Exhibit 8
FUND PARTICIPATION AGREEMENT
Allstate Life Insurance Company of New York,
Advanced Series Trust,
AST Investment Services, Inc.
and
Prudential Investments LLC
July 9, 2007
TABLE OF CONTENTS
ARTICLE I. Sale of Fund Shares......................................... 5
ARTICLE II. Representations and Warranties.............................. 9
ARTICLE III. Prospectuses and Proxy Statements; Voting................... 13
ARTICLE IV. Sales Material and Information.............................. 15
ARTICLE V. Fees and Expenses........................................... 16
ARTICLE VI. Diversification and Qualification........................... 17
ARTICLE VII. Potential Conflicts and Compliance With Mixed and Shared
Funding Exemptive Order..................................... 19
ARTICLE VIII. Indemnification............................................. 22
ARTICLE IX. Applicable Law.............................................. 27
ARTICLE X. Termination................................................. 28
ARTICLE XI. Notices..................................................... 30
ARTICLE XII. Miscellaneous............................................... 31
SCHEDULE A Diversification Compliance Report and Certification......... 34
PARTICIPATION AGREEMENT
Among
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK,
ADVANCED SERIES TRUST,
AST INVESTMENT SERVICES, INC.
and
PRUDENTIAL INVESTMENTS LLC
THIS AGREEMENT, made and entered into as of this 9th day of July, 2007, by
and among ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK, a New York life
insurance company, (the "Company"), on its own behalf and on behalf of its
separate accounts (the "Accounts"); ADVANCED SERIES TRUST, an open-end
management investment company organized under the laws of Massachusetts (the
"Fund"); AST INVESTMENT SERVICES, INC., a Connecticut corporation ("ASTISI");
and PRUDENTIAL INVESTMENTS LLC ("PI," and collectively with ASTISI, the
"Advisers" and each an "Adviser").
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and/or variable annuity
contracts (collectively, the "Variable Insurance Products") to be offered by
insurance companies, many of which have entered into participation agreements
similar to this Agreement (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
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WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (hereinafter the "SEC"), dated August 1, 1995 (File No. 812-9384),
granting Participating Insurance Companies and variable annuity and variable
life insurance separate accounts exemptions from the provisions of sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as
amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
life insurance companies that may or may not be affiliated with one another and
qualified pension and retirement plans ("Qualified Plans") (hereinafter the
"Mixed and Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and shares of the Portfolio(s) are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, each Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Company has issued and plans to continue to issue certain
variable life insurance policies and variable annuity contracts supported
wholly or partially by the Accounts (the "Contracts"); and
WHEREAS, each Account is a duly organized, validly existing segregated asset
account, established by resolution of the Board of Directors of the Company
under applicable state insurance laws, to set aside and invest assets
attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to continue to purchase shares in the
Portfolios on behalf of the Accounts to fund the Contracts, and the Fund is
authorized to sell such shares to unit investment trusts such as the Accounts
at net asset value; and
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company also intends to continue to purchase shares in other
open-end investment companies or series thereof not affiliated with the Fund
(the "Unaffiliated Funds") on behalf of the Accounts to fund the Contracts; and
WHEREAS, the Company acknowledges that its rights and obligations under this
Agreement are subject to that Indemnity Reinsurance Agreement Dated June 1,
2006 by and between the Company and The Prudential Insurance Company of America
("Prudential") ("Reinsurance Agreement"), and to that Administrative Services
Agreement Effective as of June 1, 2006 by and between the Company and
Prudential ("Administrative Services Agreement"); and
WHEREAS, specifically the Company acknowledges that pursuant to certain
provisions of the Administrative Services Agreement, including without
limitation, Sections 3, 4(i), 5(c) and 5(h) of Schedule A, and Sections 8.3 and
8.5, the Company has appointed Prudential to perform certain administrative
services, including those which the Company is obligated to perform for the
Fund under this Agreement under Sections 3.1, 3.2, 3.3, 3.4, 3.6 and 3.7 below,
in connection with the annual printing and delivery of Fund prospectuses to
shareholders and certain other services; and
WHEREAS, the Company acknowledges that pursuant to the Reinsurance Agreement
under Section 4.3, Prudential is entitled to certain fees, including those
described in Section 5.1 of this Agreement in consideration for the
administrative services described in Sections 3.1, 3.2, 3.3, 3.4, 3.6 and 3.7
of this Agreement, and that the Fund, when directed by Prudential, will pay
such fees directly to Prudential for such services; and
WHEREAS, the parties wish to enter into a written agreement governing the
arrangement among the parties.
