FUND PARTICIPATION AGREEMENT
GENWORTH LIFE INSURANCE COMPANY OF NEW YORK,
THE PRUDENTIAL SERIES FUND,
PRUDENTIAL INVESTMENTS LLC,
AND
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
JANUARY 1, 2006
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares 4
ARTICLE II. Representations and Warranties 8
ARTICLE III. Prospectuses and Proxy Statements; Voting 13
ARTICLE IV. Sales Material and Information 15
ARTICLE V. Fees and Expenses 17
ARTICLE VI. Diversification and Qualification 17
ARTICLE VII. Potential Conflicts and Compliance With
Mixed and Shared Funding Exemptive Order 20
ARTICLE VIII. Indemnification 23
ARTICLE IX. Applicable Law 28
ARTICLE X. Termination 28
ARTICLE XI. Notices 31
ARTICLE XII. Miscellaneous 32
SCHEDULE A Contracts 36
SCHEDULE B Portfolios 37
SCHEDULE C Expenses 38
SCHEDULE D Diversification Compliance Certification 41
FUND PARTICIPATION AGREEMENT
Among
GENWORTH LIFE INSURANCE COMPANY OF NEW YORK,
THE PRUDENTIAL SERIES FUND,
PRUDENTIAL INVESTMENTS LLC,
and
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
THIS AGREEMENT, made and entered into as of this 1st day of January, 2006,
by and among GENWORTH LIFE INSURANCE COMPANY OF NEW YORK (the "Company"), a New
York life insurance company, on its own behalf and on behalf of its separate
accounts (the "Accounts"); THE PRUDENTIAL SERIES FUND, an open-end management
investment company organized under the laws of Delaware (the "Fund"); PRUDENTIAL
INVESTMENTS LLC (the "Adviser"), a New York limited liability company; and
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC (the "Distributor"), a Delaware
limited liability company.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and/or variable annuity
contracts (collectively, the "Variable Insurance Products") to be offered by
insurance companies (the "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
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WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (the "SEC"), dated March 5, 1999 (File No. IC-23728) (the "Mixed and
Shared Funding Exemptive Order"), granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts exemptions from
the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended (hereinafter the "1940 Act"), and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Fund to be sold to and held by variable annuity and variable life
insurance separate accounts of life insurance companies that may or may not be
affiliated with one another and qualified pension and retirement plans
("Qualified Plans"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolio(s) are registered under
the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended, (the "1934 Act") and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Company has issued and plans to continue to issue certain
variable life insurance policies and/or variable annuity contracts supported
wholly or partially by the Accounts (the "Contracts"); and such Contracts are
listed in Schedule A attached hereto and incorporated herein by reference, as
such schedule may be amended from time to time by mutual written agreement of
the parties; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company under the insurance laws of the State of New York, to set aside and
invest assets attributable to the Contracts; and
3
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to continue to purchase shares in the
Portfolios listed on Schedule B attached hereto and incorporated herein by
reference, as such schedule may be amended from time to time by mutual written
agreement of the parties (the "Portfolios"), on behalf of the Accounts to fund
the Contracts, and the Fund is authorized to sell such shares to unit investment
trusts such as the Accounts at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company also intends to continue to purchase shares in other
open-end investment companies or series thereof not affiliated with the Fund
(the "Unaffiliated Funds") on behalf of the Accounts to fund the Contracts.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Distributor and the Adviser agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1. The Fund agrees to sell to the Company those shares of the Portfolios
which the Account orders, executing such orders on each Business Day at the net
asset value next computed after receipt by the Fund or its designee of the order
for the shares of the Portfolios. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders and receipt by such
designee shall constitute receipt by the Fund, provided that the Fund receives
notice of any such order by 10:00 a.m. Eastern time on the next following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange (the "NYSE") is open for trading and on which the Portfolio calculates
its net asset value pursuant to the rules of the SEC as described in the
then-current registration statement of the Fund on Form N-1A. "Valuation Time"
shall mean the time as of which the Fund calculates net asset value for the
shares of the Portfolios on the relevant Business Day.
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1.2. The Fund agrees to make shares of the Portfolios available for
purchase at the applicable net asset value per share by the Company and the
Accounts on those days on which the Fund calculates its Portfolios' net asset
value pursuant to rules of the SEC, and the Fund shall calculate such net asset
value on each day which the NYSE is open for trading. Notwithstanding the
foregoing, the Fund may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Fund acting in good faith, necessary or appropriate in
the best interests of the shareholders of such Portfolio. All orders accepted by
the Company shall be subject to the terms of the then current prospectus of the
Fund. The Company shall use its best efforts, and shall reasonably cooperate
with, the Fund to enforce stated prospectus policies regarding transactions in
Portfolio shares. The Company acknowledges that orders for Portfolio shares
accepted by it in violation of the stated policies of the Fund as set forth in
the Fund's then-current prospectus may be subsequently revoked or cancelled by
the Fund and that the Fund shall not be responsible for any losses incurred by
the Company or the Contract owner as a result of such cancellation. In addition,
the Company acknowledges that the Fund has the right to refuse any purchase
order for any reason, particularly if the Fund determines that a Portfolio would
be unable to invest the money effectively in accordance with its investment
policies or would otherwise be adversely affected due to the size of the
transaction, frequency of trading, or other factors.
