AMENDMENT NO. 2
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated September 21, 1996,
by and among AIM Variable Insurance Funds, Inc., a Maryland corporation, A I M
Distributors, Inc., a Delaware corporation, Pruco Life Insurance Company, an
Arizona life insurance company and Pruco Securities Corporation, a New Jersey
corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"SCHEDULE A
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES FUNDED BY THE
THE POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
------------ ------------------- -----------------
AIM V.I. Growth and Income Pruco Life Flexible Premium Discovery Select Annuity
Fund Variable Annuity Account, Contract
AIM V.I. Value Fund established June 16, 1995
AIM V.I. Value Fund Pruco Life Variable Variable Universal Life
Appreciable Account, Insurance Policy
established January 13, 1984
AIM V.I. Value Fund Pruco Life Variable PruSelect I Variable Universal
Universal Account, Life Policy
established April 17, 1989
AIM V.I. Value Fund Pruco Life Variable PruSelect II Variable Universal
Universal Account, Life Policy"
established April 17, 1989
All other terms and provisions of the Agreement not amended herein shall
remain in full force and effect.
Effective Date: August 1, 1998
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
--------------------- -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: Assistant Secretary Title: President
(SEAL)
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A I M DISTRIBUTORS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxx
--------------------- -----------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxx
Title: Assistant Secretary Title: President
(SEAL)
PRUCO LIFE INSURANCE COMPANY
Attest: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
--------------------- ---------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxx
--------------------- ---------------------
Title: Assistant Secretary Title: President
--------------------- ---------------------
(SEAL)
PRUCO SECURITIES CORPORATION
Attest: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxx
--------------------- ---------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxx
--------------------- ---------------------
Title: Assistant Secretary Title: President
--------------------- ---------------------
(SEAL)
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AMENDED AND RESTATED FUND PARTICIPATION AGREEMENT
THIS AMENDED AND RESTATED FUND PARTICIPATION AGREEMENT is made and
entered into as of June 30, 1998 by and among PRUCO LIFE INSURANCE COMPANY (the
"Company") and AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. ("Manager").
WHEREAS, the Company offers to the public certain individual variable
universal life contracts, variable annuity contracts and individual variable
life insurance contracts (collectively, the "Contracts"); and
WHEREAS, the Company wishes to offer as investment options under the
Contracts, the funds listed on EXHIBIT A hereto (the "Funds"), each of which is
a series of mutual fund shares registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"); and
WHEREAS, on the terms and conditions hereinafter set forth, the Manager
desires to make shares of the Funds available as an investment option under the
Contracts and to retain the Company to perform certain administrative services
on behalf of the Funds;
NOW, THEREFORE, the Company and the Manager agree as follows:
1. TRANSACTIONS IN THE FUNDS. Subject to the terms and conditions of
this Agreement, the Manager will cause shares of the Funds to be made available
to be purchased, exchanged, or redeemed, by the Company on behalf of Contract
owners through the Accounts (defined in SECTION 6(a) below) through a single
account per Fund at the net asset value applicable to each order. The Funds'
shares shall be purchased and redeemed on a net basis in such quantity and at
such time as determined by the Company to satisfy the requirements of the
Contracts for which the Funds serve as underlying investment media. Dividends
and capital gains distributions will be automatically reinvested in full and
fractional shares of the Funds.
2. ADMINISTRATIVE SERVICES. The Company shall be solely responsible for
providing all administrative services for the Contract owners. The Company
agrees that it will maintain and preserve all records as required by law to be
maintained and preserved, and will otherwise comply with all laws, rules and
regulations applicable to the marketing of the Contracts and the provision of
administrative services to the Contract owners.
