FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 18th day of October 1999 (the
"Agreement") by and among American Skandia Life Assurance Corporation, organized
under the laws of the State of Connecticut (the "Company"), on behalf of itself
and each separate account of the Company named in Schedule A to this Agreement,
as may be amended from time to time (each separate account referred to as the
"Separate Account" and collectively as the "Separate Accounts"); ProFunds, an
open-end management investment company organized under the laws of the State of
Delaware, solely on behalf of each of its "VP ProFunds" series named in Schedule
B to this Agreement ("Trust"); and ProFunds Advisors LLC, a limited liability
corporation organized under the laws of the State of Maryland and investment
adviser to the Trust (the "Adviser").
WHEREAS, the Trust engages in business as an open-end diversified, management
investment company and was established for the purpose of serving as the
investment vehicle for separate accounts established for variable life insurance
contracts and variable annuity contracts to be offered by insurance companies
that have entered into participation agreements substantially similar to this
Agreement ("Participating Insurance Companies"), and
WHEREAS, beneficial interests in the Trust are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (each, a "Fund" and collectively, the "Funds"); and
WHEREAS, the Company, as depositor, has established the Separate Accounts to
serve as investment vehicles for certain variable annuity contracts and variable
life insurance policies and funding agreements offered by the Company set forth
on Schedule A (the "Contracts"); and
WHEREAS, the Separate Accounts are duly organized, validly existing segregated
asset accounts, established by resolutions of the Board of Directors of the
Company under the insurance laws of the State of Connecticut, to set aside and
invest assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the VP ProFunds series named in
Schedule B, as such schedule may be amended from time to time ("Designated
Funds") on behalf of the Separate Accounts to fund the Contracts; and NOW,
THEREFORE, in consideration of their mutual promises, the Company, the Trust and
the Adviser agree as follows:
ARTICLE I - SALE OF FUND SHARES
1.1 The Trust agrees to sell to the Company those shares of the Designated
Funds that the Company orders on behalf of each Separate Account,
executing such orders on a daily basis at the net asset value (and with
no sales charges) next computed after receipt and acceptance by the
Trust or its designee of the order for the shares of the Designated
Fund. For purposes of this Section 1.1, the Company will be the
designee of the Trust solely for the purpose of receiving such orders
from each Separate Account and receipt by such designee will constitute
receipt by the Trust, provided that the Company provides the Trust with
a purchase order by 11:00 a.m. Eastern Time on the next following
Business Day. "Business Day" will mean any day on which the New York
Stock Exchange is open for trading and on which the Trust calculates
its net asset value pursuant to the rules of the Securities and
Exchange Commission (the "Commission"). However, to facilitate the
Trust's daily trading practices, the Company has agreed to provide the
Trust with an "estimated trade" and other information relating to the
Designated Funds at certain times prior to the close of business on
each Business Day and again by 8:30 a.m. Eastern Time on the following
Business Day. The Trust may net redemption requests it receives from
the Company under Section 1.3 of this Agreement against purchase orders
it receives from the Company under this Section 1.1.
1.2 The Company will transmit payment for shares of any Designated Fund
purchased by 2:00 p.m. Eastern Time on the same Business Day an order
to purchase such shares is provided to the Trust, in accordance with
Section 1.1. Payment will be made in federal funds transmitted by wire.
If payment is not transmitted by 2:00 p.m. Eastern Time, the Trust may
temporarily advance funds in an amount equal to the amount of federal
funds, to be transmitted by the Company pursuant to this Section 1.2.,
and Designated Fund shares purchased using those funds will be issued.
The Company shall promptly reimburse the Trust for such funds advanced
as well as any reasonable charges, costs, fees, interest or other
expenses incurred by the Trust in connection with any advances to, or
borrowing or overdrafts by, the Trust, or any similar reasonable
expenses incurred by the Trust, as a result of portfolio transactions
effected by the Trust based upon such purchase request. Upon receipt by
the Trust of the purchase payment, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of
the Trust.
1.3 The Trust agrees to redeem, upon the Company's request, any full or
fractional shares of the Designated Fund held by the Company, executing
such requests on a daily basis at the net asset value next computed
after receipt and acceptance by the Trust or its designee. Except as
otherwise provided herein, the Company shall not redeem Trust shares
attributable to the Contracts (as opposed to Trust shares attributable
to the Company's assets held in the Separate Accounts) except (i) as
necessary to implement Contract owner initiated or approved
transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general
application, (iii) upon written notice to the Trust as permitted by an
order of the Commission pursuant to Section 26(b) of the Investment
Company Act of 1940, as amended (the "1940 Act"), or (iv) as permitted
under the terms of the Contract. For purposes of this Section 1.3, the
Company will be the designee of the Trust solely for the purpose of
receiving requests for redemption from each Separate Account and
receipt by such designee will constitute receipt by the Trust, provided
that the Company provides the Trust with a redemption request by 11:00
a.m. Eastern Time on the next following Business Day. However, to
facilitate the Trust's daily trading practices, the Company has agreed
to provide the Trust with an "estimated trade" and other information
relating to the Designated Funds at certain times prior to the close of
business on each Business Day and again by 8:30 a.m. Eastern Time on
the following Business Day. Payment will be made in federal funds
transmitted by wire to the Company's account as designated by the
Company in writing from time to time, by 2:00 p.m. Eastern Time on the
Business Day the Trust receives notice of the redemption request from
the Company. After consulting with the Company, the Trust reserves the
right to delay payment of redemption proceeds, but in no event may such
payment be delayed longer than the period permitted under Section 22(e)
of the ▇▇▇▇ ▇▇▇. The Trust will not bear any responsibility whatsoever
for the proper disbursement or crediting of redemption proceeds, the
Company alone will be responsible for such action. If a redemption
request is received by the Trust after 11:00 a.m. Eastern Time on the
next following Business Day, such redemption request will be considered
to be received on the next following Business Day and payment for
redeemed shares will be made by the Trust on the next following
Business Day after that Business Day. The Trust may net the purchases
orders it receives from the Company under Section 1.1 of this Agreement
against the redemptions orders it receives from the Company under this
Section 1.3.
1.4 The Trust agrees to make shares of the Designated Funds available
indefinitely for purchase at the applicable net asset value per share
by Participating Insurance Companies and their separate accounts on
those days on which the Trust calculates the net asset value of each
Designated Fund pursuant to rules of the Commission; provided, however,
that the Board of Trustees of the Trust (the "Trustees") may refuse to
sell shares of any Designated Fund to any person, or suspend or
terminate the offering of shares of any Designated Fund if such action
is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Trustees, acting in good faith and in
light of their fiduciary duties under federal and any applicable state
laws, necessary in the best interests of the shareholders of such Fund.
