Exhibit (8)(a)
FUND PARTICIPATION AGREEMENT
PRUCO LIFE INSURANCE COMPANY,
AMERICAN SKANDIA TRUST,
AMERICAN SKANDIA INVESTMENT SERVICES, INC.,
PRUDENTIAL INVESTMENTS LLC,
AMERICAN SKANDIA MARKETING, INC.
AND
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
MAY 1, 2005, AS AMENDED AND RESTATED JUNE 8, 2005
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares..................................................................... 4
ARTICLE II. Representations and Warranties.......................................................... 8
ARTICLE III. Prospectuses and Proxy Statements; Voting............................................... 13
ARTICLE IV. Sales Material and Information.......................................................... 16
ARTICLE V. Fees and Expenses....................................................................... 18
ARTICLE VI. Diversification and Qualification....................................................... 18
ARTICLE VII. Potential Conflicts and Compliance With Mixed and Shared Funding Exemptive Order ....... 21
ARTICLE VIII. Indemnification ........................................................................ 24
ARTICLE IX. Applicable Law.......................................................................... 31
ARTICLE X. Termination............................................................................. 31
ARTICLE XI. Notices................................................................................. 35
ARTICLE XII. Miscellaneous........................................................................... 36
SCHEDULE A Expenses................................................................................ 42
SCHEDULE B Diversification Compliance Report and Certification.....................................
PARTICIPATION AGREEMENT
Among
PRUCO LIFE INSURANCE COMPANY,
AMERICAN SKANDIA TRUST,
AMERICAN SKANDIA INVESTMENT SERVICES, INC.,
PRUDENTIAL INVESTMENTS LLC,
AMERICAN SKANDIA MARKETING, INC.
and
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
THIS AGREEMENT, made and entered into as of this 1st day of May, 2005 and
amended and restated as of June 8, 2005, by and among PRUCO LIFE INSURANCE
COMPANY (the "Company"), an Arizona life insurance company, on its own behalf
and on behalf of its separate accounts (the "Accounts"); AMERICAN SKANDIA TRUST,
an open-end management investment company organized under the laws of
Massachusetts (the "Fund"); AMERICAN XXXXXXX
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INVESTMENT SERVICES, INC., a Connecticut corporation ("ASISI"); PRUDENTIAL
INVESTMENTS LLC ("PI," and collectively with ASISI, the "Advisers" and each an
"Adviser"), AMERICAN SKANDIA MARKETING, INC., a Delaware corporation ("ASM");
and PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC, a Delaware limited liability
company ("PIMS," and collectively with ASM, the "Distributors" and each a
"Distributor").
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/or variable annuity
contracts (collectively, the "Variable Insurance Products") to be offered by
insurance companies, many of which have entered into participation agreements
similar to this Agreement (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (hereinafter the "SEC"), dated August 1, 1995 (File No. 812-9384),
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
life insurance companies that may or may not be affiliated with one another and
qualified pension and retirement plans ("Qualified Plans") (hereinafter the
"Mixed and Shared Funding Exemptive Order"); and
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WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolio(s) are registered under
the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, each Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, each Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, (the "1934 Act") and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Company has issued and plans to continue to issue certain
variable life insurance policies and variable annuity contracts supported wholly
or partially by the Accounts (the "Contracts"); 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 Connecticut, to set aside and
invest assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to continue to purchase shares in the
Portfolios on behalf of the Accounts to fund the Contracts, and the Fund is
authorized to sell such shares to unit investment trusts such as the Accounts at
net asset value; and
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company also intends to continue to purchase shares in other
open-end investment companies or series thereof not affiliated with the Fund
(the "Unaffiliated Funds") on behalf of the Accounts to fund the Contracts; and
WHEREAS, the parties wish to enter into a written agreement governing the
arrangement already existing among the parties.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Distributors and the Advisers agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of the Portfolios
which the Account orders, executing such orders on each Business Day at the net
asset value next computed after receipt by the Fund or its designee of the order
for the shares of the Portfolios. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders and receipt by such
designee shall constitute receipt by the Fund, provided that the Fund receives
notice of any such order by 10:00 a.m. Eastern time on the next following
Business Day. "Business Day" shall 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. "Valuation Time" shall mean the time as
of which the Fund calculates net asset value for the shares of the Portfolios on
the relevant Business Day.
