EXHIBIT 8(b)
FUND PARTICIPATION AGREEMENT
PRUCO LIFE INSURANCE COMPANY,
AMERICAN SKANDIA TRUST,
AMERICAN SKANDIA INVESTMENT SERVICES, INC.,
PRUDENTIAL INVESTMENTS LLC,
AMERICAN SKANDIA MARKETING, INC.
AND
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
MAY 1, 2005
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares..................................................................... 4
ARTICLE II. Representations and Warranties.......................................................... 8
ARTICLE III. Prospectuses and Proxy Statements; Voting............................................... 12
ARTICLE IV. Sales Material and Information.......................................................... 14
ARTICLE V. Fees and Expenses....................................................................... 16
ARTICLE VI. Diversification and Qualification....................................................... 16
ARTICLE VII. Potential Conflicts and Compliance With Mixed and Shared Funding Exemptive Order ....... 19
ARTICLE VIII. Indemnification ........................................................................ 22
ARTICLE IX. Applicable Law.......................................................................... 27
ARTICLE X. Termination............................................................................. 27
ARTICLE XI. Notices................................................................................. 30
ARTICLE XII. Miscellaneous........................................................................... 30
SCHEDULE A Expenses................................................................................ 35
SCHEDULE B Diversification Compliance Report and Certification..................................... 39
PARTICIPATION AGREEMENT
Among
PRUCO LIFE INSURANCE COMPANY,
AMERICAN SKANDIA TRUST,
AMERICAN SKANDIA INVESTMENT SERVICES, INC.,
PRUDENTIAL INVESTMENTS LLC,
AMERICAN SKANDIA MARKETING, INC.
and
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
THIS AGREEMENT, made and entered into as of this 1st day of May, 2005, by
and among PRUCO LIFE INSURANCE COMPANY (the "Company"), an Arizona life
insurance company, on its own behalf and on behalf of its separate accounts (the
"Accounts"); AMERICAN SKANDIA TRUST, an open-end management investment company
organized under the laws of Massachusetts (the "Fund"); AMERICAN SKANDIA
INVESTMENT SERVICES, INC., a Connecticut corporation ("ASISI"); PRUDENTIAL
INVESTMENTS LLC ("PI," and collectively with ASISI, the "Advisers" and each an
"Adviser"), AMERICAN SKANDIA MARKETING, INC., a Delaware corporation ("ASM");
and PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC, a Delaware limited liability
company ("PIMS," and collectively with ASM, the "Distributors" and each a
"Distributor").
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, many of which have entered into
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participation agreements similar to this Agreement (hereinafter "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
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (hereinafter the "SEC"), dated August 1, 1995 (File No. 812-9384),
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") (hereinafter the
"Mixed and Shared Funding Exemptive Order"); 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 (hereinafter the "1933 Act"); and
WHEREAS, each Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, each 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
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WHEREAS, the Company has issued and plans to continue to issue certain
variable life insurance policies and variable annuity contracts supported wholly
or partially by the Accounts (the "Contracts"); 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 Arizona, 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 continue to purchase shares in 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; and
WHEREAS, the parties wish to enter into a written agreement governing the
arrangement already existing among the parties.
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund, the Distributors and the Advisers 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
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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 is open for trading and on which the Portfolio calculates its net
asset value pursuant to the rules of the SEC. "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.
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 New York Stock Exchange 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 accepted by it in violation of the Fund's stated policies 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
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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 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
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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 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 such net asset value per share 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"), an Adviser or the Fund shall immediately notify the Company as soon as
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
Advisers 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
Advisers 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. If an
adjustment is necessary
7
to correct a material error 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 Advisers to the Company for
crediting of such amounts to the applicable Contract owners accounts. Upon
notification by an Adviser of any overpayment due to a material error, the
Company shall promptly remit to the Advisers 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 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 appropriate applicable standards, on terms
mutually satisfactory to all parties.
1.11. The parties agree to mutually cooperate with respect to any state
insurance law restriction or requirement applicable to the Fund's investments;
provided, however, that the Fund reserves the right not to implement
restrictions or take other actions required by state insurance law if the Fund
or an Adviser determines that the implementation of the restriction or other
action is not in the best interest of Fund shareholders.
