DISTRIBUTION AGREEMENT
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This Distribution Agreement made this __ day of ____________, 1999, by and
between The Prudential Insurance Company of America, a New Jersey corporation
("Company"), on its own behalf and on behalf of The Prudential Individual
Variable Contract Account ("Account") used to fund individual annuity contracts
and Prudential Investment Management Services LLC, a Delaware limited liability
company ("Distributor"), effective November __, 1999.
WITNESSETH:
WHEREAS, Company has established and maintains the Account, which is a
separate investment account, pursuant to the laws of the State of New Jersey for
the purpose of selling, among other variable contracts, the Discovery Plus
Variable Annuity and the Variable Investment Plan (Variable Annuity) variable
annuity contracts ("Contracts"), to commence after the effectiveness of the
Registration Statement relating thereto filed with the Securities and Exchange
Commission on Form N-4 pursuant to the Securities Act of 1933, as amended (the
"1933 Act") and the Investment Company Act of 1940 ("Investment Company Act");
and
WHEREAS, the Account is registered as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, Distributor is registered as a broker-dealer under the Securities
Exchange Act of 1934 (the "Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, Company and the Distributor wish to enter into an agreement to
have the Distributor act as Company's principal underwriter for the sale of the
Contracts through the Account.
NOW, Therefore, for good and valuable consideration, the sufficiency of
which is acknowledged hereby, the parties agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR
Company agrees that during the term of this Agreement it will take all
action required to cause the Contracts to comply as an insurance product and a
registered security with all applicable federal and state laws and regulations.
Company appoints Distributor and Distributor agrees to act as the principal
underwriter for the sale of Contracts to the public, during the term of this
Agreement, in each state and other jurisdictions in which such Contracts may
lawfully be sold. Distributor shall offer Contracts for sale and distribution at
premium rates set by Company. Applications for Contracts shall be solicited only
by representatives duly and appropriately licensed or otherwise qualified for
the sale of such Contracts in each state or other jurisdiction. Company shall
undertake to appoint Distributor's qualified representatives as life insurance
agents of Company. Completed applications for Contracts shall be transmitted
directly to Company for acceptance or rejection in accordance with underwriting
rules established by
Company. Initial premium payments under the Contracts shall be made by check
payable to Company and shall be held at all times by Distributor or its
representatives in a fiduciary capacity and remitted promptly to Company.
Anything in this Agreement to the contrary notwithstanding, Company retains the
ultimate right to control the sale of Contracts and to appoint and discharge
life insurance agents of Company. Distributor shall be held to the exercise of
reasonable care in carrying out the provisions of this Agreement.
2. SALES AGREEMENTS
Distributor is hereby authorized to enter into separate written agreements,
on such terms and conditions as Distributor may determine not inconsistent with
the terms of this Agreement, with one or more organizations which agree to
participate in the distribution of Contracts. Such organizations (hereafter
"Brokers" or "Broker") shall be both registered as a broker/dealer under the
Exchange Act and a member in good standing of the NASD. Broker and its agents or
representatives soliciting applications for Contracts shall be duly and
appropriately licensed, registered, or otherwise qualified for the sale of such
Contracts (and the riders and other policies offered in connection therewith)
under the insurance laws and any applicable blue-sky laws of each state or other
jurisdiction in which Company is licensed to sell the Contracts.
Distributor shall have the responsibility for ensuring that Broker
supervises its representatives. Broker shall assume any legal responsibilities
of Company for the acts, commissions or defalcations of such representatives
insofar as they relate to the sale of the Contracts. Applications for Contracts
solicited by such Broker through its agents or representatives shall be
transmitted directly to Company, and if received by Distributor, shall be
forwarded to Company. All premium payments under the Contracts shall be made by
check to Company and, if received by Distributor, shall be held at all times in
a fiduciary capacity and remitted promptly to Company.
3. LIFE INSURANCE LICENSING
Company shall be responsible for insuring that Brokers are duly qualified,
under the insurance laws of the applicable jurisdictions, to sell the Contracts.
4. SUITABILITY
Company wishes to ensure that Contracts sold by Distributor will be issued
to purchasers for whom the Contract will be suitable. Distributor shall take
reasonable steps to ensure that the various representatives appointed by it
shall not make recommendations to an applicant to purchase a Contract in the
absence of reasonable grounds to believe that the purchase of the Contract is
suitable for such applicant. While not limited to the following, a determination
of suitability shall be based on information furnished to representatives after
reasonable inquiry of such applicant concerning the applicant's insurance and
investment objectives, financial situation and needs, and the likelihood that
the applicant will continue to make the premium payments contemplated by the
Contracts.
