AS FILED WITH THE SEC ON ___________________. REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
-----------
PRUCO LIFE OF NEW JERSEY
VARIABLE APPRECIABLE ACCOUNT
(Exact Name of Trust)
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Name of Depositor)
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(800) 286-7754
(Address and telephone number of principal executive offices)
-----------
THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(Name and address of agent for service)
Copy to:
JEFFREY C. MARTIN
SHEA & GARDNER
1800 MASSACHUSETTS AVENUE, N.W.
WASHINGTON, D.C. 20036
-----------
Variable Universal Life Insurance Contracts -- Pursuant to Rule 24f-2 under the
Investment Company Act of 1940, the Registrant elects to register an indefinite
amount of securities. (Title and amount of securities being registered, and
proposed maximum aggregate offering price).
Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.
The Registrant hereby amends this Registration Statement on such date as may be
necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such
dates as the Commission, action pursuant to said Section 8(a), may determine.
This filing is being made pursuant to Rules 6c-3 and 6e-3(T) under the
Investment Company Act of 1940.
Registrant elects to be governed by Rules 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940 with respect to the Contract described in this
Registration Statement.
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY FORM N-B-2)
N-B-2 ITEM NUMBER LOCATION
----------------- --------
1. Cover Page
2. Cover Page
3. Not Applicable
4. Sale of the Contracts and Sales Commissions
5. Pruco Life of New Jersey Variable Appreciable
Account
6. Pruco Life of New Jersey Variable Appreciable
Account
7. Not Applicable
8. Not Applicable
9. Litigation
10. Introduction and Summary; Short-Term Cancellation
Right or "Free Look"; Types of Death Benefit;
Changing the Type of Death Benefit; Riders;
Premiums; Allocation of Premiums; Transfers;
Dollar Cost Averaging; Auto-Rebalancing; Charges
and Expenses; How a Contract's Surrender Value
Will Vary; How a Type A (Fixed) Contract's Death
Benefit Will Vary; How a Type B (Variable)
Contract's Death Benefit Will Vary; How a Type C
(Return of Premium) Contract's Death Benefit Will
Vary; Surrender of a Contract; Withdrawals; Lapse
and Reinstatement; Increases in Basic Insurance
Amount; Decreases in Basic Insurance Amount; When
Proceeds are Paid; Contract Loans; Other General
Contract Provisions; Voting Rights; Substitution
of Fund Shares
11. Introduction and Summary; Pruco Life of New Jersey
Variable Appreciable Account
12. Cover Page; Introduction and Summary; The Funds;
Sale of the Contract and Sales Commissions
13. Introduction and Summary; The Funds; Premiums;
Allocation of Premiums; Charges and Expenses; Sale
of the Contract and Sales Commissions
14. Introduction and Summary; Detailed Information for
Prospective Contract Owners
15. Introduction and Summary; Premiums; Allocation of
Premiums; Transfers; Dollar Cost Averaging;
Auto-Rebalancing
16. Introduction and Summary; Detailed Information for
Contract Owners
<PAGE>
N-B-2 ITEM NUMBER LOCATION
----------------- --------
17. When Proceeds are Paid
18. Pruco Life of New Jersey Variable Appreciable
Account
19. Reports to Contract Owners
20. Not Applicable
21. Contract Loans
22. Not Applicable
23. Not Applicable
24. Other General Contract Provisions
25. Pruco Life Insurance Company of New Jersey
26. Introduction and Summary; The Funds; Charges and
Expenses
27. Pruco Life Insurance Company of New Jersey; The
Funds
28. Pruco Life Insurance Company of New Jersey;
Directors and Officers
29. Pruco Life Insurance Company of New Jersey
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Pruco Life Insurance Company of New Jersey
36. Not Applicable
37. Not Applicable
38. Sale of the Contract and Sales Commissions
39. Sale of the Contract and Sales Commissions
40. Not Applicable
41. Sale of the Contract and Sales Commissions
42. Not Applicable
43. Not Applicable