3. PROCESSING AND TIMING OF TRANSACTIONS.
(a) The funds hereby appoint the Company as their agent for the limited
purpose of accepting purchase and redemption orders for Fund shares from the
Contract owners. On each day the New York Stock Exchange (the "Exchange") is
open for business (each, a "Business Day"), the Company may receive instructions
from the Contract owners for the purchase or redemption of shares of the Funds
("Orders"). Orders received and accepted by the Company prior to the close of
regular trading on the Exchange (the "Close of Trading") on any given Business
Day (currently, 3:00 p.m. Central time) and transmitted to the Funds' transfer
agent by 8:30 a.m. Central time on the next following Business Day will be
executed at the net asset value determined as of the Close of Trading, on the
previous Business Day ("Day 1"). Any Orders received by the Company after the
Close of Trading, and all Orders that are transmitted by the Company after 8:30
a.m. Central time on the next following Business Day, will be executed at the
net asset value next determined following receipt of such Order. The day as of
which an Order is executed pursuant to the provisions set forth above is
referred to herein as the "Effective Trade Date".
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(b) By 5:30 p.m. Central time on each Business Day, the Manager or its
agent will provide to the Company, via facsimile or other electronic
transmission acceptable to the Company, the Funds' net asset value, dividend and
capital gain information and, in the case of income funds, the daily accrual for
interest rate factor (mil rate), determined at the Close of Trading. If the
Manager provides the Company with materially incorrect share net asset value
information through no fault of the Company, the Company on behalf of the
separate accounts shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any material
error in the calculation of net asset value per share, dividend or capital gain
information shall be reported to the Company promptly upon discovery.
(c) By 8:30 a.m. Central time on each Business Day, the Company will
provide to the Manager via facsimile or other electronic transmission acceptable
to the Manager a report stating whether the Orders received by the Company from
Contract owners by the Close of Trading on the preceding Business Day resulted
in the Accounts being a net purchaser or net seller of shares of the Funds. As
used in this Agreement, the phrase "other electronic transmission acceptable to
the Manager" includes the use of remote computer terminals located at the
premises of the Company, its agents or affiliates, which terminals may be linked
electronically to the computer system of The Manager, its agents or affiliates
(hereinafter, "Remote Computer Terminals").
(d) Upon the timely receipt from the Company of the report described in
(c) above, the Funds will execute the purchase or redemption transactions (as
the case may be) at the net asset value computed as of the Close of Trading on
Day 1. Payment for net purchase transactions shall be made by wire transfer to
the custodial account designated by the Funds on the Business Day next following
the Effective Trade Date. Such wire tramfers shall be initiated by the Company's
bank prior to 3:00 p.m. Central time and received by the Funds prior to 5:00
p.m. Central time on the Business Day next following the Effective Trade Date.
If payments for a purchase Order is not timely received, such Order will be
executed at the net asset value next computed following receipt of payment.
Payments for net redemption transactions shall be made by wire transfer by the
Funds to the account designated by the appropriate receiving party within the
time period set forth in the applicable Fund's then-current prospectus;
provided, however, the Funds will use all reasonable efforts to settle all
redemptions on the Business Day following the Effective Trade Date. Within one
week of the transaction, the Manager will send or cause to be sent a written
confirmation of all trades to the Company's Separate Accounts Department in the
form of a statement detailing the Company's total shares owned, Effective Trade
Date, shares purchased and sold and the net asset value of the shares. On any
Business Day when the Federal Reserve Wire Transfer System is closed, all
communication and processing rules will be suspended for the settlement of
Orders. Orders will be settled on the next Business Day on which the Federal
Reserve Wire Transfer System is open and the Effective Trade Date will apply.
4. PROSPECTUS AND PROXY MATERIALS.
(a) The Manager shall provide to the shareholder of record copies of the
Funds proxy materials, periodic fund reports to shareholders and other materials
that are required by law to be sent to the Funds' shareholders. In addition, the
Manager shall provide the Company with a sufficient quantity of prospectuses of
the Funds to be used in conjunction with the transactions contemplated by this
Agreement, together with such additional copies of the Funds' prospectuses as
may be reasonably requested by Company. If the Company provides for pass-through
voting by the Contract owners, the Manager will provide the Company with a
sufficient quantity of proxy materials for each Contract owner. If requested by
the Company in lieu of printed prospectuses, the Manager or its designee shall
provide such documentation (including a "camera ready" copy of the new
prospectus as set in type or, at the request of the Company, as a diskette in
the form sent to the Funds' printer) and other assistance as is reasonably
necessary in order for the parties hereto once
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each year (or more frequently if the prospectus for the Shares is supplemented
or amended) to have the prospectus for the Contracts, prospectuses for other
mutual funds in which the Contracts may be invested, and the Funds' new
prospectus printed together in one document. Such documentation shall be
provided in electronic format no later than April 15 of each year. If the
Manager fails to provide such documentation in a timely manner through no fault
of its own and such delay causes the Company to incur additional costs, the
Manager shall reimburse the Company for any reasonable and actual out-of-pocket
expenses directly attributable to such delay upon submission of any expense
accounting the Manager reasonably may require. Such out-of-pocket expenses shall
not include over-time for employees of the Company.
