FUND PARTICIPATION AGREEMENT
Genworth Life Insurance Company of New York,
The Prudential Series Fund,
Prudential Investments LLC,
and
Prudential Investment Management Services LLC
January 1, 2006
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares.......................................... 4
ARTICLE II. Representations and Warranties............................... 8
ARTICLE III. Prospectuses and Proxy Statements; Voting.................... 13
ARTICLE IV. Sales Material and Information............................... 15
ARTICLE V. Fees and Expenses............................................ 17
ARTICLE VI. Diversification and Qualification............................ 17
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order..................... 20
ARTICLE VIII. Indemnification.............................................. 23
ARTICLE IX. Applicable Law............................................... 28
ARTICLE X. Termination.................................................. 28
ARTICLE XI. Notices...................................................... 31
ARTICLE XII. Miscellaneous................................................ 32
SCHEDULE A Contracts
SCHEDULE B Portfolios
SCHEDULE C Expenses
SCHEDULE D Diversification Compliance Certification
FUND PARTICIPATION AGREEMENT
Among
GENWORTH LIFE INSURANCE COMPANY OF NEW YORK,
THE PRUDENTIAL SERIES FUND,
PRUDENTIAL INVESTMENTS LLC,
and
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
THIS AGREEMENT, made and entered into as of this 1st day of January, 2006,
by and among GENWORTH LIFE INSURANCE COMPANY OF NEW YORK (the "Company"), a New
York life insurance company, on its own behalf and on behalf of its separate
accounts (the "Accounts"); THE PRUDENTIAL SERIES FUND, an open-end management
investment company organized under the laws of Delaware (the "Fund");
PRUDENTIAL INVESTMENTS LLC (the "Adviser"), a New York limited liability
company; and PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC (the "Distributor"),
a Delaware limited liability company.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and/or variable annuity
contracts (collectively, the "Variable Insurance Products") to be offered by
insurance companies (the "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
2
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (the "SEC"), dated March 5, 1999 (File No. IC-23728) (the "Mixed and
Shared Funding Exemptive Order"), granting Participating Insurance Companies
and variable annuity and variable life insurance separate accounts exemptions
from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended (hereinafter the "1940 Act"), and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Fund to be sold to and held by variable annuity and variable life
insurance separate accounts of life insurance companies that may or may not be
affiliated with one another and qualified pension and retirement plans
("Qualified Plans"); and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and shares of the Portfolio(s) are registered under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, (the "1934 Act") and is a member
in good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Company has issued and plans to continue to issue certain
variable life insurance policies and/or variable annuity contracts supported
wholly or partially by the Accounts (the "Contracts"); and such Contracts are
listed in Schedule A attached hereto and incorporated herein by reference, as
such schedule may be amended from time to time by mutual written agreement of
the parties; and
WHEREAS, each Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of the Company
under the insurance laws of the State of New York, to set aside and invest
assets attributable to the Contracts; and
3
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to continue to purchase shares in the
Portfolios listed on Schedule B attached hereto and incorporated herein by
reference, as such schedule may be amended from time to time by mutual written
agreement of the parties (the "Portfolios"), on behalf of the Accounts to fund
the Contracts, and the Fund is authorized to sell such shares to unit
investment trusts such as the Accounts at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company also intends to continue to purchase shares in other
open-end investment companies or series thereof not affiliated with the Fund
(the "Unaffiliated Funds") on behalf of the Accounts to fund the Contracts.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Distributor and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of the Portfolios
which the Account orders, executing such orders on each Business Day at the net
asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Portfolios. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders and
receipt by such designee shall constitute receipt by the Fund, provided that
the Fund receives notice of any such order by 10:00 a.m. Eastern time on the
next following Business Day. "Business Day" shall mean any day on which the New
York Stock Exchange (the "NYSE") is open for trading and on which the Portfolio
calculates its net asset value pursuant to the rules of the SEC as described in
the then-current registration statement of the Fund on Form N-1A. "Valuation
Time" shall mean the time as of which the Fund calculates net asset value for
the shares of the Portfolios on the relevant Business Day.
4
1.2. The Fund agrees to make shares of the Portfolios available for purchase
at the applicable net asset value per share by the Company and the Accounts on
those days on which the Fund calculates its Portfolios' net asset value
pursuant to rules of the SEC, and the Fund shall calculate such net asset value
on each day which the NYSE is open for trading. Notwithstanding the foregoing,
the Fund may refuse to sell shares of any Portfolio to any person, or suspend
or terminate the offering of shares of any Portfolio if such action is required
by law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Fund acting in good faith, necessary or appropriate in the
best interests of the shareholders of such Portfolio. All orders accepted by
the Company shall be subject to the terms of the then current prospectus of the
Fund. The Company shall use its best efforts, and shall reasonably cooperate
with, the Fund to enforce stated prospectus policies regarding transactions in
Portfolio shares. The Company acknowledges that orders for Portfolio shares
accepted by it in violation of the stated policies of the Fund as set forth in
the Fund's then-current prospectus may be subsequently revoked or cancelled by
the Fund and that the Fund shall not be responsible for any losses incurred by
the Company or the Contract owner as a result of such cancellation. In
addition, the Company acknowledges that the Fund has the right to refuse any
purchase order for any reason, particularly if the Fund determines that a
Portfolio would be unable to invest the money effectively in accordance with
its investment policies or would otherwise be adversely affected due to the
size of the transaction, frequency of trading, or other factors.
