Pre-Effective Amendment to Registration Statement for a Separate Account (Unit Investment Trust) — Form N-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: N-4/A Pre-Effective Amendment to Registration Statement 45 282K
for a Separate Account (Unit Investment
Trust)
2: EX-1 Resolution 2± 11K
3: EX-3.(A) Form of Distribution Agreement 18 65K
4: EX-4 Contract Form 28 100K
5: EX-9 Voting Trust Agreement 2± 9K
6: EX-10 Exhibit 10(A) 11 31K
7: EX-13 Annual or Quarterly Report to Security Holders 1 6K
EX-3.(A) — Form of Distribution Agreement
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EXHIBIT 3(A)
FORM OF
DISTRIBUTION AGREEMENT
AGREEMENT made this ____ day of __________, 2000, by and between The
Prudential Insurance Company of America (the "Company"), a New Jersey insurance
company on its own behalf and on behalf of Prudential Discovery Premier Group
Variable Contract Account (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 annuity
contracts (the "Contracts"), to commence after the effectiveness of a
Registration Statement filed with the Securities and Exchange Commission on Form
N-4 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 Section 15(b) of 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 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 (or other payment method) 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 Contracts and 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 Contracts and
Certificates shall be duly and appropriately licensed, registered, or otherwise
qualified for the sale of such Contracts and 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 Contracts and
Certificates. Applications for Contracts and 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 (or other payment method) 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
Contracts and Certificates.
4. SUITABILITY
Parties to this Agreement are prohibited from recommending the purchase
of investment options or interests in the Account to prospective Contract
holders and Certificates purchasers. Such prohibition also shall extend to
contributions, transfers, exchanges, and redemptions by Certificate purchasers
of investment options or interests in the Account. Parties shall take reasonable
steps to ensure that their representatives and associates refrain from making
the aforementioned recommendations. Parties to this Agreement shall take
reasonable steps to ensure that they will offer Certificates that are
appropriate to the needs of the prospective Certificate purchasers. While not
limited to the following, a determination of appropriateness shall be based on
information furnished to the parties after reasonable inquiry of such applicants
concerning the
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applicants' insurance and investment objectives, financial
situations and needs, and the likelihood that the applicants will continue to
make the premium payments contemplated by the Certificates under the Contracts.
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 Contracts and
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.
Reimbursement shall be a portion of Distributor's yearly expenses based on
Company's share of relevant activity. In addition, Company shall pay Distributor
a surcharge of one (1) to three (3) percent of the commissions Company pays to
Brokers and to representatives of Distributor.
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 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
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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 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 of 1940 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.
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
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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: ---------------------------------------
Name:
Title:
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
By: ---------------------------------------
Name:
Title:
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EXHIBIT 3(B)
FORM OF
MARKETING AGREEMENT
This Marketing Agreement (the "Agreement") is made as of ______________
between Prudential Investment Management Services LLC ("PIMS"), a Delaware
limited liability company with its principal place of business at 751 Broad
Street, Newark, New Jersey 07102, and _________________________________
("Broker"), a ________________ corporation with its principal place of business
at ______________________________________.
WITNESSETH:
WHEREAS, PIMS and Broker each is a broker-dealer registered with the
U.S. Securities and Exchange Commission under the Securities Exchange Act of
1934 ("Exchange Act") and with any applicable State securities commission, and
each also is a member of the National Association of Securities Dealers, Inc.
("NASD");
WHEREAS, PIMS and Broker wish to enter into this Agreement to allow
certain of Broker's registered representatives to assist Prudential (as defined
below) in the offer and sale of the Products and Services (as defined below) to
the Plans (as defined below); and
[WHEREAS, the parties intend that this Agreement shall replace the
Broker Agreement and Marketing Assistance Agreement, both dated ____________,
between them and that such Broker and Marketing Assistance Agreements are hereby
terminated as of the date hereof].
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
1. DEFINITIONS
A. "Agreement" means this Marketing Agreement, and any appendices
thereto.
B. "Broker" means ___________________________ and, as the
context requires, certain of its associated persons.
