AGREEMENT RELATING TO THE SALE OF
CONTRACTS ON A VARIABLE BASIS
STATEMENT OF FACTS
A. On January 9, 1968, the Board of Directors of The Prudential Insurance
Company of America ("Prudential") adopted a resolution establishing The
Prudential Variable Contract Account-2 ("VCA-2") as a funding medium for such
contracts on a variable basis sold and administered by Prudential as may be
designated by it as participating therein.
B. Prudential will perform all administrative functions in connection with
the contracts on a variable basis which it may issue, including receiving
contributions from or on behalf of contract holders or participants thereunder,
allocating such contributions in accordance with the provisions of such
contracts and making variable annuity payments as they become due. More
particularly, Prudential will:
(a) maintain such books of account and records of all transactions
relating to VCA-2 as may be necessary to reflect clearly the assets
and liabilities attributable to VCA-2, and in that connection all
investments and liabilities attributable to VCA-2, at all times, shall
be identifiable and distinguishable from the other investments and
liabilities of Prudential;
(b) have custody of and keep safely at all times the assets held in VCA-2.
Such assets shall always be physically segregated from the other
assets of Prudential. Access to such assets shall be permitted only in
accordance with the applicable provisions of the Investment Company
Act of 1940 ("1940 Act"), the regulations thereunder, and such
exemptions
-2-
therefrom as may be granted by the Securities and Exchange Commission.
All persons having access to such assets shall be covered by a bond
that meets the requirements of said Act and regulations. Securities
included among the assets held in VCA-2 shall be registered in the
name of VCA-2;
(c) prepare and transmit to the VCA-2 Committee for its approval all
proxies, proxy statements and periodic reports that are required to
be, or may be, transmitted to persons having voting rights in respect
of VCA-2, as provided for by the Rules and Regulations of VCA-2, and
upon the Committee's approval transmit the same to such persons;
(d) prepare and file all reports required by law to be filed with any
state or federal regulatory agency; and
(e) pay all costs, taxes and expenses attributable to the operations of
VCA-2. Such payment shall not result in any reduction of the value or
number of Accumulation Units credited to persons who hold
participating interests in VCA-2 or in the amounts which they are
entitled to receive under contracts on a variable basis issued by
Prudential other than in a manner set forth in each such contract.
Each such contract will set forth, either in terms of dollars or of
a percentage by which the value of the amounts credited to persons
holding participating interests in VCA-2 will be reduced, the charge
that will be made in order to provide funds intended to defray the
expenses of administering the contracts and to create a surplus to
be used, if necessary, to meet the mortality and expense guarantees
made by Prudential.
C. Prudential will sell its contracts on a variable basis through agents
employed by it and through independent brokers and will pay certain sales
commissions in that connection as well as other expenses attributable to the
marketing and sale of such contracts.
-3-
D. Pursuant to the requirements of the 1940 Act VCA-2 will be registered
thereunder as an investment company.
E. The 1940 Act forbids any person from acting as principal underwriter
to a registered investment company except pursuant to a written contract and
Prudential may be regarded as the principal underwriter of VCA-2.
AGREEMENT
NOW, THEREFORE, Prudential and VCA-2 agree as follows:
1. Prudential will sell contracts on a variable basis that include
participating interests in VCA-2.
2. Each contract on a variable basis participating in VCA-2 sold by
Prudential shall set forth explicitly the percentage of each contribution made
by or on behalf of every person covered thereunder that will be credited to an
account maintained for such person. The remaining portion of each such
contribution will be retained by Prudential and may be used by it, to the extent
necessary, for the payment of commissions to persons instrumental in the sale of
such contract and for payment of other expenses incurred in connection with the
marketing and sale of such contract.
3. Promptly after it issues a contract on a variable basis that includes
participating interests in VCA-2 Prudential shall advise the Prudential Variable
Contract Account-2 Committee ("Committee") of the percentage of each
contribution that the contract provides will be credited to the accounts of
participants thereunder. Prudential shall also promptly advise the Committee of
any change in the contract that increases or decreases such percentage.
-4-
4. It is understood that the compensation to Prudential, resulting from
the fact that less than 100 per cent of the contribution made by participants
under contracts on a variable basis is credited to the accounts maintained for
such persons, is separate and apart from the additional compensation, more fully
described in a separate contract between the parties also executed as of this
date, providing for the performance of investment management services, and is
also separate from and additional to the charge or charges made, as described
in Paragraph B, subparagraph (e), of the Statement of Facts preceding this
Agreement, for the purpose of providing funds to defray the expenses of
administering the contracts.
5. This agreement shall remain in force until June 1, 1969 and from
year to year thereafter, but only so long as such continuance is approved
at least annually by the affirmative vote of the Committee, including the
specific approval of a majority of the members of the Committee who are not
persons affiliated with Prudential, or by a majority of the votes cast by
those persons having voting rights in respect of VCA-2, as provided for by
the Rules and Regulations of VCA-2.
6. This agreement shall automatically terminate in the event of its
assignment by Prudential.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
this 19th day of February, 1968.
Attest: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
/s/ X.X. Xxxxxxxx By /s/
------------------------- -----------------------------------------
X.X. Xxxxxxxx, Secretary Executive Vice President
Witnessed: THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2
/s/ By /s/ Xxxxx Xxxxxxxxx
------------------------- -----------------------------------------
Secretary to the Committee Chairman of the Committee