1.2. The Fund agrees to make shares of the Portfolios available for
purchase at the applicable net asset value per share by the Company and the
Accounts on those days on which
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the Fund calculates its Portfolios' net asset value pursuant to rules of the
SEC, and the Fund shall calculate such net asset value on each day which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, 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 Fund acting in good faith, necessary or appropriate in the
best interests of the shareholders of such Portfolio. All orders accepted by the
Company shall be subject to the terms of the then current prospectus of the
Fund. The Company shall use its best efforts, and shall reasonably cooperate
with, the Fund to enforce stated prospectus policies regarding transactions in
Portfolio shares. The Company acknowledges that orders accepted by it in
violation of the Fund's stated policies may be subsequently revoked or cancelled
by the Fund and that the Fund shall not be responsible for any losses incurred
by the Company or the Contract owner as a result of such cancellation. In
addition, the Company acknowledges that the Fund has the right to refuse any
purchase order for any reason, particularly if the Fund determines that a
Portfolio would be unable to invest the money effectively in accordance with its
investment policies or would otherwise be adversely affected due to the size of
the transaction, frequency of trading, or other factors.
1.3. The Fund will not sell shares of the Portfolios to any other
Participating Insurance Company separate account unless an agreement containing
provisions the substance of which are the same as Sections 2.1, 2.2 (except with
respect to designation of applicable law), 3.5, 3.6, 3.7, and Article VII of
this Agreement is in effect to govern such sales.
1.4. 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
each Business Day 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 1.4,
the Company shall be the designee of the Fund for receipt of requests for
redemption and receipt by such designee shall constitute
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receipt by the Fund, provided that the Fund receives notice of any such request
for redemption by 10:00 a.m. Eastern time on the next following Business Day.
1.5. The parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
Participating Insurance Companies (subject to Section 1.3) and the cash value of
the Contracts may be invested in other investment companies.
1.6. The Company shall pay for Fund shares by 3:00 p.m. Eastern time on the
next Business Day after an order to purchase Fund shares is received in
accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire and/or by a credit for any shares redeemed the
same day as the purchase.
1.7. The Fund shall pay and transmit the proceeds of redemptions of Fund
shares by 11:00 a.m. Eastern Time on the next Business Day after a redemption
order is received in accordance with Section 1.4 hereof; provided, however, that
the Fund may delay payment in extraordinary circumstances to the extent
permitted under Section 22(e) of the 1940 Act. Payment shall be in federal funds
transmitted by wire and/or a credit for any shares purchased the same day as the
redemption.
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 the Accounts. Shares
purchased from the Fund will be recorded in an appropriate title for the
relevant Account or the relevant sub-account of an Account.
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1.9. The Fund shall furnish same day notice (by electronic communication or
telephone, followed by electronic confirmation) to the Company of any income,
dividends or capital gain distributions payable on a Portfolio'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 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 by the end of the next following Business Day 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 each Business Day as soon as reasonably practicable
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 6:00 p.m. Eastern time. In
the event of an error in the computation of a Portfolio's net asset value per
share ("NAV") or any dividend or capital gain distribution (each, a "pricing
error"), an Adviser or the Fund shall immediately notify the Company as soon as
possible after discovery of the error. Such notification may be verbal, but
shall be confirmed promptly in writing. A pricing error shall be corrected as
follows: (a) if the pricing error results in a difference between the erroneous
NAV and the correct NAV of less than $0.01 per share, then no corrective action
need be taken; (b) if the pricing error results in a difference between the
erroneous NAV and the correct NAV equal to or greater than $0.01 per share, but
less than 1/2 of 1% of the Portfolio's NAV at the time of the error, then the
Advisers shall reimburse the Portfolio for any loss, after taking into
consideration any positive effect of such error; however, no adjustments to
Contract owner accounts need be made; and (c) if the pricing error results in a
difference between the erroneous NAV and the correct NAV equal to or greater
than 1/2 of 1% of the Portfolio's NAV at the time of the error, then the
Advisers shall reimburse the Portfolio for any loss (without taking into
consideration any positive effect of such error) and shall reimburse the Company
for the costs of adjustments made to correct Contract owner accounts. If an
adjustment is necessary to correct a material error which has caused Contract
owners to receive less than the amount to which they are entitled, the number of
shares of the applicable sub-account of such Contract owners will be adjusted
and the amount of any
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underpayments shall be credited by the Advisers to the Company for crediting of
such amounts to the applicable Contract owners accounts. Upon notification by an
Adviser of any overpayment due to a material error, the Company shall promptly
remit to the Advisers any overpayment that has not been paid to Contract owners.
In no event shall the Company be liable to Contract owners for any such
adjustments or underpayment amounts. A pricing error within categories (b) or
(c) above shall be deemed to be "materially incorrect" or constitute a "material
error" for purposes of this Agreement. The standards set forth in this Section
1.10 are based on the parties' understanding of the views expressed by the staff
of the SEC as of the date of this Agreement. In the event the views of the SEC
staff are later modified or superseded by SEC or judicial interpretation, the
parties shall amend the foregoing provisions of this Agreement to comport with
the appropriate applicable standards, on terms mutually satisfactory to all
parties.