C. "Plans" means the defined contribution pension plans each
consisting of at least $3 million in assets that have been
referred by Broker to The Prudential Insurance Company of
America ("Prudential"), and that receive administrative and/or
recordkeeping services from Prudential and Broker in
accordance with Section 3 of this Agreement.
D. "Products and Services" means the investment products and
certain recordkeeping and administrative products and services
that comprise the PruArray program (the "Program"), the
Discovery Premier group variable annuity and ___________. The
parties recognize and agree that certain aspects of the
Products and Services may be provided by an affiliate of
Prudential or PIMS. The parties further recognize and agree
that Prudential has the unilateral right to add or remove
mutual funds from the Program. Any such addition or removal
will be binding upon Broker upon written notice from
Prudential or PIMS to Broker.
2. SCOPE OF AGREEMENT
A. PIMS and Broker each intend that only those registered
representatives of Broker that have been approved in advance
by PIMS and continue to be associated with Broker and
appropriately licensed are authorized under this Agreement to
offer and sell the Products and Services to the Plans. Any
such authorized registered representative of Broker is
referred to herein as an "Authorized Representative." Upon
written notice to Broker, PIMS shall have the unilateral right
to terminate a registered representative's authority as an
Authorized Representative. In that event, such registered
representative no longer shall have any authority to act under
this Agreement and PIMS and Broker shall agree on one or more
Authorized Representatives to assume the responsibilities of
such registered representative with respect to any Plans; if
PIMS and Broker are unable to so agree on one or more new
Authorized Representative(s), PIMS shall have the unilateral
right to appoint a registered representative who is not
employed by or associated with Broker.
B. PIMS shall make the Products and Services available to Plans
that are referred to it in writing by an Authorized
Representative. Broker shall perform such services as may be
necessary or appropriate to assist PIMS in marketing the
Products and Services to such prospective Plans. The services
provided by Broker pursuant to this Agreement may include, but
are not limited to, the introduction or referral to PIMS of
Plans that may desire to retain PIMS to provide certain of the
Products and Services. Broker also agrees that generally, of
the investment options that Broker offers to Plans, at least
50% of such investment options shall be Prudential proprietary
mutual funds. For purposes of satisfying the 50% requirement,
the Prudential MoneyMart Assets Fund (the "Money Market Fund")
will not be considered if any of the investment options that
Broker offers to Plans include the Stable Value Fund,
Guaranteed Interest Account ("GIA") or Guaranteed Interest
Account Plus ("GIA Plus").
C. Broker shall notify PIMS in writing of any pending
introduction or referral of a prospective Plan to PIMS. Within
ten (10) business days after being notified, PIMS shall inform
Broker in writing if Prudential already had established a
prior relationship with such Plan. At Broker's request, PIMS
shall provide Broker with evidence of such prior relationship
(such as prior correspondence, etc.). The existence of such a
prior relationship shall remove that potential Plan from the
applicability of this Agreement; provided, however, that this
proviso shall not exclude from this Agreement any Plan (a
"Transferred Plan") (i) that was covered under a PIMS
Marketing Agreement with a broker-dealer other than Broker
("Other Broker") and (ii) the
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account for which was transferred to Broker in connection with
an Authorized Representative leaving the employ of Other
Broker and becoming associated with Broker. If PIMS does not
notify Broker of a prior relationship with a prospective Plan,
then Broker shall have twelve (12) months from the date of its
original notification to PIMS to facilitate the prospective
Plan's acquisition of the Products or Services pursuant to
this Agreement. If such Plan (including any Transferred Plan)
acquires the Products or Services during the twelve month
period, it becomes a "Sold Engagement Plan" hereunder. Once a
Plan has become a Sold Engagement Plan, such Plan shall be
"registered" to Broker and Broker shall be compensated by PIMS
for all Products and Services provided to that Plan pursuant
to this Agreement; provided, however, that at any time a Plan
determines that it no longer wishes to have a relationship
with Broker through which relationship such Plan receives or
has received Products and Services, then such Plan shall no
longer be considered a "Sold Engagement Plan" for the purposes
of this Agreement.
