As of May 3, 2004
by
and among Franklin Xxxxxxxxx Variable Insurance Products Trust Franklin/Xxxxxxxxx
Distributors, Inc.
The Pruco Life
Insurance Company
The Pruco Life Insurance
Company of New Jersey
Prudential Insurance
Company of America
Franklin
Xxxxxxxxx Variable Insurance Products Trust (the “Trust”), Franklin/Xxxxxxxxx
Distributors, Inc. (the “Underwriter,” and together with the Trust,
“we” or “us”) and, The Pruco Life Insurance Company, The Pruco Life
Insurance Company of New Jersey and Prudential Insurance Company of America
(“you”), on your behalf and on behalf of certain Accounts, have previously
entered into a Participation Agreement dated May 1, 2000 (the “Agreement”). The
parties now desire to amend the Agreement in this amendment (the “Amendment”).
Except
as modified hereby, all other terms and conditions of the Agreement shall remain in full
force and effect. Unless otherwise indicated, the terms defined in the Agreement shall
have the same meaning in this Amendment.
A M E N D M E N T
For
good and valuable consideration, the receipt of which is hereby acknowledged, the parties
agree to amend the Agreement as follows:
1.
Section 2.1.6 of the Agreement is hereby amended to add the following sentence
at the end of the section:
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“Without
limiting the foregoing, you agree that in recommending to a Contract owner the purchase,
sale or exchange of any subaccount units under the Contracts, you shall have reasonable
grounds for believing that the recommendation is suitable for such Contract owner.” |
2.
A new Section 2.1.12 is hereby added to the Agreement as follows:
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“2.1.12
As covered financial institutions we, only with respect to Portfolio shareholders, and you
each undertake and agree to comply, and to take full responsibility in complying with any
and all applicable laws, regulations, protocols and other requirements relating to money
laundering including, without limitation, the International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001 (Title III of the USA PATRIOT Act).”
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3.
Section 3 of the Agreement is hereby deleted in its entirety and replaced with
the following Section 3:
“3.
Purchase and Redemption of Trust Portfolio Shares
3.1
Availability of Trust Portfolio Shares
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3.1.1
We will make shares of the Portfolios available to the Accounts for the benefit of the
Contracts. The shares win be available for purchase at the net asset value per share next
computed after we (or our agent, or you as our designee) receive a purchase order, as
established in accordance with the provisions of the then current prospectus of the Trust.
All orders are subject to acceptance by us and by the Portfolio or its transfer agent, and
become effective only upon confirmation by us. Notwithstanding the foregoing, the
Trust’s Board of Trustees (“Trustees”) may refuse to sell shares of any
Portfolio to any person, or may suspend or terminate the offering of shares of any
Portfolio if such action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Trustees, they deem such action to be in
the best interests of the shareholders of such Portfolio.
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3.1.2
Without limiting the other provisions of this Section 3.1, among other delegations by the
Trustees, the Trustees have determined that there is a significant risk that the Trust and
its shareholders may be adversely affected by investors with short term trading activity
and/or whose purchase and redemption activity follows a market timing pattern as defined
in the prospectus for the Trust, and have authorized the Trust, the Underwriter and the
Trust’s transfer agent to adopt procedures and take other action (including, without
limitation, rejecting specific purchase orders in whole or in part) as they deem necessary
to reduce, discourage, restrict or eliminate such trading and/or market timing activity.
You agree that your purchases and redemptions of Portfolio shares are subject to, and that
you win assist us in implementing, the Market Timing Trading Policy and Additional
Policies (as described in the Trust’s prospectus) and the Trust’s restrictions
on excessive and/or short term trading activity and/or purchase and redemption activity
that follows a market timing pattern.
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3.1.3
We agree that shares of the Trust will be sold only to life insurance companies which have
entered into fund participation agreements with the Trust (“Participating Insurance
Companies”) and their separate accounts or to qualified pension and retirement plans
in accordance with the terms of the Shared Funding Order. No shares of any Portfolio will
be sold to the general public.
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3.2
Manual or Automated Portfolio Share Transactions
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3.2.1
Section 3.3 of this Agreement shall govern and Section 3.4 shall not be operative, unless
we receive from you at the address provided in the next sentence, written notice that you
wish to communicate, process and settle purchase and redemptions for shares (collectively,
“share transactions”) via the Fund/SERV and Networking systems of the National
Securities Clearing Corporation (“NSCC”). The address for you to send such
written notice shall be: Retirement Services, Franklin Xxxxxxxxx Investments, 000 Xxxx
Xxxxx, 0xx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000-0000. After giving ten (10) days’
advance written notice at the address provided in the previous sentence of your desire to
use NSCC processing, Section 3.4 of this Agreement shall govern and Section 3.3 shall not
be operative.
