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EXHIBIT (11)(ii)
INVESTMENT ACCOUNTING AGREEMENT
THIS AGREEMENT made and effective as of this 2nd day of January, 1996, by
and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
corporation, having its principal place of business at 000 Xxxxx Xxxxxx, Xxxxxx,
Xxx Xxxxxx 00000-0000 (the "Company"), on behalf of the separate accounts listed
on Schedule I hereto, as it may be amended from time to time (each a "Registered
Account" and collectively the "Registered Accounts"), and INVESTORS FIDUCIARY
TRUST COMPANY, a state chartered trust company organized and existing under the
laws of the State of Missouri, having its principal place of business at 000
Xxxx 00xx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx, 00000 ("IFTC").
WHEREAS, each Registered Account is registered as an investment company
under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, IFTC performs certain investment accounting and recordkeeping
services on a computerized accounting system (the "Portfolio Accounting System")
which is suitable for maintaining certain accounting records of the Registered
Accounts; and
WHEREAS, the Company desires to appoint IFTC as investment accounting and
recordkeeping agent for the Registered Accounts, and IFTC is willing to accept
such appointment;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto, intending to be legally bound, mutually covenant and agree
as follows:
1. Appointment of Recordkeeping Agent. The Company hereby constitutes and
appoints IFTC as investment accounting and recordkeeping agent for the
Registered Accounts to calculate the values and, if applicable, unit
values of the Registered Accounts and to perform certain other accounting
and recordkeeping functions for the Registered Accounts as set forth more
fully on Schedule II hereto and as required of such Registered Account
under Rule 31a of the 1940 Act with respect to portfolio transactions.
2. Representations and Warranties of the Company. The Company hereby
represents, warrants and acknowledges to IFTC:
A. That it is a corporation duly organized and existing and in good
standing under the laws of the State of New Jersey and that each
Registered Account is registered under the 1940 Act; and
B. That it has the requisite power and authority under applicable
law, its charter and its bylaws to enter into this Agreement; that
it has taken all requisite action necessary to appoint IFTC as
investment accounting and recordkeeping agent for the Registered
Accounts; that this Agreement has been duly executed and delivered
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by it; and that this Agreement constitutes its legal, valid and
binding obligation, enforceable in accordance with its terms.
3. Representations and Warranties of IFTC. IFTC hereby represents, warrants
and acknowledges to the Company:
A. That it is a trust company duly organized and existing and in good
standing under the laws of the State of Missouri, provided,
however, that it is considering merging with a newly-chartered
trust company which would be the surviving entity of such merger
and would continue the business of IFTC under the name Investors
Fiduciary Trust Company;
B. That it has the requisite power and authority under applicable
law, its charter and its bylaws to enter into and perform this
Agreement; that this Agreement has been duly executed and
delivered by IFTC; and that this Agreement constitutes a legal,
valid and binding obligation of IFTC, enforceable in accordance
with its terms; and
C. That the accounts and records maintained and preserved by IFTC
shall be the property of the Company and that it will not use any
information made available to it under the terms hereof for any
purpose other than complying with its duties and responsibilities
hereunder or as specifically authorized by the Company in writing.
4. Duties and Responsibilities of the Company.
A. The Company shall turn over to IFTC all of each Registered
Account's accounts and records previously maintained which IFTC
needs in order to fully and properly establish each Registered
Account's general ledger and auxiliary ledgers on the Portfolio
Accounting System, to accurately price each Registered Account's
securities and foreign currency holdings (if any), to calculate
their values and, if applicable, calculate their respective unit
values, and to fully and accurately prepare reports and answers
to requests pursuant to Section 5.F hereof. The Company shall also
provide to IFTC any additional information (including but not
limited to the declaration, record and payment dates and amounts
of any dividends or income and any other special actions required
concerning the securities of the Registered Accounts) necessary
for IFTC to fully and properly perform such duties and
responsibilities on an ongoing basis to the extent such
information is not readily available from generally accepted
securities industry services or publications to be used by IFTC in
performing its duties hereunder, as agreed upon in writing by IFTC
and the Company from time to time. Such additional information
shall be supplied in writing or its electronic or digital
equivalent prior to the close of the New York Stock Exchange on
each day on which IFTC prices the Registered Accounts' securities
and foreign currency holdings.
