FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of February 2005 (the
"Agreement") by and among Pruco Life Insurance Company of New Jersey, organized
under the laws of the State of New Jersey, Pruco Life Insurance Company,
organized under the laws of the State of Arizona (collectively, the "Company"),
on behalf of itself and each separate account of the Company named in Schedule A
to this Agreement, as may be amended from time to time (each separate account
referred to as the "Separate Account" and collectively as the "Separate
Accounts"); Gartmore Variable Insurance Trust, an open-end management investment
company organized as a business trust under the laws of the Commonwealth of
Massachusetts (the "Trust"); Gartmore Global Asset Management Trust, a
corporation organized under the laws of the State of Delaware and investment
adviser to the Trust (the "Adviser"); and Gartmore Distribution Services, Inc.,
a corporation organized under the laws of the State of Delaware and principal
underwriter/distributor of the Trust (the "Distributor").
WHEREAS, the Trust engages in business as an open-end diversified, management
investment company 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
which have entered into participation agreements substantially similar to this
Agreement (the "Participating Insurance Companies"), except for those agreements
between the Trust and Nationwide Insurance or its affiliates, and
WHEREAS, beneficial interests in the Trust are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (each, a "Fund" and collectively, the "Funds"); and
WHEREAS, the Company, as depositor, has established the Separate Accounts to
serve as investment vehicles for certain variable annuity contracts and variable
life insurance policies and funding agreements offered by the Company set forth
on Schedule A (the "Contracts"); and
WHEREAS, the Separate Accounts are duly organized, validly existing segregated
asset accounts, established by resolutions 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
February 1, 2005 Page 1 of 27
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Funds named in Schedule B, as such
schedule may be amended from time to time (the "Designated Funds") on behalf of
the Separate Accounts to fund the Contracts; and
WHEREAS, the Distributor is authorized to sell such shares of the Designated
Funds to unit investment trusts such as the Separate Accounts at net asset
value.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Trust, the Adviser and the Distributor agree as follows:
ARTICLE I - SALE OF FUND SHARES
1.1 The Distributor agrees to sell to the Company those shares of the
Designated Funds which the Company orders on behalf of each Separate
Account, executing such orders on a daily basis at the net asset value
next computed after receipt and acceptance by the Trust or its designee
of the order for the shares of the Trust. For purposes of this Section
1.1, the Company will be the designee of the Trust solely for the
purpose of receiving such orders from each Separate Account and receipt
by such designee will constitute receipt by the Trust; provided that
the Company provides the Trust with a purchase order by 9:00 a.m.
Eastern Time on the next following Business Day. "Business Day" will
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 (the "Commission"). The
Trust may net the redemption requests it receives from the Company
under Section 1.3 of this Agreement against the purchase orders it
receives from the Company under this Section 1.1 for each Designated
Fund.
1.2 The Company will transmit payment for shares of any Designated Fund
purchased by 2:00 p.m. Eastern Time on the same Business Day an order
to purchase shares of the Designated Fund is provided to the Trust in
accordance with Section 1.1. Payment will be made in federal funds
transmitted by wire. Upon receipt by the Trust of the payment, such
funds shall cease to be the responsibility of the Company and shall
become the responsibility of the Trust.
1.3 The Trust agrees to redeem, upon the Company's request, any full or
fractional shares of the Designated Funds held by the Company,
executing such requests on a daily basis at the net asset value next
computed after receipt and acceptance by the Trust or its designee of
the request for redemption. For purposes of this Section 1.3, the
Company will be the designee of the Trust solely for receipt of
requests for redemption from each Separate Account and receipt by such
designee will constitute receipt by the Trust; provided that the
Company provides the Trust with a redemption request by 9:00 a.m.
Eastern
February 1, 2005 Page 2 of 27
Time on the next following Business Day. Payment will be made
in federal funds transmitted by wire to the Company's account as
designated by the Company in writing from time to time, by 2:00 p.m.
Eastern Time on the same Business Day the Trust receives notice of the
redemption order from the Company. After consulting with the Company,
the Trust reserves the right to delay payment of redemption proceeds,
but in no event may such payment be delayed longer than the period
permitted under Section 22(e) of the Investment Company Act of 1940
(the "1940 Act"). The Trust will not bear any responsibility whatsoever
for the proper disbursement or crediting of redemption proceeds; the
Company alone will be responsible for such action. If a redemption
request is received after 9:00 a.m. Eastern Time, such redemption
request will be considered to be received on the next following
Business Day and payment for redeemed shares will be made on the next
following Business Day.
1.4 Each purchase, redemption, and exchange order placed by the Company
shall be placed separately for each Designated Fund and shall not be
netted with respect to any Designated Funds. However, with respect to
payment of the purchase price by the Company and of redemption proceeds
by the Trust, the Company and the Trust shall net purchase and
redemption orders received under Section 1.1 and Section 1.3 of this
Agreement, respectively, with respect to each Designated Fund and shall
transmit one net payment for all Designated Funds.
1.5 The Trust agrees to make shares of the Designated Funds available
indefinitely for purchase at the applicable net asset value per share
by Participating Insurance Companies and their separate accounts on
those days on which the Trust calculates the net asset value of each
Designated Fund pursuant to rules of the Commission; provided, however,
that the Board of Trustees of the Trust (the "Trustees") may refuse to
sell shares of any Designated Fund to any person, or suspend or
terminate the offering of shares of any Designated Fund 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
Designated Fund.
