CUSTODY AGREEMENT
AGREEMENT dated April 15, 1980 between THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT-2 ("VCA-2"), 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-2 desires to employ Custodian as a custodian of the securities
and property of VCA-2, and Custodian desires to accept such employment, on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
VCA-2 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-2, 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-2.
B. Custodian shall make payments of cash for the account of VCA-2 only
(i) for the purchase of securities for the portfolio of VCA-2 upon the delivery
of such securities to Custodian, either registered in the name of VCA-2, 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-2;
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(ii) to another Prudential bank account for the purpose of making payments to
VCA-2 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 effect a variable 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-2 participant to transfer all or a portion of
his accumulation account to a companion fixed-dollar contract account or to
cause a fixed-dollar annuity to be effected; (iv) to Prudential, upon withdrawal
by Prudential of all or part of the proportionate interest in VCA-2 then held by
it; (v) for the payment of interest, dividends, taxes, advisory, management or
supervisory fees or operating expenses (including, without limitation, fees
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 by VCA-2 held by or to be delivered to
Custodian, (vii) to any other custodian of the securities or property of VCA-2;
or (viii) for other proper account purposes. Before making any such payment,
Custodian shall receive (and may rely upon) an officers' certificate requesting
such payment and stating that it is for a purpose permitted under the terms of
items (i) thru (vii) of this subsection B, and also, in respect of Item (viii),
upon receipt of an officers' certificate and a certified copy of a resolution of
the VCA-2 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 corporate purpose and naming the person or persons to whom such payment
is to be made.
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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-2
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-2. All such
securities shall be held or disposed by Custodian for, and subject to at all
times to the instructions of, VCA-2 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-2 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. All of VCA-2 securities which are not held in the
Federal Reserve book-entry system shall be physically segregated at all times
from the securities of any other persons, firms, or corporations. 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-2 and only for the account of VCA-2 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-2 held by it pursuant to this Agreement. Custodian agrees to transfer,
exchange, or deliver securities held
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by it hereunder only (a) for sales of such securities for the account of VCA-2
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 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-2 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
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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-2 which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of VCA-2, (b) Collect interest received, with notice to VCA-2, for the account
of VCA-2, provided that interest on securities held in the Account, either in
book-entry form or otherwise, shall be credit automatically to the account on
the payable date whether or not actually collected by Custodian on that date;
and (c) execute as agent on behalf of VCA-2 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-2'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.
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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.
7. MATTERS RELATING TO LIABILITY OF CUSTODIAN
A. Custodian shall maintain detailed records of 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 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-2 Committee, and may rely on the genuiness 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-2 with respect
to the Account prior to confirmation thereof in writing, except in case of the
negligence or willful misconduct of Custodian and/or its employees.
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C. 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-2 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-2 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, identify as belonging
to VCA-2 a quantity of securities in a fungible bulk of securities held in
accounts in the name of Custodian in the Federal Reserve book-entry system.
C. Custodian shall promptly send to VCA-2 (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-2 may reasonably request from time to time.
9. REPORTS AND OTHER DOCUMENTS; INSPECTION
A. Custodian shall furnish VCA-2 with such reports as VCA-2 shall
reasonably request with respect to the securities and property of VCA-2 held in
the Account.
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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-2.
C. Custodian shall provide, upon request, affidavits for the Account
in the form of Attachments B and D to Circular Letter #2 (1977) of the New York
State Insurance Department or such other form as may be acceptable to Custodian,
Prudential and the New York State Insurance 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 Prudential.
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-2, 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-2 or by the Treasurer, the Comptroller, any assistant
treasurer or any assistant comptroller of Prudential.
10. OFFICERS' CERTIFICATES
As used herein, "officers' certificate" shall mean a request or
direction or certification signed and countersigned on behalf of VCA-2 in
accordance with the provisions of the By-Laws
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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 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-2, or by Custodian, on 60
days' notice, given in writing and sent by registered mail to the following
addresses:
(i) If to VCA-2, to Xxxxxxxxxx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000, Attention:
Xxxxx Xxxxxxxxx, with a copy to Irving Xxxxxxx Xxx; and
(ii) If to Custodian, to 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Upon any termination of this Agreement, pending (i) appointment of a successor
to Custodian or (ii) a determination by the VCA-2 Committee to hold its cash,
securities and other property in its own custody, Custodian shall not deliver
cash, securities or other property of VCA-2 to VCA-2, 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-2 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
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payment until full payment shall have been made by VCA-2 of all liabilities
constituting a charge on or against the properties then held by Custodian 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 8 of this Agreement.
B. This Agreement may not be assigned by Custodian without the consent
of VCA-2, authorized by a resolution of the VCA-2 Committee.
12. MISCELLANEOUS
A. The waiver by either party of the breach of any provision of this
Agreement shall not operate or be construed as a waiver of 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.
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E. Headings herein are for reference purposes only and shall not be
deemed to have any substantive effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT-2
By: /s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx, Chairman
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK
By: /s/
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Vice President
