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EXHIBIT 99.B6(b)
PARTICIPATION AGREEMENT
Between
LIFE & ANNUITY TRUST
And
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
THIS AGREEMENT, made and entered into this 6th day of April, 1994 by and
between American Skandia Life Assurance Corporation (hereinafter the "Company")
on its own behalf and on behalf of Separate Account B (hereinafter the
"Account"), a segregated asset account of the Company, and the Life & Annuity
Trust, an unincorporated business trust organized under the laws of Delaware
(hereinafter the "Trust") and Xxxxxxxx Inc. (hereinafter the "Underwriter").
WHEREAS, the Trust 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 variable
annuity contracts (collectively referred to herein as "Variable Insurance
Products") to be offered by insurance companies which have entered into
participation agreements substantially identical to this Agreement (hereinafter
"Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (hereinafter the
"1940 Act") and its shares of beneficial interest ("shares") will be registered
under the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Account has registered or will register certain variable
annuity contracts under the 1933 Act; and
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WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company to set aside and invest assets attributable to the aforesaid variable
annuity contracts; and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker/dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended (hereinafter the "1934 Act"), and is a member in good standing of
the National Association of Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Account intends to purchase shares in the Funds to fund
certain of the aforesaid variable annuity contracts and the Underwriter is
authorized to sell such shares to unit investment trusts such as the Account at
net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Trust and the Underwriter agree as follows:
ARTICLE I
Sale of Fund Shares
1.1 The Underwriter agrees to sell to the Company those shares of the
Trust which the Account orders, executing such orders on a daily basis at the
net asset value next computed after receipt by the Trust or its designee of the
order for the shares of the Trust. For purposes of this Section 1.1, the
Company shall be the designee of the Trust for receipt of such orders from the
Account and receipt by such designee shall constitute receipt by the Trust;
provided that the Trust receives notice of such order on the next following
Business Day. "Business Day" shall mean any day on which a Fund calculates its
net asset value pursuant to the rules of the Securities and Exchange
Commission.
1.2 The Trust agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Account on those days on which the Trust calculates its
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net asset value pursuant to rules of the Securities and Exchange Commission.
Notwithstanding the foregoing, the Board of Trustees of the Trust (hereinafter
the "Trustees") may refuse to sell shares of any Fund to any person, or suspend
or terminate the offering of shares of any Fund if such action is required by
law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Trustees acting in good faith and in light of their fiduciary
duties under federal and any applicable state laws, necessary in the best
interests of the shareholders of such Fund.
1.3 The Trust and the Underwriter agree that shares of the Trust will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Fund will be sold to the general public.
1.4 The Trust and the Underwriter will not sell Trust shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, VII and Section 2.5 of Article II
of this Agreement is in effect to govern such sales.
1.5 The Trust agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Trust held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Trust for receipt of
requests for redemption from the Account and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of
such request for redemption on the next following Business Day.
1.6 The Company agrees to purchase and redeem the shares of each Fund
offered by the then current prospectus of the Trust and in accordance with the
provisions of such prospectus. The Company agrees that all net amounts
available under the variable annuity contracts (the "Contracts") with the form
number(s) which are listed on Schedule A attached hereto and incorporated
herein by reference, as such Schedule A may be amended from time to time
hereafter by mutual written agreement of all the parties hereto, shall be
invested in the Trust, in such other investment companies, or series thereof,
advised by Xxxxx Fargo Bank ("the Adviser") as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account, provided
that such amounts may also be invested in an investment company other than the
Trust if (a) such other investment company, or series thereof, has investment
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objectives or policies that are substantially different from the investment
objectives and policies of all the Funds of the Trust; or (b) the Company gives
the Trust and the Underwriter forty-five (45) days' written notice of its
intention to make such other investment company available as a funding vehicle
for the contracts; or (c) such other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement and the
Company so informs the Trust and the Underwriter prior to their signing this
Agreement; or (d) the Trust or Underwriter consents to the use of such other
investment company.
1.7 The Account shall pay for Trust shares on the next Business Day after
an order to purchase Trust shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
1.8 Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Company or the Account.
Shares ordered from the Trust will be recorded in an appropriate title for the
Account or the appropriate subaccount of the Account.
1.9 The Trust shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Trust's shares. The Company hereby
elects to receive all such dividends and distributions as are payable on the
Fund shares in additional shares of that Fund. The Company reserves the right
to revoke this election and to receive all such dividends and distributions in
cash. The Trust shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.10 The Trust shall make the net asset value per share for each Fund
available to the Company on a daily basis as soon as reasonably practical 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 5:30 p.m. Pacific time.