1.6 The Trust and the Distributor agree that shares of the Trust 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, the sale to which will not impair the tax treatment
currently afforded the Contracts. No shares of any Fund will be sold
directly to the general public.
1.7 The Trust will not sell Trust shares to any insurance company or
separate account unless an agreement containing provisions
substantially the same as those in Articles I, III, V, and VII and
Section 2.8 of Article II of this Agreement are in effect to govern
such sales.
February 1, 2005 page 3 of 27
1.8 The Company agrees to purchase and redeem the shares of the Designated
Funds offered by the then current prospectus of the Trust in accordance
with the provisions of such prospectus.
1.9 Issuance and transfer of the shares of the Designated Funds will be by
book entry only. Stock certificates will not be issued to the Company
or to any Separate Account. Purchase and redemption orders for shares
of the Designated Funds will be recorded in an appropriate title for
each Separate Account or the appropriate sub-account of each Separate
Account.
1.10 The Trust will furnish same day notice (by electronic means) to the
Company of the declaration of any income, dividends or capital gain
distributions payable on each Designated Fund's shares. The Company
hereby elects to receive all such income, dividends and distributions
as are payable on the Fund shares in the form of additional shares of
that Fund at the ex-dividend date net asset values. The Company
reserves the right to revoke this election upon prior reasonable notice
to the Trust and to receive all such dividends and distributions in
cash. The Trust will notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.11 The Trust will make the net asset value per share for each Designated
Fund available to the Company via electronic means on a daily basis as
soon as reasonably practical after the net asset value per share is
calculated and will use its best efforts to make such net asset value
per share available by 6:30 pm, Eastern Time, each Business Day. If the
Trust provides the Company materially incorrect net asset value per
share information (as determined under SEC guidelines), the Company and
the Trust shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct net asset value per share.
Any material error in the calculation or reporting of net asset value
per share, dividend or capital gain information shall be reported to
the Company upon discovery by the Trust.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act"), or are
exempt from registration thereunder, and that the Contracts will be
issued and sold in compliance with all applicable federal and state
laws. The Company further represents and warrants that: (i) it is an
insurance company duly organized and in good standing under applicable
law; (ii) it has legally and validly established each Separate Account
as a separate account under Section 38a-433 of the General Statutes of
Connecticut; (iii) each Separate Account is or will be registered as a
unit investment trust in accordance with the provisions of the 1940 Act
to serve as a segregated investment account for the Contracts, or is
exempt from registration thereunder; and (iv) it will maintain such
registration for so long as any Contracts are outstanding. The Company
will amend each registration statement under the 1933 Act for the
Contracts and the registration statement under the 1940 Act for the
Separate Accounts from time to time as required in order to effect the
continuous
February 1, 2005 page 4 of 27
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.
2.2 Subject to the Trust's representations in Article III, the Company
represents and warrants that the Contracts are currently and at the
time of issuance will be treated as annuity contracts and/or life
insurance policies (as applicable) under applicable provisions of the
Code, and that it will maintain such treatment and that it will 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.
2.3 The Company represents and warrants that it will not purchase shares of
the Designated Fund(s) with assets derived from tax-qualified
retirement plans except, indirectly, through Contracts purchased in
connection with such plans.
2.4 The Trust represents and warrants that shares of the Designated Fund(s)
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 Trust is and will remain registered as an open-end,
diversified, management investment company under the 1940 Act for as
long as such shares of the Designated Fund(s) are sold. The Trust will
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 Trust will register and qualify
the shares of the Designated Fund(s) for sale in accordance with the
laws of the various states only if and to the extent deemed advisable
by the Trust or the Distributor.
2.5 The Trust represents that it will use its best efforts to comply with
any applicable state insurance laws or regulations as they may apply to
the investment objectives, policies and restrictions of the Designated
Funds, to the extent specifically requested in writing by the Company
and to the extent that compliance with such laws will not materially
interfere with the Trust's daily operations and investment activities.
If the Trust cannot reasonably comply with such state insurance laws or
regulations, it will so notify the Company in writing. The Trust makes
no other 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 any state.
The Company represents that it will use its best efforts to notify the
Trust of any restrictions imposed by state insurance laws that may
become applicable to the Trust as a result of the Separate Accounts'
investments therein. The Trust and the Adviser agree that they will
furnish the information reasonably required by state insurance laws to
assist the Company in obtaining the authority needed to issue the
Contracts in various states.
2.6 The Trust represents and warrants that, to the extent that it decides
to finance distribution expenses pursuant to Rule 12b-1 under the 1940
Act, the Trust undertakes to have the Trustees, a majority of
February 1, 2005 page 5 of 27
whom are not "interested" persons of the Trust, formulate and approve
any plan under Rule 12b-1 to finance distribution expenses. The Trust
shall notify the Company immediately upon determining to finance
distribution expenses pursuant to a plan adopted in accordance with
Rule 12b-1 under the 0000 Xxx.
2.7 The Trust 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 applicable provisions of
the 0000 Xxx.
2.8 The Trust represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Trust are and continue to
be at all times covered by a blanket fidelity bond or similar coverage
for the benefit of the Trust 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.
2.9 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other
individuals/entities employed by the Company dealing with the money
and/or securities of the Separate Accounts are covered by a blanket
fidelity bond or similar coverage in an amount not less than $5
million. The aforesaid bond includes coverage for larceny and
embezzlement and is issued by a reputable bonding company. The Company
agrees to hold for the benefit of the Trust and to pay to the Trust any
amounts lost from larceny, embezzlement or other events covered by the
aforesaid bond to the extent such amounts derive from activities
described in this Agreement. The Company agrees to make all reasonable
efforts to see that this bond or another bond containing these
provisions is always in effect, and agrees to notify the Trust in the
event that such coverage no longer applies.
