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EXHIBIT h(44)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
PRUCO SECURITIES CORPORATION
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TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
Section 1. Available Funds ...............................................................................2
1.1 Availability ............................................................................2
1.2 Addition, Deletion or Modification of Funds .............................................2
1.3 No Sales to the General Public ..........................................................2
Section 2. Processing Transactions .......................................................................3
2.1 Timely Pricing and Orders ...............................................................3
2.2 Timely Payments .........................................................................3
2.3 Applicable Price ........................................................................4
2.4 Dividends and Distributions .............................................................4
2.5 Book Entry ..............................................................................4
Section 3. Costs and Expenses ............................................................................4
3.1 General .................................................................................4
3.2 Registration ............................................................................4
3.3 Other (Non-Sales-Related) ...............................................................5
3.4 Other (Sales-Related) ...................................................................5
3.5 Parties To Cooperate ....................................................................5
Section 4. Legal Compliance ..............................................................................6
4.1 Tax Laws ................................................................................6
4.2 Insurance and Certain Other Laws ........................................................8
4.3 Securities Laws .........................................................................9
4.4 Notice of Certain Proceedings and Other Circumstances ...................................9
4.5 Prudential and the Underwriter To Provide Documents; Information About AVIF
.......................................................................................10
4.6 AVIF or AIM To Provide Documents; Information About Prudential and the Underwriter .....11
4.7 Definition of Sales Literature or Other Promotional Material ...........................12
Section 5. Mixed and Shared Funding .....................................................................12
5.1 General ................................................................................12
5.2 Disinterested Directors ................................................................12
5.3 Monitoring for Material Irreconcilable Conflicts .......................................13
5.4 Conflict Remedies ......................................................................14
5.5 Notice to Prudential ...................................................................15
5.6 Information Requested by Board of Directors ............................................15
5.7 Compliance with SEC Rules ..............................................................15
5.8 Other Requirements .....................................................................15
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DESCRIPTION PAGE
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Section 6. Termination ..................................................................................15
6.1 Events of Termination ..................................................................15
6.2 Notice Requirement for Termination .....................................................17
6.3 Funds To Remain Available ..............................................................17
6.4 Survival of Warranties and Indemnifications ............................................17
6.5 Continuance of Agreement for Certain Purposes ..........................................18
Section 7. Parties To Cooperate Respecting Termination ..................................................18
Section 8. Assignment ...................................................................................18
Section 9. Notices ......................................................................................18
Section 10. Voting Procedures ...........................................................................19
Section 11. Foreign Tax Credits .........................................................................19
Section 12. Indemnification .............................................................................20
12.1 Of AVIF and AIM by Prudential and the Underwriter ......................................20
12.2 Of Prudential and the Underwriter by AVIF and AIM ......................................22
12.3 Effect of Notice .......................................................................24
12.4 Successors .............................................................................24
12.5 Assignments ............................................................................24
Section 13. Applicable Law ..............................................................................25
Section 14. Execution in Counterparts ...................................................................25
Section 15. Severability ................................................................................25
Section 16. Rights Cumulative ...........................................................................25
Section 17. Headings ....................................................................................25
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PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of December,
1998 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM");
The Prudential Insurance Company of America ("Prudential"), a New Jersey life
insurance company, on behalf of itself and each of its segregated asset accounts
listed in Schedule A hereto, as the parties hereto may amend from time to time
(each, an "Account," and collectively, the "Accounts"); and Pruco Securities
Corporation, a New Jersey corporation and the principal underwriter of the
Contracts and Policies referred to below ("Underwriter") (collectively, the
"Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of fifteen separate series ("Series"),
shares ("Shares") of each of which are registered under the Securities Act of
1933, as amended (the "1933 Act") and are currently sold to one or more separate
accounts of life insurance companies to fund benefits under variable annuity
contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A
hereto as the Parties hereto may amend from time to time (each a "Fund";
reference herein to "AVIF" includes reference to each Fund, to the extent the
context requires) available for purchase by the Accounts; and
WHEREAS, AIM is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 (the "1934 Act") and a member in good standing
of the National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, AIM currently serves as the distributor for the Shares; and
WHEREAS, Prudential will be the issuer of certain variable annuity
contracts ("Contracts") and/or variable life insurance policies ("Policies") as
set forth on Schedule A hereto, as the Parties hereto may amend from time to
time, which Contracts and Policies (hereinafter collectively, the "Policies"),
if required by applicable law, will be registered under the 1933 Act; and
WHEREAS, Prudential will fund the Policies through the Accounts, each
of which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
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WHEREAS, Prudential will serve as the depositor of the Accounts, each
of which is registered as a unit investment trust investment company under the
1940 Act (or exempt therefrom), and the security interests deemed to be issued
by the Accounts under the Policies will be registered as securities under the
1933 Act (or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Prudential intends to purchase Shares in one or more of the Funds
on behalf of the Accounts to fund the Policies; and
WHEREAS, the Underwriter is a broker-dealer registered with the SEC
under the 1934 Act and a member in good standing of the NASD;
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
AVIF will make Shares of each Fund available to Prudential for
purchase and redemption at net asset value and with no sales charges, subject to
the terms and conditions of this Agreement. The Board of Directors of AVIF may
refuse to sell Shares of any Fund to any person, or suspend or terminate the
offering of Shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of the
Directors acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, such action is deemed in the best
interests of the shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other
Funds to provide additional funding media for the Policies, or to delete,
combine, or modify existing Funds, by amending Schedule A hereto. Upon such
amendment to Schedule A, any applicable reference to a Fund, AVIF, or its Shares
herein shall include a reference to any such additional Fund. Schedule A, as
amended from time to time, is incorporated herein by reference and is a part
hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
AVIF represents and warrants that Shares of each Fund have
been and will be sold only to those entities listed under Section 817(h)(4) of
the Code and the regulations thereunder, as such Code Section and the
regulations may be amended from time to time.
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SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its designated agent will use its best efforts to
provide Prudential with the net asset value per Share for each Fund by 5:30 p.m.