D. Plan accounts ("Accounts") originated under this Agreement
shall be exclusively accounts of PIMS for the purposes of the
federal and state securities laws, but nothing in this
Agreement shall prevent Broker from providing consulting and
other services to the Plans.
E. This Agreement shall not give Broker the right to offer, sell,
or market any Prudential product or service that is not
specifically referenced in this Agreement. Nor shall this
Agreement give Prudential the right to offer, sell, or market
any Product or Service directly to the Accounts without the
prior written approval of Broker.
3. DUTIES OF PARTIES
All on-going services provided to the Plans originated under this
Agreement shall be provided in accordance with this Section 3.
A. FUNCTIONS EXCLUSIVE TO PRUDENTIAL
Prudential or PIMS, as the context may require, shall have sole
responsibility for:
(1) the opening, approval, and maintenance of Accounts;
(2) maintaining for each Account the books and records required of
broker-dealers under the Exchange Act and applicable State
securities laws, and the Conduct Rules of the NASD;
(3) receiving and disbursing Account funds;
(4) preparing enrollment and educational materials for use with
prospective participants in Plans;
3
(5) safeguarding any Account funds and securities;
(6) preparing and delivering confirmations and statements for
Accounts;
(7) accepting orders from Accounts and executing transactions; and
(8) providing continuous administrative support to Plans and Plan
participants regarding their pension plans.
B. FUNCTIONS EXCLUSIVE TO BROKER
Broker shall have sole responsibility:
(1) for maintaining a supervisory system reasonably designed to
ensure that the activities of the Authorized Representatives
and its other personnel are conducted in accordance with this
Agreement and the standards imposed by the Conduct Rules of
the NASD;
(2) for ensuring that any Authorized Representative is
appropriately licensed with the NASD and any appropriate state
or other jurisdiction;
(3) for ensuring that the Authorized Representatives' activities
in offering and selling the Products and Services to the Plans
are conducted in accordance with this Agreement and the
standards imposed by the Conduct Rules of the NASD;
(4) for ensuring that only Authorized Representatives service
Sold Engagement Plans; and
(5) for ensuring that at the time an Authorized Representative
sells Products and Services, and for so long as any such
Authorized Representative continues to be compensated by
Broker under this Agreement, such Authorized Representative
has not, within the previous 10 years:
(a) been convicted, pleaded guilty (or no contest) to a felony
or misdemeanor, or was the subject of a criminal
proceeding (any of the foregoing referred to hereafter as
an "Action"), and any such Action involved either an
"investment-related" business (i.e., a business pertaining
to securities, commodities, banking, insurance, or real
estate), fraud, false statements or omissions, wrongful
taking of property, bribery, forgery, counterfeiting, or
extortion;
(b) been found to have been involved in a violation of an
investment-related (as defined above) statute or
regulation;
(c) been the subject of any order, judgment, or decree
permanently or temporarily enjoining him/her from, or
otherwise limiting him/her from, engaging in any
investment-related (as defined above) activity;
(d) been the subject of administrative proceedings before the
U.S. Securities and Exchange Commission, any other federal
regulatory agency, any state agency, the NASD, or any
registered stock exchange
4
in which he/she (i) was found to have caused an
investment-related (as defined above) business to lose its
authorization to do business or (ii) was found to have
been involved in a violation of an investment-related (as
defined above) statute or regulation and was the subject
of an order by any such regulator denying, suspending, or
revoking the authorization of the person to act in, or
barring or suspending the person's association with, an
investment-related (as defined above) business, or
otherwise significantly limiting the person's involvement
in investment-related (as defined above) activities.
Notwithstanding the foregoing, an Authorized Representative shall not
be disqualified under this paragraph 3(B)(5) with respect to any Action or other
proceeding that ultimately was resolved in his/her favor, or subsequently
reversed, suspended, or vacated.
C. FUNCTIONS TO BE PERFORMED BY PRUDENTIAL, BROKER OR BOTH
PIMS and Broker shall use their best efforts to offer and sell the
Products and Services to prospective Plans. These functions include cooperation
in: (1) preparation of marketing materials for use with prospective Plans; (2)
providing personnel to attend sales meetings with prospective Plans; and (3)
providing personnel to attend enrollment meetings with new Plans.