1.3. The Fund will not sell shares of the Portfolios to any other
Participating Insurance Company separate account unless an agreement containing
provisions the substance of which are the same as Sections 2.1, 2.2 (except
with respect to designation of applicable law), 3.5, 3.6, 3.7, and Article VII
of this Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on the Company's request, any full
or fractional shares of the Fund held by the Company, executing such requests
on each Business Day at the net asset value next computed after receipt by the
Fund or its designee of the request for redemption. For purposes of this
Section 1.4, the Company shall be the designee of the Fund for receipt of
requests for redemption and receipt by such designee shall constitute receipt
by the
5
Fund, provided that the Fund receives notice of any such request for redemption
by 10:00 a.m. Eastern time on the next following Business Day.
1.5. The parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
Participating Insurance Companies (subject to Section 1.3) and the cash value
of the Contracts may be invested in other investment companies.
1.6. The Company shall pay for Fund shares by 3:00 p.m. Eastern time on the
next Business Day after an order to purchase Fund shares is received in
accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire and/or by a credit for any shares redeemed
the same day as the purchase.
1.7. The Fund shall pay and transmit the proceeds of redemptions of Fund
shares by 11:00 a.m. Eastern Time on the next Business Day after a redemption
order is received in accordance with Section 1.4 hereof; provided, however,
that the Fund may delay payment in extraordinary circumstances to the extent
permitted under Section 22(e) of the 1940 Act. Payment shall be in federal
funds transmitted by wire and/or a credit for any shares purchased the same day
as the redemption.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or the Accounts. Shares
purchased from the Fund will be recorded in an appropriate title for the
relevant Account or the relevant sub-account of an Account.
1.9. The Fund shall furnish same day notice (by electronic communication or
telephone, followed by electronic confirmation) to the Company of any income,
dividends or capital gain distributions payable on a Portfolio's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all
6
such income dividends and capital gain distributions in cash. The Fund shall
notify the Company by the end of the next following Business Day of the number
of shares so issued as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on each Business Day as soon as reasonably practicable
after the net asset value per share is calculated and shall use its best
efforts to make the net asset value per share for each Portfolio available by
6:00 p.m. Eastern time. In the event of an error in the computation of a
Portfolio's net asset value per share ("NAV") or any dividend or capital gain
distribution (each, a "pricing error"), the Adviser or the Fund shall notify
the Company as soon as reasonably possible after discovery of the error. Such
notification may be verbal, but shall be confirmed promptly in writing. A
pricing error shall be corrected as follows: (a) if the pricing error results
in a difference between the erroneous NAV and the correct NAV of less than
$0.01 per share, then no corrective action need be taken; (b) if the pricing
error results in a difference between the erroneous NAV and the correct NAV
equal to or greater than $0.01 per share, but less than 1/2 of 1% of the
Portfolio's NAV at the time of the error, then the Adviser shall reimburse the
Portfolio for any loss, after taking into consideration any positive effect of
such error; however, no adjustments to Contract owner accounts need be made;
and (c) if the pricing error results in a difference between the erroneous NAV
and the correct NAV equal to or greater than 1/2 of 1% of the Portfolio's NAV
at the time of the error, then the Adviser shall reimburse the Portfolio for
any loss (without taking into consideration any positive effect of such error)
and shall reimburse the Company for the costs of adjustments made to correct
Contract owner accounts in accordance with the provisions of Schedule C. If an
adjustment is necessary to correct a material error (as described below) which
has caused Contract owners to receive less than the amount to which they are
entitled, the number of shares of the applicable sub-account of such Contract
owners will be adjusted and the amount of any underpayments shall be credited
by the Adviser to the Company for crediting of such amounts to the applicable
sub-accounts of such Contract owners. Upon notification by the Adviser of any
overpayment due to a material error, the Company shall promptly remit to the
Adviser any overpayment that has not been paid to Contract owners. In no event
shall the Company be liable to Contract owners for any such adjustments or
7
underpayment amounts. A pricing error within categories (b) or (c) above shall
be deemed to be "materially incorrect" or constitute a "material error" for
purposes of this Agreement. The standards set forth in this Section 1.10 are
based on the parties' understanding of the views expressed by the staff of the
SEC as of the date of this Agreement. In the event the views of the SEC staff
are later modified or superseded by SEC or judicial interpretation, the parties
shall amend the foregoing provisions of this Agreement to comport with the
then-currently acceptable standards, on terms mutually satisfactory to all
parties.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that: (a) the securities deemed to
be issued by the Accounts under the Contracts are or will be registered under
the 1933 Act, or are not so registered in proper reliance upon an exemption
from such registration requirements; (b) the Contracts will be issued and sold
in compliance in all material respects with all applicable federal and state
laws; and (c) the sale of the Contracts shall comply in all material respects
with state insurance suitability requirements.
2.2. The Company represents and warrants that: (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it has
legally and validly established each Account prior to any issuance or sale of
units thereof as a segregated asset account under New York law; and (c) it has
registered each Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account for the
Contracts, and will maintain such registration for so long as any Contracts are
outstanding as required by applicable law or, alternatively, the Company has
not registered one or more Accounts in proper reliance upon an exclusion from
such registration requirements.
2.3. The Fund represents and warrants that: (a) the Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act; (b) the Fund
shares sold pursuant to this Agreement shall be duly authorized for issuance
and sold in compliance with all applicable federal securities laws including,
without limitation, the 1933 Act, the 1934 Act, and the 1940 Act; (c)
8
the Fund is and shall remain a registered investment company under the 1940
Act; and (d) the Fund shall amend the registration statement for its shares
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares.
2.4. The Fund represents and warrants that it has adopted a plan pursuant to
Rule 12b-1 under the 1940 Act for its Class II shares. The parties acknowledge
that the Fund reserves the right to modify its existing plan or to adopt
additional plans pursuant to Rule 12b-1 under the 1940 Act (including with
respect to its Class I shares) and to impose an asset-based or other charge to
finance distribution expenses as permitted by applicable law and regulation.