Central Time on each Business Day. As used herein, "Business Day" shall mean any
day on which (i) the New York Stock Exchange is open for regular trading, and
(ii) AVIF calculates the Fund's net asset value.
(b) Prudential will use the data provided by AVIF each
Business Day pursuant to paragraph (a) immediately above to calculate Account
unit values and to process transactions that receive that same Business Day's
Account unit values. Prudential will perform such Account processing the same
Business Day, and will place corresponding orders to purchase or redeem Shares
with AVIF by 9:00 a.m. Central Time the following Business Day; provided,
however, that AVIF shall provide additional time to Prudential in the event that
AVIF is unable to meet the 5:30 p.m. time stated in paragraph (a) immediately
above. Such additional time shall be equal to the additional time that AVIF
takes to make the net asset values available to Prudential.
(c) Each order to purchase or redeem Shares will separately
describe the amount of Shares of each Fund to be purchased, redeemed or
exchanged and will not be netted; provided, however, with respect to payment of
the purchase price by Prudential and of redemption proceeds by AVIF, Prudential
and AVIF shall net purchase and redemption orders with respect to each Fund and
shall transmit one (1) net payment per Fund in accordance with Section 2.2,
below. Each order to purchase or redeem Shares shall also specify whether the
order results from purchase payments, surrenders, partial withdrawals, routine
withdrawals of charges, or requests for other transactions under Policies
(collectively, "Policy transactions").
(d) If AVIF provides materially incorrect Share net asset
value information, Prudential 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 promptly upon
discovery to Prudential.
2.2 TIMELY PAYMENTS.
Prudential will wire payment for net purchases to a custodial
account designated by AVIF by 1:00 p.m. Central Time on the same day as the
order for Shares is placed, to the extent practicable. AVIF will wire payment
for net redemptions to an account designated by Prudential by 1:00 p.m. Central
Time on the same day as the Order is placed, to the extent practicable, but in
any event within five (5) calendar days after the date the order is placed in
order to enable Prudential to pay redemption proceeds within the time specified
in Section 22(e) of the 1940 Act or such shorter period of time as may be
required by law.
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2.3 APPLICABLE PRICE.
(a) Share purchase and redemption orders that result from
Policy transactions and that Prudential receives prior to the close of regular
trading on the New York Stock Exchange on a Business Day will be executed at the
net asset values of the appropriate Funds next computed after receipt by AVIF or
its designated agent of the orders. For purposes of this Section 2.3(a), the
Underwriter shall be the designated agent of AVIF for receipt of orders relating
to Policy transactions on each Business Day and receipt by such designated agent
shall constitute receipt by AVIF; provided, that AVIF receives notice of such
orders by 9:00 a.m. Central Time on the next following Business Day or such
later time as computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by Prudential
will be effected at the net asset values of the appropriate Funds next computed
after receipt by AVIF or its designated agent of the order therefor, and such
orders will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
AVIF will furnish notice promptly to Prudential of any income
dividends or capital gain distributions payable on the Shares of any Fund.
Prudential hereby elects to reinvest all dividends and capital gains
distributions in additional Shares of the corresponding Fund at the ex-dividend
date net asset values until Prudential otherwise notifies AVIF in writing, it
being agreed by the Parties that the ex-dividend date and the payment date with
respect to any dividend or distribution will be the same Business Day.
Prudential reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry
only. Stock certificates will not be issued to Prudential. Shares ordered from
AVIF will be recorded in an appropriate title for Prudential, on behalf of its
Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided herein, each Party
will bear all expenses incident to its performance under this Agreement.
3.2 REGISTRATION.
(a) AVIF will bear the cost of its registering as a management
investment company under the 1940 Act and registering its Shares under the 1933
Act, and keeping such
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registrations current and effective; including, without limitation, the
preparation of and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices
with respect to AVIF and its Shares and payment of all applicable registration
or filing fees with respect to any of the foregoing.
(b) Prudential will bear the cost of registering, to the
extent required, each Account as a unit investment trust under the 1940 Act and
registering units of interest under the Policies under the 1933 Act and keeping
such registrations current and effective; including, without limitation, the
preparation and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with
respect to each Account and its units of interest and payment of all applicable
registration or filing fees with respect to any of the foregoing.
3.3 OTHER (NON-SALES-RELATED).
(a) AVIF will bear, or arrange for others to bear, the costs
of preparing, filing with the SEC and setting for printing AVIF's prospectus,
statement of additional information and any amendments or supplements thereto
(collectively, the "AVIF Prospectus"), periodic reports to shareholders, AVIF
proxy material and other shareholder communications.
(b) Prudential will bear the costs of preparing, filing with
the SEC and setting for printing each Account's prospectus, statement of
additional information and any amendments or supplements thereto (collectively,
the "Account Prospectus"), any periodic reports to Policy owners, annuitants or
participants under the Policies (collectively, "Participants"), voting
instruction solicitation material, and other Participant communications.
(c) Prudential or the Underwriter will print in quantity and
deliver to existing Participants the documents described in Section 3.3(b) above
and the documents provided by AVIF in camera ready or computer diskette form
pursuant to Section 4.6(b) hereof. The costs of printing in quantity and
delivering to existing Participants such documents will be borne by Prudential.
3.4 OTHER (SALES-RELATED).
The Underwriter will bear the expenses of distributing Fund
Shares and the Policies. These expenses would include by way of illustration,
but are not limited to, the costs of printing and distributing to offerees the
AVIF Prospectus and periodic reports of AVIF. These costs would also include the
costs of preparing, printing, and distributing sales literature and advertising
relating to the Funds, as well as filing such materials with, and obtaining
approval from, the SEC, NASD, any state insurance regulatory authority, and any
other appropriate regulatory authority, to the extent required.
3.5 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable,
in arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of AVIF and the Accounts.
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SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF represents and warrants that each Fund is currently
qualified as a regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and represents that it
will qualify and maintain qualification of each Fund as a RIC. AVIF will notify
Prudential immediately upon having a reasonable basis for believing that a Fund
has ceased to so qualify or that it might not so qualify in the future.