1.11. The parties agree to mutually cooperate with respect to any state
insurance law restriction or requirement applicable to the Fund's investments;
provided, however, that the Fund reserves the right not to implement
restrictions or take other actions required by state insurance law if the Fund
or an Adviser determines that the implementation of the restriction or other
action is not in the best interest of Fund shareholders.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that: (a) the securities deemed to
be issued by the Accounts under the Contracts are or will be registered under
the 1933 Act, or are not so registered in proper reliance upon an exemption from
such registration requirements; (b) the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws;
and (c) the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements.
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2.2. The Company represents and warrants that: (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it has
legally and validly established each Account prior to any issuance or sale of
units thereof as a segregated asset account under Connecticut law; and (c) it
has registered 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 will maintain such registration for so long as any Contracts are
outstanding as required by applicable law or, alternatively, the Company has not
registered one or more Accounts in proper reliance upon an exclusion from such
registration requirements.
2.3. The Fund represents and warrants that: (a) the Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act; (b) the Fund
shares sold pursuant to this Agreement shall be duly authorized for issuance and
sold in compliance with all applicable federal securities laws including without
limitation the 1933 Act, the 1934 Act, and the 1940 Act; (c) the Fund is and
shall remain registered under the 1940 Act; and (d) the Fund shall amend the
registration statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares.
2.4. The parties acknowledge that the Fund reserves the right to adopt one
or more plans pursuant to Rule 12b-1 under the 1940 Act and to impose an
asset-based or other charge to finance distribution expenses as permitted by
applicable law and regulation. The Fund and the Advisers agree to comply with
applicable provisions and SEC interpretation of the 1940 Act with respect to any
distribution plan.
2.5. The Fund represents and warrants that it shall register and qualify
the shares for sale in accordance with the laws of the various states if and to
the extent required by applicable law.
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2.6. The Fund represents and warrants 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.
2.7. Each Adviser represents and warrants that it is and shall remain duly
registered under all applicable federal and state securities laws and that it
shall perform its obligations for the Fund in compliance in all material
respects with any applicable state and federal securities laws.
2.8. Each Distributor represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the Fund in compliance in all material
respects with the laws of any applicable state and federal securities laws.
2.9. The Fund and the Advisers represent and warrant that all of their
respective officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are, and shall
continue to be at all times, covered by one or more blanket fidelity bonds or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid bonds shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company.
2.10. The Fund and the Advisers represent and warrant that they will
provide the Company with as much advance notice as is reasonably practicable of
any material change affecting the Portfolios (including, but not limited to, any
material change in the registration
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statement or prospectus affecting the Portfolios) and any proxy solicitation
affecting the Portfolios and consult with the Company in order to implement any
such change in an orderly manner, recognizing the expenses of changes and
attempting to minimize such expenses by implementing them in conjunction with
regular annual updates of the prospectus for the Contracts.
2.11 The Company represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986 as
amended (the "Code"), that the Contracts are currently and at the time of
issuance will be treated as annuity contracts or life insurance policies under
applicable provisions of the Code, and that it will make every effort to
maintain such treatment and that it will notify the Fund, the Distributors and
the Advisers 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. In addition, the Company 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 requirements, and it will notify the Fund, the Distributors
and the Advisers immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met in the
future. The Company represents and warrants that it will not purchase Fund
shares with assets derived from tax-qualified retirement plans except,
indirectly, through Contracts purchased in connection with such plans.
2.12 The Company represents and warrants that it is currently in
compliance, and will remain in compliance, with all applicable anti-money
laundering laws, regulations, and requirements. In addition, the Company
represents and warrants that it has adopted and implemented policies and
procedures reasonably designed to achieve compliance with the applicable
requirements administered by the Office of Foreign Assets Control ("OFAC") of
the U.S. Department of the Treasury.
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2.13 The Company represents and warrants that it is currently in
compliance, and will remain in compliance, with all applicable laws, rules and
regulations relating to consumer privacy, including, but not limited to,
Regulation S-P.