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NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Advisers agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of the Portfolios
which the Account orders, executing such orders on each Business Day at the net
asset value next computed after receipt by the Fund or its designee of the
order for the shares of the Portfolios. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders and
receipt by such designee shall constitute receipt by the Fund, provided that
the Fund receives notice of any such order by 10:00 a.m. Eastern time on the
next following Business Day. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Portfolio calculates
its net asset value pursuant to the rules of the SEC. "Valuation Time" shall
mean the time as of which the Fund calculates net asset value for the shares of
the Portfolios on the relevant Business Day.
1.2. The Fund agrees to make shares of the Portfolios available for purchase
at the applicable net asset value per share by the Company and the Accounts on
those days on which the Fund calculates its Portfolios' net asset value
pursuant to rules of the SEC, and the Fund shall calculate such net asset value
on each day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Fund may refuse to sell shares of any
Portfolio to any person, or suspend or terminate the offering of shares of any
Portfolio if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Fund acting in good faith,
necessary or appropriate in the best interests of the shareholders of such
Portfolio. All orders accepted by the Company shall be subject to the terms of
the then current prospectus of the Fund. The Company shall use its best
efforts, and shall reasonably cooperate with, the Fund to enforce stated
prospectus policies regarding transactions in Portfolio shares. The Company
acknowledges that orders accepted by it in violation of the Fund's stated
policies may be subsequently revoked or cancelled by the Fund and that the Fund
shall not be responsible for any losses incurred by the Company or the Contract
owner as a result of such cancellation. In
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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 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
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accordance with Section 1.4 hereof; provided, however, that the Fund may delay
payment in extraordinary circumstances to the extent permitted under
Section 22(e) of the 1940 Act. Payment shall be in federal funds transmitted by
wire and/or a credit for any shares purchased the same day as the redemption.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or the Accounts. Shares
purchased from the Fund will be recorded in an appropriate title for the
relevant Account or the relevant sub-account of an Account.
1.9. The Fund shall furnish same day notice (by electronic communication or
telephone, followed by electronic confirmation) to the Company of any income,
dividends or capital gain distributions payable on a Portfolio's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company by the end of the next following Business Day of
the number of shares so issued as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on each Business Day as soon as reasonably practicable
after the net asset value per share is calculated and shall use its best
efforts to make such net asset value per share available by 6:00 p.m. Eastern
time. In the event of an error in the computation of a Portfolio's net asset
value per share ("NAV") or any dividend or capital gain distribution (each, a
"pricing error"), an Adviser or the Fund shall immediately notify the Company
as soon as possible after discovery of the error. Such notification may be
verbal, but shall be confirmed promptly in writing. A pricing error shall be
corrected as follows: (a) if the pricing error results in a difference between
the erroneous NAV and the correct NAV of less than $0.01 per share, then no
corrective action need be taken; (b) if the pricing error results in a
difference between the erroneous NAV and the correct NAV equal to or greater
than $0.01 per share, but less than 1/2 of 1% of the Portfolio's
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NAV at the time of the error, then the Advisers shall reimburse the Portfolio
for any loss, after taking into consideration any positive effect of such
error; however, no adjustments to Contract owner accounts need be made; and
(c) if the pricing error results in a difference between the erroneous NAV and
the correct NAV equal to or greater than 1/2 of 1% of the Portfolio's NAV at
the time of the error, then the Advisers shall reimburse the Portfolio for any
loss (without taking into consideration any positive effect of such error) and
shall reimburse the Company for the costs of adjustments made to correct
Contract owner accounts. If an adjustment is necessary to correct a material
error which has caused Contract owners to receive less than the amount to which
they are entitled, the number of shares of the applicable sub-account of such
Contract owners will be adjusted and the amount of any underpayments shall be
credited by the Advisers to the Company for crediting of such amounts to the
applicable Contract owners accounts. Upon notification by an Adviser of any
overpayment due to a material error, the Company shall promptly remit to the
Advisers any overpayment that has not been paid to Contract owners. In no event
shall the Company be liable to Contract owners for any such adjustments or
underpayment amounts. A pricing error within categories (b) or (c) above shall
be deemed to be "materially incorrect" or constitute a "material error" for
purposes of this Agreement. The standards set forth in this Section 1.10 are
based on the parties' understanding of the views expressed by the staff of the
SEC as of the date of this Agreement. In the event the views of the SEC staff
are later modified or superseded by SEC or judicial interpretation, the parties
shall amend the foregoing provisions of this Agreement to comport with the
appropriate applicable standards, on terms mutually satisfactory to all parties.
