts and
variable life insurance separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and qualified pension and retirement plans
outside of the separate account context (the "Mixed and Shared Funding Exemptive
Order"). The parties to this Agreement agree that the conditions or undertakings
specified in the Mixed and Shared Funding Exemptive Order and that may be
imposed on the Company, the Fund, the Portfolios, and/or the Adviser by virtue
of the receipt of such order by the SEC will be incorporated herein by
reference, and such parties agree to comply with such conditions and
undertakings to the extent applicable to each such party; and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has developed or intends to develop certain
variable life insurance policies (hereinafter, the "Contracts") set forth in
Schedule 4 hereto, for sale to "accredited investors," as that term is defined
in Regulation D promulgated under the 1933 Act (hereinafter "Regulation D"), or
other investors permitted by Regulation D; and
WHEREAS, the Company has developed or intends to develop certain other
Contracts shown on Schedule 5 interests under which have been or will be
registered under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company under the insurance laws of the State of New York, to set aside and
invest assets attributable to the Contracts; and
WHEREAS, the Company has registered each Account listed on Schedule 2
as a unit investment trust under the 1940 Act; and
WHEREAS, each Account listed on Schedule 1 will be excepted from the
definition of an investment company under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios named in
Schedule 3, as such schedule may be amended from time to time on behalf of the
Account to fund the Contracts, and the Fund is authorized to sell such shares to
the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, the Portfolios and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of the Portfolios that
each Account orders, executing such orders on a daily basis at the net asset
value next computed after receipt and acceptance by the Fund or its designee of
the order for the shares of the Portfolio. For purposes of this Section 1.1, the
Company will be the designee of the Fund for receipt of such orders from the
Account and receipt by such designee will constitute receipt by the Fund;
provided that the Fund receives notice of such order by 10:00 a.m. Eastern Time
on the next following business day ("T+l"). "Business Day" will mean any day on
which the New York Stock Exchange is open for trading and on which the Portfolio
calculates its net asset value pursuant to the rules of the SEC.
1.2. The Company will pay for Portfolio shares on T + 1 provided that an order
to purchase Portfolio shares is made in accordance with Section 1.1 above.
Payment will be in federal funds transmitted by wire. This wire transfer will be
initiated by 12:00 p.m. Eastern Time.
1.3. Subject to the Fund's rights set forth in Article X, the Fund agrees to
make shares of the Portfolios available for purchase at the applicable net asset
value per share by the Company and each Account on those days on which the
Portfolios calculates their net asset value pursuant to rules of the SEC and the
Portfolios shall use reasonable efforts to calculate such net asset value on
each day the New York Stock Exchange is open for trading; provided, however,
that the Board of Directors of the Fund (the "Board") may refuse to sell shares
of the Portfolios to any person, or suspend or terminate the offering of shares
of the Portfolios if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Board, acting in good
faith and in light of its fiduciary duties under federal and any applicable
state laws, necessary in the best interests of the shareholders of any
Portfolio.
1.4. On each Business Day on which the Portfolios calculate their net asset
value, the Company will aggregate and calculate the net purchase or redemption
orders for each Account maintained by the Fund in which contractowner assets are
invested. Net orders will only reflect orders that the Company has received
prior to the close of regular trading on the New York Stock Exchange, Inc. (the
"NYSE") (currently 4:00 p.m., Eastern Time) on that Business Day. Orders that
the Company has received after the close of regular trading on the NYSE will be
treated as though received on the next Business Day. Each communication of
orders by the Company will constitute a representation that such orders were
received by it prior to the close of regular trading on the NYSE on the Business
Day on which the purchase or redemption order is priced in accordance with Rule
22c-1 under the 1940 Act. Other procedures relating to the handling of orders
will be in accordance with the prospectus and statement of information of the
Fund or with oral or written instructions that the Fund will forward to the
Company from time to time.
1.5. The Fund agrees that shares of the Portfolios will be sold only to
Participating Insurance Companies and their separate accounts, qualified pension
and retirement plans or such other persons as are permitted under applicable
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations promulgated thereunder. No shares of the Portfolios will be sold to
the general public except as set forth in this Section 1.5.
1.6. The Fund agrees to redeem for cash, upon the Company's request, any full or
fractional shares of the Portfolios held by the Company, executing such requests
on a daily basis at the net asset value next computed after receipt and
acceptance by the Fund or its agent of the request for redemption. For purposes
of this Section 1.6, the Company will be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee will
constitute receipt by the Fund; provided the Fund receives notice of request for
redemption by 10:00 a.m. Eastern Time on the next following Business Day.
Payment will be in federal funds transmitted by wire to the Company's account as
designated by the Company in writing from time to time, on the same Business Day
the Fund receives notice of the redemption order from the Company. The Fund
reserves the right to delay payment of redemption proceeds, but in no event may
such payment be delayed longer than the period permitted by the 1940 Act. The
Fund will not bear any responsibility whatsoever for the proper disbursement or
crediting of redemption proceeds following payment of the redemption proceeds to
the Company; the Company alone will be responsible for such action. If
notification of redemption is received after 10:00 a.m. Eastern Time, payment
for redeemed shares will be made on the next following Business Day.
1.7. The Company agrees to purchase and redeem the shares of the Portfolios
offered by the then current prospectus of the Fund in accordance with the
provisions of such prospectus.
1.8. Issuance and transfer of the Portfolios' shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Purchase
and redemption orders for Portfolio shares will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
1.9. The Fund will furnish same day notice (by telecopier, wire or telephone
followed by written confirmation) to the Company of the declaration of any
income, dividends or capital gain distributions payable on a Portfolio's shares.
The Company hereby elects to receive all such dividends and distributions as are
payable on a Portfolio shares in the form of additional shares of the Portfolio.
The Fund will notify the Company of the number of shares so issued as payment of
such dividends and distributions. The Company reserves the right to revoke this
election upon reasonable prior notice to the Fund and to receive all such
dividends and distributions in cash.
1.10. The Fund will make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and will use its reasonable efforts
to make such net asset value per share available by 6:30 p.m., Eastern Time, but
in no event later than 7:00 p.m., Eastern Time, each Business Day.
1.11. In the event adjustments are required to correct any error in the
computation of the net asset value of the Portfolio's shares, the Fund will
notify the Company as soon as practicable after discovering the need for those
adjustments that result in an error in the calculation of the net asset value
equal to or greater than .5% of the correct net asset value. Any such notice
will state for each day for which an error occurred the incorrect price, the
correct price and, to the extent communicated to the Portfolio's shareholders,
the reason for the price change. The Company may send this notice or a
derivation thereof (so long as such derivation is approved in advance by the
Adviser) to contractowners whose accounts are affected by the price change. The
parties will negotiate in good faith to develop a reasonable method for
effecting such adjustments.
1.12. The Fund will provide as much advance notice as is reasonably practicable
of any material change affecting a Portfolio (including, but not limited to, any
material change in its registration statement or prospectus and any proxy
solicitations) and will take reasonable steps to assist the Company in
implementing the change in an orderly manner, taking into account the expense of
the Company
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts listed on Schedule 5
are or will be registered under the 1933 Act and that the Contracts listed on
Schedule 4 are exempt from registration under the 1933 Act; that the Accounts
listed on Schedule 1 are and will remain excluded from the definition of an
investment company under the 1940 Act, and that it will immediately notify the
Fund and the Adviser upon having a reasonable basis for believing that the
Accounts listed on Schedule 1 have ceased to be so exempt or that they might
cease to be exempt in the future; that each Account listed on Schedule 2 are and
will be registered as unit investment trusts in accordance with the provisions
of the 1940 Act; and that the Contracts are and will be issued and sold in
compliance with all applicable federal and state laws, including state insurance
suitability requirements; that each Account meets the definition of a "separate
account" under the 1940 Act. The Company further represents and warrants that it
is an insurance company duly organized and in good standing under applicable law
and that it has legally and validly established each Account as a separate
account under applicable law and that it has legally and validly established
each Account, prior to any issuance or sale of any Contract funded by that
Account, as a segregated asset account under Section 4240 of the Insurance Laws
of the State of New York and has registered or, prior to any issuance or sale of
the Contracts, will register to the extent required by law the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts, and that it will maintain such
registration for so long as any Contracts are outstanding. The Company will
amend the registration statement under the 1933 Act for the Contracts and the
registration statement under the 1940 Act for the Account from time to time as
required in order to effect the continuous offering of the Contracts or as may
otherwise be required by applicable law. The Company will register and qualify
the Contracts for sale in accordance with the securities laws of the various
states only if and to the extent deemed necessary by the Company. The Company
further 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. The Company will use
every effort to continue to meet such definitional requirement and will notify
the Fund immediately upon having a reasonable basis for believing such
requirements have ceased to be met or that they might not be met in the future.
2.2. The Company represents that the Contracts are currently and at the time of
issuance will be treated as life insurance contracts under applicable provisions
of the Code, and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Adviser immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so treated
or that they might not be so treated in the future.
2.3. The Company represents and warrants that it will not purchase shares of a
Portfolio with assets derived from tax-qualified retirement plans except,
indirectly, through Contracts purchased in connection with such plans.
2.4. The Fund represents and warrants that shares of each Portfolio sold
pursuant to this Agreement will be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law and that the Fund is
and will remain registered under the 1940 Act for as long as such shares are
outstanding. The Fund will amend the registration statement for its shares of
the Portfolios under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of shares. The Fund will register and
qualify the shares of each Portfolio for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Fund.
2.5. The Fund represents that each Portfolio is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that it will
make every effort to maintain such qualification (under Subchapter M or any
successor or similar provision) and that it will notify the Company immediately
upon having a reasonable basis for believing that a Portfolio has ceased to so
qualify or that it might not so qualify in the future.
2.6. The Fund represents and warrants that in performing the services described
in this Agreement, the Fund will comply with all applicable federal securities
laws, rules and regulations. The Fund makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies, objectives and restrictions) complies with the insurance
laws and regulations of any state. The Fund agrees that upon request it will use
its best efforts to furnish the information required by state insurance laws so
that the Company can obtain the authority needed to issue the Contracts in the
various states.
2.7. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it
reserves the right to make such payments in the future. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1, the Fund
undertakes to have its Board formulate and approve any plan under Rule 12b-1 to
finance distribution expenses in accordance with the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of the State of New York and that it does and will comply in all
material respects with applicable provisions of the 1940 Act.
2.9. Each of the Fund and the Adviser represents and warrants that all of its
directors, trustees, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of the
Portfolios are and continue to be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Portfolios in an amount not less
than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act
or related provisions as may be promulgated from time to time. The aforesaid
bond includes coverage for larceny and embezzlement and is issued by a reputable
bonding company.
2.10. The Adviser represents and warrants that it is and shall remain duly
registered in all material respects under all applicable federal and state
securities laws and that the Adviser shall perform its obligations for the
Portfolios in compliance with applicable securities laws.
2.11. Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate or board action, as applicable, by such
party and when so executed and delivered this Agreement will be the valid and
binding obligation of such party enforceable in accordance with its terms.
ARTICLE III. Prospectuses and Proxy Statements: Voting
3.1. The Fund will provide the Company, at the Company's expense, with as many
copies of the current prospectus for the Portfolios and any amendments thereto
as the Company may request. This provision may be amended by agreement of the
parties hereto in writing.
It is understood and agreed that the Company is not responsible for the content
of the prospectus or statement of additional information ("SAI") for the Fund,
except to the extent that statements in the Fund's prospectus and SAI reflect
information given to the Fund by the Company. It is also understood and agreed
that, except with respect to information provided to the Company by the Fund or
the Adviser, the Portfolios, the Fund and the Adviser shall not be responsible
for the content of the prospectus, SAI or disclosure statement for the
Contracts.
3.2. The Fund's prospectus shall state that the SAI is available from the Fund
and the Fund at its expense shall print and provide such SAI free of charge to
the Company and to any existing contractowner or prospective contractowner who
requests such SAI.
3.3. The Fund, at the Fund's or its affiliate's expense, will provide the
Company or its mailing agent with copies of its proxy material, if any, reports
to shareholders and other communications to shareholders in such quantity as the
Company will reasonably require. The Company, at its expense, will distribute
this proxy material, reports and other communications to existing contractowners
and tabulate the votes.
3.4. The Company will:
(a) solicit voting instructions from contractowners;
(b) vote the shares of each Portfolio held in the Account in
accordance with instructions received from contractowners; and
(c) vote shares of each Portfolio held in the Account for
which no timely instructions have been received, as well as shares it owns, in
the same proportion as shares of each such Portfolio for which instructions have
been received from the contractowners;
In each case, for so long as and to the extent that the SEC continues to
interpret the 1940 Act to require pass-through voting privileges for variable
contractowners. Except as set forth above, the Company reserves the right to
vote Portfolio shares held in any segregated asset account in its own right, to
the extent permitted by law. The Company will be responsible for assuring that
each of its separate accounts participating in the Portfolio calculates voting
privileges in a manner consistent with all legal requirements, including the
Mixed and Shared Funding Exemptive Order.
3.5. The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular, the Fund will act in accordance with the
SEC's interpretation of the requirements of Section 16(a) with respect to
periodic elections of trustees and with whatever rules the SEC may promulgate
with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Adviser will provide the Company on a timely basis with investment
performance information for the Portfolio, including total return for the
preceding calendar month and calendar quarter, the calendar year to date, and
the prior one-year, five-year, and ten year (or life of the Portfolio) periods.
The Company may, based on the SEC mandated information supplied by the Adviser,
prepare communications for contractowners ("Contractowner Materials"). The
Company will provide the Adviser with copies of all Contractowner Materials
concurrently with their first use for the Adviser's internal recordkeeping
purposes. It is understood that neither the Adviser, the Fund nor the Portfolio
will be responsible for errors or omissions in, or the content of, Contractowner
Materials except to the extent that the error or omission resulted from
information provided by or on behalf of the Adviser, the Fund or the Portfolio.
Any printed information that is furnished to the Company pursuant to this
Agreement other than the Portfolio's prospectus or statement of additional
information (or information supplemental thereto), periodic reports and proxy
solicitation materials is the Adviser's sole responsibility and not the
responsibility of the Portfolio or the Fund. The Company agrees that the
Portfolio, the shareholders of the Portfolio and the officers and members of the
Board will have no liability or responsibility to the Company in these respects.
4.2. The Company will not give any information or make any representations or
statements on behalf of the Fund or concerning the Portfolio in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement, prospectus or SAI for Portfolio shares,
as such registration statement, prospectus and SAI may be amended or
supplemented from time to time, or in reports or proxy statements for a
Portfolio, or in published reports for a Portfolio which are in the public
domain or approved by the Fund or the Adviser for distribution, or in sales
literature or other material provided by the Fund or the Adviser, except with
permission of the Fund or the Adviser. The Fund and/or the Adviser, as
applicable, agrees to respond to any request for approval on a prompt and timely
basis.
Nothing in this Section 4.2 will be construed as preventing the Company
or its employees or agents from giving advice on investment in the Portfolio.
4.3. The Company will furnish, or will cause to be furnished, to the Fund or the
Adviser or its designee, each piece of sales literature or other promotional
material in which the Fund, the Portfolios or the Adviser is named, at least
fifteen (15) business days prior to its use. No such material will be used if
the Fund or the Adviser reasonably objects to such use within fifteen (10)
business days after receipt of such material. Likewise, the Fund or the Adviser
will furnish, or will cause to be furnished, to the Company or its designee,
each piece of sales literature or other promotional material in which the
Company is named, at least fifteen (15) business days prior to its use. No such
material will be used if the Company reasonably objects to such use within
fifteen (10) business days after receipt of such material.
4.4. The Fund and the Adviser will not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, each Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or SAI for the
Contracts, as such registration statement, prospectus and SAI may be amended or
supplemented from time to time, or in published reports for each Account or the
Contracts which are in the public domain or approved by the Company for
distribution to contractowners, or in sales literature or other material
provided by the Company, except with permission of the Company. The Company
agrees to respond to any request for approval on a prompt and timely basis.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Portfolios or their shares, contemporaneously with the filing of
such document with the SEC, the NASD or other regulatory authority.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the Contracts or
each Account, contemporaneously with the filing of such document with the SEC,
the NASD or other regulatory authority.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media, (e.g., on-line
networks such as the Internet or other electronic messages), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisements sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under the
NASD rules, the 1933 Act or the 1940 Act.
4.8. The Fund and each Portfolio hereby consents to the Company's use of the
name GE Investments Funds, Inc. and the name of each portfolio listed on
Schedule 3 in connection with the marketing of the Contracts, subject to the
terms of Sections 4.1, 4.2 and 10.3 of this Agreement. Such consent will
terminate with the termination of this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund, the Portfolios and the Adviser will pay no fee or other
compensation to the Company under this Agreement except if the Fund or the
Portfolios adopt and implement a plan pursuant to Rule 12b-1 under the 1940 Act
to finance distribution expenses, then, subject to obtaining any required
exemptive orders or other regulatory approvals, the Fund may make payments to
the Company or to the underwriter for the Contracts if and in such amounts
agreed to by the Fund in writing.
5.2. Except as otherwise provided herein, all expenses incident to performance
by the Fund under this Agreement shall be paid by the Fund. The Fund shall see
to it that all its shares are registered and authorized for issuance in
accordance with applicable federal law and, if and to the extent deemed
advisable by the Fund or the Adviser, in accordance with applicable state laws
prior to their sale. The Fund shall bear the expenses for the cost of
registration and qualification of the Portfolios' shares; the preparation of all
statements and notices required by any federal or state law; all taxes on the
issuance or transfer of the Portfolios' shares; and any expenses permitted to be
paid or assumed by a Portfolio pursuant to a plan, if any, under Rule 12b-1
under the 1940 Act.
ARTICLE VI. Diversification
6.1. The Fund will ensure that each Portfolio will at all times invest money
from the Contracts in such a manner as to ensure that the Contracts will comply
with Section 817(h) of the Code and Treasury Regulation 1.817-S, as amended from
time to time, relating to the diversification requirements for variable annuity
or life insurance contracts and any amendments or other modifications to such
Section or Regulation. In the event of a breach of this Article VI by the
Portfolio, it will take all reasonable steps: (a) to notify the Company of such
breach; and (b) to adequately diversify the Portfolio so as to achieve
compliance within the grace period afforded by Treasury Regulation 1.817-S.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Portfolios for the existence of any material
irreconcilable conflict among the interests of the contractowners of all
separate accounts investing in the Portfolios and determine what action, if any,
should be taken in response to such conflicts. A material irreconcilable
conflict may arise for a variety of reasons, including: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar action
by insurance, tax, or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of the Portfolios are being managed; (e) a difference in voting
instructions given by Participating Insurance Companies or by variable annuity
and variable life insurance contractowners; or (f) a decision by an insurer to
disregard the voting instructions of contractowners. The Board will promptly
inform the Company if it determines that a material irreconcilable conflict
exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which it is
aware to the Board. The Company agrees to assist the Board in carrying out its
responsibilities, as delineated in the Mixed and Shared Funding Exemptive Order,
by providing the Board with all information reasonably necessary for the Board
to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever it has determined to
disregard contractowner voting instructions. The Company's responsibilities
hereunder will be carried out with a view only to the interest of
contractowners.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested directors, that a material irreconcilable conflict exists, the
Company will, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict,
including: (a) withdrawing the assets allocable to some or all of the Accounts
from the Portfolios and reinvesting such assets in a different investment medium
or submitting the question whether such segregation should be implemented to a
vote of all affected contractowners and, as appropriate, segregating the assets
of any appropriate group (i.e., variable annuity contractowners or variable life
insurance contractowners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected contractowners
the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard contractowner voting instructions, and the Company's
judgment represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Portfolios and terminate this Agreement with respect
to such Account; provided, however, that such withdrawal and termination will be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested directors of the Board. No
charge or penalty will be imposed as a result of such withdrawal.
7.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state insurance regulators, then the Company will withdraw the
affected Account's investment in the Portfolios and terminate this Agreement
with respect to such subaccount; provided, however, that such withdrawal and
termination will be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
directors of the Board. No charge or penalty will be imposed as a result of such
withdrawal.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the disinterested members of the Board will determine whether any proposed
action adequately remedies any material irreconcilable conflict, but in no event
will the Fund or the Adviser be required to establish a new funding medium for
the Contracts. The Company will not be required by Section 7.3 to establish a
new funding medium for the Contracts if an offer to do so has been declined by
vote of a majority of contractowners materially affected by the material
irreconcilable conflict.
7.7. The Company will at least annually submit to the Board such reports,
materials or data as the Board may reasonably request so that the Board may
fully carry out the duties imposed upon it as delineated in the Mixed and Shared
Funding Exemptive Order, and said reports, materials and data will be submitted
more frequently if deemed appropriate by the Board.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Mixed and Shared Funding
Exemptive Order, then: (a) the Fund and/or the Participating Insurance
Companies, as appropriate, will take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement will continue in effect only to the extent that terms
and conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Fund, the
Portfolios, the Adviser, and each person, if any, who controls or is associated
with the Fund, the Portfolios or the Adviser within the meaning of such terms
under the federal securities laws and any director, trustee, officer, partner,
employee or agent of the foregoing (collectively, the "Indemnified Parties" for
purposes of this Section 8.1) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including reasonable legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of Portfolio shares or the Contracts and:
(1) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the registration
statement, prospectus or SAI for the Contracts or contained in the Contracts or
sales literature or other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated or necessary to make such statements not misleading in
light of the circumstances in which they were made; provided that this agreement
to indemnify will not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance upon and in
conformity with written information furnished to the Company by the Fund, the
Portfolio or the Adviser for use in the registration statement, prospectus or
SAI for the Contracts or in the Contracts or sales literature (or any amendment
or supplement) or otherwise for use in connection with the sale of the Contracts
or Portfolio shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Company or wrongful conduct of the
Company or persons under its control, with respect to the sale or distribution
of the Contracts or Portfolio shares; or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund's registration statement,
prospectus, statement of additional information or sales literature or other
promotional material of the Fund (or amendment or supplement) or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make such statements not misleading in light of the
circumstances in which they were made, if such a statement or omission was made
in reliance upon and in conformity with information furnished to the Fund by or
on behalf of the Company or persons under its control; or
(4) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this Agreement; or
(5) arise out of any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or result
from any other material breach by the Company of this Agreement;
Except to the extent provided in Sections 8. l(b) and 8.3
hereof, this indemnification will be in addition to any liability that the
Company otherwise may have.
(b) No party will be entitled to indemnification under Section 8. l(a)
to the extent such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of such party's reckless
disregard of its obligations or duties under this Agreement by the party seeking
indemnification.
(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or actions by regulatory
authorities against them in connection with the issuance or sale of the
Portfolio shares or the Contracts or the operation of the Fund.