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B. The Company shall pay to IFTC such compensation at such time as
may from time to time be agreed upon in writing by IFTC and the
Company. The initial compensation schedule is attached as Exhibit
A. The Company shall also reimburse IFTC within 30 days for all
reasonable out-of-pocket disbursements, costs and expenses
reasonably incurred by IFTC in connection with services performed
for the Company pursuant to this Agreement.
C. The Company shall notify IFTC of any statutes, rules, regulations,
requirements, or policies which relate to any Registered Accounts,
and of any changes therein, which may materially impact IFTC's
performance of its responsibilities described in Section 4.A,
above, or its related operational policies and procedures as they
relate to such Registered Accounts in a manner different from or
in addition to the requirements of the National Association of
Insurance Commissioners' accounting standards as applicable to
insurance company separate accounts or investment companies
registered under the 1940 Act in general.
D. The Company shall provide to IFTC, as conclusive proof of any fact
or matter which may reasonably be ascertained from the Company, a
certificate signed by the Company's president or other officer, or
other authorized individual, as requested by IFTC. The Company
shall also provide to IFTC instructions with respect to any matter
concerning this Agreement requested by IFTC. IFTC may rely upon
any instruction or information furnished by any person reasonably
believed by it to be an officer or agent of the Company and shall
not be held to have notice of any change of authority of any such
person until receipt of written notice thereof from the Company.
E. The Company shall preserve the confidentiality of the Portfolio
Accounting System and prevent its disclosure, except as required
by law, to other than its own employees who reasonably have a need
to know in connection with the use of the Portfolio Accounting
System contemplated hereunder, and the Company shall use its best
efforts to protect the rights of IFTC and IFTC's licensor in the
Portfolio Accounting System. IFTC's licensor is intended to be and
shall be a third party beneficiary of the Company's obligations
and undertakings contained in this paragraph.
5. Duties and Responsibilities of IFTC.
A. IFTC shall calculate each Registered Account's value and, if
applicable, unit value in accordance with instructions of the
Company and its accountants and/or other advisors and the rules of
the 1940 Act and the applicable prospectus. IFTC will price the
securities and foreign currency holdings of the Registered
Accounts for which market quotations are available by the use of
outside services designated by the Company which are normally used
and contracted with for this purpose; all
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other securities and foreign currency holdings will be priced in
accordance with the Company's instructions.
B. IFTC shall prepare and maintain, with the direction and as
interpreted by the Company or the Company's accountants and/or
other advisors, in complete, accurate, and current form, all
accounts and records needed to be maintained as a basis for
calculation of each Registered Account's value, and, if
applicable, unit value, and such other accounts and records as may
be agreed upon by the parties in writing. IFTC shall preserve such
records in the manner required by law until termination of this
Agreement, except as otherwise approved by the Company in writing.
C. IFTC shall make available to the Company and its authorized
representatives for inspection or reproduction within a reasonable
time, upon demand, all accounts and records of the Company
maintained and preserved by IFTC.
D. IFTC shall be entitled to rely conclusively on the completeness
and correctness of any and all accounts and records turned over to
it by the Company.
E. IFTC shall assist the Company's independent accountants or any
regulatory body in any requested review of the Company's accounts
and records maintained by IFTC, provided that written instructions
to do so are furnished to IFTC by the Company. IFTC shall be
reimbursed by the Company for all reasonable expenses and employee
time invested in any such review outside of routine and normal
periodic reviews.
F. Upon receipt from the Company of any necessary information or
instructions, IFTC shall provide information from the books and
records it maintains for the Company (i) that the Company needs
for completing Schedule D of the Annual Statement of the National
Association of Insurance Commissioners, tax returns,
questionnaires, or periodic reports to clients, (ii) that the
Registered Accounts' investment adviser needs for compliance with
the requirements of Rule 204-2 under the Investment Advisers Act
of 1940, as amended, and (iii) that the Company may need for such
other reports and information requests as the Company and IFTC
shall agree upon from time to time.
G. Additional Registered Accounts may be added to this Agreement,
provided that IFTC consents to such addition. Rates or charges for
each additional Registered Account shall be as agreed upon by IFTC
and the Company in writing.