<PAGE>
N-B-2 ITEM NUMBER LOCATION
----------------- --------
44. Introduction and Summary; The Funds; How a
Contract's Cash Surrender Value Will Vary; How a
Type A (Fixed) Contract's Death Benefit Will Vary;
How a Type B (Variable) Contract's Death Benefit
Will Vary; How a Type C (Return of Premium)
Contract's Death Benefit Will Vary
45. Not Applicable
46. Introduction and Summary; Pruco Life of New Jersey
Variable Appreciable Account; The Funds
47. Pruco Life of New Jersey Variable Appreciable
Account; The Funds
48. Not Applicable
49. Not Applicable
50. Not Applicable
51. Not Applicable
52. Substitution of Fund Shares
53. Tax Treatment of Contract Benefits
54. Not Applicable
55. Not Applicable
56. Not Applicable
57. Not Applicable
58. Not Applicable
59. Financial Statements: Financial Statements of
Pruco Life of New Jersey Variable Appreciable
Account; Financial Statements of Pruco Life
Insurance Company of New Jersey
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE>
PRUSELECT(SM) III
Variable Life Insurance
PROSPECTUS
Pruco Life of New Jersey
Variable Appreciable Account
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
<PAGE>
PROSPECTUS
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
PRUSELECT(SM) III
VARIABLE LIFE INSURANCE CONTRACTS
This prospectus describes certain individual flexible premium variable universal
life insurance contracts, PRUSELECT(SM) III Variable Life Insurance Contracts
(the "Contract"), issued by Pruco Life Insurance Company of New Jersey ("Pruco
Life of New Jersey"), a stock life insurance company. Pruco Life of New Jersey
is an indirect, wholly-owned subsidiary of The Prudential Insurance Company of
America. These Contracts provide individual variable universal life insurance
coverage with flexible premium payments, a variety of investment options, and
three types of death benefit options. These Contracts may be issued with a
Target Term Rider that could have a significant effect on the performance of
your Contract. For the factors to consider when adding a Target Term Rider to
your Contract, see RIDERS, page 12. The Contracts may be owned individually or
by a corporation, trust, association or similar entity. The Contracts are
available on a multiple life basis where the insureds share a common employment
or business relationship. The Contract owner will have all rights and privileges
under the Contract. The Contracts may be used for funding non-qualified
executive deferred compensation or salary continuation plans, retiree medical
benefits, or other purposes.
You may choose to invest your Contract's premiums and its earnings in the
following ways:
o Invest in one or more of 15 available subaccounts of the Pruco Life of New
Jersey Variable Appreciable Account, each of which invests in a
corresponding portfolio of the Funds indicated below:
THE PRUDENTIAL SERIES FUND, INC. (THE "SERIES FUND")
Money Market High Yield Bond Equity
Diversified Bond Stock Index Prudential Jennison
Conservative Balanced Equity Income Global
Flexible Managed
AIM VARIABLE INSURANCE FUNDS, INC. AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
AIM V.I. Value Fund American Century VP Value Fund
JANUS ASPEN SERIES MFS(R) VARIABLE INSURANCE TRUST(SM)
Growth Portfolio Emerging Growth Series
T. ROWE PRICE INTERNATIONAL SERIES, INC.
International Stock Portfolio
This prospectus describes the Contract generally and the Pruco Life of New
Jersey Variable Appreciable Account. The attached prospectuses for the Funds and
their related statements of additional information describe the investment
objectives and the risks of investing in the Fund portfolios. Pruco Life of New
Jersey may add additional investment options in the future. Please read this
prospectus and keep it for future reference.
The Securities and Exchange Commission ("SEC") maintains a Web site
(http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that file electronically with the SEC.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 286-7754
PRUSELECT is a service mark of Prudential.