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.
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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 Arizona 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 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) the Fund is and
shall remain registered 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 parties acknowledge that the Fund reserves the right to adopt one
or more plans pursuant to Rule 12b-1 under the 1940 Act and to impose an
asset-based or other charge to finance distribution expenses as permitted by
applicable law and regulation. The Fund and the Advisers 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 Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
9
2.7. Each Adviser 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 any applicable state and federal securities laws.
2.8. Each 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.
2.9. The Fund and the Advisers 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 Advisers 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.
2.11 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
10
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 Distributors and the Advisers 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. 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
every effort to continue to meet such definitional requirements, and it will
notify the Fund, the Distributors and the Advisers immediately upon having a
reasonable basis for believing that such requirements have ceased to be met or
that they might not be met in the future. 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.
2.12 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.
2.13 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.
2.14 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 to be treated in accordance with Article I of
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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 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.
2.15. 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 ("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.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. At least annually, an 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 A
hereof. If requested by the Company in lieu thereof, an Adviser, a Distributor
or the Fund shall provide such documentation (including an
12
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, a Distributor and/or an Adviser shall provide
the Company with copies of the Fund's SAI in such quantities, with expenses to
be borne in accordance with Schedule A hereof, as the Company may reasonably
require to permit timely distribution thereof to Contract owners. An Adviser, a
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, a Distributor and/or an 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 A 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 of the prospectus or SAI for the Fund. It is also
understood and agreed that, except with respect to information regarding the
Fund, the Distributors, the Advisers or the Portfolios provided in writing by
the Fund, a Distributor or an Adviser, neither the Fund, the Distributors nor
the Advisers 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;
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(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 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 not give any information or make any
representations or statements on behalf of the Fund 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 shares, as
the same may be amended or supplemented from time to time, or in
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sales literature or other promotional material approved by the Fund, a
Distributor or an Adviser, except with the permission of the Fund, a Distributor
or an Adviser.
4.2. The Fund, the Distributors and the Advisers shall not give any
information or make any representations on behalf of the Company or concerning
the Company, the Accounts, or the Contracts other than the information or
representations contained in a registration statement, 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.
4.3. 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 0000 Xxx.
4.4. 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 agencies, 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.
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ARTICLE V. Fees and Expenses
5.1. The Fund, the Distributors and the Advisers 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, a Distributor or an Adviser under this
Agreement; provided, however, (a) the parties will bear their own expenses as
reflected in Schedule A 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 Distributors and the Advisers 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 Section 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, a Distributor or an Adviser shall provide
to the Company a quarterly written diversification report, in the form attached
hereto as Schedule B, which shall show the results of the quarterly Section
817(h) diversification test and include a certification as to whether each
Portfolio complies with the Section 817(h) diversification requirement. The
diversification report shall be provided to the Company within 10 calendar days
of the end of a quarter.
6.2. The Fund, the Distributors and the Advisers 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.
6.3. The Fund, the Distributors and the Advisers represent and warrant
that the Fund and each Portfolio is currently qualified as a Regulated
Investment Company under Subchapter
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M of the Code, and that each Portfolio will maintain such qualification (under
Subchapter M or any successor or similar provisions) as long as this Agreement
is in effect.
6.4. The Fund, a Distributor or an 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
or Subchapter M qualification requirements or might not so comply in the future.
6.5. 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, an Adviser or a 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,
6.2, or 6.3 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).
6.6. 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, a Distributor or an Adviser as a
result of such a failure or alleged failure:
(a) The Company shall promptly notify the Fund, the Distributors
and the Advisers of such assertion or potential claim;
17
(b) The Company shall consult with the Fund, the Distributors and
the Advisers as to how to minimize any liability that may arise as a result of
such failure or alleged failure;
(c) The Company shall use its best efforts to minimize any
liability of the Fund, the Distributors and the Advisers 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 Distributors
and the Advisers (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 Distributors and the
Advisers with such cooperation as the Fund, the Distributors and the Advisers
shall reasonably request (including, without limitation, by permitting the Fund,
the Distributors and the Advisers to review the relevant books and records of
the Company) in order to facilitate review by the Fund, the Distributors and the
Advisers 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
Distributors and the Adviser s(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
Distributors and the Advisers, which shall not be unreasonably withheld;
provided that, the Company shall not be required to appeal any adverse judicial
decision unless the Fund and the Advisers shall have provided an opinion of
independent counsel to the effect that a reasonable
18
basis exists for taking such appeal; and further provided that the Fund, the
Distributors and the Advisers shall bear the costs and expenses, including
reasonable attorney's fees, incurred by the Company in complying with this
clause (f).