1.5 The Company shall not (unless otherwise required by applicable law),
induce Contract owners to change or modify the Trust or change the
Adviser.
1.6 The Company shall not, without prior notice to the Trust, induce
Contract owners to vote on any matter submitted for consideration by
the shareholders of the Trust in a manner other than as recommended by
the Trustees.
1.7 The Trust agrees that shares of the Trust will be sold only to
Participating Insurance Companies and their separate accounts,
qualified pension and retirement plans or such other persons as are
permitted under applicable provisions of the Internal Revenue Code of
1986, as amended, (the "Code"), and regulations promulgated thereunder,
the sale to which will not impair the tax treatment currently afforded
the Contracts. No shares of any Fund will be sold directly to the
general public.
1.8 The Trust will not sell Trust shares to any insurance company or
separate account unless an agreement containing provisions
substantially similar to those in Articles I, III, V, and VII and
Section 2.8 of Article II of this Agreement are in effect to govern
such sales.
1.9 The Company agrees to purchase and redeem the shares of the Designated
Funds offered by the then current prospectus of the Trust in accordance
with the provisions of such prospectus.
1.10 Issuance and transfer of the Trust's shares will be by book entry only.
Share certificates will not be issued to the Company or to any Separate
Account. Purchase and redemption orders for Trust shares will be
recorded in an appropriate title for each Separate Account or the
appropriate sub-account of each Separate Account.
1.11 The Trust will furnish same day notice (by facsimile) to the Company of
the declaration of any income, dividends or capital gain distributions
payable on each Designated Fund's shares. The Company hereby elects to
receive all such income, dividends and distributions as are payable on
the Fund shares in the form of additional shares of that Fund at the
ex-dividend date net asset values. The Company reserves the right to
revoke this election upon prior reasonable written notice to the Trust
and to receive all such dividends and distributions in cash. The Trust
will notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.12 The Trust will make the net asset value per share for each Designated
Fund available to the Company via electronic means on a daily basis as
soon as reasonably practical after the net asset value per share is
calculated and will use its best efforts to make such net asset value
per share available by 6:30 p.m. Eastern Time, each Business Day. If
the Trust provides the Company materially incorrect net asset value per
share information (as determined under SEC guidelines), the Company and
the Trust shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct net asset value per share.
Neither the Trust, any Designated Fund nor the Adviser shall be liable
for any information provided to the Company pursuant to this Agreement
that is based on incorrect information supplied by the Company or any
other Participating Insurance Company to the Trust. Any material error
in the calculation or reporting of net asset value per share, dividend
or capital gain information shall be reported to the Company upon
discovery by the Trust.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 ("1933 Act"), or are exempt
from registration thereunder, and that the Contracts will be issued and
sold in compliance with all applicable federal and state laws. The
Company further represents and warrants that: (i) it is an insurance
company duly organized and in good standing under applicable law; (ii)
it has legally and validly established each Separate Account as a
separate account under Section 38a-433 of the General Statutes of
Connecticut; (iii) each Separate Account is or will be registered as a
unit investment trust in accordance with the provisions of the 1940 Act
to serve as a segregated investment account for the Contracts, or is
excluded from registration thereunder, and will comply in all material
respects with the provisions of the 1940 Act, to the extent applicable;
and (iv) it will maintain such registration for so long as any
Contracts are outstanding. The Company will amend each registration
statement under the 1933 Act for the Contracts and the registration
statement under the 1940 Act for the Separate Accounts from time to
time as required under applicable law in order to effect the continuous
offering of the Contracts or as may otherwise be required by applicable
law. The Company will register and qualify the Contracts for sale in
accordance with the securities laws of the various states as
applicable.
2.2 Subject to the Trust's representations in Article III, the Company
represents and warrants that the Contracts are currently and at all
times will be treated as annuity contracts, life insurance policies
and/or variable contracts (as applicable) under applicable provisions
of the Code, and that it will maintain such treatment and that it will
notify the Trust and the Adviser immediately upon having a reasonable
basis for believing that the Contracts have ceased to be so treated or
that they might not be so treated in the future. The Company agrees
that to the extent any of the Designated Funds are offered as
investment options in a Contract that is a "modified endowment
contract" as that terms is defined in Section 7702A of the Code (or any
successor or similar provision), the prospectus for such Contract shall
identify such Contract as a modified endowment contract.
2.3 The Company represents and warrants to the Trust and the Adviser that
it has a Year 2000 compliance program in existence and that it intends
to be Year 2000 compliant so as to be able perform all of the services
and/or obligations contemplated by or under this Agreement without
interruption. The Company shall immediately notify the Trust and the
Adviser if it determines that it will be unable to perform all of the
services and/or obligations contemplated by or under this Agreement in
a manner that is Year 2000 compliant.
2.4 The Company represents and warrants that it will not purchase shares of
the Designated Fund(s) with assets derived from tax-qualified
retirement plans except, indirectly, through Contracts purchased in
connection with such plans.
2.5 The Trust represents and warrants that shares of the Designated Fund(s)
sold pursuant to this Agreement will be registered under the 1933 Act
and duly authorized for issuance in accordance with applicable law and
that the Trust is and will remain registered as an open-end, management
investment company under the 1940 Act for as long as such shares of the
Designated Fund(s) are sold. The Trust will amend the registration
statement for its shares under the 1933 Act and itself under the 1940
Act from time to time as required under applicable law in order to
effect the continuous offering of its shares.
2.6 The Trust represents that it will use its best efforts to comply with
any applicable state insurance laws or regulations as they may apply to
the investment objectives, policies and restrictions of the Funds, to
the extent specifically requested in writing by the Company. If the
Trust cannot reasonably comply with such state insurance laws or
regulations, it will so notify the Company in writing. The Trust makes
no other representation as to whether any aspect of its operations
(including, but not limited to, fees and expenses, and investment
policies) complies with the insurance laws or regulations of any state.
The Company represents that it will use its best efforts to notify the
Trust of any restrictions imposed by state insurance laws that may
become applicable to the Trust as a result of the Separate Accounts'
investments therein. The Trust and the Adviser agree that they will
furnish the information reasonably required by state insurance laws to
assist the Company in obtaining the authority needed to issue the
Contracts in various states.
