EX-99.B(h)(5)(iii)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 28th day of June 2000 (the
"Agreement") by and among American Skandia Life Assurance Corporation, organized
under the laws of the State of Connecticut (the "Company"), on behalf of itself
and each separate account of the Company named in Schedule A to this Agreement,
as may be amended from time to time (each separate account referred to as the
"Separate Account" and collectively as the "Separate Accounts"); Xxxxx Fargo
Variable Trust, an open-end management investment company organized under the
laws of the State of Delaware (the "Trust"); and Xxxxxxxx Inc., a corporation
organized under the laws of the State of Arkansas and principal
underwriter/distributor of the Trust (the "Distributor").
WHEREAS, the Trust engages in business as an open-end diversified, management
investment company and was established for the purpose of serving as the
investment vehicle for separate accounts established for variable life insurance
contracts and variable annuity contracts to be offered by insurance companies
which have entered into participation agreements substantially similar to this
Agreement (the "Participating Insurance Companies"), and
WHEREAS, beneficial interests in the Trust are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (each, a "Fund" and collectively, the "Funds"); and
WHEREAS, the Company, as depositor, has established the Separate Accounts to
serve as investment vehicles for certain variable annuity contracts and variable
life insurance policies and funding agreements offered by the Company set forth
on Schedule A (the "Contracts"); and
WHEREAS, the Separate Accounts are duly organized, validly existing segregated
asset accounts, established by resolutions of the Board of Directors of the
Company under the insurance laws of the State of Connecticut, to set aside and
invest assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Funds named in Schedule B, as such
schedule may be amended from time to time (the "Designated Funds") on behalf of
the Separate Accounts to fund the Contracts; and
WHEREAS, the Distributor is authorized to sell such shares of the Designated
Funds to unit investment trusts such as the Separate Accounts at net asset
value.
June 28, 2000 Page 1 of 27
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Trust, and the Distributor agree as follows:
ARTICLE I - SALE OF FUND SHARES
1.1 The Distributor agrees to sell to the Company those shares of the
Designated Funds which the Company orders on behalf of each Separate
Account, executing such orders on a daily basis at the net asset value next
computed after receipt and acceptance by the Trust or its designee of the
order for the shares of the Trust. For purposes of this Section 1.1, the
Company will be the designee of the Trust solely for the purpose of
receiving such orders from each Separate Account and receipt by such
designee will constitute receipt by the Trust; provided that the Company
provides the Trust with a purchase order by 9:30 a.m. Eastern Time on the
next following Business Day. "Business Day" will mean any day on which the
New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission (the "Commission"). The Trust may net the redemption
requests it receives from the Company under Section 1.3 of this Agreement
against the purchase orders it receives from the Company under this Section
1.1 for each Designated Fund.
1.2 The Company will transmit payment for shares of any Designated Fund
purchased by 2:00 p.m. Eastern Time on the same Business Day an order to
purchase shares of the Designated Fund is provided to the Trust in
accordance with Section 1.1. Payment will be made in federal funds
transmitted by wire. Upon receipt by the Trust of the payment, such funds
shall cease to be the responsibility of the Company and shall become the
responsibility of the Trust.
1.3 The Trust agrees to redeem, upon the Company's request, any full or
fractional shares of the Designated Funds held by the Company, executing
such requests on a daily basis at the net asset value next computed after
receipt and acceptance by the Trust or its designee of the request for
redemption. For purposes of this Section 1.3, the Company will be the
designee of the Trust for receipt of requests for redemption from each
Separate Account and receipt by such designee will constitute receipt by
the Trust; provided that the Company provides the Trust with a redemption
request by 9:30 a.m. Eastern Time on the next following Business Day.
Payment will be made in federal funds transmitted by wire to the Company's
account as designated by the Company in writing from time to time, on the
same Business Day the Trust receives notice of the redemption order from
the Company. After consulting with the Company, the Trust reserves the
right to delay payment of redemption proceeds, but in no event may such
payment be delayed longer than the period permitted under Section 22(e) of
the Investment Company Act of 1940 (the "1940 Act"). The Trust will not
bear any responsibility whatsoever for the proper disbursement or crediting
of redemption proceeds; the Company alone will be responsible for such
action. If a redemption request is received after 9:30 Eastern Time, such
redemption request will be considered to be received on the next
June 28, 2000 Page 2 of 27
following Business Day and payment for redeemed shares will be made on the
next following Business Day.
1.4 Each purchase, redemption, and exchange order placed by the Company shall
be placed separately for each Designated Fund and shall not be netted with
respect to any Designated Funds. However, with respect to payment of the
purchase price by the Company and of redemption proceeds by the Trust, the
Company and the Trust shall net purchase and redemption orders received
under Section 1.1 and Section 1.3 of this Agreement, respectively, with
respect to each Designated Fund and shall transmit one net payment for all
Designated Funds.
1.5 The Trust agrees to make shares of the Designated Funds available
indefinitely for purchase at the applicable net asset value per share by
Participating Insurance Companies and their separate accounts on those days
on which the Trust calculates the net asset value of each Fund pursuant to
rules of the Commission; provided, however, that the Board of Trustees of
the Trust (the "Trustees") may refuse to sell shares of any Fund to any
person, or suspend or terminate the offering of shares of any Designated
Fund if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Trustees, acting in good
faith and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders
of such Fund.
1.6 The Trust and the Distributor agree that shares of the Trust will be sold
only to Participating Insurance Companies and their separate accounts,
qualified pension and retirement plans or such other persons as are
permitted under applicable provisions of the Internal Revenue Code of 1986,
as amended, (the "Code"), and regulations promulgated thereunder, the sale
to which will not impair the tax treatment currently afforded the
Contracts. No shares of any Fund will be sold directly to the general
public.
1.7 The Trust will not sell Trust shares to any insurance company or separate
account unless an agreement containing provisions substantially the same as
Articles I, III, V, and VII and Section 2.8 of Article II of this Agreement
are in effect to govern such sales.
1.8 The Company agrees to purchase and redeem the shares of the Designated
Funds offered by the then current prospectus of the Trust in accordance
with the provisions of such prospectus.
1.9 Issuance and transfer of shares of the Designated Funds will be by book
entry only. Stock certificates will not be issued to the Company or to any
Separate Account. Purchase and redemption orders for shares of the
Designated Funds will be recorded in an appropriate title for each Separate
Account or the appropriate sub-account of each Separate Account.