(b) The cost of preparing, printing and shipping of the prospectuses,
proxy materials, periodic fund reports and other materials of the Funds to the
Company shall be paid by the Manager or its agents or affiliates; provided,
however, that if at any time the Manager or its agent reasonably deems the usage
by the Company of such items to be excessive, it may, prior to the delivery of
any quantity of materials in excess of what is deemed reasonable, request that
the Company demonstrate the reasonableness of such usage. If the Manager
believes the reasonableness of such usage has not been adequately demonstrated,
it may request that the Company pay the cost of printing (including press time)
and delivery of any excess copies of such materials. Unless the Company agrees
to make such payments, the Manager may refuse to supply such additional
materials and this section shall not be interpreted as requiring delivery by the
Manager of any copies in excess of the number of copies to be provided to
existing Contract owners.
(c) The cost of distribution, if any, of any prospectuses, proxy
materials, periodic fund reports and other materials of the Funds to the
Contract owners shall be paid by the Company and shall not be the responsibility
of the Manager or the Funds.
5. COMPENSATION AND EXPENSES.
(a) The Accounts shall be the sole shareholder of Fund shares purchased
for the Contract owners pursuant to this Agreement (the "Record Owners"). The
Company and the Record Owners shall properly complete any applications or other
forms required by the Manager or the Funds' transfer agent from time to time.
(b) The Manager acknowledges that it will derive a substantial savings in
administrative expenses, such as a reduction in expenses related to postage,
shareholder communications and recordkeeping, by virtue of having a single
shareholder account per Fund for the Accounts rather than having each Contract
owner as a shareholder. In consideration of performance by the Company of the
administrative services and performance of all other obligations under this
Agreement by the Company, the Manager will pay the Company a fee (the
"Administrative Services Fee") equal to 25 basis points (0.25%) per armum of the
average aggregate amount invested by the Company in the Funds, based on the
average aggregate market value of investments (on behalf of the Contact owners)
in the Funds by the Company, its subsidiaries and affiliates that offer
insurance products, up to an average aggregate investment in the Funds of $100
million. For all assets invested in the Funds by the Company, its subsidiaries
and affiliates that offer insurance products, over $100 million, the Manager
will pay the Company an Administrative Services Fee of 30 basis points (0.30%)
per annum of the average aggregate market value of the investments over SI 00
million.
(c) The parties understand that the Manager customarily pays, out of its
management fee, another corporation for the type of administrative services to
be provided by the Company to the Contract owners. The parties agree that the
payments by the Manager to the Company, like its payments to such other
corporation, are for administrative services only and do not constitute payment
in any manner for investment advisory services or for costs of distribution.
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(d) For the purposes of computing the payment to the Company contemplated
by this SECTION 5, the average aggregate amount invested by the Accounts in the
Funds over a one month period shall be computed by totaling the Company's
aggregate investment (share net asset value multiplied by total number of shares
of the Funds held by the Company) on each Business Day during the month and
dividing by the total number of Business Days during such month.