2.7 The Trust represents and warrants that, to the extent that it decides
to finance distribution expenses pursuant to Rule 12b-1 under the 1940
Act, the Trust undertakes to have the Trustees, a majority of whom are
not "interested" persons of the Trust, formulate and approve any plan
under Rule 12b-1 to finance distribution expenses. The Trust shall
notify the Company immediately in writing upon determining to finance
distribution expenses pursuant to a plan adopted in accordance with
Rule 12b-1 under the ▇▇▇▇ ▇▇▇.
2.8 The Trust represents that it is lawfully organized and validly existing
under the laws of the State of Delaware and that it does and will
comply in all material respects with applicable provisions of the ▇▇▇▇
▇▇▇.
2.9 The Trust represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Trust are and continue to
be at all times covered by a blanket fidelity bond or similar coverage
for the benefit of the Trust in an amount not less than the minimal
coverage as required currently by Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond
includes coverage for larceny and embezzlement and is issued by a
reputable bonding company.
2.10 The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed by the
Company dealing with the money and/or securities of the Separate
Accounts are covered by a blanket fidelity bond or similar coverage in
an amount not less than $5 million. The aforesaid bond includes
coverage for larceny and embezzlement and is issued by a reputable
bonding company. The Company agrees to hold for the benefit of the
Trust and to pay to the Trust any amounts lost from larceny,
embezzlement or other events covered by the aforesaid bond to the
extent such amounts derive from activities described in this Agreement.
The Company agrees to make all reasonable efforts to see that this bond
or another bond containing these provisions is always in effect, and
agrees to notify the Trust in the event that such coverage no longer
applies.
2.11 The Adviser represents and warrants that: (i) it is duly registered as
an investment adviser under the Investment Advisers Act of 1940, as
amended, and will remain duly registered under all applicable federal
and state securities laws; and (ii) it will perform its obligations for
the Trust in accordance in all material respects with the laws of the
State of Maryland and any applicable state and federal securities laws.
2.12 The Trust and the Adviser represent and warrant to the Company that
each has a Year 2000 compliance program in existence and that each
intends to be Year 2000 compliant so as to be able to perform all of
the services and/or obligations contemplated by or under this Agreement
without interruption. The Trust or the Adviser shall immediately notify
the Company if it determines that it will be unable to perform all of
the services and/or obligations contemplated by or under this Agreement
in a manner that is Year 2000 compliant.
ARTICLE III - FUND COMPLIANCE
3.1 The Trust and the Adviser acknowledge that any failure (whether
intentional or in good faith or otherwise) of any Designated Fund to
comply with the requirements of Subchapter M of the Code or the
diversification requirements of Section 817(h) of the Code may result
in the Contracts not being treated as variable contracts for federal
income tax purposes, which would have adverse tax consequences for
Contract owners and could also adversely affect the Company's corporate
tax liability. The Trust and the Adviser further acknowledge that any
such failure of a Designated Fund may result in costs and expenses
being incurred by the Company in obtaining whatever regulatory
authorizations are required to substitute shares of another investment
company for those of the failed Designated Fund or as well as fees and
expenses of legal counsel and other advisers to the Company and any
federal income taxes, interest or tax penalties incurred by the Company
in connection with any such failure of a Designated Fund.
3.2 The Trust represents and warrants that each Designated Fund is
currently qualified as a Regulated Investment Company under Subchapter
M of the Code, and that it will maintain such qualification (under
Subchapter M or any successor or similar provision) and that the Trust
will notify the Company immediately upon having a reasonable basis for
believing that any Designated Fund has ceased to so qualify or that it
might not so qualify in the future.
3.3 Subject to the Company's representations and warranties in Sections 2.1
and 2.2, the Trust represents that it will at all times invest money
from the Contracts in such a manner as to ensure that the Contracts
will be treated as variable contracts under the Code and the
regulations issued thereunder; including, but not limited to, that each
Designated Fund will at all times comply with Section 817(h) of the
Code and Treasury Regulation 1.817-5, as amended from time to time,
relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts, and with Section 817(d) of the
Code, relating to the definition of a variable contract, and any
amendments or other modifications to such Section or Regulation. The
Trust will notify the Company immediately upon having a reasonable
basis for believing that any Designated Fund has ceased to comply with
the diversification requirements or that any Designated Fund might not
comply with the diversification requirements in the future. In the
event of a breach of this representation by the Trust, the Trust will
take all reasonable steps to adequately diversify the affected
Designated Fund so as to achieve compliance within the grace period
afforded by Treasury Regulation 1.817-5.
3.4 The Adviser agrees to provide the Company with a certificate or
statement indicating compliance by each Fund of the Trust with Section
817(h) of the Code, such certificate or statement to be sent to the
Company no later than thirty (30) days following the end of each
calendar quarter.
ARTICLE IV - PROSPECTUS AND PROXY STATEMENTS; VOTING
4.1 The Trust will provide the Company with as many copies of the current
Trust prospectus and any supplements thereto for the Designated Fund(s)
as the Company may reasonably request for distribution to Contract
owners at the time of Contract fulfillment and confirmation. To the
extent that the Designated Fund(s) are one or more of several Funds of
the Trust, the Trust shall be obligated to provide the Company only
with disclosure related to the Designated Fund(s). The Trust will
provide the copies of said prospectus to the Company or to its mailing
agent. If requested by the Company, in lieu thereof, the Trust or the
Adviser will provide such documentation, including a final copy of a
current prospectus set in type or camera ready or electronic format and
other assistance as is reasonably necessary in order for the Company at
least annually (or more frequently if the Trust prospectus is amended
more frequently) to have the new prospectus for the Contracts and the
Trust's new prospectus printed together. The Trust or the Adviser will,
upon request, provide the Company with a copy of the Trust's prospectus
through electronic means to facilitate the Company's efforts to provide
Trust prospectuses via electronic delivery.
4.2 The Trust's prospectus will state that a Statement of Additional
Information ("SAI") for the Trust is available, and will disclose how
investors may obtain the SAI.
4.3 The Trust will provide the Company or its mailing agent with copies of
its proxy material, if any with respect to the Designated Funds,
reports to shareholders/Contract owners and other communications to
shareholders/ Contract owners in such quantity as the Company will
reasonably require. The Company will distribute this proxy material,
reports and other communications to existing Contract owners.