1.10 The Trust will furnish same day notice (by facsimile) to the Company of the
declaration of any income, dividends or capital gain distributions payable
on each Designated Fund's shares. The Company hereby elects to receive all
such income, dividends and distributions as are payable on the Fund shares
in the form of additional shares of that Fund at the ex-dividend date net
asset values. The Company reserves the right to revoke this election upon
prior reasonable notice to the Trust and to receive all such dividends and
June 28, 2000 Page 3 of 27
distributions in cash. The Trust will notify the Company of the number of
shares so issued as payment of such dividends and distributions.
1.11 The Trust will make the net asset value per share for each Designated Fund
available to the Company via electronic means on a daily basis as soon as
reasonably practical after the net asset value per share is calculated and
will use its best efforts to make such net asset value per share available
by 6:30 p.m., Eastern Time, each Business Day. If the Trust provides the
Company materially incorrect net asset value per share information (as
determined under SEC guidelines), the Company and the Trust shall be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect the correct net asset value per share. Any material error in the
calculation or reporting of net asset value per share, dividend or capital
gain information shall be reported to the Company upon discovery by the
Trust.
1.12 The Company agrees to consult with the Trust and the Distributor (or an
agent designated by the Distributor) prior to making shares of any
investment company or series thereof other than the Designated Funds
available under the Contracts that are sold exclusively through
representatives of Xxxxx Fargo Bank, N.A. ("Xxxxx Fargo Contracts"). To the
extent the Company elects to make such other investment companies or series
thereof available through the Xxxxx Fargo Contracts, it shall provide the
Trust and the Distributor sixty (60) days written notice of such change.
The Company, the Trust and the Distributor agree that all underlying
portfolios currently offered under the Xxxxx Fargo Contracts or expected to
be offered pursuant to a prior understanding of the parties are exempt from
this provision.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act"), or are exempt
from registration thereunder, and that the Contracts will be issued and
sold in compliance with all applicable federal and state laws. The Company
further represents and warrants that: (i) it is an insurance company duly
organized and in good standing under applicable law; (ii) it has legally
and validly established each Separate Account as a separate account under
Section 38a-433 of the General Statutes of Connecticut; (iii) each Separate
Account is or will be registered as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated investment
account for the Contracts, or is exempt from registration thereunder; and
(iv) it will maintain such registration for so long as any Contracts are
outstanding. The Company will amend each registration statement under the
1933 Act for the Contracts and the registration statement under the 1940
Act for the Separate Accounts from time to time as required in order to
effect the continuous offering of the Contracts or as may otherwise be
required by applicable law. The Company will register and qualify the
Contracts for sale in accordance with the securities laws of the various
states only if, and to the extent, deemed necessary by the Company.
June 28, 2000 Page 4 of 27
2.2 Subject to the Trust's representations in Article III, the Company
represents that the Contracts are currently and at the time of issuance
will be treated as annuity contracts and/or life insurance policies (as
applicable) under applicable provisions of the Code, and that it will
maintain such treatment and that it will notify the Trust and the
Distributor immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so
treated in the future.
2.3 The Company represents and warrants that it will not purchase shares of the
Designated Fund(s) with assets derived from tax-qualified retirement plans
except, indirectly, through Contracts purchased in connection with such
plans.
2.4 The Trust represents and warrants that shares of the Designated Fund(s)
sold pursuant to this Agreement will be registered under the 1933 Act and
duly authorized for issuance in accordance with applicable law and that the
Trust is and will remain registered as an open-end diversified, management
investment company under the 1940 Act for as long as such shares of the
Designated Fund(s) are sold. The Trust will amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time to
time as required in order to effect the continuous offering of its shares.
The Trust will register and qualify the shares of the Designated Fund(s)
for sale in accordance with the laws of the various states only if and to
the extent deemed advisable by the Trust or the Distributor.
2.5 The Trust represents that it will use commercially reasonable means to
comply with any applicable state insurance laws or regulations as they may
apply to the investment objectives, policies and restrictions of the
Designated Funds, to the extent specifically requested in writing by the
Company and to the extent that compliance with such laws will not
materially interfere with the Trust's daily operations and investment
activities. If the Trust cannot comply with such state insurance laws or
regulations, it will so notify the Company in writing. The Trust makes no
other representation as to whether any aspect of its operations (including,
but not limited to, fees and expenses, and investment policies) complies
with the insurance laws or regulations of any state. The Company represents
that it will use its best efforts to notify the Trust of any restrictions
imposed by state insurance laws that may become applicable to the Trust as
a result of the Separate Accounts' investments therein. The Trust and the
Distributor agree that they will furnish the information required by state
insurance laws to assist the Company in obtaining the authority needed to
issue the Contracts in various states.
2.6 The Fund undertakes to comply with the terms and conditions of its plan of
distribution pursuant to Rule 12b-1 under the 1940 Act and to have the
trustees of its Fund Board approve any plan to finance distribution
expenses in accordance with the requirements of Rule 12b-1.
2.7 The Trust represents that it is lawfully organized and validly existing
under the laws of the State of Delaware and that it does and will comply in
all material respects with applicable provisions of the 1940 Act.
June 28, 2000 Page 5 of 27
2.8 The Trust represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Trust are and continue to be
at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust in an amount not less than the minimal coverage as
required currently by Rule 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond includes coverage
for larceny and embezzlement and is issued by a reputable bonding company.
2.9 The Company represents and warrants that all of its directors, officers,
employees, investment advisers and other individuals/entities dealing with
the money and/or securities of the Separate Accounts are covered by a
blanket fidelity bond or similar coverage in an amount not less than $5
million. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company. The Company agrees that any
amounts received under such bond in connection with claims that derive from
activities described in this Agreement will be held by the Company for the
benefit of the Trust. The Company agrees to maintain such bond or other
similar coverage while this Agreement is in effect and agrees to notify the
Trust and the Distributor if such coverage is no longer maintained.
2.10 The Distributor represents and warrants that the Trust's investment
manager, Xxxxx Fargo Bank, N.A. (the "Adviser") has registered as an
investment adviser under the Investment Advisers Act of 1940 and other
applicable state securities laws or is exempt from such registration
requirements, and that the investment manager will perform its obligations
to the Trust in accordance with any applicable state and federal securities
laws.