H. IFTC shall not have any responsibility hereunder to the Company,
the Company's clients or any other person or entity for moneys or
securities of any Registered Account, whether held by the Company
or custodians of the Company.
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I. IFTC agrees that, except as otherwise required by law, IFTC will
keep confidential all records of and information in its possession
relating to the Registered Accounts and will not disclose the same
to any person except at the request or with the consent of the
Company.
J. IFTC may not, except with the express written consent of the
Company in each instance, use the name of the Company or any
Company affiliate in advertising, publicity or similar materials
distributed to existing or prospective clients.
K. IFTC shall continuously maintain adequate insurance coverage
appropriate for its duties and responsibilities under this
Agreement.
6. Indemnification. IFTC shall not be responsible or liable for, and the
Company shall indemnify and hold IFTC harmless from and against, any and
all costs, expenses, losses, damages, charges, counsel fees, payments and
liabilities, which may be asserted against or incurred by IFTC or for
which it may be liable, arising out of or attributable to:
A. IFTC's action or omission to act pursuant hereto, except for any
loss or damage arising from IFTC's failure to perform its
obligations hereunder and/or any negligent act or willful
misconduct of IFTC.
B. IFTC's payment of money as requested by the Company, or the taking
of any action which might make IFTC liable for payment of money;
provided, however, that IFTC shall not be obligated to expend its
own moneys or to take any such action except in IFTC's sole
discretion.
C. IFTC's good faith reliance upon any instructions, advice, notice,
request, consent, certificate or other instrument or paper
appearing to it to be genuine and to have been properly executed.
D. IFTC's good faith reliance on the advice or opinion of counsel for
the Company (which will be obtained at the Company's expense) or
its own counsel (which will be obtained at IFTC's own expense), or
on the instructions, advice and statements of the Company, the
Company's accountants and officers or other authorized
individuals.
E. The purchase or sale of any securities or foreign currency
positions. Without limiting the generality of the foregoing, IFTC
shall be under no duty or obligation to inquire into:
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(1) The validity of the issue of any securities purchased by or
for any Registered Account, or the legality of the purchase
thereof, or the propriety of the purchase price; or
(2) The legality of the sale of any securities by or for any
Registered Account, or the propriety of the sale prices
F. Any error, omission, inaccuracy or other deficiency in any
Registered Account's accounts and records or other information
provided by or on behalf of the Company to IFTC, or the failure of
the Company to provide, or provide in a timely manner, any
accounts, records, or information pursuant to Section 4.A hereof.
G. Any defect in, failure of performance of or unavailability of any
computer system or application provided to IFTC by or on behalf
of the Company or any error, omission, inaccuracy or other
deficiency in the information thereby supplied to IFTC.
H. Any error, omission, inaccuracy or other deficiency in the records
or other information provided by any custodian of a Registered
Account which is not affiliated with IFTC (a "nonaffiliated
custodian"), or the failure of any such nonaffiliated custodian
to provide in a timely manner any information which such
nonaffiliated custodian is to provide IFTC on behalf of the
Company for purposes of Section 4.A hereof, except to the extent
attributable to any negligence or willful misconduct by IFTC.
7. Limitation of Damages. Notwithstanding anything herein to the contrary,
as between the parties IFTC shall not be liable for consequential,
special or punitive damages in any event other than cases of IFTC's gross
negligence.
8. Force Majeure. IFTC shall not be responsible or liable for its failure or
delay in performance of its obligations under this Agreement arising out
of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation: governmental or
exchange action, war, strike, riot, emergency, civil disturbance,
terrorism, vandalism, explosions, labor disputes not involving the IFTC
work force, freezes, floods, fires, tornados, acts of God or public
enemy, revolutions, or insurrection; provided, however, that IFTC agrees
to maintain a reasonable disaster recovery program designed to minimize
any loss of data or service interruption from such causes.
9. Procedures. IFTC and the Company may from time to time adopt procedures
as they agree upon, and IFTC may conclusively assume that any procedure
approved or directed by the Company or its accountants or other advisors
does not conflict with or violate any requirements of its charter or
bylaws, any applicable law, rule or regulation, any
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Registered Account's prospectus, or any order, decree or agreement by
which it may be bound.