2.10 The Adviser represents and warrants that: (i) it is duly registered as
an investment adviser under the Investment Advisers Act of 1940, as
amended, and will remain duly registered under all applicable federal
and state securities laws; and (ii) it will perform its obligations to
the Trust in accordance in all material respects with the laws of the
State of Massachusetts and any applicable state and federal securities
laws.
2.11 The Distributor represents and warrants that it: (i) is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and will remain duly registered under all applicable
federal and state securities laws; (ii) is a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD"); (iii)
serves as principal underwriter/distributor of the Trust; and (iv) will
perform its obligations for the Trust in accordance in all material
respects with the laws of the State of Delaware and any applicable
state and federal securities laws.
February 1, 2005 page 6 of 27
ARTICLE III - FUND COMPLIANCE
3.1 The Trust, the Adviser and the Distributor acknowledge that any failure
(whether intentional or in good faith or otherwise) of any Designated
Fund to comply with the requirements of Subchapter M of the Code or the
diversification requirements of Section 817(h) of the Code may result
in the Contracts not being treated as variable contracts for federal
income tax purposes, which would have adverse tax consequences for
Contract owners and could also adversely affect the Company's corporate
tax liability. The Trust, the Adviser and the Distributor further
acknowledge that any failure of any Designated Fund may result in costs
and expenses being incurred by the Company in obtaining whatever
regulatory authorizations are required to substitute shares of another
investment company for those of the failed Designated Fund or as well
as fees and expenses of legal counsel and other advisors to the Company
and any federal income taxes, interest or tax penalties incurred by the
Company in connection with any such failure of any Designated Fund.
3.2 The Trust represents and warrants that each Designated Fund is
currently qualified as a Regulated Investment Company under Subchapter
M of the Code, and the Trust will maintain such qualification (under
Subchapter M or any successor or similar provision) and that the Trust
will notify the Company immediately upon having a reasonable basis for
believing that a Designated Fund has ceased to so qualify or that such
Designated Fund might not so qualify in the future.
3.3 The Trust represents that it 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; including, but not limited to, that each Designated
Fund will at all times comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5, as amended from time to time, relating to
the diversification requirements for variable annuity, endowment, or
life insurance contracts, and with Section 817(d) of the Code,
relating to the definition of a variable contract, and any amendments
or other modifications to such Section or Regulation. The Trust will
notify the Company immediately upon having a reasonable basis for
believing that the Trust or a Designated Fund thereunder has ceased to
comply with the diversification requirements or that the Trust or a
Designated Fund thereunder might not comply with the diversification
requirements in the future. In the event of a breach of this
representation by the Trust, it will take all reasonable steps to
adequately diversify the affected Designated Fund so as to achieve
compliance within the grace period afforded by Treasury Regulation
1.817-5.
ARTICLE IV - PROSPECTUS AND PROXY STATEMENTS; VOTING
4.1 The Trust or the Distributor will provide the Company with as many
copies of the current Trust prospectus and any supplements thereto for
the Designated Fund(s) as the Company may reasonably
February 1, 2005 page 7 of 27
request for distribution to Contract owners at the time of Contract
fulfillment and confirmation. The Trust will also provide as many
copies of said prospectus as necessary for distribution to existing
Contract owners. The Trust will provide the copies of said prospectus
to the Company or to its mailing agent for distribution. To the extent
that the Designated Fund(s) are one or more of several Funds of the
Trust, the Trust is obligated to provide the Company only with
disclosure related to the Designated Fund(s). If requested by the
Company, in lieu thereof, the Trust or the Distributor will provide
such documentation, including a final copy of a current prospectus set
in type or camera-ready or electronic format, and other assistance as
is reasonably necessary in order for the Company at least annually (or
more frequently if the Trust prospectus is amended more frequently) to
have the new prospectus for the Contracts and the Trust's new
prospectus printed together. The Trust or the Distributor will, upon
request, provide the Company with a copy of the Trust's prospectus
through electronic means to facilitate the Company's efforts to
provide Trust prospectuses via electronic delivery.
4.2 The Trust's prospectus will state that the Statement of Additional
Information (the "SAI") for the Trust is available and will disclose
how investors can obtain the SAI.
4.3 The Trust, at its expense, will provide the Company or its mailing
agent with copies of its proxy material, if any, with respect to the
Designated Funds, reports to shareholders/Contract owners and other
communications to shareholders/ Contract owners in such quantity as the
Company will reasonably require. The Company will distribute this proxy
material, reports and other communications to existing Contract owners
and will xxxx the Trust for the reasonable cost of such distribution.
4.4 If and to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the shares of the Designated Funds held in the Separate
Account in accordance with instructions received from Contract
owners; and
(c) vote shares of the Designated Funds held in the Separate
Account for which no timely instructions have been received in
the same proportion as shares of such Designated Fund for
which instructions have been received from the Company's
Contract owners,
so long as and to the extent that the Commission continues to interpret
the 1940 Act to require pass-through voting privileges for variable
Contract owners. The Company reserves the right to vote shares of the
Designated Funds held in any segregated asset account in its own right,
to the extent permitted by law. The Company will be responsible for
assuring that the Separate Accounts participating in the Trust
calculate voting privileges in a manner consistent with all legal
requirements, including the Proxy Voting Procedures set forth in
Schedule C and the Mixed and Shared Funding Order, as described in
Section 7.1.