2.11 The Distributor represents and warrants that it: (i) is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and will remain duly registered under all applicable
federal and state securities laws; (ii) is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"); (iii) serves as
principal underwriter/distributor of the Trust; and (iv) will perform its
obligations for the Trust in accordance in all material respects with the
laws of the State of Arkansas and any applicable state and federal
securities laws.
ARTICLE III - FUND COMPLIANCE
3.1 The Trust represents and warrants that each Designated Fund is currently
qualified as a Regulated Investment Company under Subchapter M of the Code,
and the Trust will maintain such qualification (under Subchapter M or any
successor or similar provision) and that the Trust will notify the Company
immediately upon having a reasonable basis for believing that a Designated
Fund has ceased to so qualify or that such Designated Fund might not so
qualify in the future.
3.2 The Trust represents that it will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be treated
as variable contracts under the Code and the regulations issued thereunder;
including, but not limited to, that each Designated Fund will at all times
comply with Section
June 28, 2000 Page 6 of 27
817(h) of the Code and Treasury Regulation 1.817-5, as amended from time
to time, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts, and with Section 817(d)
of the Code, relating to the definition of a variable contract, and any
amendments or other modifications to such Section or Regulation. The
Trust will notify the Company immediately upon having a reasonable basis
for believing that the Trust or a Designated Fund thereunder has ceased
to comply with the diversification requirements or that the Trust or a
Designated Fund might not comply with the diversification requirements
in the future. In the event of a breach of this representation by the
Trust, it will take all reasonable steps to adequately diversify the
affected Designated Fund so as to achieve compliance within the grace
period afforded by Treasury Regulation 1.817-5.
ARTICLE IV - PROSPECTUS AND PROXY STATEMENTS; VOTING
4.1 The Trust or the Distributor will provide the Company with as many copies
of the current Trust prospectus and any supplements thereto for the
Designated Fund(s) as the Company may reasonably request for distribution
to Contract owners at the time of Contract fulfillment and confirmation.
The Trust will also provide as many copies of said prospectus as necessary
for distribution to existing Contract owners. The Trust will provide the
copies of said prospectus to the Company or to its mailing agent for
distribution. The Company will xxxx the Trust or the Distributor for the
reasonable cost of such distribution. To the extent that the Designated
Fund(s) are one or more of several Funds of the Trust, the Trust shall be
obligated to provide the Company only with disclosure related to the
Designated Fund(s). If requested by the Company, in lieu thereof, the Trust
or the Distributor will provide such documentation, including a final copy
of a current prospectus set in type or camera-ready or electronic format,
and other assistance as is reasonably necessary in order for the Company at
least annually (or more frequently if the Trust prospectus is amended more
frequently) to have the new prospectus for the Contracts and the Trust's
new prospectus printed together. The Trust or the Distributor will, upon
request, provide the Company with a copy of the Trust's prospectus through
electronic means to facilitate the Company's efforts to provide Trust
prospectuses via electronic delivery.
4.2 The Trust's prospectus will state that the Statement of Additional
Information (the "SAI") for the Trust is available and will disclose how
investors can obtain the SAI.
4.3 The Trust, at its expense, will provide the Company or its mailing agent
with copies of its proxy material, if any, with respect to the Designated
Funds, reports to shareholders/Contract owners and other communications to
shareholders/ Contract owners in such quantity as the Company will
reasonably require. The Company will distribute this proxy material,
reports and other communications to existing Contract owners and will xxxx
the Trust for the reasonable cost of such distribution.
June 28, 2000 Page 7 of 27
4.4 If and to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the shares of the Designated Funds held in the Separate Account in
accordance with instructions received from Contract owners; and
(c) vote shares of the Designated Funds held in the Separate Account for
which no timely instructions have been received in the same proportion
as shares of such Designated Fund for which instructions have been
received from the Company's Contract owners,
so long as and to the extent that the Commission continues to interpret the
1940 Act to require pass-through voting privileges for variable Contract
owners. The Company reserves the right to vote shares of the Designated
Funds held in any segregated asset account in its own right, to the extent
permitted by law. The Company will be responsible for assuring that the
Separate Accounts participating in the Trust calculate voting privileges in
a manner consistent with all legal requirements, including the Proxy Voting
Procedures set forth in Schedule C and the Mixed and Shared Funding Order,
as described in Section 7.1.
4.5 The Trust will comply with all provisions of the 1940 Act requiring voting
by shareholders.
ARTICLE V - SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Trust or
the Distributor, each piece of sales literature or other promotional
material in which the Trust, the Adviser or the Distributor is named, at
least ten (10) business days prior to its use. No such material will be
used if the Trust or the Distributor reasonably objects to such use within
five (5) business days after receipt of such material or to its continued
use.
5.2 The Company will not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust in connection
with the sale of the Contracts other than the information or
representations contained in the registration statement, prospectus or SAI
for shares of the Designated Funds, as such registration statement,
prospectus and SAI may be amended or supplemented from time to time, or in
reports or proxy statements for the Designated Funds, or in published
reports for the Designated Funds which are in the public domain or approved
by the Trust or the Distributor (on its own behalf or on behalf of the
Adviser) for distribution, or in sales literature or other material
provided by the Trust or the Distributor, except with permission of the
Trust or the Distributor (on its own behalf or on behalf of the Adviser).
The Trust or the Distributor agree to respond to any request for approval
on a prompt and timely basis.
5.3 The Trust or the Distributor (on its own behalf or on behalf of the
Adviser) will furnish, or will cause to be furnished, to the Company or its
designee, each piece of sales literature or other promotional material in
which the Company or its separate account is named, at least ten (10)
business days prior to its use. No
June 28, 2000 Page 8 of 27
such material will be used if the Company reasonably objects to such use
within five (5) business days after receipt of such material or to its
continued use.
5.4 The Trust or the Distributor will not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, each Separate Account, or the Contracts other than the information
or representations contained in a registration statement, prospectus or SAI
for the Contracts, as such registration statement, prospectus and SAI may
be amended or supplemented from time to time, or in published reports for
each Separate Account or the Contracts which are in the public domain or
approved by the Company for distribution to Contract owners, or in sales
literature or other material provided by the Company, except with
permission of the Company. The Company agrees to respond to any request for
approval on a prompt and timely basis.