2.14 The Company represents and warrants that it has adopted, and will at
all times during the term of this Agreement maintain, reasonable and appropriate
procedures ("Late Trading Procedures") designed to ensure that any and all
orders relating to the purchase, sale or exchange of Fund shares communicated to
the Fund to be treated in accordance with Article I of this Agreement as having
been received on a Business Day have been received by the Valuation Time on such
Business Day and were not modified after the Valuation Time, and that all orders
received from Contract owners but not rescinded by the Valuation Time were
communicated to the Fund or its agent as received for that Business Day. Each
transmission of orders by the Company shall constitute a representation by the
Company that such orders are accurate and complete and relate to orders received
by the Company by the Valuation Time on the Business Day for which the order is
to be priced and that such transmission includes all orders relating to Fund
shares received from Contract owners but not rescinded by the Valuation Time.
The Company agrees to provide the Fund or its designee with a copy of the Late
Trading Procedures and such certifications and representations regarding the
Late Trading Procedures as the Fund or its designee may reasonably request. The
Company will promptly notify the Fund in writing of any material change to the
Late Trading Procedures.
2.15. The Company represents and warrants that it has adopted, and will at
all times during the term of this Agreement maintain, reasonable and appropriate
procedures ("Market Timing Procedures") designed to minimize any adverse impact
on other Fund investors due to excessive trading. The Company agrees to provide
the Fund or its designee with a copy of the Market Timing Procedures and such
certifications and representations regarding the Market Timing Procedures as the
Fund or its designee may reasonably request. The Company will
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promptly notify the Fund in writing of any material change to the Market Timing
Procedures. The parties agree to cooperate in light of any conflict between the
Market Timing Procedures and actions taken or policies adopted by the Fund
designed to minimize any adverse impact on other Fund investors due to excessive
trading.
ARTICLE III. Printing and Distribution of Fund Documents and other
Administrative Services Provided by the Company to the Fund
3.1. At least annually, an Adviser or Distributor shall provide the Company
with camera-ready copy of the Fund's prospectus and any supplements thereto for
printing and delivery by the Company to all Contract owners. If requested by the
Company in lieu thereof, an Adviser, a Distributor or the Fund shall provide
camera-ready copy (including an electronic version of the current prospectus) to
the Company and other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus for the Fund is
amended) to have the prospectus for the Contracts and the prospectus for the
Fund printed together in one document and delivered to all Contract owners.
3.2. If applicable state or federal laws or regulations require that the
Statement of Additional Information ("SAI") for the Fund be distributed to all
Contract owners, then the Fund, a Distributor and/or an Adviser shall provide
the Company with camera-ready copy of the Fund's SAI and any supplements thereto
for printing and delivery to all Contract ownersSchedule B An Adviser, a
Distributor and/or the Fund shall also provide camera-ready copy of the SAI to
the Company for printing and delivery to any Contract owner or prospective owner
who requests such SAI from the Fund.
3.3. The Fund, a Distributor and/or an Adviser shall provide the Company
with copies of the Fund's proxy material, reports to shareholders and other
communications to
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shareholders suitable for printing to permit Schedule B timely distribution
thereof by the Company to Contract owners.
3.4 The Company shall also provide the following administrative services to
the Fund:
Maintenance of books and records
. In the general ledger, reconcile and balance ASLAC's separate account
investments in the various portfolios of the Fund
Purchase and Redemption Orders
. Reconcile and provide notice to AST of (a) net cash flow into AST, and
(b) cash required for net redemption orders with confirmation thereof
to AST
AST-Related Contract Owner Services
. Assist AST with proxy solicitations, specifically with respect to
soliciting voting instructions from contract owners
. Investigate and respond to inquiries from contract owners that relate
to AST and not to the separate account
Reports
. Periodic information reporting to AST
. Preparation of reports regarding AST for third-party reporting
services
3.5. It is understood and agreed that, except with respect to information
regarding the Company provided in writing by that party, the Company shall not
be responsible for the
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content of the prospectus or SAI for the Fund. It is also understood and agreed
that, except with respect to information regarding the Fund, the Distributors,
the Advisers or the Portfolios provided in writing by the Fund, a Distributor or
an Adviser, neither the Fund, the Distributors nor the Advisers are responsible
for the content of the prospectus or SAI for the Contracts.
3.6. If and to the extent required by law the Company shall:
(a) solicit voting instructions from Contract owners;
(b) vote the Portfolio shares held in the Accounts in accordance with
instructions received from Contract owners;
(c) vote Portfolio shares held in the Accounts for which no
instructions have been received in the same proportion as Portfolio shares
for which instructions have been received from Contract owners, so long as
and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners; and
(d) vote Portfolio shares held in its general account or otherwise in
the same proportion as Portfolio shares for which instructions have been
received from Contract owners, so long as and to the extent that the SEC
continues to interpret the 1940 Act to require such voting by the insurance
company. The Company reserves the right to vote Fund shares in its own
right, to the extent permitted by law.
