PARTICIPATION AGREEMENT
Among
XXXXXXXXXXX VARIABLE ACCOUNT FUNDS,
OPPENHEIMERFUNDS INC.
and
PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
THIS AGREEMENT (the "Agreement"), made and entered into as of the 1st day
of August, 2000 by and among Pruco Life Insurance Company of New Jersey
(hereinafter the "Company"), on its own behalf and on behalf of each separate
account of the Company named in Schedule 1 to this Agreement, as may be amended
from time to time by mutual consent (hereinafter collectively the "Accounts"),
Xxxxxxxxxxx Variable Account Funds (hereinafter the "Fund") and
OppenheimerFunds, Inc. (hereinafter the "Adviser").
WHEREAS, the Fund is an open-end management investment company and is
available to act as the investment vehicle for separate accounts now in
existence or to be established at any date hereafter for variable life insurance
policies, variable annuity contracts and other tax-deferred products
(collectively, the "Variable Insurance Products") offered by insurance companies
(hereinafter "Participating Insurance Companies");
WHEREAS the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio", and each representing the
interests in a particular managed pool of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated July 16, 1986 (File No. 812-6324) 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
both affiliated and unaffiliated life insurance companies (hereinafter the
"Mixed and Shared Funding Exemptive Order")
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act");
WHEREAS, the Adviser is duly registered as an investment adviser under
the federal Investment Advisers Act of 1940;
WHEREAS, the Company has registered or will register certain variable
annuity and/or life insurance contracts under the 1933 Act (hereinafter
"Contracts") (unless an exemption from registration is available);
WHEREAS, the Accounts are or will be duly organized, validly existing
segregated asset accounts, established by resolution of the Board of Directors
of the Company, to set aside and invest assets attributable to the aforesaid
variable contracts (the Contract(s) and the Account(s) covered by the Agreement
are specified in Schedule 1 attached hereto, as may be modified by mutual
consent from time to time);
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless an exemption from registration is
available);
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase service shares in the Portfolios
(the Portfolios covered by this Agreement are specified in Schedule 2 attached
hereto as may be modified by mutual consent from time to time), on behalf of the
Accounts to fund the Contracts named in Schedule 1, as may be amended from time
to time by mutual consent, and the Fund is authorized to sell such shares to
unit investment trusts such as the Accounts at net asset value; and
-2-
NOW, THEREFORE, in consideration of their mutual promises, the Fund, the
Adviser and the Company agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Fund agrees to sell to the Company those shares of the Fund
which the Company orders on behalf of the Account, executing such orders on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the order for the shares of the Fund. For purposes of this
Section 1.1, the Company shall be the designee of the Fund for receipt of such
orders from each Account and receipt by such designee shall constitute receipt
by the Fund; provided that the Fund receives written (or facsimile) notice of
such order by 9:30 a.m. New York 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 Fund calculates its net asset value pursuant to the
rules of the SEC.
1.2. The Company shall pay for Fund shares by 2 p.m. New York time on the
next Business Day after it places an order to purchase Fund shares in accordance
with Section 1.1 hereof. Payment shall be in federal funds transmitted by wire
or by a credit for any shares redeemed.
1.3. The Fund agrees to make Fund shares available for purchase at the
applicable net asset value per share by the Company for their separate Accounts
listed in Schedule 1 on those days on which the Fund calculates its net asset
value pursuant to rules of the SEC; provided, however, that the Board of
Trustees of the Fund (hereinafter the "Trustees") 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 Trustees, acting in
good faith and in light of their fiduciary duties under federal and any
applicable state laws, in the best interests of the shareholders of any
Portfolio.
-3-
1.4. The Fund agrees to redeem, upon the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests on a
daily basis 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 written (or facsimile) notice of such request
for redemption by 9:30 a.m. New York time on the next following Business Day.
Payment shall be made within the time period specified in the Fund's prospectus
or statement of additional information, in federal funds transmitted by wire to
the Company's account as designated by the Company in writing from time to time.
1.5. The Company shall pay for the Fund shares on the next Business Day
after an order to purchase shares is made in accordance with the provisions of
Section 1.4 hereof. Payment shall be in federal funds transmitted by wire
pursuant to the instructions of the Fund's treasurer or by a credit for any
shares redeemed.