5.5 The Trust will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of
the above, that relate to the Trust or shares of the Designated Funds,
within a reasonable time after filing of each such document with the
Commission or the NASD.
5.6 The Company will provide to the Trust at least one complete copy of all
definitive prospectuses, definitive SAI, reports, solicitations for voting
instructions, sales literature and other promotional materials,
applications for exemptions, requests for no action letters, and all
amendments to any of the above, that relate to the Contracts or each
Separate Account, contemporaneously with the filing of each such document
with the Commission or the NASD (except that with respect to post-effective
amendments to such prospectuses and SAIs and sales literature and
promotional material, only those prospectuses and SAIs and sales literature
and promotional material that relate to or refer to the Trust or the
Designated Funds will be provided.) In addition, the Company will provide
to the Trust at least one complete copy of (i) a registration statement
that relates to the Contracts or each Separate Account, containing
representative and relevant disclosure concerning the Trust or the
Designated Funds; and (ii) any post-effective amendments to any
registration statements relating to the Contracts or such Separate Account
that refer to or relate to the Trust or the Designated Funds.
5.7 For purposes of this Article V, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such
as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media,
(i.e., on-line networks such as the Internet or other electronic
----
messages)), sales literature (i.e., any written communication
----
distributed or made generally available to customers or the public,
including brochures, circulars, research reports, market letters, form
letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials
or other communications distributed or made generally available to some
June 28, 2000 Page 9 of 27
or all agents or employees, registration statements, prospectuses, SAIs,
shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the NASD Conduct Rules,
the 1933 Act or the 0000 Xxx.
5.8 The Trust and the Distributor (on its own behalf or on behalf of the
Adviser) hereby consent to the Company's use of the names of the Xxxxx
Fargo Variable Trust, Xxxxx Fargo Bank, N.A. and Xxxxxxxx Inc. as well as
the names of the Designated Funds set forth in Schedule B of this
Agreement, in connection with marketing the Contracts, subject to the terms
of Sections 5.1 or 5.2 of this Agreement. The Trust and the Distributor (on
its own behalf or on behalf of the Adviser) hereby consent to the use of
any trademark, trade name, service xxxx or logo used by the Trust, the
Distributor or the Adviser, subject to the Trust's or the Distributor's
approval of such use and in accordance with reasonable requirements of the
Trust or the Distributor. Such consent will terminate with the termination
of this Agreement. The Company agrees and acknowledges that either of the
Trust, the Adviser or the Distributor are the owner of the name, trademark,
trade name, service xxxx and logo and that all use of any designation
comprised in whole or in part of the name, trademark, trade name, service
xxxx and logo under this Agreement shall inure to the benefit of the Trust,
Adviser and/or the Distributor.
5.9 The Trust, the Distributor and the Company agree to adopt and implement
procedures reasonably designed to ensure that information concerning the
Company, the Trust or the Distributor, respectively, and their respective
affiliated companies, that is intended for use only by brokers or agents
selling the Contracts (i.e. information that is not intended for
distribution to Contract owners or prospective Contract owners) and is
properly marked as "Not For Use With The Public" or "For Broker-Dealer Use
Only" and that such information is only so used.
ARTICLES VI - FEES, COSTS AND EXPENSES
6.1 Each party shall, in accordance with the allocation of expenses specified
in this Agreement, reimburse the other party(ies) for expenses initially
paid by one party but allocated to another party. In addition, nothing
herein shall prevent the parties hereto from otherwise agreeing to perform
and arranging for appropriate compensation for (i) for distribution and
shareholder-related services under a plan adopted in accordance with Rule
12b-1 under the 1940 Act; and (ii) other services that are not primarily
intended to result in the sale of shares of the Designated Funds, which are
provided to Contract owners relating to the Designated Funds.
6.2 All expenses incident to performance by the Trust of this Agreement will be
paid by the Trust or the Distributor to the extent permitted by law. All
shares of the Designated Funds will be duly authorized for issuance and
registered in accordance with applicable federal law and, to the extent
deemed advisable by the Trust, in accordance with applicable state law,
prior to sale. The Trust will bear the expenses for the cost of
registration and qualification of the Trust's shares, including without
limitation, the preparation of and filing
June 28, 2000 Page 10 of 27
with the SEC of Forms N-1A and Rule 24f-2 Notices on behalf of the Trust
and payment of all applicable registration or filing fees (if applicable)
with respect to shares of the Trust; preparation and filing of the Trust's
prospectus, SAI and registration statement, proxy materials and reports;
typesetting the Trust's prospectus; typesetting and printing proxy
materials and reports to Contract owners (including the costs of printing a
Trust prospectus that constitutes an annual report); the preparation of all
statements and notices required by any federal or state law; all taxes on
the issuance or transfer of the Trust's shares; any expenses permitted to
be paid or assumed by the Trust pursuant to a plan, if any, under Rule
12b-1 under the 1940 Act; and other costs associated with preparation and
printing of prospectuses and SAIs for the Designated Funds in electronic or
typeset format for distribution to Contract Owners.
6.3 The Company shall bear all expenses associated with the registration,
qualification, and filing of the Contracts under applicable federal
securities and state insurance laws; the cost of preparing, printing, and
distributing the Contracts' prospectus and SAI; and the cost of printing
and distributing annual individual account statements for Contract owners
are required by state law.
ARTICLE VII - MIXED & SHARED FUNDING RELIEF
7.1 The Trust represents and warrants that it has received an order from the
Commission dated September 28, 1998 (File No. 812-11158) granting
Participating Insurance Companies and variable annuity separate accounts
and variable life insurance separate accounts relief from the provisions of
Sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Trust to be sold to and held by variable annuity
separate accounts and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and qualified
pension and retirement plans outside of the separate account context (the
"Mixed and Shared Funding Order"). If and to the extent that the Trust
engages in mixed and shared funding as contemplated by the Mixed and Shared
Funding Order, this Article VII shall apply. To that end, the parties to
this Agreement agree that the conditions or undertakings specified in the
Mixed and Shared Funding Order and that may be imposed on the Company or
the Trust by virtue of the receipt of such order by the Commission, will be
incorporated herein by reference, and such parties agree to comply with
such conditions and undertakings to the extent applicable to each such
party.