4.5 The Trust will comply with all provisions of the 1940 Act requiring
voting by shareholders.
February 1, 2005 page 8 of 27
ARTICLE V - SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Trust
or the Distributor, each piece of sales literature or other promotional
material in which the Trust, the Adviser or the Distributor is named,
at least ten (10) business days prior to its use. No such material will
be used if the Trust or the Distributor reasonably objects to such use
within five (5) business days after receipt of such material or to its
continued use.
5.2 The Company will not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement, prospectus or
SAI for shares of the Designated Funds, as such registration statement,
prospectus and SAI may be amended or supplemented from time to time, or
in reports or proxy statements for the Designated Funds, or in
published reports for the Designated Funds which are in the public
domain or approved by the Trust, the Adviser or the Distributor for
distribution, or in sales literature or other material provided by the
Trust, the Adviser or the Distributor, except with permission of the
Trust, the Adviser or the Distributor. The Trust, the Adviser or the
Distributor agree to respond to any request for approval on a prompt
and timely basis.
5.3 The Trust, the Adviser or the Distributor 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 or its
separate account is named, at least ten (10) business days prior to its
use. No such material will be used if the Company reasonably objects to
such use within five (5) business days after receipt of such material
or to its continued use.
5.4 The Trust, the Adviser or the Distributor will not give any information
or make any representations or statements on behalf of the Company or
concerning the Company, each Separate 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 Separate Account or the
Contracts which are in the public domain or approved by the Company for
distribution to Contract owners, 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.
5.5 The Trust 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 Trust or shares of the Designated
Funds, within a reasonable time after filing of each such document with
the Commission or the NASD.
February 1, 2005 page 9 of 27
5.6 The Company will provide to the Trust at least one complete copy of all
definitive prospectuses, definitive SAI, 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
Separate Account, contemporaneously with the filing of each such
document with the Commission or the NASD (except that with respect to
post-effective amendments to such prospectuses and SAIs and sales
literature and promotional material, only those prospectuses and SAIs
and sales literature and promotional material that relate to or refer
to the Trust or the Designated Funds will be provided.) In addition,
the Company will provide to the Trust at least one complete copy of (i)
a registration statement that relates to the Contracts or each Separate
Account, containing representative and relevant disclosure concerning
the Trust or the Designated Funds; and (ii) any post-effective
amendments to any registration statements relating to the Contracts or
such Separate Account that refer to or relate to the Trust or the
Designated Funds.
5.7 For purposes of this Article V, 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, (i.e., 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
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, SAIs, shareholder reports, and proxy
materials and any other material constituting sales literature or
advertising under the NASD Conduct Rules, the 1933 Act or the 0000 Xxx.
5.8 The Trust, the Adviser and the Distributor hereby consent to the
Company's use of the names of the Gartmore Variable Insurance Trust,
Gartmore Global Asset Management Trust, Gartmore Global Partners and
Gartmore Distribution Services, Inc. as well as the names of the
Designated Funds set forth in Schedule B of this Agreement, in
connection with marketing the Contracts, subject to the terms of
Sections 5.1 or 5.2 of this Agreement. The Trust, the Adviser and the
Distributor hereby consent to the use of any trademark, trade name,
service xxxx or logo used by the Trust, the Adviser and the
Distributor, subject to the Trust's, the Adviser's and/or the
Distributor's approval of such use and in accordance with reasonable
requirements of the Trust, the Adviser or the Distributor. Such consent
will terminate with the termination of this Agreement. The Company
agrees and acknowledges that either of the Trust, the Adviser or the
Distributor are the owner of the name, trademark, trade
February 1, 2005 page 10 of 27
name, service xxxx and logo and that all use of any designation
comprised in whole or in part of the name, trademark, trade name,
service xxxx and logo under this Agreement shall inure to the benefit
of the Trust, Adviser and/or the Distributor.
5.9 The Trust, the Adviser, the Distributor and the Company agree to adopt
and implement procedures reasonably designed to ensure that information
concerning the Company, the Trust, the Adviser or the Distributor,
respectively, and their respective affiliated companies, 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
prospective Contract owners) and is properly marked as "Not For Use
With The Public" or "For Broker-Dealer Use Only" and that such
information is only so used.
ARTICLES VI - FEES, COSTS AND EXPENSES
6.1 Each party shall, in accordance with the allocation of expenses
specified in this Agreement, reimburse the other party(ies) for
expenses initially paid by one party but allocated to another party. In
addition, nothing herein shall prevent the parties hereto from
otherwise agreeing to perform and arranging for appropriate
compensation for (i) for distribution and shareholder-related services
under a plan adopted in accordance with Rule 12b-1 under the 1940 Act;
and (ii) other services that are not primarily intended to result in
the sale of shares of the Designated Funds, which are provided to
Contract owners relating to the Designated Funds.
6.2 All expenses incident to performance by the Trust of this Agreement
will be paid by the Trust or the Distributor to the extent permitted by
law. All shares of the Designated Funds will be duly authorized for
issuance and registered in accordance with applicable federal law and,
to the extent deemed advisable by the Trust, in accordance with
applicable state law, prior to sale. The Trust will bear the expenses
for the cost of registration and qualification of the Trust's shares,
including without limitation, the preparation of and filing with the
SEC of Forms N-1A and Rule 24f-2 Notices on behalf of the Trust and
payment of all applicable registration or filing fees (if applicable)
with respect to shares of the Trust; preparation and filing of the
Trust's prospectus, SAI and registration statement, proxy materials and
reports; typesetting the Trust's prospectus; typesetting and printing
proxy materials and reports to Contract owners (including the costs of
printing a Trust prospectus that constitutes an annual report); the
preparation of all statements and notices required by any federal or
state law; all taxes on the issuance or transfer of the Trust's shares;
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; and other costs
associated with preparation and printing of prospectuses and SAIs for
the Designated Funds in electronic or typeset format for distribution
to Contract Owners.