3.7. The Company shall be responsible for assuring that each of its
separate accounts holding shares of a Portfolio calculates voting privileges as
directed by the Fund and agreed to by the Company and the Fund. The Fund agrees
to promptly notify the Company of any changes of interpretations or amendments
of the Mixed and Shared Funding Exemptive Order.
3.8. 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 (except insofar
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as the SEC may interpret Section 16 of the 1940 Act not to require such
meetings) or, as the Fund currently intends, 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 SEC's interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors or
trustees and with whatever rules the SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall not give any information or make any representations
or statements on behalf of the Fund in connection with the sale of the Contracts
other than the information or representations contained in the registration
statement, including the prospectus or SAI for the Fund shares, as the same may
be amended or supplemented from time to time, or in sales literature or other
promotional material approved by the Fund, a Distributor or an Adviser, except
with the permission of the Fund, a Distributor or an Adviser.
4.2. The Fund, the Distributors and the Advisers shall not give any
information or make any representations on behalf of the Company or concerning
the Company, the Accounts, or the Contracts other than the information or
representations contained in a registration statement, including the prospectus
or SAI for the Contracts, as the same may be amended or supplemented from time
to time, or in sales literature or other promotional material approved by the
Company or its designee, except with the permission of the Company.
4.3. For purposes of Articles IV and VIII, the phrase "sales literature and
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other
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public media; e.g., on-line networks such as the Internet or other electronic
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 shareholder reports,
and proxy materials (including solicitations for voting instructions) and any
other material constituting sales literature or advertising under the NASD
rules, the 1933 Act or the 0000 Xxx.
4.4. At the request of any party to this Agreement, each other party will
make available to the other party's independent auditors and/or representatives
of the appropriate regulatory agencies, all records, data and access to
operating procedures that may be reasonably requested in connection with
compliance and regulatory requirements related to this Agreement or any party's
obligations under this Agreement.
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ARTICLE V. Fees and Expenses
5.1. In consideration of the services provided by the Company to the Fund
that are set forth in sections 3.1, 3.2, 3.3 and 3.4 under Agreement, the Fund
will pay the Company 0.10% on an annualized basis of the net asset value of
shares of the Fund owned by separate accounts of the Company that are invested
in the Fund. Such amount shall be determined on the last day of each calendar
quarter and is payable within 10 days after the end of such calendar quarter.
Except as otherwise provided in this Agreement, the Fund, the Distributors and
the Advisers shall pay no fee or other compensation to the Company under this
Agreement, and the Company shall pay no fee or other compensation to the Fund, a
Distributor or an Adviser under this Agreement. provided, however, the parties
may enter into other agreements relating to the Company's investment in the
Fund, including services agreements.
ARTICLE VI. Diversification and Qualification
6.1. The Fund, the Distributors and the Advisers represent and warrant that
the Fund and each Portfolio thereof will at all times comply with Section 817(h)
of the Code and Treasury Regulation (S)1.817-5, as amended from time to time,
and any Treasury interpretations thereof, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications or successor provisions to such Section or
Regulations. The Fund, a Distributor or an Adviser shall provide to the Company
a quarterly written diversification report, in the form attached hereto as
Schedule A which shall show the results of the quarterly Section 817(h)
diversification test and include a certification as to whether each Portfolio
complies with the Section 817(h) diversification requirement. The
diversification report shall be provided to the Company within 10 calendar days
of the end of a quarter.
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6.2. The Fund, the Distributors and the Advisers agree that shares of the
Portfolios will be sold only to Participating Insurance Companies and their
separate accounts and to Qualified Plans. No shares of any Portfolio of the Fund
will be sold to the general public.
6.3. The Fund, the Distributors and the Advisers represent and warrant that
the Fund and each Portfolio is currently qualified as a Regulated Investment
Company under Subchapter M of the Code, and that each Portfolio will maintain
such qualification (under Subchapter M or any successor or similar provisions)
as long as this Agreement is in effect.
6.4. The Fund, a Distributor or an Adviser will notify the Company
immediately upon having a reasonable basis for believing that the Fund or any
Portfolio has ceased to comply with the aforesaid Section 817(h) diversification
or Subchapter M qualification requirements or might not so comply in the future.
6.5. Without in any way limiting the effect of Sections 8.2, 8.3 and 8.4
hereof and without in any way limiting or restricting any other remedies
available to the Company, an Adviser or a Distributor will pay all costs
associated with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Fund or any Portfolio to comply with Sections 6.1,
6.2, or 6.3 hereof, including all costs associated with reasonable and
appropriate corrections or responses to any such failure; such costs may
include, but are not limited to, the costs involved in creating, organizing, and
registering a new investment company as a funding medium for the Contracts
and/or the costs of obtaining whatever regulatory authorizations are required to
substitute shares of another investment company for those of the failed
Portfolio (including but not limited to an order pursuant to Section 26(c) of
the 1940 Act).