1.11. The parties agree to mutually cooperate with respect to any state
insurance law restriction or requirement applicable to the Fund's investments;
provided, however, that the Fund reserves the right not to implement
restrictions or take other actions required by state insurance law if the Fund
or an Adviser determines that the implementation of the restriction or other
action is not in the best interest of Fund shareholders.
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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 applicable state law; and
(c) it has registered each Account as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated investment account
for the Contracts will maintain such registration for so long as any Contracts
are outstanding as required by applicable law or, alternatively, the Company
has not registered one or more Accounts in proper reliance upon an exclusion
from such registration requirements.
2.3. The Fund represents and warrants that: (a) the Fund shares sold
pursuant to this Agreement shall be registered under the 1933 Act; (b) the Fund
shares sold pursuant to this Agreement shall be duly authorized for issuance
and sold in compliance with all applicable federal securities laws including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act; (c) the Fund
is and shall remain registered under the 1940 Act; and (d) the Fund shall amend
the registration statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
shares.
2.4. The parties acknowledge that the Fund reserves the right to adopt one
or more plans pursuant to Rule 12b-1 under the 1940 Act and to impose an
asset-based or other charge to finance distribution expenses as permitted by
applicable law and regulation. The Fund and the Advisers agree to comply with
applicable provisions and SEC interpretation of the 1940 Act with respect to
any distribution plan.
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2.5. The Fund represents and warrants that it shall register and qualify the
shares for sale in accordance with the laws of the various states if and to the
extent required by applicable law.
2.6. The Fund represents and warrants that it is lawfully organized and
validly existing under the laws of the Commonwealth of Massachusetts and that
it does and will comply in all material respects with the 1940 Act.
2.7. Each Adviser represents and warrants that it is and shall remain duly
registered under all applicable federal and state securities laws and that it
shall perform its obligations for the Fund in compliance in all material
respects with any applicable state and federal securities laws.
2.8. The Fund and the Advisers represent and warrant that all of their
respective officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are, and shall
continue to be at all times, covered by one or more blanket fidelity bonds or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bonds shall
include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.9. The Fund and the Advisers represent and warrant that they will provide
the Company with as much advance notice as is reasonably practicable of any
material change affecting the Portfolios (including, but not limited to, any
material change in the registration statement or prospectus affecting the
Portfolios) and any proxy solicitation affecting the Portfolios and consult
with the Company in order to implement any such change in an orderly manner,
recognizing the expenses of changes and attempting to minimize such expenses by
implementing them in conjunction with regular annual updates of the prospectus
for the Contracts.
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2.10 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 and the Advisers
immediately upon having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so treated in the
future. In addition, the Company represents and warrants that each Account is a
"segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. The Company will use every effort to continue to meet
such definitional requirements, and it will notify the Fund and the Advisers
immediately upon having a reasonable basis for believing that such requirements
have ceased to be met or that they might not be met in the future. The Company
represents and warrants that it will not purchase Fund shares with assets
derived from tax-qualified retirement plans except, indirectly, through
Contracts purchased in connection with such plans.
2.11 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.
2.12 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.
2.13 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
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exchange of Fund shares communicated to the Fund to be treated in accordance
with Article I of this Agreement as having been received on a Business Day have
been received by the Valuation Time on such Business Day and were not modified
after the Valuation Time, and that all orders received from Contract owners but
not rescinded by the Valuation Time were communicated to the Fund or its agent
as received for that Business Day. Each transmission of orders by the Company
shall constitute a representation by the 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.