ARTICLE VII. Potential Conflicts and Compliance With Mixed and Shared
Funding Exemptive Order
7.1. 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 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
trustees who are not interested persons of the Fund, the Distributor, the
Adviser or any subadviser to any of the
19
Portfolios (the "Independent Directors"), 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 Directors), take whatever steps are necessary to
remedy or eliminate the 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
Directors. 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 Advisers, the
Distributors 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 months
after the Board informs the Company in writing that it has determined that such
decision has created an irreconcilable material conflict; provided, however,
20
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 Directors. 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.
7.6. For purposes of Sections 7.3 through 7.5 of this Agreement, a
majority of the Independent Directors 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 Directors.
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.
21
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Fund,
the Distributors and the Advisers and each of their respective officers and
directors or trustees and each person, if any, who controls the Fund, a
Distributor or an 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 an Adviser, a Distributor or the
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 or sales
literature or other promotional material of the Fund 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
Fund Shares; or
22
(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 2.11 and Section 6.6 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) 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
23
action is brought against the Indemnified Parties, the Company shall be entitled
to participate, at its own 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.
(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 Advisers
(a) Each 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 an 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, a Distributor or an 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 fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this Agreement to
24
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 an Adviser, a 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, a Distributor or an
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 an Adviser, a
Distributor or the Fund; or
(iv) arise as a result of any failure by the Fund, a
Distributor or an 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, a Distributor
or an Adviser in this Agreement or arise out of or result from
any other material breach of this Agreement by an Adviser, a
Distributor or the Fund; or
(vi) arise out of or result from the incorrect or untimely
calculation or reporting by the Fund, a Distributor or an
Adviser of the daily net asset value per share (subject to
Section 1.10 of this Agreement) or dividend or capital gain
distribution rate;
25
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 Advisers specified in Article VI hereof.
(b) The Advisers 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 Advisers 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 Advisers 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 Advisers of any
such claim shall not relieve the Advisers 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
Advisers have been prejudiced by such failure to give notice. In case any such
action is brought against the Indemnified Parties, the Advisers will be entitled
to participate, at their own expense, in the defense thereof. The Advisers also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Advisers to such party of
the Advisers' election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Advisers 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.
26
(d) The Company agrees promptly to notify the Advisers 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 New Jersey,
without regard to the New Jersey conflict of laws provisions.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, 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
(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 shares as the underlying
investment media of the Contracts issued or to be issued by the Company; or
(d) at the option of the Fund, a Distributor or an Adviser in the
event that formal administrative proceedings are instituted against the Company
by the NASD, the SEC, the Insurance Commissioner or like official of any state
or any other regulatory body regarding the
27
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, a Distributor or an 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, a Distributor or an
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, a Distributor or an
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 Section 817(h) diversification requirements or
Subchapter M qualifications 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(a)-(h); 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
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;
28
(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 Section 817(h) of the
Code diversification requirements, the Fund, the Distributors and the Advisers
shall, at the option of the Company, continue to 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 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 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.
29
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:
Pruco Life Insurance Company
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Secretary
If to the Fund:
American Skandia Trust
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Secretary
If to the Advisers:
American Skandia Investment Services, Inc.
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Secretary
Prudential Investments LLC
Gateway Center Three
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Secretary
If to the Distributors:
American Skandia Marketing, Inc.
Xxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Secretary
30
Prudential Investment Management Services LLC
Gateway Center Three
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Secretary
ARTICLE XII. Miscellaneous
12.1. Subject to the requirements of legal process and regulatory
authority, 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. Without limiting the foregoing, no party hereto shall disclose
any information that another party has designated as proprietary.
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.
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
31
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.