1.3. The Fund will not sell shares of the Portfolios to any other
Participating Insurance Company separate account unless an agreement containing
provisions the substance of which are the same as Sections 2.1, 2.2 (except with
respect to designation of applicable law), 3.5, 3.6, 3.7, and Article VII of
this Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on the Company's request, any full
or fractional shares of the Fund held by the Company, executing such requests on
each Business Day at the net asset value next computed after receipt by the Fund
or its designee of the request for redemption. For purposes of this Section 1.4,
the Company shall be the designee of the Fund for receipt of requests for
redemption and receipt by such designee shall constitute receipt by the
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Fund, provided that the Fund receives notice of any such request for redemption
by 10:00 a.m. Eastern time on the next following Business Day.
1.5. The parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
Participating Insurance Companies (subject to Section 1.3) and the cash value of
the Contracts may be invested in other investment companies.
1.6. The Company shall pay for Fund shares by 3:00 p.m. Eastern time on the
next Business Day after an order to purchase Fund shares is received in
accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire and/or by a credit for any shares redeemed the
same day as the purchase.
1.7. The Fund shall pay and transmit the proceeds of redemptions of Fund
shares by 11:00 a.m. Eastern Time on the next Business Day after a redemption
order is received in accordance with Section 1.4 hereof; provided, however, that
the Fund may delay payment in extraordinary circumstances to the extent
permitted under Section 22(e) of the 1940 Act. Payment shall be in federal funds
transmitted by wire and/or a credit for any shares purchased the same day as the
redemption.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or the Accounts. Shares
purchased from the Fund will be recorded in an appropriate title for the
relevant Account or the relevant sub-account of an Account.
1.9. The Fund shall furnish same day notice (by electronic communication or
telephone, followed by electronic confirmation) to the Company of any income,
dividends or capital gain distributions payable on a Portfolio's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
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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 the net asset value per share for each Portfolio available by 6:00 p.m.
Eastern time. In the event of an error in the computation of a Portfolio's net
asset value per share ("NAV") or any dividend or capital gain distribution
(each, a "pricing error"), the Adviser or the Fund shall notify the Company as
soon as reasonably possible after discovery of the error. Such notification may
be verbal, but shall be confirmed promptly in writing. A pricing error shall be
corrected as follows: (a) if the pricing error results in a difference between
the erroneous NAV and the correct NAV of less than $0.01 per share, then no
corrective action need be taken; (b) if the pricing error results in a
difference between the erroneous NAV and the correct NAV equal to or greater
than $0.01 per share, but less than 1/2 of 1% of the Portfolio's NAV at the time
of the error, then the Adviser shall reimburse the Portfolio for any loss, after
taking into consideration any positive effect of such error; however, no
adjustments to Contract owner accounts need be made; and (c) if the pricing
error results in a difference between the erroneous NAV and the correct NAV
equal to or greater than 1/2 of 1% of the Portfolio's NAV at the time of the
error, then the Adviser shall reimburse the Portfolio for any loss (without
taking into consideration any positive effect of such error) and shall reimburse
the Company for the costs of adjustments made to correct Contract owner accounts
in accordance with the provisions of Schedule C. If an adjustment is necessary
to correct a material error (as described below) which has caused Contract
owners to receive less than the amount to which they are entitled, the number of
shares of the applicable sub-account of such Contract owners will be adjusted
and the amount of any underpayments shall be credited by the Adviser to the
Company for crediting of such amounts to the applicable sub-accounts of such
Contract owners. Upon notification by the Adviser of any overpayment due to a
material error, the Company shall promptly remit to the Adviser any overpayment
that has not been paid to Contract owners. In no event shall the Company be
liable to Contract owners for any such adjustments or underpayment
7
amounts. A pricing error within categories (b) or (c) above shall be deemed to
be "materially incorrect" or constitute a "material error" for purposes of this
Agreement. The standards set forth in this Section 1.10 are based on the
parties' understanding of the views expressed by the staff of the SEC as of the
date of this Agreement. In the event the views of the SEC staff are later
modified or superseded by SEC or judicial interpretation, the parties shall
amend the foregoing provisions of this Agreement to comport with the
then-currently acceptable standards, on terms mutually satisfactory to all
parties.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that: (a) the securities deemed to
be issued by the Accounts under the Contracts are or will be registered under
the 1933 Act, or are not so registered in proper reliance upon an exemption from
such registration requirements; (b) the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws;
and (c) the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements.
2.2. The Company represents and warrants that: (a) it is an insurance
company duly organized and in good standing under applicable law; (b) it has
legally and validly established each Account prior to any issuance or sale of
units thereof as a segregated asset account under New York law; and (c) it has
registered each Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account for the
Contracts, and will maintain such registration for so long as any Contracts are
outstanding as required by applicable law or, alternatively, the Company has not
registered one or more Accounts in proper reliance upon an exclusion from such
registration requirements.
2.3. The Fund represents and warrants that: (a) the Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act; (b) the Fund
shares sold pursuant to this Agreement shall be duly authorized for issuance and
sold in compliance with all applicable federal securities laws including,
without limitation, the 1933 Act, the 1934 Act, and the 1940
8
Act; (c) the Fund is and shall remain a registered investment company under the
1940 Act; and (d) the Fund shall amend the registration statement for its shares
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares.
2.4. The Fund represents and warrants that it has adopted a plan pursuant
to Rule 12b-1 under the 1940 Act for its Class II shares. The parties
acknowledge that the Fund reserves the right to modify its existing plan or to
adopt additional plans pursuant to Rule 12b-1 under the 1940 Act (including with
respect to its Class I shares) and to impose an asset-based or other charge to
finance distribution expenses as permitted by applicable law and regulation. The
Fund, the Distributor and the Adviser agree to comply with applicable provisions
and SEC interpretation of the 1940 Act with respect to any distribution plan.