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3.2.2
At any time when, pursuant to the preceding paragraph, Section 3.4 of this Agreement
governs, any party to this Agreement may send written notice to the other parties that it
chooses to end the use of the NSCC Fund/SERV and Networking systems and return to manual
handling of share transactions. Such written notice shall be sent: (i) if from you to us,
to the address provided in the preceding paragraph; (ii) if from us to you, to your
address in Schedule G of this Agreement. After giving ten (10) days’ advance written
notice at the address as provided in the previous sentence, Section 3.3 of this Agreement
shall govern and Section 3.4 shall not be operative.
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3.3
Manual Purchase and Redemption
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3.3.1
You are hereby appointed as our designee for the sole purpose of receiving from Contract
owners purchase and exchange orders and requests for redemption resulting from investment
in and payments under the Contracts that pertain to sub accounts that invest in Portfolios
(“Instructions”). “Business Day” shall mean any day on which the New
York Stock Exchange is open for trading and on which the Trust calculates its net asset
value pursuant to the rules of the SEC and its current prospectus. “Close of
Trading” shall mean the close of trading on the New York Stock Exchange, generally
4:00 p.m. Eastern Time. You represent and warrant that all Instructions transmitted to us
for processing on or as of a given Business Day (“Day 1”) shall have been
received in proper form and time stamped by you prior to the Close of Trading on Day 1.
Such Instructions shall receive the share price next calculated following the Close of
Trading on Day 1, provided that we receive such Instructions from you before 9 a.m.
Eastern Time on the next Business Day (“Day 2”). You represent and warrant that
Instructions received in proper form and time stamped by you after the Close of Trading on
Day 1 shall be treated by you and transmitted to us as if received on Day 2. Such
Instructions shall receive the share price next calculated following the Close of Trading
on Day 2. You represent and warrant that you have, maintain and periodically test,
procedures and systems in place reasonably designed to prevent Instructions received after
the Close of Trading on Day 1 from being executed with Instructions received before the
Close of Trading on Day 1. All Instructions we receive from you after 9 a.m. Eastern Time
on Day 2 shall be processed by us on the following Business Day and shall receive the
share price next calculated following the Close of Trading on Day 2.
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3.3.2
We shall calculate the net asset value per share of each Portfolio on each Business Day,
and shall communicate these net asset values to you or your designated agent on a daily
basis as soon as reasonably practical after the calculation is completed (normally by 6:30
p.m. Eastern Time).
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3.3.3
You shall submit payment for the purchase of shares of a Portfolio on behalf of an Account
in federal funds transmitted by wire to the Trust or to its designated custodian, which
must receive such wires no later than the close of the Reserve Bank, which is 6:00 p.m.
Eastern Time, on the Business Day following the Business Day as of which such purchases
orders are made.
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3.3.4
We will redeem any full or fractional shares of any Portfolio, when requested by you on
behalf of an Account, at the net asset value next computed after receipt by us (or our
agent or you as our designee) of the request for redemption, as established in accordance
with the provisions of the then current prospectus of the Trust. We shall make payment for
such shares in the manner we establish from time to time, but in no event shall payment be
delayed for a greater period than is permitted by the 0000 Xxx.
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3.3.5
Issuance and transfer of the Portfolio shares will be by book entry only. Stock
certificates will not be issued to you or the Accounts. Portfolio shares purchased from
the Trust will be recorded in the appropriate title for each Account or the appropriate
subaccount of each Account.
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3.3.6
We shall furnish, on or before the ex-dividend date, notice to you of any income dividends
or capital gain distributions payable on the shares of any Portfolio. You hereby elect to
receive all such income dividends and capital gain distributions as are payable on shares
of a Portfolio in additional shares of that Portfolio, and you reserve the right to change
this election in the future. We will notify you of the number of shares so issued as
payment of such dividends and distributions.
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3.3.7
Each party to this Agreement agrees that, in the event of a material error resulting from
incorrect information or confirmations, the parties will seek to comply in all material
respects with the provisions of applicable federal securities laws.