2.14. The Company represents and warrants that it has adopted, and will at
all times during the term of this Agreement maintain, reasonable and
appropriate procedures ("Market Timing Procedures") designed to minimize any
adverse impact on other Fund investors due to excessive trading. The Company
agrees to provide the Fund or its designee with a copy of the Market Timing
Procedures and such certifications and representations regarding the Market
Timing Procedures as the Fund or its designee may reasonably request. The
Company will promptly notify the Fund in writing of any material change to the
Market Timing Procedures. The parties agree to cooperate in light of any
conflict between the Market Timing Procedures and actions taken or policies
adopted by the Fund designed to minimize any adverse impact on other Fund
investors due to excessive trading.
ARTICLE III. Printing and Distribution of Fund Documents and other
AdministrativeServices Provided by the Company to the Fund
3.1. At least annually, an Adviser shall provide the Company with
camera-ready copy of the Fund's prospectus and any supplements thereto for
printing and delivery by the Company
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to all Contract owners at the Company's expense. If requested by the Company in
lieu thereof, an Adviser or the Fund shall provide camera-ready copy (including
an electronic version of the current prospectus) to the Company 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 and delivered to all Contract owners.
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 and/or an Adviser shall provide the Company with
camera-ready copy of the Fund's SAI and any supplements thereto for printing
and delivery to all Contract owners. An Adviser and/or the Fund shall also
provide camera-ready copy of the SAI to the Company for printing and delivery
to any Contract owner or prospective owner who requests such SAI from the Fund.
3.3. The Fund and/or an Adviser shall provide the Company with copies of the
Fund's proxy material, reports to shareholders and other communications to
shareholders suitable for printing to permit the timely distribution thereof by
the Company to Contract owners.
3.4 The Company shall also provide or cause to be provided the following
administrative services to the Fund:
Purchase and Redemption Orders
. Reconcile and provide notice to the Fund of (a) net cash flow into the
Fund , and (b) cash required for net redemption orders with confirmation
thereof to the Fund
AST-Related Contract Owner Services
. Assist the Fund with proxy solicitations, specifically with respect to
soliciting voting instructions from contract owners
. Investigate and respond to inquiries from contract owners that relate to
the Fund and not to the separate account
Reports
. Periodic information reporting to the Fund
. Preparation of reports regarding the Fund for third-party reporting
services
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3.5. It is understood and agreed that, except with respect to information
regarding the Company provided in writing by that party, the Company shall not
be responsible for the content of the prospectus or SAI for the Fund. It is
also understood and agreed that, except with respect to information regarding
the Fund, the Advisers or the Portfolios provided in writing by the Fund, or an
Adviser, neither the Fund nor the Advisers are responsible for the content of
the prospectus or SAI for the Contracts.
3.6. 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.
3.7. 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.
3.8. 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 not give any information or make any representations
or statements on behalf of the Fund in connection with the sale of the
Contracts other than the information or representations contained in the
registration statement, including the prospectus or SAI for the Fund shares, as
the same may be amended or supplemented from time to time, or in sales
literature or other promotional material approved by the Fund or an Adviser,
except with the permission of the Fund or an Adviser.
4.2. The Fund and the Advisers shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Accounts, or the Contracts other than the information or representations
contained in a registration statement, including the prospectus or SAI for the
Contracts, as the same may be amended or supplemented from time to time, or in
sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.3. For purposes of Articles IV and VIII, the phrase "sales literature and
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media; e.g.,
on-line networks such as the Internet or other electronic media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational
or training materials or other communications distributed or made generally
available to some or all agents or
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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 ▇▇▇▇
▇▇▇.
4.4. At the request of any party to this Agreement, each other party will
make available to the other party's independent auditors and/or representatives
of the appropriate regulatory agencies, all records, data and access to
operating procedures that may be reasonably requested in connection with
compliance and regulatory requirements related to this Agreement or any party's
obligations under this Agreement.