4.4 If and to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the shares of the Designated Funds held in the Separate
Account in accordance with instructions received from Contract
owners; and
(c) vote shares of the Designated Funds held in the Separate Account
for which no timely instructions have been received in the same
proportion as shares of such Designated Fund for which
instructions have been received from the Company's Contract
owners,
so long as and to the extent that the Commission continues to interpret
the 1940 Act to require pass-through voting privileges for variable
Contract owners. The Company reserves the right to vote shares of the
Designated Funds held in any segregated asset account in its own right,
to the extent permitted by law. The Company will be responsible for
assuring that the Separate Accounts participating in the Trust
calculate voting privileges in a manner consistent with all legal
requirements, including the Proxy Voting Procedures set forth in
Schedule C and the Mixed and Shared Funding Order, as described in
Section 7.1.
4.5 The Trust will comply with all provisions of the 1940 Act requiring
voting by shareholders.
ARTICLE V - SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Trust
or the Adviser, each piece of sales literature or other promotional
material in which the Trust or the Adviser is named, at least ten (10)
business days prior to its use. No such material will be used if the
Trust or the Adviser reasonably objects to such use within five (5)
business days after receipt of such material, or to its continued use.
5.2 The Company will not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust or the
Adviser in connection with the sale of the Contracts other than the
information or representations contained in the registration statement,
prospectus or SAI for shares of Designated Funds, as such registration
statement, prospectus and SAI may be amended or supplemented from time
to time, or in reports or proxy statements for the Designated Funds, or
in published reports for the Designated Funds which are in the public
domain or approved by the Trust or the Adviser for distribution, or in
sales literature or other material provided by the Trust or the
Adviser, except with permission of the Trust or the Adviser. The Trust
or the Adviser, as applicable, agree to respond to any request for
approval on a prompt and timely basis.
5.3 The Trust or the Adviser will furnish, or will cause to be furnished,
to the Company or its designee, each piece of sales literature or other
promotional material in which the Company or its separate account is
named, at least ten (10) business days prior to its use. No such
material will be used if the Company reasonably objects to such use
within five (5) business days after receipt of such material, or to its
continued use.
5.4 The Trust or the Adviser will not give any information or make any
representations or statements on behalf of the Company or concerning
the Company, each Separate Account, or the Contracts other than the
information or representations contained in a registration statement,
prospectus or SAI for the Contracts, as such registration statement,
prospectus and SAI may be amended or supplemented from time to time, or
in published reports for each Separate Account or the Contracts which
are in the public domain or approved by the Company for distribution to
Contract owners, or in sales literature or other material provided by
the Company, except with permission of the Company. The Company agrees
to respond to any request for approval on a prompt and timely basis.
5.5 The Trust will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Trust or shares of the Designated
Funds, within a reasonable time after filing of each such document with
the Commission or the NASD.
5.6 The Company will provide to the Trust at least one complete copy of all
definitive prospectuses, definitive SAI, reports, solicitations for
voting instructions, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Contracts or each
Separate Account, contemporaneously with the filing of each such
document with the Commission or the NASD (except that with respect to
post-effective amendments to such prospectuses and SAIs and sales
literature and promotional material, only those prospectuses and SAIs
and sales literature and promotional material that relate to or refer
to the Trust or the Designated Funds will be provided). In addition,
the Company will provide to the Trust at least one complete copy of (i)
a registration statement that relates to the Contracts or each Separate
Account, containing representative and relevant disclosure concerning
the Trust; and (ii) any post-effective amendments to any registration
statements relating to the Contracts or such Separate Account that
refer to or relate to the Trust. The Company shall promptly notify the
Trust regarding any complaints received from Contract owners pertaining
to the Trust or the Designated Funds.
5.7 For purposes of this Article V, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or
other public media, (i.e., on-line networks such as the Internet or
other electronic messages)), sales literature (i.e., any written
communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market
letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made
generally available to some or all agents or employees, registration
statements, prospectuses, SAIs, shareholder reports, and proxy
materials and any other material constituting sales literature or
advertising under the NASD Conduct Rules, the 1933 Act or the ▇▇▇▇ ▇▇▇.
5.8 The Trust and the Adviser hereby consent to the Company's use of the
names of the ProFunds, ProFunds VP and ProFund Advisors LLC as well as
the names of the Designated Funds set forth in Schedule B of this
Agreement, in connection with marketing the Contracts, subject to the
terms of Sections 5.1 and 5.2 of this Agreement. The Trust and the
Adviser hereby consent to the use of any trademark, trade name, service
▇▇▇▇ or logo used by the Trust and the Adviser, subject to the Trust's
or the Adviser's approval of such use and in accordance with reasonable
requirements of the Trust or the Adviser. Such consent will terminate
with the termination of this Agreement. The Company agrees and
acknowledges that the Trust or the Adviser are the owner of the name,
trademark, trade name, service ▇▇▇▇ and logo customarily used by each
of them and that all use of any designation comprised in whole or in
part of the name, trademark, trade name, service ▇▇▇▇ and logo
customarily used by each of them under this Agreement shall inure to
the benefit of the Trust and/or the Adviser.
5.9 The Trust, the Adviser and the Company agree to adopt and implement
procedures reasonably designed to ensure that information concerning
the Company, the Trust or the Adviser, respectively, and their
respective affiliated companies, that is intended for use only by
brokers or agents selling the Contracts (i.e., information that is not
intended for distribution to Contract owners or prospective Contract
owners) and is properly marked as "Not For Use With The Public" or "For
Broker-Dealer Use Only" and that such information is only so used.
ARTICLES VI - FEES, COSTS AND EXPENSES
6.1 Each party shall, in accordance with the allocation of expenses
specified in this Agreement, reimburse other parties for expenses
initially paid by one party but allocated to another party. In
addition, nothing herein shall prevent the parties hereto from
otherwise agreeing to perform and arranging for appropriate
compensation for (i) for distribution and shareholder-related services
under a plan adopted in accordance with Rule 12b-1 under the 1940 Act
and (ii) other services that are not primarily intended to result in
the sale of shares of the Designated Funds, which are provided to
Contract owners relating to the Designated Funds.
6.2 All expenses incident to performance by the Trust of this Agreement
will be paid by the Trust or the Adviser to the extent permitted by
law. All shares of the Designated Funds will be duly authorized for
issuance and registered in accordance with applicable federal law and,
to the extent deemed advisable by the Trust or the Adviser, qualified
for sale in accordance with applicable state law, prior to sale. The
Trust will bear the expenses for the cost of registration and
qualification of the Trust's shares, including without limitation, the
preparation of and filing with the SEC Form N-1A and Rule 24f-2 Notices
on behalf of the Trust and payment of all applicable registration or
filing fees (if applicable) with respect to shares of the Trust;
preparation and filing of the Trust's prospectus, SAI and registration
statement, proxy materials and reports; typesetting the Trust's
prospectus; typesetting and printing proxy materials and reports to
Contract owners (including the costs of printing a Trust prospectus
that constitutes an annual report); the preparation of all statements
and notices required by any federal or state law; all taxes on the
issuance or transfer of the shares of the Designated Funds; any
expenses permitted to be paid or assumed by the Trust with respect to
the Designated Funds pursuant to a plan, if any, under Rule 12b-1 under
the 1940 Act; and other costs associated with preparation of
prospectuses and SAIs regarding the Designated Funds in electronic or
typeset format for distribution to existing Contract owners.