D. COMPLIANCE WITH RULES AND REGULATIONS
PIMS and Broker shall comply with all laws, rules, and regulations of
any governmental agency having jurisdiction with respect to their respective
performance of their obligations hereunder. PIMS and Broker shall each be solely
responsible for maintaining any and all licenses which may be required for the
provision of the Products and Services and the performance of their obligations
hereunder generally.
E. DISCLOSURE DOCUMENTS, ADVERTISING AND/OR SALES MATERIAL
Broker shall not distribute any disclosure document regarding any
Products or Services (such as prospectuses and statements of additional
information) other than those supplied by Prudential or PIMS. If Broker wishes
to distribute advertising and/or sales material related to the Products and
Services, such advertising and/or sales material must be prepared by PIMS or be
approved by PIMS prior to first use.
F. USE OF INSURANCE AGENCY AFFILIATE OF BROKER
[It is understood and agreed that Broker's Authorized Representatives
may be employed by, or associated with (as defined in Article I of the By-Laws
of the NASD), __________________________________, an affiliate of Broker that is
licensed as an insurance agency (hereinafter referred to as "Insurance Agency
Affiliate"), and whose shareholders, officers, and employees are "associated
persons" of Broker within the meaning of Section 3(a)(18) of the Exchange Act.
Broker agrees that if the Products and Services are offered, sold or serviced
through Insurance Agency Affiliate:
5
(1) Broker will retain full responsibility for compliance with the requirements
of all applicable federal and state securities laws and insurance laws,
except as otherwise set forth in this Agreement and except with respect to
the maintenance of the SEC Registration Statement under the Securities Act
of 1933, and will continue to perform all obligations set forth above;
(2) Any books and records maintained by Insurance Agency Affiliate in the
offer, sale and service of Products and Services will be deemed, for
purposes of the Exchange Act, to be books and records of Broker and will
conform to the requirements of Section 17 of the Exchange Act and the rules
thereunder. The manner in which the books and records of Broker and
Insurance Agency Affiliate are made and maintained will permit supervisory
personnel of Broker as well as authorized examiners of the SEC, or of
another appropriate governmental agency or self-regulatory organization, to
review data concerning transactions relating to Products and Services
effected through Insurance Agency Affiliate to the same extent as if such
transactions had been effected through Broker itself. This may be
accomplished either through maintaining one set of books and records for
Broker and Insurance Agency Affiliate or by maintaining separate sets of
books and records with adequate integration, through cross-referencing or
otherwise, between records maintained by Broker and those maintained by
Insurance Agency Affiliate;
(3) Compensation to be paid to Broker attributable to sales of Products and
Services shall be paid to Insurance Agency Affiliate in accordance with the
SEC no-action letter dated ___________________ issued to
_____________________________. At all times for which compensation payments
are to be made to Insurance Agency Affiliate under this Agreement,
Insurance Agency Affiliate is and shall be an insurance agency properly
licensed and appointed as required under the insurance laws in any state(s)
or jurisdictions(s) in which the Products and Services are solicited and
sold;
(4) All obligations and responsibilities of Broker under this Agreement,
including but not limited to any supervisory, compliance, and
indemnification provisions, shall apply to the activities of the Insurance
Agency Affiliate and any other registered representative associated with
the Broker offering or selling the Products and Services, for which
compensation is payable to Insurance Agency Affiliate hereunder and
notwithstanding payment of compensation to Insurance Agency Affiliate
hereunder;
(5) Payments by PIMS to Insurance Agency Affiliate shall constitute full
payment for all compensation to be paid to Broker for the sale of the
Products and Services in all applicable states and/or jurisdictions. PIMS
has no responsibility for, nor any liability with respect to, any
compensation arrangements between Broker and Insurance Agency Affiliate,
and/or any Authorized Representative;
(6) Broker agrees to provide Insurance Agency Affiliate's Taxpayer
Identification Number ("TIN") to PIMS, and Broker understands and agrees,
and will cause Insurance Agency Affiliate to understand and agree, that
PIMS shall, for all the compensation payments made to Insurance Agency
Affiliate, use Insurance Agency Affiliate's TIN for purposes of federal and
state tax reporting and shall issue tax reporting forms with respect to
such payments solely to Insurance Agency Affiliate. Broker also agrees to
6
cause Insurance Agency Affiliate to refund to PIMS any amounts due PIMS
under this Agreement;
(7) Payments under this Agreement to Insurance Agency Affiliate shall cease
immediately:
(a) with respect to any state or jurisdiction in which the Insurance
Agency Affiliate's insurance license is expired, revoked,
suspended, terminated, or impaired; or
(b) when Insurance Agency Affiliate's status as an associated person
of Broker terminates.