10. Term and Termination. The initial term of this Agreement shall be a
period of one year commencing on the effective date hereof. This
Agreement shall continue thereafter until terminated by either the
Company or IFTC by notice in writing received by the other party not less
than one hundred twenty (120) days prior to the date upon which such
termination shall take effect. Upon termination of this Agreement:
A. The Company shall pay to IFTC its fees and compensation due
hereunder and its reimbursable disbursements, costs and expenses
paid or incurred to such date, except to the extent such fees,
compensation, disbursements, costs and expenses are being disputed
by the Company in good faith.
B. The Company shall designate a successor (which may be the Company)
by notice in writing to IFTC on or before the termination date.
C. IFTC shall deliver to the successor, or if none has been
designated, to the Company at IFTC's office, all records, funds
and other properties of the Company deposited with or held by IFTC
hereunder. In the event that neither a successor nor the Company
takes delivery of all records, funds and other properties of the
Company by the termination date, IFTC's sole obligation with
respect thereto from the termination date until delivery to a
successor or the Company shall be to exercise reasonable care to
hold the same in custody in its form and condition as of the
termination date, and IFTC shall be entitled to reasonable
compensation therefor, including but not limited to all of its
out-of-pocket costs and expenses incurred in connection therewith;
provided, that IFTC shall not be required to maintain and preserve
any records of the Company for more than ninety (90) days after
the termination date.
11. Notices. Notices, requests, instructions and other writings addressed to
the Company c/o The Prudential Asset Management Company, 00 Xxxxxxx Xxxx,
Xxxxxxx Xxxx, Xxx Xxxxxx 00000 or at such address as the Company may have
designated to IFTC in writing, shall be deemed to have been properly
given to the Company hereunder; and notices, requests, instructions and
other writings addressed to IFTC at its offices at 000 Xxxx 00xx Xxxxxx,
Xxxxxx Xxxx, XX 00000, Attn: Xxxxx Xxxxxx, or to such other address as it
may have designated to the Company in writing, shall be deemed to have
been properly given to IFTC hereunder.
12. Limitation of Account Liability. Each Registered Account shall be
regarded for all purposes as a separate party apart from each other.
Unless the context otherwise requires, with respect to every transaction
covered by this Agreement, every reference herein to a Registered Account
or the Company shall be deemed to relate solely to the particular
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Registered Account to which such transaction relates. Under no
circumstances shall the rights, obligations or remedies with respect to a
particular Registered Account constitute a right, obligation or remedy
applicable to any other. The use of this single document to memorialize
the separate agreement of IFTC and the Company with respect to each
Registered Account is understood to be for clerical convenience only and
shall not constitute any basis for joining any Registered Accounts for
any reason.
13. Electronic Communications. If IFTC shall provide the Company direct
access to the Portfolio Accounting System or if IFTC and the Company
shall agree to utilize any electronic system of communication, the
Company shall be fully responsible for any and all consequences of the
use or misuse of the terminal device, passwords, access instructions and
other means of access to such system(s) which are utilized by, assigned
to or otherwise made available to the Company. The Company agrees to
implement and use its best efforts to enforce appropriate security
policies and procedures to prevent unauthorized or improper access to or
use of such system(s). IFTC shall be fully protected in acting hereunder
upon any instructions, communications, data or other information received
by IFTC by such means as fully and to the same effect as if delivered to
IFTC by written instrument signed by the requisite authorized
representative(s) of the Company. The Company shall indemnify and hold
IFTC harmless from and against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability which may be
suffered or incurred by IFTC as a result of the use or misuse, whether
authorized or unauthorized, of any such system(s) by the Company or by
any person who acquires access to such system(s) through the terminal
device, passwords, access instructions or other means of access to such
system(s) which are utilized by, assigned to or otherwise made available
to the Company except to the extent attributable to any negligence or
willful misconduct by IFTC.
14. Miscellaneous
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws
of the State of Missouri, without reference to the choice of laws
principles thereof.
B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto
and their respective successors and permitted assigns.
C. The representations and warranties, the indemnification extended
hereunder, and the provisions of Section 4.E. are intended to and
shall continue after and survive the expiration, termination or
cancellation of this Agreement.