(b) AVIF represents that it will comply and maintain each
Fund's compliance with the diversification requirements set forth in Section
817(h) of the Code and Section 1.817-5(b) of the regulations under the Code.
AVIF will notify Prudential immediately upon having a reasonable basis for
believing that a Fund has ceased to so comply or that a Fund might not so comply
in the future.
(c) Prudential agrees that if the Internal Revenue Service
("IRS") asserts in writing in connection with any governmental audit or review
of Prudential or, to Prudential's knowledge, of any Participant, that any Fund
has failed to comply with the diversification requirements of Section 817(h) of
the Code or Prudential otherwise becomes aware of any facts that could give rise
to any claim against AVIF or its affiliates as a result of such a failure or
alleged failure:
(i) Prudential shall promptly notify AVIF of such
assertion or potential claim;
(ii) Prudential shall consult with AVIF as to how to
minimize any liability that may arise as a result of such
failure or alleged failure;
(iii) Prudential shall use its best efforts to
minimize any liability of AVIF or its affiliates resulting
from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations Section
1.817-5(a)(2), to the Commissioner of the IRS that such
failure was inadvertent;
(iv) Prudential shall permit AVIF, its affiliates and
their legal and accounting advisors to participate in any
conferences, settlement discussions or other administrative or
judicial proceeding or contests (including judicial appeals
thereof) with the IRS, any Participant or any other claimant
regarding any claims that could give rise to liability to AVIF
or its affiliates as a result of such a failure or alleged
failure;
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(v) any written materials to be submitted by
Prudential to the IRS, any Participant or any other claimant
in connection with any of the foregoing proceedings or
contests (including, without limitation, any such materials to
be submitted to the IRS pursuant to Treasury Regulations
Section 1.817-5(a)(2)), (a) shall be provided by Prudential to
AVIF (together with any supporting information or analysis) at
least ten (10) business days' prior to the day on which such
proposed materials are to be submitted, and (b) shall not be
submitted by Prudential to any such person without the express
written consent of AVIF which shall not be unreasonably
withheld;
(vi) Prudential shall provide AVIF or its affiliates
and their accounting and legal advisors with such cooperation
as AVIF shall reasonably request (including, without
limitation, by permitting AVIF and its accounting and legal
advisors to review the relevant books and records of
Prudential) in order to facilitate review by AVIF or its
advisors of any written submissions provided to it pursuant to
the preceding clause or its assessment of the validity or
amount of any claim against its arising from such a failure or
alleged failure;
(vii) Prudential shall not with respect to any claim
of the IRS or any Participant that would give rise to a claim
against AVIF or its affiliates (a) compromise or settle any
claim, (b) accept any adjustment on audit, or (c) forego any
allowable administrative or judicial appeals, without the
express written consent of AVIF or its affiliates, which shall
not be unreasonably withheld, provided that Prudential shall
not be required, after exhausting all administrative
penalties, to appeal any adverse judicial decision unless AVIF
or its affiliates shall have provided an opinion of
independent counsel to the effect that a reasonable basis
exists for taking such appeal; and provided further that the
costs of any such appeal shall be borne equally by the Parties
hereto; and
(viii) AVIF and its affiliates shall have no
liability as a result of such failure or alleged failure if
Prudential fails to comply with any of the foregoing clauses
(i) through (vii), and such failure could be shown to have
materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give
its written consent to any compromise or settlement of any claim or liability
hereunder, Prudential may, in its discretion, authorize AVIF or its affiliates
to act in the name of Prudential in, and to control the conduct of, such
conferences, discussions, proceedings, contests or appeals and all
administrative or judicial appeals thereof, and in that event AVIF or its
affiliates shall bear the fees and expenses associated with the conduct of the
proceedings that it is so authorized to control; provided that in no event shall
Prudential have any liability resulting from AVIF's refusal to accept the
proposed settlement or compromise with respect to any failure caused by AVIF. As
used in this Agreement, the term "affiliates" shall have the same meaning as
"affiliated person" as defined in Section 2(a)(3) of the 1940 Act.
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(d) Prudential represents and warrants that the Policies
currently are and will be treated as annuity, endowment, or life insurance
contracts under applicable provisions of the Code and that it will maintain such
treatment; Prudential will notify AVIF immediately upon having a reasonable
basis for believing that any of the Policies have ceased to be so treated or
that they might not be so treated in the future.
(e) Prudential represents and warrants that each Account is a
"segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract,"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. Prudential will continue to meet such definitional
requirements, and it will notify AVIF immediately upon having a reasonable basis
for believing that such requirements have ceased to be met or that they might
not be met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) AVIF and AIM will use their best efforts to comply with
any applicable state insurance laws or regulations, to the extent specifically
requested in writing by Prudential.
(b) Prudential represents and warrants that (i) it is an
insurance company duly organized, validly existing and in good standing under
the laws of the State of New Jersey and has full corporate power, authority and
legal right to execute, deliver and perform its duties and comply with its
obligations under this Agreement, (ii) it has legally and validly established
and maintains each Account as a segregated asset account under the New Jersey
Insurance Code and the regulations thereunder, and (iii) the Policies comply in
all material respects with all other applicable federal and state laws and
regulations.
(c) AVIF represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Maryland and has full power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this Agreement.
(d) AIM represents and warrants that it is a Delaware
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has full power, authority and right to
execute, deliver and perform its duties and comply with the its obligations
under this Agreement.
(e) The Underwriter represents and warrants that it is a New
Jersey corporation duly organized, validly existing, and in good standing under
the laws of the State of New Jersey and has full power, authority, and legal
right to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.
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4.3 SECURITIES LAWS.
