FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of May 2001 (the "Agreement")
by and among American Skandia Life Assurance Corporation, organized under the
laws of the State of Connecticut ("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"); The Prudential Series
Fund, Inc., an open-end management investment company organized under the laws
of the State of Maryland ("Fund"); Prudential Investments Fund Management LLC, a
limited liability corporation organized under the laws of the State of Delaware
and investment adviser to the Fund ("Adviser"); and Prudential Investment
Management Services LLC, a limited liability corporation organized under the
laws of the State of Delaware and principal underwriter/distributor of the Trust
("Distributor").
WHEREAS, the Fund 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 Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (each, a " Portfolio " and collectively, the "
Portfolios"); 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 ("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
April 26, 2001 Page 1 of 27
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule B, as
such schedule may be amended from time to time ("Designated Portfolios") on
behalf of the Separate Accounts to fund the Contracts; and
WHEREAS, the Distributor is authorized to sell such shares of the Portfolios to
unit investment trusts such as the Separate Accounts at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and the Distributor agree as follows:
ARTICLE I - SALE OF FUND SHARES
1.1. The Distributor agrees to sell to the Company those shares of the
Designated Portfolios that the Company orders on behalf of each Separate
Account, executing such orders on a daily basis at the net asset value
next computed after receipt and acceptance by the Fund or its designee of
the order for the shares of the Fund. For purposes of this Section 1.1,
the Company will be the designee of the Fund solely for the purpose of
receiving such orders from each Separate Account and receipt by such
designee will constitute receipt by the Fund, provided that the Company
provides the Fund with a purchase order by 10:00 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 Fund
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission (the "Commission"). The Fund may net the 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 Portfolio
purchased by 2:00 p.m. Eastern Time on the same Business Day an order to
purchase such shares is provided to the Fund, in accordance with Section
1.1. Payment will be made in federal funds transmitted by wire. Upon
receipt by the Fund of the purchase payment, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of
the Fund.
1.3. The Fund agrees to redeem, upon the Company's request, any full or
fractional shares of the Designated Portfolio held by the Company,
executing such requests on a daily basis at the net asset value next
computed after receipt and acceptance by the Fund or its designee. For
purposes of this Section 1.3, the Company will be the designee of the Fund
solely for the purpose of receiving requests for redemption from each
Separate Account and receipt by such designee will constitute
April 26, 2001 Page 2 of 27
receipt by the Fund, provided that the Company provides the Fund with a
redemption request by 10:00 a.m. Eastern Time on the next 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 Fund receives
notice of the redemption request from the Company. After consulting with
the Company, the Fund 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 Investment Company Act of 1940
(the "1940 Act"). The Fund 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 Fund after 10:00 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 Fund on the next following Business Day. The Fund may net
purchase orders it receives from the Company under Section 1.1 of this
Agreement against the redemption requests it receives from the Company
under this Section 1.3.
1.4. The Fund agrees to make shares of the Designated Portfolios 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 Fund calculates the net asset value of each Designated
Portfolio pursuant to rules of the Commission; provided, however, that the
Board of Directors of the Fund (the "Directors") may refuse to sell shares
of any Designated Portfolio to any person, or suspend or terminate the
offering of shares of any Designated Portfolio if such action is required
by law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Directors, 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 Designated Portfolio.
1.5. The Fund and the Distributor agree that shares of the Fund 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 Designated Portfolio will be sold directly to
the general public.
1.6. The Fund will not sell Fund 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.
April 26, 2001 Page 3 of 27
1.7. The Company agrees to purchase and redeem the shares of the Designated
Portfolios offered by the then current prospectus of the Fund in
accordance with the provisions of such prospectus.
1.8. Issuance and transfer of the Fund'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 Fund shares will be recorded
in an appropriate title for each Separate Account or the appropriate
sub-account of each Separate Account.
1.9. The Fund 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 Portfolio'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 Portfolio at the
ex-dividend date net asset values. The Company reserves the right to
revoke this election upon prior reasonable written notice to the Fund and
to receive all such dividends and distributions in cash. The Fund will
notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.10. The Fund will make the net asset value per share for each Designated
Portfolio 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 5:30 p.m., Eastern Time, each Business Day. If the Fund
provides the Company materially incorrect net asset value per share
information (as determined under SEC guidelines), the Company and the Fund
shall be entitled to an adjustment to the number of shares purchased or
redeemed to reflect the correct net asset value per share. 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 Fund.
