Exhibit 1.A.(3)(a)
DISTRIBUTION AGREEMENT
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AGREEMENT made this _____ day of ____________, 1997, by and between The
Prudential Insurance Company of America, a New Jersey corporation ("Company"),
on its own behalf and on behalf of the Prudential Variable Appreciable Account
("Account"), and Pruco Securities Corporation, a New Jersey corporation
("Distributor").
WITNESSETH:
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WHEREAS, the Company has established and maintains the Account, a separate
investment account, pursuant to the laws of New Jersey for the purpose of
selling variable universal life insurance contracts ("Contracts"), to commence
after the effectiveness of the Registration Statement relating thereto filed
with the Securities and Exchange Commission on Form S-6 pursuant to the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Account will be 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 "Securities Exchange Act") and is a member of the
National Association of Securities Dealers, Inc. ("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
the Contracts through the Account;
NOW, THEREFORE, the parties agree as follows:
1. Appointment of the Distributor
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The Company agrees that during the term of this Agreement it will take
all action which is required to cause the Contracts to comply as an insurance
product and a registered security with all applicable federal and state laws and
regulations. The Company appoints the Distributor and the 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 the Contracts for sale
and distribution at premium rates set by the Company. Applications for the
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 the Company for acceptance or
rejection in accordance with underwriting rules established by the Company.
Initial premium payments 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
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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 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 the Agreement.
2. Sales Agreements
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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 Contracts. Such organizations (hereafter
"Broker") shall be both registered as a broker/dealer under the Securities
Exchange Act and a member of 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 the
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 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 Distributor, shall be held at all times in
a fiduciary capacity and remitted promptly to Company.
3. Life Insurance Licensing
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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
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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 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 Contracts.
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5. Promotion Materials
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Company shall have the responsibility for furnishing to Distributor
and its representatives sales promotion materials and individual sales proposals
related to the sale of the Contracts. Distributor shall not use any such
materials that have not been approved by Company.
6. Compensation
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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 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 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 the Agreement in the initial sales efforts and
the continuing obligations hereunder.
7. Records
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Distributor shall have the responsibility for maintaining the records
of representatives licensed, registered and otherwise qualified to sell the
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
the Distributor in connection with this Agreement shall be the property of the
Company and shall be returned to the Company upon termination of this Agreement,
free from any claims or retention of rights by the Distributor. 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.
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8. Investigation and Proceeding
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(a) Distributor and Company agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the 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. 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 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 business days prior to its being 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
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This Agreement shall terminate automatically upon its assignment
without the prior written consent of both parties. This 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 times of termination, and the agreements
contained in paragraph 8. hereof.
10. Regulation
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This Agreement shall be subject to the provisions of the 1940 Act and
the Securities Exchange Act of 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.
11. Severability
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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.
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12. Applicable Law
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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 _____________________
PRUCO SECURITIES CORPORATION
By _____________________
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