(a) Prudential and the Underwriter represent and warrant that
(i) interests in each Account pursuant to the Policies will be registered under
the 1933 Act to the extent required by the 1933 Act, (ii) the Policies will be
duly authorized for issuance and sold in compliance with all applicable federal
and state laws, including, without limitation, the 1933 Act, the 1934 Act, the
1940 Act and Arizona law, (iii) each Account is and will remain registered under
the 1940 Act, to the extent required by the 1940 Act, (iv) each Account does and
will comply in all material respects with the requirements of the 1940 Act and
the rules thereunder, to the extent required, (v) each Account's 1933 Act
registration statement relating to the Policies, together with any amendments
thereto, will at all times comply in all material respects with the requirements
of the 1933 Act and the rules thereunder, (vi) Prudential will amend the
registration statement for its Policies under the 1933 Act and for its Accounts
under the 1940 Act from time to time as required in order to effect the
continuous offering of its Policies or as may otherwise be required by
applicable law, and (vii) each Account Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.
(b) AVIF and AIM represent and warrant that (i) Shares sold
pursuant to this Agreement will be registered under the 1933 Act to the extent
required by the 1933 Act and duly authorized for issuance and sold in compliance
with Maryland law, (ii) AVIF is and will remain registered under the 1940 Act to
the extent required by the 1940 Act, (iii) AVIF will amend the registration
statement for its Shares under the 1933 Act and itself under the 1940 Act from
time to time as required in order to effect the continuous offering of its
Shares, (iv) AVIF does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, (v) AVIF's 1933 Act
registration statement, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933 Act and rules
thereunder, and (vi) AVIF Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder.
(c) AVIF will register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF and/or AIM will immediately notify Prudential of (i)
the issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to AVIF's registration statement
under the 1933 Act or AVIF Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or AVIF Prospectus, (iii) the
initiation of any proceedings for that purpose or for any other purpose relating
to the registration or offering of AVIF's Shares, or (iv) any other action or
circumstances that may prevent the lawful offer or sale of Shares of any Fund in
any state or jurisdiction, including, without limitation, any circumstances in
which (a) such Shares are not registered and, in all material respects, issued
and sold in accordance with applicable state and federal law, or (b) such law
precludes the use of such Shares as an underlying investment medium of the
Policies issued or to be issued by Prudential. AVIF will
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make every reasonable effort to prevent the issuance, with respect to any Fund,
of any such stop order, cease and desist order or similar order and, if any such
order is issued, to obtain the lifting thereof at the earliest possible time.
(b) Prudential and the Underwriter will immediately notify
AVIF of (i) the issuance by any court or regulatory body of any stop order,
cease and desist order, or other similar order with respect to each Account's
registration statement under the 1933 Act relating to the Policies or each
Account Prospectus, (ii) any request by the SEC for any amendment to such
registration statement or Account Prospectus, (iii) the initiation of any
proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Policies,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. Prudential will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
time.
4.5 PRUDENTIAL AND THE UNDERWRITER TO PROVIDE DOCUMENTS;
INFORMATION ABOUT AVIF.
(a) Prudential or the Underwriter will provide to AVIF or its
designated agent at least one (1) complete copy of all SEC registration
statements, Account Prospectuses, reports, any preliminary and final voting
instruction solicitation material, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate to each
Account or the Policies, contemporaneously with the filing of such document with
the SEC or other regulatory authorities.
(b) The Underwriter will provide to AVIF or its designated
agent at least one (1) complete copy of each piece of sales literature or other
promotional material in which AVIF or any of its affiliates is named, at least
five (5) business days' prior to its use or such shorter period as the Parties
hereto may, from time to time, agree upon. No such material shall be used if
AVIF or its designated agent objects to such use within five (5) business days
after receipt of such material or such shorter period as the Parties hereto may,
from time to time, agree upon. AVIF hereby designates its investment adviser as
the entity to receive such sales literature or other promotional material, until
such time as AVIF appoints another designated agent by giving notice to
Prudential in the manner required by Section 9 hereof.
(c) Neither Prudential, the Underwriter, nor any of their
respective affiliates will give any information or make any representations or
statements on behalf of or concerning AVIF or its affiliates in connection with
the sale of the Policies other than (i) the information or representations
contained in the registration statement, including the AVIF Prospectus contained
therein, relating to Shares, as such registration statement and AVIF Prospectus
may be amended from time to time; or (ii) in reports or proxy materials for
AVIF; or (iii) in sales literature or other promotional material approved by
AVIF, except with the express written permission of AVIF.
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(d) Prudential and the Underwriter shall adopt and implement
procedures reasonably designed to ensure that information concerning AVIF and
its affiliates that is intended for use only by brokers or agents selling the
Policies (i.e., information that is not intended for distribution to
Participants or offerees) ("broker only materials") is so used, and neither AVIF
nor any of its affiliates shall be liable for any losses, damages or expense
relating to the improper use of such broker only materials.
4.6 AVIF OR AIM TO PROVIDE DOCUMENTS; INFORMATION ABOUT PRUDENTIAL AND
THE UNDERWRITER.
(a) AVIF will provide to Prudential at least one (1) complete
copy of all SEC registration statements, AVIF Prospectuses, reports, any
preliminary and final proxy material, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate to AVIF
or the Shares of a Fund, contemporaneously with the filing of such document with
the SEC or other regulatory authorities.
(b) AVIF will provide to Prudential or the Underwriter camera
ready or computer diskette copies of all AVIF Prospectuses, proxy materials,
periodic reports to shareholders and other materials required by law to be sent
to Participants who have allocated any Policy value to a Fund. AVIF will provide
such copies to Prudential or the Underwriter in a timely manner so as to enable
Prudential or the Underwriter, as the case may be, to print and distribute such
materials within the time required by law to be furnished to Participants.
(c) AIM will provide to Prudential or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which Prudential, the Underwriter or any of their
respective affiliates is named, or that refers to the Policies, at least five
(5) business days' prior to its use or such shorter period as the Parties hereto
may, from time to time, agree upon. No such material shall be used if Prudential
or its designated agent objects to such use within five (5) business days after
receipt of such material or such shorter period as the Parties hereto may, from
time to time, agree upon. Prudential shall receive all such sales literature or
other promotional material, until such time as it appoints a designated agent by
giving notice to AVIF in the manner required by Section 9 hereof.