8.2. Indemnification By The Adviser, the Fund and each Portfolio
(a) The Adviser, the Fund and each Portfolio, in each case solely to
the extent relating to such party's responsibilities hereunder, agree to
indemnify and hold harmless the Company and each person, if any, who controls or
is associated with the Company within the meaning of such terms under the
federal securities laws and any director, trustee, officer, partner, employee or
agent of the foregoing (collectively, the "Indemnified Parties" for purposes of
this Section 8.2) against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the written consent of
the Adviser, the Fund or a Portfolio, as applicable) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may become
subject under any statute, regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement, prospectus or statement of additional information for the Fund or
sales literature or other promotional material of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated or necessary to make such statements not misleading in light of the
circumstances in which they were made; provided that this agreement to indemnify
will not apply as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in conformity with
information furnished to the Adviser, the Fund or a Portfolio by or on behalf of
the Company for use in the registration statement, prospectus or statement of
additional information for the Fund or in sales literature of the Fund (or any
amendment or supplement thereto) or otherwise for use in connection with the
sale of the Contracts or Portfolio shares; or
(2) arise out of or as a result of statements or
representations or wrongful conduct of the Adviser, the Fund or a Portfolio or
persons under the control of the Adviser, the Fund or a Portfolio respectively,
with respect to the sale of the Portfolio shares; or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement, prospectus,
statement of additional information or sales literature or other promotional
material covering the Contracts (or any amendment or supplement thereto), or the
omission or alleged omission to state therein a material fact required to be
stated or necessary to make such statement or statements not misleading in light
of the circumstances in which they were made, if such statement or omission was
made in reliance upon and in conformity with written information furnished to
the Company by the Adviser, the Fund or a Portfolio or persons under the control
of the Adviser, the Fund or a Portfolio; or
(4) arise as a result of any failure by the Fund, the Adviser
or a Portfolio to provide the services and furnish the materials under the terms
of this Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the diversification requirements and procedures
related thereto specified in Article VI of this Agreement); or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser, the Fund or a Portfolio in
this Agreement, or arise out of or result from any other material breach of this
Agreement by the Adviser, the Fund or a Portfolio;
Except to the extent provided in Sections 8.2(b) and 8.3
hereof, this indemnification will be in addition to any liability that the
Adviser, the Fund or the Portfolio otherwise may have.
(b) No party will be entitled to indemnification under Section 8.2(a)
to the extent such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, or gross negligence in the performance of such
party's duties under this Agreement, or by reason of such party's reckless
disregard of its obligations or duties under this Agreement by the party seeking
indemnification.
(c) The Indemnified Parties will promptly notify the Adviser, the Fund
or a Portfolio of the commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection with the issuance
or sale of the Contracts or the operation of the account.
8.3. Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.3) will not be liable
under the indemnification provisions of this Article VIII with respect to any
claim made against a party entitled to indemnification under this Article VIII
("Indemnified Party" for the purpose of this Section 8.3) unless such
Indemnified Party will have notified the Indemnifying Party in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim will have been served upon such
Indemnified Party (or after such party will have received notice of such service
on any designated agent), but failure to notify the Indemnifying Party of any
such claim will not relieve the Indemnifying Party from any liability which it
may have to the Indemnified Party against whom such action is brought otherwise
than on account of the indemnification provision of this Article VIII, except to
the extent that the failure to notify results in the failure of actual notice to
the Indemnifying Party and such Indemnifying Party is damaged solely as a result
of failure to give such notice. In case any such action is brought against the
Indemnified Party, the Indemnifying Party will be entitled to participate, at
its own expense, in the defense thereof. The Indemnifying Party also will be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Indemnifying Party to the Indemnified
Party of the Indemnifying Party's election to assume the defense thereof, the
Indemnified Party will bear the fees and expenses of any additional counsel
retained by it, and the Indemnifying Party will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation, unless: (a) the Indemnifying Party and the
Indemnified Party will have mutually agreed to the retention of such counsel; or
(b) the named parties to any such proceeding (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Indemnifying Party will not be
liable for any settlement of any proceeding effected without its written consent
but if settled with such consent or if there is a final judgment for the
plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party from
and against any loss or liability by reason of such settlement or judgment. A
successor by law of the parties to this Agreement will be entitled to the
benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII will survive any
termination of this Agreement.
ARTICLE IX. Applicable Law
9.1. This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.
9.2. This Agreement will be subject to the provisions of the 1933 Act, the 1934
Act and the 1940 Act, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, the Mixed and Shared Funding Exemptive
Order) and the terms hereof will be interpreted and construed in accordance
therewith.
ARTICLE X. Termination
10.1. This Agreement will terminate:
(a) at the option of any party, with or without cause, upon ninety (90)
days' advance written notice to the other parties; or
(b) at the option of the Company, upon receipt of the Company's written
notice by the other parties, with respect to a Portfolio if shares of the
Portfolio are not reasonably available to meet the requirements of the Contracts
as determined in good faith by the Company; or
(c) at the option of the Company, upon receipt of the Company's written
notice by the other parties, with respect to a Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or Federal law or such law precludes the use of such shares
as the underlying investment medium of the Contracts issued or to be issued by
the Company; or
(d) at the option of the Fund, upon receipt of the Fund's written
notice by the other parties, upon institution of formal proceedings against the
Company by the NASD, the SEC, the insurance commission of any state or any other
regulatory body regarding the Company's duties under this Agreement or related
to the sale of the Contracts, the administration of the Contracts, the operation
of the Account, or the purchase of Portfolio shares, provided that the Fund
determines in its sole judgment, exercised in good faith, that any such
proceeding would have a material adverse effect on the Company's ability to
perform its obligations under this Agreement; or
(e) at the option of the Company, upon receipt of the Company's written
notice by the other parties, upon institution of formal proceedings against the
Fund, the Adviser or a Portfolio by the NASD, the SEC, or any state securities
or insurance department or any other regulatory body, provided that the Company
determines in its sole judgment, exercised in good faith, that any such
proceeding would have a material adverse effect on the Fund's, the Adviser's or
a Portfolio's ability to perform its obligations under this Agreement; or
(f) at the option of the Company, upon receipt of the Company's written
notice by the other parties, if a Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code, or under any successor or
similar provision, or if the Company reasonably and in good faith believes that
a Portfolio may fail to so qualify; or
(g) at the option of the Company, upon receipt of the Company's written
notice by the other parties, with respect to a Portfolio if the Portfolio fails
to meet the diversification requirements specified in Article VI hereof or if
the Company reasonably and in good faith believes the Portfolio may fail to meet
such requirements; or
(h) at the option of any party to this Agreement, upon written notice
to the other parties, upon another party's material breach of any provision of
this Agreement which material breach is not cured within thirty (30) days of
said notice; or
(i) at the option of the Company, if the Company determines in its sole
judgment exercised in good faith, that either the Fund, the Adviser or a
Portfolio has suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Company, such termination to be
effective sixty (60) days' after receipt by the other parties of written notice
of the election to terminate; or
(j) at the option of the Fund or the Adviser, if the Fund or the
Adviser respectively' determines in its sole judgment exercised in good faith,
that the Company has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have a material adverse
impact upon the business and operations of the Fund or the Adviser, such
termination to be effective sixty (60) days' after receipt by the other parties
of written notice of the election to terminate; or
(k) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the contractowners having an
interest in the Account (or any subaccount) to substitute the shares of another
investment company for the corresponding Portfolio shares in accordance with the
terms of the Contracts for which those Portfolio shares had been selected to
serve as the underlying investment medium. The Company will give sixty (60)
days' prior written notice to the Fund of the date of any proposed vote or other
action taken to replace the Portfolio shares; or
(l) at the option of the Company or the Fund upon a determination by a
majority of the Board, or a majority of the disinterested Board members, that a
material irreconcilable conflict exists among the interests of: (1) all
contractowners of variable insurance products of all separate accounts; or (2)
the interests of the Participating Insurance Companies investing in the
Portfolio as set forth in Article VII of this Agreement; or
(m) at the option of the Fund in the event any of the Contracts are not
issued or sold in accordance with applicable federal and/or state law.
Termination will be effective immediately upon such occurrence without notice.
10.2. Notice Requirement
No termination of this Agreement will be effective unless and until the
party terminating this Agreement gives prior written notice to all other parties
of its intent to terminate, which notice will set forth the basis for the
termination.
10.3. Effect of Termination
Notwithstanding any termination of this Agreement, the Fund will, at
the option of the Company, continue to make available additional shares of a
Portfolio pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts will be permitted to reallocate
investments in a Portfolio (as in effect on such date), redeem investments in a
Portfolio and/or invest in Portfolio upon the making of additional purchase
payments under the Existing Contracts.
10.4. Surviving Provisions
Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify other parties will survive and not
be affected by any termination of this Agreement. In addition, each party's
obligations under Section 12.7 will survive and not be affected by any
termination of this Agreement. Finally, with respect to Existing Contracts, all
provisions of this Agreement also will survive and not be affected by any
termination of this Agreement.
ARTICLE XI. Notices
11.1. Any notice will be deemed duly given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other parties.
If to the Company:
GE Capital Life Assurance Company of New York
6610 West Broad Street
Richmond, VA 23260
Attn: Linda L. Lanam, Esq.
If to the Fund, the Adviser and/or the Portfolios:
c/o GE Investment Management Incorporated
3003 Summer Street, Stamford, CT 06905
Attn: Associate General Counsel, Mutual Funds
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property of the
Fund for the enforcement of any claims against the Fund as neither the
directors, trustees, officers, partners, employees, agents or shareholders
assume any personal liability for obligations entered into on behalf of the
Fund. No other portfolio or series of the Fund will be liable for the
obligations or liabilities of another Portfolio.
12.2. The Fund and the Adviser acknowledge that the identities of the customers
of the Company or any of its affiliates (collectively the "Company Protected
Parties" for purposes of this Section 12.2), information maintained regarding
those customers, and all computer programs and procedures or other information
developed or used by the Company Protected Parties or any of their employees or
agents in connection with the Company's performance of its duties under this
Agreement are the valuable property of the Company Protected Parties. The Fund
and the Adviser agree that if they come into possession of any list or
compilation of the identities of or other information about the Company
Protected Parties' customers, or any other information or property of the
Company Protected Parties, other than such information as is publicly available
or as may be independently developed or compiled by the Fund and the Adviser
from information supplied to them by the Company Protected Parties' customers
who also maintain accounts directly with the Fund or the Adviser, the Fund and
the Adviser will hold such information or property in confidence and refrain
from using, disclosing or distributing any of such information or other property
except: (a) with the Company's prior written consent; or (b) as required by law
or judicial process. The Company acknowledges that the identities of the
customers of the Fund, the Adviser or any of their affiliates (collectively the
"Adviser Protected Parties" for purposes of this Section 12.2), information
maintained regarding those customers, and all computer programs and procedures
or other information developed or used by the Adviser Protected Parties or any
of their employees or agents in connection with the Fund's or the Adviser's
performance of their respective duties under this Agreement are the valuable
property of the Adviser Protected Parties. The Company agrees that if it comes
into possession of any list or compilation of the identities of or other
information about the Adviser Protected Parties' customers, or any other
information or property of the Adviser Protected Parties, other than such
information as is publicly available or as may be independently developed or
compiled by the Company from information supplied to them by the Adviser
Protected Parties' customers who also maintain accounts directly with the
Company, the Company will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or other
property except: (a) with the Fund's or the Adviser's prior written consent; or
(b) as required by law or judicial process. Each party acknowledges that any
breach of the agreements in this Section 12.2 would result in immediate and
irreparable harm to the other parties for which there would be no adequate
remedy at law and agree that in the event of such a breach, the other parties
will be entitled to equitable relief by way of temporary and permanent
injunctions, as well as such other relief as any court of competent jurisdiction
deems appropriate.
12.3. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
12.5. If any provision of this Agreement will be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement will not be
affected thereby.
12.6. This Agreement will not be assigned by any party hereto without the prior
written consent of all the parties.
12.7. Each party to this Agreement will maintain all records required by law,
including records detailing the services it provides. Such records will be
preserved, maintained and made available to the extent required by law and in
accordance with the 1940 Act and the rules thereunder. Each party to this
Agreement will cooperate with each other party and all appropriate governmental
authorities (including without limitation the SEC, the NASD and state insurance
regulators) and will permit each other and such authorities reasonable access to
its books and records in connection with any investigation or inquiry relating
to this Agreement or the transactions contemplated hereby. Upon request by the
Fund and at the Fund's expense, the Company agrees to promptly make copies or,
if required, originals of all records pertaining to the performance of services
under this Agreement available to the Fund. The Fund agrees that the Company
will have the right to inspect, audit and copy all records pertaining to the
performance of services under this Agreement pursuant to the requirements of any
state insurance department. Each party also agrees to promptly notify the other
parties if it experiences any difficulty in maintaining the records in an
accurate and complete manner. This provision will survive termination of this
Agreement.
12.8. The parties to this Agreement acknowledge and agree that all liabilities
of the Fund arising, directly or indirectly, under this agreement, will be
satisfied solely out of the assets of the Fund and that no trustee, officer,
agent or holder of shares of beneficial interest of the Fund will be personally
liable for any such liabilities.
12.9. The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts, the
Accounts or the Portfolios or other applicable terms of this Agreement.
12.10. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
By:_______________________________
Name:
Title:
GE INVESTMENTS FUNDS, INC.
By:_______________________________
Name:
Title:
GE INVESTMENT MANAGEMENT
INCORPORATED
By:_______________________________
Name:
Title:
<PAGE>
Schedule 1
PARTICIPATION AGREEMENT
By and Among
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
And
GE INVESTMENTS FUNDS, INC.
And
GE INVESTMENT MANAGEMENT INCORPORATED
Unregistered Accounts
Name of Account: Date of Resolution of Company's Board
which Established the Account:
<PAGE>
Schedule 2
PARTICIPATION AGREEMENT
By and Among
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
And
GE INVESTMENTS FUNDS, INC.
And
GE INVESTMENT MANAGEMENT INCORPORATED
Registered Accounts
Name of Account: Date of Resolution of Company's Board
which Established the Account:
<PAGE>
Schedule 3
PARTICIPATION AGREEMENT
By and Among
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
And
GE INVESTMENTS FUNDS, INC.
And
GE INVESTMENT MANAGEMENT INCORPORATED
Name(s) of Portfolio
S&P 500 Index Fund
Money Market Fund
Total Return Fund
International Equity Fund
Real Estate Securities Fund
Global Income Fund
Value Equity Fund
Income Fund
U.S. Equity Fund
<PAGE>
Schedule 4
PARTICIPATION AGREEMENT
By and Among
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
And
GE INVESTMENTS FUNDS, INC.
And
GE INVESTMENT MANAGEMENT INCORPORATED
Exempt Contracts
<PAGE>
Schedule 5
PARTICIPATION AGREEMENT
By and Among
GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
And
GE INVESTMENTS FUNDS, INC.
And
GE INVESTMENT MANAGEMENT INCORPORATED
Registered Contracts
8 (iv)
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 29th day of May, 1998, between JANUS ASPEN
SERIES, an open-end management investment company organized as a Delaware
business trust (the "Trust"), and G.E. CAPITAL LIFE ASSURANCE COMPANY OF NEW
YORK, a life insurance company organized under the laws of the State of New York
(the "Company"), on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A, as may be amended from time to
time (the "Accounts").
W I T N E S S E T H:
WHEREAS, the Trust has registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and has registered the offer
and sale of its shares under the Securities Act of 1933, as amended (the "1933
Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Trust has received an order from the Securities and
Exchange Commission granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a)
and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Exemptive Order"); and
WHEREAS, the Company has registered or will register (unless
registration is not required under applicable law) certain variable life
insurance policies and/or variable annuity contracts under the 1933 Act (the
"Contracts"); and
WHEREAS, the Company has registered or will register (unless
registration is not required under applicable law) each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Company desires to utilize shares of one or more
Portfolios as an investment vehicle of the Accounts;
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I
Sale of Trust Shares
1.1 The Trust shall make shares of its Portfolios available to the
Accounts at the net asset value next computed after receipt of such purchase
order by the Trust (or its agent), as established in accordance with the
provisions of the then current prospectus of the Trust. Shares of a particular
Portfolio of the Trust shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of the
Contracts. The Trustees of the Trust (the "Trustees") may refuse to sell shares
of any Portfolio to any person, or suspend or terminate the offering of shares
of any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Trustees acting in good
faith and in light of their fiduciary duties under federal and any applicable
state laws, necessary in the best interests of the shareholders of such
Portfolio.
1.2 The Trust will redeem any full or fractional shares of any
Portfolio when requested by the Company on behalf of an Account at the net asset
value next computed after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Trust. The Trust shall make payment for such shares in the
manner established from time to time by the Trust, but in no event shall payment
be delayed for a greater period than is permitted by the 1940 Act.
1.3 For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints
the Company as its agent for the limited purpose of receiving and accepting
purchase and redemption orders resulting from investment in and payments under
the Contracts. Receipt by the Company shall constitute receipt by the Trust
provided that i) such orders are received by the Company in good order prior to
the time the net asset value of each Portfolio is priced in accordance with its
prospectus and ii) the Trust receives notice of such orders by 11:00 a.m. New
York time on the next following Business Day. "Business Day" shall mean any day
on which the New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission.
1.4 Purchase orders that are transmitted to the Trust in accordance
with Section 1.3 shall be paid for no later than 12:00 noon New York time on the
same Business Day that the Trust receives notice of the order. Payments shall be
made in federal funds transmitted by wire.
1.5 Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Shares ordered from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
1.6 The Trust shall furnish same day notice to the Company of any
income dividends or capital gain distributions payable on the Trust's shares.
The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Trust shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.7 The Trust shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 6 p.m. New York
time.
1.8 The Trust agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified pension
and retirement plans to the extent permitted by the Exemptive Order. No shares
of any Portfolio will be sold directly to the general public. The Company agrees
that Trust shares will be used only for the purposes of funding the Contracts
and Accounts listed in Schedule A, as amended from time to time.
1.9 The Trust agrees that all Participating Insurance Companies shall
have the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.8 and
Article IV of this Agreement.
ARTICLE II
Obligations of the Parties
2.1 The Trust shall prepare and be responsible for filing with the
Securities and Exchange Commission and any state regulators requiring such
filing all shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials), prospectuses and statements
of additional information of the Trust. The Trust shall bear the costs of
registration and qualification of its shares, preparation and filing of the
documents listed in this Section 2.1 and all taxes to which an issuer is subject
on the issuance and transfer of its shares.
2.2 At the option of the Company, the Trust shall either (a) provide
the Company (at the Company's expense) with as many copies of the Trust's
current prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the foregoing,
as the Company shall reasonably request; or (b) provide the Company with a
camera ready copy of such documents in a form suitable for printing. The Trust
shall provide the Company with a copy of its statement of additional information
in a form suitable for duplication by the Company. The Trust (at its expense)
shall provide the Company with copies of any Trust-sponsored proxy materials in
such quantity as the Company shall reasonably require for distribution to
Contract owners.
2.3 The Company shall bear the costs of printing and distributing the
Trust's prospectus, statement of additional information, shareholder reports and
other shareholder communications to owners of and applicants for policies for
which the Trust is serving or is to serve as an investment vehicle. The Company
shall bear the costs of distributing proxy materials (or similar materials such
as voting solicitation instructions) to Contract owners. The Company assumes
sole responsibility for ensuring that such materials are delivered to Contract
owners in accordance with applicable federal and state securities laws.
2.4 The Company agrees and acknowledges that the Trust's adviser, Janus
Capital Corporation ("Janus Capital"), is the sole owner of the name and mark
"Janus" and that all use of any designation comprised in whole or part of Janus
(a "Janus Mark") under this Agreement shall inure to the benefit of Janus
Capital. Except as provided in Section 2.5, the Company shall not use any Janus
Mark on its own behalf or on behalf of the Accounts or Contracts in any
registration statement, advertisement, sales literature or other materials
relating to the Accounts or Contracts without the prior written consent of Janus
Capital. Upon termination of this Agreement for any reason, the Company shall
cease all use of any Janus Mark(s) as soon as reasonably practicable.
2.5 The Company shall furnish, or cause to be furnished, to the Trust
or its designee, a copy of each Contract prospectus or statement of additional
information in which the Trust or its investment adviser is named prior to the
filing of such document with the Securities and Exchange Commission. The Company
shall furnish, or shall cause to be furnished, to the Trust or its designee,
each piece of sales literature or other promotional material in which the Trust
or its investment adviser is named, at least fifteen Business Days prior to its
use. No such material shall be used if the Trust or its designee reasonably
objects to such use within fifteen Business Days after receipt of such material.
2.6 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust or
its investment adviser in connection with the sale of the Contracts other than
information or representations contained in and accurately derived from the
registration statement or prospectus for the Trust shares (as such registration
statement and prospectus may be amended or supplemented from time to time),
reports of the Trust, Trust-sponsored proxy statements, or in sales literature
or other promotional material approved by the Trust or its designee, except as
required by legal process or regulatory authorities or with the written
permission of the Trust or its designee.
2.7 The Trust shall not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Contracts (as such registration statement and prospectus may
be amended or supplemented from time to time), or in materials approved by the
Company for distribution including sales literature or other promotional
materials, except as required by legal process or regulatory authorities or with
the written permission of the Company.
2.8 So long as, and to the extent that the Securities and Exchange
Commission interprets the 1940 Act to require pass-through voting privileges for
variable policyowners, the Company will provide pass-through voting privileges
to owners of policies whose cash values are invested, through the Accounts, in
shares of the Trust. The Trust shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Trust. With respect to each Account, the
Company will vote shares of the Trust held by the Account and for which no
timely voting instructions from policyowners are received as well as shares it
owns that are held by that Account, in the same proportion as those shares for
which voting instructions are received. The Company and its agents will in no
way recommend or oppose or interfere with the solicitation of proxies for Trust
shares held by Contract owners without the prior written consent of the Trust,
which consent may be withheld in the Trust's sole discretion.
ARTICLE III
Representations and Warranties
3.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of New York and
that it has legally and validly established each Account as a segregated asset
account under such law on the date set forth in Schedule A.
3.2 The Company represents and warrants that each Account (1) has been
registered or, prior to any issuance or sale of the Contracts, will be
registered as a unit investment trust in accordance with the provisions of the
1940 Act or, alternatively (2) has not been registered in proper reliance upon
an exclusion from registration under the 1940 Act.
3.3 The Company represents and warrants that the Contracts or interests
in the Accounts (1) are or, prior to issuance, will be registered as securities
under the 1933 Act or, alternatively (2) are not registered because they are
properly exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are properly exempt from registration under the
1933 Act. The Company further represents and warrants that the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws; and the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements.
3.4 The Trust represents and warrants that it is duly organized and
validly existing under the laws of the State of Delaware.
3.5 The Trust represents and warrants that the Trust shares offered and
sold pursuant to this Agreement will be registered under the 1933 Act and the
Trust shall be registered under the 1940 Act prior to any issuance or sale of
such shares. The Trust shall amend its registration statement under the 1933 Act
and the 1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Trust shall register and qualify its shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Trust.
3.6 The Trust represents and warrants that the investments of each
Portfolio will comply with the diversification requirements set forth in Section
817(h) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.
ARTICLE IV
Potential Conflicts
4.1 The parties acknowledge that the Trust's shares may be made
available for investment to other Participating Insurance Companies. In such
event, the Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Trustees shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Exemptive Order by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
4.3 If it is determined by a majority of the Trustees, or a majority of
its disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its expense and to the extent reasonably practicable (as determined by the
Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to some or all of the Accounts from the Trust or any Portfolio
and reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Trust, or submitting the question of
whether or not such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any appropriate
group (i.e., annuity contract owners, life insurance contract owners, or
variable contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected Contract owners
the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
4.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees. Any such withdrawal and
termination must take place within six (6) months after the Trust gives written
notice that this provision is being implemented. Until the end of such six (6)
month period, the Trust shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Trust.