6.3 The Company shall bear all expenses associated with the registration,
qualification, and filing of the Contracts under applicable federal
securities and state insurance laws; the cost of preparing, printing,
and distributing the Contracts' prospectus and SAI; the cost of
printing the Trust's prospectus for use in connection with offering the
Contracts; and the cost of printing and distributing annual individual
account statements for Contract owners are required by state law.
ARTICLE VII - MIXED & SHARED FUNDING RELIEF
7.1 The Trust represents and warrants that it may rely on an order that was
granted by the Commission granting Participating Insurance Companies
and variable annuity separate accounts and variable life insurance
separate accounts relief from the provisions of Sections 9(a), 13(a),
15(a), and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of
the Designated Funds to be sold to and held by variable annuity
separate accounts and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and
qualified pension and retirement plans outside of the separate account
context (the "Mixed and Shared Funding Order"). The parties to this
Agreement agree that the conditions or undertakings required by the
Mixed and Shared Funding Order that may be imposed on the Company, the
Trust and/or the Adviser by virtue of the receipt of such order by the
Commission: (i) shall apply only upon the sale of shares of the
Designated Funds, to variable life insurance separate accounts (and
then only to the extent required under the 1940 Act); (ii) will be
incorporated herein by reference; and (iii) such parties agree to
comply with such conditions and undertakings to the extent applicable
to each such party notwithstanding any provision of this Agreement to
the contrary.
7.2 The Trustees will monitor the Trust for the existence of any material
irreconcilable conflict among the interests of the Contract owners of
all separate accounts investing in the Designated Funds. A material
irreconcilable conflict may arise for a variety of reasons, including,
but not limited to: (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 Designated Fund are being
managed; (e) a difference in voting instructions given by Participating
Insurance Companies or by variable annuity and variable life insurance
Contract owners; or (f) a decision by an insurer to disregard the
voting instructions of Contract owners. The Trustees will promptly
inform the Company if it determines that a material irreconcilable
conflict exists and the implications thereof. In reliance upon the
Mixed and Shared Funding Order, a majority of the Trustees will consist
of persons who are not "interested" persons of the Trust (i.e.,
"disinterested Trustees").
7.3 The Company will promptly report any potential or existing conflicts of
which it is aware to the Trustees. The Company agrees to assist the
Trustees in carrying out their responsibilities under the Mixed and
Shared Funding Order by promptly providing the Trustees with all
information reasonably necessary for the Trustees to consider any
issues raised. This includes, but is not limited to, an obligation by
the Company to promptly inform the Trustees whenever Contract owner
voting instructions are to be disregarded. The Board will record in its
minutes, or other appropriate records, all reports received by it and
all action with regard to a conflict.
7.4 If it is determined by a majority of the Trustees, or a majority of the
disinterested Trustees of the Board, that a material irreconcilable
conflict exists, the Company and other Participating Insurance
Companies will, at their expense and to the extent reasonably
practicable (as determined by a majority of the disinterested
trustees), take whatever steps are necessary to remedy or eliminate the
material irreconcilable conflict, up to and including: (a) withdrawing
the assets allocable to some or all of the Separate Accounts from the
Designated Fund and reinvesting such assets in a different investment
medium, including (but not limited to) another Designated Fund of the
Trust, or submitting the question whether such segregation should be
submitted to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
variable annuity Contract owners or variable life insurance Contract
owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Contract owners
the option of making such a change; and (b) establishing a new
registered management investment company or managed separate account.
7.5 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions, and such
disregard of voting instructions could conflict with the majority of
Contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the
Company may be required, at the Trust's election, to withdraw the
affected sub-account of the Separate Account's investment in the
Designated Fund and terminate this Agreement with respect to such
sub-account; provided, however, that such withdrawal and termination
will be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the
disinterested Trustees. No charge or penalty will be imposed as a
result of such withdrawal. Any such withdrawal and termination must
take place within six (6) months after the Trust gives written notice
to the Company that this provision is being implemented. Until the end
of such six-month period the Adviser and Trust will, to the extent
permitted by law and the Mixed and Shared Funding Order, continue to
accept and implement orders by the Company for the purchase (and
redemption) of shares of the Trust.
7.6 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with
the decisions of the majority of other state insurance regulators, then
the Company will withdraw the affected sub-account of the Separate
Account's investment in the Designated Fund and terminate this
Agreement with respect to such sub-account; provided, however, that
such withdrawal and termination will be limited to the extent required
by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested Trustees. No charge or penalty will be
imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Trust gives
written notice to the Company that this provision is being implemented.
Until the end of such six-month period the Trust will, to the extent
permitted by law and the Mixed and Shared Funding order, continue to
accept and implement orders by the Company for the purchase (and
redemption) of shares of the Designated Funds.
7.7 For purposes of Sections 7.4 through 7.7 of this Agreement, a majority
of the disinterested Trustees will determine whether any proposed
action adequately remedies any material irreconcilable conflict, but in
no event will the Trust be required to establish a new funding medium
for the Contracts. The Company will not be required by Section 7.4 to
establish a new funding medium for the Contracts if an offer to do so
has been declined by vote of a majority of Contract owners affected by
the material irreconcilable conflict. In the event that the Trustees
determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the
Separate Account's investment in the Designated Funds and terminate
this Agreement within six (6) months after the Trustees inform 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 disinterested Trustees.
7.8 The Company will at least annually submit to the Trustees such reports,
materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon it as delineated
in the Mixed and Shared Funding Order, and said reports, materials and
data will be submitted more frequently if deemed appropriate by the
Trustees.
7.9 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Order) on terms and
conditions materially different from those contained in the Mixed and
Shared Funding Order, then: (a) the Trust and/or the Participating
Insurance Companies, as appropriate, will 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 4.3, 4.4, 4.5, 7.1, 7.2, 7.3, 7.4, 7.5, and 7.6 of this
Agreement will 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.