(d) Neither AVIF nor any of its affiliates will give any
information or make any representations or statements on behalf of or concerning
Prudential, the Underwriter, each Account, or the Policies other than (i) the
information or representations contained in the registration statement,
including each Account Prospectus contained therein, relating to the Policies,
as such registration statement and Account Prospectus may be amended from time
to time; or (ii) in reports or voting instruction materials for each Account; or
(iii) in sales literature or other promotional material approved by Prudential
or its affiliates, except with the express written permission of Prudential.
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(e) AIM shall adopt and implement procedures reasonably
designed to ensure that information concerning Prudential, the Underwriter, and
their respective affiliates that is intended for use only by brokers or agents
selling the Policies (i.e., information that is not intended for distribution to
Participants or offerees) ("broker only materials") is so used, and neither
Prudential, the Underwriter, nor any of their respective affiliates shall be
liable for any losses, damages or expense relating to the improper use of such
broker only materials.
4.7 DEFINITION OF SALES LITERATURE OR OTHER PROMOTIONAL MATERIAL.
For purposes of this Section 4.7, 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, video tape
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, circular, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published articles), 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 of advertising under NASD Rules, the 1940
Act or the 1933 Act.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
The SEC has granted an order AVIF exempting it from certain
provisions of the 1940 Act and rules thereunder so that AVIF may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable life insurance contracts, separate accounts
of insurance companies unaffiliated with Prudential, and trustees of qualified
pension and retirement plans (collectively, "Mixed and Shared Funding"). The
Parties recognize that the SEC has imposed terms and conditions for such orders
that are substantially identical to many of the provisions of this Section 5.
Sections 5.2 through 5.8 below shall apply, if and only if AVIF continues to
implement Mixed and Shared Funding, pursuant to such an exemptive order or
otherwise. AVIF hereby notifies Prudential that it may be appropriate to include
in the prospectus pursuant to which a Policy is offered disclosure regarding the
potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED DIRECTORS.
AVIF agrees that its Board of Directors shall at all times
consist of directors a majority of whom (the "Disinterested Directors") are not
interested persons of AVIF within the meaning of Section 2(a)(19) of the 1940
Act and the Rules thereunder and as modified by any applicable orders of the
SEC, except that if this condition is not met by reason of the death,
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disqualification, or bona fide resignation of any director, then the operation
of this condition shall be suspended (a) for a period of forty-five (45) days if
the vacancy or vacancies may be filled by the Board, (b) for a period of sixty
(60) days if a vote of shareholders is required to fill the vacancy or
vacancies, or (c) for such longer period as the SEC may prescribe by order upon
application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Directors will monitor for the
existence of any material irreconcilable conflict between the interests of the
Participants in all separate accounts of life insurance companies utilizing AVIF
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). Prudential agrees to inform the Board of Directors of AVIF of the
existence of or any potential for any such material irreconcilable conflict of
which it is aware. The concept of a "material irreconcilable conflict" is not
defined by the 1940 Act or the rules thereunder, but the Parties recognize that
such a conflict may arise for a variety of reasons, including, without
limitation:
(a) an action by any state insurance or other 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 and variable life insurance contract Participants or by
Participants of different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to
disregard the voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with
exemptive orders of the type referred to in Section 5.1 hereof, Prudential will
assist the Board of Directors in carrying out its responsibilities by providing
the Board of Directors with all information reasonably necessary for the Board
of Directors to consider any issue raised, including information as to a
decision by Prudential to disregard voting instructions of Participants.
Prudential's responsibilities with the foregoing shall be carried out with a
view only to the interest of Participants.
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5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the
members of the Board of Directors or a majority of the Disinterested Directors
that a material irreconcilable conflict exists, Prudential will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority of the Disinterested Directors), take whatever steps
are necessary to remedy or eliminate the material irreconcilable conflict, which
steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all
of the Accounts from AVIF or any Fund and reinvesting such
assets in a different investment medium, including another
Fund of AVIF, or submitting the question whether such
segregation should be implemented to a vote of all affected
Participants and, as appropriate, segregating the assets of
any particular group (e.g., annuity Participants, life
insurance Participants or all Participants) that votes in
favor of such segregation, or offering to the affected
Participants the option of making such a change; and
(ii) establishing a new registered investment company
of the type defined as a "management company" in Section 4(3)
of the 1940 Act or a new separate account that is operated as
a management company.
(b) If the material irreconcilable conflict arises because of
Prudential's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote,
Prudential may be required, at AVIF's election, to withdraw each Account's
investment in AVIF or any Fund. No charge or penalty will be imposed as a result
of such withdrawal. Any such withdrawal must take place within six (6) months
after AVIF gives notice to Prudential that this provision is being implemented,
and until such withdrawal AVIF shall continue to accept and implement orders by
Prudential for the purchase and redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to Prudential
conflicts with the majority of other state regulators, then Prudential will
withdraw each Account's investment in AVIF within six (6) months after AVIF's
Board of Directors informs Prudential that it has determined that such decision
has created a material irreconcilable conflict, and until such withdrawal AVIF
shall continue to accept and implement orders by Prudential for the purchase and
redemption of Shares of AVIF.
(d) Prudential agrees that any remedial action taken by it in
resolving any material irreconcilable conflict will be carried out at its
expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested
Directors will determine whether or not any proposed action adequately remedies
any material irreconcilable conflict. In no event, however, will AVIF or any of
its affiliates be required to establish a new funding medium for any Policies.
Prudential will not be required by the terms hereof to establish a new funding
medium
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for any Policies if an offer to do so has been declined by vote of a majority of
Participants materially adversely affected by the material irreconcilable
conflict.