4.5 If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Trust and terminate this Agreement with
respect to such Account within six (6) months after the Trustees inform the
Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. Until the end of such six (6) month period, the Trust shall continue
to accept and implement orders by the Company for the purchase and redemption of
shares of the Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Company be required to establish a new funding medium for the Contracts
if an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Trustees determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within six (6)
months after the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Exemptive
Order, and said reports, materials and data shall be submitted more frequently
if deemed appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable.
ARTICLE V
Indemnification
5.1 Indemnification By the Company. The Company agrees to indemnify and
hold harmless the Trust and each of its Trustees, officers, employees and agents
and each person, if any, who controls the Trust within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Article V) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement or prospectus for the Contracts or in the
Contracts themselves or in sales literature generated or approved by
the Company on behalf of the Contracts or Accounts (or any amendment or
supplement to any of the foregoing) (collectively, "Company Documents"
for the purposes of this Article V), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this indemnity shall not apply as
to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Company by or on
behalf of the Trust for use in Company Documents or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Trust Documents as defined in Section 5.2(a)) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon and accurately derived
from written information furnished to the Trust by or on behalf of the
Company; or
(d) arise out of or result from any failure by the Company to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company.
5.2 Indemnification By the Trust. The Trust agrees to indemnify and
hold harmless the Company and each of its directors, officers, employees and
agents and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Article V) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Trust) or
expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the Trust (or any amendment or
supplement thereto), (collectively, "Trust Documents" for the purposes
of this Article V), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Trust by or on behalf
of the Company for use in Trust Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Company Documents) or wrongful conduct of the Trust or
persons under its control, with respect to the sale or acquisition of
the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written information
furnished to the Company by or on behalf of the Trust; or
(d) arise out of or result from any failure by the Trust to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Trust.
5.3 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
5.4 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other party in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have received notice of
service upon or other notification to any designated agent), but failure to
notify the party against whom indemnification is sought of any such claim shall
not relieve that party from any liability which it may have to the Indemnified
Party in the absence of Sections 5.1 and 5.2.
<PAGE>
5.5 In case any such action is brought against the Indemnified Parties,
the indemnifying party shall be entitled to participate, at its own expense, in
the defense of such action. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the indemnifying party to the Indemnified
Party of an election to assume such defense, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
indemnifying party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
ARTICLE VI
Termination
6.1 This Agreement may be terminated by either party for any reason by
six (6) months' advance written notice delivered to the other party.
6.2 Notwithstanding any termination of this Agreement, the Trust shall,
at the option of the Company, continue to make available additional shares of
the Trust (or any Portfolio) pursuant to the terms and conditions of this
Agreement for all Contracts in effect on the effective date of termination of
this Agreement, provided that the Company continues to pay the costs set forth
in Section 2.3.
6.3 The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.8 shall survive the
termination of this Agreement as long as shares of the Trust are held on behalf
of Contract owners in accordance with Section 6.2.
ARTICLE VII
Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
<PAGE>
If to the Trust:
Janus Aspen Series
100 Fillmore Street
Denver, Colorado 80206
Attention: General Counsel
If to the Company:
G.E. Capital Life Assurance Company of New York
6610 W. Broad Street
Richmond, Virginia 23230
Attention: Linda E. Lanam
ARTICLE VIII
Miscellaneous
8.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
8.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of State of Colorado.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
8.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers, Inc., and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in
<PAGE>
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
8.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
8.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the prior written approval of the other
party.
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
8.11 Subject to the requirements of legal process and regulatory
authorities, each party shall treat as confidential the names and addresses of
Contract owners.
8.12 Each party shall have the right, upon reasonable notice and during
normal business hours, to inspect, audit and copy all records of the other party
that pertain to that party's performance of its obligations under this
Agreement.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
JANUS ASPEN SERIES
By:__________________________
Name:________________________
Title:_______________________
G.E. CAPITAL LIFE ASSURANCE
COMPANY OF NEW YORK
By:__________________________
Name:________________________
Title:_______________________
<PAGE>
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Contracts Funded
Date Established by Board of Directors By Separate Account
GE Capital Life Separate Account II, Individual Deferred Variable
established April 1, 1996 Annuity Policy - Form NY 1066
AGREEMENT BETWEEN OPPENHEIMER VARIABLE ACCOUNT FUNDS, OPPENHEIMERFUNDS, INC.
AND GE CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
AGREEMENT DATED as of May 29, 1998 between OPPENHEIMER VARIABLE ACCOUNT FUNDS
(the "Fund"), OPPENHEIMERFUNDS, INC. (OFI), and GE CAPITAL LIFE ASSURANCE
COMPANY OF NEW YORK (GENY).
WHEREAS, the Fund represents and warrants that it is and will remain an open-end
diversified investment company registered as such under the Investment Company
Act of 1940 whose shares are registered under the Securities Act of 1933;
WHEREAS, the Fund represents and warrants that its shares, which currently are
issued with respect to ten (10) separate series, are offered only for purchase
by policies of life insurance companies ("Policies");
WHEREAS, the Fund and OFI represent and warrant that shares of the Fund shall be
sold only to insurance companies that are purchasing those shares for policies
established by certain life insurance companies ("participating insurance
companies");
WHEREAS, GENY desires to utilize shares of series of the Fund identified on
Schedule A hereto as one of the funding media of the policies identified on
Schedule B hereto;
WHEREAS, GENY represents and warrants the policies identified on Schedule B
hereto, have or will register as a unit investment trust(s) under the Investment
Company Act of 1940 unless an exemption from registration is available;
WHEREAS, the Fund represents and warrants that it has obtained an order from the
Securities and Exchange Commission granting participating insurance companies
and variable life insurance and variable annuity policies exemptions from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the Investment Company
Act of 1940, as amended, and Rules 6e-2(b) (15) and 6e-3(T)(b)(15) thereunder to
the extent necessary to permit shares of the fund to be sold to and held by
variable annuity and variable life policies of both affiliated and unaffiliated
life insurance companies (the "Order");
Now, therefore, in consideration of the premises and the mutual promises and
covenants hereinafter set forth, the Fund, OFI and GENY agree as follows:
1. The Fund shall make shares of the series identified on Schedule A hereto (as
may be modified by mutual consent from time to time) available for purchase at
net asset value by one or more policies of GENY identified on Schedule B hereto
(as may be modified by mutual consent from time to time) to support products of
GENY identified on Schedule C hereto (as may be modified by mutual consent from
time to time). Orders for such shares shall be executed on a daily basis at the
net asset value next computed after receipt by the Fund of the order. Requests
for such shares shall be executed on a daily basis at the net asset value next
computed after receipt by the Fund or its agent of the order for shares of the
Fund. For purposes of this Section 1, GENY shall be an agent of the Fund for
receipt of such orders and receipt by such agent shall constitute receipt by the
Fund; provided that such order is received by GENY by the Pricing Time on a
Business Day and the Fund receives written (or a facsimile) notice of such order
by 9:30 A.M. New York time on the next following Business Day. "Pricing Time"
shall mean the time of day as of which the Fund calculates its net asset value,
and "Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which the Fund calculates its net asset value, pursuant
to the rules of the Securities and Exchange Commission.
<PAGE>
2. The Fund agrees to redeem for cash, on GENY's request, any full or fractional
shares of the Fund held by GENY, executing such requests on a daily basis at the
net asset value next computed after receipt by the Fund of the request for
redemption. For purposes of this Section 2, GENY shall be the agent of the Fund
for receipt of requests for redemption, and receipt by such agent shall
constitute receipt by the Fund; provided that such request is received by GENY
by the Pricing Time on a Business Day and the Fund receives notice of such
request for redemption by 9:30 A.M. New York time on the next following Business
Day.
3. GENY shall pay for Fund shares on the next Business Day after an order to
purchase Fund shares is made in accordance with the provisions of Section 1.
4. The Fund shall furnish same day notice by telecopier to GENY of any income
dividends or capital gains distributions payable on the Fund's shares. GENY will
receive all such income dividends or capital gains distributions payable with
respect to a series in additional shares attributable to that series. The Fund
shall notify GENY of the number of shares issued as payment of such income
dividends or capital gains distributions.
5. The Fund shall make the net asset value per share of each series available to
GENY on a daily basis as soon as reasonably possible after the net asset value
per share is calculated and shall use its best efforts to make such net asset
value per share available to GENY by 5:30 pm New York time.
6. GENY shall pay for the reasonable costs of printing and mailing all
shareholder reports, notices, proxy materials (or similar materials such as
voting instruction solicitation materials) of the Fund that are required by the
federal securities laws to be sent to owners of policies issued by GENY for
which the Fund is serving or is to serve as an investment vehicle. GENY shall
also pay the reasonable costs of printing and distributing the Fund's
prospectuses and statements of additional information to owners of and
applicants applying for policies for which the Fund is serving or is to serve as
an investment vehicle.
7. The Fund shall prepare and be responsible for filing with the Securities and
Exchange Commission and any state securities regulators requiring such filing
all shareholder reports, notices, proxy materials (or similar materials such as
voting instruction solicitation materials), prospectuses and statements of
additional information of the Fund.
<PAGE>
8. The Fund agrees that the investment portfolios of each series of the Fund
will comply with the diversification requirements set forth in Section 817(h) of
the Internal Revenue Code of 1986, as amended.
9. In the event this agreement is terminated, the Fund agrees that, as long as
shares of the Fund are available for purchase by policies of any other insurance
companies, it will permit GENY to continue to purchase shares of the Fund for
the account of its policyholders then funding policies, in whole or in part,
with shares of the Fund, provided GENY continues to pay the costs described in
Section 6 above.
10. GENY shall not give any information or make any representations or
statements on behalf of or concerning the Fund or OFI in connection with the
sale of the policies other than the information or representations contained in
the registration statement or prospectus for the Fund shares, as such
registration statement and prospectus may be amended from time to time, or in
reports or proxy statements for the Fund, or in sales literature approved by the
Fund or OFI, except as required by legal process or regulatory authorities or
with permission of the Fund and OFI.
11. The Fund and OFI shall not give any information or make any representation
on behalf of or concerning GENY, the separate account(s) of GENY, or the
policies, other than the information or representations contained in a
registration statement or prospectus for the policies, as such registration
statement and prospectus may be amended from time to time, or in materials
approved by GENY for distribution, including sales literature or promotional
materials, except as required by legal process or regulatory authorities or with
permission of GENY.
12. The Fund shall bear the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports (including all documents related to the
solicitation of voting instructions from owners of the policies), the
preparation of all statements and notices relating to the Fund that may be
required by any federal or state law, and all taxes to which an issuer is
subject on the issuance and transfer of the Fund's shares.
13.1 The Board of Trustees of the Fund will monitor the Fund for any material
irreconcilable conflicts between the interests of the owners of all policies
whose cash values are held in policies investing in the Fund ("Policyowners")
and will promptly inform GENY if it determines that a material irreconcilable
conflict exists. GENY and OFI, as a matter of ongoing responsibility, will
undertake and shall promptly report to the Fund's Board any potential or
existing material irreconcilable conflict between the policyowners. GENY and OFI
will assist the Board in carrying out its responsibilities in monitoring such
conflicts, by providing the Board in a timely manner with all information
reasonably necessary for the Board to consider any issues raised, including
information as to a decision by GENY to disregard voting instructions of
policyowners. This includes, but is not limited to, reporting to the Board on
all matters referred to in the Order and in the application for the Order. The
responsibility to report such information and conflicts and to assist the Board
will be carried out with a view only to the interests of policyowners.
<PAGE>
13.2 If it is determined by either a majority of the Board of Trustees of the
Fund or a majority of its disinterested trustees, that a material irreconcilable
conflict exists, GENY shall, at its expense and to the extent reasonably
practicable (as determined by the majority of the Fund's disinterested trustees)
take whatever steps are necessary to remedy or eliminate the material
irreconcilable conflict, up to and including:
(a) withdrawing the assets allocable to the policies from the Fund (or
any series of the Fund) and reinvesting such assets in a different
investment medium, including another series of the Fund, or submitting
the question whether such segregation should be implemented to a vote
of all affected policyowners and, as appropriate, segregating the
assets of any group voting in favor of segregation, or offering to
affected policyowners the option of making such a change; and
(b) establishing a new registered management investment company or
managed separate account.
These responsibilities will be carried out with a view only to the interest of
policyowners. No penalty will be imposed by the Fund on GENY for withdrawing
assets from the Fund (or any series of the Fund) in the event of a material
irreconcilable conflict.
For purposes of this Section 13.2 a majority of the disinterested trustees shall
determine whether any proposed action adequately remedies any material
irreconcilable conflict, but in no event will the Fund or OFI be required to
establish a new funding medium for any variable contract. GENY shall not be
required by this Section 13.2 to establish a new funding medium for any variable
contract if an offer to do so has been declined by vote of a majority of the
policyowners materially adversely affected by the material irreconcilable
conflict. GENY will recommend to its policyowners that they decline an offer to
establish a new funding medium only if the company believes it in the best
interest of the policyowners.
13.3 So long as, and to the extent that the Securities and Exchange Commission
interprets the Investment Company Act of 1940 to require pass-through voting
privileges for variable policyowners, GENY will provide pass-through voting
privileges to owners of policies whose cash values are invested, through a GENY
separate account, in shares of the Fund. GENY shall be responsible for assuring
that a GENY separate account calculates voting privileges in a manner consistent
with all other policies investing in the Fund. GENY will vote shares of the Fund
held in a GENY separate account for which no timely voting instructions from
policyowners are received, as well as shares it owns, in the same proportion as
those shares for which voting instructions are received.
13.4 The Fund and GENY shall comply with Rule 6e-2, 6e-3(T) or, if adopted, 6e-3
of the Securities and Exchange Commission, if and to the extent they are amended
to provide exemptive relief with respect to mixed or shared funding.
13.5 OFI and GENY shall at least annually submit to the Fund's Board of Trustees
such reports, materials or data as the Trustees may reasonably request so that
the Trustees may fully carry out the obligations imposed upon them by the Order,
and said reports, materials and data shall be submitted more frequently if
deemed appropriate by the Trustees.
<PAGE>
13.6 The Fund hereby represents and warrants that it has not and will not sell
Fund shares to any insurance company or separate account unless an agreement
containing provisions substantially the same as Sections 13.1 through 13.5 of
this agreement is in effect to govern such sales.
13.7 Each of the undertakings in this Section 13 will survive termination of
this Agreement and will remain in effect for as long as shares of the Fund are
held by GENY for the account of its policyowners.
14. GENY agrees to indemnify and hold harmless the Fund and OFI, each member of
their Board of Trustees or Board of Directors, each of their officers, and each
person who controls the Fund within the meaning of Section 15 of The Securities
Act of 1933 against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of GENY), or any expenses of
litigation (including court costs and reasonable attorney's fees), to which the
indemnified parties may become subject under any statute or regulation or at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Fund's shares and;
(a) arise out of any untrue or allegedly untrue statements of any
material fact contained in the registration statement or prospectus for
the policies, in the policies themselves or in sales literature created
or approved by GENY for the policies, or arise out of or are based upon
the omission or alleged omission to state therein any material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that such statements or omissions were
not made in reliance upon and in conformity with information furnished
by GENY by or on behalf of the Fund or OFI; or
(b) arise out of or as a result of statements or representations or
wrongful conduct of GENY or persons under its control, with respect to
sale or distribution of the policies, provided any such statement or
representation or wrongful conduct was not made in reliance upon and in
conformity with information furnished to GENY by or on behalf of the
Fund or OFI; or
(c) arise out of any untrue or allegedly untrue statement of a material
fact contained in the Fund's registration statement, prospectus or
sales literature or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon information furnished to the Fund or OFI by GENY,
or
(d) arise as a result of a breach of this agreement or a breach of any
misrepresentation and/or warranty made by GENY in this agreement.
<PAGE>
15.1. The Fund agrees to indemnify and hold harmless GENY, each member of its
Board of Directors, each of its officers, and any person that controls GENY
within the meaning of Section 15 of The Securities Act of 1933 against any and
all losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Fund), or expenses of litigation (including
court costs and reasonable attorney's fees) to which the indemnified parties may
become subject under any statute or regulation or at common law or otherwise,
insofar as such losses, claims, damages, liabilities, or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the policies and;
(a) arise out of any untrue or allegedly untrue statement of any
material fact contained in the registration statement or prospectus or
sales literature for the Fund, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, provided that such statements or omissions were not made in
reliance upon and in conformity with information furnished to the Fund
by or on behalf of GENY; or
(b) arise out of or as a result of statements or representations or
wrongful conduct of the Fund, or persons under the control of the Fund,
with respect to sale or distribution of the policies, provided any such
statement or representation or wrongful conduct was not made in
reliance upon and in conformity with information furnished to the Fund
by or on behalf of GENY; or
(c) arise out of any untrue or allegedly untrue statement of any
material fact contained in the registration statement or prospectus for
the policies, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement therein not misleading if such statement or omission was made
in reliance upon information furnished to GENY by the Fund; or
(d) arise as a result of a breach of this agreement or a breach of any
representation and/or warranty made by the Fund in this agreement.
15.2 OFI agrees to indemnify and hold harmless GENY, each member of its Board of
Directors, each of its officers and any person that controls GENY within the
meaning of Section 15 of The Securities Act of 1933 against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of OFI), or expenses of litigation (including court costs and
reasonable attorney's fees) to which the indemnified parties may become subject
under any statute or regulation or at common law or otherwise, insofar as such
losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the policies and;
(a) arise out of any untrue or allegedly untrue statement of any
material fact contained in the registration statement or prospectus or
sales literature for the Fund, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, provided that such statements or omissions were not made in
reliance upon and in conformity with information furnished to OFI by or
on behalf of GENY; or
(b) arise out of or as a result of statements or representations or
wrongful conduct of OFI or persons under the control of OFI, with
respect to sale or distribution of the policies, provided any such
statement or representation or wrongful conduct was not made in
reliance upon and in conformity with information furnished to OFI by or
on behalf of GENY; or
<PAGE>
(c) arise out of any untrue or allegedly untrue statement of any
material fact contained in the registration statement, prospectus or
sales literature for the policies, or the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading if such
statement or omission was made in reliance upon information furnished
to GENY by OFI; or
(d) arise as a result of a breach of this agreement or a breach of any
representation and/or warranty made by OFI in this agreement.
16. The indemnification provided under Sections 14, 15.1 and 15.2 shall not be
available to an indemnified party if the loss, claim, damages, liability or
litigation for which indemnification is sought resulted from such indemnified
party's willful misfeasance, bad faith or gross negligence in the performance of
such indemnified party's duties or by reason of such indemnified party's
reckless disregard of obligations and duties under this agreement.
17. No indemnification shall be available under Sections 14, 15.1 or 15.2 unless
the indemnified party gave written notice of the nature of the claim for which
indemnification is sought to the party from whom indemnification is sought. Said
notice must be given within a reasonable time after the summons or other initial
legal process giving information as to the nature of the claim is served upon
the indemnified party. However, failure to notify the party against whom
indemnification is sought shall not relieve that party of any liability which it
might have in the absence of Sections 14, 15.1 and 15.2 of this agreement.
18. In the event that an action is brought against a party indemnified under
Sections 14, 15.1 or 15.2, the party owning the obligation to indemnify (the
"indemnifying party") may participate, at its own expense in the defense
thereof. The indemnifying party may also assume the defense of any such action,
with counsel satisfactory to the indemnified party. After the indemnifying party
notifies the indemnified party of its intention to assume the defense of an
action, the indemnified party shall bear the expenses of any additional counsel
obtained by it, and the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by the
indemnified party independently in connection with the defense thereof.
19. Subject to the requirements of legal process and regulatory authorities,
each party to this agreement shall treat as confidential the names and addresses
of the owners of the policies.
20. Each party to this agreement shall cooperate with the other parties and with
all governmental authorities (including without limitation, the Securities and
Exchange Commission, the NASD and the state insurance and securities regulators)
and shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this agreement or the
transactions contemplated hereby.
21. This agreement may be terminated by any party upon six month's advance
written notice to the other parties.
<PAGE>
20.1. GENY shall have the right, at all reasonable times, to inspect, audit and
copy all records of the Fund and/or OFI that pertain to the Fund's or OFI's
performance of their obligations under this agreement.
22. OFI and GENY each understands that the obligations of the Fund under this
Agreement are not binding upon any shareholder or Trustee of the Fund
personally, but bind only the Fund and the Fund's property; OFI and GENY each
represent that it has notice of the provisions of the Declaration of Trust of
the Fund disclaiming shareholder and Trustee liability for acts or obligations
of the Fund.
IN WITNESS WHEREOF, GENY, the Fund and OFI has caused this agreement to be
duly executed as of the day and year first above written.
GE Capital Life Assurance Company of New York
By: __________________________________________
Title: President and Chief Executive Officer
Oppenheimer Variable Account Funds
By: ___________________________________________
Title: Vice President and Secretary
OppenheimerFunds, Inc.
By: ____________________________________________
Title: Executive Vice President
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SCHEDULE A
Portfolios of Oppenheimer Variable Account Funds:
Oppenheimer High Income Fund
Oppenheimer Bond Fund
Oppenheimer Aggressive Growth Fund
Oppenheimer Growth Fund
Oppenheimer Multiple Strategies Fund
A-1
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SCHEDULE B
GE Capital Life Separate Account II
B-1
<PAGE>
SCHEDULE C
Individual Deferred Variable Annuity Policy - Form NY 1066
C-1
8 (vi)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 29th day of May, 1998, by and between the
PBHG INSURANCE SERIES FUND, INC. ("FUND"), a Maryland corporation, PILGRIM
BAXTER & ASSOCIATES, LTD. ("Adviser"), a Delaware corporation, GE CAPITAL LIFE
ASSURANCE COMPANY OF NEW YORK ("LIFE COMPANY"), a life insurance company
organized under the laws of the State of New York.
WHEREAS, FUND is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "`40 Act"), as
an open-end, diversified management investment company; and
WHEREAS, FUND is organized as a series fund comprised of several
Portfolios ("Portfolios"), with those currently available being listed on
Appendix A hereto; and
WHEREAS, FUND was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts ("Separate
Accounts") of such life insurance companies ("Participating Insurance
Companies"); and
WHEREAS, FUND may also offer its shares to certain qualified pension
and retirement plans ("Qualified Plans"); and
WHEREAS, FUND will apply for an order from the SEC, granting
Participating Insurance Companies and their separate accounts exemptions from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the `40 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Portfolios of the FUND to be sold to and held by Variable
Contract separate accounts of both affiliated and unaffiliated Participating
Insurance Companies and Qualified Plans ("Exemptive Order"); and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having FUND as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, ADVISER is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940 and as a broker-dealer under the
Securities Exchange Act of 1934, as amended and acts as the FUND's investment
adviser; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of FUND to fund the
aforementioned Variable Contracts and FUND is authorized to sell such shares to
LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE
COMPANY, FUND, and ADVISER agree as follows:
Article I. SALE OF FUND SHARES
1.1 FUND agrees to make available to the Separate Accounts of LIFE
COMPANY shares of the selected Portfolios as listed on Appendix B for investment
of purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in FUND's Registration Statement.