(e) The Manager will calculate the amount of the payment to be made
pursuant to this SECTION 5 at the end of each calendar quarter and will make
such payment to the Company within 30 days thereafter. The check for such
payment will be accompanied by a statement showing the calculation of the
amounts being paid by the Manager for the relevant months and such other
supporting data as may be reasonably requested by the Company and shall be
mailed to:
For the Pruco Life Variable Appreciable Account and Variable Universal Account:
Pruco Life Insurance Company
c/o The Prudential Insurance Company of America
Gateway Center Three, 00xx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxx, Director of Accounting
For the Pruco Life Flexible Premium Variable Annuity Account:
Pruco Life Insurance Company
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Attn: Xxxx Xxxxxx
6. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and wan-ants that: (i) this Agreement has been
duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established the
accounts set forth on EXHIBIT B hereto (the "Accounts"), which are separate
accounts under Arizona insurance law, and has to the extent required by law
registered the Accounts as unit investment trusts under the Investment Company
Act to serve as investment vehicles for the Contracts; (iii) each Contract
provides for the allocation of net amounts received by the Company to an
Account for investment in the shares of one of more specified investment
companies selected among those companies available through the Accounts to act
as underlying investment media; (iv) selection of a particular investment
company is made by the Contract owner under a particular Contract, who may
change such selection from time to time in accordance with the terms of the
applicable Contract; and (v) the activities of the Company contemplated by
this Agreement comply with all provisions of federal and state insurance,
securities, and tax laws applicable to such activities.
(b) The Manager represents that: (i) this Agreement has been duly
authorized by all necessary corporate action and, when executed and delivered,
shall constitute the legal, valid and binding obligation of the Manager,
enforceable in accordance with its terms; and (ii) the investments of the
Funds will at all times be adequately diversified within the meaning of
Section 817(h) of the Internal Revenue Service Code of 1986, as amended (the
"Code"), and the regulations thereunder, and that at all times while this
Agreement is in effect, all beneficial interests in each of the Funds will be
owned by one or more insurance companies or by any other party permitted under
Section 1.817-5(f)(3) of the Regulations promulgated under the Code. In the
event of a breach of this Section 6(b)(ii) by the Funds or the Manager will
take all reasonable steps (A) to notify the
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Company of such breach and (B) to adequately diversify the Funds so as to
achieve compliance within the grace period afforded by Treasury Regulation
1.817-5.
(c) The Manager represents that the Funds are currently qualified as
Regulated Investment Companies under Subchapter M of the Internal Revenue Code,
and that they will maintain such qualification (under Subchapter M or any
successor or similar provision) and that the Manager will notify the Company
immediately upon having a reasonable basis for believing that the Funds have
ceased to so qualify or that they might not qualify in the future.
7. ADDITIONAL COVENANTS AND AGREEMENTS.
(a) Each party shall comply with all provisions of federal and state
laws applicable to its respective activities under this Agreement.
(b) Each party shall promptly notify the other parties in the event that
it is, for any reason, unable to perform any of its obligations under this
Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to the Accounts on any Business Day
will be based upon instructions that it received from the Contract owners in
proper form prior to the Close of Trading of the Exchange on that Business Day.
(d) The Company covenants and agrees that all Orders transmitted to the
Funds' transfer agent, whether by telephone, telecopy, or other electronic
transmission acceptable to the Manager, shall be sent by or under the authority
and direction of a person designated by the Company as being duly authorized to
act on behalf of the owner of the Account. Absent actual knowledge to the
contrary, the Manager shall be entitled to rely on the existence of such
authority and to assume that any person transmitting Orders for the purchase,
redemption or transfer of Fund shares on behalf of the Company is "an
appropriate person" as used in Sections 8-107 and 8-401 of the Uniform
Commercial Code with respect to the transmission of instructions regarding Fund
shares on behalf of the owner of such Fund shares. The Company shall maintain
the confidentiality of all passwords and security procedures issued, installed
or otherwise put in place with respect to the use of Remote Computer Terminals
and assumes full responsibility for the security therefor. The Company further
agrees to be solely responsible for the accuracy, propriety and consequences of
all data transmitted to the Manager by the Company by telephone, telecopy or
other electronic transmission acceptable to the Manager.
(e) The Company shall furnish, or shall cause to be furnished, to the
Manager, each piece of sales literature or other promotional material in which a
Fund or the Manager is named, at least eight business days prior to its use. No
such material shall be used if the Funds or the Manager reasonably objects in
writing to such use within eight business days after receipt of such material.