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3.4
Automated Purchase and Redemption
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3.4.1
“Fund/SERV” shall mean NSCC’s Mutual Fund Settlement, Entry and
Registration Verification System, a system for automated, centralized processing of mutual
fund purchase and redemption orders, settlement, and account registration;
“Networking” shall mean NSCC’s system that allows mutual funds and life
insurance companies to exchange account level information electronically; and
“Settling Bank” shall mean the entity appointed by the Trust or you, as
applicable, to perform such settlement services on behalf of the Trust and you, as
applicable, which entity agrees to abide by NSCC’s then current rules and procedures
insofar as they relate to same day funds settlement. In all cases, processing and
settlement of share transactions shall be done in a manner consistent with applicable law.
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3.4.2
You are hereby appointed as our designee for the sole purpose of receiving from Contract
owners purchase and exchange orders and requests for redemption resulting from investment
in and payments under the Contracts that pertain to subaccounts that invest in Portfolios
(“Instructions”). “Business Day” shall mean any day on which the New
York Stock Exchange is open for trading and on which the Trust calculates its net asset
value pursuant to the rules of the SEC and its current prospectus. “Close of
Trading” shall mean the close of trading on the New York Stock Exchange, generally
4:00 p.m. Eastern Time. Upon receipt of Instructions, and upon your determination that
there are good funds with respect to Instructions involving the purchase of shares, you
will calculate the net purchase or redemption order for each Portfolio.
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3.4.3
On each Business Day, you shall aggregate all purchase and redemption orders for shares of
a Portfolio that you received prior to the Close of Trading. You represent and warrant
that all orders for net purchases or net redemptions derived from Instructions received by
you and transmitted to Fund/SERV for processing on or as of a given Business Day
(“Day 1”) shall have been received in proper form and time stamped by you prior
to the Close of Trading on Day 1. Such orders shall receive the share price next
calculated following the Close of Trading on Day 1, provided that we receive Instructions
from Fund/SERV by 6:30 a.m. Eastern Time on the next Business Day (“Day 2”). You
represent and warrant that orders received in good order and time stamped by you after the
Close of Trading on Day 1 shall be treated by you and transmitted to Fund/SERV as if
received on Day 2. Such orders shall receive the share price next calculated following the
Close of Trading on Day 2. All Instructions we receive from Fund/SERV after 6:30 a.m.
Eastern Time on Day 2 shall be processed by us on the following Business Day and shall
receive the share price next calculated following the close of trading on Day 2. You
represent and warrant that you have, maintain and periodically test, procedures and
systems in place reasonably designed to prevent orders received after the Close of Trading
on Day 1 from being executed with orders received before the Close of Trading on Day 1,
and periodically monitor the systems to determine their effectiveness. Subject to your
compliance with the foregoing, you will be considered the designee of the Underwriter and
the Portfolios, and the Business Day on which Instructions are received by you in proper
form prior to the Close of Trading will be the date as of which shares of the Portfolios
are deemed purchased, exchanged or redeemed pursuant to such Instructions. Dividends and
capital gain distributions will be automatically reinvested at net asset value in
accordance with the Portfolio’s then current prospectus.
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3.4.4
We shall calculate the net asset value per share of each Portfolio on each Business Day,
and shall furnish to you through NSCC’s Networking or Mutual Fund Profile System: (i)
the most current net asset value information for each Portfolio; and (ii) in the case of
fixed income funds that declare daily dividends, the daily accrual or the interest rate
factor. All such information shall be furnished to you by 6:30 p.m. Eastern Time on each
Business Day or at such other time as that information becomes available.
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3.4.5
You will wire payment for net purchase orders by the Trust’s NSCC Firm Number, in
immediately available funds, to an NSCC settling bank account designated by you in
accordance with NSCC rules and procedures on the same Business Day such purchase orders
are communicated to NSCC. For purchases of shares of daily dividend accrual funds, those
shares will not begin to accrue dividends until the day the payment for those shares is
received.
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3.4.6
We will redeem any full or fractional shares of any Portfolio, when requested by you on
behalf of an Account, at the net asset value next computed after receipt by us (or our
agent or you as our designee) of the request for redemption, as established in accordance
with the provisions of the then current prospectus of the Trust. NSCC will wire payment
for net redemption orders by the Trust, in immediately available funds, to an NSCC
settling bank account designated by you in accordance with NSCC rules and procedures on
the Business Day such redemption orders are communicated to NSCC, except as provided in
the Trust’s prospectus and statement of additional information.