(8) Broker may, upon the written consent of PIMS, designate a substitute
Insurance Agency Affiliate, provided the substitute Insurance Agency
Affiliate meets all of the requirements set forth herein.]
4. LIMITS ON AUTHORITY
A. LIMITS ON BROKER'S AUTHORITY
(1) Apart from this Agreement, Broker shall not bind Prudential in
any way. In all of its activities under this Agreement,
including assisting in the offer and sale of the Products and
Services, Broker shall act as an independent contractor and
not as an agent or employee of Prudential or PIMS. Broker
shall not have any authority to assume or create any
obligation or contract, express or implied, on behalf of
Prudential or PIMS.
(2) Neither Broker nor any of Broker's employees or
representatives shall be considered employees of, or persons
associated with, Prudential or PIMS for purposes of any
federal or state securities law or regulation, or otherwise.
Broker shall require all representatives or employees who
perform services pursuant to this Agreement to agree to be
bound by the terms of Sections 8, 9, 10, and 11 of this
Agreement.
(3) Broker is not authorized to use the name of Prudential or its
affiliates in advertising or promoting its business without
the prior written consent of Prudential.
B. LIMITS ON PRUDENTIAL'S AUTHORITY
(1) Apart from this Agreement, neither PIMS nor Prudential shall
bind or obligate Broker in any way. In all of its activities
under this Agreement, PIMS agrees to assist Broker in the
offer and sale of the Products and Services, and not act as an
agent of Broker, and shall not hold itself out as such. PIMS
shall not have any authority to assume or create any
obligation or contract, express or implied, on behalf of
Broker.
7
(2) Neither PIMS nor any of PIMS's employees or representatives
shall be considered employees of or persons associated with
Broker for purposes of any federal or state securities law or
regulation, or otherwise.
(3) Prudential and PIMS are not authorized to use the name of
Broker or its affiliates in advertising or promoting their
business without the prior written consent of Broker.
5. TERM
This Agreement is effective as of the date of its execution, and shall
continue in force for one year from that date. Thereafter, this Agreement shall
automatically be renewed every year for a further one year period; provided that
either party may terminate this Agreement for any reason upon 60 days' prior
written notice. PIMS may terminate this Agreement immediately if Broker breaches
the Agreement, becomes insolvent, or ceases to maintain the net capital required
under the Exchange Act.
Termination of this Agreement shall not excuse Broker from any
agreement, obligation, or undertaking pursuant to Sections 8, 9, and 10 of this
Agreement, which sections shall survive the termination of this Agreement.
6. CONSIDERATION AND PAYMENT
A. For the services provided herein with respect to each Plan,
Broker shall receive compensation from PIMS ("compensation")
pursuant to the fee arrangement outlined in Appendix A, which
may be amended as provided for in Section 16 of this
Agreement. Such compensation shall be paid to Broker by PIMS
within thirty (30) days of PIMS's receipt of fees from Plans
pursuant to this Agreement. Broker shall be responsible for
paying Authorized Representatives the compensation that they
are owed.
B. PIMS agrees, in the event of termination of this Agreement, to
pay to Broker any unpaid compensation accrued by Broker up to
the date of termination. Notwithstanding anything to the
contrary in this Agreement or any Appendix to this Agreement,
any and all compensation owing to Broker hereunder (other than
unpaid and accrued amounts up to the date of termination)
shall cease as of the date of termination. Furthermore, to the
extent that a Plan ceases to be a "Sold Engagement Plan"
pursuant to the circumstances set forth in the final sentence
of Section 2C of this Agreement or PIMS exercises its
unilateral right to appoint a registered representative who is
not employed by or associated with Broker pursuant to the
final sentence of Section 2A, any and all compensation payable
to Broker with respect to affected Plans will cease as of that
time.