2.5. The Fund represents and warrants that it shall register and qualify
the shares for sale in accordance with the laws of the various states if and to
the extent required by applicable law.
2.6. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the State of Delaware and that it does and
will comply in all material respects with the 1940 Act.
2.7. The Adviser represents and warrants that it is and shall remain duly
registered as an investment adviser under all applicable federal and state
securities laws and that it shall perform its obligations for the Fund in
compliance in all material respects with any applicable state and federal
securities laws.
2.8. The Distributor represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the Fund in compliance in all material
respects with the laws of any applicable state and federal securities laws.
9
2.9. The Fund and the Adviser represent and warrant that all of their
respective officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are, and shall
continue to be at all times, covered by one or more blanket fidelity bonds or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid bonds shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company.
2.10. The Fund and the Adviser represent, warrant, and covenant: (i) that
each Portfolio shall be classified as a "partnership" or "disregarded entity"
for federal income tax purposes and shall at all times maintain such
classification; (ii) to notify the Company upon having a reasonable basis for
believing that the Fund or any Portfolio has ceased to comply, or might not so
comply, with the aforesaid classification as a "partnership" or "disregarded
entity," and (iii) that each Portfolio shall not be a "publicly-traded
partnership" within the meaning of the Code and the regulations thereunder.
2.11. The Fund and the Adviser represent and warrant that they will provide
the Company with as much advance notice as is reasonably practicable of any
material change affecting the Portfolios (including, but not limited to, any
material change in the registration statement or prospectus affecting the
Portfolios) and any proxy solicitation affecting the Portfolios and consult with
the Company in order to implement any such change in an orderly manner,
recognizing the expenses of changes and attempting to minimize such expenses by
implementing them in conjunction with regular annual updates of the prospectus
for the Contracts.
2.12. The Company represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986, as
amended (the "Code"), that the Contracts are currently and at the time of
issuance will be treated as annuity contracts or life insurance policies under
applicable provisions of the Code, and that it will make every effort to
maintain such treatment and that it will notify the Fund, the Distributor and
the Adviser
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immediately upon having a reasonable basis for believing that the Contracts have
ceased to be so treated or that they may not be so treated in the future. In
addition, the Company represents and warrants that each Account is a "segregated
asset account" and that interests in each Account are offered exclusively
through the purchase of or transfer into a "variable contract" within the
meaning of such terms under Section 817 of the Code and the regulations
thereunder. The Company will use best efforts to continue to meet such
definitional requirements, and it will notify the Fund, the Distributor and the
Adviser immediately upon having a reasonable basis for believing that such
requirements have ceased to be met or that they may not be met in the future.
The Company represents and warrants that it will not purchase Fund shares with
assets derived from tax-qualified retirement plans except, indirectly, through
Contracts purchased in connection with such plans.
2.13 The Company represents and warrants that it is currently in
compliance, and will remain in compliance, with all applicable anti-money
laundering laws, regulations, and requirements. In addition, the Company
represents and warrants that it has adopted and implemented policies and
procedures reasonably designed to achieve compliance with the applicable
requirements administered by the Office of Foreign Assets Control ("OFAC") of
the U.S. Department of the Treasury.
2.14 The Company represents and warrants that it is currently in
compliance, and will remain in compliance, with all applicable laws, rules and
regulations relating to consumer privacy, including, but not limited to,
Regulation S-P.
2.15 The Company represents and warrants that it has adopted, and will at
all times during the term of this Agreement maintain, reasonable and appropriate
procedures ("Late Trading Procedures") designed to ensure that any and all
orders relating to the purchase, sale or exchange of Fund shares communicated to
the Fund are treated in accordance with Article I of this Agreement as having
been received on a Business Day have been received by the Valuation Time on such
Business Day and were not modified after the Valuation Time, and that all orders
received from Contract owners but not rescinded by the Valuation Time were
communicated to
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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.
2.16. The Company represents and warrants that it has adopted, and will at
all times during the term of this Agreement maintain, reasonable and appropriate
procedures ("Market Timing Procedures") designed to minimize any adverse impact
on other Fund investors due to excessive trading. The Company agrees to provide
the Fund or its designee with a copy of the Market Timing Procedures and such
certifications and representations regarding the Market Timing Procedures as the
Fund or its designee may reasonably request. The Company will promptly notify
the Fund in writing of any material change to the Market Timing Procedures. The
parties agree to cooperate in light of any conflict between the Market Timing
Procedures and actions taken or policies adopted by the Fund designed to
minimize any adverse impact on other Fund investors due to excessive trading.
2.17. In accordance with Rule 22c-2(a)(2) under the 1940 Act, the Company
shall provide, promptly upon request by the Fund, the Taxpayer Identification
Number of all shareholders that purchased, redeemed, transferred, or exchanged
shares held through an account with the Company, and the amount and dates of
such shareholder purchases, redemptions, transfers and exchanges; provided,
however, that the Company shall not undertake any activity, including the
provision of Contract owner names or other identifying information, that will
cause it to violate any federal or state law, rule or regulation concerning the
privacy of owners of the Contracts.
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2.18 The Fund, the Adviser and the Distributor make no representation as to
whether any aspect of the Fund's operations (including, but not limited to, fees
and expenses and investment policies) complies with the insurance laws or
regulations of the various states.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. At least annually, the Adviser or Distributor shall provide the
Company with as many copies of the Fund's current prospectus as the Company may
reasonably request, with expenses to be borne in accordance with Schedule C
hereof. If requested by the Company in lieu thereof, the Adviser, Distributor or
Fund shall provide such documentation (including an electronic version of the
current prospectus) and other assistance as is reasonably necessary in order for
the Company once each year (or more frequently if the prospectus for the Fund is
amended) to have the prospectus for the Contracts and the prospectus for the
Fund printed together in one document.