The Fund, the Distributor and the Adviser agree to comply with applicable
provisions and SEC interpretation of the 1940 Act with respect to any
distribution plan.
2.5. The Fund represents and warrants that it shall register and qualify the
shares for sale in accordance with the laws of the various states if and to the
extent required by applicable law.
2.6. The Fund represents and warrants 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 the 1940 Act.
2.7. The Adviser represents and warrants that it is and shall remain duly
registered as an investment adviser under all applicable federal and state
securities laws and that it shall perform its obligations for the Fund in
compliance in all material respects with any applicable state and federal
securities laws.
2.8. The Distributor represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the Fund in compliance in all material
respects with the laws of any applicable state and federal securities laws.
9
2.9. The Fund and the Adviser represent and warrant that all of their
respective officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are, and shall
continue to be at all times, covered by one or more blanket fidelity bonds or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bonds shall
include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.10. The Fund and the Adviser represent, warrant, and covenant: (i) that
each Portfolio shall be classified as a "partnership" or "disregarded entity"
for federal income tax purposes and shall at all times maintain such
classification; (ii) to notify the Company upon having a reasonable basis for
believing that the Fund or any Portfolio has ceased to comply, or might not so
comply, with the aforesaid classification as a "partnership" or "disregarded
entity," and (iii) that each Portfolio shall not be a "publicly-traded
partnership" within the meaning of the Code and the regulations thereunder.
2.11. The Fund and the Adviser represent and warrant that they will provide
the Company with as much advance notice as is reasonably practicable of any
material change affecting the Portfolios (including, but not limited to, any
material change in the registration statement or prospectus affecting the
Portfolios) and any proxy solicitation affecting the Portfolios and consult
with the Company in order to implement any such change in an orderly manner,
recognizing the expenses of changes and attempting to minimize such expenses by
implementing them in conjunction with regular annual updates of the prospectus
for the Contracts.
2.12. The Company represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986, as
amended (the "Code"), that the Contracts are currently and at the time of
issuance will be treated as annuity contracts or life insurance policies under
applicable provisions of the Code, and that it will make every effort to
maintain such treatment and that it will notify the Fund, the Distributor and
the Adviser immediately upon
10
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they may not be so treated in the future. In addition, the
Company represents and warrants that each Account is a "segregated asset
account" and that interests in each Account are offered exclusively through the
purchase of or transfer into a "variable contract" within the meaning of such
terms under Section 817 of the Code and the regulations thereunder. The Company
will use best efforts to continue to meet such definitional requirements, and
it will notify the Fund, the Distributor and the Adviser immediately upon
having a reasonable basis for believing that such requirements have ceased to
be met or that they may not be met in the future. The Company represents and
warrants that it will not purchase Fund shares with assets derived from
tax-qualified retirement plans except, indirectly, through Contracts purchased
in connection with such plans.
2.13 The Company represents and warrants that it is currently in compliance,
and will remain in compliance, with all applicable anti-money laundering laws,
regulations, and requirements. In addition, the Company represents and warrants
that it has adopted and implemented policies and procedures reasonably designed
to achieve compliance with the applicable requirements administered by the
Office of Foreign Assets Control ("OFAC") of the U.S. Department of the
Treasury.
2.14 The Company represents and warrants that it is currently in compliance,
and will remain in compliance, with all applicable laws, rules and regulations
relating to consumer privacy, including, but not limited to, Regulation S-P.
2.15 The Company represents and warrants that it has adopted, and will at
all times during the term of this Agreement maintain, reasonable and
appropriate procedures ("Late Trading Procedures") designed to ensure that any
and all orders relating to the purchase, sale or exchange of Fund shares
communicated to the Fund are treated in accordance with Article I of this
Agreement as having been received on a Business Day have been received by the
Valuation Time on such Business Day and were not modified after the Valuation
Time, and that all orders received from Contract owners but not rescinded by
the Valuation Time were communicated to the Fund or its agent as received for
that Business Day. Each transmission of orders by the Company shall constitute
a representation by the
11
Company that such orders are accurate and complete and relate to orders
received by the Company by the Valuation Time on the Business Day for which the
order is to be priced and that such transmission includes all orders relating
to Fund shares received from Contract owners but not rescinded by the Valuation
Time. The Company agrees to provide the Fund or its designee with a copy of the
Late Trading Procedures and such certifications and representations regarding
the Late Trading Procedures as the Fund or its designee may reasonably request.
The Company will promptly notify the Fund in writing of any material change to
the Late Trading Procedures.
2.16. The Company represents and warrants that it has adopted, and will at
all times during the term of this Agreement maintain, reasonable and
appropriate procedures ("Market Timing Procedures") designed to minimize any
adverse impact on other Fund investors due to excessive trading. The Company
agrees to provide the Fund or its designee with a copy of the Market Timing
Procedures and such certifications and representations regarding the Market
Timing Procedures as the Fund or its designee may reasonably request. The
Company will promptly notify the Fund in writing of any material change to the
Market Timing Procedures. The parties agree to cooperate in light of any
conflict between the Market Timing Procedures and actions taken or policies
adopted by the Fund designed to minimize any adverse impact on other Fund
investors due to excessive trading.
2.17. In accordance with Rule 22c-2(a)(2) under the 1940 Act, the Company
shall provide, promptly upon request by the Fund, the Taxpayer Identification
Number of all shareholders that purchased, redeemed, transferred, or exchanged
shares held through an account with the Company, and the amount and dates of
such shareholder purchases, redemptions, transfers and exchanges; provided,
however, that the Company shall not undertake any activity, including the
provision of Contract owner names or other identifying information, that will
cause it to violate any federal or state law, rule or regulation concerning the
privacy of owners of the Contracts.