C. PIMS shall on a monthly basis provide Broker with a report of
any revenues derived from the Products and Services provided
hereunder and from which Broker is entitled to receive
compensation. In the event Broker should dispute any payment,
PIMS, after receiving notice from Broker of such dispute,
shall cause to be provided to Broker a statement of
reconciliation which demonstrates the amount of compensation
paid to Broker. If an inaccuracy is found, the payment made to
Broker shall be adjusted in accordance with the statement of
reconciliation. If the statement of reconciliation indicates
that the payment made to Broker was correct, and Broker still
disputes the payment, PIMS shall cause its independent
auditors to supply Broker with an independent statement of
reconciliation ("Independent Report"). If the Independent
Report indicates that the payment to Broker was not deficient,
then Broker agrees to reimburse PIMS for the cost of the
Independent Report.
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7. GOVERNMENTAL REQUIREMENTS
Broker agrees to provide copies of all documents and other information
requested by, and to otherwise cooperate with, Prudential and PIMS for purposes
of complying with federal and state laws and regulations, which copies shall
become the property of PIMS.
8. STANDARDS OF CONDUCT
All services performed, directly or indirectly, by, or on behalf of
Broker in connection with this Agreement, or in furtherance of its objectives,
shall be carried out in form and substance in accordance with all applicable
laws and regulations of the United States, the laws of all applicable states and
other jurisdictions, and in accordance with the Conduct Rules of the NASD.
9. INTELLECTUAL PROPERTY AND DATA RIGHTS
Broker shall not use any of the trademark(s) or tradename(s),
servicemark(s) or any similar name or names, or combinations thereof, owned or
claimed by Prudential or an affiliate, without the prior written consent of
Prudential or PIMS. As soon as practicable, but no later than fifteen (15) days
after termination or cancellation of this Agreement, Broker shall return all of
the physically deliverable sales data or materials relating to the Products and
Services to PIMS. Effective on the date of termination or cancellation, Broker
shall discontinue using any such data or materials.
10. INDEMNIFICATION
A. GENERAL PROVISION
PIMS agrees to indemnify and hold harmless Broker, its members,
directors, officers, employees, agents and representatives against any and all
claims, liabilities, losses or damages which arise from PIMS's material breach
of any term of this Agreement or any representation or warranty in Section 11 of
this Agreement.
Broker agrees to indemnify and hold harmless PIMS and its affiliates,
and its current and former directors, officers, employees, agents and
representatives against all claims, liabilities, losses or damages which arise
from Broker's performance, negligent or otherwise, of its duties under this
Agreement, any misstatement or omission made by Broker or any Authorized
Representative regarding the Products and Services, or the
9
breach of any term of
this Agreement or any representation or warranty in Section 11 of this
Agreement.
B. PAYMENT OF FINES AND PENALTIES
PIMS shall indemnify and hold Broker harmless from any fines,
penalties, and related expenses incurred by Broker because of PIMS's failure to
comply with the laws, rules, and regulations of any governmental agency having
jurisdiction over its performance of obligations hereunder. Broker shall
indemnify and hold PIMS and its affiliates harmless from any fines, penalties,
and related expenses incurred by PIMS because of Broker's failure to comply with
the laws, rules, and regulations of any governmental agency having jurisdiction
over the performance of its obligations hereunder.
11. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF BROKER
Broker represents and warrants that:
(1) It is duly organized and existing and in good standing under
the laws of the State of _________________.
(2) It is empowered by its organizational documents to enter into
and perform under this Agreement.
(3) This Agreement has been fully authorized, executed and
delivered by Broker and constitutes a legal, valid and binding
agreement enforceable in accordance with its terms.