5.5 NOTICE TO PRUDENTIAL.
AVIF will promptly make known in writing to Prudential the
Board of Directors' determination of the existence of a material irreconcilable
conflict, a description of the facts that give rise to such conflict and the
implications of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
Prudential and AVIF (or its investment adviser) will at least
annually submit to the Board of Directors of AVIF such reports, materials or
data as the Board of Directors may reasonably request so that the Board of
Directors may fully carry out the obligations imposed upon it by the provisions
hereof or any exemptive order granted by the SEC to permit Mixed and Shared
Funding, and said reports, materials and data will be submitted at any
reasonable time deemed appropriate by the Board of Directors. All reports
received by the Board of Directors of potential or existing conflicts, and all
Board of Directors actions with regard to determining the existence of a
conflict, notifying Participating Insurance Companies and Participating Plans of
a conflict, and determining whether any proposed action adequately remedies a
conflict, will be properly recorded in the minutes of the Board of Directors or
other appropriate records, and such minutes or other records will be made
available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which AVIF is serving as an investment
medium for variable life insurance Policies, 1940 Act Rules 6e-3(T) or, if
applicable, 6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief
with respect to Mixed and Shared Funding, AVIF agrees that it will comply with
the terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.
5.8 OTHER REQUIREMENTS.
AVIF will require that each Participating Insurance Company
and Participating Plan enter into an agreement with AVIF that contains in
substance the same provisions as are set forth in Sections 4.1(b), 4.1(d),
4.3(a), 4.4(b), 4.5(a), 5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as
to a Fund:
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(a) at the option of AVIF or Prudential upon the approval by
(i) a majority of the Disinterested Directors, or (ii) a majority vote of the
Shares of the affected Fund that are held in the corresponding Subaccount of an
Account (pursuant to the procedures set forth in Section 10 of this Agreement
for voting Shares in accordance with Participant instructions); provided,
however, that the approvals described in clauses (i) and (ii) above shall not be
required if (1) the aggregate account value under the Policies is less than one
million dollars ($1,000,000,000) at the date the notice of termination is
delivered, and (2) thirty-six (36) full calendar months have expired following
the date the first Policy invested in any Fund; or
(b) at the option of AVIF or AIM upon institution of formal
proceedings against Prudential or its affiliates by the NASD, the SEC, any state
insurance regulator or any other regulatory body regarding Prudential's
obligations under this Agreement or related to the sale of the Policies, the
operation of each Account, or the purchase of Shares, if, in each case, AVIF or
AIM reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on the Fund with respect to which the Agreement is to be
terminated; or
(c) at the option of Prudential upon institution of formal
proceedings against AVIF, its principal underwriter, or its investment adviser
by the NASD, the SEC, or any state insurance regulator or any other regulatory
body regarding AVIF's obligations under this Agreement or related to the
operation or management of AVIF or the purchase of AVIF Shares, if, in each
case, Prudential reasonably determines that such proceedings, or the facts on
which such proceedings would be based, have a material likelihood of imposing
material adverse consequences on Prudential, or the Subaccount corresponding to
the Fund with respect to which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the
Fund's Shares are not registered and, in all material respects, issued and sold
in accordance with any applicable federal or state law, or (ii) such law
precludes the use of such Shares as an underlying investment medium of the
Policies issued or to be issued by Prudential; or
(e) upon termination of the corresponding Subaccount's
investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of Prudential if the Fund ceases to qualify
as a RIC under Subchapter M of the Code or under successor or similar
provisions, or if Prudential reasonably believes that the Fund may fail to so
qualify; or
(g) at the option of Prudential if the Fund fails to comply
with Section 817(h) of the Code or with successor or similar provisions, or if
Prudential reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF or AIM if the Policies issued by
Prudential cease to qualify as annuity contracts or life insurance contracts
under the Code (other than by reason of the
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Fund's noncompliance with Section 817(h) or Subchapter M of the Code) or if
interests in an Account under the Policies are not registered, where required,
and, in all material respects, are not issued or sold in accordance with any
applicable federal or state law; or
(i) upon another Party's material breach of any provision of
this Agreement; or
(j) at the option of either party upon six (6) months' advance
written notice.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and
until the Party terminating this Agreement gives prior written notice to the
other Party to this Agreement of its intent to terminate, and such notice shall
set forth the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the
provisions of Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall
be given at least six (6) months in advance of the effective date of termination
unless a shorter time is required by law or is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the
provisions of Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall
be given at least ninety (90) days in advance of the effective date of
termination unless a shorter time is required by law or is agreed to by the
Parties hereto; and
(c) in the event that any termination is based upon the
provisions of Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such
prior written notice shall be given as soon as possible after the terminating
Party learns of the event causing termination to be required.
6.3 FUNDS TO REMAIN AVAILABLE.
Except (a) as necessary to implement Participant-initiated
transactions, (b) as required by state insurance laws or regulations, (c) as
required pursuant to Section 5 of this Agreement, or (d) with respect to any
Fund as to which this Agreement has terminated pursuant to Section 6.1 hereof,
Prudential shall not (i) redeem AVIF Shares attributable to the Policies (as
opposed to AVIF Shares attributable to Prudential's assets held in each
Account), or (ii) prevent Participants from allocating payments to or
transferring amounts from a Fund that was otherwise available under the
Policies, until six (6) months after Prudential shall have notified AVIF of its
intention to do so.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the
termination of this Agreement.
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6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any
Fund pursuant to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or
6.1(i) hereof, this Agreement shall nevertheless continue in effect as to any
Shares of that Fund that are outstanding as of the date of such termination (the
"Initial Termination Date"). This continuation shall extend to the date as of
which an Account owns no Shares of the affected Fund.
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable
assistance to one another in taking all necessary and appropriate steps for the
purpose of ensuring that an Account owns no Shares of a Fund after the Final
Termination Date with respect thereto, or, in the case of a termination pursuant
to Section 6.1(a), the termination date specified in the notice of termination.
Such steps may include combining the affected Account with another Account,
substituting other mutual fund shares for those of the affected Fund, or
otherwise terminating participation by the Policies in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with
the written consent of each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted by Section 2
hereof will be given by means mutually acceptable to the Parties concerned. Each
other notice or communication required or permitted by this Agreement will be
given to the following persons at the following addresses and facsimile numbers,
or such other persons, addresses or facsimile numbers as the Party receiving
such notices or communications may subsequently direct in writing:
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxx Xxxxxxxxx, Esq.