1.11 The Trust may apply for an order exempting it from certain provisions
of the 1940 Act and rules thereunder so that the Trust may be available for
investment by certain other entities, including, without limitation, separate
accounts funding variable life insurance policies, separate
accounts of insurance companies unaffiliated with the Company and trustees of
qualified pension and retirement plans ("mixed and shared funding").
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ARTICLE II
Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state
insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established the
Account prior to any issuance or sale thereof as a segregated asset account
under Section 38a-433(a) of the General Statutes of Connecticut, Revision of
1958, as amended, and has registered or, prior to any issuance or sale of the
Contracts, will register the Account as a unit investment trust in accordance
with the provisions of the 1940 Act to serve as a segregated investment account
for the Contracts, and will amend the Separate Account's registration
statements under the 1933 Act and the 1940 Act to add the Trust as a funding
vehicle for the Contracts.
2.2 The Trust represents and warrants that Trust shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Delaware and all
applicable federal and state securities laws and that the Trust is and shall
remain registered under the 1940 Act. The Trust 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. The
Trust shall register and qualify the shares for sale in accordance with the
laws of the various states only if and to the extent deemed advisable by the
Trust or the Underwriter.
2.3 The Trust represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
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2.4 The Company represents that the Contracts are currently treated as
annuity contracts, under applicable provisions of the Code, as amended, and
that it will make every effort to maintain such treatment and that it will
notify the Trust and the Underwriter 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.
2.5 The Trust makes no 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 the various states
except that the Trust represents that the Trust's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Delaware.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker/dealer with the Securities
and Exchange Commission. The Underwriter further represents that it will sell
and distribute the Trust shares in accordance with the laws of the State of
Delaware and all applicable state and federal securities laws, including
without limitation, the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.7 The Trust represents that it is lawfully organized and validly
existing under the laws of the State of Delaware and that it does and will
comply in all material respects with the 0000 Xxx.
2.8 The Trust and Underwriter represent and warrant that all of their
trustees, directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Trust are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust in an amount not less than
$500,000. The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.9 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Trust are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Trust, in an amount not less than $500,000. The aforesaid Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
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2.10 The Trust represents that it will provide the Company notice of 90
days prior to the effective date of any plan under Rule 12b-1 pursuant to the
1940 Act if, at the time such plan is adopted, the majority of the Trust's
Board does not consist of disinterested Trustees. The Trust also represents
that it understands that the Company may need to take whatever steps are
necessary to cease investing in the Trust as a result of the adoption of such a
plan in order to comply with the terms of certain orders for exemptive relief
from provisions of the 1940 Act given to the Company and certain of its
separate accounts by the Securities and Exchange Commission.
ARTICLE III
Prospectuses and Proxy Statement; Voting
3.1 The Underwriter shall provide the Company (at the Company's expense)
with as many copies of its current prospectus as the Company may reasonably
request. If requested by the Company in lieu thereof, the Trust shall provide
such documentation (including a final copy of the new prospectus as set in type
at the Trust's expense) and other assistance as is reasonably necessary in
order for the Company once each year (or more frequently if the prospectus for
the Trust is amended) to have the prospectus for the Contracts and the Trust's
prospectus printed together in one document (such printing to be at the
Company's expense).
3.2 The Trust's prospectus shall state that the statement of additional
information for the Trust is available from the Underwriter (or in the Trust's
discretion, the prospectus shall state that such statement is available from
the Trust).
3.3 The Trust, at its expense, shall provide the Company with copies of
its proxy material, reports to stockholders and other communications to
stockholders in such quantity as the Company shall reasonably require for
distributing to Contract owners and participants.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract Owners or
participants;
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(ii) vote the Trust shares in accordance with instructions
received from Contract owners or participants; and
(iii) vote Trust shares for which no instructions have been
received in the same proportion as Trust shares of such
portfolio for which instructions have been received:
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting privileges
for variable contract owners. The Company reserves the right to vote Trust
shares held in any segregated asset account or in its general account in its
own right, to the extent permitted by law.
3.5 The Trust will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Trust will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the
Trust is not one of the 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 Trust
will act in accordance with the Securities and Exchange Commission's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of trustees and with whatever rules the Commission may promulgate
with respect thereto.