(4) The execution, delivery and performance by Broker of this
Agreement shall not violate any provision of current law,
including, without limitation, the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"); the Internal
Revenue Code of 1986, as amended (the "Code"); any federal or
state or other jurisdiction's securities law or regulation;
any order, rule or regulation of any court or governmental or
regulatory body; or any agreement or instrument to which
Broker is a party or by which Broker is bound.
(5) It currently is, and shall continue to be during the term of
this Agreement, registered as a broker-dealer under the
Exchange Act and any applicable State securities laws, and is
and will continue to be a member of the NASD.
(6) It will use its best efforts to meet business goals and
standards pertaining to the Products and Services, as mutually
agreed upon from time to time between the parties, with
respect to the activities it performs pursuant to this
Agreement.
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B. REPRESENTATIONS AND WARRANTIES OF PIMS
PIMS represents and warrants that:
(1) It is duly organized and existing and is in good standing
under the laws of Delaware.
(2) It is empowered under its organizational documents to enter
into and perform this Agreement.
(3) This Agreement has been duly authorized, executed and
delivered by PIMS and constitutes a legal, valid and binding
obligation enforceable in accordance with its terms.
(4) The execution, delivery and performance by PIMS of this
Agreement shall not violate any provision of current law,
including, without limitation, ERISA, the Code and federal and
state securities laws; any order, rule or regulation of any
court or governmental or regulatory body; or any agreement or
instrument to which PIMS is a party or by which PIMS is bound.
(5) It currently is, and shall continue to be during the term of
this Agreement, registered as a broker-dealer under the
Exchange Act and any applicable State securities law, and is
and will continue to be a member of the NASD.
12. ASSIGNMENT
Broker may not transfer this Agreement without the prior written
consent of PIMS. PIMS may assign this Agreement to any affiliate upon notice to
Broker.
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13. THIRD PARTY BENEFICIARIES
This Agreement shall not be construed to create any enforceable right
or interest in any party other than Prudential, PIMS, and Broker.
14. APPLICABLE LAW AND ARBITRATION
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New Jersey, without giving effect to the
conflicts of laws principles thereof. Any controversy or dispute arising out of
or related to this Agreement, or the breach thereof, which cannot first be
settled amicably between PIMS and Broker shall be settled by arbitration
pursuant to the Code of Arbitration Procedure of the NASD. Neither party shall
seek punitive damages from the other, and, if punitive damages are so awarded by
the arbitration panel, neither party shall seek to collect that part of the
panel's award from the other. Arbitration shall be held in the State of New
Jersey. Judgment on any award rendered by the arbitration panel may be entered
in any court having jurisdiction thereof except to the extent punitive damages
are part of the award.
15. SECTION HEADINGS
The section headings in this Agreement are provided solely for the
convenience of the parties, and shall not be construed as having any legal or
interpretative effect.
16. ENTIRE AGREEMENT
This Agreement supersedes all prior oral or written agreements, if any,
between the parties relating to the subject matter hereof, and constitutes the
entire agreement between the parties. Any revisions, amendments, or changes to
this Agreement (except revisions, amendments, or changes to Appendix A, and
except for PIMS's ability to unilaterally terminate the authority of an
Authorized Representative and unilaterally appoint a registered representative
who is not employed by or associated with Broker as described in Section 2A)
shall be in writing and signed by authorized representatives of the parties.
Appendix A may be amended only by PIMS, and will be considered amended upon
notice to Broker.
17. NOTICES AND CORRESPONDENCE
All notices and correspondence pertaining to this Agreement shall be
sent by first class mail, express mail, or courier service to the following
addresses, or other address(es), provided that prior written notice regarding
such other address(es) is given to the other party:
(a) To PIMS: Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
12th Floor
Newark, NJ 07102
Attn.: Chief Legal Officer
cc: Scott S. Wallner, Legal Officer
Prudential Investment Management Services
LLC
751 Broad Street
Newark, NJ 07102-3777
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(b) To Broker:
Attn: ___________________
18. EXECUTION
The parties hereto have executed this Agreement as of the day and year
first written above.
[BROKER] PRUDENTIAL INVESTMENT MANAGEMENT
SERVICES LLC
By: __________________________ By: __________________________
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