12
2.18 The Fund, the Adviser and the Distributor make no representation as to
whether any aspect of the Fund's operations (including, but not limited to,
fees and expenses and investment policies) complies with the insurance laws or
regulations of the various states.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. At least annually, the Adviser or Distributor shall provide the Company
with as many copies of the Fund's current prospectus as the Company may
reasonably request, with expenses to be borne in accordance with Schedule C
hereof. If requested by the Company in lieu thereof, the Adviser, Distributor
or Fund shall provide such documentation (including an electronic version of
the current prospectus) and other assistance as is reasonably necessary in
order for the Company once each year (or more frequently if the prospectus for
the Fund is amended) to have the prospectus for the Contracts and the
prospectus for the Fund printed together in one document.
3.2. If applicable state or federal laws or regulations require that the
Statement of Additional Information ("SAI") for the Fund be distributed to all
Contract owners, then the Fund, Distributor and/or the Adviser shall provide
the Company with copies of the Fund's SAI in such quantities, with expenses to
be borne in accordance with Schedule C hereof, as the Company may reasonably
require to permit timely distribution thereof to Contract owners. The Adviser,
the Distributor and/or the Fund shall also provide an SAI to any Contract owner
or prospective owner who requests such SAI from the Fund.
3.3. The Fund, the Distributor and/or the Adviser shall provide the Company
with copies of the Fund's proxy material, reports to shareholders and other
communications to shareholders in such quantity, with expenses to be borne in
accordance with Schedule C hereof, as the Company may reasonably require to
permit timely distribution thereof to Contract owners.
3.4. It is understood and agreed that, except with respect to information
regarding the Company provided in writing by that party, the Company shall not
be responsible for the content
13
of the prospectus or SAI for the Fund. It is also understood and agreed that,
except with respect to information regarding the Fund, the Distributor, the
Adviser or the Portfolios provided in writing by the Fund, the Distributor or
the Adviser, neither the Fund, the Distributor nor Adviser are responsible for
the content of the prospectus or SAI for the Contracts.
3.5. If and to the extent required by law the Company shall:
(a) solicit voting instructions from Contract owners;
(b) vote the Portfolio shares held in the Accounts in accordance with
instructions received from Contract owners;
(c) vote Portfolio shares held in the Accounts for which no instructions
have been received in the same proportion as Portfolio shares for which
instructions have been received from Contract owners, so long as and to the
extent that the SEC continues to interpret the 1940 Act to require pass-through
voting privileges for variable contract owners; and
(d) vote Portfolio shares held in its general account or otherwise in
the same proportion as Portfolio shares for which instructions have been
received from Contract owners, so long as and to the extent that the SEC
continues to interpret the 1940 Act to require such voting by the insurance
company. The Company reserves the right to vote Fund shares in its own right,
to the extent permitted by law.
3.6. The Company shall be responsible for assuring that each of its separate
accounts holding shares of a Portfolio calculates voting privileges as directed
by the Fund and agreed to by the Company and the Fund. The Fund agrees to
promptly notify the Company of any changes of interpretations or amendments of
the Mixed and Shared Funding Exemptive Order.
3.7. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or, as the Fund currently intends, comply
with Section 16(c) of the 1940 Act (although the Fund is not one of the
14
trusts described in Section 16(c) of that Act) as well as with Sections 16(a)
and, if and when applicable, 16(b). Further, the Fund will act in accordance
with the SEC's interpretation of the requirements of Section 16(a) with respect
to periodic elections of directors or trustees and with whatever rules the SEC
may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, a copy of each piece of sales literature or other promotional
material that the Company develops or proposes to use and in which the Fund (or
a Portfolio thereof), the Adviser or the Distributor is named in connection
with the Contracts, at least five (5) Business Days prior to its use. No such
material shall be used if the Fund or its designee objects to such use within
three (3) Business Days after receipt of such material.
4.2. The Company shall not give any information or make any representations
or statements on behalf of or concerning the Fund, the Portfolios, the Adviser
or the Distributor in connection with the sale of the Contracts other than the
information or representations contained in the registration statement,
including the prospectus or SAI for the Fund, as the same may be amended or
supplemented from time to time, or in sales literature or other promotional
material approved by the Fund, the Distributor or the Adviser, except with the
permission of the Fund, the Distributor or the Adviser.
4.3. The Fund, the Adviser or the Distributor shall furnish, or shall cause
to be furnished, to the Company, a copy of each piece of sales literature or
other promotional material in which the Company and/or its separate account(s)
is named at least five (5) Business Days prior to its use. No such material
shall be used if the Company objects to such use within three (3) Business Days
after receipt of such material.
4.4. The Fund, the Distributor and the Adviser shall not give any
information or make any representations on behalf of the Company or concerning
the Company, the Accounts, or the
15
Contracts other than the information or representations contained in a
registration statement, including the prospectus or SAI for the Contracts, as
the same may be amended or supplemented from time to time, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund or its designees will provide to the Company at least one
complete copy of all registration statements, prospectuses, SAIs, 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 Fund within a reasonable period of time following the filing of
such document(s) with the SEC or NASD or other regulatory authorities.
4.6. The Company will provide to the Fund or its designees at least one
complete copy of all registration statements, prospectuses, SAIs, 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 the Accounts,
within a reasonable period of time following the filing of such document(s)
with the SEC, NASD, or other regulatory authority.