(f) The Company shall not give any information or make any representations
or statements on behalf of any Fund or concerning any Fund other than the
information or representations contained in the registration statement or
prospectus for the Fund shares, as such registration statement and prospectus
may be amended or supplemented from time to time, or in reports or proxy
statements for that Fund, or in sales literature or other promotional material
approved by the Manager, except with the permission of the Manager. The Manager
agrees to respond to any request for approval on a prompt and timely basis.
(g) The Manager shall furnish, or shall cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional
material in which the Company or the
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Accounts is named, at least ten business days prior to its use. No such material
shall be used if the Company reasonably objects in writing to such use within
ten business days after receipt of such material.
(h) The Manager 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 or prospectus for the Contracts, as such registration
statement and prospectus may be amended or supplemented from time to time, or in
published reports for the Accounts which are in the public domain or approved by
the Company for distribution to Contract owners, or in sales literature or other
promotional material approved by the Company, except with the permission of the
Company. The Company agrees to respond to any request for approval on a prompt
and timely basis.
(i) The Manager will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials, and
all amendments to any of the above, that relate to that Fund or its shares, upon
the Company's request.
(j) The Company will provide to the Manager at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, and all amendments to any of the above, that relate to
the Contracts or the Accounts, upon the Manager's request.
(k) For purposes of this Section 7, 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), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, 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, prospectuses, statements of additional information, shareholder
reports, and proxy materials and any other material constituting sales
literature or advertising under NASD rules, the Investment Company Act or the
Securities Act of 1993 (the "1933 Act").
(1) For so long as the Manager maintains a web site on the Internet, the
Company may provide a hyperlink to such site. If the Manager discontinues such
web site or no longer maintains copies of Fund prospectuses therein for any
reason, the Manager shall provide an electronic version of the Funds'
prospectuses to the Company for use on the Company's web site, as reasonably
requested by the Company.
8. USE OF NAMES. Except as otherwise expressly provided for in this
Agreement, neither the Manager nor the Funds shall use any trademark, trade
name, service xxxx or logo of the Company, or any variation of any such
trademark, trade name, service xxxx or logo, without the Company's prior written
consent, the granting of which shall be at the Company's sole option. Except as
otherwise expressly provided for in this Agreement, the Company shall not use
any trademark, trade name, service xxxx or logo of the Manager or the Funds, or
any variation of any such trademarks, trade names, service marks, or logos,
without the prior written consent of either the Manager or the Funds, as
appropriate, the granting of which shall be at the sole option of the Manager
and/or the Funds.
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9. PROXY VOTING.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the Investment Company
Act as requiring such privileges. It shall be the responsibility of the Company
to assure that it calculates voting privileges in a consistent manner.
(b) The Company will distribute to Contract owners all proxy material
furnished by the Manager and will vote shares in accordance with instructions
received from such Contract owners. The Company shall vote Fund shares for which
no instructions have been received in the same proportion as shares for which
such instructions have been received. The Company and its agents shall not
oppose or interfere with the solicitation of proxies for Fund shares held for
such Contract owners.
10. INDEMNITY.
(a) The Manager agrees to indemnify and hold harmless the Company and
its officers, directors, employees, agents, affiliates and each person, if any,
who controls the Company within the meaning of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this SECTION 10(A)) against any losses,
claims, expenses, damages or liabilities (including amounts paid in settlement
thereof) or litigation expenses (including legal and other expenses)
(collectively, "Losses"), to which the Indemnified Parties may become subject,
insofar as such Losses (i) result from a breach by the Manager of a material
provision of this Agreement, or (ii) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement or prospectus of the Funds or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading.
The Manager will reimburse any legal or other expenses reasonably incurred by
the Indemnified Parties in connection with investigating or defending any such
Losses. The Manager shall not be liable for indemnification hereunder if such
Losses are attributable to the negligence or misconduct of the Company in
performing its obligations under this Agreement.