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 (the "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,
April 26, 2001 Page 4 of 27
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 Fund'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 and/or life insurance policies (as
applicable) under applicable provisions of the Code, and that it maintain
such treatment and that it will notify the Fund and the Distributor
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.
2.3. The Company represents and warrants that it will not purchase shares of
the Designated Portfolio(s) with assets derived from tax-qualified
retirement plans except, indirectly, through Contracts purchased in
connection with such plans.
2.4. The Fund represents and warrants that shares of the Designated
Portfolio(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 Fund 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 Portfolio(s) are sold. The Fund 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.
2.5. The Fund 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 Fund
cannot reasonably comply with such state insurance laws or regulations, it
will so notify the Company in writing. The Fund 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 Fund of any restrictions
imposed by state insurance laws that may become applicable to the Fund as
a result of the Separate Accounts' investments therein. The Fund 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.
April 26, 2001 Page 5 of 27
2.6. The Fund represents and warrants that, to the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act,
the Fund undertakes to have the Directors, a majority of whom are not
"interested" persons of the Fund, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses. The Fund hereby notifies the
Company that a plan under Rule 12b-1 has been adopted and approved by the
Directors of the Fund, and that the shares of the Designated Portfolio(s)
sold by the Fund are sold subject to such plan under Rule 12b-1. .
2.7. The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will comply
in all material respects with applicable provisions of the ▇▇▇▇ ▇▇▇.
2.8. The Fund represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and continue to be
at all times covered by a blanket fidelity bond or similar coverage for
the benefit of the Fund 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.
2.9. 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 Fund and to pay to the Fund 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 Fund in the event that such coverage no longer applies.
2.10. 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 Fund in
accordance in all material respects with the laws of the State of Delaware
and any applicable state and federal securities laws.
2.11. The Distributor represents and warrants that it: (i) is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and will remain duly registered under all applicable
federal and state securities laws; (ii) is a member in good standing of
the National
April 26, 2001 Page 6 of 27
Association of Securities Dealers, Inc. ("NASD"); (iii) serves as
principal underwriter/distributor of the Fund; and (iv) will perform its
obligations for the Fund in accordance in all material respects with the
laws of the State of Delaware and any applicable state and federal
securities laws.
ARTICLE III - FUND COMPLIANCE
3.1. The Fund, the Adviser and the Distributor acknowledge that any failure
(whether intentional or in good faith or otherwise) of any Designated
Portfolio 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 Fund, the Adviser and the Distributor further
acknowledge that any failure of any Designated Portfolio 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 Portfolio or as well
as fees and expenses of legal counsel and other advisors to the Company
and any federal income taxes, interest or tax penalties incurred by the
Company in connection with any such failure of any Designated Portfolio.
3.2. The Fund represents and warrants that each Designated Portfolio is
currently qualified as a Regulated Investment Company under Subchapter M
of the Code, and that the Fund will maintain such qualification (under
Subchapter M or any successor or similar provision) and that the Fund will
notify the Company immediately upon having a reasonable basis for
believing that any Designated Portfolio has ceased to so qualify or that
it might not so qualify in the future.
3.3. Subject to the Company's representation and warranty in Sections 2.1 and
2.2, the Fund 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 the each Designated
Portfolio 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 Fund will notify the
Company immediately upon having a reasonable basis for believing that any
Designated Portfolio has ceased to comply with the diversification
requirements or that any Designated Portfolio might not comply with the
diversification requirements in the future. In the event of a breach of
this representation by the
April 26, 2001 Page 7 of 27
Fund, the Fund will take all reasonable steps to adequately diversify the
affected Designated Portfolio so as to achieve compliance within the grace
period afforded by Treasury Regulation 1.817-5.