ARTICLE IV
Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee, each piece of sales literature or other promotional
material in which the Trust or its investment adviser or the Underwriter is
named, at least five Business Days prior to its use unless such material is
substantially similar to material previously approved by the Trust or its
designee. No such material shall be used if the Trust or its designee object
to such use within five business days after receipt of such material.
4.2 The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Trust shares, as
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such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the fund, or in sales
literature or other promotional material approved by the Trust or its designee
or by the Underwriter, except with the permission of the Trust or the
Underwriter or the designee of either.
4.3 The Trust, Underwriter, or its designee shall furnish, or shall 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(s)
is named at least five Business Days prior to its use unless such material is
substantially similar to material previously approved by the Company or its
designee. No such material shall be used if the Company or its designee object
to such use within five business days after receipt of such material.
4.4 The Trust and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for the Account which are in the public domain
or approved by the Company for distribution to Contract owners or participants,
or in sales literature or other promotional material approved by the Company or
its designee, except with the permission of the Company.
4.5 The Trust will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Trust or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
4.6 The Company will provide to the Trust at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate to the
Contracts or the Account, contemporaneously with the filing of such document
with the Securities and Exchange Commission.
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4.7 For purposes of this Article IV, 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), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
Statements of Additional Information, shareholder reports, and proxy materials.
ARTICLE V
Fees and Expenses
5.1 The Trust and Underwriter shall pay no fee or other compensation to
the Company under this agreement.
5.2 All expenses incident to performance by the Trust under this Agreement
shall be paid by the Trust. The Trust shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal
law and, if and to the extent deemed advisable by the Trust, in accordance with
applicable state laws prior to their sale. The Trust shall bear the expenses
for the cost of registration and qualification of the Trust's shares,
preparation and filing of the Trust's prospectus and registration statement,
proxy materials and reports, printing the prospectus and proxy materials and
reports to shareholders (including the annual report), the preparation of
statements and notices required by any federal or state law, all taxes on the
issuance or transfer of the Trust's shares, and any expenses permitted to be
paid or assumed by the Trust pursuant to a plan, if any, under Rule 12b-1.
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5.3 The Company shall bear the expenses of printing and distributing the
Trust's prospectus to owners and participants of Contracts issued by the
Company and of distributing the Trust's proxy materials and reports to such
Contract owners or participants.
ARTICLE VI
Diversification
6.1 The Trust 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. Without limiting the
scope of the foregoing, the Trust will at all times comply with Section 817(h)
of the Code and the rules and regulations thereunder.
ARTICLE VII
Potential Conflicts
7.1 The Board of Trustees of the Trust (the "Board") will monitor the
Trust for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts investing in the
Trust. 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 Fund are
being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (f) a decision
by an insurer to disregard the voting instructions of contract owners. The
Board shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
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 any mixed and/or
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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 disregarded.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Trust or any Fund and reinvesting such assets in a different investment
medium, including (but not limited ) another Fund of the Trust, 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) the vote 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 Trust's election, to withdraw the Account's investment
in the Trust 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
disinterested members of the Board. Any such withdrawal and termination must
take place within six months after the Trust gives written notice that this
provision is being implemented, and until the end of that six month period the
Underwriter and Trust shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Trust.
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 Trust and terminate this Agreement with six
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months after the board informs the Company in writing that it has determined
that such decision has created an irreconcilable material conflict; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board. Until the end of the
foregoing six month period, the Underwriter and Trust shall continue to accept
and implement orders by the Company for the purchase (and redemption) of shares
of the Trust.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Trust 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 materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Trust
and terminate this Agreement within six 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
disinterested members of the Board.
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 Act
or the rules promulgated thereunder with respect to mixed or shared funding,
then (a) the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule 6e-2
and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules
are applicable; and (b) Sections 3.4, 3.5, 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.
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ARTICLE VIII
Indemnification
8.1 Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Trust and
each of its Trustees and officers and each person, if any, who controls the
Trust 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, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including 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 actions in respect thereof) or
settlements are related to the sale or acquisition of the Contracts shares 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 for the Contracts or
contained in the Contracts or sales literature 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 to the Company by
or on behalf of the Trust for use in the Registration Statement
or prospectus 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 Trust 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
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literature of the Trust 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 Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement,
prospectus, or sales literature of the Trust 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 to the Trust by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material
breach of any representation and/or warranty made by the Company
in this Agreement or arise out of or result from any other
material breach of this Agreement by the Company,
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, 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 gross 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 the Trust, whichever is applicable.
(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
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Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. 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 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 Trust Shares or the Contracts or the operation
of the Trust.