1.2 FUND agrees to sell to LIFE COMPANY those shares of the selected
Portfolios of FUND which LIFE COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by FUND or its designee
of the order for the shares of FUND. For purposes of this Section 1.2, LIFE
COMPANY shall be the designee of FUND for receipt of such orders from the
designated Separate Account and receipt by such designee shall constitute
receipt by FUND; provided that LIFE COMPANY receives the order by 4:00 p.m. New
York time and FUND receives notice from LIFE COMPANY by telephone or facsimile
(or by such other means as FUND and LIFE COMPANY may agree in writing) of such
order by 8:30 a.m. New York time on the next following Business Day. "Business
Day" shall mean any day on which the New York Stock Exchange is open for trading
and on which FUND calculates its net asset value pursuant to the rules of the
SEC.
1.3 FUND agrees to redeem on LIFE COMPANY's request, any full or
fractional shares of FUND held by LIFE COMPANY, executing such requests on a
daily basis at the net asset value next computed after receipt by FUND or its
designee of the request for redemption, in accordance with the provisions of
this agreement and FUND's Registration Statement. For purposes of this Section
1.3, LIFE COMPANY shall be the designee of FUND for receipt of requests for
redemption from the designated Separate Account and receipt by such designee
shall constitute receipt by FUND; provided that LIFE COMPANY receives the
request for redemption by 4:00 p.m. New York time and FUND receives notice from
LIFE COMPANY by telephone or facsimile (or by such other means as FUND and LIFE
COMPANY may agree in writing) of such request for redemption by 8:30 a.m. New
York time on the next following Business Day.
1.4 FUND shall furnish, on or before the ex-dividend date, notice to
LIFE COMPANY of any income dividends or capital gain distributions payable on
the shares of any Portfolio of FUND. LIFE COMPANY hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. FUND shall notify LIFE
COMPANY or its designee of the number of shares so issued as payment of such
dividends and distributions.
1.5 FUND shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 7:00 p.m. New York time.
If FUND provides LIFE COMPANY with incorrect share net asset value information
through no fault of LIFE COMPANY, LIFE COMPANY on behalf of the Separate
Accounts, shall be entitled to an adjustment to the number of shares purchased
or redeemed to reflect the correct share net asset value. Any error in the
calculation of net asset value per share, dividend or capital gain information
shall be reported promptly upon discovery to LIFE COMPANY.
1.6 At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of FUND shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined shall
be transmitted to FUND by LIFE COMPANY by 8:30 a.m. New York Time on the
Business Day next following LIFE COMPANY's receipt of such requests and premiums
in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If LIFE COMPANY's order requests the purchase of FUND shares, LIFE
COMPANY shall pay for such purchase by wiring federal funds to FUND or its
designated custodial account on the day the order is transmitted by LIFE
COMPANY. If LIFE COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to LIFE COMPANY, FUND shall use its best efforts
to wire the redemption proceeds to LIFE COMPANY by the next Business Day, unless
doing so would require FUND to dispose of Portfolio securities or otherwise
incur additional costs. In any event, proceeds shall be wired to LIFE COMPANY
within three Business Days or such longer period permitted by the '40 Act or the
rules, orders or regulations thereunder and FUND shall notify the person
designated in writing by LIFE COMPANY as the recipient for such notice of such
delay by 3:00 p.m. New York Time the same Business Day that LIFE COMPANY
transmits the redemption order to FUND.
1.8 FUND agrees that all shares of the Portfolios of FUND will be sold
only to Participating Insurance Companies which have agreed to participate in
FUND to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h) of the Internal Revenue Code
of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of the
Portfolios of FUND will not be sold directly to the general public.
1.9 FUND may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of or liquidate any Portfolio of
FUND if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board of Directors of the FUND
(the "Board"), acting in good faith and in light of its duties under federal and
any applicable state laws, deemed necessary, desirable or appropriate and in the
best interests of the shareholders of such Portfolios.
1.10 Issuance and transfer of Portfolio shares will be by book entry
only. Stock certificates will not be issued to LIFE COMPANY or the Separate
Accounts. Shares ordered from Portfolio will be recorded in appropriate book
entry titles for the Separate Accounts.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 LIFE COMPANY represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the State of New
York and that it has legally and validly established each Separate Account as a
segregated asset account under such laws, and that Capital Brokerage
Corporation, the principal underwriter for the Variable Contracts, is registered
as a broker-dealer under the Securities Exchange Act of 1934 (the "'34 Act").
2.2 LIFE COMPANY represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the `40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable Contracts
will be registered under the Securities Act of 1933 (the "`33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and further that the sale of the Variable Contracts shall comply in all material
respects with applicable state insurance law suitability requirements.
2.4 LIFE COMPANY represents and warrants that the Variable Contracts
are currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify FUND immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.5 FUND represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and FUND shall be
registered under the `40 Act prior to and at the time of any issuance or sale of
such shares. FUND, subject to Section 1.9 above, shall amend its registration
statement under the `33 Act and the `40 Act from time to time as required in
order to effect the continuous offering of its shares. FUND shall register and
qualify its shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by FUND.
2.6 FUND represents and warrants that each Portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately diversify
the Portfolio to achieve compliance.
2.7 FUND represents and warrants that each Portfolio invested in by the
Separate Account intends to elect to be treated as a "regulated investment
company" under Subchapter M of the Code, and to qualify for such treatment for
each taxable year and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
2.8. ADVISER represents and warrants that it is and will remain duly
registered and licensed in all material respects under all applicable federal
and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal laws.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 FUND shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of FUND. FUND
shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes and filing fees to which an issuer is subject on the issuance and
transfer of its shares.
3.2 At least annually, FUND or its designee shall provide LIFE COMPANY,
free of charge, with as many copies of the current prospectus for the shares of
the Portfolios as LIFE COMPANY may reasonably request for distribution to
existing Variable Contract owners whose Variable Contracts are funded by such
shares. FUND or its designee shall provide LIFE COMPANY, at LIFE COMPANY's
expense, with as many copies of the current prospectus for the shares as LIFE
COMPANY may reasonably request for distribution to prospective purchasers of
Variable Contracts. If requested by LIFE COMPANY in lieu thereof, FUND or its
designee shall provide such documentation (including a "camera ready" copy of
the new prospectus as set in type or, at the request of LIFE COMPANY, as a
diskette in the form sent to the financial printer) and other assistance as is
reasonably necessary in order for the parties hereto once a year (or more
frequently if the prospectus for the shares is supplemented or amended) to have
the prospectus for the FUND shares and the prospectuses for other funds serving
as underlying investments for the Variable Contract printed together in one
document. The expenses of such printing will be apportioned between (a) LIFE
COMPANY and (b) FUND in proportion to the number of pages of the FUND's
prospectus and the total number of pages of prospectus of other underlying
funds, taking account of other relevant factors affecting the expense of
printing, such as covers, columns, graphs and charts; FUND to bear the cost of
printing the FUND's prospectus portion of such document for distribution only to
owners of existing Variable Contracts funded by the FUND's shares and LIFE
COMPANY to bear the remaining expense; provided, however, LIFE COMPANY shall
bear all printing expenses of such combined documents where used for
distribution to prospective purchasers or to owners of existing Variable
Contracts not funded by the FUND's shares. In the event that LIFE COMPANY
requests that FUND or its designee provide FUND's prospectus in a "camera ready"
or diskette format, FUND shall be responsible for providing the prospectus in
the format in which it is accustomed to formatting prospectuses and shall bear
the expense of providing the prospectus in such format (e.g. typesetting
expenses), and LIFE COMPANY shall bear the expense of adjusting or changing the
format to conform with any of its prospectuses.
3.3 FUND will provide LIFE COMPANY with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory authority. LIFE
COMPANY will provide FUND with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or supplements to any of
the above that relate to a Separate Account promptly after the filing of each
such document with the SEC or other regulatory authority.
Article IV. SALES MATERIALS
4.1 LIFE COMPANY will furnish, or will cause to be furnished, to FUND
and ADVISER, each piece of sales literature or other promotional material in
which FUND or ADVISER is named, at least ten (10) Business Days prior to its
intended use. No such material will be used if FUND or ADVISER objects to its
use in writing within five (5) Business Days after receipt of such material.
4.2 FUND and ADVISER will furnish, or will cause to be furnished, to
LIFE COMPANY, each piece of sales literature or other promotional material in
which LIFE COMPANY or its Separate Accounts are named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if LIFE
COMPANY objects to its use in writing within ten (10) Business Days after
receipt of such material.
4.3 FUND and its affiliates and agents shall not give any information
or make any representations on behalf of LIFE COMPANY or concerning LIFE
COMPANY, the Separate Accounts, or the Variable Contracts issued by LIFE
COMPANY, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts or reports prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by LIFE COMPANY or its designee, except with
the prior written permission of LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of FUND or concerning FUND
other than the information or representations contained in a registration
statement or prospectus for FUND, as such registration statement and prospectus
may be amended or supplemented from time to time, or in sales literature or
other promotional material approved by FUND or its designee, except with the
prior written permission of FUND.
4.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use, in
a newspaper, magazine or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures or other
public media), sales literature (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under National Association of Securities Dealers, Inc.
("NASD") rules, the `40 Act or the '33 Act.
Article V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that FUND has filed an application with the
SEC to request an order granting relief from various provisions of the '40 Act
and the rules thereunder to the extent necessary to permit FUND shares to be
sold to and held by Variable Contract separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and Qualified Plans. The
Exemptive Order issued as a result of that application requires FUND and each
Participating Insurance Company to comply with conditions and undertakings
substantially as provided in this Section 5. The Fund will not enter into a
participation agreement with any other Participating Insurance Company unless it
imposes the same conditions and undertakings as are imposed on LIFE COMPANY
hereby.
5.2 The Board of Directors of the Fund (the "Board") will monitor FUND
for the existence of any material irreconcilable conflict between the interests
of Variable Contract owners of all separate accounts investing in FUND and
between the interests of Qualified Plan Participants, if any, and Variable
Contract Owners investing in Fund. An irreconcilable material conflict may arise
for a variety of reasons, which may include: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling or any similar action by insurance, tax or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of FUND are being managed;
(e) a difference in voting instructions given by Variable Contract owners,
Qualified Plans or Qualified Plan Participants, if any; (f) a decision by a
Participating Insurance Company to disregard the voting instructions of Variable
Contract owners and (g) if applicable, a decision by a Qualified Plan to
disregard the voting instructions of plan participants.
5.3 LIFE COMPANY will report any potential or existing conflicts to the
Board. LIFE COMPANY will be responsible for assisting the Board in carrying out
its duties in this regard by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. The responsibility
includes, but is not limited to, an obligation by the LIFE COMPANY to inform the
Board whenever it has determined to disregard Variable Contract owner voting
instructions. These responsibilities of LIFE COMPANY will be carried out with a
view only to the interests of the Variable Contract owners.
5.4 If a majority of the Board or majority of its disinterested
Directors, determines that a material irreconcilable conflict exists affecting
LIFE COMPANY, LIFE COMPANY, at its expense and to the extent reasonably
practicable (as determined by a majority of the Board's disinterested
Directors), will take any steps necessary to remedy or eliminate the
irreconcilable material conflict, including; (a) withdrawing the assets
allocable to some or all of the Separate Accounts from FUND or any Portfolio
thereof and reinvesting those assets in a different investment medium, which may
include another Portfolio of FUND, or another investment company; (b) submitting
the question as to whether such segregation should be implemented to a vote of
all affected Variable Contract owners and as appropriate, segregating the assets
of any appropriate group (i.e variable annuity or variable life insurance
Contract owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Variable Contract owners
the option of making such a change; and (c) establishing a new registered
management investment company (or series thereof) or managed separate account.
If a material irreconcilable conflict arises because of LIFE COMPANY's decision
to disregard Variable Contract owner voting instructions, and that decision
represents a minority position or would preclude a majority vote, LIFE COMPANY
may be required, at the election of FUND, to withdraw the Separate Account's
investment in FUND, and no charge or penalty will be imposed as a result of such
withdrawal. The responsibility to take such remedial action shall be carried out
with a view only to the interests of the Variable Contract owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
FUND or ADVISER (or any other investment adviser of FUND) be required to
establish a new funding medium for any Variable Contract. Further, LIFE COMPANY
shall not be required by this Section 5.4 to establish a new funding medium for
any Variable Contracts if any offer to do so has been declined by a vote of a
majority of Variable Contract owners materially and adversely affected by the
irreconcilable material conflict.
5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to LIFE COMPANY.
5.6 No less than annually, LIFE COMPANY shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out its obligations under the Exemptive Order. Such reports,
materials, and data shall be submitted more frequently if deemed appropriate by
the Board.
<PAGE>
Article VI. VOTING
6.1 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the `40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, LIFE COMPANY, where applicable, will vote shares of the Portfolio
held in its Separate Accounts in a manner consistent with voting instructions
timely received from its Variable Contract owners. LIFE COMPANY will be
responsible for assuring that each of its Separate Accounts that participates in
FUND calculates voting privileges in a manner consistent with other
Participating Insurance Companies. LIFE COMPANY will vote shares for which it
has not received timely voting instructions, as well as shares it owns, in the
same proportion as its votes those shares for which it has received voting
instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the `40
Act or the rules thereunder with respect to mixed and shared funding on terms
and conditions materially different from any exemptions granted in the Exemptive
Order, then FUND, and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-2 and Rule
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are
applicable.
Article VII. INDEMNIFICATION
7.1 Indemnification by LIFE COMPANY. LIFE COMPANY agrees to indemnify
and hold harmless FUND, ADVISER and each of their directors, principals,
officers, employees and agents and each person, if any, who controls FUND or
ADVISER within the meaning of Section 15 of the `33 Act (collectively, the
"Indemnified Parties" for purposes of this Article VII) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of LIFE COMPANY, which consent shall not be unreasonably
withheld) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of FUND's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the Registration Statement or prospectus or sales literature
for the Variable Contracts or contained in the Variable
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to LIFE COMPANY by or
on behalf of FUND for use in the registration statement or
prospectus for the Variable Contracts or in the Variable
Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale
of the Variable Contracts or FUND shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of FUND
not supplied by LIFE COMPANY, or persons under its control) or
wrongful conduct of LIFE COMPANY or persons under its control,
with respect to the sale or distribution of the Variable
Contracts or FUND shares; or
(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature of FUND or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to FUND for inclusion
therein by or on behalf of LIFE COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to provide
substantially the services and furnish the materials under the
terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in this
Agreement or arise out of or result from any other material
breach of this Agreement by LIFE COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
7.3 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY of any
such claim shall not relieve LIFE COMPANY from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to participate at
its own expense in the defense of such action. LIFE COMPANY also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from LIFE COMPANY to such party of LIFE
COMPANY's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and LIFE
COMPANY will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.4 Indemnification by ADVISER. ADVISER agrees to indemnify and hold
harmless LIFE COMPANY and each of its directors, officers, employees, and agents
and each person, if any, who controls LIFE COMPANY within the meaning of Section
15 of the `33 Act (collectively, the "Indemnified Parties" for the purposes of
this Article VII) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of ADVISER which
consent shall not be unreasonably withheld) or litigation (including legal and
other expenses) to which the Indemnified Parties may become subject under any
statute, or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of FUND's shares or the
Variable Contracts and:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement or prospectus or sales
literature of FUND (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance
upon and in conformity with information furnished to
ADVISER or FUND by or on behalf of LIFE COMPANY for use in
the registration statement or prospectus for FUND or in
sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Variable Contracts or FUND shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for
the Variable Contracts not supplied by ADVISER or persons
under its control) or wrongful conduct of FUND or ADVISER or
persons under their control, with respect to the sale or
distribution of the Variable Contracts or FUND shares; or
(c) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature covering the
Variable Contracts, or any amendment thereof or supplement
thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not
misleading, if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished to LIFE
COMPANY for inclusion therein by or on behalf of FUND; or
(d) arise as a result of (i) a failure by FUND to provide
substantially the services and furnish the materials under
the terms of this Agreement; or (ii) a failure by a
Portfolio(s) invested in by the Separate Account to comply
with the diversification requirements of Section 817(h) of
the Code; or (iii) a failure by a Portfolio(s) invested in
by the Separate Account to qualify as a "regulated
investment company" under Subchapter M of the Code; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by ADVISER or FUND in
this Agreement or arise out of or result from any other
material breach of this Agreement by ADVISER or FUND.
7.5 ADVISER shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement.
7.6 ADVISER shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified ADVISER in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify ADVISER of any such claim shall not
relieve ADVISER from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, ADVISER shall be entitled to participate at its own expense
in the defense thereof. ADVISER also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from ADVISER to such party of ADVISER's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and ADVISER will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of LIFE COMPANY or FUND at any time from the
date hereof upon six (6) months' prior written notice,
unless a shorter time is agreed to by the parties;
(b) At the option of LIFE COMPANY, if FUND shares are not
reasonably available to meet the requirements of the
Variable Contracts as determined by LIFE COMPANY. Prompt
notice of election to terminate shall be furnished by LIFE
COMPANY, said termination to be effective ten days after
receipt of notice unless FUND makes available a sufficient
number of shares to reasonably meet the requirements of the
Variable Contracts within said ten-day period;
(c) At the option of LIFE COMPANY, upon the institution of
formal proceedings against FUND by the SEC, the NASD, or any
other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in LIFE COMPANY's
reasonable judgment, materially impair FUND's ability to
meet and perform FUND's obligations and duties hereunder.
Prompt notice of election to terminate shall be furnished by
LIFE COMPANY with said termination to be effective upon
receipt of notice;
(d) At the option of FUND, upon the institution of formal
proceedings against LIFE COMPANY by the SEC, the NASD, or
any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in FUND's
reasonable judgment, materially impair LIFE COMPANY's
ability to meet and perform its obligations and duties
hereunder. Prompt notice of election to terminate shall be
furnished by FUND with said termination to be effective upon
receipt of notice;
(e) In the event FUND's shares are not registered, issued or
sold in accordance with applicable state or federal law, or
such law precludes the use of such shares as the underlying
investment medium of Variable Contracts issued or to be
issued by LIFE COMPANY. Termination shall be effective upon
such occurrence without notice;
(f) At the option of FUND if the Variable Contracts cease to
qualify as annuity contracts or life insurance contracts, as
applicable, under the Code, or if FUND reasonably believes
that the Variable Contracts may fail to so qualify.
Termination shall be effective upon receipt of notice by
LIFE COMPANY;
(g) At the option of LIFE COMPANY, upon FUND's breach of any
material provision of this Agreement, which breach has not
been cured to the satisfaction of LIFE COMPANY within ten
days after written notice of such breach is delivered to
FUND;
(h) At the option of FUND, upon LIFE COMPANY's breach of any
material provision of this Agreement, which breach has not
been cured to the satisfaction of FUND within ten days after
written notice of such breach is delivered to LIFE COMPANY;
(i) At the option of FUND, if the Variable Contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law. Termination shall be effective
immediately upon such occurrence without notice;
(j) In the event this Agreement is assigned without the prior
written consent of LIFE COMPANY, FUND, and ADVISER,
termination shall be effective immediately upon such
occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, the FUND and the ADVISER at the option of LIFE COMPANY shall
continue to make available additional shares of the Fund pursuant to the terms
of this Agreement, for all Variable Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, the owners of Existing Contracts or LIFE
COMPANY, whichever shall have the legal authority to do so, shall be permitted
to reallocate investment in the FUND, redeem investments in the FUND and/or
invest in the FUND upon the making of additional premium payments under the
Existing Contracts. The parties agree that this Section 8.3 shall not apply to
any terminations under Article V of this Agreement.
8.4 In the event of a termination of this Agreement pursuant to Section
8.2 hereof, LIFE COMPANY, as promptly as practicable under the circumstances,
shall notify FUND and ADVISER that it wishes to exercise the option afforded by
Section 8.3 hereof.
8.5 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations or as
permitted by order of the Securities and Exchange Commission, LIFE COMPANY shall
not redeem the shares attributable to the Variable Contracts (as opposed to the
shares attributable to LIFE COMPANY's assets held in the Separate Accounts), and
LIFE COMPANY shall not prevent Variable Contract owners from allocating payments
to a Portfolio that was otherwise available under the Variable Contracts until
thirty (30) days after the LIFE COMPANY shall have notified FUND of its
intention to do so.
<PAGE>
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail
return receipt requested to the other party at the address of such party set
forth below or at such other address as such party may from time to time specify
in writing to the other party.
If to FUND:
PBHG Insurance Series Fund, Inc.
825 Duportail Road
Wayne, PA 19087
Attention: Mr. Brian F. Bereznak
With a copy to:
PBHG Insurance Series Fund, Inc.
825 Duportail Road
Wayne, PA 19087
Attention: John M. Zerrr, Esq.
If to the ADVISER:
PBHG Insurance Series Fund, Inc.
825 Duportail Road
Wayne, PA 19087
Attention: Mr. Brian F. Bereznak
With a copy to:
PBHG Insurance Series Fund, Inc.
825 Duportail Road
Wayne, PA 19087
Attention: John M. Zerrr, Esq.
If to LIFE COMPANY:
G.E. Capital Life Assurance Company of New York
6610 West Broad Street
Richmond, VA 23230
Attn: Linda L. Lanam
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Pennsylvania. It shall also be subject to the provisions of the federal
securities laws and the rules and regulations thereunder and to any orders of
the SEC granting exemptive relief therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the
shareholders of shares of any Portfolio nor the Directors or officers of FUND or
any Portfolio shall be personally liable hereunder. No Portfolio shall be liable
for the liabilities of any other Portfolio. All persons dealing with FUND or a
Portfolio must look solely to the property of FUND or that Portfolio,
respectively, for enforcement of any claims against FUND or that Portfolio. It
is also understood that each of the Portfolios shall be deemed to be entering
into a separate Agreement with LIFE COMPANY so that it is as if each of the
Portfolios had signed a separate Agreement with LIFE COMPANY and that a single
document is being signed simply to facilitate the execution and administration
of the Agreement.
10.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
10.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
10.8 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by FUND,
ADVISER and the LIFE COMPANY.
<PAGE>
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
PBHG INSURANCE SERIES FUND, INC.
By:_____________________________
Name:
Title:
PILGRIM BAXTER & ASSOCIATES, LTD.
By:_____________________________
Name:
Title:
G.E. CAPITAL LIFE ASSURANCE COMPANY
OF NEW YORK
By:______________________________
Name:
Title:
<PAGE>
Appendix A
PBHG Insurance Series Fund, Inc. - Portfolios
PBHG Growth II Portfolio
PBHG Large Cap Growth Portfolio
<PAGE>
Appendix B
Separate Accounts Selected Portfolios
G.E. Capital Life Separate Account II PBHG Growth II
PBHG Large Cap Growth
8 (vii)
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
G.E. CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of the 8th day of May,
1998 by and among G.E. CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK, (hereinafter
the "Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated business
trust organized under the laws of the Commonwealth of Massachusetts (hereinafter
the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
<PAGE>
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser")
is duly registered as an investment adviser under the federal Investment
Advisers Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain
variable life insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is or will, before it purchases any Fund
shares, be a duly organized, validly existing segregated asset account,
established by resolution of the Board of Directors of the Company, on the date
shown for such Account on Schedule A hereto, to set aside and invest assets
attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (hereinafter
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Underwriter is authorized to sell such shares
to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares
of the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Boston time on
the next following Business Day. "Business Day" shall mean any day on which the
New York Stock Exchange is open for trading and on which the Fund calculates its
net asset value pursuant to the rules of the Securities and Exchange Commission.