4.7. For purposes of Articles IV and VIII, the phrase "sales literature and
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media; e.g.,
on-line networks such as the Internet or other electronic media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational
or training materials or other communications distributed or made generally
available to some or all agents or employees, and shareholder reports, and
proxy materials (including solicitations for voting instructions) and any other
material constituting sales literature or advertising under the NASD rules, the
1933 Act or the 1940 Act.
16
4.8. At the request of any party to this Agreement, each other party will
make available to the other party's independent auditors and/or representatives
of the appropriate regulatory authorities, all records, data and access to
operating procedures that may be reasonably requested in connection with
compliance and regulatory requirements related to this Agreement or any party's
obligations under this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Fund, the Distributor and the Adviser shall pay no fee or other
compensation to the Company under this Agreement, and the Company shall pay no
fee or other compensation to the Fund, the Distributor or Adviser under this
Agreement; provided, however, (a) the parties will bear their own expenses as
reflected in Schedule C and other provisions of this Agreement, and (b) the
parties may enter into other agreements relating to the Company's investment in
the Fund, including services agreements.
ARTICLE VI. Diversification and Qualification
6.1. The Fund, the Distributor and the Adviser represent and warrant that
the Fund and each Portfolio thereof will at all times comply with
Section 817(h) of the Code and Treasury Regulation (S)1.817-5, as amended from
time to time, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications or successor provisions to
such Section or Regulations. The Fund, the Distributor or the Adviser shall
provide to the Company a quarterly written diversification certification, in
the form attached hereto as Schedule D, as to whether each Portfolio complies
with the diversification requirements of Section 817(h) of the Code.
6.2. The Fund, the Distributor and the Adviser agree that shares of the
Portfolios will be sold only to Participating Insurance Companies and their
separate accounts and to Qualified Plans. No shares of any Portfolio of the
Fund will be sold to the general public.
17
6.3. The Fund, the Distributor or the Adviser will notify the Company
immediately upon having a reasonable basis for believing that the Fund or any
Portfolio has ceased to comply with the aforesaid Section 817(h)
diversification requirements or might not so comply in the future.
6.4. Without in any way limiting the effect of Sections 8.2, 8.3 and 8.4
hereof and without in any way limiting or restricting any other remedies
available to the Company, the Adviser or Distributor will pay all costs
associated with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Fund or any Portfolio to comply with Sections 6.1
or 6.2 hereof, including all costs associated with reasonable and appropriate
corrections or responses to any such failure; such costs may include, but are
not limited to, the costs involved in creating, organizing, and registering a
new investment company as a funding medium for the Contracts and/or the costs
of obtaining whatever regulatory authorizations are required to substitute
shares of another investment company for those of the failed Portfolio
(including, but not limited to, an order pursuant to Section 26(c) of the 1940
Act).
6.5. The Company agrees that if the Internal Revenue Service ("IRS") asserts
in writing in connection with any governmental audit or review of the Company
(or, to the Company's knowledge, of any Contract owner) that any Portfolio has
failed to comply with the diversification requirements of Section 817(h) of the
Code or the Company otherwise becomes aware of any facts that could give rise
to any claim against the Fund, the Distributor or the Adviser as a result of
such a failure or alleged failure:
(a) The Company shall promptly notify the Fund, the Distributor and the
Adviser of such assertion or potential claim;
(b) The Company shall consult with the Fund, the Distributor and the
Adviser as to how to minimize any liability that may arise as a result of such
failure or alleged failure;
18
(c) The Company shall use its best efforts to minimize any liability of
the Fund, the Distributor and the Adviser resulting from such failure,
including, without limitation, demonstrating, pursuant to Treasury Regulations,
Section 1.817-5(a)(2), to the commissioner of the IRS that such failure was
inadvertent;
(d) Any written materials to be submitted by the Company to the IRS, any
Contract owner or any other claimant in connection with any of the foregoing
proceedings or contests (including, without limitation, any such materials to
be submitted to the IRS pursuant to Treasury Regulations,
Section 1.817-5(a)(2)) shall be provided by the Company to the Fund, the
Distributor and the Adviser (together with any supporting information or
analysis) within at least two (2) business days prior to submission;
(e) The Company shall provide the Fund, the Distributor and the Adviser
with such cooperation as the Fund, the Distributor and the Adviser shall
reasonably request (including, without limitation, by permitting the Fund, the
Distributor and the Adviser to review the relevant books and records of the
Company) in order to facilitate the review by the Fund, the Distributor and the
Adviser of any written submissions provided to it or its assessment of the
validity or amount of any claim against it arising from such failure or alleged
failure;
(f) The Company shall not with respect to any claim of the IRS or any
Contract owner that would give rise to a claim against the Fund, the
Distributor and the Adviser (i) compromise or settle any claim, (ii) accept any
adjustment on audit, or (iii) forego any allowable administrative or judicial
appeals, without the express written consent of the Fund, the Distributor and
the Adviser, which shall not be unreasonably withheld; provided that, the
Company shall not be required to appeal any adverse judicial decision unless
the Fund, the Distributor, or the Adviser shall have provided an opinion of
independent counsel to the effect that a reasonable basis exists for taking
such appeal; and further provided that the Fund, the Distributor and the
Adviser shall bear the costs and expenses, including reasonable attorney's
fees, incurred by the Company in complying with this clause (f).