3.2. If applicable state or federal laws or regulations require that the
Statement of Additional Information ("SAI") for the Fund be distributed to all
Contract owners, then the Fund, Distributor and/or the Adviser shall provide the
Company with copies of the Fund's SAI in such quantities, with expenses to be
borne in accordance with Schedule C hereof, as the Company may reasonably
require to permit timely distribution thereof to Contract owners. The Adviser,
the Distributor and/or the Fund shall also provide an SAI to any Contract owner
or prospective owner who requests such SAI from the Fund.
3.3. The Fund, the Distributor and/or the Adviser shall provide the Company
with copies of the Fund's proxy material, reports to shareholders and other
communications to shareholders in such quantity, with expenses to be borne in
accordance with Schedule C hereof, as the Company may reasonably require to
permit timely distribution thereof to Contract owners.
3.4. It is understood and agreed that, except with respect to information
regarding the Company provided in writing by that party, the Company shall not
be responsible for the content
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of the prospectus or SAI for the Fund. It is also understood and agreed that,
except with respect to information regarding the Fund, the Distributor, the
Adviser or the Portfolios provided in writing by the Fund, the Distributor or
the Adviser, neither the Fund, the Distributor nor Adviser are responsible for
the content of the prospectus or SAI for the Contracts.
3.5. If and to the extent required by law the Company shall:
(a) solicit voting instructions from Contract owners;
(b) vote the Portfolio shares held in the Accounts in accordance with
instructions received from Contract owners;
(c) vote Portfolio shares held in the Accounts for which no
instructions have been received in the same proportion as Portfolio shares for
which instructions have been received from Contract owners, so long as and to
the extent that the SEC continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners; and
(d) vote Portfolio shares held in its general account or otherwise in
the same proportion as Portfolio shares for which instructions have been
received from Contract owners, so long as and to the extent that the SEC
continues to interpret the 1940 Act to require such voting by the insurance
company. The Company reserves the right to vote Fund shares in its own right, to
the extent permitted by law.
3.6. The Company shall be responsible for assuring that each of its
separate accounts holding shares of a Portfolio calculates voting privileges as
directed by the Fund and agreed to by the Company and the Fund. The Fund agrees
to promptly notify the Company of any changes of interpretations or amendments
of the Mixed and Shared Funding Exemptive Order.
3.7. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the 1940
Act not to require such meetings) or, as the Fund currently intends, comply with
Section 16(c) of the 1940 Act (although the Fund is not one of the
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trusts described in Section 16(c) of that Act) as well as with Sections 16(a)
and, if and when applicable, 16(b). Further, the Fund will act in accordance
with the SEC's interpretation of the requirements of Section 16(a) with respect
to periodic elections of directors or trustees and with whatever rules the SEC
may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, a copy of each piece of sales literature or other promotional
material that the Company develops or proposes to use and in which the Fund (or
a Portfolio thereof), the Adviser or the Distributor is named in connection with
the Contracts, at least five (5) Business Days prior to its use. No such
material shall be used if the Fund or its designee objects to such use within
three (3) Business Days after receipt of such material.
4.2. The Company shall not give any information or make any representations
or statements on behalf of or concerning the Fund, the Portfolios, the Adviser
or the Distributor in connection with the sale of the Contracts other than the
information or representations contained in the registration statement,
including the prospectus or SAI for the Fund, as the same may be amended or
supplemented from time to time, or in sales literature or other promotional
material approved by the Fund, the Distributor or the Adviser, except with the
permission of the Fund, the Distributor or the Adviser.
4.3. The Fund, the Adviser or the Distributor shall furnish, or shall cause
to be furnished, to the Company, a copy of each piece of sales literature or
other promotional material in which the Company and/or its separate account(s)
is named at least five (5) Business Days prior to its use. No such material
shall be used if the Company objects to such use within three (3) Business Days
after receipt of such material.
4.4. The Fund, the Distributor and the Adviser shall not give any
information or make any representations on behalf of the Company or concerning
the Company, the Accounts, or the
15
Contracts other than the information or representations contained in a
registration statement, including the prospectus or SAI for the Contracts, as
the same may be amended or supplemented from time to time, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5. The Fund or its designees will provide to the Company at least one
complete copy of all registration statements, prospectuses, SAIs, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Fund within a reasonable period of time following the filing of
such document(s) with the SEC or NASD or other regulatory authorities.
4.6. The Company will provide to the Fund or its designees at least one
complete copy of all registration statements, prospectuses, SAIs, reports,
solicitations for voting instructions, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Contracts or the Accounts,
within a reasonable period of time following the filing of such document(s) with
the SEC, NASD, or other regulatory authority.
4.7. For purposes of Articles IV and VIII, the phrase "sales literature and
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media; E.G.,
on-line networks such as the Internet or other electronic media), sales
literature (I.E., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and shareholder reports, and proxy
materials (including solicitations for voting instructions) and any other
material constituting sales literature or advertising under the NASD rules, the
1933 Act or the 1940 Act.
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4.8. At the request of any party to this Agreement, each other party will
make available to the other party's independent auditors and/or representatives
of the appropriate regulatory authorities, all records, data and access to
operating procedures that may be reasonably requested in connection with
compliance and regulatory requirements related to this Agreement or any party's
obligations under this Agreement.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund, the Distributor and the Adviser shall pay no fee or other
compensation to the Company under this Agreement, and the Company shall pay no
fee or other compensation to the Fund, the Distributor or Adviser under this
Agreement; provided, however, (a) the parties will bear their own expenses as
reflected in Schedule C and other provisions of this Agreement, and (b) the
parties may enter into other agreements relating to the Company's investment in
the Fund, including services agreements.