7.2 The Board of Trustees of the Trust (the "Trust Board") will monitor the
Trust for the existence of any material irreconcilable conflict among the
interests of the Contract owners of all separate accounts investing in the
Trust. A material irreconcilable conflict may arise for a variety of
reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Fund are being managed; (e) a
June 28, 2000 Page 11 of 27
difference in voting instructions given by variable annuity contract
owners, variable life insurance contract owners, and trustees of qualified
pension or retirement plans; (f) a decision by a Participating Insurance
Company to disregard the voting instructions of Contract owners; or (g) if
applicable, a decision by a qualified pension or retirement plan to
disregard the voting instructions of plan participants. The Trust Board
shall promptly inform the Company if it determines that a material
irreconcilable conflict exists and the implications thereof. A majority of
the Trust Board shall consist of Trustees who are not "interested persons"
of the Trust.
7.3. The Company has reviewed a copy of the Mixed and Shared Funding Order, and
in particular, has reviewed the conditions to the requested relief set
forth therein. The Company agrees to assist the Trust Board in carrying out
its responsibilities under the Mixed and Shared Funding Order, by providing
the Trust Board with all information reasonably necessary for the Trust
Board to consider any issues raised. This includes, but is not limited to,
an obligation by the Company to inform the Trust Board whenever Contract
owner voting instructions are disregarded. The Trust Board shall record in
its minutes or other appropriate records, all reports received by it and
all action with regard to a conflict.
7.4. If it is determined by a majority of the Trust Board, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested Trustees), take whatever
steps are necessary to remedy or eliminate the material irreconcilable
conflict, up to and including: (a) withdrawing the assets allocable to some
or all of the Separate Accounts from the relevant Fund and reinvesting such
assets in a different investment medium, including another Fund, or in the
case of insurance company participants submitting the question as to
whether such segregation should be implemented by a vote of all affected
Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity Contract owners or life insurance Contract
owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Contract owners the
option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
7.5. If the Company's disregard of voting instructions could conflict with the
majority of Contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the
Company may be required, at the Trust's election, to withdraw the Separate
Account's investment in the Trust and terminate this Agreement with respect
to such Separate Account, and no charge or penalty will be imposed as a
result of such withdrawal. Any such withdrawal and termination shall take
place within 30 days after written notice is given that this provision is
being implemented, subject to applicable law but in any event consistent
with the terms of the Mixed and Shared Funding Order. Until such withdrawal
and termination is implemented, the Distributor and the Trust shall
continue to accept and implement orders by the Company for the purchase and
redemption of shares of the Trust. Such withdrawal and termination
June 28, 2000 Page 12 of 27
shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of disinterested
Trustees.
7.6. If a particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state insurance regulators,
then the Company will withdraw the Separate Account's investment in the
Trust and terminate this Agreement with respect to such Separate Account
within 30 days after the Trust informs the Company of a material
irreconcilable conflict, subject to applicable law but in any event
consistent with the terms of the Mixed and Shared Funding Order. Until
such withdrawal and termination is implemented, the Distributor and the
Trust shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust. Such withdrawal and
termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of
disinterested Trustees.
7.7. For purposes of Sections 7.4 through 7.7 of this Agreement, a majority of
the disinterested members of the Trust Board shall determine whether any
proposed action adequately remedies any material irreconcilable conflict,
but in no event will the Trust or the Distributor be required to establish
a new funding medium for the Contracts. The Company shall not be required
by Section 7.4 to establish a new funding medium for the Contracts if an
offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the material irreconcilable conflict.
7.8. The Trust Board's determination of the existence of a material
irreconcilable conflict and its implication will be made known in writing
to the Company.
7.9. The Company shall at least annually submit to the Trust Board such
reports, materials, or data as the Trust Board may reasonably request so
that the Trustees may fully carry out the duties imposed upon the Trust
Board by the Mixed and Shared Funding Order, and said reports, materials
and data shall be submitted more frequently if deemed appropriate by the
Trust Board.
7.10. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3(T) is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Mixed and Shared Funding Order) on terms
and conditions materially different from those contained in the Mixed and
Shared Funding Order, the Trust and/or the Company, as appropriate, shall
take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable.
ARTICLE VIII - INDEMNIFICATION
8.1 Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Trust, the
Distributor, and each of the Trust's or the Distributor's directors,
officers, employees or agents and each person, if any, who controls or
is associated with the Trust or the Distributor within the meaning of
such terms under
June 28, 2000 Page 13 of 27
the federal securities laws (collectively, the "Indemnified Parties" for
purposes of this Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent
of the Company) or actions in respect thereof (including reasonable legal
and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or litigations in respect
thereof) or settlements:
(1) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the registration
statement, prospectus or SAI for the Contracts or contained in the
Contracts or sales literature or other promotional material for the
Contracts (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated or necessary to
make such statements not misleading in light of the circumstances in
which they were made; provided that this agreement to indemnify will
not apply as to any Indemnified Party if such statement or omission of
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf
of the Trust or the Distributor for use in the registration statement,
prospectus or SAI for the Contracts or in the Contracts or sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(2) arise out of or as a result of statements or representations by or on
behalf of the Company (other than statements or representations
contained in the Trust registration statement, prospectus, SAI or
sales literature or other promotional material of the Trust, or any
amendment or supplement to the foregoing, not supplied by the Company
or persons under its control) or wrongful conduct of the Company or
persons under its control, with respect to the sale or distribution of
the Contracts or Trust shares; or
(3) arise out of untrue statement or alleged untrue statement of a
material fact contained in the Trust registration statement,
prospectus, SAI or sales literature or other promotional material of
the Trust (or amendment or supplement) or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make such statements not misleading in light
of the circumstances in which they were made, if such a statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust by or on behalf of the Company or persons under
its control; or
(4) arise as a result of any failure by the Company to provide the
services, furnish the materials or to make any payments under the
terms of this Agreement; or
(5) arise out of any material breach of any representation and/or warranty
made by the Company in this Agreement or arise out of or result from
any other material breach by the Company of this Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Company
otherwise may have.
(b) No party will be entitled to indemnification under Section 8.1(a) if
such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such party's duties and obligations
under this Agreement.
June 28, 2000 Page 14 of 27
(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or litigation
by regulatory authorities against them in connection with the issuance
or sale of shares of the Designated Funds or the Contracts or the
operation of the Trust.