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3.4.7
Issuance and transfer of the Portfolio shares will be by book entry only. Stock
certificates will not be issued to you or the Accounts. Portfolio shares purchased from
the Trust will be recorded in the appropriate title for each Account or the appropriate
subaccount of each Account.
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3.4.8
We shall furnish through NSCC’s Networking or Mutual Fund Profile System on or before
the ex-dividend date, notice to you of any income dividends or capital gain distributions
payable on the shares of any Portfolio. You hereby elect to receive all such income
dividends and capital gain distributions as are payable on shares of a Portfolio in
additional shares of that Portfolio, and you reserve the right to change this election in
the future. We will notify you of the number of shares so issued as payment of such
dividends and distributions.
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3.4.9
All orders are subject to acceptance by Underwriter and become effective only upon
confirmation by Underwriter. Underwriter reserves the right: (i) not to accept any
specific order or part of any order for the purchase or exchange of shares through
Fund/SER V; and (ii) to require any redemption order or any part of any redemption order
to be settled outside of Fund/SERV, in which case the order or portion thereof shall not
be “confirmed” by Underwriter, but rather shall be accepted for redemption in
accordance with Section 3.4.11 below.
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3.4.10
All trades placed through Fund/SERV and confirmed by Underwriter via Fund/SERV shall
settle in accordance with Underwriter’s profile within Fund/SERV applicable to you.
Underwriter agrees to provide you with account positions and activity data relating to
share transactions via Networking.
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3.4.11
If on any specific day you or Underwriter are unable to meet the NSCC deadline for the
transmission of purchase or redemption orders for that day, a party may at its option
transmit such orders and make such payments for purchases and redemptions directly to you
or us, as applicable, as is otherwise provided in the Agreement; provided, however, that
we must receive written notification from you by 9:00 a.m. Eastern Time on any day that
you wish to transmit such orders and/or make such payments directly to us.
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3.4.12
In the event that you or we are unable to or prohibited from electronically communicating,
processing or settling share transactions via Fund/SERV, you or we shall notify the other,
including providing the notification provided above in Section 3.A.11. After all parties
have been notified, you and we shall submit orders using manual transmissions as are
otherwise provided in the Agreement.
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3.4.13
These procedures are subject to any additional terms in each Portfolio’s prospectus
and the requirements of applicable law. The Trust reserves the right, at its discretion
and without notice, to suspend the sale of shares or withdraw the sale of shares of any
Portfolio.
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3.4.
14 Each party to the Agreement agrees that, in the event of a material error
resulting from incorrect information or confirmations, the parties will seek to
comply in all material respects with the provisions of applicable federal
securities laws. |
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3.4.15
You and Underwriter represent and warrant that each: (a) has entered into an agreement
with NSCC; (b) has met and will continue to meet all of the requirements to participate in
Fund/SERV and Networking; (c) intends to remain at all times in compliance with the then
current rules and procedures of NSCC, all to the extent necessary or appropriate to
facilitate such communications, processing, and settlement of share transactions; and (d)
will notify the other parties to this Agreement if there is a change in or a pending
failure with respect to its agreement with NSCC.”
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4.
A new Section 6.7 is hereby added to the Agreement as follows:
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“6.7
You agree that any posting of Portfolio prospectuses on your website will result in the
Portfolio prospectuses: (i) appearing identical to the hard copy printed version; (ii)
being clearly associated with the particular Contracts in which they are available and
posted in close proximity to the applicable Contract prospectuses; (iii) having no less
prominence than prospectuses of any other underlying funds available under the Contracts;
and (iv) being used in an authorized manner. Notwithstanding the above, you understand and
agree that you are responsible for ensuring that participation in the Portfolios, and any
website posting, or other use, of the Portfolio prospectuses is in compliance with this
Agreement and applicable state and federal securities and insurance laws and regulations,
including as they relate to paper or electronic use of fund prospectuses. The format of
such presentation, the script and layout for any website that mentions the Trust, the
Underwriter, an Adviser or the Portfolios shall be routed to us as sales literature or
other promotional materials, pursuant to Section 6 of this Agreement.
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In
addition, you agree to be solely responsible for maintaining and updating the Portfolio
prospectuses’ PDF files (including prospectus supplements) and removing and/or
replacing promptly any outdated prospectuses, as necessary, ensuring that any accompanying
instructions by us, for using or stopping use are followed. You agree to designate and
make available to us a person to act as a single point of communication contact for these
purposes. We are not responsible for any additional costs or additional liabilities that
may be incurred as a result of your election to place the Portfolio prospectuses on your
website. We reserve the right to revoke this authorization, at any time and for any
reason, although we may instead make our authorization subject to new procedures.”