<PAGE>
1.2. The Fund agrees to make its shares available indefinitely
for purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund
will be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to
any insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Section 2.5 of
Article II of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of
Portfolio shares offered by the then current prospectus of the Fund shall be
made in accordance with the provisions of such prospectus. The Company agrees
that all net amounts available under the variable annuity contracts with the
form number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, as such Schedule A may be amended from time to time
hereafter by mutual written agreement of all the parties hereto, (the
"Contracts") shall be invested in the Fund, in such other Funds advised by the
Adviser as may be mutually agreed to in writing by the parties hereto, or in the
Company's general account, provided that such amounts may also be invested in an
investment company other than the Fund if (a) such other investment company, or
series thereof, has investment objectives or policies that are substantially
different from the investment objectives and policies of all the Portfolios of
the Fund; or (b) the Company gives the Fund and the Underwriter 45 days written
notice of its intention to make such other investment company available as a
funding vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to their
signing this Agreement (a list of such funds appearing on Schedule C to this
Agreement); or (d) the Fund or Underwriter consents to the use of such other
investment company.
1.7. The Company shall pay for Fund shares on the next Business
Day after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are
or will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 4240 of the New York Insurance Law and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
<PAGE>
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of New
York and all applicable federal and state securities laws and that the Fund is
and shall remain registered under the 1940 Act. The Fund shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently
treated as endowment, annuity or life insurance contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states except that the Fund represents that the Fund's investment
policies, fees and expenses are and shall at all times remain in compliance with
the laws of the State of New York and the Fund and the Underwriter represent
that their respective operations are and shall at all times remain in material
compliance with the laws of the State of New York to the extent required to
perform this Agreement.
<PAGE>
2.7. The Underwriter represents and warrants that it is a member
in good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of New York and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is
and shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of New York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and will be covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimum coverage as required
currently of entities subject to the requirements of Rule 17g-1 of the 1940 Act
or related provisions as may be promulgated from time to time. The aforesaid
bond shall include coverage for larceny and embezzlement and shall be issued by
a reputable bonding company.
<PAGE>
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many
printed copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the Company
in lieu thereof, the Fund shall provide camera-ready film containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following three
sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure annually as
required by the 1933 Act and/or the 1940 Act, the cost of printing shall be
borne by the Fund. If the Company chooses to receive camera-ready film in lieu
of receiving printed copies of the Fund's prospectus, the Fund will reimburse
the Company in an amount equal to the product of A and B where A is the number
of such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3.1) to shareholders in such quantity
as the Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in a particular separate account in the
same proportion as Fund shares of such portfolio for
which instructions have been received in that
separate account,
<PAGE>
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material. The Fund or its designee
will use reasonable efforts to review materials within a shorter time period if
the Company makes a request for expedited review in a letter accompanying such
materials.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
<PAGE>
4.4. The Fund and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
of the following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
<PAGE>
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or other
resources available to the Underwriter. No such payments shall be made directly
by the Fund.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the
Fund's prospectus, proxy materials and reports to owners of Contracts issued by
the Company.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts
in such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
<PAGE>
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts
of which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a
majority of its disinterested trustees, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
<PAGE>
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
<PAGE>
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the
Fund and each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by
or on behalf of the Fund for use in the Registration Statement
or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature of the Fund not supplied by the Company, or persons
under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms
of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c)
hereof.
<PAGE>
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation to which an Indemnified Party
would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is
applicable.
8.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have
notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of
the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but
failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own expense, in
the defense of such action. The Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Company to such
party of the Company's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs
of investigation.
8.1(d). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Fund
Shares or the Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless
the Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
<PAGE>
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any material
fact contained in the Registration Statement or
prospectus or sales literature of the Fund (or any
amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or
such alleged statement or omission was made in
reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf
of the Company for use in the Registration Statement
or prospectus for the Fund or in sales literature (or
any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
<PAGE>
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
result from the gross negligence, bad faith or willful misconduct of the Board
or any member thereof, are related to the operations of the Fund and:
<PAGE>
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure to
comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to
notify the Fund of the commencement of any litigation or proceedings against it
or any of its respective officers or directors in connection with this
Agreement, the issuance or sale of the Contracts, with respect to the operation
of an Account, or the sale or acquisition of shares of the Fund.
<PAGE>
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by ninety (90)
days advance written notice delivered to the other
parties; or
(b) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio based
upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued
or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under
any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify;
or
<PAGE>
(e) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio fails to meet the
diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both of
the Fund or the Underwriter respectively, shall determine,
in their sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a
material adverse change in its business, operations,
financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that either the
Fund or the Underwriter has suffered a material adverse
change in its business, operations, financial condition or
prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written
notice to the Company, if the Company gives the Fund and
the Underwriter the written notice specified in Section
1.6(b) hereof and at the time such notice was given there
was no notice of termination outstanding under any other
provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective
forty five (45) days after the notice specified in Section
1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
<PAGE>
10.3 The Company shall not redeem Fund shares attributable to
the Contracts (as opposed to Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
G.E. Capital Life Assurance Company of New York
6610 West Broad Street
Richmond, New York 23230
Attention: Linda L. Lanam
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
<PAGE>
12.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
The Company shall promptly notify the Fund and the Underwriter of any change in
control of the Company.
12.9. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared for
filing with the New York Insurance Department
under statutory accounting principles) and annual
report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon
as practical and in any event within 120 days
after the end of each fiscal year;
(b) the Company's quarterly statutory statements, as
soon as practical and in any event within 45 days
after the end of each quarterly period:
<PAGE>
(c) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state
insurance regulator, as soon as practical after
the filing thereof;
(d) any other report submitted to the Company by
independent accountants in connection with any
annual, interim or special audit made by them of
the books of the Company, as soon as practical
after the receipt thereof. However, the Company
shall be under no obligation to provide any such
reports that contain privileged or confidential
information.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
G.E. CAPITAL LIFE ASSURANCE COMPANY
By: _________________________
Name: _________________________
Title: _________________________
VARIABLE INSURANCE PRODUCTS FUND
By: ________________________
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Kevin J. Kelly
President
<PAGE>
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Policy Form Numbers of Contracts Funded
Date Established by Board of Directors By Separate Account
G. E. Capital Life Separate Account II NY 1066
(April 1, 1996)
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At
this time the Underwriter will inform the Company of the Record, Mailing
and Meeting dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Legal
Department of the Underwriter or its affiliate ("Fidelity Legal") must
approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found
on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes (already on Cards as printed by the
Fund)
<PAGE>
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed
to the Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is
important. One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and
reviewed and approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
<PAGE>
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible)
of the procedure are "hand verified," i.e., examined as to why they did
not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity
Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Fidelity Variable Insurance Products Fund II
Asset Manager Portfolio
Contrafund Portfolio
Fidelity Variable Insurance Products Fund III:
Growth & Income Portfolio
Growth Opportunities Portfolio
G.E. Investments Funds, Inc.
Money Market Fund
Income Fund
S & P 500 Index Fund
Total Return Fund
International Equity Fund
Real Estate Securities Fund
Value Equity Fund
Global Income Fund
Oppenheimer Variable Account Funds
Oppenheimer High Income Fund
Oppenheimer Bond Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Multiple Strategies Fund
Janus Aspen Series
Growth Portfolio
Aggressive Growth Portfolio
Worldwide Growth Portfolio
International Growth Portfolio
Balanced Portfolio
Flexible Income Portfolio
Capital Appreciation Portfolio
Federated Insurance Series
Federated Utility Fund II
Federated High Income Bond Fund II
Federated American Leaders Fund II
The Alger American Fund:
Alger American Growth Portfolio
Alger American Small Capitalization Portfolio
PBHG Insurance Series Fund, Inc.
PBHG Growth II Portfolio
PBHG Large Cap Growth Portfolio
Goldman Sachs Variable Insurance Trust
Mid Cap Equity Fund
Growth and Income Fund
8 (viii)
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
G.E. CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of the 8th day of May,
1998 by and among G.E. CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK, (hereinafter
the "Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND II, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
<PAGE>
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser")
is duly registered as an investment adviser under the federal Investment
Advisers Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain
variable life insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is or will, before it purchases any Fund
shares, be a duly organized, validly existing segregated asset account,
established by resolution of the Board of Directors of the Company, on the date
shown for such Account on Schedule A hereto, to set aside and invest assets
attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (hereinafter
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Underwriter is authorized to sell such shares
to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares
of the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Boston time on
the next following Business Day. "Business Day" shall mean any day on which the
New York Stock Exchange is open for trading and on which the Fund calculates its
net asset value pursuant to the rules of the Securities and Exchange Commission.
<PAGE>
1.2. The Fund agrees to make its shares available indefinitely
for purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund
will be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to
any insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Section 2.5 of
Article II of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of
Portfolio shares offered by the then current prospectus of the Fund shall be
made in accordance with the provisions of such prospectus. The Company agrees
that all net amounts available under the variable annuity contracts with the
form number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, as such Schedule A may be amended from time to time
hereafter by mutual written agreement of all the parties hereto, (the
"Contracts") shall be invested in the Fund, in such other Funds advised by the
Adviser as may be mutually agreed to in writing by the parties hereto, or in the
Company's general account, provided that such amounts may also be invested in an
investment company other than the Fund if (a) such other investment company, or
series thereof, has investment objectives or policies that are substantially
different from the investment objectives and policies of all the Portfolios of
the Fund; or (b) the Company gives the Fund and the Underwriter 45 days written
notice of its intention to make such other investment company available as a
funding vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to their
signing this Agreement (a list of such funds appearing on Schedule C to this
Agreement); or (d) the Fund or Underwriter consents to the use of such other
investment company.
<PAGE>
1.7. The Company shall pay for Fund shares on the next Business
Day after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are
or will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 4240 of the New York Insurance Law and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
<PAGE>
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of New
York and all applicable federal and state securities laws and that the Fund is
and shall remain registered under the 1940 Act. The Fund shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently
treated as endowment, annuity or life insurance contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states except that the Fund represents that the Fund's investment
policies, fees and expenses are and shall at all times remain in compliance with
the laws of the State of New York and the Fund and the Underwriter represent
that their respective operations are and shall at all times remain in material
compliance with the laws of the State of New York to the extent required to
perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member
in good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of New York and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
<PAGE>
2.8. The Fund represents that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is
and shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of New York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and will be covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimum coverage as required
currently of entities subject to the requirements of Rule 17g-1 of the 1940 Act
or related provisions as may be promulgated from time to time. The aforesaid
bond shall include coverage for larceny and embezzlement and shall be issued by
a reputable bonding company.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many
printed copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the Company
in lieu thereof, the Fund shall provide camera-ready film containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following three
sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure annually as
required by the 1933 Act and/or the 1940 Act, the cost of printing shall be
borne by the Fund. If the Company chooses to receive camera-ready film in lieu
of receiving printed copies of the Fund's prospectus, the Fund will reimburse
the Company in an amount equal to the product of A and B where A is the number
of such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
<PAGE>
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3.1) to shareholders in such quantity
as the Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with
instructions received from Contract owners; and
(iii) vote Fund shares for which no instructions have
been received in a particular separate account in
the same proportion as Fund shares of such
portfolio for which instructions have been
received in that separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
<PAGE>
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material. The Fund or its designee
will use reasonable efforts to review materials within a shorter time period if
the Company makes a request for expedited review in a letter accompanying such
materials.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
<PAGE>
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
of the following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or other
resources available to the Underwriter. No such payments shall be made directly
by the Fund.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the
Fund's prospectus, proxy materials and reports to owners of Contracts issued by
the Company.
<PAGE>
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts
in such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts
of which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
<PAGE>
7.3. If it is determined by a majority of the Board, or a
majority of its disinterested trustees, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
<PAGE>
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the
Fund and each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by
or on behalf of the Fund for use in the Registration Statement
or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
<PAGE>
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature of the Fund not supplied by the Company, or persons
under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms
of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c)
hereof.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation to which an Indemnified Party
would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is
applicable.
<PAGE>
8.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have
notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of
the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but
failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own expense, in
the defense of such action. The Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Company to such
party of the Company's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs
of investigation.
8.1(d). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Fund
Shares or the Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless
the Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Registration Statement or prospectus
or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company
for use in the Registration Statement or prospectus
for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
<PAGE>
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii)arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is applicable.
<PAGE>
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
result from the gross negligence, bad faith or willful misconduct of the Board
or any member thereof, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure to
comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
<PAGE>
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify
the Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of an Account,
or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
<PAGE>
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by ninety (90)
days advance written notice delivered to the other
parties; or
(b) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio based
upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued
or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under
any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify;
or
(e) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio fails to meet the
diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both of
the Fund or the Underwriter respectively, shall determine,
in their sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a
material adverse change in its business, operations,
financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that either the
Fund or the Underwriter has suffered a material adverse
change in its business, operations, financial condition or
prospects since the date of this Agreement or is the
subject of material adverse publicity; or
<PAGE>
(h) termination by the Fund or the Underwriter by written
notice to the Company, if the Company gives the Fund and
the Underwriter the written notice specified in Section
1.6(b) hereof and at the time such notice was given there
was no notice of termination outstanding under any other
provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective
forty five (45) days after the notice specified in Section
1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to
the Contracts (as opposed to Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
G.E. Capital Life Assurance Company of New York
6610 West Broad Street
Richmond, New York 23230
Attention: Linda L. Lanam
<PAGE>
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
<PAGE>
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
The Company shall promptly notify the Fund and the Underwriter of any change in
control of the Company.
12.9. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared for
filing with the New York Insurance Department
under statutory accounting principles) and annual
report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon
as practical and in any event within 120 days
after the end of each fiscal year;
(b) the Company's quarterly statutory statements, as
soon as practical and in any event within 45 days
after the end of each quarterly period:
(c) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state
insurance regulator, as soon as practical after
the filing thereof;
(d) any other report submitted to the Company by
independent accountants in connection with any
annual, interim or special audit made by them of
the books of the Company, as soon as practical
after the receipt thereof. However, the Company
shall be under no obligation to provide any such
reports that contain privileged or confidential
information.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
G.E. CAPITAL LIFE ASSURANCE COMPANY
By: _________________________
Name: _________________________
Title: _________________________
VARIABLE INSURANCE PRODUCTS FUND II
By: ________________________
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Kevin J. Kelly
President
<PAGE>
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Policy Form Numbers of Contracts
Funded
Date Established by Board of Directors By Separate Account
G. E. Capital Life Separate Account II NY 1066
(April 1, 1996)
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At
this time the Underwriter will inform the Company of the Record, Mailing
and Meeting dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Legal
Department of the Underwriter or its affiliate ("Fidelity Legal") must
approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found
on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification
of votes (already on Cards as printed by the Fund)
<PAGE>
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed
to the Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is
important. One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and
reviewed and approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
<PAGE>
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible)
of the procedure are "hand verified," i.e., examined as to why they did
not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity
Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio
Growth Portfolio
Overseas Portfolio
Fidelity Variable Insurance Products Fund III
Growth & Income Portfolio
Growth Opportunities Portfolio
G.E. Investments Funds, Inc.
Money Market Fund
Income Fund
S & P 500 Index Fund
Total Return Fund
International Equity Fund
Real Estate Securities Fund
Value Equity Fund
Global Income Fund
Oppenheimer Variable Account Funds
Oppenheimer High Income Fund
Oppenheimer Bond Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Multiple Strategies Fund
Janus Aspen Series
Growth Portfolio
Aggressive Growth Portfolio
Worldwide Growth Portfolio
International Growth Portfolio
Balanced Portfolio
Flexible Income Portfolio
Capital Appreciation Portfolio
Federated Insurance Series
Federated Utility Fund II
Federated High Income Bond Fund II
Federated American Leaders Fund II
<PAGE>
The Alger American Fund:
Alger American Growth Portfolio
Alger American Small Capitalization Portfolio
PBHG Insurance Series Fund, Inc.
PBHG Growth II Portfolio
PBHG Large Cap Growth Portfolio
Goldman Sachs Variable Insurance Trust
Mid Cap Equity Fund
Growth and Income Fund
8 (ix)
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND III,
FIDELITY DISTRIBUTORS CORPORATION
and
G.E. CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into as of the 8th day of May,
1998 by and among G.E. CAPITAL LIFE ASSURANCE COMPANY OF NEW YORK, (hereinafter
the "Company"), a New York corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), and the VARIABLE INSURANCE PRODUCTS FUND III, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and FIDELITY DISTRIBUTORS CORPORATION (hereinafter the
"Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation agreements
with the Fund and the Underwriter (hereinafter "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be made
available under this Agreement, as may be amended from time to time by mutual
agreement of the parties hereto (each such series hereinafter referred to as a
"Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and
Exchange Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T) (b) (15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Shared Funding Exemptive Order"); and
<PAGE>
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser")
is duly registered as an investment adviser under the federal Investment
Advisers Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain
variable life insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is or will, before it purchases any Fund
shares, be a duly organized, validly existing segregated asset account,
established by resolution of the Board of Directors of the Company, on the date
shown for such Account on Schedule A hereto, to set aside and invest assets
attributable to the aforesaid variable annuity contracts; and
WHEREAS, the Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with
the Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934, as amended, (hereinafter the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc. (hereinafter
"NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Underwriter is authorized to sell such shares
to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares
of the Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Boston time on
the next following Business Day. "Business Day" shall mean any day on which the
New York Stock Exchange is open for trading and on which the Fund calculates its
net asset value pursuant to the rules of the Securities and Exchange Commission.
<PAGE>
1.2. The Fund agrees to make its shares available indefinitely
for purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value pursuant
to rules of the Securities and Exchange Commission and the Fund shall use
reasonable efforts to calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
Board of Trustees of the Fund (hereinafter the "Board") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund
will be sold only to Participating Insurance Companies and their separate
accounts. No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to
any insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Section 2.5 of
Article II of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Fund held by the Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund for
receipt of requests for redemption from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives
notice of such request for redemption on the next following Business Day.
1.6. The Company agrees that purchases and redemptions of
Portfolio shares offered by the then current prospectus of the Fund shall be
made in accordance with the provisions of such prospectus. The Company agrees
that all net amounts available under the variable annuity contracts with the
form number(s) which are listed on Schedule A attached hereto and incorporated
herein by this reference, as such Schedule A may be amended from time to time
hereafter by mutual written agreement of all the parties hereto, (the
"Contracts") shall be invested in the Fund, in such other Funds advised by the
Adviser as may be mutually agreed to in writing by the parties hereto, or in the
Company's general account, provided that such amounts may also be invested in an
investment company other than the Fund if (a) such other investment company, or
series thereof, has investment objectives or policies that are substantially
different from the investment objectives and policies of all the Portfolios of
the Fund; or (b) the Company gives the Fund and the Underwriter 45 days written
notice of its intention to make such other investment company available as a
funding vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to their
signing this Agreement (a list of such funds appearing on Schedule C to this
Agreement); or (d) the Fund or Underwriter consents to the use of such other
investment company.
<PAGE>
1.7. The Company shall pay for Fund shares on the next Business
Day after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the
federal funds so wired, such funds shall cease to be the responsibility of the
Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Boston time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are
or will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 4240 of the New York Insurance Law and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts.
<PAGE>
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of New
York and all applicable federal and state securities laws and that the Fund is
and shall remain registered under the 1940 Act. The Fund shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
2.4. The Company represents that the Contracts are currently
treated as endowment, annuity or life insurance contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have a
board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states except that the Fund represents that the Fund's investment
policies, fees and expenses are and shall at all times remain in compliance with
the laws of the State of New York and the Fund and the Underwriter represent
that their respective operations are and shall at all times remain in material
compliance with the laws of the State of New York to the extent required to
perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member
in good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Fund
shares in accordance with the laws of the State of New York and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
<PAGE>
2.8. The Fund represents that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is
and shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of New York and any applicable state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of
their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
and will be covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimum coverage as required
currently of entities subject to the requirements of Rule 17g-1 of the 1940 Act
or related provisions as may be promulgated from time to time. The aforesaid
bond shall include coverage for larceny and embezzlement and shall be issued by
a reputable bonding company.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many
printed copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the Company
in lieu thereof, the Fund shall provide camera-ready film containing the Fund's
prospectus and Statement of Additional Information, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus and/or Statement of Additional Information for the
Fund is amended during the year) to have the prospectus for the Contracts and
the Fund's prospectus printed together in one document, and to have the
Statement of Additional Information for the Fund and the Statement of Additional
Information for the Contracts printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following three
sentences, all expenses of printing and distributing Fund prospectuses and
Statements of Additional Information shall be the expense of the Company. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts in order to update disclosure annually as
required by the 1933 Act and/or the 1940 Act, the cost of printing shall be
borne by the Fund. If the Company chooses to receive camera-ready film in lieu
of receiving printed copies of the Fund's prospectus, the Fund will reimburse
the Company in an amount equal to the product of A and B where A is the number
of such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
<PAGE>
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of printing any prospectuses or Statements of
Additional Information other than those actually distributed to existing owners
of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information for the Fund is available from the Underwriter or the
Company (or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with
copies of its proxy statements, reports to shareholders, and other
communications (except for prospectuses and Statements of Additional
Information, which are covered in Section 3.1) to shareholders in such quantity
as the Company shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with
instructions received from Contract owners; and
(iii) vote Fund shares for which no instructions have
been received in a particular separate account in
the same proportion as Fund shares of such
portfolio for which instructions have been
received in that separate account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent permitted
by law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set forth on Schedule B
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as well as
with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the Securities and Exchange Commission's interpretation
of the requirements of Section 16(a) with respect to periodic elections of
trustees and with whatever rules the Commission may promulgate with respect
thereto.
<PAGE>
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material shall
be used if the Fund or its designee reasonably objects to such use within
fifteen Business Days after receipt of such material. The Fund or its designee
will use reasonable efforts to review materials within a shorter time period if
the Company makes a request for expedited review in a letter accompanying such
materials.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or its designee shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its use.
No such material shall be used if the Company or its designee reasonably objects
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
<PAGE>
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
of the following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, Statements of Additional Information, shareholder reports, and
proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other
compensation to the Company under this agreement, except that if the Fund or any
Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or other
resources available to the Underwriter. No such payments shall be made directly
by the Fund.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, setting
in type and printing the proxy materials and reports to shareholders (including
the costs of printing a prospectus that constitutes an annual report), the
preparation of all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the
Fund's prospectus, proxy materials and reports to owners of Contracts issued by
the Company.
<PAGE>
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts
in such a manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without limiting
the scope of the foregoing, the Fund will at all times comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing conflicts
of which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a
majority of its disinterested trustees, that a material irreconcilable conflict
exists, the Company and other Participating Insurance Companies shall, at their
expense and to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
<PAGE>
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
<PAGE>
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the
Fund and each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company by
or on behalf of the Fund for use in the Registration Statement
or prospectus for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature of the Fund not supplied by the Company, or persons
under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of
the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms
of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c)
hereof.