6.3 The Company shall bear all expenses associated with the registration,
qualification, and filing of the Contracts under applicable federal
securities and state insurance laws; the cost of preparing, printing,
February 1, 2005 page 11 of 27
and distributing the Contracts' prospectus and SAI; and the cost of
printing and distributing annual individual account statements for
Contract owners are required by state law.
ARTICLE VII - MIXED & SHARED FUNDING RELIEF
7.1 The Trust represents and warrants that it has received an order from
the Commission 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 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 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 Order").
If and to the extent that the Trust engages in Mixed and Shared funding
as contemplated by the Mixed and Shared Funding Order, this Article VII
shall apply. To that end, the parties to this Agreement agree that the
conditions or undertakings specified in the Mixed and Shared Funding
Order and that may be imposed on the Company, the Trust and/or the
Adviser by virtue of the receipt of such order by the Commission, 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.
7.2 The Trustees will monitor the Trust for the existence of any material
irreconcilable conflict among the interests of the Contract owners of
all separate accounts investing in the Trust. A material irreconcilable
conflict may arise for a variety of reasons, including, but not limited
to: (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 Fund are being managed; (e) a difference in
voting instructions given by variable annuity contract owners, variable
life insurance contract owners, and trustees of qualified pension or
retirement plans; (f) a decision by a Participating Insurance Company
to disregard the voting instructions of Contract owners; or (g) if
applicable, a decision by a qualified pension or retirement plan to
disregard the voting instructions of plan participants. The Trustees
will promptly inform the Company if it determines that a material
irreconcilable conflict exists and the implications thereof. A majority
of the Trustees will consist of persons who are not "interested"
persons of the Trust.
7.3 The Company will promptly report any potential or existing conflicts of
which it is aware to the Trustees. The Company agrees to assist the
Trustees in carrying out their responsibilities under the Mixed and
Shared Funding Order by promptly providing the Trustees with all
information reasonably
February 1, 2005 page 12 of 27
necessary for the Trustees to consider any issues raised. This
includes, but is not limited to, an obligation by the Company to inform
the Trustees whenever Contract owner voting instructions are
disregarded.The Board will record in its minutes or other appropriate
records, all reports received by it and all action with regard to a
conflict.
7.4 If it is determined by a majority of the Trustees, or a majority of the
disinterested Trustees of the Board, that a material irreconcilable
conflict exists, the Company and other Participating Insurance
Companies will, 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
material irreconcilable conflict, up to and including: (a) withdrawing
the assets allocable to some or all of the Separate Accounts from the
relevant Fund and reinvesting such assets in a different investment
medium, including another Fund, or in the case of insurance company
participants, submitting the question as to whether such segregation
should be implemented by a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
variable annuity Contract owners 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 Contract owners
the option of making such a change; and (b) establishing a new
registered management investment company or managed separate account.
7.5 If the Company's disregard of voting instructions could conflict with
the majority of Contract owner voting instructions, and the Company's
judgment represents a minority position or would preclude a majority
vote, the Company may be required, at the Trust's election, to withdraw
the Separate Account's investment in the Trust and terminate this
Agreement with respect to such Separate Account, and no charge or
penalty will be imposed as a result of such withdrawal. Any such
withdrawal and termination must take place within six (6) months after
written notice is given that this provision is being implemented
subject to applicable law but in any event consistent with the terms of
the Mixed and Shared Funding Order. Until such withdrawal and
termination is implemented, the Distributor and the Trust shall
continue to accept and implement orders by the Company for the purchase
and redemption of shares of the Trust.
7.6 If 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 Separate Account's
investment in the Trust and terminate this Agreement with respect to
such Separate Account, subject to applicable law but in any event
consistent with the terms of the Mixed and Shared Funding Order. Until
such withdrawal and termination is implemented, the Distributor and the
Trust shall continue to accept and implement orders by the Company for
the purchase and redemption of shares of the Trust. Such
February 1, 2005 page 13 of 27
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.
7.7 For purposes of Sections 7.4 through 7.7 of this Agreement, a majority
of the disinterested Trustees will 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 the Contracts. The Company will not be required by Section 7.4 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.
7.8 The Company will 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 the Trustees by
the Mixed and Shared Funding Order, and said reports, materials and
data will be submitted more frequently if deemed appropriate by the
Trustees.
7.9 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3(T) is adopted, to provide 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 Order) on
terms and conditions materially different from those contained in the
Mixed and Shared Funding Order, the Trust and/or the Company, 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.