<PAGE>
PROSPECTUS CONTENTS
PAGE
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS..........................1
INTRODUCTION AND SUMMARY......................................................2
BRIEF DESCRIPTION OF THE CONTRACT...........................................2
CHARGES.....................................................................2
TYPES OF DEATH BENEFIT......................................................4
LIFE INSURANCE DEFINITIONAL TESTS...........................................4
PREMIUM PAYMENTS............................................................5
REFUND......................................................................5
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY,
THE PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT, AND THE
VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT......................6
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY..................................6
THE PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT...................6
THE FUNDS...................................................................7
WHICH INVESTMENT OPTION SHOULD BE SELECTED?.................................9
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS..........................9
REQUIREMENTS FOR ISSUANCE OF A CONTRACT.....................................9
SHORT-TERM CANCELLATION RIGHT OR "FREE-LOOK"...............................10
TYPES OF DEATH BENEFIT.....................................................10
CHANGING THE TYPE OF DEATH BENEFIT.........................................11
RIDERS.....................................................................12
PREMIUMS...................................................................13
ALLOCATION OF PREMIUMS.....................................................13
TRANSFERS..................................................................14
DOLLAR COST AVERAGING......................................................14
AUTO-REBALANCING...........................................................14
CHARGES AND EXPENSES.......................................................15
HOW A CONTRACT'S SURRENDER VALUE WILL VARY.................................17
HOW A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL VARY....................18
HOW A TYPE B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL VARY.................19
HOW A TYPE C (RETURN OF PREMIUM) CONTRACT'S DEATH BENEFIT WILL VARY........20
SURRENDER OF A CONTRACT....................................................21
WITHDRAWALS................................................................21
LAPSE AND REINSTATEMENT....................................................22
INCREASES IN BASIC INSURANCE AMOUNT........................................22
DECREASES IN BASIC INSURANCE AMOUNT........................................23
WHEN PROCEEDS ARE PAID.....................................................23
ILLUSTRATIONS OF SURRENDER VALUES, DEATH BENEFITS,
AND ACCUMULATED PREMIUMS ................................................24
CONTRACT LOANS.............................................................26
SALE OF THE CONTRACT AND SALES COMMISSIONS.................................27
TAX TREATMENT OF CONTRACT BENEFITS.........................................27
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS........29
EXCHANGE RIGHT.............................................................29
OTHER GENERAL CONTRACT PROVISIONS..........................................29
VOTING RIGHTS..............................................................30
SUBSTITUTION OF FUND SHARES................................................31
REPORTS TO CONTRACT OWNERS.................................................31
STATE REGULATION...........................................................31
EXPERTS....................................................................31
LITIGATION.................................................................31
YEAR 2000 COMPLIANCE.......................................................32
<PAGE>
ADDITIONAL INFORMATION.....................................................33
FINANCIAL STATEMENTS.......................................................33
DIRECTORS AND OFFICERS.......................................................34
FINANCIAL STATEMENTS OF THE VARIABLE UNIVERSAL LIFE SUBACCOUNTS OF THE
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT........................A1
CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY OF NEW
JERSEY AN SUBSIDIARIES.......................................................B1
<PAGE>
DEFINITIONS OF SPECIAL TERMS USED IN THIS
PROSPECTUS
ATTAINED AGE -- The insured's age on the Contract date plus the number of years
since then. For any coverage segment effective after the Contract date, the
insured's attained age is the issue age of that segment plus the length of time
since its effective date.
BASIC INSURANCE AMOUNT -- The amount of life insurance as shown in the Contract.
CASH VALUE -- The same as the "Contract Fund."
CONTRACT -- The variable universal life insurance policy described in this
prospectus.
CONTRACT ANNIVERSARY -- The same date as the Contract date in each later year.
CONTRACT DATE -- The date the Contract is effective, as specified in the
Contract.
CONTRACT DEBT -- The principal amount of all outstanding loans plus any interest
we have charged that is not yet due and that we have not yet added to the loan.
CONTRACT FUND -- The total amount credited to a specific Contract. On any date
it is equal to the sum of the amounts in all the subaccounts and the principal
amount of any Contract debt.
CONTRACT OWNER -- You. Unless a different owner is named in the application, the
owner of the Contract is the insured.
CONTRACT YEAR -- A year that starts on the Contract date or on a Contract
anniversary. For any portion of a Contract representing an increase, "Contract
year" is a year that starts on the effective date of the increase. See INCREASES
IN BASIC INSURANCE AMOUNT, page 22.
COVERAGE SEGMENT -- The basic insurance amount at issue is the first coverage
segment. For each increase in basic insurance amount, a new coverage segment is
created for the amount of the increase. See INCREASES IN BASIC INSURANCE AMOUNT,
page 22.
DEATH BENEFIT -- The amount we will pay upon the death of the insured before
reduction by any Contract debt and amounts needed to pay charges through the
date of death.
FACE AMOUNT -- The same as the "basic insurance amount." If the Contract is
issued with a Target Term Rider, the "basic insurance amount" plus the rider
coverage amount equals the total "face amount."