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PRUCO SECURITIES CORPORATION
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxx Xxxxxxxxx, Esq.
AIM VARIABLE INSURANCE FUNDS, INC.
A I M DISTRIBUTORS, INC.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section
3 hereof, Prudential will distribute all proxy material furnished by AVIF to
Participants to whom pass-through voting privileges are required to be extended
and will solicit voting instructions from Participants. Prudential will vote
Shares in accordance with timely instructions received from Participants.
Prudential will vote Shares that are (a) not attributable to Participants to
whom pass-through voting privileges are extended, or (b) attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Shares for which said instructions have been received from
Participants, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass through voting privileges for Participants. Neither
Prudential nor any of its affiliates will in any way recommend action in
connection with or oppose or interfere with the solicitation of proxies for the
Shares held for such Participants. Prudential reserves the right to vote shares
held in any Account in its own right, to the extent permitted by law. Prudential
shall be responsible for assuring that each of its Accounts holding Shares
calculates voting privileges in a manner consistent with that of other
Participating Insurance Companies or in the manner required by the Mixed and
Shared Funding exemptive order obtained by AVIF. AVIF will notify Prudential of
any changes of interpretations or amendments to the Mixed and Shared Funding
exemptive order it has obtained.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with Prudential concerning
any decision to elect or not to elect pursuant to Section 853 of the Code to
pass through the benefit of any foreign tax credits to its shareholders.
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SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY PRUDENTIAL AND THE UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and
12.1(c), below, Prudential and the Underwriter each agree to indemnify and hold
harmless AVIF, its affiliates (including AIM), and each of their respective
directors and officers, and each person, if any, who controls AVIF or its
affiliates (including AIM) within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 12.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of Prudential) or actions in respect
thereof (including, to the extent 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 actions are related to the sale or acquisition of AVIF's Shares and:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any Account's 1933 Act registration statement,
any Account Prospectus, the Policies, or sales literature or
advertising for the Policies (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, that
this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to Prudential or the
Underwriter by or on behalf of AVIF for use in any Account's
1933 Act registration statement, any Account Prospectus, the
Policies, or sales literature or advertising or otherwise for
use in connection with the sale of Policies or Shares (or any
amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other
statements or representations (other than statements or
representations contained in AVIF's 1933 Act registration
statement, AVIF Prospectus, sales literature or advertising of
AVIF, or any amendment or supplement to any of the foregoing,
not supplied for use therein by or on behalf of Prudential or
the Underwriter and on which such persons have reasonably
relied) or the negligent, illegal or fraudulent conduct of
Prudential, the Underwriter or their respective affiliates or
persons under their control (including, without limitation,
their employees and "Associated Persons," as that term is
defined in paragraph (m) of Article I of the NASD's By-Laws),
in connection with the sale or distribution of the Policies or
Shares; or
(iii) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in AVIF's 1933 Act registration statement, AVIF
Prospectus, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing, or the
omission or alleged omission to state
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therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon and in
conformity with information furnished to AVIF or AIM by or on
behalf of Prudential, the Underwriter or their respective
affiliates for use in AVIF's 1933 Act registration statement,
AVIF Prospectus, sales literature or advertising of AVIF, or
any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by Prudential
or the Underwriter to perform the obligations, provide the
services and furnish the materials required of them under the
terms of this Agreement, or any material breach of any
representation and/or warranty made by Prudential or the
Underwriter in this Agreement or arise out of or result from
any other material breach of this Agreement by Prudential or
the Underwriter; or
(v) arise as a result of failure by the Policies
issued by Prudential to qualify as life insurance, endowment,
or annuity contracts under the Code, otherwise than by reason
of any Fund's failure to comply with Subchapter M or Section
817(h) of the Code.
(b) Neither Prudential nor the Underwriter shall be liable
under this Section 12.1 with respect to any losses, claims, damages, liabilities
or actions to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement, or (ii) to
AVIF or AIM.
(c) Neither Prudential nor the Underwriter shall be liable
under this Section 12.1 with respect to any action against an Indemnified Party
unless AVIF or AIM shall have notified Prudential or the Underwriter in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the action shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify Prudential or the
Underwriter of any such action shall not relieve Prudential or the Underwriter
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this Section 12.1. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, Prudential or the Underwriter shall be entitled to
participate, at its own expense, in the defense of such action and also shall be
entitled to assume the defense thereof, with counsel approved by the Indemnified
Party named in the action, which approval shall not be unreasonably withheld.
After notice from Prudential or the Underwriter to such Indemnified Party of its
election to assume the defense thereof, the Indemnified Party will cooperate
fully with Prudential and shall bear the fees and expenses of any additional
counsel retained by it, and Prudential will not be liable to such Indemnified
Party under this Agreement for any legal or other expenses subsequently incurred
by such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.
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12.2 OF PRUDENTIAL AND THE UNDERWRITER BY AVIF AND AIM.