<PAGE>
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation to which an Indemnified Party
would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is
applicable.
8.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have
notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of
the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but
failure to notify the Company of any such claim shall not
relieve the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own expense, in
the defense of such action. The Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Company to such
party of the Company's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs
of investigation.
8.1(d). The Indemnified Parties will promptly notify the
Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Fund
Shares or the Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless
the Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
<PAGE>
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Registration Statement or prospectus
or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Underwriter or Fund by or on behalf of the Company
for use in the Registration Statement or prospectus
for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Registration
Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
Registration Statement, prospectus, or sales
literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statement or statements therein not misleading,
if such statement or omission was made in reliance
upon information furnished to the Company by or on
behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise,
to comply with the diversification requirements
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the
Underwriter in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Underwriter; as limited by and in
accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
<PAGE>
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to each Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
result from the gross negligence, bad faith or willful misconduct of the Board
or any member thereof, are related to the operations of the Fund and:
<PAGE>
(i) arise as a result of any failure by the Fund to
provide the services and furnish the materials under
the terms of this Agreement (including a failure to
comply with the diversification requirements
specified in Article VI of this Agreement);or
(ii) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify
the Fund of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of an Account,
or the sale or acquisition of shares of the Fund.
<PAGE>
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason by ninety (90)
days advance written notice delivered to the other
parties; or
(b) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio based
upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued
or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code or under
any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify;
or
(e) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Portfolio in the
event that such Portfolio fails to meet the
diversification requirements specified in Article VI
hereof; or
<PAGE>
(f) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both of
the Fund or the Underwriter respectively, shall determine,
in their sole judgment exercised in good faith, that the
Company and/or its affiliated companies has suffered a
material adverse change in its business, operations,
financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity;
or
(g) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that either the
Fund or the Underwriter has suffered a material adverse
change in its business, operations, financial condition or
prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(h) termination by the Fund or the Underwriter by written
notice to the Company, if the Company gives the Fund and
the Underwriter the written notice specified in Section
1.6(b) hereof and at the time such notice was given there
was no notice of termination outstanding under any other
provision of this Agreement; provided, however any
termination under this Section 10.1(h) shall be effective
forty five (45) days after the notice specified in Section
1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
10.3 The Company shall not redeem Fund shares attributable to
the Contracts (as opposed to Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Underwriter 90 days notice of its intention to do so.
<PAGE>
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
G.E. Capital Life Assurance Company of New York
6610 West Broad Street
Richmond, New York 23230
Attention: Linda L. Lanam
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
12.3 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
<PAGE>
12.4 This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
12.7 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior written consent of
all parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or company
under common control with the Underwriter, if such assignee is duly licensed and
registered to perform the obligations of the Underwriter under this Agreement.
The Company shall promptly notify the Fund and the Underwriter of any change in
control of the Company.
12.9. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared for
filing with the New York Insurance Department
under statutory accounting principles) and annual
report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon
as practical and in any event within 120 days
after the end of each fiscal year;
(b) the Company's quarterly statutory statements, as
soon as practical and in any event within 45 days
after the end of each quarterly period:
(c) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state
insurance regulator, as soon as practical after
the filing thereof;
<PAGE>
(d) any other report submitted to the Company by
independent accountants in connection with any
annual, interim or special audit made by them of
the books of the Company, as soon as practical
after the receipt thereof. However, the Company
shall be under no obligation to provide any such
reports that contain privileged or confidential
information.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
G.E. CAPITAL LIFE ASSURANCE COMPANY
By: _________________________
Name: _________________________
Title: _________________________
VARIABLE INSURANCE PRODUCTS FUND III
By: ________________________
Robert C. Pozen
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Kevin J. Kelly
President
<PAGE>
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Policy Form Numbers of Contracts
Funded
Date Established by Board of Directors By Separate Account
G. E. Capital Life Separate Account II NY 1066
(April 1, 1996)
<PAGE>
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Fund by the Underwriter, the Fund and the
Company. The defined terms herein shall have the meanings assigned in the
Participation Agreement except that the term "Company" shall also include the
department or third party assigned by the Insurance Company to perform the steps
delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At
this time the Underwriter will inform the Company of the Record, Mailing
and Meeting dates. This will be done verbally approximately two months
before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to Fidelity, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which
this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Legal
Department of the Underwriter or its affiliate ("Fidelity Legal") must
approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found
on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund)
<PAGE>
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
Customers by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed
to the Company or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is
important. One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and
reviewed and approved in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
<PAGE>
Note: For Example, If the account registration is under "Bertram C.
Jones, Trustee," then that is the exact legal name to be printed on the
Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter, a new Card and return envelope. The mutilated or illegible Card
is disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible)
of the procedure are "hand verified," i.e., examined as to why they did
not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity
Legal must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston
time. Fidelity Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
<PAGE>
SCHEDULE C
Other investment companies currently available under variable annuities or
variable life insurance issued by the Company:
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio
Growth Portfolio
Overseas Portfolio
Fidelity Variable Insurance Products Fund II
Asset Manager Portfolio
Contrafund Portfolio
G.E. Investments Funds, Inc.
Money Market Fund
Income Fund
S & P 500 Index Fund
Total Return Fund
International Equity Fund
Real Estate Securities Fund
Value Equity Fund
Global Income Fund
Oppenheimer Variable Account Funds
Oppenheimer High Income Fund
Oppenheimer Bond Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Multiple Strategies Fund
Janus Aspen Series
Growth Portfolio
Aggressive Growth Portfolio
Worldwide Growth Portfolio
International Growth Portfolio
Balanced Portfolio
Flexible Income Portfolio
Capital Appreciation Portfolio
Federated Insurance Series
Federated Utility Fund II
Federated High Income Bond Fund II
Federated American Leaders Fund II
<PAGE>
The Alger American Fund:
Alger American Growth Portfolio
Alger American Small Capitalization Portfolio
PBHG Insurance Series Fund, Inc.
PBHG Growth II Portfolio
PBHG Large Cap Growth Portfolio
Goldman Sachs Variable Insurance Trust
Mid Cap Equity Fund
Growth and Income Fund
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this __ day of May, 1998 by and
between GOLDMAN SACHS VARIABLE INSURANCE TRUST, an unincorporated business trust
formed under the laws of Delaware (the "Trust"), GOLDMAN, SACHS & CO., a New
York limited partnership (the "Distributor"), __________ and INSURANCE COMPANY,
a ________ life insurance company (the "Company"), on its own behalf and on
behalf of each separate account of the Company identified herein.
WHEREAS, the Trust is a series-type mutual fund offering shares of
beneficial interest (the "Trust shares") consisting of one or more separate
series ("Series") of shares, each such Series representing an interest in a
particular investment portfolio of securities and other assets (a "Fund"), and
which Series may be subdivided into various classes ("Classes") with each such
Class supporting a distinct charge and expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies to be offered by
insurance companies and may also be utilized by qualified retirement plans; and
WHEREAS, the Distributor has the exclusive right to distribute Trust
shares to qualifying investors; and
WHEREAS, the Company desires that the Trust serve as an investment
vehicle for a certain separate account(s) of the Company and the Distributor
desires to sell shares of certain Series and/or Class(es) to such separate
account(s);
NOW, THEREFORE, in consideration of their mutual promises, the Trust,
the Distributor and the Company agree as follows:
ARTICLE I
Additional Definitions
1.1. "Account" -- the separate account of the Company described more
specifically in Schedule 1 to this Agreement. If more than one separate account
is described on Schedule 1, the term shall refer to each separate account so
described.
1.2. "Business Day" -- each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.3. "Code" -- the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.4. "Contracts" -- the class or classes of variable annuity contracts
and/or variable life insurance policies issued by the Company and described more
specifically on Schedule 2 to this Agreement.
1.5. "Contract Owners" -- the owners of the Contracts, as distinguished
from all Product Owners.
1.6. "Participating Account" -- a separate account investing all or a
portion of its assets in the Trust, including the Account.
1.7. "Participating Insurance Company" -- any insurance company
investing in the Trust on its behalf or on behalf of a Participating Account,
including the Company.
1.8. "Participating Plan" -- any qualified retirement plan investing in
the Trust.
1.9. "Participating Investor" -- any Participating Account,
Participating Insurance Company or Participating Plan, including the Account and
the Company.
1.10. "Products" -- variable annuity contracts and variable life
insurance policies supported by Participating Accounts, including the Contracts.
1.11. "Product Owners" -- owners of Products, including Contract
Owners.
1.12. "Trust Board" -- the board of trustees of the Trust.
1.13. "Registration Statement" -- with respect to the Trust shares or a
class of Contracts, the registration statement filed with the SEC to register
such securities under the 1933 Act, or the most recently filed amendment
thereto, in either case in the form in which it was declared or became
effective. The Contracts' Registration Statement for each class of Contracts is
described more specifically on Schedule 2 to this Agreement. The Trust's
Registration Statement is filed on Form N-1A (File No. 333-35883).
1.14. "1940 Act Registration Statement" -- with respect to the Trust or
the Account, the registration statement filed with the SEC to register such
person as an investment company under the 1940 Act, or the most recently filed
amendment thereto. The Account's 1940 Act Registration Statement is described
more specifically on Schedule 2 to this Agreement. The Trust's 1940 Act
Registration Statement is filed on Form N-1A (File No. 811-08361).
1.15. "Prospectus" -- with respect to shares of a Series (or Class) of
the Trust or a class of Contracts, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933 Act.
With respect to any provision of this Agreement requiring a party to take action
in accordance with a Prospectus, such reference thereto shall be deemed to be to
the version for the applicable Series, Class or Contracts last so filed prior to
the taking of such action. For purposes of Article IX, the term "Prospectus"
shall include any statement of additional information incorporated therein.
1.16. "Statement of Additional Information" -- with respect to the
shares of the Trust or a class of Contracts, each version of the definitive
statement of additional information or supplement thereto filed with the SEC
pursuant to Rule 497 under the 1933 Act. With respect to any provision of this
Agreement requiring a party to take action in accordance with a Statement of
Additional Information, such reference thereto shall be deemed to be the last
version so filed prior to the taking of such action.
1.17. "SEC" -- the Securities and Exchange Commission.
1.18. "NASD" -- The National Association of Securities Dealers, Inc.
1.19. "1933 Act" -- the Securities Exchange Act of 1933, as amended.
1.20. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.1. Availability of Shares
(a) The Trust has granted to the Distributor exclusive
authority to distribute the Trust shares and to select which Series or
Classes of Trust shares shall be made available to Participating
Investors. Pursuant to such authority, and subject to Article X hereof,
the Distributor shall make available to the Company for purchase on
behalf of the Account, shares of the Series and Classes listed on
Schedule 3 to this Agreement, such purchases to be effected at net
asset value in accordance with Section 2.3 of this Agreement. Such
Series and Classes shall be made available to the Company in accordance
with the terms and provisions of this Agreement until this Agreement is
terminated pursuant to Article X or the Distributor suspends or
terminates the offering of shares of such Series or Classes in the
circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series or
Classes of Trust shares in existence now or that may be established in
the future will be made available to the Company only as the
Distributor may so provide, subject to the Distributor's rights set
forth in Article X to suspend or terminate the offering of shares of
any Series or Class or to terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust may
revoke the Distributor's authority pursuant to the terms and conditions
of its distribution agreement with the Distributor; and (ii) the Trust
reserves the right in its sole discretion to refuse to accept a request
for the purchase of Trust shares, including but not limited to requests
for purchases by persons considered by the Trust to be market timers.
2.2. Redemptions. The Trust shall redeem, at the Company's request, any
full or fractional Trust shares held by the Company on behalf of the Account,
such redemptions to be effected at net asset value in accordance with Section
2.3 of this Agreement. Notwithstanding the foregoing, (i) the Company shall not
redeem Trust shares attributable to Contract Owners except in the circumstances
permitted in Article X of this Agreement, and (ii) the Trust may delay
redemption of Trust shares of any Series or Class to the extent permitted by the
1940 Act, any rules, regulations or orders thereunder, or the Prospectus for
such Series or Class.
2.3. Purchase and Redemption Procedures
(a) The Trust hereby appoints the Company as an agent of the
Trust for the limited purpose of receiving purchase and redemption
requests on behalf of the Account (but not with respect to any Trust
shares that may be held in the general account of the Company) for
shares of those Series or Classes made available hereunder, based on
allocations of amounts to the Account or subaccounts thereof under the
Contracts, other transactions relating to the Contracts or the Account
and customary processing of the Contracts. Receipt of any such requests
(or effectuation of such transaction or processing) on any Business Day
by the Company as such limited agent of the Trust prior to the Trust's
close of business as defined from time to time in the applicable
Prospectus for such Series or Class (which as of the date of execution
of this Agreement is defined as the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m. New York Time)) shall
constitute receipt by the Trust on that same Business Day, provided
that the Company uses its best efforts to provide actual and sufficient
notice of such request to the Trust by 8:30 a.m. New York Time on the
next following Business Day and the Trust receives such notice no later
than 9:00 a.m. New York time on such Business Day. Such notice may be
communicated by telephone to the office or person designated for such
notice by the Trust as indicated on Schedule 5 to this Agreement, and
shall be confirmed by facsimile.
(b) The Company shall pay for shares of each Series or Class
on the same day that it provides actual notice to the Trust of a
purchase request for such shares. Payment for Series or Class shares
shall be made in Federal funds transmitted to the Trust by wire to be
received by the Trust by 3:30 p.m. New York Time on the day the Trust
receives actual notice of the purchase request for Series or Class
shares (unless the Trust determines and so advises the Company that
sufficient proceeds are available from redemption of shares of other
Series or Classes effected pursuant to redemption requests tendered by
the Company on behalf of the Account). In no event may proceeds from
the redemption of shares requested pursuant to an order received by the
Company after the Trust's close of business on any Business Day be
applied to the payment for shares for which a purchase order was
received prior to the Trust's close of business on such day. If the
issuance of shares is canceled because Federal funds are not timely
received, the Company shall indemnify the respective Fund and
Distributor with respect to all costs, expenses and losses relating
thereto. Upon the Trust's receipt of Federal funds so wired, such funds
shall cease to be the responsibility of the Company and shall become
the responsibility of the Trust. If Federal funds are not received on
time, such funds will be invested, and Series or Class shares purchased
thereby will be issued, as soon as practicable after actual receipt of
such funds but in any event not on the same day that the purchase order
was received.
(c) Payment for Series or Class shares redeemed by the Account
or the Company shall be made in Federal funds transmitted by wire to
the Company or any other person properly designated in writing by the
Company. The Trust shall use its best efforts to transmit such funds by
6:00 p.m. New York Time on the same Business Day after the Trust
receives actual notice of the redemption order for Series or Class
shares (unless redemption proceeds are to be applied to the purchase of
Trust shares of other Series or Classes in accordance with Section
2.3(b) of this Agreement), except that the Trust reserves the right to
redeem Series or Class shares in assets other than cash and to delay
payment of redemption proceeds to the extent permitted by the 1940 Act,
any rules or regulations or orders thereunder, or the applicable
Prospectus; provided, however, that if the Trust fails to transmit such
redemption proceeds by 6:00 p.m. New York Time on the same Business Day
and such failure is due to circumstances within the Trust's or the
Distributor's control, the Distributor will pay interest to the Company
equal to the amount of such proceeds multiplied by the current Federal
funds rate on each day that delivery of the proceeds is overdue. The
Trust shall not bear any responsibility whatsoever for the proper
disbursement or crediting of redemption proceeds by the Company; the
Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Series or Class
shares held or to be held in the Company's general account shall be
effected at the net asset value per share next determined after the
Trust's actual receipt of such request, provided that, in the case of a
purchase request, payment for Trust shares so requested is received by
the Trust in Federal funds prior to close of business for determination
of such value, as defined from time to time in the Prospectus for such
Series or Class.
(e) Prior to the first purchase of any Trust shares hereunder,
the Company and the Trust shall provide each other with all information
necessary to effect wire transmissions of Federal funds to the other
party and all other designated persons pursuant to such protocols and
security procedures as the parties may agree upon. Should such
information change thereafter, the Trust and the Company, as
applicable, shall notify the other in writing of such changes,
observing the same protocols and security procedures, at least three
Business Days in advance of when such change is to take effect. The
Company and the Trust shall observe customary procedures to protect the
confidentiality and security of such information.
(f) The procedures set forth herein are subject to any
additional terms set forth in the applicable Prospectus for the Series
or Class or by the requirements of applicable law.
2.4. Net Asset Value. The Trust shall make the net asset value per
share for each Series or Class available to the Company on a daily basis as soon
as reasonably practicable after the net asset value per share for such Series or
Class is calculated and shall use its best efforts to make such net asset value
per share available by 6:30 p.m. New York Time each business day. The Trust will
notify the Company as soon as possible if on any Business Day it is determined
that the calculation of net asset value per share will be available after 6:30
p.m. New York Time. The Trust shall calculate such net asset value in accordance
with the Prospectus for such Series or Class.
2.5. Dividends and Distributions. The Trust shall furnish notice to the
Company as soon as reasonably practicable of any income dividends or capital
gain distributions payable on any Series or Class shares. The Company, on its
behalf and on behalf of the Account, hereby elects to receive all such dividends
and distributions as are payable on any Series or Class shares in the form of
additional shares of that Series or Class. The Company reserves the right, on
its behalf and on behalf of the Account, to revoke this election and to receive
all such dividends and capital gain distributions in cash; to be effective, such
revocation must be made in writing and received by the Trust at least three (3)
Business Days prior to a dividend or distribution date. The Trust shall notify
the Company promptly of the number of Series or Class shares so issued as
payment of such dividends and distributions.
2.6. Book Entry. Issuance and transfer of Trust shares shall be by book
entry only. Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Trust shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
2.7. Pricing Errors. Any material errors in the calculation of net
asset value, dividends or capital gain information shall be reported immediately
upon discovery to the Company. An error shall be deemed "material" based on the
Trust's reasonable interpretation of the SEC's position and policy with regard
to materiality, as it may be modified from time to time. Neither the Trust, any
Fund, the Distributor, nor any of their affiliates shall be liable for any
information provided to the Company pursuant to this Agreement which information
is based on incorrect information supplied by or on behalf of the Company or any
other Participating Company to the Trust or the Distributor; otherwise if the
Trust provides the Company with a materially incorrect share net asset value,
the Company on behalf of the Account(s) described in Schedule 1, shall be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect correct net asset value.
2.8. Limits on Purchasers. The Distributor and the Trust shall sell
Trust shares only to insurance companies and their separate accounts and to
persons or plans ("Qualified Persons") that qualify to purchase shares of the
Trust under Section 817(h) of the Code and the regulations thereunder without
impairing the ability of the Account to consider the portfolio investments of
the Trust as constituting investments of the Account for the purpose of
satisfying the diversification requirements of Section 817(h). The Distributor
and the Trust shall not sell Trust shares to any insurance company or separate
account unless an agreement complying with Article VIII of this Agreement is in
effect to govern such sales. The Company hereby represents and warrants that it
and the Account are Qualified Persons.
ARTICLE III
Representations and Warranties
3.1. Company. The Company represents and warrants that: (i) the Company
is an insurance company duly organized and in good standing under _______
insurance law; (ii) the Account is a validly existing separate account, duly
established and maintained in accordance with applicable law; (iii) the
Account's 1940 Act Registration Statement will be or has been filed with the SEC
in accordance with the provisions of the 1940 Act and the Account will be or is
duly registered as a unit investment trust thereunder; (iv) the Contracts'
Registration Statement has been declared effective by the SEC prior to the
issuance or sale of the Contracts; (v) the Contracts will be issued in
compliance in all material respects with all applicable Federal and state laws;
(vi) the Contracts have been filed, qualified and/or approved for sale under the
insurance laws and regulations of the states in which the Contracts will be
offered only if and to the extent required by applicable law; (vii) the Account
will maintain its registration under the 1940 Act and will comply in all
material respects with the 1940 Act; (viii) subject to Article VI hereof, the
Contracts currently are, and at the time of issuance and for so long as they are
outstanding will be, treated as annuity contracts or life insurance policies,
whichever is appropriate, under applicable provisions of the Code; and (ix) the
Company's entering into and performing its obligations under this Agreement does
not and will not violate its charter documents or by-laws, rules or regulations,
or any agreement to which it is a party. The Company will notify the Trust
promptly if for any reason it is unable to perform its obligations under this
Agreement.
3.2. Trust. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Delaware law; (ii) the Trust's 1940 Act Registration Statement has been filed
with the SEC in accordance with the provisions of the 1940 Act and the Trust is
duly registered as an open-end management investment company thereunder; (iii)
the Trust's Registration Statement has been declared effective by the SEC; (iv)
the Trust shares will be issued in compliance in all material respects with all
applicable federal laws; (v) the Trust will remain registered under and will
comply in all material respects with the 1940 Act during the term of this
Agreement; (vi) each Fund of the Trust qualifies or will qualify as a "regulated
investment company" under Subchapter M of the Code and complies or will comply
with the diversification standards prescribed in Section 817(h) of the Code and
the regulations thereunder; and (vii) the investment policies of each Fund are
in material compliance with any investment restrictions set forth on Schedule 4
to this Agreement. The Trust, however, makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) otherwise complies with the insurance laws or regulations
of any state.
3.3. Distributor. The Distributor represents and warrants that: (i) the
Distributor is a limited partnership duly organized and in good standing under
New York law; (ii) the Distributor is registered as a broker-dealer under
federal and applicable state securities laws and is a member of the NASD; and
(iii) the Distributor is registered as an investment adviser under federal
securities laws. The Distributor further represents that it will sell and
distribute Fund shares in accordance with applicable federal and state
securities laws, including without limitation, the 1933 Act, the Securities
Exchange Act of 1934, and the 1940 Act.
3.4. Legal Authority. Each party represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate, partnership or trust action, as applicable, by such party, and, when
so executed and delivered, this Agreement will be the valid and binding
obligation of such party enforceable in accordance with its terms.
ARTICLE IV
Regulatory Requirements
4.1. Trust Filings. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. Contracts Filings. The Company shall amend the Contracts'
Registration Statement and the Account's 1940 Act Registration Statement from
time to time as required in order to effect the continuous offering of the
Contracts in compliance with applicable law or as may otherwise be required by
applicable law, but in any event shall maintain a current effective Contracts'
Registration Statement and the Account's Registration Statement under the 1940
Act for so long as the Contracts are outstanding unless the Company (i) has
supplied the Trust with an SEC no-action letter or opinion of counsel
satisfactory to the Trust's counsel to the effect that maintaining such
Registration Statement(s) on a current basis is no longer required, or (ii) has
made a reasonable determination based on SEC no-action or interpretive positions
that maintaining such Registration Statement(s) is no longer required, provided
that this subsection (ii) shall not apply to circumstances where the Company has
determined that maintaining such registration(s) is not required pursuant to
Section 3(c)(1) or 3(c)(7) of the 1940 Act or the non-public offering exemptions
under the 1933 Act. The Company shall be responsible for filing all such
Contract forms, applications, marketing materials and other documents relating
to the Contracts and/or the Account with state insurance commissions, as
required or customary, and shall use its best efforts: (a) to obtain any and all
approvals thereof, under applicable state insurance law, of each state or other
jurisdiction in which Contracts are or may be offered for sale; and (b) to keep
such approvals in effect for so long as the Contracts are outstanding.