FUNDS -- Mutual funds with separate portfolios. One or more of the available
Fund portfolios may be chosen as an underlying investment for the Contract.
MONTHLY DATE -- The Contract date and the same date in each subsequent month.
NET CASH VALUE -- The Contract Fund minus any Contract debt.
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY -- Us, we, Pruco Life of New Jersey.
The company offering the Contract.
THE PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT (THE "ACCOUNT") -- A
separate account of Pruco Life of New Jersey registered as a unit investment
trust under the Investment Company Act of 1940.
SEGMENT ALLOCATION AMOUNT -- The amount used to determine the charge for sales
expenses. See CHARGES AND EXPENSES, page 15.
SUBACCOUNT -- An investment division of the Account, the assets of which are
invested in the shares of the corresponding portfolio of the Funds.
SURRENDER VALUE -- The amount payable to the Contract owner upon surrender of
the Contract. It is equal to the Contract Fund minus any Contract debt plus any
return of sales charges.
TARGET PREMIUM -- The same as "segment allocation amount." See CHARGES AND
EXPENSES, page 15.
VALUATION PERIOD -- The period of time from one determination of the value of
the amount invested in a subaccount to the next. Such determinations are made
when the net asset values of the portfolios of the Funds are calculated, which
is generally at 4:15 p.m. Eastern time on each day during which the New York
Stock Exchange is open.
US, WE -- Pruco Life Insurance Company of New Jersey.
YOU -- The owner of the Contract.
1
<PAGE>
================================================================================
INTRODUCTION AND SUMMARY
THIS SUMMARY PROVIDES A BRIEF OVERVIEW OF THE MORE SIGNIFICANT ASPECTS OF THE
CONTRACT. WE PROVIDE FURTHER DETAIL IN THE SUBSEQUENT SECTIONS OF THIS
PROSPECTUS AND IN THE CONTRACT. THE CONTRACT, INCLUDING THE APPLICATION ATTACHED
TO IT, CONSTITUTES THE ENTIRE AGREEMENT BETWEEN YOU AND PRUCO LIFE OF NEW JERSEY
AND YOU SHOULD RETAIN THESE DOCUMENTS.
As you read this prospectus you should keep in mind that this is a life
insurance contract. VARIABLE LIFE INSURANCE has significant investment aspects
and requires you to make investment decisions, and therefore it is also a
"security." Securities that are offered to the public must be registered with
the Securities and Exchange Commission. The prospectus that is a part of the
registration statement must be given to all prospective purchasers.
BRIEF DESCRIPTION OF THE CONTRACT
The Contract is an individual flexible premium variable universal life insurance
contract that is offered by Pruco Life Insurance Company of New Jersey. These
Contracts may be issued with a Target Term Rider that could have a significant
effect on the performance of your Contract. For the factors to consider when
adding a Target Term Rider to your Contract, see RIDERS, page 12. The Contracts
are available on a multiple life basis where the insureds share a common
employment or business relationship. The Contracts may be owned individually or
by a corporation, trust, association or similar entity. The Contract owner will
have all rights and privileges under the Contract. The Contracts may be used for
such purposes as funding non-qualified executive deferred compensation or salary
continuation plans, retiree medical benefits, or other purposes.
The Contract is a form of variable universal life insurance. It is based on a
Contract Fund, the value of which changes every business day. The chart below
describes how the value of your Contract Fund changes.
You may invest premiums in one or more of the 15 available subaccounts. Your
Contract Fund value changes every day depending upon the change in the value of
the particular investment options that you have selected.
Although the value of your Contract Fund will increase if there is favorable
investment performance in the subaccounts you select, there is a risk that
investment performance will be unfavorable and that the value of your Contract
Fund will decrease. The risk will be different, depending upon which investment
options you choose. See WHICH INVESTMENT OPTION SHOULD BE SELECTED?, page 9.
CHARGES
The following chart outlines the components of your Contract Fund and the
adjustments which may be made including the maximum charges which may be
deducted from each premium payment and from the amounts held in the designated
investment options. These charges are largely designed to cover insurance costs
and risks, as well as sales and administrative expenses. The maximum charges
shown in the chart, as well as the current lower charges, are fully described
under CHARGES AND EXPENSES, page 15.