(a) Except to the extent provided in Sections 4.1(c)(vii),
12.2(d), 12.2(e) and 12.2(f), below, AVIF and AIM each agree to indemnify and
hold harmless Prudential, the Underwriter, their respective affiliates, and each
of their respective directors and officers, and each person, if any, who
controls Prudential, the Underwriter, or their respective affiliates within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 12.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
AVIF and AIM) or actions in respect thereof (including, to the extent
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 actions are related to
the sale or acquisition of AVIF's Shares and:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in AVIF's 1933 Act registration statement, AVIF
Prospectus or sales literature or advertising of AVIF (or any
amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to AVIF or its
affiliates by or on behalf of Prudential or its affiliates for
use in AVIF's 1933 Act registration statement, AVIF
Prospectus, or in sales literature or advertising (or any
amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other
statements or representations (other than statements or
representations contained in any Account's 1933 Act
registration statement, any Account Prospectus, sales
literature or advertising for the Policies, or any amendment
or supplement to any of the foregoing, not supplied for use
therein by or on behalf of AVIF or its affiliates and on which
such persons have reasonably relied) or the negligent, illegal
or fraudulent conduct of AVIF, its affiliates or persons under
their control (including, without limitation, their employees
and "Associated Persons"), in connection with the sale or
distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any Account's 1933 Act registration statement,
any Account Prospectus, sales literature or advertising
covering the Policies, or any amendment or supplement to any
of the foregoing, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon and in
conformity with information furnished to Prudential, the
Underwriter, or their respective affiliates by or on behalf of
AVIF
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or AIM for use in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature or
advertising covering the Policies, or any amendment or
supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF or AIM
to perform the obligations, provide the services and furnish
the materials required of it under the terms of this
Agreement, or any material breach of any representation and/or
warranty made by AVIF or AIM in this Agreement or arise out of
or result from any other material breach of this Agreement by
AVIF or AIM.
(b) Except to the extent provided in Sections 4.1(c)(vii),
12.2(d), 12.2(e) and 12.2(f) hereof, AVIF and AIM each agree to indemnify and
hold harmless the Indemnified Parties from and against any and all losses,
claims, damages, liabilities (including amounts paid in settlement thereof with,
except as set forth in Section 12.2(c) below, the written consent of AVIF and
AIM) or actions in respect thereof (including, to the extent reasonable, legal
and other expenses) to which the Indemnified Parties may become subject directly
or indirectly under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or actions directly or indirectly result
from or arise out of the failure of any Fund to operate as a regulated
investment company in compliance with (i) Subchapter M of the Code and
regulations thereunder, or (ii) Section 817(h) of the Code and regulations
thereunder, including, without limitation, any income taxes and related
penalties, rescission charges, liability under state law to Participants
asserting liability against Prudential or the Underwriter pursuant to the
Policies, the costs of any ruling and closing agreement or other settlement with
the IRS, and the cost of any substitution by Prudential of Shares of another
investment company or portfolio for those of any adversely affected Fund as a
funding medium for each Account that Prudential reasonably deems necessary or
appropriate as a result of the noncompliance.
(c) The written consent of AVIF and AIM referred to in Section
12.2(b) above shall not be required with respect to amounts paid in connection
with any ruling and closing agreement or other settlement with the IRS.
(d) Neither AVIF nor AIM shall be liable under this Section
12.2 with respect to any losses, claims, damages, liabilities or actions to
which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of such Indemnified Party's
reckless disregard of its obligations and duties (i) under this Agreement, or
(ii) to Prudential, each Account, the Underwriter or Participants.
(e) Neither AVIF nor AIM shall be liable under this Section
12.2 with respect to any action against an Indemnified Party unless the
Indemnified Party shall have notified AVIF or AIM in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the action shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify AVIF or AIM of any such action shall
not relieve AVIF or AIM from any liability
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which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this Section 12.2. Except as otherwise provided
herein, in case any such action is brought against an Indemnified Party, AVIF or
AIM will be entitled to participate, at its own expense, in the defense of such
action and also shall be entitled to assume the defense thereof (which shall
include, without limitation, the conduct of any ruling request and closing
agreement or other settlement proceeding with the IRS), with counsel approved by
the Indemnified Party named in the action, which approval shall not be
unreasonably withheld. After notice from AVIF or AIM to such Indemnified Party
of its election to assume the defense thereof, the Indemnified Party will
cooperate fully with AVIF and shall bear the fees and expenses of any additional
counsel retained by it, and AVIF will not be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.
(f) In no event shall either AVIF or AIM be liable under the
indemnification provisions contained in this Agreement to any individual or
entity, including, without limitation, Prudential, the Underwriter, or any other
Participating Insurance Company or any Participant, with respect to any losses,
claims, damages, liabilities or expenses that arise out of or result from (i) a
breach of any representation, warranty, and/or covenant made by Prudential or
the Underwriter hereunder or by any Participating Insurance Company under an
agreement containing substantially similar representations, warranties and
covenants, (ii) the failure by Prudential or any Participating Insurance Company
to maintain its segregated asset account (which invests in any Fund) as a
legally and validly established 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 (iii) the failure by Prudential or any
Participating Insurance Company to maintain its variable annuity and/or variable
life insurance contracts (with respect to which any Fund serves as an underlying
funding vehicle) as life insurance, endowment or annuity contracts under
applicable provisions of the Code.
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified
Party referred to in Sections 12.1(c) or 12.2(e) above of participation in or
control of any action by the indemnifying Party will in no event be deemed to be
an admission by the indemnifying Party of liability, culpability or
responsibility, and the indemnifying Party will remain free to contest liability
with respect to the claim among the Parties or otherwise.
12.4 SUCCESSORS.
This Agreement shall be binding on successors of any Party who
shall be entitled, among other things, to the benefits of the indemnification
contained in this Section 12.
12.5 ASSIGNMENTS.
This Agreement shall not be assigned by any party hereto
without the prior written consent of all the parties, which consent shall not be
unreasonably withheld.
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SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof
interpreted under and in accordance with Maryland law, without regard for that
state's principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
will not be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
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, that the Parties are entitled to under federal
and state laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are
for purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
---------------------------------------------
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers signing below.
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
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
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, on behalf of itself and its
separate accounts
Attest: /s/ XXXXXX X. XXXXXXX By: /s/ XXXX X. XXXX
-------------------------- -------------------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxx X. Xxxx
-------------------------- -------------------------------
Title: Assistant Secretary Title: VP, Product Development
-------------------------- -------------------------------
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
---------------------------- --------------------------------
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SCHEDULE A
FUNDS AVAILABLE UNDER THE POLICIES
AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
The Prudential Variable Appreciable Account,
established August 11, 1987
POLICIES FUNDED BY THE SEPARATE ACCOUNTS
Prudential Variable Universal Life Insurance Policy
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