1.6. The Company agree to purchase and redeem the shares of the
Portfolios named in Schedule 2 offered by the then current prospectus and
statement of additional information of the Fund in accordance with the
provisions of such prospectus and statement of additional information. The
Company shall not permit any person other than a Contract owner to give
instructions to the Company which would require the Company to redeem or
exchange shares of the Fund.
ARTICLE II. SALES MATERIAL, PROSPECTUSES AND OTHER REPORTS
2.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least ten Business Days
prior to its use. No such material shall be used if the Fund or its designee
reasonably object to such use within ten Business Days after receipt of such
material. "Business Day" shall mean any day in which the New York Stock Exchange
is open for
-4-
trading and in which the Fund calculates its net asset value pursuant to the
rules of the Securities and Exchange Commission.
2.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sale literature or other promotional material approved by the Fund or its
designee, except with the permission of the Fund.
2.3. For purposes of this Article II, the phrase "sales literature or
other promotional material" means 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 billboard
or electronic media), and sales literature (such as brochures, circulars, market
letters and form letters), distributed or made generally available to customers
or the public.
2.4. The Fund shall provide a copy of its current prospectus within a
reasonable period of its filing date, and provide other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Fund is supplemented or amended) to have the
prospectus for the Contracts and the Fund's prospectus printed together in one
document (such printing to be at the Company's expense). The Adviser shall be
permitted to review and approve the typeset form of the Fund's Prospectus prior
to such printing.
2.5. The Fund or the Adviser shall provide the Company with either: (i) a
copy of the Fund's proxy material, reports to shareholders, other information
relating to the Fund necessary to prepare financial reports, and other
communications to shareholders for printing and distribution to Contract owners
at the Company's expense, or (ii) camera ready and/or printed copies, if
appropriate, of such material for distribution to Contract owners at the
Company' expense, within a reasonable period of the filing date for definitive
copies of such material. The Adviser shall be
-5-
permitted to review and approve the typeset form of such proxy material,
shareholder reports and communications prior to such printing provided such
materials have been provided within a reasonable period.
ARTICLE III. FEES AND EXPENSES
3.1. The Fund and 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 or Adviser, except as provided herein.
3.2. All expenses incident to performance by each party of its respective
duties under this Agreement shall be paid by that party. The Fund shall see to
it that all its shares are registered and authorized for issuance in accordance
with applicable federal law and, if and to the extent advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, and the preparation of all statements
and notices required by any federal or state law.
3.3. The Company shall bear the expenses of typesetting, printing and
distributing the Fund's prospectus, proxy materials and reports to owners of
Contracts issued by the Company.
3.4. The Fund's general distributor for its service class of shares,
OppenheimerFunds Distributor, Inc., may make payments either to the Company or
at the Company's direction, to any entity providing services to Contract owners
of the Company holding service shares under Policies issued by the Company, for
services with respect to such shares, including without limitation a portion of
the expenses that would otherwise be borne by the Company under Section 3.3
hereof, provided that such payments (i) are in accordance with the terms and
conditions of the Fund's Distribution and Service Plan and Agreement for the
Portfolio and class
-6-
of shares held by such Contract owners, and (ii) are made at the annual rate
authorized by the Fund's Board of Trustees.
3.5 In the event the Fund adds one or more additional Portfolios and the
parties desire to make such Portfolios available to the respective Contract
owners as an underlying investment medium, a new Schedule 1 or an amendment to
this Agreement shall be executed by the parties authorizing the issuance of
shares of the new Portfolios to the particular Account. The amendment may also
provide for the sharing of expenses for the establishment of new Portfolios
among Participating Insurance Companies desiring to invest in such Portfolios
and the provision of funds as the initial investment in the new Portfolios.