ARTICLE IV - PROSPECTUS AND PROXY STATEMENTS; VOTING
4.1. The Fund or the Distributor will provide the Company with as many copies
of the current Fund prospectus and any supplements thereto for the
Designated Portfolio(s) as the Company may reasonably request for
distribution to Contract owners at the time of Contract fulfillment and
confirmation. The Fund will also provide as many copies of said prospectus
as necessary for distribution to existing Contract owners. The Fund will
provide the copies of said prospectus to the Company or to its mailing
agent for distribution. The Company will ▇▇▇▇ the Fund or the Distributor
for the reasonable cost of such distribution. To the extent that the
Designated Portfolio(s) are one or more of several Funds of the Fund, the
Fund shall be obligated to provide the Company only with disclosure
related to the Designated Portfolio(s). If requested by the Company, in
lieu thereof, the Fund or the Distributor 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 Fund
prospectus is amended more frequently) to have the new prospectus for the
Contracts and the Fund's new prospectus printed together. The Fund or the
Distributor will, upon request, provide the Company with a copy of the
Fund's prospectus through electronic means to facilitate the Company's
efforts to provide Fund prospectuses via electronic delivery.
4.2. The Fund's prospectus will state that a Statement of Additional
Information ("SAI") for the Fund is available, and will disclose how
investors may obtain the SAI.
4.3. The Fund, at its expense, will provide the Company or its mailing agent
with copies of its proxy material, if any, with respect to the Designated
Portfolios, 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 Portfolios held in the Separate
Account in accordance with instructions received from Contract
owners; and
April 26, 2001 Page 8 of 27
(c) vote shares of the Designated Portfolios held in the Separate
Account for which no timely instructions have been received in the
same proportion as shares of such Designated Portfolio 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 Portfolios 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 Fund 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 Fund 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 Fund or
the Distributor, each piece of sales literature or other promotional
material in which the Fund, the Adviser or the Distributor is named, at
least ten (10) business days prior to its use. No such material will be
used if the Fund or the Distributor 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 Fund or concerning the Fund 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
the Designated Portfolios, 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 Portfolios, or in published reports
for the Designated Portfolios which are in the public domain or approved
by the Fund, the Adviser or the Distributor for distribution, or in sales
literature or other material provided by the Fund, the Adviser or the
Distributor, except with permission of the Fund, the Adviser or the
Distributor. The Fund, the Adviser or the Distributor agree to respond to
any request for approval on a prompt and timely basis.
5.3. The Fund, the Adviser or the Distributor 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.
April 26, 2001 Page 9 of 27
5.4. The Fund, the Adviser or the Distributor 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 Fund 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 Fund or shares of the Designated Portfolios,
within a reasonable time after filing of each such document with the
Commission or the NASD.
5.6. The Company will provide to the Fund 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
Fund or the Designated Portfolios will be provided). In addition, the
Company will provide to the Fund 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
Fund; 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 Fund.
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
April 26, 2001 Page 10 of 27
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 Fund, the Adviser and the Distributor hereby consent to the Company's
use of the names of The Prudential Series Fund, Inc., Prudential
Investments Fund Management LLC and Prudential Investment Management
Services LLC as well as the names of the Designated Portfolios set forth
in Schedule B of this Agreement, in connection with marketing the
Contracts, subject to the terms of Sections 5.1 or 5.2 of this Agreement.
The Fund, the Adviser and the Distributor hereby consent to the use of any
trademark, trade name, service ▇▇▇▇ or logo used by the Fund, the Adviser
and the Distributor, subject to the Fund's, the Adviser's and/or the
Distributor's approval of such use and in accordance with reasonable
requirements of the Fund, the Adviser or the Distributor. Such consent
will terminate with the termination of this Agreement. The Company agrees
and acknowledges that either of the Fund, the Adviser or the Distributor
are the owner of the name, trademark, trade name, service ▇▇▇▇ and logo
and that all use of any designation comprised in whole or in part of the
name, trademark, trade name, service ▇▇▇▇ and logo under this Agreement
shall inure to the benefit of the Fund, Adviser and/or the Distributor.
5.9. The Fund, the Adviser, the Distributor and the Company agree to adopt and
implement procedures reasonably designed to ensure that information
concerning the Company, the Fund, the Adviser or the Distributor,
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 Portfolios,
which are provided to Contract owners relating to the Designated
Portfolios.