5. PROMOTION MATERIALS
Company shall have the responsibility for furnishing to Distributor and its
representatives sales promotion materials and individual sales proposals related
to the sale of
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Contracts. Distributor shall not use any such materials that have not been
approved by Company. Distributor shall be responsible for obtaining NASD review
of all promotional materials.
6. COMPENSATION
Company shall arrange for the payment of commissions directly to those
registered representatives of Distributor who are entitled thereto in connection
with the sale of the Contracts on behalf of Distributor, in the amounts and on
such terms and conditions as Company and Distributor shall determine; provided
that such terms, conditions, and commissions shall be as set forth in, or as are
not inconsistent with, the Prospectus included as part of the Registration
Statement for the Contracts and effective under the 1933 Act.
Company shall arrange for the payment of commissions directly to those
Brokers who sell Contracts under agreements entered into pursuant to paragraph 2
hereof, in amounts as may be agreed to by the Company and specified in such
written agreements.
Company shall reimburse Distributor for the costs and expenses incurred by
Distributor in furnishing or obtaining the services, materials and supplies
required by the terms of this Agreement in the initial sales efforts and the
continuing obligations hereunder.
7. RECORDS
Distributor shall be responsible for maintaining records of representatives
licensed, registered, and otherwise qualified to sell Contracts. Distributor
shall maintain such other records as are required of it by applicable laws and
regulations. The books, accounts, and records of Company, the Account, and
Distributor shall be maintained so as to clearly and accurately disclose the
nature and details of the transactions. All records maintained by Distributor in
connection with this Agreement shall be the property of Company and shall be
returned to Company upon termination of this Agreement, free from any claims or
retention of rights by Distributor. Distributor shall keep confidential any
information obtained pursuant to this Agreement and shall disclose such
information only if Company has authorized such disclosure or if such disclosure
is expressly required by applicable federal or state regulatory authorities.
8. INVESTIGATION AND PROCEEDING
(a) Distributor and Company agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with Contracts distributed under this Agreement. Distributor and
Company further agree to cooperate fully in any securities regulatory
investigation or proceeding or judicial proceeding with respect to Company,
Distributor, their affiliates and their agents or representatives to the extent
that such investigation or proceeding is in connection with Contracts
distributed under this Agreement. Distributor shall furnish applicable federal
and state regulatory authorities with any information or reports in connection
with its services under this Agreement which such authorities may request in
order to ascertain whether Company's operations are being conducted in a manner
consistent with any applicable law or regulations.
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(b) In the case of a substantive customer complaint, Distributor and
Company will cooperate in investigating such complaint and any response to such
complaint will be sent to the other party to this Agreement for approval not
less than FIVE (5) BUSINESS DAYS prior to its being sent to the customer or
regulatory authority, except that if more prompt response is required, the
proposed response shall be communicated by telephone or telegraph.
9. TERMINATION
This Agreement may be terminated at any time by either party on SIXTY (60)
DAYS prior written notice to the other party, without payment of penalty. In the
event that the Agreement is assigned, however, it shall terminate automatically.
Upon termination of this Agreement, all authorizations, rights, and obligations
shall cease except the obligation to settle accounts hereunder, including
commissions on premiums subsequently received for Contracts in effect at times
of termination, and the agreements contained in paragraph 8 hereof.
10. ASSIGNMENTS AND TRANSFERS
No transfer or assignment shall be effective without the prior written
consent of both the Company and the Distributor, except with respect to
transfers pursuant to Rule 2a-6 under the Investment Company Act. All agreements
that result from any assignment or transfer affecting New Jersey are subject to
the approval of the New Jersey Department of Insurance. Additional regulatory
approvals may also be required.
11. REGULATION
This Agreement shall be subject to the provisions of the 1940 Act and the
Exchange Act and the rules, regulations, and rulings thereunder and of the
applicable rules and regulations of the NASD, from time to time in effect, and
the terms hereof shall be interpreted and construed in accordance therewith.
12. SEVERABILITY
Should any provision of this Agreement be held or made invalid by a court
decision, statute, rule, or otherwise, the remainder of this Agreement shall not
be affected thereby.
13. WARRANTIES
Each party to this Agreement warrants to the other party as follows:
(a) it has full power and authority to execute and deliver this Agreement
and to perform and observe the provisions herein;
(b) the execution, delivery, and performance of this Agreement have been
authorized by all necessary corporate actions and do not and will not contravene
any requirement of law or any contractual restrictions or agreement binding on
or affecting such party or its assets; and
(c) this Agreement has been duly and properly executed and delivered by
such party and constitutes a legal, valid, and binding obligation of such party
enforceable with its terms.
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14. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE PRUDENTIAL LIFE INSURANCE COMPANY
OF AMERICA
By:
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Name:
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Title:
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PRUDENTIAL INVESTMENT MANAGEMENT
SERVICES LLC
By:
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Name:
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Title:
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