(b) The Company agrees to indemnify and hold harmless the Manager and the
Funds and their respective officers, directors, employees, agents, affiliates
and each person, if any, who controls the Funds or the Manager within the
meaning of the 1933 Act (collectively, the "Indemnified Parties" for purposes of
this SECTION 10(B)) against any Losses to which the Indemnified Parties may
become subject, insofar as such Losses (i) result from a breach by the Company
of a material provision of this Agreement, or (ii) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement or prospectus of the Company regarding
the Contracts, if any, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii) result from
the use by any person of a Remote Computer Terminal. The Company will reimburse
any legal or other expenses reasonably incurred by the Indemnified Parties in
connection with investigating or defending any such Losses. The Company shall
not be liable for indemnification hereunder if such Losses are attributable to
the negligence or misconduct of the Manager or the Funds in performing their
obligations under this Agreement.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under this SECTION 10. In case any such
II-16
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this SECTION 10 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such action, the
indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of the
indemnified parties in such action, or permit a default or consent to the entry
of any judgment in respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such claimant an
unconditional release from all liability in respect of such claim.
11. POTENTIAL CONFLICTS.
(a) The Company has received a copy of an application for exemptive
relief, as amended, filed by the Manager on December 21, 1987, with the SEC and
the order issued by the SEC in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the requested relief set
forth in such application for exemptive relief. As set forth in such
application, the Board of Directors of the Funds (the "Board") will monitor the
Funds for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts investing in the
Funds. An irreconcilable material conflict may arise for a variety of reasons,
including: (i) an action by any state insurance regulatory authority; (ii) 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 actions by insurance, tax or securities
regulatory authorities; (iii) an administrative or judicial decision in any
relevant proceeding; (iv) the manner in which the investments of any portfolio
are being managed; (v) a difference in voting instructions given by variable
annuity contract owners and variable life insurance contract owners; or (vi) a
decision by an insurer to disregard the voting instructions of contract owners.
The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
(b) The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order by providing the Board
with all information reasonably necessary for the Board to consider any issues
raised. This includes, but is not limited to, an obligation by the Company to
infonn the Board whenever contract owner voting instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with regard
to contract owner investments in the Funds, the Board shall give prompt notice
to all Participating Companies. If the Board determines that the Company is
responsible for causing or creating said conflict, the Company shall at its sole
cost and expense, and to the extent reasonably practicable (as determined by a
majority of the disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict. Such necessary
action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Accounts from the
Funds and reinvesting such assets in a different
investment medium or submitting the question of whether
such segregation should be implemented to a vote of all
affected contract owners and as appropriate, segregating
the assets of any
II-17
appropriate group (i.e., annuity contract owners, life
insurance contract owners, or variable contract owners of
one or more Participating Companies) that votes in favor
of such segregation, or offering to the affected contract
owners the option of making such a change; and/or
(ii) establishing a new registered management investment
company or managed separate account.
(d) If a material irreconcilable conflict arises as a result of a decision
by the Company to disregard its contract owner voting instructions and said
decision represents a minority position or would preclude a majority vote by all
of its contract owners having an interest in the Funds, the Company at its sole
cost, may be required, at the Board's election, to withdraw the Accounts'
investment in the Funds 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
disinterested members of the Board.
(e) For the purpose of this SECTION 11, a majority of the disinterested
Board members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict but in no event will the Funds be
required to establish a new funding medium for any Contract. The Company shall
not be required by this SECTION 11 to establish a new funding medium for any
Contract if an offer to do so has been declined by vote of a majority of the
Contract owners materially adversely affected by the irreconcilable material
conflict.
12. TERMINATION. This agreement shall terminate as to the sale and
issuance of new Contracts:
(a) at the option of either the Company or the Manager upon six months'
advance written notice to the other,
(b) at the option of the Company if the Funds' shares are not available
for any reason to meet the requirement of Contracts as determined by the
Company. Reasonable advance notice of election to terminate shall be furnished
by Company;
(c) at the option of either the Company or the Manager, upon institution
of formal proceedings against the broker-dealer or broker-dealers marketing the
Contracts, any Account, the Company, the Manager, or the Funds by the National
Association of Securities Dealers, Inc. (the "NASD"), the SEC or any other
regulatory body;
(d) upon termination of the Management Agreement between the Funds and
Manager. Notice of such termination shall be promptly furnished to the Company.