19
ARTICLE VII.Potential Conflicts and Compliance With Mixed and Shared Funding
Exemptive Order
7.1. The Fund's Board of Trustees (the "Board") will monitor the Fund for
the existence of any material irreconcilable conflict between the interests of
the Contract owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or regulations,
or a public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio is being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners or by contract owners of different
Participating Insurance Companies; or (f) a decision by a Participating
Insurance Company to disregard the voting instructions of Contract owners. The
Board shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing material conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by the Company to inform the Board whenever Contract owner voting instructions
are to be disregarded. Such responsibilities shall be carried out by the
Company with a view only to the interests of its Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of its
directors who are not interested persons of the Fund, the Distributor, the
Adviser or any subadviser to any of the Portfolios, as defined in
Section 2(a)(19) of the 1940 Act (the "Independent Trustees"), that a material
irreconcilable conflict exists, the Company and other Participating Insurance
Companies shall, at their expense and to the extent reasonably practicable (as
determined by a majority of the Independent Trustees), take whatever steps are
necessary to remedy or eliminate the
20
irreconcilable material conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the separate accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio, or submitting the question
whether such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any appropriate
group (i.e., annuity contract owners, life insurance contract owners, or
variable contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected contract owners
the option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment
in the Fund and terminate this Agreement; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Independent Trustees. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice that this provision
is being implemented, and until the end of that six-month period the Adviser,
the Distributor and the Fund shall continue to accept and implement orders by
the Company for the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six
(6) months after the Board informs the Company in writing that it has
determined that such decision has created an irreconcilable material conflict;
provided, however, that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as determined
by a majority of the Independent Trustees. Until the end of the foregoing
six-month period, the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
21
7.6. For purposes of Sections 7.3 through 7.5 of this Agreement, a majority
of the Independent Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Fund be required to establish a new funding medium for the Contracts. The
Company shall not be required by Section 7.3 to establish a new funding medium
for the Contracts if an offer to do so has been declined by vote of a majority
of Contract owners affected by the irreconcilable material conflict. In the
event that the Board determines that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six
(6) months after the Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the Independent Trustees.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and
Shared Funding Exemptive Order, then (a) the Fund and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be necessary
to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted,
to the extent such rules are applicable; and (b) Sections 3.5, 3.6, 3.7, 7.1,
7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
22
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
(a) As limited by and in accordance with Section 8.1(b) and 8.1(c)
hereof, the Company agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, the Distributor or
the Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlement with the written consent of the Company) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, expenses, damages or liabilities (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus or SAI covering the Contracts or contained in
the Contracts or sales literature or other promotional material for
the Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by or
on behalf of the Adviser, Distributor or Fund for use in the
registration statement or prospectus for the Contracts or in the
Contracts or sales literature or other promotional material (or any
amendment or supplement to any of the foregoing) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or other
promotional material of the Fund not supplied by the Company or
persons under its control) or
23
wrongful conduct of the Company or persons under its control, with
respect to the sale or distribution of the Contracts or Fund Shares;
or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement, prospectus,
SAI, or sales literature or other promotional material of the Fund,
or any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, if such a statement or omission was made in reliance upon
information furnished in writing to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company, including without limitation Section 2.12
and Section 6.5 hereof.
(b) The Company shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith, or negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to any of the Indemnified Parties.
(c) The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Company of
any such claim shall not relieve the Company from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision, except to the extent that
the Company has been prejudiced by such failure to give notice. In case any
such action is brought against the Indemnified Parties, the Company shall be
entitled to participate, at its own
24
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation. The Company shall
not be liable under this indemnification provision with respect to any claim,
action, suit, or preceding settled by an Indemnified Party without the
Company's written approval.
(d) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of
the Fund.
8.2. Indemnification by the Adviser
(a) The Adviser agrees to indemnify and hold harmless the Company and
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Adviser) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or SAI or sales literature or other
promotional material of the Fund prepared by the Fund, the
Distributor or the Adviser (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material
25
fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this Agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished in
writing to the Adviser, the Distributor or the Fund by or on behalf
of the Company for use in the registration statement, prospectus or
SAI for the Fund or in sales literature or other promotional material
(or any amendment or supplement to any of the foregoing) or otherwise
for use in connection with the sale of the Contracts or the Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or other
promotional material for the Contracts not supplied by the Adviser or
persons under its control) or wrongful conduct of the Fund, the
Distributor or the Adviser or persons under their control, with
respect to the sale or distribution of the Contracts or Fund shares;
or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement, prospectus,
SAI, or sales literature or other promotional material covering the
Contracts, or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or omission was
made in reliance upon information furnished in writing to the Company
by or on behalf of the Adviser, the Distributor or the Fund; or
(iv) arise as a result of any failure by the Fund, the Distributor or
the Adviser to provide the services and furnish the materials under
the terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with the
diversification and other qualification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, the Distributor or
the Adviser in this Agreement or arise out of or result from any
other material breach of this Agreement by the Adviser, the
Distributor or the Fund (including, without limitation, any material
breach, whether unintentional or in good faith or otherwise, of the
representations, warranties, or covenants set forth in Section 2.10
of this Agreement); or
(vi) arise out of or result from the incorrect or untimely
calculation or reporting by the Fund, the Distributor or the Adviser
of a Portfolio's daily
26
NAV per share (subject to Section 1.10 of this Agreement) or dividend
or capital gain distribution rate.
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Adviser specified in Article VI hereof.
(b) The Adviser shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith, or negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to any of the Indemnified Parties.
(c) The Adviser shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Adviser of
any such claim shall not relieve the Adviser from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision, except to the extent that
the Adviser has been prejudiced by such failure to give notice. In case any
such action is brought against the Indemnified Parties, the Adviser will be
entitled to participate, at its own expense, in the defense thereof. The
Adviser also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Adviser to
such party of the Adviser's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Adviser 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.
27
The Adviser shall not be liable under this indemnification provision with
respect to any claim, action, suit, or preceding settled by an Indemnified
Party without the Adviser's written approval.
(d) The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware, without regard
to the Delaware conflict of laws provisions.