ARTICLE VI. DIVERSIFICATION AND QUALIFICATION
6.1. The Fund, the Distributor and the Adviser represent and warrant that
the Fund and each Portfolio thereof will at all times comply with Section 817(h)
of the Code and Treasury Regulation 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, the Distributor or the Adviser shall provide to the
Company a quarterly written diversification certification, in the form attached
hereto as Schedule D, as to whether each Portfolio complies with the
diversification requirements of Section 817(h) of the Code.
6.2. The Fund, the Distributor and the Adviser agree that shares of the
Portfolios will be sold only to Participating Insurance Companies and their
separate accounts and to Qualified Plans. No shares of any Portfolio of the Fund
will be sold to the general public.
17
6.3. The Fund, the Distributor or the Adviser will notify the Company
immediately upon having a reasonable basis for believing that the Fund or any
Portfolio has ceased to comply with the aforesaid Section 817(h) diversification
requirements or might not so comply in the future.
6.4. Without in any way limiting the effect of Sections 8.2, 8.3 and 8.4
hereof and without in any way limiting or restricting any other remedies
available to the Company, the Adviser or Distributor will pay all costs
associated with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Fund or any Portfolio to comply with Sections 6.1 or
6.2 hereof, including all costs associated with reasonable and appropriate
corrections or responses to any such failure; such costs may include, but are
not limited to, the costs involved in creating, organizing, and registering a
new investment company as a funding medium for the Contracts and/or the costs of
obtaining whatever regulatory authorizations are required to substitute shares
of another investment company for those of the failed Portfolio (including, but
not limited to, an order pursuant to Section 26(c) of the 1940 Act).
6.5. The Company agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review of the
Company (or, to the Company's knowledge, of any Contract owner) that any
Portfolio has failed to comply with the diversification requirements of Section
817(h) of the Code or the Company otherwise becomes aware of any facts that
could give rise to any claim against the Fund, the Distributor or the Adviser as
a result of such a failure or alleged failure:
(a) The Company shall promptly notify the Fund, the Distributor and
the Adviser of such assertion or potential claim;
(b) The Company shall consult with the Fund, the Distributor and the
Adviser as to how to minimize any liability that may arise as a result of such
failure or alleged failure;
18
(c) The Company shall use its best efforts to minimize any liability
of the Fund, the Distributor and the Adviser resulting from such failure,
including, without limitation, demonstrating, pursuant to Treasury Regulations,
Section 1.817-5(a)(2), to the commissioner of the IRS that such failure was
inadvertent;
(d) Any written materials to be submitted by the Company to the IRS,
any Contract owner or any other claimant in connection with any of the foregoing
proceedings or contests (including, without limitation, any such materials to be
submitted to the IRS pursuant to Treasury Regulations, Section 1.817-5(a)(2))
shall be provided by the Company to the Fund, the Distributor and the Adviser
(together with any supporting information or analysis) within at least two (2)
business days prior to submission;
(e) The Company shall provide the Fund, the Distributor and the
Adviser with such cooperation as the Fund, the Distributor and the Adviser shall
reasonably request (including, without limitation, by permitting the Fund, the
Distributor and the Adviser to review the relevant books and records of the
Company) in order to facilitate the review by the Fund, the Distributor and the
Adviser of any written submissions provided to it or its assessment of the
validity or amount of any claim against it arising from such failure or alleged
failure;
(f) The Company shall not with respect to any claim of the IRS or any
Contract owner that would give rise to a claim against the Fund, the Distributor
and the Adviser (i) compromise or settle any claim, (ii) accept any adjustment
on audit, or (iii) forego any allowable administrative or judicial appeals,
without the express written consent of the Fund, the Distributor and the
Adviser, which shall not be unreasonably withheld; provided that, the Company
shall not be required to appeal any adverse judicial decision unless the Fund,
the Distributor, or the Adviser shall have provided an opinion of independent
counsel to the effect that a reasonable basis exists for taking such appeal; and
further provided that the Fund, the Distributor and the Adviser shall bear the
costs and expenses, including reasonable attorney's fees, incurred by the
Company in complying with this clause (f).
19
ARTICLE VII. POTENTIAL CONFLICTS AND COMPLIANCE WITH MIXED AND SHARED FUNDING
EXEMPTIVE ORDER
7.1. The Fund's Board of Trustees (the "Board") will monitor the Fund for
the existence of any material irreconcilable conflict between the interests of
the Contract owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or regulations,
or a public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio is being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners or by contract owners of different
Participating Insurance Companies; or (f) a decision by a Participating
Insurance Company to disregard the voting instructions of Contract owners. The
Board shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing material conflicts
of which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by the Company to inform the Board whenever Contract owner voting instructions
are to be disregarded. Such responsibilities shall be carried out by the Company
with a view only to the interests of its Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of its
directors who are not interested persons of the Fund, the Distributor, the
Adviser or any subadviser to any of the Portfolios, as defined in Section
2(a)(19) of the 1940 Act (the "Independent Trustees"), that a material
irreconcilable conflict exists, the Company and other Participating Insurance
Companies shall, at their expense and to the extent reasonably practicable (as
determined by a majority of the Independent Trustees), take whatever steps are
necessary to remedy or eliminate the
20
irreconcilable material conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the separate accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio, or submitting the question
whether such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any appropriate
group (I.E., annuity contract owners, life insurance contract owners, or
variable contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected contract owners
the option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment in
the Fund and terminate this Agreement; provided, however, that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the Independent
Trustees. Any such withdrawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of that six-month period the Adviser, the
Distributor and the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six (6)
months after the Board informs the Company in writing that it has determined
that such decision has created an irreconcilable material conflict; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the Independent Trustees. Until the end of the foregoing six-month
period, the Fund shall continue to accept and implement orders by the Company
for the purchase (and redemption) of shares of the Fund.