This SUBSECTION (D) shall not be deemed to apply if contemporaneously with such
termination a new contract of substantially similar terms is entered into
between the Funds and Manager,
(e) upon the requisite vote of Contract owners having an interest in any
of the Funds to substitute for the Funds' shares the shares of another
investment company in accordance with the terms of Contracts for which the
Funds' shares had been selected to serve as the underlying investment medium.
The Company will give 60 days' written notice to the Funds and the Manager of
any proposed vote to replace the Funds' shares;
(f) upon assignment of this Agreement unless made with the written consent
of all other parties hereto;
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(g) if the Funds' shares are not registered, issued or sold in conformance
with Federal law or such law precludes the use of Fund shares as an underlying
investment medium of Contracts issued or to be issued by the Company. Prompt
notice shall be given by either party should such situation occur,
(h) at the option of the Manager, if the Manager reasonably determines in
good faith that the Company is not offering shares of the Funds in conformity
with the terms of this Agreement or applicable law;
(i) at the option of any party hereto upon a determination that continuing
to perform under this Agreement would, in the reasonable opinion of the
terminating party's counsel, violate any applicable federal or state law, rule,
regulation or judicial order;
(j) at the option of the Company if a Fund fails to meet the
diversification requirements specified in Section 6(b)(ii) hereof,
(k) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(1) at the option of the Company upon three months' advance written notice
if a Fund substantially changes its investment objective or investment style.
13. CONTINUATION OF AGREEMENT. Termination as the result of any cause
listed in SECTION 12 shall not affect the Manager's obligation to continue to
cause the Funds to furnish their shares under the terms of this Agreement to
Contracts then in force for which its shares serve or may serve as the
underlying medium (unless such further sale of Fund shares is proscribed by law
or the SEC or other regulatory body). Following termination, the Manager shall
not have any Administrative Services payment obligation to the Company (except
for payment obligations accrued but not yet paid as of the termination date).
14. NON-EXCLUSIVITY. Each of the parties acknowledges and agrees that this
Agreement and the arrangement described herein are intended to be non-exclusive
and that each of the parties is free to enter into similar agreements and
arrangements with other entities.
15. SURVIVAL. The provisions of SECTION 8 (use of names) and SECTION 10
(indemnity) of this Agreement shall survive termination of this Agreement.
16. AMENDMENT. Neither this Agreement, nor any provision hereof, may be
amended, waived, discharged or terminated orally, but only by an instrument in
writing signed by all of the parties hereto.
17. NOTICES. All notices and other communications hereunder shall be given
or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
II-19
To the Company:
Pruco Life Insurance Company
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
With a copy to:
Pruco Life Insurance Company
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxxxxxx
(973) 367-772S (office number)
(000) 000-0000 (telecopy number)
To the Manager:
American Century Investments
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx, Esq.
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
SECTION 17 shall be deemed to have been delivered on receipt.
18. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned without the
written consent of all parties to the Agreement at the time of such assignment.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
20. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the matters dealt with herein, and
supersedes all previous agreements, written or oral, with respect to such
matters, specifically including that certain Fund Participation Agreement dated
May 16, 1997, by and among the Company, the Manager and American Century
Investment Services, Inc.
22. CONFIDENTIALITY. Subject to applicable law and regulatory authority,
each party hereto shall treat as confidential all information reasonably
identified as such in writing by any other party hereto (including without
limitation the names and addresses of the owners of the
II-20
Contracts) and, except as contemplated by this Agreement shall not disclose,
disseminate or utilize such confidential information until such time as it may
come into the public domain without the expressed prior written consent of the
affected party.
23. COOPERATION. 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 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.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
AMERICAN CENTURY INVESTMENT, PRUCO LIFE INSURANCE COMPANY
MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxx
---------------------------- ---------------------------
Xxxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxxx
Executive Vice President Title: Senior Vice President
II-21
EXHIBIT A
FUNDS AVAILABLE
-------------------------------------------------- -----------------------------
ISSUER NAME OF FUND
-------------------------------------------------- -----------------------------
American Century Variable Portfolios, Inc. VP Value
-------------------------------------------------- -----------------------------
II-22
EXHIBIT B
ACCOUNTS
Pruco Life Variable Appreciable Account
Pruco Life Variable Universal Account
Pruco Life Flexible Premium Variable Annuity Account
II-23
