DISTRIBUTION AGREEMENT
* * *
This Distribution Agreement made this __ day of ____________, 199_,
by and between Pruco Life Insurance Company, an Arizona corporation ("Company"),
on its own behalf and on behalf of Pruco Life Flexible Premium Variable Annuity
Account ("Account") used to fund individual annuity contracts and Prudential
Investment Management Services LLC, a Delaware limited liability company
("Distributor").
WITNESSETH:
WHEREAS, Company has established and maintains the Account, which is
a separate investment account, pursuant to the laws of the State of Arizona for
the purpose of selling variable annuity contracts ("Contracts"), to commence
after the effectiveness of the Registration Statement relating thereto filed
with the Securities and Exchange Commission on Forms S-1 and N-4 pursuant to the
Securities Act of 1933, as amended (the "1933 Act") and the Investment Company
Act of 1940 ("Investment Company Act"); and
WHEREAS, the Account is registered as a unit investment trust under
the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "Exchange Act") and is a member of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, Company and the Distributor wish to enter into an agreement
to have the Distributor act as Company's principal underwriter for the sale of
the Contracts through the Account.
NOW, THEREFORE, for good and valuable consideration, the sufficiency
of which is acknowledged hereby, the parties agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR
Company agrees that during the term of this Agreement it will take
all action required to cause the Contracts to comply as an insurance product and
a registered security with all applicable federal and state laws and
regulations. Company appoints Distributor and Distributor agrees to act as the
principal underwriter for the sale of Contracts to the public, during the term
of this Agreement, in each state and other jurisdictions in which such Contracts
may lawfully be sold. Distributor shall offer Contracts for sale and
distribution at premium rates set by Company. Applications for Contracts shall
be solicited only by representatives duly and appropriately licensed or
otherwise qualified for the sale of such Contracts in each state or other
jurisdiction. Company shall undertake to appoint Distributor's qualified
representatives as life insurance agents of Company. Completed applications for
Contracts shall be transmitted directly to Company for acceptance or rejection
in accordance with underwriting rules established by Company. Initial
premium payments under the Contracts shall be made by check payable to Company
and shall be held at all times by Distributor or its representatives in a
fiduciary capacity and remitted promptly to Company. Anything in this Agreement
to the contrary notwithstanding, Company retains the ultimate right to control
the sale of Contracts and to appoint and discharge life insurance agents of
Company. Distributor shall be held to the exercise of reasonable care in
carrying out the provisions of this Agreement.
2. SALES AGREEMENTS
Distributor is hereby authorized to enter into separate written
agreements, on such terms and conditions as Distributor may determine not
inconsistent with the terms of this Agreement, with one or more organizations
which agree to participate in the distribution of Contracts. Such organizations
(hereafter "Brokers" or "Broker") shall be both registered as a broker/dealer
under the Exchange Act and a member in good standing of the NASD. Broker and its
agents or representatives soliciting applications for Contracts shall be duly
and appropriately licensed, registered, or otherwise qualified for the sale of
such Contracts (and the riders and other policies offered in connection
therewith) under the insurance laws and any applicable blue-sky laws of each
state or other jurisdiction in which Company is licensed to sell the Contracts.
Distributor shall have the responsibility for ensuring that Broker
supervises its representatives. Broker shall assume any legal responsibilities
of Company for the acts, commissions or defalcations of such representatives
insofar as they relate to the sale of the Contracts. Applications for Contracts
solicited by such Broker through its agents or representatives shall be
transmitted directly to Company, and if received by Distributor, shall be
forwarded to Company. All premium payments under the Contracts shall be made by
check to Company and, if received by Distributor, shall be held at all times in
a fiduciary capacity and remitted promptly to Company.
3. LIFE INSURANCE LICENSING
Company shall be responsible for insuring that Brokers are duly
qualified, under the insurance laws of the applicable jurisdictions, to sell the
Contracts.
4. SUITABILITY
Company wishes to ensure that Contracts sold by Distributor will be
issued to purchasers for whom the Contract will be suitable. Distributor shall
take reasonable steps to ensure that the various representatives appointed by it
shall not make recommendations to an applicant to purchase a Contract in the
absence of reasonable grounds to believe that the purchase of the Contract is
suitable for such applicant. While not limited to the following, a determination
of suitability shall be based on information furnished to representatives after
reasonable inquiry of such applicant concerning the applicant's insurance and
investment objectives, financial situation and needs, and the likelihood that
the applicant will continue to make the premium payments contemplated by the
Contracts.
5. PROMOTION MATERIALS
Company shall have the responsibility for furnishing to Distributor
and its representatives sales promotion materials and individual sales proposals
related to the sale of Contracts.