ARTICLE VIII - INDEMNIFICATION
8.1 Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Trust, the
Adviser, the Distributor, and each of the Trust's or the
Adviser's or the Distributor's directors, officers, employees or
agents and each person, if any, who controls or is associated
with the Trust, the Adviser or the Distributor within the meaning
of such terms under the federal securities laws (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 actions in respect thereof (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 litigation in respect thereof) or settlements:
(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
February 1, 2005 page 14 of 27
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 of 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 Trust, the
Adviser, or the Distributor 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
Trust shares ; or
(2) arise out of or as a result of statements or representations by
or on behalf of the Company (other than statements or
representations contained in the Trust registration statement,
prospectus, SAI or sales literature or other promotional material
of the Trust, or any amendment or supplement to the foregoing,
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
Trust shares ; or
(3) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the Trust registration statement,
prospectus, SAI or sales literature or other promotional material
of the Trust (or any amendment or supplement thereto) 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
Trust 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, furnish the materials or to make any payments 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 8.1(b) and 8.4 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 8.1(a) if
such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such party's duties and obligations
under this Agreement.
(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or litigation
by regulatory authorities against them in connection with the issuance
or sale of shares of the Designated Funds or the Contracts or the
operation of the Trust.
8.2 Indemnification by the Adviser & Distributor
(a) The Adviser and Distributor agree to indemnify and hold harmless the
Company and each of its directors, officers, employees or agents and
each person, if any, who controls or is associated with the Company
within the meaning of such terms under the federal securities laws
(collectively, the "Indemnified Parties" for purposes of this Section
8.2) against any and all
February 1, 2005 page 15 of 27
losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Adviser and
Distributor), or litigation in respect thereof (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
litigation 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 SAI for the Trust
or sales literature or other promotional material generated
or approved by the Adviser or the Distributor on behalf of
the Trust (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 of such alleged statement or omission was made in
reliance upon and in conformity with information furnished
to the Adviser or Trust by or on behalf of the Company for
use in the registration statement, prospectus or SAI for the
Trust or in sales literature generated or approved by the
Adviser or the Distributor on behalf of the Trust (or any
amendment or supplement thereto) or otherwise for use in
connection with the sale of the Contracts or Trust shares;
or
(2) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Contracts or in the Contract or Trust registration
statements, prospectuses or statements of additional
information or sales literature or other promotional
material for the Contracts or of the Trust, or any amendment
or supplement to the foregoing, not supplied by the Adviser
or the Distributor or persons under the control of the
Adviser or the Distributor respectively) or wrongful conduct
of the Adviser or the Distributor or persons under the
control of the Adviser or the Distributor respectively, with
respect to the sale or distribution of the Contracts or
Trust shares; or
(3) 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 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 information furnished to the
Company by or on behalf of the Adviser or the Distributor or
persons under the control of the Adviser or the Distributor;
or
(4) arise as a result of any failure by the Adviser or the
Distributor to provide the services and furnish the
materials under the terms of this Agreement; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser or the
Distributor in this Agreement, or arise out of or result
from any other material breach of this Agreement by the
Adviser or the Distributor (including a failure, whether
intentional or in good faith or otherwise, to comply with
the requirements of Subchapter M of the Code specified in
Article III, Section 3.2 of this Agreement and the
diversification requirements specified in Article III,
Section 3.3 of this Agreement, as described more fully in
Section 8.5 below);
February 1, 2005 page 16 of 27
except to the extent provided in Sections 8.2(b) and 8.4 hereof.
This indemnification will be in addition to any liability that
the Adviser or Distributor otherwise may have.
(b) No party will be entitled to indemnification under Section 8.2(a)
if such loss, claim, damage, liability or litigation is due to
the willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such party's duties and
obligations under this Agreement.
(c) The Indemnified Parties will promptly notify the Adviser and the
Distributor of the commencement of any litigation, proceedings,
complaints or litigation by regulatory authorities against them
in connection with the issuance or sale of the Contracts or the
operation of the Separate Account.
8.3 Indemnification by the Trust
(a) The Trust agrees to indemnify and hold harmless the Company and
each of its directors, officers, employees or agents and each
person, if any, who controls or is associated with the Company
within the meaning of such terms under the federal securities
laws (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 Trust), or litigation in respect thereof
(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 litigation in
respect thereof) or settlements, are related to the operations of
the Trust and:
(1) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this
Agreement; or
(2) 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 (including a failure,
whether intentional or in good faith or otherwise, to comply
with the requirements of Subchapter M of the Code specified
in Article III, Section 3.2 of this Agreement and the
diversification requirements specified in Article III,
Section 3.3 of this Agreement as described more fully in
Section 8.5 below); or
(3) arise out of or result from the materially incorrect or
untimely calculation or reporting of daily net asset value
per share or dividend or capital gain distribution;
except to the extent provided in Sections 8.3(b) and 8.4 hereof.
This indemnification will be in addition to any liability that
the Trust otherwise may have.
February 1, 2005 page 17 of 27
(b) No party will be entitled to indemnification under Section 8.3(a)
if such loss, claim, damage, liability or litigation is due to
the willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such party's duties and
obligations under this Agreement.
(c) In no event shall the Trust be liable under the indemnification
provisions contained in this Agreement to any individual or
entity, including without limitation, the Company, or any
Contract owner, with respect to any losses, claims, damages,
liabilities or expenses that arise out of or result from the
failure by the Company to maintain its segregated asset account
under applicable state law and as a duly registered unit
investment trust under the provisions of the 1940 Act (unless
exempt therefrom) or, subject to compliance by the Designated
Funds with the diversification requirements specified in Article
III, the failure by the Company to maintain its Contracts (with
respect to which any Designated Fund serves as an underlying
funding vehicle) as life insurance, endowment or annuity
contracts under applicable provisions of the Code.
(d) The Indemnified Parties will promptly notify the Trust 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
Separate Account.
8.4 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) 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 8.4) if such Indemnified Party has failed to notify 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
February 1, 2005 page 18 of 27
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.