12.9. The Company agrees that the obligations assumed by the Fund, the
Distributors and the Advisers pursuant to this Agreement shall be limited in any
case to the Fund, the Distributors and the Advisers and their respective assets
and the Company shall not seek satisfaction of any such obligation from the
shareholders of the Fund, the Distributors or the Advisers, the Directors,
officers, employees or agents of the Fund, a Distributor or an Adviser, or any
of them.
12.10. The Fund, the Distributors and the Advisers 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, the Distributors
nor the Advisers 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.
32
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
Advisers and the Fund, and the Distributors and the Fund.
33
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.
PRUCO LIFE INSURANCE COMPANY,
By its authorized officer,
By: Xxxxxx X. Xxxx
Title: VP and Actuary
AMERICAN SKANDIA TRUST,
By its authorized officer,
By: _____________________________________________
Title: President
AMERICAN SKANDIA INVESTMENT SERVICES, INC.,
By its authorized officer,
By: _____________________________________________
Title: President
PRUDENTIAL INVESTMENTS LLC,
By its authorized officer,
By: _____________________________________________
Title: President
AMERICAN SKANDIA MARKETING, INC.,
By its authorized officer,
By: _____________________________________________
Title: President
34
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC,
By its authorized officer,
By: ____________________________
Title: President
35
SCHEDULE A
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. Certain Fund expenses are paid
through the fee paid to the Administrator under the Administration Agreement.
PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR
ITEM FUNCTION COORDINATION EXPENSE
---------------------- ------------------------- --------------------- ---------------------
Mutual Fund Prospectus Printing of combined Company Inforce - Fund
prospectuses Prospective - Company
Distribution (including Company Fund
postage) to New and
Inforce Clients
Distribution (including Company Company
postage) to Prospective
Clients
Product Prospectus Printing and Distribution Company Company
for Inforce and
Prospective Clients
Mutual Fund Prospectus If Required by Fund, Fund, Distributors or Fund, Distributors or
Update & Distribution Distributor or Adviser Advisers Advisers
If Required by Company Company (Fund, Company
Distributors or Advisers
to provide Company with
document in PDF format)
36
PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR
ITEM FUNCTION COORDINATION EXPENSE
--------------------------- ------------------------- ---------------------- ---------------------
Product Prospectus Update & If Required by Fund, Company Fund, Distributors or
Distribution Distributors or Advisers Advisers
If Required by Company Company Company
Mutual Fund SAI Printing Fund, Distributors or Fund, Distributors or
Advisers Advisers
Distribution (including Party who receives the Party who receives the
postage) request request
Product SAI Printing Company Company
Distribution Company Company
Proxy Material for Mutual Printing if proxy Fund, Distributors or Fund, Distributors or
Fund required by Law Advisers Advisers
Distribution (including Company Fund, Distributors or
labor) if proxy required Advisers
by Law
Printing Company Company
& distribution if
required by Company
Mutual Fund Annual & Printing of reports Fund, Distributors or Fund, Distributors or
Semi-Annual Report Advisers Advisers
Distribution Company Fund, Distributors or
Advisers
Other communication to New If Required by the Fund, Company Distributors or Advisers
and Prospective clients Distributors or Advisers
If Required by Company Company Company
37
PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR
ITEM FUNCTION COORDINATION EXPENSE
-------------------------- ------------------------ --------------------- ---------------------
Other communication to Distribution (including Company Fund, Distributors or
inforce labor and printing) if Advisers
required by the Fund,
Distributors or Advisers
Distribution (including Company Company
labor and printing) if
required by Company
Operations of the Fund All operations and Fund, Distributors or Fund or Advisers
related expenses, Advisers
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 Accounts Federal registration of Company Company
units of separate account
(24f-2 fees)
38
SCHEDULE B
DIVERSIFICATION COMPLIANCE REPORT AND CERTIFICATION
Name of fund:
Total Market Value as of _____________ ___________________
Four Largest Cumulative % of I.R.C. Limitations
Investments Market Value as of Assets Greater than
--------------- ------------------ -------------------- -------------------
1
2
3
4
5
Total Assets _______________________
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.
ALTERNATE TEST
If the alternative test under IRC Section 851 is used, those testing results
should be attached.
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
39