ARTICLE VIII - INDEMNIFICATION
8.1 Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Trust, the
Adviser, and each of the Trust's or the Adviser's trustees,
directors, officers, employees or agents and each person, if any,
who controls or is associated with the Trust or the Adviser within
the meaning of such terms under the federal securities laws
(collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Company) or actions in respect thereof (including
reasonable legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or litigation in respect thereof) or
settlements:
(1) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement, prospectus or SAI for the
Contracts or contained in the Contracts or sales literature
or other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated or
necessary to make such statements not misleading in light of
the circumstances in which they were made; provided that this
agreement to indemnify will not apply as to any Indemnified
Party if such statement or omission of such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the
Trust or the Adviser for use in the registration statement,
prospectus or SAI for the Contracts or in the Contracts or
sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or shares; or
(2) arise out of or as a result of statements or representations
by the Company (other than statements or representations
contained in the Trust registration statement, prospectus,
SAI or sales literature or other promotional material of the
Trust, or any amendment or supplement to the foregoing, not
supplied by the Company or persons under its control) or
wrongful conduct of the Company or persons under its control,
with respect to the sale or distribution of the Contracts or
shares of the Designated Funds; or
(3) arise out of untrue statement or alleged untrue statement of
a material fact contained in the Trust registration
statement, prospectus, SAI or sales literature or other
promotional material of the Trust (or any amendment or
supplement thereto) or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make such statements not misleading in light
of the circumstances in which they were made, if such a
statement or omission was made in reliance upon and in
conformity with information furnished to the Trust by or on
behalf of the Company or persons under its control; or
(4) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of
this Agreement; or
(5) arise out of any material breach of any representation and/or
warranty made by the Company in this Agreement or arise out
of or result from any other material breach by the Company of
this Agreement; or
(6) arise as a result of the provision by the Company to the
Trust of insufficient or incorrect information regarding the
purchase or sale of shares of the Designated Funds, or the
failure of the Company to provide such information in
accordance with the deadlines stated in Sections 1.1 and 1.3;
except to the extent provided in Sections 8.1(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Company
otherwise may have.
(b) No party will be entitled to indemnification under Section
8.1(a) if such loss, claim, damage, liability or litigation is
due to the willful misfeasance, bad faith, gross negligence,
or reckless disregard in the performance of such party's
duties and obligations under this Agreement.
(c) The Indemnified Parties promptly will notify the Company of
the commencement of any litigation, proceedings, complaints or
litigation by regulatory authorities against them in
connection with the issuance or sale of the Designated Funds
or the Contracts or the operation of the Trust.
8.2 Indemnification by the Adviser
(a) The Adviser agrees to indemnify and hold harmless the Company and
each of its directors, officers, employees or agents and each
person, if any, who controls or is associated with the Company
within the meaning of such terms under the federal securities
(collectively, the "Indemnified Parties" for purposes of this
Section 8.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Adviser) or litigation in respect thereof
(including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or litigation in respect
thereof) or settlements:
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement, prospectus or SAI for the Trust
or sales literature or other promotional material of the
Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact
required to be stated or necessary to make such statements
not misleading in light of the circumstances in which they
were made; provided that this agreement to indemnify will not
apply as to any Indemnified Party if such statement or
omission of such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Adviser or the Trust by or on behalf of the Company for
use in the registration statement, prospectus or SAI for the
Trust or in sales literature generated or approved by the
Adviser on behalf of the Trust (or any amendment or
supplement thereto) or otherwise for use in connection with
the sale of the Contracts or shares of the Designated Funds;
or
(2) arise out of or as a result of statements or representations
by the Adviser (other than statements or representations
contained in the Contracts or in the Contract or Trust
registration statements, prospectuses or statements of
additional information or sales literature or other
promotional material for the Contracts or of the Trust, or
any amendment or supplement to the foregoing, not supplied by
the Adviser or persons under the control of the Adviser) or
wrongful conduct of the Adviser or persons under the control
of the Adviser, with respect to the sale or distribution of
the Contracts or shares of the Designated Funds; or
(3) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, SAI or sales literature or other promotional
material covering the Contracts (or any amendment or
supplement thereto), or the omission or alleged omission to
state therein a material fact required to be stated or
necessary to make such statement or statements not misleading
in light of the circumstances in which they were made, if
such statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on
behalf of the Adviser or persons under the control of the
Adviser; or
(4) arise as a result of any failure by the Adviser to provide
the services and furnish the materials under the terms of
this Agreement; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in this
Agreement, or arise out of or result from any other material
breach of this Agreement by the Adviser, including a failure,
whether intentional or in good faith or otherwise, to comply
with the requirements of Subchapter M of the Code specified
in Article III, Section 3.2 of this Agreement and the
diversification requirements specified in Article III,
Section 3.3 of this Agreement, as described more fully in
Section 8.5 below;
except to the extent provided in Sections 8.2(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Adviser
otherwise may have.
(b) No party will be entitled to indemnification under Section 8.2(a)
if such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such party's duties and
obligations under this Agreement.
(c) The Indemnified Parties will promptly notify the Adviser of the
commencement of any litigation, proceedings, complaints or
litigation by regulatory authorities against them in connection
with the issuance or sale of the Contracts or the operation of the
Separate Accounts.
8.3 Indemnification by the Trust
(a) The Trust agrees to indemnify and hold harmless the Company and
each of its directors, officers, employees or agents and each
person, if any, who controls or is associated with the Company
within the meaning of such terms under the federal securities laws
(collectively, the "Indemnified Parties" for purposes of this
Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Trust) or litigation in respect thereof (including
reasonable legal and other expenses) to which the Indemnified
Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or litigation in respect thereof) or
settlements, are related to the operations of the Trust and:
(1) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this
Agreement; or
(2) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Trust (including a failure, whether intentional
or in good faith or otherwise, to comply with the requirements of
Subchapter M of the Code specified in Article III, Section 3.2 of
this Agreement and the diversification requirements specified in
Article III, Section 3.3 of this Agreement as described more fully
in Section 8.5 below);
(3) arise out of or result from the materially incorrect
calculation or reporting of daily net asset value per share or
dividend or capital gain distribution;
except to the extent provided in Sections 8.3(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Trust
otherwise may have.
(b) No party will be entitled to indemnification under Section 8.3(a)
if such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such party's duties and
obligations under this Agreement.
(c) In no event shall the Trust be liable under the indemnification
provisions contained in this Agreement to any individual or
entity, including without limitation, the Company, or any Contract
owner, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from the failure by the
Company to maintain its segregated asset account under applicable
state law and as a duly registered unit investment trust under the
provisions of the 1940 Act (unless exempt therefrom) or, subject
to compliance by the Designated Funds with the diversification
requirements specified in Article III, the failure by the Company
to maintain its Contracts (with respect to which any Designated
Fund serves as an underlying funding vehicle) as life insurance,
endowment or annuity contracts under applicable provisions of the
Code.