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D. No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and
executed by each party hereto.
E. The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting from any breach of any of the terms or conditions of
this Agreement, including the payment of damages, shall not be
construed as a continuing or permanent waiver of any such terms,
conditions, rights or privileges, but the same shall continue and
remain in full force and effect as if no such forbearance or
waiver had occurred. No waiver, release or discharge of either
party's rights hereunder shall be effective unless contained in a
written instrument signed by the party sought to be charged.
F. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
G. This Agreement may be executed in two or more separate
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
H. If any part, term or provision of this Agreement is determined by
the courts or any regulatory authority to be illegal, in conflict
with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and
the rights and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular part,
term or provision held to be illegal or invalid.
I. This Agreement may not be assigned by either party without the
prior written consent of the other; provided, that the merger
described in Section 3.A hereof shall not be prohibited hereunder.
J. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between the
Company and IFTC.
K. It is understood and agreed that IFTC will perform the services
hereunder as an independent contractor, and that during the
performance of the services, IFTC's employees will not be
considered employees of the Company within the meaning or the
application of any federal, state or local laws or regulations
including, but not limited to, laws or regulations covering
unemployment insurance, old age benefits, workers' compensation
insurance, industrial accident, labor or taxes of any kind.
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L. Except as specifically provided herein, this Agreement does not in
any way affect any other agreements entered into among the parties
hereto and any actions taken or omitted by either party hereunder
shall not affect any rights or obligations of the other party
hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective and duly authorized officers, to be effective as of the day
and year first above written.
INVESTORS FIDUCIARY TRUST COMPANY
By: /s/ Xxxxx Xxxxxx
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Title: EVP
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THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Xxxxxx X. Fanzetti
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Title: Vice President
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SCHEDULE I
Accounts:
Prudential Variable Contract Account - 2
Prudential Variable Contract Account - 10
Prudential Variable Contract Account - 11
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SCHEDULE II
ACCOUNTING AND RECORDKEEPING FUNCTIONS
I. Daily Procedures
A. Provide Prudential Asset Management Company (PAMCo) personnel
and/or the adviser(s) with a cash available balance within the
agreed upon time frame.
B. Reconcile the custodial bank account(s) and resolve any identified
problems.
C. Review trade activity transmitted to IFTC and ensure that all
trades have been properly recorded onto the Portfolio Accounting
System ("PAS"). Enter any trades received outside of the direct
transmission from PAMCo personnel or the investment adviser(s) in
the Portfolio Accounting System (PAS) before the close of business
on the day received, if received by 4:00 p.m. CT. Reconcile trade
activity to trade control reports received from the investment
adviser(s).
D. Reconcile aggregate shares and/or par value of each Account to the
aggregate amounts shown on a holdings report provided by the
investment adviser(s).
E. Record the unitholder activity received from PAMCo onto the PAS.
Reconcile the activity to reports received from PAMCo.
F. Review general ledger activity for reasonableness.
G. Review sources of corporate action activity (i.e.; Wall Street
Journal, Bloomberg Financial Markets, PAS reports) to determine if
securities in the portfolio(s) are impacted. Record the necessary
information to properly reflect the impact of the corporate action
activity on the records of the portfolio(s).
H. Perform market valuation on the portfolios that require daily
valuation using the pricing services(s) identified by PAMCo.
I. Transmit the required information to PAMCo for the unit value
calculations within the time frame agreed to by both parties.
II. Monthly Procedures
A. Reconcile asset listing received from custodial bank(s) to the
accounting records maintained on the PAS.
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B. Prepare monthly reporting package for PAMCo and investment
adviser(s). This information will be provided to PAMCo within 4
business days after receipt of monthly reports from the PAS.
Information will include:
- Analysis of monthly activity in significant accounts.
- PAS reports, as identified by PAMCo.
- Standard reporting information as requested by PAMCo.
C. Perform monthly reconciliation to Prudential's statutory
record-keeping system.
III. Periodic Procedures
A. Provide schedules supporting the investment records to respond to
requests from external auditors on an "as needed" basis.
B. Provide schedules to PAMCo supporting the investment records on an
"as needed" basis.
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