ARTICLE IV. POTENTIAL CONFLICTS
4.1. The Board of Trustees of the Fund (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
are being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (f) a decision
by an insurer to disregard the voting instructions of Contract owners. The Board
shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof
4.2. The Company has reviewed a copy of the Mixed and Shared Funding
Exemptive Order, and in particular, has reviewed the conditions to the requested
relief set forth therein. The Company agrees to be bound by the responsibilities
of a participating insurance
-7-
companies as set forth in the Mixed and Shared Funding Exemptive Order,
including without limitation the requirement that the Company 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 in monitoring such
conflicts under the Mixed and Shared Funding Exemptive Order, by providing the
Board in a timely manner 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 disregarded and by confirming in writing, at the Fund's
request, that the Company are unaware of any such potential or existing material
irreconcilable conflicts.
4.3. If it is determined by a majority of the Board, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up to an
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 of
the Fund, 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.
4.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that decision
could conflict with the majority of Contract owner instructions, 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,
-8-
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested members of the Board. 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 the 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.
4.5. 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,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested members of the Board. 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, subject to applicable
regulatory limitation.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested members of the Board 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 4.3 to establish a new
funding medium for Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely 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 particular 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
-9-
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
ARTICLE V. APPLICABLE LAW
5.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
5.2. 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 Securities and
Exchange Commission 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 VI. TERMINATION
6.1 This Agreement shall terminate with respect to some or all
Portfolios:
(a) at the option of any party upon six month's advance written notice
to the other parties;
(b) at the option of the Company to the extent that shares of
Portfolios are not reasonably available to meet the requirements
of its Contracts or are not appropriate funding vehicles for the
Contracts, as determined by the Company reasonably and in good
faith. Prompt notice of the election to terminate for such cause
and an explanation of such cause shall be furnished by the
Company; or
(c) as provided in Article IV
6.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 6.1(a) may be exercised for cause
or for no cause.
ARTICLE VII. NOTICES
-10-
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 to the
other party.
If to the Fund:
Xxxxxxxxxxx Variable Account Funds
0000 X. Xxxxxx Xxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Treasurer
If to the Adviser:
OppenheimerFunds, Inc.
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxx, General Counsel
If to the Company:
Pruco Life Insurance Company
of New Jersey
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Assistant General Counsel
ARTICLE VIII. MISCELLANEOUS
8.1. 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 it may come into the public domain.
-11-
8.2. 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.
8.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.4. 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.
8.5. Each party hereto shall cooperate with, and promptly notify each
other party and all appropriate governmental authorities (including without
limitation the Securities and Exchange Commission, the National Association of
Securities Dealers, Inc. 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.
8.6. 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.
8.7. It is understood by the parties that this Agreement is not an
exclusive arrangement in any respect.
8.8. The Company and the Adviser each understand and agree that the
obligations of the Fund under this Agreement are not binding upon any
shareholder of the Fund personally, but bind only the Fund and the Fund's
property; the Company and the Adviser each represent that it has notice of the
provisions of the Declaration of Trust of the Fund disclaiming shareholder
liability for acts or obligations of the Fund.
8.9. This Agreement shall not be assigned by any party hereto without the
prior written consent of all the parties.
-12-
8.10. This Agreement sets forth the entire agreement between the parties
and supercedes all prior communications, agreements and understandings, oral or
written, between the parties regarding the subject matter hereof
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 as of the date specified
below.
PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
By: /s/ XXXXXX X. XXXXXX
-------------------------------
Title: President
----------------------------
Date: August 7, 2000
-----------------------------
XXXXXXXXXXX VARIABLE ACCOUNT
FUNDS
By: /s/ XXXXXX X. XXXXXXX
-------------------------------
Title: Vice President and
Secretary
Date: July 27, 2000
OPPENHEIMERFUNDS, INC.
By: /s/ XXXXXX X. XXXXXXX
-------------------------------
Title: Executive Vice President
Date: July 27, 2000
-13-
SCHEDULE 1
Separate Accounts Contracts
----------------- ---------
PRUCO LIFE OF NEW JERSEY PRUSELECT III
VARIABLE APPRECIABLE ACCOUNT COLI POLICY
-14-
SCHEDULE 2
PORTFOLIOS OF XXXXXXXXXXX VARIABLE ACCOUNT FUNDS:
XXXXXXXXXXX AGGRESSIVE GROWTH FUND/VA [SERVICE SHARES]
-15-