================================================================================
2
<PAGE>
================================================================================
------------------------------------------------------------
PREMIUM PAYMENT
------------------------------------------------------------
|
--------------------------------------------------
o less a charge of up to 7.5% of the
premiums paid for taxes attributable
to premiums. In New York this is called
a premium based administrative charge.
o less a charge for sales expenses of up
to 15% of the premiums paid.
--------------------------------------------------
|
- --------------------------------------------------------------------------------
INVESTED PREMIUM AMOUNT
To be invested in one or a combination of 15 investment portfolios of the Funds.
- --------------------------------------------------------------------------------
|
- --------------------------------------------------------------------------------
CONTRACT FUND
On the Contract Date, the Contract Fund is equal to the invested premium amount
minus any of the charges described below which may be due on that date.
Thereafter, the value of the Contract Fund changes daily.
- --------------------------------------------------------------------------------
|
- --------------------------------------------------------------------------------
PRUCO LIFE OF NEW JERSEY ADJUSTS
THE CONTRACT FUND FOR:
o Addition of any new invested premium amounts.
o Addition of any increase due to investment results of the chosen subaccounts.
o Addition of guaranteed interest at an effective annual rate of 4% on the
amount of any Contract loan. (Separately, interest charged on the loan
accrues at an effective annual rate of 4.25% or 5%. See CONTRACT LOANS,
page24.)
o Subtraction of any decrease due to investment results of the chosen
subaccounts.
o Subtraction of any amount withdrawn.
o Subtraction of the charges listed below, as applicable.
- --------------------------------------------------------------------------------
|
- --------------------------------------------------------------------------------
DAILY CHARGES
o Management fees and expenses are deducted from the Fund assets.
o We deduct a daily mortality and expense risk charge, equivalent to an annual
rate of up to 0.5%, from the subaccount assets.
- --------------------------------------------------------------------------------
================================================================================
3
<PAGE>
================================================================================
- --------------------------------------------------------------------------------
MONTHLY CHARGES
o We reduce the Contract Fund by a monthly administrative charge of up to $10
plus $0.05 per $1,000 of the basic insurance amount.
o We deduct a cost of insurance ("COI") charge.
o If the Contract includes riders, we deduct rider charges from the Contract
Fund.
o If the rating class of an insured results in an extra charge, we will deduct
that charge from the Contract Fund.
- --------------------------------------------------------------------------------
|
- --------------------------------------------------------------------------------
POSSIBLE ADDITIONAL CHARGES
o We assess an administrative charge of up to $25 for any withdrawals.
o We may assess an administrative charge of up to $25 for any change in basic
insurance amount.
o We may assess an administrative charge of up to $25 for any change in the
Target Term Rider coverage amounts (see RIDERS, page 12).
o We assess an administrative charge of up to $25 for each transfer exceeding
12 in any Contract year.
- --------------------------------------------------------------------------------
TYPES OF DEATH BENEFIT
There are three types of death benefit available. You may choose a Contract with
a Type A (fixed) death benefit under which the cash value varies daily with
investment experience, and the death benefit generally remains at the basic
insurance amount you initially chose. However, the Contract Fund may grow to a
point where the death benefit may increase and vary with investment experience.
If you choose a Contract with a Type B (variable) death benefit, the cash value
and the death benefit both vary with investment experience. If you choose a
Contract with a Type C (return of premium) death benefit, the death benefit is
increased by the amount of premiums paid into the Contract, less withdrawals,
plus interest at a rate between 0% and 8% (in 1/2% increments) chosen by the
Contract owner. For Type A and Type B death benefit, as long as the Contract is
inforce, the death benefit will never be less than the basic insurance amount
shown in your Contract. See TYPE OF DEATH BENEFIT, page 10.
LIFE INSURANCE DEFINITIONAL TESTS
In order to qualify as life insurance for Federal tax purposes, the Contract
must adhere to the definition of life insurance under Section 7702 of the
Internal Revenue Code. At issue, the Contract owner chooses one of the following
definition of life insurance tests: (1) Cash Value Accumulation Test or (2)
Guideline Premium Test. Under the Cash Value Accumulation Test, there is a
minimum death benefit to cash value ratio. Under the Guideline Premium Test,
there is a limit to the amount of premiums that can be paid into the Contract,
as well as a minimum death benefit to cash value ratio. For more information,
see TAX TREATMENT OF CONTRACT BENEFITS, page 27.