April 26, 2001 Page 11 of 27
6.2. All expenses incident to performance by the Fund of this Agreement will be
paid by the Fund or the Distributor to the extent permitted by law. All
shares of the Designated Portfolios will be duly authorized for issuance
and registered in accordance with applicable federal law and, to the
extent deemed advisable by the Fund, in accordance with applicable state
law, prior to sale. The Fund will bear the expenses for the cost of
registration and qualification of the Fund's shares, including without
limitation, the preparation of and filing with the SEC of Forms N-1A and
Rule 24f-2 Notices on behalf of the Fund and payment of all applicable
registration or filing fees (if applicable) with respect to shares of the
Fund; preparation and filing of the Fund's prospectus, SAI and
registration statement, proxy materials and reports; typesetting the
Fund's prospectus; typesetting and printing proxy materials and reports to
Contract owners (including the costs of printing a Fund 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 shares of the Designated Portfolios; any expenses permitted to
be paid or assumed by the Fund with respect to the Designated Portfolios
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 Portfolios 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
Fund'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 Fund represents and warrants that it has received an order from 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 Portfolios 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 Fund and/or the Adviser by virtue of the receipt of such
order by the Commission will: (i) apply only
April 26, 2001 Page 12 of 27
upon the sale of shares of the Designated Portfolio to a variable life
insurance separate account (and then only to the extent required under the
1940 Act); (ii) 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 the
agreement to the contrary.
7.2. The Directors will monitor the Fund for the existence of any material
irreconcilable conflict among the interests of the Contract owners of all
separate accounts investing in the Designated Portfolios. 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 Portfolio 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 Directors 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 Directors will consist of persons who are
not "interested" persons of the Fund.
7.3. The Company will promptly report any potential or existing conflicts of
which it is aware to the Directors. The Company agrees to assist the
Directors in carrying out their responsibilities under the Mixed and
Shared Funding Order by promptly providing the Directors with all
information reasonably necessary for the Directors to consider any issues
raised. This includes, but is not limited to, an obligation by the Company
to promptly inform the Directors 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 Directors, or a majority of the
disinterested Directors 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 directors), 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 Portfolio and
reinvesting such assets in a different investment medium, including (but
not limited to) another Designated Portfolio of the Fund, or submitting
the question whether such segregation should be submitted to a vote of all
affected
April 26, 2001 Page 13 of 27
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 Fund's election, to withdraw the affected sub-account of
the Separate Account's investment in the Designated Portfolio 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 Directors. 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
Fund gives written notice to the Company that this provision is being
implemented. Until the end of such six-month period the Adviser and Fund
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 Fund.
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 Portfolio 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 Directors. 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 Fund gives written notice to the
Company that this provision is being implemented. Until the end of such
six-month period the Fund 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
Portfolios.
7.7. For purposes of Sections 7.4 through 7.7 of this Agreement, a majority of
the disinterested Directors will determine whether any proposed action
adequately remedies any material irreconcilable conflict, but in no event
will the Fund be required to establish a new funding medium for the
Contracts. The
April 26, 2001 Page 14 of 27
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.
7.8. The Company will at least annually submit to the Directors such reports,
materials or data as the Directors may reasonably request so that the
Directors 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 Directors.
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 Fund 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 Fund, the
Adviser, the Distributor, and each of the Fund's or the Adviser's or
the Distributor's directors, officers, employees or agents and each
person, if any, who controls or is associated with the Fund, the
Adviser or the Distributor 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
April 26, 2001 Page 15 of 27
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 Fund,
the Adviser, of the Distributor 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 of the Designated Portfolios; or
(2) arise out of or as a result of statements or representations by
or on behalf of the Company (other than statements or
representations contained in the Fund registration statement,
prospectus, SAI or sales literature or other promotional material
of the Fund, 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 Portfolios; or
(3) arise out of untrue statement or alleged untrue statement of a
material fact contained in the Fund registration statement,
prospectus, SAI or sales literature or other promotional material
of the Fund (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
Fund 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;
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 shares of the Designated Portfolios or the Contracts or
the operation of the Fund.
8.2 Indemnification by the Adviser & Distributor
(a) The Adviser and Distributor agree 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
April 26, 2001 Page 16 of 27
(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 and Distributor) 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 Fund or sales
literature or other promotional material generated or approved by
the Adviser or the Distributor on behalf of the Fund (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 Fund by or on behalf of the Company
for use in the registration statement, prospectus or SAI for the
Fund or in sales literature generated or approved by the Adviser
or the Distributor on behalf of the Fund (or any amendment or
supplement thereto) or otherwise for use in connection with the
sale of the Contracts or shares of the Designated Portfolios; or
(2) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Contracts or in the Contract or Fund registration statements,
prospectuses or statements of additional information or sales
literature or other promotional material for the Contracts or of
the Fund, or any amendment or supplement to the foregoing, not
supplied by the Adviser or the Distributor or persons under the
control of the Adviser or the Distributor respectively) or
wrongful conduct of the Adviser or the Distributor or persons
under the control of the Adviser or the Distributor respectively,
with respect to the sale or distribution of the Contracts or
shares of the Designated Portfolios; 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 the Distributor or
persons under the control of the Adviser or the Distributor; or
(4) arise as a result of any failure by the Adviser or the
Distributor 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 or the
Distributor in this Agreement, or arise out of or result from any
other material breach of this Agreement by the Adviser or the
Distributor (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,
April 26, 2001 Page 17 of 27
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
or Distributor 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 and the
Distributor 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 Account.