8.5 Indemnification for Failure to Comply with Diversification Requirements
The Trust and the Adviser acknowledge that if a Designated Fund(s)
fails (whether intentionally or in good faith or otherwise) to comply
with the diversification requirements specified in Article III, Section
3.3 of this Agreement, the Contracts consequently may not be treated as
variable contracts for federal income tax purposes, which would have
adverse tax consequences for Contract owners and could also adversely
affect the Company's corporate tax liability. Accordingly, without in
any way limiting the effect of Sections 8.2(a) and 8.3(a) hereof and
without in any way limiting or restricting any other remedies available
to the Company, the Trust, the Adviser and the Distributor will pay on
a joint and several basis all costs associated with or arising out of
any failure, or any anticipated or reasonably foreseeable failure, of
any Designated Fund to comply with Section 3.3 of this Agreement,
including all costs associated with correcting or responding 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 Designated
Fund (including but not limited to an order pursuant to Section 26(b)
of the 1940 Act); reasonable fees and expenses of legal counsel and
other advisors to the Company and any federal income taxes or tax
penalties (or "toll charges" or exactments or amounts paid in
settlement) reasonably incurred by the Company in connection with any
such failure or anticipated or reasonably foreseeable failure. Such
indemnification and reimbursement obligation shall be in addition to
any other indemnification and reimbursement obligations of the Trust,
the Adviser and/or the Distributor under this Agreement.
February 1, 2005 page 19 of 27
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 Delaware.
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 Commission may grant (including, but not limited to,
the Mixed and Shared Funding Order) and the terms hereof will be
interpreted and construed in accordance therewith.
ARTICLE X - TERMINATION
10.1 This Agreement will terminate automatically in the event of its
assignment, unless made with the written consent of each party, or:
(a) at the option of any party, with or without cause, with
respect to one, some or all of the Designated Funds, upon
six (6) month's advance written notice to the other parties
or, if later, upon receipt of any required exemptive relief
or orders from the SEC, unless otherwise agreed in a
separate written agreement among the parties; or
(b) at the option of the Company, upon written notice to the other
parties, with respect to any Designated Fund if shares of the
Designated Fund 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 written notice to the other
parties, with respect to any Fund in the event any of the
Fund'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 Company; or
(d) at the option of the Trust upon institution of formal
proceedings against the Company by the NASD, the Commission,
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 Separate Account, or the
purchase of Trust shares, provided that the Trust determines
in its reasonable judgment 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 institution of formal
proceedings against the Trust, the Adviser or the Distributor
by the NASD, the Commission or any state securities or
insurance commission or any other regulatory body regarding
the Trust's, the Advisor's or the
February 1, 2005 page 20 of 27
Distributor's duties under this Agreement, or related to the
purchase, redemption or distribution of Trust shares,
provided that the Company determines in its reasonable
judgment that any such proceeding would have a material
adverse effect on the Trust's, the Adviser's or the
Distributor's ability to perform its obligations under this
Agreement; or
(f) at the option of the Company, if any Designated Fund 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 any Designated Fund
may fail to so qualify; or
(g) subject to the Company's compliance with Article II, at the
option of the Company, with respect to any Designated Fund, if
the Designated Fund fails to meet the diversification
requirements specified in Section 3.3 hereof or if the Company
reasonably believes any Designated Fund may fail to meet such
requirements; or
(h) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith that either the Trust,
the 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 or the
Contracts (including the sale thereof); or
(j) at the option of the Trust, the Adviser or the Distributor, if
the Trust, the Adviser or the Distributor 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 Trust, the Adviser or the
Distributor; or
(k) at the option of the Company or the Trust upon receipt of
any necessary regulatory approvals and/or the vote of the
Contract owners having an interest in the Separate Account
(or any sub-account) to substitute the shares of another
investment company for the corresponding Designated Fund's
shares in accordance with the terms of the Contracts for
which those Designated Fund shares had been selected to
serve as the underlying portfolio. The Company will give
sixty (60) days' prior written notice to the Trust of the
date of any proposed vote or other action taken to replace
shares of the Designated Fund or of the filing of any
required regulatory approval(s); or
February 1, 2005 page 21 of 27
(1) at the option of the Company or the Trust upon a determination
by a majority of the Trust Board, or a majority of the
disinterested Trustees, that a material irreconcilable
conflict exists among the interests of: (1) all Contract
owners of variable insurance products of all separate
accounts; or (2) the interests of the Participating Insurance
Companies investing in the Trust as set forth in Article VII
of this Agreement; or
(m) subject to the Trust's compliance with Article III, at the
option of the Trust in the event any of the Contracts are not
issued or sold in accordance with applicable federal and/or
state law, or will not be treated as annuity contracts, life
insurance policies and/or variable contracts (as applicable)
under applicable provisions of the Code, or in the event any
representation or warranty of the Company in Section 2.1 is no
longer true. Termination will be effective immediately upon
such occurrence without notice.
10.2 Notice Requirement
(a) In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice
will be given in advance of the effective date of termination
as required by such provisions.
(b) In the event that a party to this Agreement terminates the
Agreement based upon the provisions of Sections 10.1(b)-(h),
prompt written notice of the election to terminate this
Agreement for cause shall be furnished by the party
terminating the Agreement to the non-terminating party(ies).
The Agreement shall be terminated effective upon receipt of
such notice by the non-terminating party(ies).
