CUSTODY AGREEMENT
AGREEMENT dated July 14, 1982 between THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT-11 ("VCA-11"), a separate account of The Prudential Insurance Company of
America ("Prudential") registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, and XXXXXX GUARANTY
TRUST COMPANY OF NEW YORK, a banking corporation organized under the laws of the
State of New York ("Custodian").
W I T N E S S E T H
WHEREAS, VCA-11 desires to employ Custodian as a custodian of the
securities and property of VCA-11, and Custodian desires to accept such
employment, on the terms and conditions herinafter set forth;
NOW THEREFORE, in consideration of the mutual agreements herein made,
VCA-11 and Custodian hereby agree as follows:
1. RECEIPT AND DISBURSEMENT OF CASH
A. Custodian shall open and maintain a custody account (the "Account")
in the name of VCA-11, subject only to draft or order by Custodian acting
pursuant to the terms of this Agreement. Custodian shall hold in the Account
all cash received by it from, or for the account of, VCA-11.
B. Custodian shall make payments of cash for the account of VCA-11 only
(i) for the purchase of securities for the portfolio of VCA-11
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upon the delivery of such securities to Custodian, either registered in the mane
of VCA-11 of Custodian's nominee referred to in Section 2 below or in bearer
form or proper form for transfer, or by Federal Reserve book-entry delivery to
Custodian's account for the benefit of VCA-11; (ii) to another Prudential bank
for the purpose of making payments to VCA-11 participants or beneficiaries of
participants in accordance with their respective contracts as a result of the
withdrawal of all or a portion of an accumulation account, an election to
purchase an annuity or the payment of a death benefit provided for under the
contract; (iii) to Prudential, as a result of the election by a VCA-11
participant or a beneficiary of a participant to transfer all or a portion of
his accumulation account to a companion variable or fixed-dollar contract; (iv)
to Prudential, upon withdrawal by Prudential or all or part of the
proportionate interest in VCA-11 then held by it; (v) for the payment of
interest, dividends, taxes, advisory, management or supervisory fees or
operating and administrative expenses (including, without limitation, fees and
expenses payable to Prudential and fees for legal, accounting and auditing
services); (vi) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to be VCA-11 held by or to be
delivered to Custodian; (vii) to any other custodian of the securities or
property of VCA-11, or (viii) for other proper account purposes. Before making
any such payment, Custodian shall receive (and may rely upon) an officers'
certificate, defined in Section 10 below, requesting such payment and stating
that it is for a purpose permitted under the terms of items (i) through(vii) of
this subsection B, and also, in respect of item (viii),
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upon receipt of an officers' certificate and a certified copy of a resolution of
the VCA-11 Committee specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose to be a
proper account purpose and naming the person or persons to whom such payment is
to be made.
C. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by Custodian for the
account of VCA-11.
2. RECEIPT OF SECURITIES
Custodian shall hold in the Account, pursuant to the provisions of this
Agreement, all securities received by it for the account of VCA-11. All such
securities shall be held or disposed by Custodian for, and subject at all times
to the instructions of, VCA-11 pursuant to the provisions of this Agreement.
Custodian shall be authorized to utilize the Federal Reserve book-entry system
for such of the securities of VCA-11 as are eligible therefor. Any securities
held in the Federal Reserve book-entry system shall be represented in one or
more accounts in the name of Custodian which do not include any of Custodian's
assets other than assets held as fiduciary, custodian or otherwise for
customers. Securities held by Custodian in definitive form, i.e., not held in
the Federal Reserve book-entry system, shall be registered in the name of
Custodian's nominee, Xxxxxxx & Co., which shall be used only for registration of
securities owned by or in portfolios managed by
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Prudential. All of VCA-11 securities which are registered in the name of
Xxxxxxx & Co. shall be physically segregated at all times from the securities of
any other persons, firms or corporations, including, without limitation, any
other securities registered in the name of Xxxxxxx & Co. under the terms of
other custody agreements. Custodian shall have no power or authority to lend,
assign, hypothecate, pledge or otherwise dispose of any such securities and
investments, except pursuant to the directive of VCA-11 and only for the account
of VCA-11 as set forth in Section 3 below.
3. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES
Custodian shall have sole power to release or deliver any securities of
VCA-11 held by it pursuant to this Agreement. Custodian agrees to transfer,
exchange, or deliver securities held by it hereunder only (a) for sales of such
securities for the account of VCA-11 upon receipt of Custodian of payment
therefor, (b) when such securities are called, redeemed or retired or otherwise
become payable, (c) for examination by any broker selling any such securities in
accordance with "street delivery" custom, (d) in exchange for or upon conversion
into other securities alone or other securities and cash whether pursuant to any
plan or merger, consolidation, reorganization, recapitalization or readjustment,
or otherwise, (e) upon conversion of such securities pursuant to their terms
into other securities, (f) upon exercise of subscription, purchase or other
similar rights represented by such securities, (g) for the purpose of exchanging
interim receipts or
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temporary securities for definitive securities, or (h) for other proper account
purposes. As to any deliveries made by Custodian pursuant to items (b), (d),
(e), (f), and (g), securities or cash receivable in exchange therefor
shall be deliverable to Custodian. Before making any transfer, exchange
or delivery under the terms of items (a), (b), (c), (d), (e), (f), or (g) of
this Section 3, the Custodian shall receive an officers' certificate
authorizing such transfer, exchange or delivery and stating that it is for a
purpose permitted by such items and also, in respect of item (h), upon
receipt of an officers' certificate and a certified copy of a resolution of
the VCA-11 Committee specifying the securities to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such purpose to
be a proper account purpose, and naming the person or persons to whom
delivery of such securities shall be made.
4. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS
Unless and until Custodian receives an officers' certificate to the
contrary, Custodian shall: (a) Present for payment all coupons and other income
items held by it for the account of VCA-11 which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of VCA-11; (b) Collect interest received, with notice to VCA-11, for the account
of VCA-11, provided that interest on securities held in the Account, either in
book-entry form or otherwise, shall be credited automatically to the account on
the payable date whether or not actually collected by Custodian on that date;
and (c) execute as
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agent on behalf of VCA-11 all necessary ownership certificates required by the
Internal Revenue Code or the Income Tax Regulations of the United States
Treasury Department or under the laws of any State now or hereafter in effect,
inserting VCA-11's name on such certificate as the owner of the securities
covered thereby, to the extent it may lawfully do so.
5. TAXES
Custodian shall execute and deliver such certificates in connection with
securities delivered to it or by it under Agreement as may be required under
the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State, to exempt
from taxation any exemptable transfers and/or deliveries of any such securities.
6. FEES AND EXPENSES
Custodian shall be compensated for its services pursuant to this Agreement
by fee and/or balance arrangements agreed upon by the parties from time to time.
Expenses incurred for postage, insurance, exchange, correspondent and similar
charges in connection with transactions under this Agreement may not be deducted
from sales proceeds or charged against the Account or any other Prudential
account without specific authorization.
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7. MATTERS RELATING TO LIABILITY OF CUSTODIAN
A. Custodian shall maintain detailed records or all securities and
property held in the Account. All securities and property held by Custodian in
the Account shall be kept with the care exercised by Custodian with respect to
its own securities. Custodian's responsibility for all securities and property
held under this Agreement shall be that of a bailee for hire under the statutory
and case law of the State of New York.
B. Custodian represents and warrants to VCA-11 that it presently has in
force, and will maintain in force during the term of this Agreement, Bankers
Blanket Bond insurance coverage under Form No. 24 in an amount which Custodian
deems to be appropriate, together with a "Central Handling of Securities -
Discovery Form" Rider thereto. Although Custodian carries Bankers Blanket Bond
insurance coverage to insure itself against loss from any cause, it is
understood that Custodian shall be under no obligation to insure for the direct
benefit of VCA-11.
C. Custodian shall not be liable for any action taken in good faith upon
any certificate herein described or certified copy of any resolution of the VCA-
11 Committee, and may rely on the genuineness of any such document which it may,
in good faith, believe to have been validly executed. Custodian shall not be
liable for executing, failing to execute, or any mistake in the execution of,
telephonic, facsimile or other non-written instructions from VCA-11 with respect
to the Account prior to
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confirmation thereof in writing, except in case of the negligence or willful
misconduct of Custodian and/or its employees.
D. In consideration of Custodian's registration of any securities in the
name of its nominee, VCA-11 agrees to indemnify and hold harmless Custodian and
its nominee from all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against it or its
nominee by reason of such registration, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct.
Custodian is authorized to charge any account of VCA-11 for such items.
E. Custodian shall not deliver any cash, securities or other property
from the Account to or for the account of any natural person, other than a
natural person acting in his official capacity on behalf of an instrumentality
of the Federal government or of any state government.
8.MATTERS RELATING TO USE OF FEDERAL RESERVE BOOK-ENTRY SYSTEM
A. Custodian shall promptly send or cause to be sent to VCA-11 a
confirmation of all transfers to or from the account, clearly distinguishing
between securities held in the Federal Reserve book-entry system and those not
so held. Transaction statements shall be furnished to VCA-11 on a daily basis.