21
7.6. For purposes of Sections 7.3 through 7.5 of this Agreement, a majority
of the Independent Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Fund be required to establish a new funding medium for the Contracts. The
Company shall not be required by Section 7.3 to establish a new funding medium
for the Contracts if an offer to do so has been declined by vote of a majority
of Contract owners affected by the irreconcilable material conflict. In the
event that the Board determines that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six (6)
months after the Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the Independent Trustees.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.5, 3.6, 3.7, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
22
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
(a) As limited by and in accordance with Section 8.1(b) and 8.1(c)
hereof, the Company agrees to indemnify and hold harmless the Fund, the
Distributor and the Adviser and each of their respective officers and directors
or trustees and each person, if any, who controls the Fund, the Distributor or
the Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, expenses, damages and liabilities (including amounts paid in
settlement with the written consent of the Company) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, expenses, damages or liabilities (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus or SAI covering the
Contracts or contained in the Contracts or sales literature or
other promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, PROVIDED that this
Agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf
of the Adviser, Distributor or Fund for use in the registration
statement or prospectus for the Contracts or in the Contracts or
sales literature or other promotional material (or any amendment
or supplement to any of the foregoing) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or
other promotional material of the Fund not supplied by the
Company or persons under its control) or
23
wrongful conduct of the Company or persons under its control,
with respect to the sale or distribution of the Contracts or Fund
Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature or other
promotional material of the Fund, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if such
a statement or omission was made in reliance upon information
furnished in writing to the Fund by or on behalf of the Company;
or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, including without
limitation Section 2.12 and Section 6.5 hereof.
(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that the Company
has been prejudiced by such failure to give notice. In case any such action is
brought against the Indemnified Parties, the Company shall be entitled to
participate, at
24
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. The
Company shall not be liable under this indemnification provision with respect to
any claim, action, suit, or preceding settled by an Indemnified Party without
the Company's written approval.
(d) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of the
Fund.
8.2. INDEMNIFICATION BY THE ADVISER
(a) The Adviser agrees to indemnify and hold harmless the Company and
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.2) against any and all losses, claims,
expenses, damages, liabilities (including amounts paid in settlement with the
written consent of the Adviser) or litigation (including reasonable legal and
other expenses) to which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
or other promotional material of the Fund prepared by the Fund,
the Distributor or the Adviser (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a
25
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 Adviser, the Distributor
or the Fund by or on behalf of the Company for use in the
registration statement, prospectus or SAI for the Fund or in
sales literature or other promotional material (or any amendment
or supplement to any of the foregoing) or otherwise for use in
connection with the sale of the Contracts or the Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature or
other promotional material for the Contracts not supplied by the
Adviser or persons under its control) or wrongful conduct of the
Fund, the Distributor or the Adviser or persons under their
control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature or other
promotional material covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein
not misleading, if such statement or omission was made in
reliance upon information furnished in writing to the Company by
or on behalf of the Adviser, the Distributor or the Fund; or
(iv) arise as a result of any failure by the Fund, the
Distributor or the Adviser to provide the services and furnish
the materials under the terms of this Agreement (including a
failure, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, the Distributor
or the Adviser in this Agreement or arise out of or result from
any other material breach of this Agreement by the Adviser, the
Distributor or the Fund (including, without limitation, any
material breach, whether unintentional or in good faith or
otherwise, of the representations, warranties, or covenants set
forth in Section 2.10 of this Agreement); or
(vi) arise out of or result from the incorrect or untimely
calculation or reporting by the Fund, the Distributor or the
Adviser of a Portfolio's daily
26
NAV per share (subject to Section 1.10 of this Agreement) or
dividend or capital gain distribution rate.
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Adviser specified in Article VI hereof.
(b) The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason of
such Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
any of the Indemnified Parties.
(c) The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that the Adviser
has been prejudiced by such failure to give notice. In case any such action is
brought against the Indemnified Parties, the Adviser will be entitled to
participate, at its own expense, in the defense thereof. The Adviser also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Adviser to such party of the
Adviser's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Adviser will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
27
The Adviser shall not be liable under this indemnification provision with
respect to any claim, action, suit, or preceding settled by an Indemnified Party
without the Adviser's written approval.
(d) The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Delaware,
without regard to the Delaware conflict of laws provisions.