(c) In the event that a party to this Agreement terminates the
Agreement based upon the provisions of Sections 10.1(i) or
(j), prior written notice of the election to terminate this
Agreement for cause shall be furnished by the party
terminating the Agreement to the non-terminating party(ies).
Such prior written notice shall be given by the party
terminating this Agreement to the non-terminating party(ies)
at least sixty (60) days before the effective date of
termination.
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Trust, the
Adviser and the Distributor will, at the option of the Company,
continue to make available additional shares of the Trust 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 the Designated Funds (as in effect on such date), redeem
investments in the Designated Funds and/or invest in the Designated
Funds upon the making of additional purchase payments under the
Existing Contracts. The parties
February 1, 2005 page 22 of 27
agree that this Section 10.3 will not apply to any terminations under
Article VII and the effect of such Article VII terminations will 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 will survive
and not be affected by any termination of this Agreement. In addition,
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
Any notice will be deemed duly given when sent by 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 parties. All notices will be deemed given three (3) business days after
the date received or rejected by the addressee:
If to the Company:
------------------
Pruco Life Insurance Company of New Jersey
Pruco Life Insurance Company
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, Senior Vice President
If to the Trust:
----------------
Gartmore Variable Insurance Trust
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn:
If to the Adviser:
------------------
Gartmore Global Asset Management Trust
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn:
If to the Distributor:
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February 1, 2005 page 23 of 27
Gartmore Distribution Services, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn:
ARTICLE XII - MISCELLANEOUS
12.1 All persons dealing with the Trust must look solely to the property of
the Trust or the Designated Funds for the enforcement of any claims
against the Trust or the Designated Funds as neither the trustees,
officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Trust or the Designated
Funds.
12.2 The Trust, the Adviser and the Distributor acknowledge that the
identities of the customers of the Company or any of its affiliates
(collectively the "Protected Parties" for purposes of this Section
12.2), information maintained regarding those customers, and all
computer programs and procedures developed by the 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 Protected Parties. The Trust, the Adviser and the
Distributor agree that if they come into possession of any list or
compilation of the identities of or other information about the
Protected Parties' customers, or any other property of the Protected
Parties, other than such information as may be independently developed
or compiled by the Trust, the Adviser and the Distributor from
information supplied to them by the Protected Parties' customers who
also maintain accounts directly with the Trust, the Adviser and the
Distributor, the Trust, the Adviser and the Distributor 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 Trust and the Adviser
acknowledge that any breach of the agreements in this Section 12.2
would result in immediate and irreparable harm to the Protected Parties
for which there would be no adequate remedy at law and agree that in
the event of such a breach, the Protected 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.
February 1, 2005 page 24 of 27
12.6 This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties.
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 law.
12.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
12.9 Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including without limitation
the Commission, 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.
12.10 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 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.
12.11 The Agreement may be amended by written instrument signed by all
parties to the Agreement. Notwithstanding the above, 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 Separate
Accounts or the Designated Funds of the Trust or other applicable terms
of this Agreement.
February 1, 2005 page 25 of 27
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.
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
PRUCO LIFE INSURANCE COMPANY
By: ______________________________
GARTMORE VARIABLE INSURANCE TRUST
By: ______________________________
GARTMORE GLOBAL ASSET MANAGEMENT TRUST
By: ______________________________
GARTMORE DISTRIBUTION SERVICES, INC.
By: ______________________________
February 1, 2005 page 26 of 27
PARTICIPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Associated Contracts of the Company are
permitted in accordance with the provisions of this Agreement to invest in Funds
of the Trust shown in Schedule B:
NAME OF SEPARATE ACCOUNT:
Pruco Life Flexible Premium Variable Annuity Account
CONTRACT(S):
NAME OF SEPARATE ACCOUNT:
Pruco Life of New Jersey Flexible Premium Variable Annuity Account
CONTRACT(S):
NAME OF SEPARATE ACCOUNT:
CONTRACT(S):
February 1, 2005 page 1 of 1
PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following
Designated Funds of the Trust.
Gartmore GVIT Developing Markets Fund
February 1, 2005 page 1 of 1
PARTICIPATION AGREEMENT
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Trust. 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 Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Trust as early as
possible before the date set by the Trust for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Trust 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 contract owner/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 this Step #2. The Company will use its best efforts to call in
the number of Customers to the Trust, as soon as possible, but no later
than two weeks after the Record Date.
3. The Trust's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Trust will provide the last Annual
Report to the Company pursuant to the terms of Section 6.2 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 Trust. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Trust or its
affiliate 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:
o name (legal name as found on account registration)
o address
o Trust or account number
o coding to state number of units
o individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Trust).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, the Trust will develop, produce and 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 Company).
Contents of envelope sent to Customers by the Company will include:
February 1, 2005 page 1 of 3
o Voting Instruction Card(s)
o one proxy notice and statement (one document)
o return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
o "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
Trust.)
o cover letter - optional, supplied by Company and reviewed and approved
in advance by the Trust
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 the Trust.
7. Package mailed by the Company.
* The Trust 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 the Trust in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card. Note: For Example, if the account registration is
under "Xxxx X. Xxxxx, 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 and 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 been "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 Trust receives the tabulations
stated in terms of a percentage and the number of SHARES.) The Trust must
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to the Trust on
the morning of the meeting not later than 10:00 a.m. Eastern time. The
Trust may request an earlier deadline if reasonable and if required to
calculate the vote in time for the meeting.
February 1, 2005 page 2 of 3
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.
The Trust 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, the Trust 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.
February 1, 2005 page 3 of 3