(d) The Indemnified Parties will promptly notify the Trust of the
commencement of any litigation, proceedings, complaints or actions
by regulatory authorities against them in connection with the
issuance or sale of the Contracts or the operation of the Separate
Account.
8.4 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) will not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification
under this Article VIII ("Indemnified Party" for the purpose of this
Section 8.4) if such Indemnified Party will has failed to notify the
Indemnifying Party in accordance with its obligations under Section
8.1(c), 8.2(c) or 8.3(d), whichever is relevant, but failure to notify
the Indemnifying Party of any such claim will not relieve the
Indemnifying Party from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of the indemnification provision of this Article VIII, except
to the extent that the failure to notify results in the failure of
actual notice to the Indemnifying Party and such Indemnifying Party is
damaged solely as a result of failure to give such notice. In case any
such action is brought against the Indemnified Party, the Indemnifying
Party will be entitled to participate, at its own expense, in the
defense thereof. The Indemnifying Party also will be entitled to assume
the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the Indemnifying Party to the Indemnified
Party of the Indemnifying Party's election to assume the defense
thereof, the Indemnified Party will bear the fees and expenses of any
additional counsel retained by it, and the Indemnifying Party will not
be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation, unless: (a) the Indemnifying Party and the Indemnified
Party will have mutually agreed to the retention of such counsel; or
(b) the named parties to any such proceeding (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The Indemnifying Party will not be liable for any settlement of
any proceeding effected without its written consent but if settled with
such consent or if there is a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and
against any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement will be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII will survive
any termination of this Agreement.
8.5 Indemnification for Failure to Comply with Diversification Requirements
The Trust and the Adviser acknowledge that if the Designated Funds fail
(whether intentionally or in good faith or otherwise) to comply with
the diversification requirements specified in Article III, Section 3.3
of this Agreement, the Contracts consequently may not be treated as
variable contracts for federal income tax purposes, which would have
adverse tax consequences for Contract owners and could also adversely
affect the Company's corporate tax liability. Accordingly, without in
any way limiting the effect of Sections 8.3(a) and 8.4 hereof and
without in any way limiting or restricting any other remedies available
to the Company, the Trust and the Adviser will pay on a joint and
several basis all costs associated with or arising out of any failure,
or any anticipated or reasonably foreseeable failure, of any Designated
Fund to comply with Section 3.3 of this Agreement, including all costs
associated with correcting or responding 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 Designated Fund (including
but not limited to an order pursuant to Section 26(b) of the 1940 Act);
reasonable fees and expenses of legal counsel and other advisors to the
Company and any federal income taxes or tax penalties (or "toll
charges" or exactments or amounts paid in settlement) reasonably
incurred by the Company in connection with any such failure or
anticipated or reasonably foreseeable failure. Such indemnification and
reimbursement obligation shall be in addition to any other
indemnification and reimbursement obligations of the Trust, and/or the
Adviser under this Agreement.
ARTICLE IX - APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Maryland.
9.2 This Agreement will be subject to the provisions of the 1933 Act, the
1934 Act and the 1940 Act, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the Commission may grant (including, but not limited to,
the Mixed and Shared Funding Order) and the terms hereof will be
interpreted and construed in accordance therewith.
ARTICLE X - TERMINATION
10.1 This Agreement will terminate automatically in the event of its
assignment, unless made with the written consent of each party, or:
(a) at the option of any party, with or without cause, with respect to
one, some or all of the Designated Funds, upon six (6) month's
advance written notice to the other parties or, if later, upon
receipt of any required exemptive relief or orders from the SEC,
unless otherwise agreed in a separate written agreement among the
parties; or
(b) at the option of the Company, upon written notice to the other
parties, with respect to any Designated Fund if shares of the
Designated Fund are not reasonably available to meet the
requirements of the Contracts as determined in good faith by the
Company; or
(c) at the option of the Company, upon written notice to the other
parties, with respect to any Fund in the event any of the Fund's
shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use
of such shares as the underlying investment media of the Contracts
issued or to be issued by Company; or
(d) at the option of the Trust or the Adviser upon institution of
formal proceedings against the Company by the NASD, the
Commission, the insurance commission of any state or any other
regulatory body, provided that the Trust determines in its
reasonable judgment that any such proceeding would have a material
adverse effect on the Company's ability to perform its obligations
under this Agreement; or
(e) at the option of the Company upon institution of formal
proceedings against the Trust or the Adviser by the NASD, the
Commission or any state securities or insurance commission or any
other regulatory body, provided that the Company determines in its
reasonable judgment that any such proceeding would have a material
adverse effect on the Trust's or the Adviser's ability to perform
its obligations under this Agreement; or
(f) at the option of the Company, if any Designated Fund ceases to
qualify as a Regulated Investment Company under Subchapter M of
the Code, or under any successor or similar provision, or if the
Company reasonably believes that any Designated Fund may fail to
so qualify; or
(g) subject to the Company's compliance with Article II, at the option
of the Company, with respect to any Designated Fund, if any
Designated Fund fails to meet the diversification requirements
specified in Section 3.3 hereof or if the Company reasonably
believes any Designated Fund may fail to meet such requirements;
or
(h) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith that the Trust or the
Adviser has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement
or is the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations of
the Company or the Contracts (including the sale thereof); or
(j) at the option of the Trust or the Adviser, if the Trust or the
Adviser, respectively, determines in its sole judgment exercised
in good faith that the Company has suffered a material adverse
change in its business, operations or financial condition since
the date of this Agreement or is the subject of material adverse
publicity which is likely to have a material adverse impact upon
the business and operations of the Trust or the Adviser; or
(k) at the option of the Company or the Trust upon receipt of any
necessary regulatory approvals and/or the vote of the Contract
owners having an interest in the Separate Account (or any
sub-account) to substitute the shares of another investment
company for the corresponding Designated Fund's shares in
accordance with the terms of the Contracts for which those Fund
shares had been selected to serve as the underlying portfolio. The
Company will give sixty (60) days' prior written notice to the
Trust of the date of any proposed vote or other action taken to
replace the Designated Fund shares or of the filing of any
required regulatory approval(s); or
(1) at the option of the Company or the Trust upon a determination by
a majority of the Trust Board, or a majority of the disinterested
Trustees, that a material irreconcilable conflict exists among the
interests of: (1) all Contract owners of variable insurance
products of all separate accounts; or (2) the interests of the
Participating Insurance Companies investing in the Trust as set
forth in Article VII of this Agreement; or
(m) subject to the Trust's compliance with Article III, at the option
of the Trust in the event any of the Contracts are not issued or
sold in accordance with applicable federal and/or state law, or
will not be treated as annuity contracts, life insurance policies
and/or variable contracts (as applicable) under applicable
provisions of the Code, or in the event any representation or
warranty of the Company in Section 2.1 is no longer true.