================================================================================
4
<PAGE>
================================================================================
PREMIUM PAYMENTS
The Contract is a flexible premium contract - there are no scheduled premiums.
Except for the minimum initial premium, and subject to a minimum of $25 per
subsequent payment, you choose the timing and amount of premium payments. The
Contract will remain inforce if the Contract Fund is greater than zero and more
than any Contract debt. See PREMIUMS, page 12 and LAPSE AND REINSTATEMENT,
page 22.
We offer and suggest regular billing of premiums even though you decide when to
make premium payments and, subject to a $25 minimum, in what amounts. You should
discuss your billing options with your Pruco Life of New Jersey representative
when you apply for the Contract. See PREMIUMS, page 12.
REFUND
For a limited time, you may return your Contract for a refund in accordance with
the terms of its "free-look" provision. See SHORT-TERM CANCELLATION RIGHT OR
"FREE-LOOK," page 10.
For the DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS, see page 1.
THE REPLACEMENT OF LIFE INSURANCE IS GENERALLY NOT IN YOUR BEST INTEREST. IN
MOST CASES, IF YOU REQUIRE ADDITIONAL COVERAGE, THE BENEFITS OF YOUR EXISTING
CONTRACT CAN BE PROTECTED BY PURCHASING ADDITIONAL INSURANCE OR A SUPPLEMENTAL
CONTRACT. IF YOU ARE CONSIDERING REPLACING A CONTRACT, YOU SHOULD COMPARE THE
BENEFITS AND COSTS OF SUPPLEMENTING YOUR EXISTING CONTRACT WITH THE BENEFITS AND
COSTS OF PURCHASING THE CONTRACT DESCRIBED IN THIS PROSPECTUS AND YOU SHOULD
CONSULT WITH A QUALIFIED TAX ADVISER.
THIS PROSPECTUS MAY ONLY BE OFFERED IN JURISDICTIONS IN WHICH THE OFFERING IS
LAWFUL. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH
THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
PROSPECTUSES AND STATEMENTS OF ADDITIONAL INFORMATION FOR THE FUNDS.
================================================================================
5
<PAGE>
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY,
THE PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT, AND THE
VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey", "us", or
"we") is a stock life insurance company, organized in 1982 under the laws of the
State of New Jersey. It is licensed to sell life insurance and annuities only in
the States of New Jersey and New York.
Pruco Life of New Jersey is an indirect, wholly-owned subsidiary of Prudential,
a mutual insurance company founded in 1875 under the laws of the State of New
Jersey. Prudential is currently considering reorganizing itself into a publicly
traded stock company through a process known as "demutualization." On February
10, 1998, the Company's Board of Directors authorized management to take the
preliminary steps necessary to allow the Company to demutualize. On July 1,
1998, legislation was enacted in New Jersey that would permit this conversion to
occur and that specified the process for conversion. Demutualization is a
complex process involving development of a plan of reorganization, adoption of a
plan by the Company's Board of Directors, a public hearing, voting by qualified
policyholders and regulatory approval, all of which could take two or more years
to complete. Prudential's management and Board of Directors have not yet
determined to demutualize and it is possible that, after careful review,
Prudential could decide not to go public.
The plan of reorganization, which hasn't been developed and approved, would
provide the criteria for determining eligibility and the methodology for
allocating shares or other consideration to those who would be eligible. Under
New Jersey's demutualization law, a policy would have to be in effect on the
date Prudential's Board of Directors adopted a plan of reorganization in order
to be considered for eligibility. Generally, the amount of shares or other
consideration eligible customers would receive would be based on a number of
factors, including the types, amounts and issue years of their policies. As a
general rule, owners of Prudential-issued insurance policies and annuity
contracts would be eligible, while mutual fund customers and customers of the
Company's subsidiaries, such as the Pruco Life insurance companies, would not
be. It has not yet been determined whether any exceptions to that general rule
will be made with respect to policyholders and contract owners of Prudential's
subsidiaries. This does not constitute a proposal, offer, solicitation or
recommendation regarding any plan of reorganization that may be proposed or a
recommendation regarding the ownership of any stock that could be issued in
connection with any such demutualization.