4.3. Voting of Trust Shares. With respect to any matter put to vote by
the holders of Trust shares ("Voting Shares"), the Company will provide
"pass-through" voting privileges to owners of Contracts registered with the SEC
as long as the 1940 Act requires such privileges in such cases. In cases in
which "pass-through" privileges apply, the Company will (i) solicit voting
instructions from Contract Owners of SEC-registered Contracts; (ii) vote Voting
Shares attributable to Contract Owners in accordance with instructions or
proxies timely received from such Contract Owners; and (iii) vote Voting Shares
held by it that are not attributable to reserves for SEC-registered Contracts or
for which it has not received timely voting instructions in the same proportion
as instructions received in a timely fashion from Owners of SEC-registered
Contracts. The Company shall be responsible for ensuring that it calculates
"pass-through" votes for the Account in a manner consistent with the provisions
set forth above and with other Participating Insurance Companies. Neither the
Company nor any of its affiliates will in any way recommend action in connection
with, or oppose or interfere with, the solicitation of proxies for the Trust
shares held for such Contract Owners, except with respect to matters as to which
the Company has the right under Rule 6e-2 or 6e-3(T) under the 1940 Act, to vote
Voting Shares without regard to voting instructions from Contract Owners.
4.4. State Insurance Restrictions. The Company acknowledges and agrees
that it is the responsibility of the Company and other Participating Insurance
Companies to determine investment restrictions and any other restrictions,
limitations or requirements under state insurance law applicable to any Fund or
the Trust or the Distributor, and that neither the Trust nor the Distributor
shall bear any responsibility to the Company, other Participating Insurance
Companies or any Product Owners for any such determination or the correctness of
such determination. Schedule 4 sets forth the investment restrictions that the
Company and/or other Participating Insurance Companies have determined are
applicable to any Fund and with which the Trust has agreed to comply as of the
date of this Agreement. The Company shall inform the Trust of any investment
restrictions imposed by state insurance law that the Company determines may
become applicable to the Trust or a Fund from time to time as a result of the
Account's investment therein, other than those set forth on Schedule 4 to this
Agreement. Upon receipt of any such information from the Company or any other
Participating Insurance Company, the Trust shall determine whether it is in the
best interests of shareholders to comply with any such restrictions. If the
Trust determines that it is not in the best interests of shareholders (it being
understood that "shareholders" for this purpose shall mean Product Owners) to
comply with a restriction determined to be applicable by the Company, the Trust
shall so inform the Company, and the Trust and the Company shall discuss
alternative accommodations in the circumstances. If the Trust determines that it
is in the best interests of shareholders to comply with such restrictions, the
Trust and the Company shall amend Schedule 4 to this Agreement to reflect such
restrictions, subject to obtaining any required shareholder approval thereof.
4.5. Drafts of Filings. The Trust and the Company shall provide to each
other copies of draft versions of any Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or Contract
Owner reports, proxy statements, solicitations for voting instructions,
applications for exemptions, requests for no-action letters, and all amendments
or supplements to any of the above, prepared by or on behalf of either of them
and that mentions the other party by name. Such drafts shall be provided to the
other party sufficiently in advance of filing such materials with regulatory
authorities in order to allow such other party a reasonable opportunity to
review the materials; provided that each party shall only comment on that
portion of the draft that relates to that party or the conduct of its business.
4.6. Copies of Filings. The Trust and the Company shall provide to each
other at least one complete copy of all Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or Contract
Owner reports, proxy statements, solicitations of voting instructions,
applications for exemptions, requests for no-action letters, and all amendments
or supplements to any of the above, that relate to the Trust, the Contracts or
the Account, as the case may be, promptly after the filing by or on behalf of
each such party of such document with the SEC or other regulatory authorities
(it being understood that this provision is not intended to require the Trust to
provide to the Company copies of any such documents prepared, filed or used by
Participating Investors other than the Company and the Account).
4.7. Regulatory Responses. Each party shall promptly provide to all
other parties copies of responses to no-action requests, notices, orders and
other rulings received by such party with respect to any filing covered by
Section 4.6 of this Agreement.
4.8. Complaints and Proceedings
(a) The Trust and/or the Distributor shall immediately notify
the Company of: (i) the issuance by any court or regulatory body of any
stop order, cease and desist order, or other similar order (but not
including an order of a regulatory body exempting or approving a
proposed transaction or arrangement) with respect to the Trust's
Registration Statement or the Prospectus of any Series or Class; (ii)
any request by the SEC for any amendment to the Trust's Registration
Statement or the Prospectus of any Series or Class; (iii) the
initiation of any proceedings for that purpose or for any other
purposes relating to the registration or offering of the Trust shares;
or (iv) any other action or circumstances that may prevent the lawful
offer or sale of Trust shares or any Class or Series in any state or
jurisdiction, including, without limitation, any circumstance in which
(A) such shares are not registered and, in all material respects,
issued and sold in accordance with applicable state and federal law or
(B) such law precludes the use of such shares as an underlying
investment medium for the Contracts. The Trust will make every
reasonable 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) The Company shall immediately notify the Trust and the
Distributor of: (i) the issuance by any court or regulatory body of any
stop order, cease and desist order, or other similar order (but not
including an order of a regulatory body exempting or approving a
proposed transaction or arrangement) with respect to the Contracts'
Registration Statement or the Contracts' Prospectus; (ii) any request
by the SEC for any amendment to the Contracts' Registration Statement
or Prospectus; (iii) the initiation of any proceedings for that purpose
or for any other purposes relating to the registration or offering of
the Contracts; or (iv) any other action or circumstances that may
prevent the lawful offer or sale of the Contracts or any class of
Contracts in any state or jurisdiction, including, without limitation,
any circumstance in which such Contracts are not registered, qualified
and approved, and, in all material respects, issued and sold in
accordance with applicable state and federal laws. The Company will
make every reasonable 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.
(c) Each party shall immediately notify the other parties when
it receives notice, or otherwise becomes aware of, the commencement of
any litigation or proceeding against such party or a person affiliated
therewith in connection with the issuance or sale of Trust shares or
the Contracts.
(d) The Company shall provide to the Trust and the Distributor
any complaints it has received from Contract Owners pertaining to the
Trust or a Fund, and the Trust and Distributor shall each provide to
the Company any complaints it has received from Contract Owners
relating to the Contracts.
4.9. Cooperation. Each party hereto shall cooperate with the other
parties and all appropriate government authorities (including without limitation
the SEC, the NASD and state securities and insurance regulators) and shall
permit such authorities reasonable access to its books and records in connection
with any investigation or inquiry by any such authority relating to this
Agreement or the transactions contemplated hereby. However, such access shall
not extend to attorney-client privileged information.
ARTICLE V
Sale, Administration and Servicing of the Contracts
5.1. Sale of the Contracts. The Company shall be responsible for the
sale and marketing of the Contracts. Subject to Article II and Section 5.4, the
Company shall make available Contracts, the Contracts' and Trust's Prospectuses,
Contracts' and Trust's Statements of Additional Information, and all amendments
or supplements to any of the foregoing to Contract Owners and prospective
Contract Owners, all in material compliance accordance with federal and state
laws. The Company shall, consistent with industry practice, use its reasonable
efforts to ensure that all persons offering the Contracts are duly licensed and
registered under applicable insurance and securities laws. The Company shall
ensure that procedures are in place that sales of the Contracts satisfy
applicable suitability requirements under insurance and securities laws and
regulations, including without limitation the rules of the NASD. The Company
shall adopt and implement procedures reasonably designed to ensure that
information concerning the Trust and the Distributor that is intended for use
only by brokers or agents selling the Contracts (i.e., information that is not
intended for distribution to Contract Owners or offerees) is so used.
5.2. Administration and Servicing of the Contracts. In connection with
the offering of the Contracts, the Company shall be fully responsible for the
underwriting, issuance, service and administration of the Contracts and for the
administration of the Account, including, without limitation, the calculation of
performance information for the Contracts, the timely payment of Contract Owner
redemption requests and processing of Contract transactions, and the maintenance
of a service center. The Company shall use its best efforts to perform such
functions in all respects at a level commensurate with those standards
prevailing in the variable insurance industry. Subject to Section 5.4, the
Company shall provide to Contract Owners all Trust reports, solicitations for
voting instructions including any related Trust proxy solicitation materials,
and updated Trust Prospectuses as required under the federal securities laws.
5.3. Customer Complaints. The Company shall establish reasonable
procedures to promptly address all customer complaints and resolve such
complaints consistent with high ethical standards and principles of ethical
conduct.
5.4. Trust Prospectuses and Reports. In order to enable the Company to
fulfill its obligations under this Agreement and the federal securities laws,
the Trust shall provide the Company with a copy, in camera-ready form or form
otherwise suitable for printing or duplication of: (i) the Trust's Prospectus
for the Series and Classes listed on Schedule 3 and any supplement thereto; (ii)
each Statement of Additional Information and any supplement thereto; (iii) any
Trust proxy soliciting material for such Series or Classes; and (iv) any Trust
periodic shareholder reports or other communications with shareholders. The
Trust and the Company may agree upon alternate arrangements, but in all cases,
the Trust reserves the right to approve the printing of any such material. The
Trust shall provide the Company at least 10 days advance written notice when any
such material shall become available, provided, however, that in the case of a
supplement, the Trust shall provide the Company notice reasonable in the
circumstances, it being understood that circumstances surrounding such
supplement may not allow for advance notice. The Company may not alter any
material so provided by the Trust or the Distributor (including without
limitation presenting or delivering such material in a different medium, e.g.,
electronic or Internet) without the prior written consent of the Distributor.
5.5. Trust Advertising Material. No piece of advertising or sales
literature or other promotional material in which the Trust or the Distributor
is named shall be used by the Company or any person directly or indirectly
authorized by the Company, including without limitation, underwriters,
distributors, and sellers of the Contracts, except with the prior written
consent of the Trust or the Distributor, as applicable, as to the form, content
and medium of such material, which consent shall not be unreasonably withheld;
provided that such prior written consent shall not be required if the Company
receives a written or facsimile acknowledgement from the Trust or the
Distributor that such material has been received by the Trust or the Distributor
for review at least 10 Business Days prior to its use, and, after the expiration
of such 10 Business Day period, the Trust or the Distributor has not commented
upon the content of such material and is therefore deemed to consent to its use.
No further changes may be made to material approved in accordance with this
Section 5.5 without obtaining the Trust's or Distributor's consent to such
changes as set forth in the preceding sentence. The Trust or Distributor may at
any time in its sole discretion revoke such consent upon reasonable
determination that such revocation is necessary, and upon notification of such
revocation, the Company shall discontinue use of the material subject to such
revocation, it being understood that the Company shall be afforded a reasonable
period of time to discontinue such use. Until further notice to the Company, the
Trust has delegated its rights and responsibilities under this provision to the
Distributor.
5.6. Contracts Advertising Material. No piece of advertising or sales
literature or other promotional material in which the Company is named shall be
used by the Trust or the Distributor, except with the prior written consent of
the Company, which consent shall not be unreasonably withheld; provided that
such prior written consent shall not be required if the Trust receives a written
or facsimile acknowledgement that such material has been received by the Company
for review at least 10 Business Days prior to its use and, after the expiration
of such 10 Business Day period, the Company has not commented upon the content
of such material and is therefore deemed to consent to its use. The Company may
at any time in its sole discretion revoke any consent upon reasonable
determination that such revocation is necessary, and upon notification of such
revocation, the Trust and the Distributor shall discontinue use of the material
subject to such revocation, it being understood that Trust and Distributor shall
be afforded a reasonable period of time to discontinue such use. The Company,
upon prior written notice to the Trust, may delegate its rights and
responsibilities under this provision to the principal underwriter for the
Contracts.
5.7. Trade Names. No party shall use any other party's names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of such other party, or after written consent therefor has
been revoked, provided that separate consent is not required under this Section
5.7 to the extent that consent to use a party's name, logo, trademark or service
mark in connection with a particular piece of advertising or sales literature
has previously been given by a party under Section 5.5 or 5.6 of this Agreement.
The Company shall not use in advertising, publicity or otherwise the name of the
Trust, Distributor, or any of their affiliates nor any trade name, trademark,
trade device, service mark, symbol or any abbreviation, contraction or
simulation thereof of the Trust, Distributor, or their affiliates without the
prior written consent of the Trust or the Distributor in each instance. The
Trust and the Distributor shall not use in advertising, publicity or otherwise
the name of the Company, or any of its affiliates nor any trade name, trademark,
trade device, service mark, symbol or any abbreviation, contraction or
simulation thereof of the Company, or its affiliates without the prior written
consent of the Company in each instance.
5.8. Representations by Company. Except with the prior written consent
of the Trust, the Company shall not give any information or make any
representations or statements about the Trust or the Funds nor shall it
authorize or allow any other person to do so except information or
representations contained in the Trust's Registration Statement or the Trust's
Prospectuses or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in writing by the Trust or its
designee in accordance with this Article V, or in published reports or
statements of the Trust in the public domain.
5.9. Representations by Trust. Except with the prior written consent of
the Company, the Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account
or the Contracts other than the information or representations contained in the
Contracts' Registration Statement or Contracts' Prospectus or in published
reports of the Account which are in the public domain or in sales literature or
other promotional material approved in writing by the Company in accordance with
this Article V.
5.10. Advertising. For purposes of this Article V, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
material constituting sales literature or advertising under the NASD rules, the
1940 Act or the 1933 Act.
5.11 Periodic Trust Information. The Trust agrees to use its best
efforts to provide to the Company, within 5 Business Days after the end of a
calendar month and shall provide no later than 10 Business Days after the end of
the calendar month, the following information with respect to each Fund of the
Trust set forth on Schedule 3, each as of the last Business Day of such calendar
month: each Fund's 10 largest portfolio holdings (based on the percentage of
each Fund's net assets); the five industry sectors in which each Fund's
investments are most heavily weighted; and year-to-date SEC standardized
performance data. In addition, the Trust agrees to use its best efforts to
provide to the Company within 10 Business Days after the end of a calendar
quarter and shall provide no later than 15 Business Days after the end of the
calendar quarter a market commentary from the portfolio manager of each Fund set
forth on Schedule 3, as of the last Business Day of such quarter. Also, the
Trust agrees to provide the Company, within 15 Business Days after a request is
submitted to the Trust by the Company, the following information with respect to
each Fund set forth on Schedule 3, each as of the date or dates specified in
such request: net asset value; net asset value per share; and such other share
information as may be agreed by the Company and the Trust from time to time. The
Trust acknowledges that such information may be furnished to the Company's
internal or independent auditors and to the insurance departments in which the
Company does business.
ARTICLE VI
Compliance with Code
6.1. Section 817(h). Each Fund of the Trust shall comply with Section
817(h) of the Code and the regulations issued thereunder to the extent
applicable to the Fund as an investment company underlying the Account, and the
Trust shall (i) notify the Company immediately upon having a reasonable basis
for believing that a Fund has ceased to so qualify or that it might not so
qualify in the future, and (ii) take all reasonable steps to adequately
diversify a Fund to achieve compliance with the grace period afforded by
Treasury Regulation 1.817-5.
6.2. Subchapter M. Each Fund of the Trust shall maintain the
qualification of the Fund as a registered investment company (under Subchapter M
or any successor or similar provision), and the Trust shall (i) notify the
Company immediately upon having a reasonable basis for believing that a Fund has
ceased to so qualify or that it might not so qualify in the future, and (ii)
take all reasonable steps to maintain qualification or to requalify the Funds as
a registered investment company under Subchapter M.
6.3. Contracts. The Company shall ensure the continued treatment of the
Contracts as annuity contracts or life insurance policies, whichever is
appropriate, under applicable provisions of the Code and shall notify the Trust
and the Distributor immediately upon having a reasonable basis for believing
that the Contracts have ceased to be so treated or that they might not be so
treated in the future.
ARTICLE VII
Expenses
7.1. Expenses. All expenses incident to each party's performance under
this Agreement (including expenses expressly assumed by such party pursuant to
this Agreement) shall be paid by such party to the extent permitted by law.
7.2. Trust Expenses. Expenses incident to the Trust's performance of
its duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Trust shares under the
federal securities laws;
(b) preparation and filing with the SEC of the Trust's
Prospectuses, Trust's Statement of Additional Information,
Trust's Registration Statement, Trust proxy materials and
shareholder reports, and preparation of a camera-ready copy of
the foregoing;
(c) preparation of all statements and notices required by any
Federal or state securities law;
(d) printing of all materials and reports required to be provided
by the Trust to existing shareholders and Contract Owners;
(e) all taxes on the issuance or transfer of Trust shares;
(f) payment of all applicable fees relating to the Trust,
including, without limitation, all fees due under Rule 24f-2
in connection with sales of Trust shares to qualified
retirement plans, custodial, auditing, transfer agent and
advisory fees, fees for insurance coverage and Trustees' fees;
and
(g) any expenses permitted to be paid or assumed by the Trust
pursuant to a plan, if any, under Rule 12b-1 under the 1940
Act.
7.3. Company Expenses. Expenses incident to the Company's performance
of its duties and obligations under this Agreement include, but are not limited
to, the costs of:
(a) registration and qualification of the Contracts under the
federal securities laws;
(b) preparation and filing with the SEC of the Contracts'
Prospectus and Contracts' Registration Statement;
(c) the sale, marketing and distribution of the Contracts,
including printing and dissemination of Contracts' and the
Trust's Prospectuses for new sales of Contracts and
compensation for Contract sales;
(d) administration of the Contracts;
(e) distribution of and solicitation of voting instructions with
respect to Trust proxy materials to existing Contract Owners;
(f) mailing of all materials and reports required to be provided
by the Trust to existing Shareholders and Contract Owners;
(g) payment of all applicable fees relating to the Contracts,
including, without limitation, all fees due under Rule 24f-2;
(h) preparation, printing and dissemination of all statements and
notices to Contract Owners required by any Federal or state
insurance law other than those paid for by the Trust; and
(i) preparation, printing and dissemination of all marketing
materials for the Contracts and Trust (to the extent it
relates to the Contracts) except where other arrangements are
made in advance.
7.4. 12b-1 Payments. The Trust shall pay no fee or other compensation
to the Company under this Agreement, except that if the Trust or any Series or
Class adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to
finance distribution expenses, then payments may be made to the Company in
accordance with such plan. The Trust currently does not intend to make any
payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940
Act or in contravention of such rule, although it may make payments pursuant to
Rule 12b-1 in the future. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1 and such formulation is required by the 1940 Act
or any rules or order thereunder, the Trust undertakes to have a Board of
Trustees, a majority of whom are not interested persons of the Trust, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
ARTICLE VIII
Potential Conflicts
8.1. Exemptive Order. The parties to this Agreement acknowledge that
the Trust has received an order (the "Exemptive Order") granting relief from
various provisions of the 1940 Act and the rules thereunder to the extent
necessary to permit Trust shares to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and other Qualified Persons (as defined in
Section 2.8 hereof). The Exemptive Order requires the Trust and each
Participating Insurance Company to comply with conditions and undertakings
substantially as provided in this Article VIII. The Trust will not enter into a
participation agreement with any other Participating Insurance Company unless it
imposes the same conditions and undertakings on that company as are imposed on
the Company pursuant to this Article VIII.
8.2. Company Monitoring Requirements. The Company will monitor its
operations and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts between
or among the interests of Participating Plans, Product Owners of variable life
insurance policies and Product Owners of variable annuity contracts.
8.3. Company Reporting Requirements. The Company shall report any
conflicts or potential conflicts to the Trust Board and will provide the Trust
Board, at least annually, with all information reasonably necessary for the
Trust Board to consider any issues raised by such existing or potential
conflicts or by the conditions and undertakings required by the Exemptive Order.
The Company also shall assist the Trust Board in carrying out its obligations
including, but not limited to: (a) informing the Trust Board whenever it
disregards Contract Owner voting instructions with respect to variable life
insurance policies, and (b) providing such other information and reports as the
Trust Board may reasonably request. The Company will carry out these obligations
with a view only to the interests of Contract Owners.
8.4. Trust Board Monitoring and Determination. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans, Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts and determine what action, if any, should be taken in response to
those conflicts. A majority vote of Trustees who are not interested persons of
the Trust as defined in the 1940 Act (the "disinterested trustees") shall
represent a conclusive determination as to the existence of a material
irreconcilable conflict between or among the interests of Product Owners and
Participating Plans and as to whether any proposed action adequately remedies
any material irreconcilable conflict. The Trust Board shall give prompt written
notice to the Company and Participating Plan of any such determination.
8.5. Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans, the Company will, at its own expense, take whatever action
is necessary to remedy such conflict as it adversely affects Contract Owners up
to and including (1) establishing a new registered management investment
company, and (2) withdrawing assets from the Trust attributable to reserves for
the Contracts subject to the conflict and reinvesting such assets in a different
investment medium (including another Fund of the Trust) or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected Contract Owners, and, as appropriate, segregating the assets supporting
the Contracts of any group of such owners that votes in favor of such
withdrawal, or offering to such owners the option of making such a change. The
Company will carry out the responsibility to take the foregoing action with a
view only to the interests of Contract Owners.
8.6. Withdrawal. If a material irreconcilable conflict arises because
of the Company's decision to disregard the voting instructions of Contract
Owners of variable life insurance policies and that decision represents a
minority position or would preclude a majority vote at any Fund shareholder
meeting, then, at the request of the Trust Board, the Company will redeem the
shares of the Trust to which the disregarded voting instructions relate. No
charge or penalty, however, will be imposed in connection with such a
redemption.
8.7. Expenses Associated with Remedial Action. In no event shall the
Trust be required to bear the expense of establishing a new funding medium for
any Contract. The Company shall not be required by this Article to establish a
new funding medium for any Contract if an offer to do so has been declined by
vote of a majority of the Contract Owners materially adversely affected by the
irreconcilable material conflict.