8.3 Indemnification by the Fund
(a) The Fund 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 Fund) 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 Fund
and:
(1) arise as a result of any failure by the Fund 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 Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund (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); or
(3) arise out of or result from the materially incorrect or untimely
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 Fund
otherwise may have.
April 26, 2001 Page 18 of 27
(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 Fund 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
Portfolios with the diversification requirements specified in Article
III, the failure by the Company to maintain its Contracts (with
respect to which any Designated Portfolio 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 Fund 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 has failed to notify the Indemnifying Party in
accordance with its obligations under Sections 8.1(c), 8.2(c) or 8.3(d), as
applicable, 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
April 26, 2001 Page 19 of 27
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 Fund and the Adviser acknowledge that if a Designated Portfolio(s)
fails (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 8.2(a) and 8.3(a) hereof and without in any way
limiting or restricting any other remedies available to the Company, the
Fund, the Adviser and the Distributor 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 Portfolio 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 Portfolio (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
April 26, 2001 Page 20 of 27
obligation shall be in addition to any other indemnification and
reimbursement obligations of the Fund, the Adviser and/or the Distributor
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 Delaware.
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 Portfolios, 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 Portfolio if shares of the
Designated Portfolio 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 Fund upon institution of formal proceedings
against the Company by the NASD, the Commission, the insurance
commission 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 administration of the Contracts, the operation of the
Separate Account, or the purchase of the Fund shares, provided that
the Fund 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
April 26, 2001 Page 21 of 27
(e) at the option of the Company upon institution of formal proceedings
against the Fund, the Adviser or the Distributor 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 Fund's, the Adviser's or the Distributor's
ability to perform its obligations under this Agreement; or
(f) at the option of the Company, if any Designated Portfolio 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 Portfolio 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 Portfolio, if any
Designated Portfolio fails to meet the diversification requirements
specified in Section 3.3 hereof or if the Company reasonably believes
any Designated Portfolio 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 either the Fund, the Adviser or
the Distributor 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 Fund, the Adviser or the Distributor, if the
Fund, the Adviser or the Distributor 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 Fund, the Adviser or
the Distributor; or
(k) at the option of the Company or the Fund 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 Portfolio's shares in accordance with the terms of the
Contracts for which those Designated Portfolio shares had been
selected to serve as the underlying
April 26, 2001 Page 22 of 27
portfolio. The Company will give sixty (60) days' prior written notice
to the Fund of the date of any proposed vote or other action taken to
replace the shares of a Designated Portfolio or of the filing of any
required regulatory approval(s); or
(1) at the option of the Company or the Fund upon a determination by a
majority of the Fund Board, or a majority of the disinterested
Directors, 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 Fund as set forth in Article VII
of this Agreement; or
(m) subject to the Fund's compliance with Article III, at the option of
the Fund 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.
April 26, 2001 Page 23 of 27
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Fund, the Adviser
and the Distributor will, 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 will be permitted to reallocate investments in the Designated
Portfolios (as in effect on such date), redeem investments in the
Designated Portfolios and/or invest in the Designated Portfolios 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: President
If to the Fund:
--------------
The Prudential Series Fund, Inc.
Gateway Center Three, 4th floor
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Secretary
April 26, 2001 Page 24 of 27
If to the Adviser:
-----------------
Prudential Investments Fund Management LLC
Gateway Center Three, 4th floor
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Secretary
If to the Distributor:
---------------------
Prudential Investment Management Services LLC
Gateway Center Three, 14th floor
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Secretary
ARTICLE XII - MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property of the
Fund or the relevant Designated Portfolio for the enforcement of any claims
against the Fund or the Designated Portfolio as neither the directors,
officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund or any Designated
Portfolios.