9.2. This Agreement shall be subject to the provisions of the 1933 Act, the
1934 Act and the 1940 Act, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant (including, but not limited to, the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with respect to
some or all Portfolios, upon sixty (60) days' advance written notice delivered
to the other parties; or
(b) at the option of the Company by written notice to the other
parties with respect to any Portfolio based upon the Company's determination
that shares of such Portfolio are not reasonably available to meet the
requirements of the Contracts; or
28
(c) at the option of the Company by written notice to the other
parties with respect to any Portfolio in the event any of the Portfolio's shares
are not registered, issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such Portfolio as the underlying
investment option of the Contracts issued or to be issued by the Company; or
(d) at the option of the Fund, the Distributor or the Adviser in the
event that formal administrative proceedings are instituted against the Company
by the NASD, the SEC, the insurance commissioner or comparable official of any
state or any other regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, the operation of any Account,
or the purchase of the Fund shares, if, in each case, the Fund, Distributor or
Adviser, as the case may be, reasonably determines in its sole judgment
exercised in good faith, that any such administrative proceedings will have a
material adverse effect upon the ability of the Company to perform its
obligations under this Agreement; or
(e) at the option of the Company in the event that formal
administrative proceedings are instituted against the Fund, the Distributor or
the Adviser by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body, if the Company reasonably determines in
its sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the Fund,
the Distributor or the Adviser to perform their obligations under this
Agreement; or
(f) at the option of the Company by written notice to the Fund with
respect to any Portfolio if the Company reasonably believes that the Portfolio
will fail to meet the diversification requirements of Section 817(h) of the Code
specified in Article VI hereof; or
(g) at the option of any non-defaulting party hereto in the event of a
material breach of this Agreement by any party hereto (the "defaulting party")
other than as described in Section 10.1(b)-(f); provided, that the
non-defaulting party gives written notice thereof to the defaulting party, with
copies of such notice to all other non-defaulting parties, and if such breach
29
shall not have been remedied within thirty (30) days after such written notice
is given, then the non-defaulting party giving such written notice may terminate
this Agreement by giving thirty (30) days written notice of termination to the
defaulting party; or
(h) at any time upon written agreement of all parties to this
Agreement.
10.2. NOTICE REQUIREMENT
No termination of this Agreement shall be effective unless and until the
party terminating this Agreement gives prior written notice to all other parties
of its intent to terminate, which notice shall set forth the basis for the
termination. Furthermore,
(a) in the event any termination is based upon the provisions of
Article VII, or the provisions of Section 10.1(a) of this Agreement, the prior
written notice shall be given in advance of the effective date of termination as
required by those provisions unless such notice period is shortened by mutual
written agreement of the parties;
(b) in the event any termination is based upon the provisions of
Section 10.1(d), 10.1(e) or 10.1(g) of this Agreement, the prior written notice
shall be given at least sixty (60) days before the effective date of
termination; and
(c) in the event any termination is based upon the provisions of
Section 10.1(b), 10.1(c) or 10.1(f), the prior written notice shall be given in
advance of the effective date of termination, which date shall be determined by
the party sending the notice.
10.3. EFFECT OF TERMINATION
Notwithstanding any termination of this Agreement, other than as a result
of a failure by either the Fund or the Company to meet the diversification
requirements of Section 817(h) of the Code, the Fund, the Distributor and the
Adviser shall, at the option of the Company, continue to
30
make available additional shares of the Fund pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.3 shall not apply to any terminations under Article VII of this
Agreement and the effect of such Article VII terminations shall be governed by
Article VII of this Agreement.
10.4. SURVIVING PROVISIONS
Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII of this Agreement to indemnify other parties shall survive
and not be affected by any termination of this Agreement. In addition, with
respect to Existing Contracts, all provisions of this Agreement shall also
survive and not be affected by any termination of this Agreement.
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other parties.
If to the Company:
Genworth Life Insurance Company of New York
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel - Securities
31
If to the Fund:
The Prudential Series Fund
Gateway Center Three
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary
If to the Adviser:
Prudential Investments LLC
Gateway Center Three
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary
If to the Distributor:
Prudential Investment Management Services LLC
Gateway Center Three
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary
ARTICLE XII. MISCELLANEOUS
12.1. Except as required by law, subpoena, court order or regulatory order
or request, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize such
names and addresses and other confidential information without the express
written consent of the affected party until such time as such information may
come into the public domain.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
32
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
12.6. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in a forum jointly
selected by the relevant parties (but if applicable law requires some other
forum, then such other forum) in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
12.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that a transaction that does not result in a change
of actual control or management of a party hereto shall not be deemed to be an
assignment of this Agreement for purposes of this Section 12.8. Any assignment
of this Agreement in violation of this Section 12.8 shall be void.
12.9. The Company agrees that the obligations assumed by the Fund,
Distributor and the Adviser pursuant to this Agreement shall be limited in any
case to the Fund, Distributor and
33
Adviser and their respective assets and the Company shall not seek satisfaction
of any such obligation from the shareholders of the Fund, Distributor or the
Adviser, the Directors, officers, employees or agents of the Fund, Distributor
or Adviser, or any of them.
12.10. The Fund, the Distributor and the Adviser agree that the obligations
assumed by the Company pursuant to this Agreement shall be limited in any case
to the Company and its assets and neither the Fund, Distributor nor Adviser
shall seek satisfaction of any such obligation from the shareholders of the
Company, the directors, officers, employees or agents of the Company, or any of
them.
12.11. No provision of this Agreement may be deemed or construed to modify
or supersede any contractual rights, duties, or indemnifications, as between the
Adviser and the Fund, and the Distributor and the Fund.
12.12. This Agreement supersedes and replaces the predecessor Participation
Agreement among the Company, The Prudential Series Fund, Inc. and other entities
and any amendments thereto.