ARTICLE V. Fees and Expenses
5.1 In consideration of the services that the Company has provided or caused
to have been provided to the Fund that are set forth in sections 3.1, 3.2, 3.3
and 3.4 under Agreement, the Fund will pay the Company or its designee no more
than 0.10% on an annualized basis of the net asset value of shares of the Fund
owned by separate accounts of the Company that are invested in the Fund. Such
amount shall be determined on the last day of each calendar quarter (based on
the annual rate used by the Fund to pay insurance companies affiliated with the
Advisers for similar services) and is payable within 10 days after the end of
such calendar quarter. Except as otherwise provided in this Agreement, the Fund
and the Advisers shall pay no fee or other compensation to the Company under
this Agreement, and the Company shall pay no fee or other compensation to the
Fund or an Adviser under this Agreement provided, however, 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 and the Advisers represent and warrant that the Fund and each
Portfolio thereof will at all times comply with Section 817(h) of the Code and
Treasury Regulation (S)1.817-5, as amended from time to time, and any Treasury
interpretations thereof, relating to the
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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 or an Adviser shall provide to the
Company a quarterly written diversification report, in the form attached hereto
as Schedule A which shall show the results of the quarterly Section 817(h)
diversification test and include a certification as to whether each Portfolio
complies with the Section 817(h) diversification requirement. The
diversification report shall be provided to the Company within 10 calendar days
of the end of a quarter.
6.2. The Fund and the Advisers agree that shares of the Portfolios will be
sold only to Participating Insurance Companies and their separate accounts and
to Qualified Plans. No shares of any Portfolio of the Fund will be sold to the
general public.
6.3. The Fund and the Advisers represent and warrant that the Fund and each
Portfolio is currently qualified as a Regulated Investment Company under
Subchapter M of the Code, and that each Portfolio will maintain such
qualification (under Subchapter M or any successor or similar provisions) as
long as this Agreement is in effect.
6.4. The Fund or an Adviser will notify the Company immediately upon having
a reasonable basis for believing that the Fund or any Portfolio has ceased to
comply with the aforesaid Section 817(h) diversification or Subchapter M
qualification requirements or might not so comply in the future.
6.5. Without in any way limiting the effect of Sections 8.2, 8.3 and 8.4
hereof and without in any way limiting or restricting any other remedies
available to the Company, an Adviser will pay all costs associated with or
arising out of any failure, or any anticipated or reasonably foreseeable
failure, of the Fund or any Portfolio to comply with Sections 6.1, 6.2, or 6.3
hereof, including all costs associated with reasonable and appropriate
corrections or responses to any such failure; such costs may include, but are
not limited to, the costs involved in creating, organizing, and registering a
new investment company as a funding medium for the Contracts and/or the costs
of obtaining whatever regulatory authorizations are required to substitute
shares
17
of another investment company for those of the failed Portfolio (including but
not limited to an order pursuant to Section 26(c) of the 1940 Act).
6.6. The Company agrees that if the Internal Revenue Service ("IRS") asserts
in writing in connection with any governmental audit or review of the Company
(or, to the Company's knowledge, of any Contract owner) that any Portfolio has
failed to comply with the diversification requirements of Section 817(h) of the
Code or the Company otherwise becomes aware of any facts that could give rise
to any claim against the Fund or an Adviser as a result of such a failure or
alleged failure:
(a) The Company shall promptly notify the Fund and the Advisers of such
assertion or potential claim;
(b) The Company shall consult with the Fund and the Advisers as to how
to minimize any liability that may arise as a result of such failure or alleged
failure;
(c) The Company shall use its best efforts to minimize any liability of
the Fund and the Advisers resulting from such failure, including, without
limitation, demonstrating, pursuant to Treasury Regulations,
Section 1.817-5(a)(2), to the commissioner of the IRS that such failure was
inadvertent;
(d) Any written materials to be submitted by the Company to the IRS, any
Contract owner or any other claimant in connection with any of the foregoing
proceedings or contests (including, without limitation, any such materials to
be submitted to the IRS pursuant to Treasury Regulations, Section
1.817-5(a)(2)) shall be provided by the Company to the Fund and the Advisers
(together with any supporting information or analysis) within at least two
(2) business days prior to submission;
(e) The Company shall provide the Fund and the Advisers with such
cooperation as the Fund and the Advisers shall reasonably request (including,
without limitation,
18
by permitting the Fund and the Advisers to review the relevant books and
records of the Company) in order to facilitate review by the Fund and the
Advisers of any written submissions provided to it or its assessment of the
validity or amount of any claim against it arising from such failure or alleged
failure;
(f) The Company shall not with respect to any claim of the IRS or any
Contract owner that would give rise to a claim against the Fund and the Adviser
s(i) compromise or settle any claim, (ii) accept any adjustment on audit, or
(iii) forego any allowable administrative or judicial appeals, without the
express written consent of the Fund and the Advisers, which shall not be
unreasonably withheld; provided that, the Company shall not be required to
appeal any adverse judicial decision unless the Fund and the Advisers shall
have provided an opinion of independent counsel to the effect that a reasonable
basis exists for taking such appeal; and further provided that the Fund and the
Advisers 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 Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio is being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners or by contract owners of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to disregard
the voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and
the implications thereof.