12.2 The Fund, the Adviser and the Distributor acknowledge that the identities
of the customers of the Company or any of its affiliates (collectively the
"Protected Parties" for purposes of this Section 12.2), information
maintained regarding those customers, and all computer programs and
procedures developed by the Protected Parties or any of their employees or
agents in connection with the Company's performance of its duties under
this Agreement are the valuable property of the Protected Parties. The
Fund, the Adviser and the Distributor agree that if they come into
possession of any list or compilation of the identities of or other
information about the Protected Parties' customers, or any other property
of the Protected Parties, other than such information as may be
independently developed or compiled by the Fund, the Adviser and the
Distributor from information supplied to them by the Protected Parties'
customers who also maintain accounts directly with the Fund, the Adviser
and the Distributor, the Fund, the Adviser and the Distributor will hold
such information or property in confidence and refrain from using,
disclosing or distributing any of such information or other property
except: (a) with the Company' s prior written consent; or (b) as required
by law or judicial process. The Fund and the Adviser acknowledge that any
breach of the agreements in this Section 12.2 would result in immediate and
irreparable harm to the Protected Parties for which there would be no
adequate remedy at law and agree that in the event
April 26, 2001 Page 25 of 27
of such a breach, the Protected Parties will be entitled to equitable
relief by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems appropriate.
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 fund 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 Fund or other applicable terms of this Agreement.
April 26, 2001 Page 26 of 27
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: ______________________________
THE PRUDENTIAL SERIES FUND, INC.
By: ______________________________
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC
By: ______________________________
PRUDENTIAL INVESTMENT MANAGEMENT
SERVICES LLC
By: ______________________________
April 26, 2001 Page 27 of 27
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 Portfolios of the Fund 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 (ASAP)
American Skandia Advisor Plan IISM (ASAP II)
American Skandia Advisor Plan IISM Premier (ASAP II Premier)
American Skandia XTra CreditSM (XTra Credit)
American Skandia XTra CreditSM Premier (XTra Credit Premier)
American Skandia LifeVest(R) (ASL)
American Skandia LifeVest(R) Premier (ASL Premier)
American Skandia ProtectorSM (AS Pro)
American Skandia Apex (AS Apex)
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Variable Account B (Class 2
Sub-accounts)
CONTRACT(S):
American Skandia Advisors Choice(R)2000 (Choice)
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Variable Account B (Class 3
Sub-accounts)
CONTRACT(S):
American Skandia Impact (AS Impact)
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Variable Account B (Class 7
Sub-accounts)
CONTRACT(S):
American Skandia Variable Immediate Annuity
American Skandia Advisors Income Annuity
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Variable Account B (Class 8
Sub-accounts)
CONTRACT(S):
American Skandia Advisors Income Annuity
April 26, 2001
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Variable Account Q
CONTRACT(S):
American Skandia AS(k)(R) Group Variable Annuity (AS(k))
NAME OF SEPARATE ACCOUNT:
American Skandia Life Assurance Corporation Separate Account F
CONTRACT(S):
American Skandia Trophy (AS Trophy)
American Skandia Life Champion (AS Life Champion)
American Skandia Life Focus (AS Life Focus)
American Skandia Life Horizon (AS Life Horizon)
April 26, 2001
PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following
Portfolios of the Fund.
▇▇ ▇▇▇▇▇▇▇▇ International Growth Portfolio - Class II Shares
April 26, 2001
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 Fund. 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 Fund as early as
possible before the date set by the Fund 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 Fund will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.
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 Fund, as soon as possible, but no later than
two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Fund 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 Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Fund 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:
. name (legal name as found on account registration)
. address
. Fund or account number
. coding to state number of units
. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, the Fund 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
April 26, 2001
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:
. Voting Instruction Card(s)
. one proxy notice and statement (one document)
. return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
. "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
Fund.)
. cover letter - optional, supplied by Company and reviewed and approved
in advance by the Fund
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 Fund.
7. Package mailed by the Company.
* The Fund 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. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.
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 Fund receives the tabulations stated
in terms of a percentage and the number of SHARES.) The Fund must review
and approve tabulation format.
April 26, 2001
13. Final tabulation in shares is verbally given by the Company to the Fund on
the morning of the meeting not later than 10:00 a.m. Eastern time. The Fund
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 Fund 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 Fund 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.
April 26, 2001