8.2 Indemnification By the Underwriter
(a) The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
control the Company within the meaning of Section 1 of the 1933 Act
(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 Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may
become subject under any statute, 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 Trust's
shares 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 sales literature of the
Trust (or any amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
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
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alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Underwriter
or Trust by or on behalf of the Company for use in the
Registration Statement or prospectus for the Trust or in sales
literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Trust
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 for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Trust, Underwriter or
persons under their control, with respect to the sale or
distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement,
prospectus, or sales literature 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 to the
Company by or on behalf of the Trust; or
(iv) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Trust and/or
Underwriter in this Agreement or arise out of or result from
any other material breach of this Agreement by the Trust and/or
Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would
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otherwise be subject by reason of such Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Company or the Account,
whichever is applicable.
(c) The Underwriter 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 Underwriter 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 Underwriter
of any such claim shall not relieve the Underwriter from any liability which it
may have to the indemnified Party against whom such action is brought otherwise
then on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter'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 Underwriter 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 Underwriter 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.
8.3 Indemnification By the Trust
(a) The Trust agrees to indemnify and hold harmless the Company, the
Underwriter and each of their respective directors and officers and each
person, if any, who controls the Company or the Underwriter within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts
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paid in settlement with the written consent of the Trust) or litigation
(including legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements which:
(i) are related to the sale or acquisition of the Trust's shares
and:
A. 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 sales literature
for the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated 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 to the Underwriter or
Trust by or on behalf of the Company for use in the
Registration Statement or prospectus for the Trust
or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Trust shares; or
B. 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 for the Contracts not supplied by the Underwriter
or persons under its control) or wrongful conduct of the
Trust, or persons under its control, with respect to the
sale or distribution of the Contracts or Trust shares; or
C. arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature 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
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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 to
the Company by or on behalf of the Trust; or
(ii) are related to the operations of the Trust, results from the
gross negligence, bad faith or willful misconduct of the Board
or any member thereof and:
A. arise as a result of any failure by the Trust 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
requirements specified in Article VI of this Agreement; or
B. arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Trust;
as limited by and in accordance with the provisions of Section 8.3(b) and
8.3(c) hereof.
(b) The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company, the Trust, the Underwriter or the
Account, whichever is applicable.
(c) The Trust 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 Trust 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 Trust of
any such claim shall not relieve the Trust 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. In case any such action is brought
against the Indemnified Parties, the Trust will be entitled to participate, at
its own expense, in the defense thereof. The Trust also shall be entitled to
assume the defense thereof, with counsel
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satisfactory to the party named in the action. After notice from the Trust to
such party of the Trust'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 Trust 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 and the Underwriter agree promptly to notify the
Trust of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Trust.
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 Connecticut.
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 Securities
and Exchange Commission may grant 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 upon one year's advance written
notice to the other parties without the payment of any penalty; provided,
however, such notice may not be given earlier than one year following the date
of this Agreement; or
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(b) at the option of the Company to the extent that shares of Funds
are not reasonably available to meet the requirements of the Contracts as
determined by the Company, provided however, that such termination shall apply
only to the Fund(s) not reasonably available; or
(c) at the option of the Trust in the event that formal
administrative proceedings are instituted against the Company by the National
Association of Securities Dealers, Inc. ("NASD"), the Securities and Exchange
Commission, the Insurance Commissioner or any other regulatory body regarding
the Company's duties under this Agreement or related to the sale of the
Contracts, the operation of the Account, or the purchase of the Trust shares,
provided, however, that the Trust determines in its sole judgment exercised in
good faith, that any such administrative proceedings will have a material
adverse effect upon the ability of the Company to perform its obligations under
this Agreement; or
(d) at the option of the Company in the event that formal
administrative proceedings are instituted against the Trust or Underwriter by
the NASD, the Securities and Exchange Commission, or any state securities or
insurance department or any other regulatory body, provided, however, that the
Company 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 Trust or Underwriter to perform its obligations under this Agreement; or
(e) upon requisite vote of the Contract owners having an interest