7.2. The Company will report any potential or existing conflicts of which it
is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Mixed and Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited to, an obligation
by the Company to inform the Board whenever Contract owner voting instructions
are to be disregarded. Such responsibilities shall be carried out by the
Company with a view only to the interests of its Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of its
trustees who are not interested persons of the Fund, the Adviser or any
subadviser to any of the Portfolios (the "Independent Directors"), that a
material irreconcilable conflict exists, the Company and other Participating
Insurance Companies shall, at their expense and to the extent reasonably
practicable (as determined by a majority of the Independent Directors), take
whatever steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to and including: (1) withdrawing the
20
assets allocable to some or all of the separate accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio, or submitting the question
whether such segregation should be implemented to a vote of all affected
contract owners and, as appropriate, segregating the assets of any appropriate
group (i.e., annuity contract owners, life insurance contract owners, or
variable contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected contract owners
the option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment
in the Fund and terminate this Agreement; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Independent Directors. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice that this provision
is being implemented, and until the end of that six-month period the Advisers
and the Fund shall continue to accept and implement orders by the Company for
the purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six months
after the Board informs the Company in writing that it has determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the Independent Directors. Until the end of the foregoing six-month period, the
Fund shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
21
7.6. For purposes of Sections 7.3 through 7.5 of this Agreement, a majority
of the Independent Directors shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Fund be required to establish a new funding medium for the Contracts. The
Company shall not be required by Section 7.3 to establish a new funding medium
for the Contracts if an offer to do so has been declined by vote of a majority
of Contract owners affected by the irreconcilable material conflict. In the
event that the Board determines that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six
(6) months after the Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the Independent Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and
Shared Funding Exemptive Order, then (a) the Fund and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be necessary
to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted,
to the extent such rules are applicable: and (b) Sections 3.5, 3.6, 3.7, 7.1,
7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1.Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Fund and the
Advisers and each of their respective officers and directors or trustees and
each person, if any,
22
who controls the Fund or an Adviser within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, expenses, damages and
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including reasonable legal and other expenses) to
which the Indemnified Parties may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus or SAI covering the Contracts or contained in
the Contracts or sales literature or other promotional material for
the Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by or
on behalf of an Adviser or the Fund for use in the registration
statement or prospectus for the Contracts or in the Contracts or
sales literature or other promotional material (or any amendment or
supplement to any of the foregoing) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature or other
promotional material of the Fund not supplied by the Company or
persons under its control) or wrongful conduct of the Company or
persons under its control, with respect to the sale or distribution
of the Contracts or Fund Shares; or
(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
23
(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 2.10
and Section 6.6 hereof,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
(b) The Company shall not be liable under this indemnification provision
with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith, or negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to any of the Indemnified Parties.
(c) The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Company of
any such claim shall not relieve the Company from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision, except to the extent that
the Company has been prejudiced by such failure to give notice. In case any
such action is brought against the Indemnified Parties, the Company shall be
entitled to participate, at its own expense, in the defense of such action. The
Company also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Company to
such party of the Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently
24
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
(d) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund Shares or the Contracts or the operation of
the Fund.