6.6. The Company agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review of the
Company (or, to the
19
Company's knowledge, of any Contract owner) that any Portfolio has failed to
comply with the diversification requirements of Section 817(h) of the Code or
the Company otherwise becomes aware of any facts that could give rise to any
claim against the Fund, a Distributor or an Adviser as a result of such a
failure or alleged failure:
(a) The Company shall promptly notify the Fund, the Distributors and
the Advisers of such assertion or potential claim;
(b) The Company shall consult with the Fund, the Distributors and the
Advisers as to how to minimize any liability that may arise as a result of
such failure or alleged failure;
(c) The Company shall use its best efforts to minimize any liability
of the Fund, the Distributors and the Advisers resulting from such failure,
including, without limitation, demonstrating, pursuant to Treasury
Regulations, Section 1.817-5(a)(2), to the commissioner of the IRS that
such failure was inadvertent;
(d) Any written materials to be submitted by the Company to the IRS,
any Contract owner or any other claimant in connection with any of the
foregoing proceedings or contests (including, without limitation, any such
materials to be submitted to the IRS pursuant to Treasury Regulations,
Section 1.817-5(a)(2)) shall be provided by the Company to the Fund, the
Distributors and the Advisers (together with any supporting information or
analysis) within at least two (2) business days prior to submission;
(e) The Company shall provide the Fund, the Distributors and the
Advisers with such cooperation as the Fund, the Distributors and the
Advisers shall reasonably request
20
(including, without limitation, by permitting the Fund, the Distributors
and the Advisers to review the relevant books and records of the Company)
in order to facilitate review by the Fund, the Distributors and the
Advisers of any written submissions provided to it or its assessment of the
validity or amount of any claim against it arising from such failure or
alleged failure;
(f) The Company shall not with respect to any claim of the IRS or any
Contract owner that would give rise to a claim against the Fund, the
Distributors and the Adviser s(i) compromise or settle any claim, (ii)
accept any adjustment on audit, or (iii) forego any allowable
administrative or judicial appeals, without the express written consent of
the Fund, the Distributors and the Advisers, which shall not be
unreasonably withheld; provided that, the Company shall not be required to
appeal any adverse judicial decision unless the Fund and the Advisers shall
have provided an opinion of independent counsel to the effect that a
reasonable basis exists for taking such appeal; and further provided that
the Fund, the Distributors and the Advisers shall bear the costs and
expenses, including reasonable attorney's fees, incurred by the Company in
complying with this clause (f).
ARTICLE VII. Potential Conflicts and Compliance With Mixed and Shared Funding
Exemptive Order
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 is being managed; (e) a difference in voting
21
instructions given by variable annuity contract and variable life insurance
contract owners or by contract owners of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to disregard
the voting instructions of contract owners. The Board shall promptly inform 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 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 Contract owner voting instructions
are to be disregarded. Such responsibilities shall be carried out by the Company
with a view only to the interests of its Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of its
trustees who are not interested persons of the Fund, the Distributor, the
Adviser or any subadviser to any of the Portfolios (the "Independent
Directors"), 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 Independent
Directors), 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, 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.
22
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 Account's investment in
the Fund and terminate this Agreement; 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 Independent
Directors. 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 Advisers, the
Distributors and the 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
Account's investment in the Fund and terminate this Agreement 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 Independent Directors. Until the end of the foregoing six-month period, the
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 7.5 of this Agreement, a majority
of the Independent Directors 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
23
of a majority of Contract owners 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 Independent Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, 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 3.5, 3.6, 3.7, 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
(a) The Company agrees to indemnify and hold harmless the Fund, the
Distributors and the Advisers and each of their respective officers and
directors or trustees and each person, if any, who controls the Fund, a
Distributor or an Adviser within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section
24
8.1) against any and all losses, claims, expenses, damages and 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 or
regulation, at common law or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (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 or SAI covering 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 therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by or
on behalf of an Adviser, a Distributor or the Fund for use in the
registration statement or prospectus for the Contracts or in the
Contracts or sales literature or other promotional material (or any
amendment or supplement to any of the foregoing) 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 or other
promotional material 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,
SAI, or sales literature or other promotional material of the Fund, or
any
25
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 in writing 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, including without limitation Section 2.11
and Section 6.6 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, 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 or to any of the Indemnified Parties.