June 28, 2000 Page 15 of 27
8.2 Indemnification by the Distributor
(a) The Distributor agrees to indemnify and hold harmless the Company and
each of its directors, officers, employees or agents and each person,
if any, who controls or is associated with the Company within the
meaning of such terms under the federal securities laws (collectively,
the "Indemnified Parties" for purposes of this Section 8.2) against
any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Distributor) or
litigation in respect thereof (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or litigation in
respect thereof) or settlements:
(1) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus or SAI for the Trust or sales
literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated or necessary to
make such statements not misleading in light of the circumstances
in which they were made; provided that this agreement to
indemnify will not apply as to any Indemnified Party if such
statement or omission of such alleged statement or omission was
made in reliance upon and in conformity with information
furnished to the Trust or the Distributor by or on behalf of the
Company for use in the registration statement, prospectus or SAI
for the Trust or in sales literature of the Trust (or any
amendment or supplement thereto) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(2) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Contracts or in the Contract or Trust registration statements,
prospectuses or statements of additional information or sales
literature or other promotional material for the Contracts or of
the Trust, or any amendment or supplement to the foregoing, not
supplied by the Distributor or persons under the control of the
Distributor respectively) or wrongful conduct of the Distributor
or persons under the control of the Distributor respectively,
with respect to the sale or distribution of the Contracts or
Trust shares; or
(3) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI or sales literature orother promotional material
covering the Contracts (or any amendment or supplement thereto),
or the omission or alleged omission to state therein a material
fact required to be stated or necessary to make such statement or
statements not misleading in light of the circumstances in which
they were made, if such statement or omission was made in
reliance upon and in conformity with information furnished to the
Company by or on behalf of the Distributor or persons under the
control of the Distributor; or
(4) arise as a result of any failure by the Distributor to provide
the services and furnish the materials under the terms of this
Agreement;
except to the extent provided in Sections 8.2(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Distributor
otherwise may have.
June 28, 2000 Page 16 of 27
(b) No party will be entitled to indemnification under Section 8.2(a) if
such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such party's duties and obligations
under this Agreement.
(c) The Indemnified Parties will promptly notify the Distributor of the
commencement of any litigation, proceedings, complaints or litigation
by regulatory authorities against them in connection with the issuance
or sale of the Contracts or the operation of the Separate Account.
8.3 Indemnification by the Trust
(a) The Trust agrees to indemnify and hold harmless the Company and each
of its directors, officers, employees or agents and each person, if
any, who controls or is associated with the Company within the meaning
of such terms under the federal securities laws (collectively, the
"Indemnified Parties" for purposes of this Section 8.3) against any
and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Trust) or litigation in
respect thereof (including reasonable legal and other expenses) to
which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or litigation in respect
thereof) or settlements, are related to the operations of the Trust
and:
(1) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this
Agreement; or
(2) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Trust (including a failure,
whether intentional or in good faith or otherwise, to comply with
the requirements of Subchapter M of the Code specified in Article
III, Section 3.1 of this Agreement and the diversification
requirements specified in Article III, Section 3.2 of this
Agreement,
except to the extent provided in Sections 8.3(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Trust
otherwise may have.
(b) No party will be entitled to indemnification under Section 8.3(a) if
such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such party's duties and obligations
under this Agreement.
(c) The Indemnified Parties will promptly notify the Trust of the
commencement of any litigation, proceedings, complaints or actions by
regulatory authorities against them in connection with the issuance or
sale of the Contracts or the operation of the Separate Account.
8.4 Indemnification Procedure
June 28, 2000 Page 17 of 27
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) will not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification
under this Article VIII ("Indemnified Party" for the purpose of this
Section 8.4) if such Indemnified Party has failed to notify the
Indemnifying Party in writing within a reasonable time after the summons
or other first legal process giving information of the nature of the
claim will have been served upon such Indemnified Party (or after such
party will have received notice of such service on any designated
agent), but failure to notify the Indemnifying Party of any such claim
will not relieve the Indemnifying Party from any liability which it may
have to the Indemnified Party against whom such action is brought
otherwise than on account of the indemnification provision of this
Article VIII, except to the extent that the failure to notify results in
the failure of actual notice to the Indemnifying Party and such
Indemnifying Party is damaged solely as a result of failure to give such
notice. In case any such action is brought against the Indemnified
Party, the Indemnifying Party will be entitled to participate, at its
own expense, in the defense thereof. The Indemnifying Party also will be
entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Indemnifying Party to
the Indemnified Party of the Indemnifying Party's election to assume the
defense thereof, the Indemnified Party will bear the fees and expenses
of any additional counsel retained by it, and the Indemnifying Party
will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation, unless: (a) the Indemnifying Party and the Indemnified
Party will have mutually agreed to the retention of such counsel; or (b)
the named parties to any such proceeding (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The Indemnifying Party will not be liable for any settlement of
any proceeding effected without its written consent but if settled with
such consent or if there is a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and
against any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement will be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII will survive
any termination of this Agreement.
ARTICLE IX - APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware.
9.2 This Agreement will be subject to the provisions of the 1933 Act, the 1934
Act and the 1940 Act, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and
June 28, 2000 Page 18 of 27
regulations as the Commission may grant (including, but not limited to, the
Mixed and Shared Funding Order) and the terms hereof will be interpreted
and construed in accordance therewith.