B. With regard to securities held in the Federal Reserve book-entry
system, Custodian shall also, by book-entry or otherwise,
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identify as belonging to VCA-11 a quantity of securities in a fungible bulk of
securities either (i) held in account in the name of Custodian in the Federal
Reserve book-entry system, or (ii) registered in the name of Xxxxxxx & Co.
C. Custodian shall promptly send to VCA-11 (i) all reports which it
receives from the Federal Reserve book-entry system on its system of internal
accounting control, and (ii) such reports on the system of internal accounting
control of Custodian as VCA-11 may reasonably request from time to time.
9. REPORTS AND OTHER DOCUMENTS; INSPECTION
A. Custodian shall furnish VCA-11 with such reports as VCA-11 shall
reasonably request with respect to the securities and property of VCA-11 held in
the Account.
B. Custodian shall maintain records sufficient to determine and verify
information relating to the securities and property in the Account that may be
reported in Prudential's Annual Statement and supporting Schedules as filed with
various regulatory authorities and in connection with the audit of the financial
statements of VCA-11.
C. Custodian shall provide, upon request, affidavits for the Account in
the form of Attachments B and D to Circular Letter #2 (1977) of New York State
Insurance Department or such other form as may be acceptable to Custodian,
Prudential and the New York State Insurance
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Department in order for the securities and property in the Account to be
recognized by the New York State Insurance Department as admitted assets of
Prudential, and to provide similar affidavits for submission to the Insurance
Departments of other states, if requested by VCA-11.
D. The books and records of Custodian pertaining to its actions under
this Agreement shall be open to inspection and audit at reasonable times by
officers, employees and independent auditors employed by VCA-11 and by any
representative of an appropriate regulatory body; provided, however, that
written instructions to that effect are furnished to Custodian by the Chairman
or Secretary of VCA-11 or by the Treasurer, the Comptroller, any Assistant
Treasurer or any Assistant Comptroller of Prudential.
10. OFFICERS' CERTIFICATES
As used herein, the term "officers' certificate" shall mean a request or
direction or certification signed and countersigned on behalf of VCA-11 by
Prudential in accordance with the provisions of the By-Laws of Prudential and
related resolutions of the Finance Committee of the Board of Directors of
Prudential which form part of Prudential's Booklet of Authorized Signatures
furnished to Custodian, as such Booklet may be revised from time to time. Any
requirement in this Agreement that an officers' certificate be furnished to
Custodian shall be satisfied if telephonic, facsimile or other non-written
instructions to Custodian are
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confirmed promptly by the delivery to Custodian of an officers' certificate in
accordance with the first sentence of this Section.
11. TERMINATION; ASSIGNMENT
A. This Agreement may be terminated by VCA-11, or by Custodian, on 60
days' notice, given in writing and sent by registered mail to the following
addresses:
(i) If to VCA-11, to: Xxxxxxxxxx Xxxxx,
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. XxxXxxxxx
with a copy to: Irving Xxxxxxx Xxx
Vice President and Associate General Counsel
at the same address;
(ii) If to Custodian, to:
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Upon termination of this Agreement, pending (i) appointment of a successor
to Custodian or (ii) a determination by the VCA-11 Committee to hold its cash,
securities and other property in its own custody, Custodian shall not deliver
cash, securities, or other property of VCA-11 to VCA-11 but may deliver them to
a bank or trust company in the City of New York of its own selection, having an
aggregate capital, surplus and undivided profits, as shown by its last published
report of not less than Five Hundred Thousand Dollars ($500,000) as a temporary
Custodian for VCA-11 to be held under terms similar to those of this Agreement;
provided, however, that Custodian shall not be required to make any such
delivery or payment until full payment shall have been made by VCA-11 of all
liabilities constituting a charge on or against the properties then held by
Custodian
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or on or against Custodian, and until full payment shall have been made to
Custodian of all its fees, compensation, costs and expenses, subject to the
provisions of Section 7 of this Agreement.
B. This Agreement may not be assigned by Custodian without the consent
of VCA-11 authorized by a resolution of the VCA-11 Committee.
12. MISCELLANEOUS
A. The waiver by either party of the breach of any provision of this
Agreement shall not operate or be constructed as a waiver or any other or
subsequent breach.
B. This Agreement cannot be amended or terminated orally.
C. This Agreement shall be governed by and construed in accordance with
the law of the State of New York.
D. This Agreement may be executed in several counterparts.
E. Headings herein are for reference purposes only and shall not be
deemed to have any substantive effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT-11
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------
XXXXXXX X. XXXXXXXXX
CHAIRMAN, VCA-11 COMMITTEE
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ Xxxxxx X. Xxxx
-------------------------
Xxxxxx X. Xxxx
Vice-President
Approved and agreed to:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Xxxxx X. Xxxxxxx
ASSISTANT TREASURER