(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
26
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, except to the extent that the
Company has been prejudiced by such failure to give notice. 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.
(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.
27
8.2. Indemnification by the Advisers
(a) Each Adviser agrees to indemnify and hold harmless the Company and
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, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of an Adviser) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of 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 SAI or sales literature or other
promotional material of the Fund prepared by the Fund, a Distributor
or an Adviser (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 in writing to an Adviser, a
Distributor or the Fund by or on behalf of the Company for use in the
registration statement, prospectus or SAI for the Fund or in sales
literature or other promotional material (or any amendment or
supplement to any of the foregoing) or otherwise for use in connection
with the sale of the Contracts or the 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, SAI or sales literature or other
promotional material for the Contracts not supplied by the Adviser or
persons under
28
its control) or wrongful conduct of the Fund, a Distributor or an
Adviser 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,
SAI, or sales literature or other promotional material 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 in writing to the Company by or on
behalf of an Adviser, a Distributor or the Fund; or
(iv) arise as a result of any failure by the Fund, a Distributor or an
Adviser 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 and
other qualification 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 Fund, a Distributor or an
Adviser in this Agreement or arise out of or result from any other
material breach of this Agreement by an Adviser, a Distributor or the
Fund; or
(vi) arise out of or result from the incorrect or untimely calculation
or reporting by the Fund, a Distributor or an Adviser of the daily net
asset value per share (subject to Section 1.10 of this Agreement) or
dividend or capital gain distribution rate;
29
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Advisers specified in Article VI hereof.
(b) The Advisers shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, 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 or to any of the Indemnified Parties.
(c) The Advisers 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 Advisers 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
Advisers of any such claim shall not relieve the Advisers from any
liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification
provision, except to the extent that the Advisers have been prejudiced by
such failure to give notice. In case any such action is brought against the
Indemnified Parties, the Advisers will be entitled to participate, at their
own expense, in the defense thereof. The Advisers also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the Advisers to such party of the Advisers'
election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
Advisers 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.
30
(d) The Company agrees promptly to notify the Advisers of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
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 State of New Jersey,
without regard to the New Jersey conflict of laws provisions.
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 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 X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with respect to
some or all Portfolios, upon sixty (60) days advance written notice
delivered to the other parties; or
31
(b) at the option of the Company by written notice to the other
parties 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) at the option of the Company by written notice to the other
parties 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) at the option of the Fund, a Distributor or an Adviser in the
event that formal administrative proceedings are instituted against the
Company by the NASD, the SEC, the Insurance Commissioner or like official
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 any Account, or the purchase of the Fund shares, if, in each case, the
Fund, a Distributor or an Adviser, as the case may be, reasonably
determines in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon the
ability of the Company to perform its obligations under this Agreement; or
(e) at the option of the Company in the event that formal
administrative proceedings are instituted against the Fund, a Distributor
or an Adviser by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body, if the Company reasonably
determines in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon the
ability of the Fund, a Distributor or an Adviser to perform their
obligations under this Agreement; or
(f) at the option of the Company by written notice to the Fund with
respect to any Portfolio if the Company reasonably believes that the
Portfolio will fail to meet the Section 817(h) diversification requirements
or Subchapter M qualifications specified in Article VI hereof; or
(g) at the option of any non-defaulting party hereto in the event of a
material breach of this Agreement by any party hereto (the "defaulting
party") other than as
32
described in Section 10.1(a)-(h); provided, that the non-defaulting party
gives written notice thereof to the defaulting party, with copies of such
notice to all other non-defaulting parties, and if such breach shall not
have been remedied within thirty (30) days after such written notice is
given, then the non-defaulting party giving such written notice may
terminate this Agreement by giving thirty (30) days written notice of
termination to the defaulting party; or
(h) at any time upon written agreement of all parties to this
Agreement.
10.2. Notice Requirement
No termination of this Agreement shall 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 shall set forth the basis for the
termination. Furthermore,
(a) in the event any termination is based upon the provisions of
Article VII, or the provisions of Section 10.1(a) of this Agreement, the
prior written notice shall be given in advance of the effective date of
termination as required by those provisions unless such notice period is
shortened by mutual written agreement of the parties;
(b) in the event any termination is based upon the provisions of
Section 10.1(d), 10.1(e) or 10.1(g) of this Agreement, the prior written
notice shall be given at least sixty (60) days before the effective date of
termination; and
33
(c) in the event any termination is based upon the provisions of
Section 10.1(b), 10.1(c) or 10.1(f), the prior written notice shall be
given in advance of the effective date of termination, which date shall be
determined by the party sending the notice.