8.2.Indemnification by the Advisers
(a) Each Adviser agrees to indemnify and hold harmless the Company and
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of an Adviser) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or SAI or sales literature or other
promotional material of the Fund prepared by the Fund or an Adviser
(or any amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided
that this Agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished in writing to an Adviser 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
25
(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 or an
Adviser or persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement, prospectus,
SAI, or sales literature or other promotional material covering the
Contracts, or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or omission was
made in reliance upon information furnished in writing to the Company
by or on behalf of an Adviser or the Fund; or
(iv) arise as a result of any failure by the Fund or an Adviser to
provide the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or an Adviser in this
Agreement or arise out of or result from any other material breach of
this Agreement by an Adviser or the Fund; or
(vi) arise out of or result from the incorrect or untimely
calculation or reporting by the Fund or an Adviser of the daily net
asset value per share (subject to Section 1.10 of this Agreement) or
dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof. This indemnification is in addition to and apart from the
responsibilities and obligations of the Advisers specified in Article VI hereof.
(b) The Advisers shall not be liable under this indemnification
provision with respect to any losses, claims, expenses, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith, or negligence in
the performance of such Indemnified Party's duties or by reason of such
26
Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to any of the Indemnified Parties.
(c) The Advisers shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Advisers in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Advisers of
any such claim shall not relieve the Advisers from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision, except to the extent that
the Advisers have been prejudiced by such failure to give notice. In case any
such action is brought against the Indemnified Parties, the Advisers will be
entitled to participate, at their own expense, in the defense thereof. The
Advisers also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Advisers
to such party of the Advisers' election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Advisers will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
(d) The Company agrees promptly to notify the Advisers of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
27
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New Jersey, without
regard to the New Jersey conflict of laws provisions.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party, with or without cause, with respect to
some or all Portfolios, upon sixty (60) days advance written notice delivered
to the other parties; or
(b) at the option of the Company by written notice to the other parties
with respect to any Portfolio based upon the Company's determination that
shares of such Portfolio are not reasonably available to meet the requirements
of the Contracts; or
(c) at the option of the Company by written notice to the other parties
with respect to any Portfolio in the event any of the Portfolio's shares are
not registered, issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as the underlying
investment media of the Contracts issued or to be issued by the Company; or
(d) at the option of the Fund or an Adviser in the event that formal
administrative proceedings are instituted against the Company by the NASD, the
SEC, the Insurance Commissioner or like official of any state or any other
regulatory body regarding the 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 or an Adviser, as the case may be,
reasonably determines in its sole judgment exercised in good faith, that any
such
28
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 or an Adviser by the NASD, the SEC,
or any state securities or insurance department or any other regulatory body,
if the Company reasonably determines in its sole judgment exercised in good
faith, that any such administrative proceedings will have a material adverse
effect upon the ability of the Fund or an Adviser to perform their obligations
under this Agreement; or
(f) at the option of the Company by written notice to the Fund with
respect to any Portfolio if the Company reasonably believes that the Portfolio
will fail to meet the Section 817(h) diversification requirements or Subchapter
M qualifications specified in Article VI hereof; or
(g) at the option of the Company in the event the Fund's decision not to
implement restrictions or take other actions required by state insurance law,
as described in Section 1.11 of this Agreement, subjects the Company to
regulatory action by the Insurance Commissioner or like official of any state
or any other regulatory body; or
(h) at the option of any non-defaulting party hereto in the event of a
material breach of this Agreement by any party hereto (the "defaulting party")
other than as described in Section 10.1(a)-(h); provided, that the
non-defaulting party gives written notice thereof to the defaulting party, with
copies of such notice to all other non-defaulting parties, and if such breach
shall not have been remedied within thirty (30) days after such written notice
is given, then the non-defaulting party giving such written notice may
terminate this Agreement by giving thirty (30) days written notice of
termination to the defaulting party; or
(i) 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
29
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), 10(g) or 10.1(h) of this Agreement, the prior written
notice shall be given at least sixty (60) days before the effective date of
termination; and
(c) in the event any termination is based upon the provisions of
Section 10.1(b), 10.1(c) or 10.1(f), the prior written notice shall be given in
advance of the effective date of termination, which date shall be determined by
the party sending the notice.