2
Distributor shall not use any such materials that have not been approved by
Company. Distributor shall be responsible for obtaining NASD review of all
promotional materials.
6. COMPENSATION
Company shall arrange for the payment of commissions directly to
those registered representatives of Distributor who are entitled thereto in
connection with the sale of the Contracts on behalf of Distributor, in the
amounts and on such terms and conditions as Company and Distributor shall
determine; provided that such terms, conditions, and commissions shall be as set
forth in, or as are not inconsistent with, the Prospectus included as part of
the Registration Statement for the Contracts and effective under the 1933 Act.
Company shall arrange for the payment of commissions directly to
those Brokers who sell Contracts under agreements entered into pursuant to
paragraph 2 hereof, in amounts as may be agreed to by the Company and specified
in such written agreements.
Company shall reimburse Distributor for the costs and expenses
incurred by Distributor in furnishing or obtaining the services, materials and
supplies required by the terms of this Agreement in the initial sales efforts
and the continuing obligations hereunder.
7. RECORDS
Distributor shall be responsible for maintaining records of
representatives licensed, registered, and otherwise qualified to sell Contracts.
Distributor shall maintain such other records as are required of it by
applicable laws and regulations. The books, accounts, and records of Company,
the Account, and Distributor shall be maintained so as to clearly and accurately
disclose the nature and details of the transactions. All records maintained by
Distributor in connection with this Agreement shall be the property of Company
and shall be returned to Company upon termination of this Agreement, free from
any claims or retention of rights by Distributor. Distributor shall keep
confidential any information obtained pursuant to this Agreement and shall
disclose such information only if Company has authorized such disclosure or if
such disclosure is expressly required by applicable federal or state regulatory
authorities.
8. INVESTIGATION AND PROCEEDING
(a) Distributor and Company agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with Contracts distributed under this Agreement. Distributor and
Company further agree to cooperate fully in any securities regulatory
investigation or proceeding or judicial proceeding with respect to Company,
Distributor, their affiliates and their agents or representatives to the extent
that such investigation or proceeding is in connection with Contracts
distributed under this Agreement. Distributor shall furnish applicable federal
and state regulatory authorities with any information or reports in connection
with its services under this Agreement which such authorities may request in
order to ascertain whether Company's operations are being conducted in a manner
consistent with any applicable law or regulations.
(b) In the case of a substantive customer complaint, Distributor and
Company will cooperate in investigating such complaint and any response to such
complaint will be sent to the other party to this Agreement for approval not
less than FIVE (5) BUSINESS DAYS prior to its being
3
sent to the customer or regulatory authority, except that if more prompt
response is required, the proposed response shall be communicated by telephone
or telegraph.
9. TERMINATION
This Agreement may be terminated at any time by either party on SIXTY
(60) DAYS prior written notice to the other party, without payment of penalty.
In the event that the Agreement is assigned, however, it shall terminate
automatically. Upon termination of this Agreement, all authorizations, rights,
and obligations shall cease except the obligation to settle accounts hereunder,
including commissions on premiums subsequently received for Contracts in effect
at times of termination, and the agreements contained in paragraph 8 hereof.
10. ASSIGNMENTS AND TRANSFERS
No transfer or assignment shall be effective without the prior
written consent of both the Company and the Distributor, except with respect to
transfers pursuant to Rule 2a-6 under the Investment Company Act. All agreements
that result from any assignment or transfer affecting Arizona are subject to
the approval of the Arizona Department of Insurance. Additional regulatory
approvals may also be required.
11. REGULATION
This Agreement shall be subject to the provisions of the 1940 Act and
the Exchange Act and the rules, regulations, and rulings thereunder and of the
applicable rules and regulations of the NASD, from time to time in effect, and
the terms hereof shall be interpreted and construed in accordance therewith.
12. SEVERABILITY
Should any provision of this Agreement be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby.
13. WARRANTIES
Each party to this Agreement warrants to the other party as follows:
(a) it has full power and authority to execute and deliver this
Agreement and to perform and observe the provisions herein;
(b) the execution, delivery, and performance of this Agreement have
been authorized by all necessary corporate actions and do not and will not
contravene any requirement of law or any contractual restrictions or agreement
binding on or affecting such party or its assets; and
(c) this Agreement has been duly and properly executed and delivered
by such party and constitutes a legal, valid, and binding obligation of such
party enforceable with its terms.
4
14. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Arizona.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
PRUCO LIFE INSURANCE COMPANY
By:__________________________________
Name:________________________________
Title:_______________________________
PRUDENTIAL INVESTMENT MANAGEMENT
SERVICES LLC
By:__________________________________
Name:________________________________
Title:_______________________________
5