9.2. This Agreement shall be subject to the provisions of the 1933 Act, the
1934 Act and the 1940 Act, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the SEC may grant (including, but not limited to, the Mixed and
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with respect to
some or all Portfolios, upon sixty (60) days' advance written notice delivered
to the other parties; or
(b) at the option of the Company by written notice to the other parties
with respect to any Portfolio based upon the Company's determination that
shares of such Portfolio are not reasonably available to meet the requirements
of the Contracts; or
28
(c) at the option of the Company by written notice to the other parties
with respect to any Portfolio in the event any of the Portfolio's shares are
not registered, issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such Portfolio as the underlying
investment option of the Contracts issued or to be issued by the Company; or
(d) at the option of the Fund, the Distributor or the Adviser in the
event that formal administrative proceedings are instituted against the Company
by the NASD, the SEC, the insurance commissioner or comparable official of any
state or any other regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, the operation of any
Account, or the purchase of the Fund shares, if, in each case, the Fund,
Distributor or Adviser, as the case may be, reasonably determines in its sole
judgment exercised in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of the Company to perform its
obligations under this Agreement; or
(e) at the option of the Company in the event that formal administrative
proceedings are instituted against the Fund, the Distributor or the Adviser by
the NASD, the SEC, or any state securities or insurance department or any other
regulatory body, if the Company reasonably determines in its sole judgment
exercised in good faith, that any such administrative proceedings will have a
material adverse effect upon the ability of the Fund, the Distributor or the
Adviser to perform their obligations under this Agreement; or
(f) at the option of the Company by written notice to the Fund with
respect to any Portfolio if the Company reasonably believes that the Portfolio
will fail to meet the diversification requirements of Section 817(h) of the
Code specified in Article VI hereof; or
(g) at the option of any non-defaulting party hereto in the event of a
material breach of this Agreement by any party hereto (the "defaulting party")
other than as described in Section 10.1(b)-(f); provided, that the
non-defaulting party gives written notice thereof to the defaulting party, with
copies of such notice to all other non-defaulting parties, and if such breach
29
shall not have been remedied within thirty (30) days after such written notice
is given, then the non-defaulting party giving such written notice may
terminate this Agreement by giving thirty (30) days written notice of
termination to the defaulting party; or
(h) at any time upon written agreement of all parties to this Agreement.
10.2. Notice Requirement
No termination of this Agreement shall be effective unless and until the
party terminating this Agreement gives prior written notice to all other
parties of its intent to terminate, which notice shall set forth the basis for
the termination. Furthermore,
(a) in the event any termination is based upon the provisions of Article
VII, or the provisions of Section 10.1(a) of this Agreement, the prior written
notice shall be given in advance of the effective date of termination as
required by those provisions unless such notice period is shortened by mutual
written agreement of the parties;
(b) in the event any termination is based upon the provisions of
Section 10.1(d), 10.1(e) or 10.1(g) of this Agreement, the prior written notice
shall be given at least sixty (60) days before the effective date of
termination; and
(c) in the event any termination is based upon the provisions of
Section 10.1(b), 10.1(c) or 10.1(f), the prior written notice shall be given in
advance of the effective date of termination, which date shall be determined by
the party sending the notice.
10.3. Effect of Termination
Notwithstanding any termination of this Agreement, other than as a result of
a failure by either the Fund or the Company to meet the diversification
requirements of Section 817(h) of the Code, the Fund, the Distributor and the
Adviser shall, at the option of the Company, continue to
30
make available additional shares of the Fund pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.3 shall not apply to any terminations under Article VII of this
Agreement and the effect of such Article VII terminations shall be governed by
Article VII of this Agreement.
10.4. Surviving Provisions
Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII of this Agreement to indemnify other parties shall survive
and not be affected by any termination of this Agreement. In addition, with
respect to Existing Contracts, all provisions of this Agreement shall also
survive and not be affected by any termination of this Agreement.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other parties.
If to the Company:
Genworth Life Insurance Company of New York
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel - Securities
31
If to the Fund:
The Prudential Series Fund
Gateway Center Three
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Secretary
If to the Adviser:
Prudential Investments LLC
Gateway Center Three
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Secretary
If to the Distributor:
Prudential Investment Management Services LLC
Gateway Center Three
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Secretary
ARTICLE XII. Miscellaneous
12.1. Except as required by law, subpoena, court order or regulatory order
or request, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize such
names and addresses and other confidential information without the express
written consent of the affected party until such time as such information may
come into the public domain.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
32
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
12.6. Any controversy or claim arising out of or relating to this Agreement,
or breach thereof, shall be settled by arbitration in a forum jointly selected
by the relevant parties (but if applicable law requires some other forum, then
such other forum) in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
12.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that a transaction that does not result in a change
of actual control or management of a party hereto shall not be deemed to be an
assignment of this Agreement for purposes of this Section 12.8. Any assignment
of this Agreement in violation of this Section 12.8 shall be void.
12.9. The Company agrees that the obligations assumed by the Fund,
Distributor and the Adviser pursuant to this Agreement shall be limited in any
case to the Fund, Distributor and
33
Adviser and their respective assets and the Company shall not seek satisfaction
of any such obligation from the shareholders of the Fund, Distributor or the
Adviser, the Directors, officers, employees or agents of the Fund, Distributor
or Adviser, or any of them.
12.10. The Fund, the Distributor and the Adviser agree that the obligations
assumed by the Company pursuant to this Agreement shall be limited in any case
to the Company and its assets and neither the Fund, Distributor nor Adviser
shall seek satisfaction of any such obligation from the shareholders of the
Company, the directors, officers, employees or agents of the Company, or any of
them.
12.11. No provision of this Agreement may be deemed or construed to modify
or supersede any contractual rights, duties, or indemnifications, as between
the Adviser and the Fund, and the Distributor and the Fund.
12.12. This Agreement supersedes and replaces the predecessor Participation
Agreement among the Company, The Prudential Series Fund, Inc. and other
entities and any amendments thereto.