34
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
GENWORTH LIFE INSURANCE COMPANY OF
NEW YORK
By its authorized officer,
By:
------------------------------------
Title:
THE PRUDENTIAL SERIES FUND
By its authorized officer,
By:
------------------------------------
Title: Vice President
PRUDENTIAL INVESTMENTS LLC
By its authorized officer,
By:
------------------------------------
Title: Executive Vice President
PRUDENTIAL INVESTMENT MANAGEMENT
SERVICES LLC
By its authorized officer,
By:
------------------------------------
Title: President
35
SCHEDULE A
CONTRACTS
SEPARATE ACCOUNT UTILIZING THE PORTFOLIOS
Genworth Life of New York VL Separate Account 1 ESTABLISHED ON MARCH 20, 2000;
RENAMED ON SEPTEMBER 7, 2005
Genworth Life of New York VA Separate Account 1 ESTABLISHED ON APRIL 1, 1996;
RENAMED ON SEPTEMBER 7, 2005
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Accumulator - Flexible Premium Single Life and Joint and Last Survivor Variable
Life Insurance Policy SEC File No. 333-88312
Choice - Flexible Premium Variable Deferred Annuity Contract SEC File No.
333-47016
Selections - Flexible Premium Variable Deferred Annuity Contract SEC File No.
333-97085
SCHEDULE B
PORTFOLIOS
THE PRUDENTIAL SERIES FUND
▇▇▇▇▇▇▇▇ 20/20 Focus Portfolio - Class II Shares
▇▇▇▇▇▇▇▇ Portfolio - Class II Shares
Equity Portfolio - Class II Shares
SP Prudential U.S. Emerging Growth Portfolio - Class II Shares
SP ▇▇▇▇▇▇▇ ▇▇▇▇▇ International Growth Portfolio - Class II Shares
Natural Resources Portfolio - Class II Shares
SCHEDULE C
EXPENSES
The Fund and/or the Distributor and/or Adviser, and the Company will coordinate
the functions and pay the costs of the completing these functions based upon an
allocation of costs in the tables below. Costs shall be allocated to reflect the
Fund's share of the total costs determined according to the number of pages of
the Fund's respective portions of the documents.
PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR
ITEM FUNCTION COORDINATION EXPENSE
------------------------------------------------------------------------------------------------------------------------------------
Mutual Fund Prospectus Printing of prospectuses Company Inforce - Fund
Prospective - Company
Distribution (including postage) to Company Fund
Inforce Clients
Distribution (including postage) to Company Company
Prospective Clients
Product Prospectus Printing and Distribution for Company Company
Inforce and Prospective Clients
Mutual Fund Prospectus Update & If Required by Fund, Distributor or Fund, Distributor or Adviser Fund, Distributor or
Distribution Adviser Adviser
If Required by Company Company (Fund, Distributor or Company
Adviser to provide Company with
document in PDF format)
Product Prospectus Update & If Required by Fund, Distributor or Company Fund, Distributor or
Distribution Adviser Adviser
If Required by Company Company Company
PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR
ITEM FUNCTION COORDINATION EXPENSE
------------------------------------------------------------------------------------------------------------------------------------
Mutual Fund SAI Printing Fund, Distributor or Adviser Fund, Distributor or
Adviser
Distribution (including postage) Party who receives the request Party who receives the
request
Product SAI Printing Company Company
Distribution Company Company
Proxy Material for Mutual Fund Printing if proxy required by Law Fund, Distributor or Adviser Fund, Distributor or
Adviser
Distribution (including labor) if Company Fund, Distributor or
proxy required by Law Adviser
Printing & distribution if required Company Company
by Company
Mutual Fund Annual & Semi-Annual Printing of reports Fund, Distributor or Adviser Fund, Distributor or
Report Adviser
Distribution Company Fund, Distributor or
Adviser
Other communication to New and If Required by the Fund, Distributor Company Distributor or Adviser
Prospective clients or Adviser
If Required by Company Company Company
Other communication to inforce Distribution (including labor and Company Fund, Distributor or
printing) if required by the Fund, Adviser
Distributor or Adviser
Distribution (including labor and Company Company
printing) if required by Company
PARTY RESPONSIBLE FOR PARTY RESPONSIBLE FOR
ITEM FUNCTION COORDINATION EXPENSE
------------------------------------------------------------------------------------------------------------------------------------
Operations of the Fund All operations and related expenses, Fund, Distributor or Adviser Fund or Adviser
including the cost of registration
and qualification of shares, taxes
on the issuance or transfer of
shares, cost of management of the
business affairs of the Fund, and
expenses paid or assumed by the fund
pursuant to any Rule 12b-1 plan
Operations of the Accounts Federal registration of units of Company Company
separate account (24f-2 fees)
SCHEDULE D
Diversification Compliance Certification
Name of Portfolio:
Note: For purposes of diversification testing, all securities of the same
issuer, all interests in the same real property project, and all interests in
the same commodity are each treated as a single investment. In the case of
government securities each government agency or instrumentality is treated as a
separate issuer. See Treas. Reg. 1.817-5 for additional information.
SPECIAL TEST FOR VARIABLE LIFE INSURANCE
Where the only contracts based on the account are life insurance contracts
(i.e., no annuity contracts), an account is adequately diversified to the extent
it is invested in Treasury securities. Treasury securities held through a
custodial arrangement that is treated as a grantor trust (e.g. CATs and TGRs)
will be treated as Treasury securities if substantially all of the assets of the
trust are represented by Treasury securities. Options on Treasury securities are
not considered Treasury securities. Where an account is invested in part in
Treasury securities, revise the above general diversification test percentage
limits by adding to them a product of .5 and the percentage of the value of the
total assets invested in Treasury securities. For example, if an account is 60%
invested in Treasury securities, the percentage limit would be increased by 30%
(0.5 x 60%) and would be applied to the assets of the account other than
Treasury securities.
CERTIFICATION
The undersigned certifies that this Report and Certification, and any related
attachments, have been prepared accurately and provide a true representation of
account assets as of the last day of the quarter indicated above, and that the
fund complies with IRC Section 817(h).
-------------------------------- --------------------
Signed by Date