8.8. Successor Rules. If and to the extent that Rule 6e-2 and Rule
6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from
any provisions of the 1940 Act or the rules promulgated thereunder with respect
to mixed and shared funding on terms and conditions materially different from
those contained in the Exemptive Order, then (i) the Trust and/or the Company,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the
extent such rules are applicable, and (ii) Sections 8.2 through 8.5 of this
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
Indemnification
9.1. Indemnification by the Company. The Company hereby agrees to, and
shall, indemnify and hold harmless the Trust, the Distributor and each person
who controls or is affiliated with the Trust or the Distributor within the
meaning of such terms under the 1933 Act or 1940 Act (but not any Participating
Insurance Companies or Qualified Persons) and any officer, trustee, partner,
director, employee or agent of the foregoing, against any and all losses,
claims, damages or liabilities, joint or several (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amounts
paid in settlement of, any action, suit or proceeding or any claim asserted), to
which they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Contracts Registration
Statement, Contracts Prospectus, sales literature or other
promotional material for the Contracts or the Contracts
themselves (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were
made; provided that this obligation to indemnify shall not
apply if such statement or omission was made in reliance
upon and in conformity with information furnished in writing
to the Company by the Trust or the Distributor for use in
the Contracts Registration Statement, Contracts Prospectus
or in the Contracts or sales literature or promotional
material for the Contracts (or any amendment or supplement
to any of the foregoing) or otherwise for use in connection
with the sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact contained
in the Trust Registration Statement, any Prospectus for Series
or Classes or sales literature or other promotional material
of the Trust (or any amendment or supplement to any of the
foregoing), or the omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with
information furnished to the Trust or Distributor in writing
by or on behalf of the Company; or
(c) arise out of or are based upon any wrongful conduct of, or
violation of federal or state law by, the Company or persons
under its control, with respect to the sale, marketing or
distribution of the Contracts or Trust shares; or
(d) arise as a result of any failure by the Company, or persons
under its control or any third party with which the Company
has contractually delegated administration responsibilities
for the Contracts, to provide services, furnish materials or
make payments as required under this Agreement; or
(e) arise out of any material breach by the Company or persons
under its control of this Agreement (including any breach of
any warranties contained in Article III hereof); or
(f) arise out of any failure to transmit a request for redemption
or purchase of Trust shares or payment therefor on a timely
basis in accordance with the procedures set forth in Article
II, or any unauthorized use of the names or trade names of the
Trust or the Distributor.
This indemnification is in addition to any liability that the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the wilful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
9.2. Indemnification by the Trust. The Trust hereby agrees to, and
shall, indemnify and hold harmless the Company and each person who controls or
is affiliated with the Company within the meaning of such terms under the 1933
Act or 1940 Act and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Trust Registration Statement,
any Prospectus for Series or Classes or sales literature or
other promotional material of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or
omission was made in reliance upon and in conformity with
information furnished in writing by the Company to the Trust
or the Distributor for use in the Trust Registration
Statement, Trust Prospectus or sales literature or
promotional material for the Trust (or any amendment or
supplement to any of the foregoing) or otherwise for use in
connection with the sale of the Contracts or Trust shares;
or
(b) arise out of any untrue statement of a material fact contained
in the Contracts Registration Statement, Contracts Prospectus
or sales literature or other promotional material for the
Contracts (or any amendment or supplement to any of the
foregoing), or the omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in
writing by the Trust to the Company; or
(c) arise out of or are based upon wrongful conduct of or
violation of federal or state law by the Trust or its Trustees
or officers or persons under its control with respect to the
sale of Trust shares; or
(d) arise as a result of any failure by the Trust or its Trustees
or officers or persons under its control to provide services,
furnish materials or make payments as required under the terms
of this Agreement;
(e) arise out of any material breach by the Trust of this
Agreement or persons under its control (including any breach
of Section 6.1 of this Agreement and any warranties contained
in Article III hereof);
(f) arise out of any unauthorized use of the names or trade
names of the Company; or
(g) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net asset value
per share or dividend or capital gain distribution rate,
provided that the foregoing shall be limited to reasonable
administrative costs, and shall not apply where such
miscalculation or report is the result of (i) incorrect
information supplied by or on behalf of the Company to the
Trust or the Distributor, or (ii) circumstances outside the
Trust's or the Distributor's control.
it being understood that in no way shall the Trust be liable to the Company with
respect to any violation of insurance law, compliance with which is a
responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Trust in accordance with Section 4.4 hereof.
This indemnification is in addition to any liability that the Trust may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the wilful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
party seeking indemnification.
9.3. Indemnification by the Distributor. The Distributor hereby agrees
to, and shall, indemnify and hold harmless the Company and each person who
controls or is affiliated with the Company within the meaning of such terms
under the 1933 Act or 1940 Act and any officer, director, employee or agent of
the foregoing, against any and all losses, claims, damages or liabilities, joint
or several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they or any of them may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Trust Registration Statement,
any Prospectus for Series or Classes or sales literature or
other promotional material of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or
omission was made in reliance upon and in conformity with
information furnished in writing by the Company to the Trust
or Distributor for use in the Trust Registration Statement,
Trust Prospectus or sales literature or promotional material
for the Trust (or any amendment or supplement to any of the
foregoing) or otherwise for use in connection with the sale
of the Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact contained
in the Contracts Registration Statement, Contracts Prospectus
or sales literature or other promotional material for the
Contracts (or any amendment or supplement to any of the
foregoing), or the omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in
writing by the Distributor to the Company; or
(c) arise out of or are based upon wrongful conduct of or
violation of federal or state law by the Distributor or
persons under its control with respect to the sale of Trust
shares; or
(d) arise as a result of any failure by the Distributor or persons
under its control to provide services, furnish materials or
make payments as required under the terms of this Agreement;
(e) arise out of any material breach by the Distributor or persons
under its control of this Agreement (including any breach of
Section 6.1 of this Agreement and any warranties contained in
Article III hereof); or
(f) arise out of any unauthorized use of the names or trade
names of the Company;
it being understood that in no way shall the Distributor be liable to the
Company with respect to any violation of insurance law, compliance with which is
a responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Distributor in accordance with Section 4.4
hereof. This indemnification is in addition to any liability that the
Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is caused
by the wilful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
9.4. Rule of Construction. It is the parties' intention that, in the
event of an occurrence for which the Trust has agreed to indemnify the Company,
the Company shall seek indemnification from the Trust only in circumstances in
which the Trust is entitled to seek indemnification from a third party with
respect to the same event or cause thereof.
9.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
Relationship of the Parties; Termination
10.1. Non-Exclusivity and Non-Interference. The parties hereto
acknowledge that the arrangement contemplated by this Agreement is not
exclusive; the Trust shares may be sold to other insurance companies and
investors (subject to Section 2.8 hereof) and the cash value of the Contracts
may be invested in other investment companies, provided, however, that until
this Agreement is terminated pursuant to this Article X:
(a) the Company shall promote the Trust and the Funds made
available hereunder on a substantially similar basis as other
funding vehicles available under the Contracts;
(b) the Company shall not, without prior notice to the Distributor
(unless otherwise required by applicable law), take any action
to operate the Account as a management investment company
under the 1940 Act;
(c) the Company shall not, without the prior written consent of
the Distributor, which consent shall not be unreasonably
withheld, solicit, induce or encourage Contract Owners to
change or modify the Trust, or to change the Trust's
distributor or investment adviser (unless otherwise required
by applicable law);
(d) the Company shall not solicit, induce or encourage Contract
Owners to transfer or withdraw Contract Values allocated to a
Fund or to exchange their Contracts for contracts not allowing
for investment in the Trust, except with 60 days prior written
notice to the Distributor under circumstances where the
Company has determined such solicitation, inducement or
encouragement to be in the best interests of Contract Owners
(unless otherwise required by applicable law), provided that
the foregoing shall not apply in connection with the
implementation and operation of an asset allocation program by
the Company;
(e) the Company shall not substitute another investment company
for one or more Funds without providing written notice to the
Distributor at least [30] days in advance of effecting any
such substitution; and
(f) the Company shall not withdraw the Account's investment in the
Trust or a Fund of the Trust except as necessary to facilitate
Contract Owner requests and routine Contract processing.
10.2. Termination of Agreement. This Agreement shall not terminate
until (i) the Trust is dissolved, liquidated, or merged into another entity, or
(ii) as to any Fund that has been made available hereunder, the Account no
longer invests in that Fund and the Company has confirmed in writing to the
Distributor, if so requested by the Distributor, that it no longer intends to
invest in such Fund. However, certain obligations of, or restrictions on, the
parties to this Agreement may terminate as provided in Sections 10.3 through
10.5 and the Company may be required to redeem Trust shares pursuant to Section
10.6 or in the circumstances contemplated by Article VIII. Article IX and
Sections 5.7 and 10.7 shall survive any termination of this Agreement.
10.3. Termination of Offering of Trust Shares. The obligation of the
Trust and the Distributor to make Trust shares available to the Company for
purchase pursuant to Article II of this Agreement shall terminate at the option
of the Distributor upon written notice to the Company as provided below:
(a) upon institution of formal proceedings against the Company,
or the Distributor's reasonable determination that
institution of such proceedings is being considered by the
NASD, the SEC, the insurance commission of any state or any
other regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts, the
operation of the Account, the administration of the
Contracts or the purchase of Trust shares, or an expected or
anticipated ruling, judgment or outcome which would, in the
Distributor's reasonable judgment exercised in good faith,
materially impair the Company's or Trust's ability to meet
and perform the Company's or Trust's obligations and duties
hereunder, such termination effective upon 15 days prior
written notice;
(b) subject to the Trust's compliance with Article VI, in the
event any of the Contracts are not registered, issued or sold
in accordance with applicable federal and/or state law, such
termination effective immediately upon receipt of written
notice;
(c) if the Distributor shall determine, in its sole judgment
exercised in good faith, that either (1) the Company shall
have suffered a material adverse change in its business or
financial condition or (2) the Company shall have been the
subject of material adverse publicity which is likely to have
a material adverse impact upon the business and operations of
either the Trust or the Distributor, such termination
effective upon 30 days prior written notice;
(d) if the Distributor suspends or terminates the offering of
Trust shares of any Series or Class to all Participating
Investors or only designated Participating Investors, if
such action is required by law or by regulatory authorities
having jurisdiction or if, in the sole discretion of the
Distributor acting in good faith, suspension or termination
is necessary in the best interests of the shareholders of
any Series or Class (it being understood that "shareholders"
for this purpose shall mean Product Owners), such notice
effective immediately upon receipt of written notice, it
being understood that a lack of Participating Investor
interest in a Series or Class may be grounds for a
suspension or termination as to such Series or Class and
that a suspension or termination shall apply only to the
specified Series or Class;
(e) upon the Company's assignment of this Agreement (including,
without limitation, any transfer of the Contracts or the
Account to another insurance company pursuant to an assumption
reinsurance agreement) unless the Trust consents thereto, such
termination effective upon 30 days prior written notice;
(f) if the Company is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction
of the Trust within 10 days after written notice of such
breach has been delivered to the Company, such termination
effective upon expiration of such 10-day period;
(g) upon (i) the determination of the Trust's Board to dissolve,
liquidate or merge the Trust as contemplated by Section
10.2(i), in connection with which the Trust and the
Distributor undertake to provide the Company with advance
notice of any such meeting at which dissolution, liquidation
or merger of the Trust is considered, (ii) termination of the
Agreement pursuant to Section 10.2(ii), or (iii) notice from
the Company pursuant to Section 10.4 or 10.5, such termination
pursuant hereto to be effective upon 15 days prior written
notice; or
(h) at any time upon six months prior notice.
Except in the case of an option exercised under clause (b), (d) or (g), the
obligations shall terminate only as to new Contracts and the Distributor shall
continue to make Trust shares available to the extent necessary to permit owners
of Contracts in effect on the effective date of such termination (hereinafter
referred to as "Existing Contracts") to reallocate investments in the Trust,
redeem investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts.
10.4. Termination of Investment in a Fund. The Company may elect to
cease investing in a Fund, promoting a Fund as an investment option under the
Contracts, or withdraw its investment or the Account's investment in a Fund,
subject to compliance with applicable law, upon written notice to the Trust of
any of the following events (unless provided otherwise below, effective as soon
as reasonably practicable but in no event later than 10 days after the
occurrence of the event):
(a) if the Trust informs the Company pursuant to Section 4.4 that
it will not cause such Fund to comply with investment
restrictions as requested by the Company and the Trust and the
Company are unable to agree upon any reasonable alternative
accommodations;
(b) if shares in such Fund are not reasonably available to meet
the requirements of the Contracts as determined by the Company
(including any non-availability as a result of notice given by
the Distributor pursuant to Section 10.3(d)), and the
Distributor, after receiving written notice from the Company
of such non-availability, fails to make available, within 5
Business Days after receipt of such notice, a sufficient
number of shares in such Fund to meet the requirements of the
Contracts; or
(c) if such Fund fails to meet the diversification requirements
specified in Section 817(h) of the Code and any regulations
thereunder and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure
or correct such failure;
(d) if the Company determines in its sole judgement, exercised in
good faith, that either the Investment Adviser or the
Distributor has suffered a material adverse change in its
business, operations or financial condition since the date of
this Agreement, or is the subject of material adverse
publicity which is likely to have a material adverse impact
upon the business and operations of the Company, such
termination effective upon 30 days prior written notice;
(e) upon the Trust's or the Distributor's assignment of this
Agreement, unless the Company consents thereto, such
termination effective upon 30 days prior written notice; or
(f) at any time upon 6 months prior notice.
Such termination shall apply only as to the affected Fund and shall not apply to
any other Fund in which the Company or the Account invests.
10.5. Termination of Investment by the Company. The Company may elect
to cease investing in all Series or Classes of the Trust made available
hereunder, promoting the Trust as an investment option under the Contracts, or
withdraw its investment or the Account s investment in the Trust, subject to
compliance with applicable law, upon written notice to the Trust within 15 days
of the occurrence of any of the following events (unless provided otherwise
below):
(a) upon institution of formal proceedings against the Trust or
the Distributor (but only with regard to the Trust) by the
NASD, the SEC or any state securities or insurance commission
or any other regulatory body;
(b) if, with respect to the Trust or a Fund, the Trust or the Fund
ceases to qualify as a regulated investment company under
Subchapter M of the Code, as defined therein, or any successor
or similar provision, or if the Company reasonably believes
that the Trust may fail to so qualify, and the Trust, upon
written request, fails to provide reasonable assurance that it
will take action to cure or correct such failure within 30
days;
(c) if the Trust or Distributor is in material breach of a
provision of this Agreement, which breach has not been cured
to the satisfaction of the Company within 10 days after
written notice of such breach has been delivered to the Trust
or the Distributor, as the case may be, such termination
effective upon expiration of such 10-day "cure" period;
(d) if the Company determines in its sole judgement, exercised in
good faith, that either the Investment Adviser or the
Distributor has suffered a material adverse change in its
business, operations or financial condition since the date of
this Agreement, or is the subject of material adverse
publicity which is likely to have a material adverse impact
upon the business and operations of the Company, such
termination effective upon 30 days prior written notice;
(e) upon the Trust's or the Distributor's assignment of this
Agreement, unless the Company consents thereto, such
termination effective upon 30 days prior written notice; or
(f) at any time upon 6 months prior notice.
10.6. Company Required to Redeem. The parties understand and
acknowledge that it is essential for compliance with Section 817(h) of the Code
that the Contracts qualify as annuity contracts or life insurance policies, as
applicable, under the Code. Accordingly, if any of the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable, under
the Code, or if the Trust reasonably believes that any such Contracts may fail
to so qualify, the Trust shall have the right to require the Company to redeem
Trust shares attributable to such Contracts upon notice to the Company and the
Company shall so redeem such Trust shares in order to ensure that the Trust
complies with the provisions of Section 817(h) of the Code applicable to
ownership of Trust shares. Notice to the Company shall specify the period of
time the Company has to redeem the Trust shares or to make other arrangements
satisfactory to the Trust and its counsel, such period of time to be determined
with reference to the requirements of Section 817(h) of the Code. In addition,
the Company may be required to redeem Trust shares pursuant to action taken or
request made by the Trust Board in accordance with the Exemptive Order described
in Article VIII or any conditions or undertakings set forth or referenced
therein, or other SEC rule, regulation or order that may be adopted after the
date hereof. The Company agrees to redeem shares in the circumstances described
herein and to comply with applicable terms and provisions. Also, in the event
that the Distributor suspends or terminates the offering of a Series or Class
pursuant to Section 10.3(d) of this Agreement, the Company, upon request by the
Distributor, will cooperate in taking appropriate action to withdraw the
Account's investment in the respective Fund.
10.7. Confidentiality. A party will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
other parties to this Agreement and their affiliates.
ARTICLE XI
Applicability to New Accounts and New Contracts
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts, any Series or Class, additions of new classes of Contracts to be
issued by the Company and separate accounts therefor investing in the Trust.
Such amendments may be made effective by executing the form of amendment
included on each schedule attached hereto. The provisions of this Agreement
shall be equally applicable to each such class of Contracts, Series, Class or
separate account, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all of
the parties.
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this
Agreement is to be made in writing and shall be given:
If to the Trust:
Douglas C. Grip
President
Goldman Sachs Variable Insurance Trust
One New York Plaza
New York, NY 10004
If to the Distributor:
Douglas C. Grip
Vice President
Goldman Sachs & Co.
One New York Plaza
New York, NY 10004
If to the Company:
[Name]
[Title]
________________ Life Insurance Company
[Street Address]
[City, State]
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
Miscellaneous
13.1. Interpretation. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the state
of Delaware, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933
Act, 1940 Act and Securities Exchange Act of 1934, as amended,
and the rules, regulations and rulings thereunder, including
such exemptions from those statutes, rules, and regulations as
the SEC may grant, and the terms hereof shall be limited,
interpreted and construed in accordance therewith.
(b) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or
effect.
(c) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of the Agreement shall not be affected thereby.
(d) The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all
rights, remedies and obligations, at law or in equity, which
the parties hereto are entitled to under state and federal
laws.
13.2. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which together shall constitute one and the
same instrument.
13.3. No Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Company, the Distributor or the
Trust without the prior written consent of the other parties.
13.4. Declaration of Trust. A copy of the Declaration of Trust of the
Trust is on file with the Secretary of State of the state of Delaware, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as trustees, and is not binding upon any of the Trustees,
officers or shareholders of the Trust individually, but binding only upon the
assets and property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
on the date specified below.
GOLDMAN SACHS VARIABLE INSURANCE TRUST
(Trust)
Date:_______________ By:___________________________________
Name:
Title:
GOLDMAN, SACHS & CO.
(Distributor)
Date:_______________ By:___________________________________
Name:
Title:
_________________________________
(Company)
Date:_______________ By:___________________________________
Name:
Title:
<PAGE>
Schedule 1
Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
<TABLE>
<CAPTION>
Date Established by
Name of Account and Board of Directors of the SEC 1940 Act Registration Type of Product Supported
Subaccounts Company Number by Account
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
<S> <C>
</TABLE>
[Form of Amendment to Schedule 1]
Effective as of _________, the following separate accounts of the Company are
hereby added to this Schedule 1 and made subject to the Agreement:
<TABLE>
<CAPTION>
Date Established by
Name of Account and Board of Directors of the SEC 1940 Act Registration Type of Product Supported
Subaccounts Company Number by Account
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
<S> <C>
</TABLE>
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 1 in accordance with Article XI of the Agreement.
- ---------------------------------- ------------------------------------
Goldman Sachs Variable Insurance Trust Life Insurance Company
- ---------------------------------- ------------------------------------
Goldman, Sachs & Co.
<PAGE>
Schedule 2
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 1
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
<TABLE>
<CAPTION>
SEC 1933 Act
Policy Marketing Name Registration Number Contract Form Number Annuity or Life
- -------------------------------------- -------------------- ----------------------- -------------------
<S> <C>
</TABLE>
[Form of Amendment to Schedule 2]
Effective as of _______, the following classes of Contracts are hereby added to
this Schedule 2 and made subject to the Agreement:
<TABLE>
<CAPTION>
SEC 1933 Act Registration Name of Supporting
Policy Marketing Name Number Account Annuity or Life
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
<S> <C>
</TABLE>
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 2 in accordance with Article XI of the Agreement.
Schedule 3
Trust Classes and Series
Available Under
Each Class of Contracts
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Contracts:
<TABLE>
<CAPTION>
Contracts Marketing Name Trust Classes and Series
- --------------------------------------- --------------------------------------
<S> <C>
</TABLE>
[Form of Amendment to Schedule 3]
Effective as of __________________, this Schedule 3 is hereby amended to reflect
the following changes in Trust Classes and Series:
<TABLE>
<CAPTION>
Contracts Marketing Name Trust Classes and Series
- --------------------------------------- --------------------------------------
<S> <C>
</TABLE>
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 3 in accordance with Article XI of the Agreement.
- ---------------------------------- ------------------------------------
Goldman Sachs Variable Insurance Trust Life Insurance Company
- ---------------------------------- ------------------------------------
Goldman, Sachs & Co.
<PAGE>
Schedule 4
Investment Restrictions
Applicable to the Trust
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
- --------------------------------------------------------------------------------
[Form of Amendment to Schedule 4]
Effective as of ___________________, this Schedule 4 is hereby amended to
reflect the following changes:
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 4 in accordance with Article XI of the Agreement.
- ---------------------------------- ------------------------------------
Goldman Sachs Variable Insurance Trust Life Insurance Company
- ---------------------------------- ------------------------------------
Goldman, Sachs & Co.
<PAGE>
Schedule 5
Notice Provided Pursuant to Section 2.3(a)
Notice provided to the Trust by the Company concerning purchases and redemption
orders pursuant to Section 2.3(a) of this Agreement shall be made to:
Goldman Sachs Asset Management
Shareholder Services (Chicago)
[GE Capital Life Assurance letterhead]
May 6, 1998
GE Capital Life Assurance Company of New York
125 Park Avenue, 6th Floor
New York, NY 10017-5529
Gentlemen:
With reference to Pre-Effective Amendment No. 1 to Form N-4 (File Number
333-39955) filed by GE Capital Life Assurance Company of New York and GE Capital
Life Separate Account II with the Securities and Exchange Commission covering
flexible premium variable deferred annuity policies, I have examined such
documents and such law as I considered necessary and appropriate, and on the
basis of such examination, it is my opinion that:
1. GE Capital Life Assurance Company of New York is duly organized and validly
existing under the laws of the State of New York and has been duly
authorized to issue individual flexible premium variable deferred annuity
policies by the Bureau of Insurance of the State Corporation Commission of
the State of New York.
2. GE Capital Life Separate Account II is a duly authorized and existing
separate account established pursuant to the provisions of the Code of New
York.
3. The flexible premium variable deferred annuity policies, when issued as
contemplated by said Form N-4 Registration Statement, will constitute
legal, validly issued and binding obligations of GE Capital Life Assurance
Company of New York.
I hereby consent to the use of this letter, or copy thereof, as an exhibit to
Pre Effective Amendment No. 1 to the Registration Statement on Form N-4 (File
Number 333-39955) and the reference to me under the caption "Legal Matters" in
the Statement of Additional Information contained in said Pre-Effective
Amendment.
Sincerely,
/s/Michael J. Furney
_____________________
Michael J. Furney
Assistant Vice President
[Sutherland, Asbill & Brennan LLP Letterhead]
STEPHEN E. ROTH
DIRECT LINE: (202) 383-0158
Internet: [email protected]
May 6, 1998
Board of Directors
The Life Insurance Company of Virginia
6610 West Broad Street
Richmond, Virginia 23230
Ladies and Gentlemen:
We hereby consent to the reference to our name under the
caption "Legal Matters" in the Prospectus filed as part of Pre-Effective
Amendment No. 1 to the registration statement on Form N-4 for GE Capital Life
Separate Account II (File No. 333-39955). In giving this consent, we do not
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN LLP
By: /s/ Stephen E. Roth
--------------------------------
Stephen E. Roth
Consent of Independent Accountants
The Board of Directors
GE Capital Life Assurance Company of New York:
We consent to the use of our report included in the Statement of Additional
Information incorporated herein by reference (pre-effective amendment no. 1 to
Form N-4 of registration no. 333-39955) and to the reference to our firm under
the heading "Experts" in the Statement of Additional Information.
KPMG Peat Marwick LLP
Richmond, Virginia
May 8, 1998