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5.
A new Section 6.8 is hereby added to the Agreement as follows:
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“6.8
Each of your and your distributor’s registered representatives, agents, independent
contractors and employees, as applicable, will have access to our websites at
xxxxxxxxxxxxxxxxx.xxx, and such other URLs through which we may permit you to conduct
business concerning the Portfolios from time to time (referred to collectively as the
“Site”) as provided herein: (i) upon registration by such individual on a Site;
(ii) if you cause a Site Access Request Form (an “Access Form”) to be signed by
your authorized supervisory personnel and submitted to us, as a Schedule to, and legally a
part of, this Agreement; or (iii) if you provide such individual with the necessary access
codes or other information necessary to access the Site through any generic or firm-wide
authorization we may grant you from time to time. Upon receipt by us of a completed
registration submitted by an individual through the Site or a signed Access Form
referencing such individual, we shall be entitled to rely upon the representations
contained therein as if you had made them directly hereunder and we will issue a user
identification, express number and/or password (collectively, “Access Code”).
Any person to whom we issue an Access Code or to whom you provide the necessary Access
Codes or other information necessary to access the Site through any generic or firm-wide
authorization we may grant you from time to time shall be an “Authorized User.”
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We
shall be entitled to assume that such person validly represents you and that all
instructions received from such person are authorized, in which case such person will have
access to the Site, including all services and information to which you are authorized to
access on the Site. All inquiries and actions initiated by you (including your Authorized
Users) are your responsibility, are at your risk and are subject to our review and
approval (which could cause a delay in processing). You agree that we do not have a duty
to question information or instructions you (including Authorized Users) give to us under
this Agreement, and that we are entitled to treat as authorized, and act upon, any such
instructions and information you submit to us. You agree to take all reasonable measures
to prevent any individual other than an Authorized User from obtaining access to the Site.
You agree to inform us if you wish to restrict or revoke the access of any individual
Access Code. If you become aware of any loss or theft or unauthorized use of any Access
Code, you agree to contact us immediately. You also agree to monitor your (including
Authorized Users’) use of the Site to ensure the terms of this Agreement are
followed. You also agree that you will comply with all policies and agreements concerning
Site usage, including without limitation the Terms of Use Agreement(s) posted on the Site
(“Site Terms”), as may be revised and reposted on the Site from time to time,
and those Site Terms (as in effect from time to time) are a part of this Agreement. Your
duties under this section are considered “services” required under the terms of
this Agreement. You acknowledge that the Site is transmitted over the Internet on a
reasonable efforts basis and we do not warrant or guarantee their accuracy, timeliness,
completeness, reliability or non-infringement. Moreover, you acknowledge that the Site is
provided for informational purposes only, and is not intended to comply with any
requirements established by any regulatory or governmental agency.”
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6.
A new paragraph is added at the end of Section 10.8 of the Agreement as follows:
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“Each
party to this Agreement agrees to limit the disclosure of nonpublic personal information
of Contract owners consistent with its policies on privacy with respect to such
information and Regulation S-P of the SEC. Each party hereby agrees that it will comply
with all applicable requirements under the regulations implementing Title V of the
Xxxxx-Xxxxx-Xxxxxx Act and any other applicable federal and state consumer privacy acts,
rules and regulations. Each party further represents that it has in place, and agrees that
it will maintain, information security policies and procedures for protecting nonpublic
personal customer information adequate to conform to applicable legal requirements.”
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IN WITNESS WHEREOF, each of the
parties has caused its duly authorized officers to execute this Amendment.
The Trust: FRANKLIN XXXXXXXXX VARIABLE INSURANCE
PRODUCTS TRUST
Only on behalf of
each Portfolio listed
on Schedule C of
the Agreement. By: _/s/Xxxxx X. Skidmore_________
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
The Underwriter:
FRANKLIN/XXXXXXXXX DISTRIBUTORS, INC.
By. / ___/s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
The Company:
THE PRUCO LIFE INSURANCE COMPANY THE PRUCO LIFE INSURANCE COMPANY OF
NEW JERSEY
By: __/s/____________________ By: __/s/____________________
Name: Name:
Title: Title:
PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By: /s/_ .
Name:
Title:
Signature Page of
Amendment to Participation Agreement
As of May 3, 2004