34
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
GENWORTH LIFE INSURANCE COMPANYOF NEW YORK
By its authorized officer,
By: ---------------------------------
Title:
THE PRUDENTIAL SERIES FUND
By its authorized officer,
By: ---------------------------------
Title: Vice President
PRUDENTIAL INVESTMENTS LLC
By its authorized officer,
By: ---------------------------------
Title: Executive Vice President
PRUDENTIAL INVESTMENT MANAGEMENTSERVICES LLC
By its authorized officer,
By: ---------------------------------
Title: President
35
SCHEDULE A
CONTRACTS
SEPARATE ACCOUNT UTILIZING THE PORTFOLIOS
Genworth Life of New York VL Separate Established on March 20, 2000;
Account 1 Renamed on September 7, 2005
Genworth Life of New York VA Separate Established on April 1, 1996;
Account 1 Renamed on September 7, 2005
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Accumulator - Flexible Premium Single Life and Joint and Last Survivor Variable
Life Insurance Policy
SEC File No. 333-88312
Choice - Flexible Premium Variable Deferred Annuity Contract
SEC File No. 333-47016
Selections - Flexible Premium Variable Deferred Annuity Contract
SEC File No. 333-97085
SCHEDULE B
PORTFOLIOS
The Prudential Series Fund
Xxxxxxxx 20/20 Focus Portfolio - Class II Shares
Xxxxxxxx Portfolio - Class II Shares
Equity Portfolio - Class II Shares
SP Prudential U.S. Emerging Growth Portfolio - Class II Shares
SP Xxxxxxx Xxxxx International Growth Portfolio - Class II Shares
Natural Resources Portfolio - Class II Shares
SCHEDULE C
EXPENSES
The Fund and/or the Distributor and/or Adviser, and the Company will coordinate
the functions and pay the costs of the completing these functions based upon an
allocation of costs in the tables below. Costs shall be allocated to reflect
the Fund's share of the total costs determined according to the number of pages
of the Fund's respective portions of the documents.
Party Responsible Party Responsible
Item Function for Coordination for Expense
---- ------------------- ------------------ ------------------
Mutual Fund Printing of Company Inforce - Fund
Prospectus prospectuses Prospective -
Company
Distribution Company Fund
(including
postage) to
Inforce Clients
Distribution Company Company
(including
postage) to
Prospective Clients
Product Prospectus Printing and Company Company
Distribution for
Inforce and
Prospective Clients
Mutual Fund If Required by Fund, Distributor Fund, Distributor
Prospectus Fund, Distributor or Adviser or Adviser
Update & or Adviser
Distribution
If Required by Company (Fund, Company
Company Distributor or
Adviser to provide
Company with
document in PDF
format)
Product Prospectus If Required by Company Fund, Distributor
Update & Fund, Distributor or Adviser
Distribution or Adviser
If Required by Company Company
Company
Party Responsible Party Responsible
Item Function for Coordination for Expense
---- ------------------- ------------------ ------------------
Mutual Fund SAI Fund, Distributor Fund, Distributor
Printing or Adviser or Adviser
Distribution Party who receives Party who receives
(including postage) the request the request
Product SAI Printing Company Company
Distribution Company Company
Proxy Material for Printing if proxy Fund, Distributor Fund, Distributor
Mutual Fund required by Law or Adviser or Adviser
Distribution Company Fund, Distributor
(including labor) or Adviser
if proxy required
by Law
Printing & Company Company
distribution if
required by Company
Mutual Fund Printing of reports Fund, Distributor Fund, Distributor
Annual & or Adviser or Adviser
Semi-Annual Report
Distribution Company Fund, Distributor
or Adviser
Other If Required by the Company Distributor or
communication to Fund, Distributor Adviser
New and or Adviser
Prospective clients
If Required by Company Company
Company
Other Distribution Company Fund, Distributor
communication to (including labor or Adviser
inforce and printing) if
required by the
Fund, Distributor
or Adviser
Distribution Company Company
(including labor
and printing) if
required by Company
Party Responsible Party Responsible
Item Function for Coordination for Expense
---- ------------------- ------------------ ------------------
Operations of the All operations and Fund, Distributor Fund or Adviser
Fund related expenses, or Adviser
including the cost
of registration
and qualification
of shares, taxes
on the issuance or
transfer of
shares, cost of
management of the
business affairs
of the Fund, and
expenses paid or
assumed by the
fund pursuant to
any Rule 12b-1 plan
Operations of the Federal Company Company
Accounts registration of
units of separate
account (24f-2
fees)
SCHEDULE D
Diversification Compliance Certification
Name of Portfolio:
Note: For purposes of diversification testing, all securities of the same
issuer, all interests in the same real property project, and all interests in
the same commodity are each treated as a single investment. In the case of
government securities each government agency or instrumentality is treated as a
separate issuer. See Treas. Reg. 1.817-5 for additional information.
Special Test for Variable Life Insurance
Where the only contracts based on the account are life insurance contracts
(i.e., no annuity contracts), an account is adequately diversified to the
extent it is invested in Treasury securities. Treasury securities held through
a custodial arrangement that is treated as a grantor trust (e.g. CATs and TGRs)
will be treated as Treasury securities if substantially all of the assets of
the trust are represented by Treasury securities. Options on Treasury
securities are not considered Treasury securities. Where an account is invested
in part in Treasury securities, revise the above general diversification test
percentage limits by adding to them a product of .5 and the percentage of the
value of the total assets invested in Treasury securities. For example, if an
account is 60% invested in Treasury securities, the percentage limit would be
increased by 30% (0.5 x 60%) and would be applied to the assets of the account
other than Treasury securities.
Certification
The undersigned certifies that this Report and Certification, and any related
attachments, have been prepared accurately and provide a true representation of
account assets as of the last day of the quarter indicated above, and that the
fund complies with IRC Section 817(h).
------------------------------- ------------------
Signed by Date