Termination will be effective immediately upon such occurrence
without notice.
10.2 Notice Requirement
(a) In the event that any termination of this Agreement is based upon
the provisions of Article VII, such prior written notice will be
given in advance of the effective date of termination as required
by such provisions.
(b) In the event that a party to this Agreement terminates the
Agreement based upon the provisions of Sections 10.1(b)-(h),
prompt written notice of the election to terminate this Agreement
for cause shall be furnished by the party terminating the
Agreement to the non-terminating party(ies). The Agreement shall
be terminated effective upon receipt of such notice by the
non-terminating party(ies).
(c) In the event that a party to this Agreement terminates the
Agreement based upon the provisions of Sections 10.1(i) or (j),
prior written notice of the election to terminate this Agreement
for cause shall be furnished by the party terminating the
Agreement to the non-terminating party(ies). Such prior written
notice shall be given by the party terminating this Agreement to
the non-terminating party(ies) at least sixty (60) days before the
effective date of termination.
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Trust and the
Adviser will, at the option of the Company, continue to make available
additional shares of the Trust pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the
Existing Contracts will be permitted to reallocate investments in the
Designated Funds (as in effect on such date), redeem investments in the
Designated Funds and/or invest in the Designated Funds upon the making
of additional purchase payments under the Existing Contracts. The
parties agree that this Section 10.3 will not apply to any terminations
under Article VII and the effect of such Article VII terminations will
be governed by Article VII of this Agreement.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify other parties will survive
and not be affected by any termination of this Agreement. In addition,
with respect to Existing Contracts, all provisions of this Agreement
also will survive and not be affected by any termination of this
Agreement.
ARTICLE XI - NOTICES
Any notice will be deemed duly given when sent by certified mail, return receipt
requested, to the other party at the address of such party set forth below or at
such other address as such party may from time to time specify in writing to the
other parties. All notices will be deemed given three (3) business days after
the date received or rejected by the addressee:
If to the Company:
-----------------
American Skandia Life Assurance Corporation
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to the Trust:
---------------
ProFunds
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Adviser:
-----------------
ProFund Advisors LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
ARTICLE XII - MISCELLANEOUS
12.1 All persons dealing with the Trust must look solely to the property of
the Trust or the relevant Designated Fund for the enforcement of any
claims against the Trust or the Designated Fund, as neither the
trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Trust, or any
Designated Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and,
except as permitted by this Agreement, shall not disclose, disseminate
or utilize such names and addresses and other confidential information
without the express written consent of the affected party until such
time as such information has come into the public domain.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
12.5 If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
12.6 This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled
to under state and federal law.
12.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
12.9 Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including without limitation
the Commission, the NASD and state insurance regulators) and will
permit each other and such authorities reasonable access to its books
and records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby.
12.10 Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as
applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
12.11 This Agreement may be amended by written instrument signed by all
parties to the Agreement. Notwithstanding the above, the parties to
this Agreement may amend the schedules to this Agreement from time to
time to reflect changes in or relating to the Contracts, the Separate
Accounts or the Funds of the Trust or other applicable terms of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the date specified below.
AMERICAN SKANDIA I.IFE ASSURANCE
CORPORATION
By: ______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Deputy Chief Executive Officer and President
PROFUNDS
By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
PROFUND ADVISORS LLC
By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
October 14, 1999
PARTICIPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Associated Contracts of American Skandia
Life Assurance Corporation are permitted in accordance with the provisions of
this Agreement to invest in Funds of the Trust shown in Schedule B: NAME OF
SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Variable Account B (Class 1
Sub-accounts) CONTRACT(S):
American Skandia Advisor Plan (ASAPSM)
American Skandia Advisor Plan IISM (ASAPII)
American Skandia XTra CreditSM (ASXT)
American Skandia LifeVest(R) (ASL(R))
American Skandia ProtectorSM (AS ProSM)
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Variable Account B (Class 2
Sub-accounts) CONTRACT(S):
American Skandia Advisors Choice(R)2000 (Choice2000)
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Variable Account B (Class 3
Sub-accounts) CONTRACT(S):
American Skandia Impact (AS ImpactSM)
October 14, 1999
PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following Funds of
the Trust.
ProFund VP Europe 30
ProFund VP SmallCap
ProFund VP UltraOTC
October 14, 1999
PARTICIPATION AGREEMENT
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Trust. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Trust as early as
possible before the date set by the Trust for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Trust will inform
the Company of the Record, Mailing and Meeting dates.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call in
the number of Customers to the Trust, as soon as possible, but no later
than two weeks after the Record Date.
3. The Trust's Annual Report (if any) must be sent to each Customer by the
Company either before or together with the Customers' receipt of voting
instruction solicitation material. The Trust will provide the last Annual
Report to the Company pursuant to the terms of Section 6.2 of the Agreement
to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Trust. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Trust or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
|X| name (legal name as found on account registration)
|X| address
|X| Trust or account number
|X| coding to state number of units
|X| individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Trust).
(This and related steps may occur later in the chronological process
due to possible uncertainties relating to the proposals.)
5. During this time, the Trust will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the Company).
Contents of envelope sent to Customers by the Company will include:
|X| Voting Instruction Card(s)
|X| one proxy notice and statement (one document)
|X| return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
|X| "urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the
Trust.)
|X| cover letter - optional, supplied by Company and reviewed and approved
in advance by the Trust
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Trust.
7. Package mailed by the Company.
* The Trust must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time is
calculated as calendar days from (but NOT including,) the meeting, counting
backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card. Note: For Example, if the account registration is
under "▇▇▇▇ ▇. ▇▇▇▇▇, Trustee," then that is the exact legal name to be
printed on the Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Trust receives the tabulations
stated in terms of a percentage and the number of SHARES.) The Trust must
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to the Trust on
the morning of the meeting not later than 10:00 a.m. Eastern time. The
Trust may request an earlier deadline if reasonable and if required to
calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Trust will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Trust will be
permitted reasonable access to such Cards.
16. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
October 14, 1999