in the Account (or any subaccount) to substitute the shares of another
investment company for the corresponding Fund shares of the Trust in accordance
with the terms of the Contracts for which those Fund shares had been selected
to serve as the underlying investment media. The Company will give 30 days'
prior written notice to the Trust of the date of any proposed vote to replace
the Trust's shares; or
(f) at the option of the Company, in the event any of the Trust'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
(g) at the option of the Trust, in the event the Contracts are not
registered, issued or sold in accordance with applicable state and/or federal
law; or
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(h) at the option of the Company, if the Trust 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 the
Trust may fail to so qualify; or
(i) at the option of the Company, if the Trust fails to meet the
diversification requirements specified in Article VI hereof; or
(j) at the option of either the Trust or the Underwriter, if (1)
the Trust or the Underwriter, respectively, shall determine, in their sole
judgment reasonably exercised in good faith, that the Company has suffered a
material adverse change in the business or financial condition or is the
subject of material adverse publicity and such material adverse change or
material adverse publicity will have a material adverse impact upon the
business and operations of either the Trust or the Underwriter, (2) the Trust
or the Underwriter shall notify the Company in writing of such determination
and its intent to terminate this Agreement, and (3) after considering the
actions taken by the Company and any other changes in circumstances since the
giving of such notice, such determination of the Trust or the
Underwriter shall continue to apply on the sixtieth day following the giving of
such notice, which sixtieth day shall be the effective date of termination; or
(k) at the option of the Company, if (1) the Company shall
determine, in its sole judgment reasonably exercised in good faith, that either
the Trust or the Underwriter has suffered a material adverse change in its
business or financial condition or is the subject of material adverse publicity
and such material adverse change or material adverse publicity will have a
material adverse impact upon the business and operations of the Company, (2)
the Company shall notify the Trust and the Underwriter in writing of such
determination and its intent to terminate the Agreement, and (3) after
considering the actions taken by the Trust and/or the Underwriter and any other
changes in circumstances since the giving of such notice, such determination
continue to apply on the sixtieth day following the giving of such notice,
which sixtieth day shall be the effective date of termination; or
(l) at the option of either the Trust or the Underwriter, if the
Company gives the Trust and the Underwriter the written notice specified in
Section 1.6(b) hereof and at the time such notice was given there was no notice
of termination outstanding under any other provision of this Agreement;
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provided, however any termination under this Section 10.1(l) shall be effective
forty-five days after the notice specified in Section 1.6(b) was given; or
(m) automatically in the event of its assignment, unless made with
the written consent of each party.
10.2 It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for any
reason or for no reason.
10.3 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 to this Agreement of its intent to
terminate which notice shall set forth the basis for such termination.
Furthermore,
(a) In the event that any termination is based upon the provisions
of Article VII, or the provision of Section 10.1(a), 10.1(j), 10.1(k) or
10.1(l) of this Agreement, such prior written notice shall be given in advance
of the effective date of termination as required by such provisions; and
(b) in the event that any termination is based upon the provisions
of Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice
shall be given at least 90 days before the effective date of termination.
10.4 Effect of Termination. Notwithstanding any termination of this
Agreement, the Trust and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Trust pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Trust, redeem
investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 10.4 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.
10.5 Except as necessary to implement Contract Owner initiated
transactions, or as required by state and/or federal laws or regulations, the
Company shall not redeem Trust shares attributable to the Contracts (as opposed
to Trust shares attributable to the Company's assets held in the Accounts).
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Furthermore, except in cases where permitted under the terms of the Contracts,
the Company shall not prevent Contract Owners from allocating payments to a
Fund that was otherwise available under the Contracts without first giving the
Trust or the Underwriter ninety (90) days notice of its intention to do so.
ARTICLE XI
Notices
11.1 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 party.
If to the Trust:
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Treasurer
If to the Company:
American Skandia Life Assurance Corporation
Attention: President
If to the Underwriter:
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Treasurer
ARTICLE XII
Miscellaneous
12.1 All persons dealing with the Trust must look solely to the property
of the Trust for the enforcement of any claims against the Trust as neither the
Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Trust.
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12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize such
names and addresses and other confidential information until such time as it
may come into the public domain without the express written consent of the
affected party.
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 shall constitute one and the same
instrument.
12.5 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.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, 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.
12.7 The Trust shall own and control all records generated on behalf of
the Trust as a result of services provided under this Agreement. In addition,
the Trust shall have the right to inspect, audit, and/or copy all records
pertaining to the performance of services under this Agreement.
12.8 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.
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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 as of the date specified below.
Company:
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
By: /s/Xxxxxx X. Xxxxx
Date: 4/6/94
Trust:
LIFE & ANNUITY TRUST
By: /s/Xxxxxxx X. Xxxxx, Xx.
Date: 4/5/94
Underwriter:
XXXXXXXX INC.
By: /s/Xxxxxxx X. Xxxxx, Xx.
Date: 4/5/94
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Schedule A
Contracts
A-1