10.3. Effect of Termination
Notwithstanding any termination of this Agreement, other than as a result
of a failure by either the Fund or the Company to meet Section 817(h) of the
Code diversification requirements, the Fund, the Distributors and the Advisers
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 10.3 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.
10.4. Surviving Provisions
Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII to indemnify other parties shall survive and not be affected
by any termination of this Agreement. In addition, with respect to Existing
Contracts, all provisions of this Agreement shall also survive and not be
affected by any termination of this Agreement.
34
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 parties.
If to the Company:
Pruco Life Insurance Company
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
If to the Fund:
American Skandia Trust
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Secretary
If to the Advisers:
American Skandia Investment Services, Inc.
Xxx Xxxxxxxxx Xxxxx
00
Xxxxxxx, XX 00000
Attention: Secretary
Prudential Investments LLC
Gateway Center Three
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Secretary
If to the Distributors:
American Skandia Marketing, Inc.
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Secretary
Prudential Investment Management Services LLC
Gateway Center Three
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Secretary
ARTICLE XII. Miscellaneous
36
12.1. 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 without the express written consent
of the affected party until such time as such information may come into the
public domain. Without limiting the foregoing, no party hereto shall disclose
any information that another party has designated as proprietary.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
37
12.6. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in a forum jointly
selected by the relevant parties (but if applicable law requires some other
forum, then such other forum) in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
12.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
12.9. The Company agrees that the obligations assumed by the Fund, the
Distributors and the Advisers pursuant to this Agreement shall be limited in any
case to the Fund, the Distributors and the Advisers and their respective assets
and the Company shall not seek satisfaction of any such obligation from the
shareholders of the Fund, the Distributors or the Advisers, the Directors,
officers, employees or agents of the Fund, a Distributor or an Adviser, or any
of them.
12.10. The Fund, the Distributors and the Advisers agree that the
obligations assumed by the Company pursuant to this Agreement shall be limited
in any case to the Company and its assets and neither the Fund, the Distributors
nor the Advisers shall seek satisfaction of any such obligation from the
shareholders of the Company, the directors, officers, employees or agents of the
Company, or any of them.
38
12.11. No provision of this Agreement may be deemed or construed to modify
or supersede any contractual rights, duties, or indemnifications, as between the
Advisers and the Fund, and the Distributors and the Fund.
39
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.
PRUCO LIFE INSURANCE COMPANY
By its authotized officer,
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
AMERICAN SKANDIA TRUST,
By its authorized officer,
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
AMERICAN SKANDIA INVESTMENT SKRVICES,
INCORPORATED
By its authorized officer,
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
PRUDENTIAL INVESTMENTS LLC
By its authorized officer,
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
AMERICAN SKANDTA MARKETING, INCORPORATED
By its authorized officer,
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
40
PRUDENTIAL INVESTMENTS MANAGEMENT
SERVICES LLC,
By its authorized officer,
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
41
SCHEDULE A
Diversification Compliance Report and Certification
Name of fund:
Total Market Value as of
-------------------- ----------------------
Four Largest Market Value Cumulative % I.R.C. Limitations
Investments as of of Assets Greater than
------------ ------------ ------------ ------------------
1
2
3
4
5
Total Assets
--------------
Note: For purposes of diversification testing, all securities of the same
issuer, all interests in the same real property project, and all interests in
the same commodity are each treated as a single investment. In the case of
government securities each government agency or instrumentality is treated as a
separate issuer. See Treas. Reg. 1.817-5 for additional information.
Special Test for Variable Life Insurance
Where the only contracts based on the account are life insurance contracts
(i.e., no annuity contracts), an account is adequately diversified to the extent
it is invested in Treasury securities. Treasury securities held through a
custodial arrangement that is treated as a grantor trust (e.g. CATs and TGRs)
will be treated as Treasury securities if substantially all of the assets of the
trust are represented by Treasury securities. Options on Treasury securities are
not considered Treasury securities. Where an account is invested in part in
Treasury securities, revise the above
42
general diversification test percentage limits by adding to them a product of .5
and the percentage of the value of the total assets invested in Treasury
securities. For example, if an account is 60% invested in Treasury securities,
the percentage limit would be increased by 30% (0.5 x 60%) and would be applied
to the assets of the account other than Treasury securities.
ALTERNATE TEST
If the alternative test under IRC Section 851 is used, those testing results
should be attached.
CERTIFICATION
The undersigned certifies that this Report and Certification, and any related
attachments, have been prepared accurately and provide a true representation of
account assets as of the last day of the quarter indicated above, and that the
fund complies with IRC Section 817(h).
---------------------------------------- ---------------------
Signed by Date
43