10.3. Effect of Termination
Notwithstanding any termination of this Agreement, other than as a result of
a failure by either the Fund or the Company to meet Section 817(h) of the Code
diversification requirements, the Fund and the Advisers shall, at the option of
the Company, continue to make available additional shares of the Fund pursuant
to the terms and conditions of this Agreement, for all Contracts in effect on
the effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to reallocate investments in the Fund,
redeem investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 10.3 shall not apply to any terminations under Article VII
and the effect of such Article VII terminations shall be governed by Article
VII of this Agreement.
10.4. Surviving Provisions
Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII to indemnify other parties shall survive and not be affected
by any termination of this Agreement. In addition, with respect to Existing
Contracts, all provisions of this Agreement shall also survive and not be
affected by any termination of this Agreement.
30
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:
Allstate Life Insurance Company of New York
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
If to the Fund:
Advanced Series Trust
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Secretary
If to the Advisers:
AST Investment Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Secretary
Prudential Investments LLC
Gateway Center Three
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary
ARTICLE XII. Miscellaneous
12.1. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all
31
information reasonably identified as confidential in writing by any other party
hereto and, except as permitted by this Agreement, shall not disclose,
disseminate or utilize such names and addresses and other confidential
information without the express written consent of the affected party until
such time as such information may come into the public domain. Without limiting
the foregoing, no party hereto shall disclose any information that another
party has designated as proprietary.
12.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in 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.
32
12.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
12.9. The Company agrees that the obligations assumed by the Fund and the
Advisers pursuant to this Agreement shall be limited in any case to the Fund
and the Advisers and their respective assets and the Company shall not seek
satisfaction of any such obligation from the shareholders of the Fund or the
Advisers, the Directors, officers, employees or agents of the Fund or an
Adviser, or any of them.
12.10. The Fund and the Advisers agree that the obligations assumed by the
Company pursuant to this Agreement shall be limited in any case to the Company
and its assets and neither the Fund nor the Advisers shall seek satisfaction of
any such obligation from the shareholders of the Company, the directors,
officers, employees or agents of the Company, or any of them.
12.11. No provision of this Agreement may be deemed or construed to modify
or supersede any contractual rights, duties, or indemnifications, as between
the Advisers and the Fund.
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 above.
ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK
By its authorized officer,
By:
-----------------------------
Name:
Title:
33
ADVANCED SERIES TRUST
By its authorized officer,
By:
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President
AST INVESTMENT SERVICES, INC.
By its authorized officer,
By:
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and
Chief Administrative Officer
PRUDENTIAL INVESTMENTS LLC
By its authorized officer,
By:
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and
Chief Administrative Officer
34
SCHEDULE A
Diversification Compliance Report and Certification
Name of fund:
Total Market Value as of ______________ _______________
Four Largest Market Value Cumulative % of I.R.C. Limitations
Investments as of Assets Greater than
------------------- ---------------- ---------------- ------------------
1
2
3
4
5
Total Assets __________________________
Note: For purposes of diversification testing, all securities of the same
issuer, all interests in the same real property project, and all interests in
the same commodity are each treated as a single investment. In the case of
government securities each government agency or instrumentality is treated as a
separate issuer. See Treas. Reg. 1.817-5 for additional information.
Special Test for Variable Life Insurance
Where the only contracts based on the account are life insurance contracts
(i.e., no annuity contracts), an account is adequately diversified to the
extent it is invested in Treasury securities. Treasury securities held through
a custodial arrangement that is treated as a grantor trust (e.g. CATs and TGRs)
will be treated as Treasury securities if substantially all of the assets of
the trust are represented by Treasury securities. Options on Treasury
securities are not considered Treasury securities. Where an account is invested
in part in Treasury securities, revise the above general diversification test
percentage limits by adding to them a product of .5 and the percentage of the
value of the total assets invested in Treasury securities. For example, if an
account is 60% invested in Treasury securities, the percentage limit would be
increased by 30% (0.5 x 60%) and would be applied to the assets of the account
other than Treasury securities.
Alternate Test
If the alternative test under IRC Section 851 is used, those testing results
should be attached.
Certification
The undersigned certifies that this Report and Certification, and any related
attachments, have been prepared accurately and provide a true representation of
account assets as of the last day of the quarter indicated above, and that the
fund complies with IRC Section 817(h).
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Signed by Date