Exhibit 1.A.(3)(a)
DISTRIBUTION AGREEMENT
AGREEMENT made this ____ day of , 199 , by and between The Prudential
Insurance Company of America (the "Company"), a New Jersey corporation on its
own behalf and on behalf of Prudential Variable Contract Account GI-2 (the
"Account") and Prudential Investment Management Services LLC (the
"Distributor"), a Delaware limited liability company.
WITNESSETH:
WHEREAS, the Company has established and maintains the Account, a
separate investment account, pursuant to the laws of New Jersey for the purpose
of providing a choice of variable investment options under group life insurance
contracts (the "Contracts"), to commence after the effectiveness of the
Registration Statement filed with the Securities and Exchange Commission on Form
S-6 pursuant to the Securities Act of 1933, as amended (the "Securities Act");
WHEREAS, the Account is registered as a unit investment trust under the
Investment Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Distributor is a broker-dealer registered with the
Securities and Exchange Commission (the "Commission") under the Securities
Exchange Act of 1934 (the "Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Company and the Distributor wish to enter into an
agreement to have the Distributor act as the Company's principal underwriter for
the sale of Contracts and the distribution of certificates of participation (the
"Certificates") in the Contracts;
NOW THEREFORE, the parties agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR
The Company agrees that during the term of this Agreement it will take
all action required to cause the Contracts to comply with all applicable federal
and state laws and regulations. During the term of this Agreement, the Company
appoints the Distributor and the Distributor agrees to act as the principal
underwriter for the sale of Contracts, as well as the Certificates issued
thereunder, in each state and other jurisdictions in which such Contracts may
lawfully be sold. Distributor shall offer the Contracts for sale and distribute
Certificates at premium rates set by the Company. Applications for the Contracts
and the underlying Certificates shall be solicited only by representatives of
Distributor duly qualified and
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appropriately licensed in each state or other jurisdiction where they solicit
such applications. Company shall appoint Distributor's qualified representatives
as life insurance agents of Company. Completed applications for Contracts and
the underlying Certificates shall be transmitted directly to the Company for
acceptance or rejection in accordance with underwriting rules established by the
Company. Initial premium payments for the Certificates under the Contracts shall
be made by check payable to the Company and shall be held at all times by
Distributor or its representatives in a fiduciary capacity and remitted promptly
to the Company. Anything in this Agreement to the contrary notwithstanding, the
Company retains the ultimate right to control the sale of the Contracts, as well
as the Certificates issued thereunder, and to appoint and discharge life
insurance agents of the Company. The 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 this Agreement, with one or more organizations which agree to
participate in the distribution of the Certificates under the Contracts. Such
organization (hereafter "Broker") shall be registered with the Commission under
Section 15(b) of the Exchange Act and with the NASD as a member firm. Broker and
its representatives soliciting applications for Certificates shall be duly and
appropriately licensed, registered, or otherwise qualified for the sale of such
Certificates (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 the Broker or its representatives solicit such sales.
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 Certificates. Applications for Certificates solicited by such
Broker through its representatives shall be transmitted directly to the 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 Broker, 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
Certificates.
4. SUITABILITY
Distributor shall take reasonable steps to ensure that the various
representatives registered with the NASD through it shall not make
recommendations to prospective Certificate purchasers in the absence of
reasonable grounds to believe that the purchase of a
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Certificate is suitable for such prospect. While not limited to the following, a
determination of suitability shall be based on information furnished to a
representative 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 Certificates under the Contracts. The same shall hold true
for recommendations made to prospective Contractholders where the prospect is
incapable of evaluating the investment risk independently and is not exercising
independent judgment in evaluating the representative's recommendation.
5. PROMOTIONAL MATERIALS
Company shall have the responsibility for furnishing to Distributor and
its representatives sales promotion materials and individual sales proposals
relating to the sale of the Contracts and Certificates. 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
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 are 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 Securities Act.
Company shall arrange for the payment of commissions directly to those
Brokers who sell Contract Certificates 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 between Distributor and Brokers.
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 have the responsibility for maintaining the records
of its representatives that are licensed, registered and otherwise qualified to
sell the Contracts and the underlying Certificates. Distributor shall maintain
such other records as are required of it by applicable laws and regulations. The
books, accounts, and records of the Company, the Account and Distributor shall
be maintained so as to disclose clearly and accurately the nature and details of
the transactions. Copies of all records maintained by the Distributor in
connection with this Agreement shall be made available to and become the
property of the
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Company upon its request. The Distributor shall keep confidential any
information obtained pursuant to this Agreement and shall disclose such
information only if the Company has authorized such disclosure, or if such
disclosure is expressly required by applicable federal or state regulatory
authorities.
8. INVESTIGATION AND PROCEEDING
Distributor and Company agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Contracts and Certificates distributed under this Agreement.
Distributor and Company further agree to cooperate fully in any securities
regulatory investigation or proceeding with respect to Company, Distributor,
their affiliates and their representatives to the extent that such investigation
or proceeding is in connection with the Contracts and Certificates distributed
under this Agreement. The 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 the Company's operations are being conducted in a manner
consistent with any applicable law or regulation.
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 business days before being sent to the customer or regulatory
authority, except that if a more prompt response is required, the proposed
response shall be communicated by telephone or telegraph.
9. TERMINATION
This Agreement shall terminate automatically upon its assignment within
the meaning of such term in the Investment Company Act. This Agreement, however,
may be transferred by the Distributor without the prior written consent of the
Company in the circumstances set forth in Rule 2a-6 under the Investment Company
Act. The Agreement may be terminated at any time by either party on 60 days
written notice to the other party, without the payment of any penalty. 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 a time of
termination, and the agreements contained in paragraph 8 hereof.
10. REGULATION
This Agreement shall be subject to the provisions of the Investment
Company Act and the Exchange Act and of the rules, regulations, and rulings
thereunder and 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.
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11. SEVERABILITY
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
12. 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 duly 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 in accordance
with its terms.
13. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
BY:__________________________________
TITLE:
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
BY:__________________________________
TITLE:
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