ARTICLE X - TERMINATION
10.1 This Agreement will terminate automatically in the event of its assignment,
unless made with the written consent of each party, or:
(a) at the option of any party, with or without cause, with respect to
one, some or all of the Designated Funds, upon six (6) month's advance
written notice to the other parties or, if later, upon receipt of any
required exemptive relief or orders from the SEC, unless otherwise
agreed in a separate written agreement among the parties; or
(b) at the option of the Company, upon written notice to the other
parties, with respect to any Designated Fund if shares of the
Designated Fund are not reasonably available to meet the requirements
of the Contracts as determined in good faith by the Company; or
(c) at the option of the Company, upon written notice to the other
parties, with respect to any Fund in the event any of the Fund's
shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of
such shares as the underlying investment media of the Contracts issued
or to be issued by Company; or
(d) at the option of the Trust upon institution of formal proceedings
against the Company by the NASD, the Commission, the insurance
commission of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the
Contracts, the administration of the Contracts, the operation of the
Separate Account, or the purchase of Trust shares, provided that the
Trust determines in its reasonable judgment that any such proceeding
would have a material adverse effect on the Company's ability to
perform its obligations under this Agreement; or
(e) at the option of the Company upon institution of formal proceedings
against the Trust, the Adviser or the Distributor by the NASD, the
Commission or any state securities or insurance commission or any
other regulatory body, regarding the Trust's or the Distributor's
duties under this Agreement or related to the purchase, redemption or
distribution of Trust shares, provided that the Company determines in
its reasonable judgment that any such proceeding would have a material
adverse effect on the Trust's or the Distributor's ability to perform
its obligations under this Agreement; or
(f) at the option of the Company, if any Designated Fund ceases to qualify
as a Regulated Investment Company under Subchapter M of the Code, or
under any successor or similar provision, or if the Company reasonably
believes that any Designated Fund may fail to so qualify; or
June 28, 2000 Page 19 of 27
(g) at the option of the Company, with respect to any Designated Fund, if
the Designated Fund fails to meet the diversification requirements
specified in Section 3.2 hereof or if the Company reasonably believes
any Designated Fund may fail to meet such requirements; or
(h) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its sole
judgment exercised in good faith that either the Trust, the Adviser or
the Distributor has suffered a material adverse change in its
business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is
likely to have a material adverse impact upon the business and
operations of the Company or the Contracts (including the sale
thereof); or
(j) at the option of the Trust or the Distributor, if the Trust or the
Distributor respectively, determines in its sole judgment exercised in
good faith that the Company has suffered a material adverse change in
its business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is
likely to have a material adverse impact upon the business and
operations of the Trust or the Distributor; or
(k) at the option of the Company or the Trust upon receipt of any
necessary regulatory approvals and/or the vote of the Contract owners
having an interest in the Separate Account (or any sub-account) to
substitute the shares of another investment company for the
corresponding Designated Fund's shares in accordance with the terms of
the Contracts for which those Designated Fund shares had been selected
to serve as the underlying portfolio. The Company agrees to consult
with the Trust and the Distributor (or an agent designated by the
Distributor) in advance of any substitution decisions and will give
sixty (60) days' prior written notice to the Trust of the date of any
proposed vote or other action taken to replace shares of the
Designated Funds or of the filing of any required regulatory
approval(s); or
(1) at the option of the Company or the Trust upon a determination by a
majority of the Trust Board, or a majority of the disinterested
Trustees, that a material irreconcilable conflict exists among the
interests of: (1) all Contract owners of variable insurance products
of all separate accounts; or (2) the interests of the Participating
Insurance Companies investing in the Trust as set forth in Article VII
of this Agreement; or
(m) subject to the Trust's compliance with Article III, at the option of
the Trust in the event any of the Contracts are not issued or sold in
accordance with applicable federal and/or state law. Termination will
be effective immediately upon such occurrence without notice.
10.2 Notice Requirement
June 28, 2000 Page 20 of 27
(a) In the event that any termination of this Agreement is based upon the
provisions of Article VII, such prior written notice will be given in
advance of the effective date of termination as required by such
provisions.
(b) In the event that a party to this Agreement terminates the Agreement
based upon the provisions of Sections 10.1(b)-(h), prompt written
notice of the election to terminate this Agreement for cause shall be
furnished by the party terminating the Agreement to the nonterminating
party. The Agreement shall be terminated effective upon receipt of
such notice by the non-terminating party(ies).
(c) In the event that a party to this Agreement terminates the Agreement
based upon the provisions of Sections 10.1(i) or (j), prior written
notice of the election to terminate this Agreement for cause shall be
furnished by the party terminating the Agreement to the nonterminating
party(ies). Such prior written notice shall be given by the party
terminating this Agreement to the non-terminating party(ies) at least
sixty (60) days before the effective date of termination.
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Trust and the
Distributor will, at the option of the Company, continue to make available
additional shares of the Trust pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination
of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, the owners of the Existing Contracts will
be permitted to reallocate investments in the Designated Funds (as in
effect on such date), redeem investments in the Designated Funds and/or
invest in the Designated Funds upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this Section
10.3 will not apply to any terminations under Article VII and the effect of
such Article VII terminations will be governed by Article VII of this
Agreement.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII to indemnify other parties will survive and not be
affected by any termination of this Agreement. In addition, with respect to
Existing Contracts, all provisions of this Agreement also will survive and
not be affected by any termination of this Agreement.
ARTICLE XI - NOTICES
Any notice will be deemed duly given when sent by certified mail, return receipt
requested, to the other party at the address of such party set forth below or at
such other address as such party may from time to time specify in writing to the
other parties. All notices will be deemed given three (3) business days after
the date received or rejected by the addressee:
June 28, 2000 Page 21 of 27
If to the Company:
-----------------
American Skandia Life Assurance Corporation
0 Xxxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxxx 00000-0000
Attn: Xx. Xxxxxx X. Xxxxxxx
If to the Trust:
---------------
Xxxxx Fargo Variable Trust
c/o: C. Xxxxx Xxxxxxx, Secretary
Xxxxx Fargo Funds
000 Xxxxxx Xxxxxx - 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
June 28, 2000 Page 22 of 27
If to the Distributor:
---------------------
Xxxxxxxx Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
ARTICLE XII - MISCELLANEOUS
12.1 All persons dealing with the Trust must look solely to the property of the
Trust or the Designated Funds for the enforcement of any claims against the
Trust or the Designated Funds as neither the trustees, officers, agents or
shareholders assume any personal liability for obligations entered into on
behalf of the Trust or the Designated Funds
12.2 The Trust and the Distributor acknowledge that the identities of the
customers of the Company or any of its affiliates (collectively the
"Protected Parties" for purposes of this Section 12.2), information
maintained regarding those customers, and all computer programs and
procedures developed by the Protected Parties or any of their employees or
agents in connection with the Company's performance of its duties under
this Agreement are the valuable property of the Protected Parties. The
Trust and the Distributor agree that if they come into possession of any
list or compilation of the identities of or other information about the
Protected Parties' customers, or any other property of the Protected
Parties, other than such information as may be independently developed or
compiled by the Trust and the Distributor from information supplied to them
by the Protected Parties' customers who also maintain accounts directly
with the Trust and the Distributor, the Trust and the Distributor will hold
such information or property in confidence and refrain from using,
disclosing or distributing any of such information or other property
except: (a) with the Company' s prior written consent; or (b) as required
by law or judicial process. The Trust and the Distributor acknowledge that
any breach of the agreements in this Section 12.2 would result in immediate
and irreparable harm to the Protected Parties for which there would be no
adequate remedy at law and agree that in the event of such a breach, the
Protected Parties will be entitled to equitable relief by way of temporary
and permanent injunctions, as well as such other relief as any court of
competent jurisdiction deems appropriate.
12.3 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
12.5 If any provision of this Agreement will be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement will
not be affected thereby.
12.6 This Agreement will not be assigned by any party hereto without the prior
written consent of all the parties.
June 28, 2000 Page 23 of 27
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal law.
12.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
12.9 Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and will permit each
other and such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
12.10 Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as applicable,
by such party and when so executed and delivered this Agreement will be
the valid and binding obligation of such party enforceable in accordance
with its terms.
12.11 The Agreement may be amended by written instrument signed by all parties
to the Agreement. Notwithstanding the above, the parties to this Agreement
may amend the schedules to this Agreement from time to time to reflect
changes in or relating to the Contracts, the Separate Accounts or the
Designated Funds of the Trust or other applicable terms of this Agreement.
June 28, 2000 Page 24 of 27
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the date specified below.
AMERICAN SKANDIA I.IFE ASSURANCE
CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx
Deputy Chief Executive Officer and President
XXXXX FARGO VARIABLE TRUST
By: /s/ C. Xxxxx Xxxxxxx
-----------------------------------
C. Xxxxx Xxxxxxx Secretary
XXXXXXXX INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx Vice President
June 28, 2000 Page 25 of 27
PARTICIPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Associated Contracts of American Skandia
Life Assurance Corporation are permitted in accordance with the provisions of
this Agreement to invest in Designated Funds of the Trust shown in Schedule B:
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Variable Account B (Class 1 Sub-
accounts)
CONTRACT(S):
American Skandia Advisor Plan (ASAPSM)
American Skandia Advisor Plan IISM (ASAP II)
American Skandia Advisor Plan IISM Premier (ASAP II Premier)
American Skandia XTra CreditSM (XTra Credit)
American Skandia XTra CreditSM Premier (XTra Credit Premier)
Xxxxx Fargo Stagecoach Extra Credit (Xxxxx XT)*
American Skandia LifeVest(R) (ASL(R))
American Skandia LifeVest(R) Premier (ASL(R) Premier)
Xxxxx Fargo Stagecoach Variable Annuity Flex (Xxxxx ASL)*
American Skandia ProtectorSM (AS ProSM)
Well Fargo Stagecoach Variable Annuity Plus*
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Variable Account B (Class 2
Sub-accounts)
CONTRACT(S):
American Skandia Advisors Choice(R)2000 (Choice2000)
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Variable Account B (Class 3 Sub-
accounts)
CONTRACT(S):
American Skandia Impact (AS ImpactSM)
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Separate Account Q
CONTRACT(S):
American Skandia AS(k) Group Variable Annuity
* Each of the Contracts identified with an asterisk is considered a "Xxxxx Fargo
Contract" as described in Section 1.12 of the Agreement.
June 28, 2000 Page 1 of 1
PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following
Designated Funds of the Trust.
WFVT Asset Allocation Fund
WFVT Growth Fund
WFVT Equity Value Fund*
WFVT Money Market Fund
WFVT Small Cap Growth
WFVT Corporate Bond Fund
WFVT Equity Income Fund
WFVT Large Company Growth Fund
WFVT International Equity Fund
* The WFVT Equity Value Fund is available in each of the American Skandia
variable annuities shown in Schedule A. All other Xxxxx Fargo Variable
Trust Funds shown above are only available in Xxxxx Fargo Stagecoach Extra
Credit, Xxxxx Fargo Stagecoach Variable Annuity Flex and Well Fargo
Stagecoach Variable Annuity Plus.
June 28, 2000 Page 1 of 1
PARTICIPATION AGREEMENT
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Trust. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Trust as early as
possible before the date set by the Trust for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of
voting instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Trust will
inform the Company of the Record, Mailing and Meeting dates. This will
be done verbally approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call
in the number of Customers to the Trust, as soon as possible, but no
later than two weeks after the Record Date.
3. The Trust's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Trust will provide the last
Annual Report to the Company pursuant to the terms of Section 6.2 of the
Agreement to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Trust. The Company, at its expense,
shall produce and personalize the Voting Instruction Cards. The Trust or
its affiliate must approve the Card before it is printed. Allow
approximately 2-4 business days for printing information on the Cards.
Information commonly found on the Cards includes:
. name (legal name as found on account registration)
. address
. Trust or account number
. coding to state number of units
. individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Trust).
(This and related steps may occur later in the chronological process
due to possible uncertainties relating to the proposals.)
5. During this time, the Trust will develop, produce and pay for the Notice
of Proxy and the Proxy Statement (one document). Printed and folded
notices and statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by
the Company). Contents of envelope sent to Customers by the Company will
include:
June 28, 2000 Page 1 of 1
. Voting Instruction Card(s)
. one proxy notice and statement (one document)
. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
. "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly as
possible and that their vote is important. One copy will be
supplied by the Trust.)
. cover letter - optional, supplied by Company and reviewed and
approved in advance by the Trust
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to the Trust.
7. Package mailed by the Company.
* The Trust must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but NOT
including,) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into
vote categories of all yes, no, or mixed replies, and to begin data
entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by the Trust in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card
and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanator
letter and a new Card and return envelope. The mutilated or illegible
Card is disregarded and considered to be NOT RECEIVED for purposes of
vote tabulation. Any Cards that have been "kicked out" (e.g.
mutilated, illegible) of the procedure are "hand verified," i.e.,
examined as to why they did not complete the system. Any questions on
those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to
sort the Cards as they first arrive into categories depending upon
their vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Trust receives the tabulations
stated in terms of a percentage and the number of SHARES.) The Trust
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to the
Trust on the morning of the meeting not later than 10:00 a.m. Eastern
time. The Trust may request an earlier deadline if reasonable and if
required to calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Trust will provide a standard form for each Certification.
June 28, 2000 Page 1 of 1
15. The Company will be required to box and archive the Cards received
from the Customers. In the event that any vote is challenged or if
otherwise necessary for legal, regulatory, or accounting purposes, the
Trust will be permitted reasonable access to such Cards.
16. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
June 28, 2000 Page 1 of 1