As of December 31, 1998, Prudential has invested $127 million in Pruco Life of
New Jersey through its subsidiary Pruco Life Insurance Company in connection
with Pruco Life of New Jersey's organization and operation. Prudential is under
no obligation to make such contributions and its assets do not back the benefits
payable under the Contract. Pruco Life of New Jersey's consolidated financial
statements begin on page B1 and should be considered only as bearing upon Pruco
Life of New Jersey's ability to meet its obligations under the Contracts.
THE PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
The Pruco Life of New Jersey Variable Appreciable Account (the "Account") was
established on January 13, 1984 under New Jersey law as a separate investment
account. The Account meets the definition of a "separate account" under the
federal securities laws. The Account holds assets that are segregated from all
of Pruco Life of New Jersey's other assets.
The obligations to Contract owners and beneficiaries arising under the Contracts
are general corporate obligations of Pruco Life of New Jersey. Pruco Life of New
Jersey is also the legal owner of the assets in the Account. Pruco Life of New
Jersey will maintain assets in the Account with a total market value at least
equal to the reserve and other liabilities relating to the variable benefits
attributable to the Account. These assets may not be charged with liabilities
which arise from any other business Pruco Life of New Jersey conducts. In
addition to these assets, the Account's assets may include funds contributed by
Pruco Life of New Jersey to commence operation of the Account and may include
accumulations of the charges Pruco Life of New Jersey makes against the Account.
From time to time these additional assets will be transferred to Pruco Life of
New Jersey's general account. Before making any such transfer, Pruco Life of New
Jersey will consider any possible adverse impact the transfer might have on the
Account.
6
<PAGE>
The Account is a unit investment trust, which is a type of investment company.
It is registered with the Securities and Exchange Commission ("SEC") under the
Investment Company Act of 1940 ("1940 Act"). This does not involve any
supervision by the SEC of the management or investment policies or practices of
the Account. For state law purposes, the Account is treated as a part or
division of Pruco Life of New Jersey.
Currently, you may invest in one or a combination of 15 available subaccounts
within the Account, each of which invests in a single corresponding portfolio of
the Funds. Additional subaccounts may be added in the future. The Account's
financial statements begin on page A1.
THE FUNDS
The following is a list of the Funds, the portfolios' investment objectives and
investment advisers:
THE PRUDENTIAL SERIES FUND, INC. (THE "SERIES FUND"):
o MONEY MARKET PORTFOLIO: The investment objective is maximum current income
consistent with the stability of capital and the maintenance of liquidity.
The Portfolio invests in high quality short-term debt obligations that
mature in 13 months or less.
o DIVERSIFIED BOND PORTFOLIO: The investment objective is a high level of
income over a longer term while providing reasonable safety of capital. The
Portfolio invests primarily in higher grade debt obligations and high
quality money market investments.
o CONSERVATIVE BALANCED PORTFOLIO: The investment objective is a total
investment return consistent with a conservatively managed diversified
portfolio. The Portfolio invests in a mix of equity securities, debt
obligations and money market instruments.
o FLEXIBLE MANAGED PORTFOLIO: The investment objective is a total investment
return consistent with an aggressively managed diversified portfolio. The
Portfolio invests in a mix of equity securities, debt obligations and money
market instruments.
o HIGH YIELD BOND PORTFOLIO: The investment objective is a high total return.
The Portfolio invests primarily in high yield/high risk debt securities.
o STOCK INDEX PORTFOLIO: The investment objective is investment results that
generally correspond to the performance of publicly-traded common stocks.
The Portfolio attempts to duplicate the price and yield performance of the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index").
o EQUITY INCOME PORTFOLIO: The investment objective is both current income
and capital appreciation. The Portfolio invests primarily in common stocks
and convertible securities that provide good prospects for returns above
those of the S&P 500 Index or the NYSE Composite Index.
o EQUITY PORTFOLIO: The investment objective is capital appreciation. The
Portfolio invests primarily in common stocks of major established
corporations as well as smaller companies that offer attractive prospects
of appreciation.
o PRUDENTIAL JENNISON PORTFOLIO: The investment objective is to achieve
long-term growth of capital. The Portfolio invests primarily in equity
securities of major established corporations that offer above-average
growth prospects.
o GLOBAL PORTFOLIO: The investment objective is long-term growth of capital.
The Portfolio invests primarily in common stocks (and their equivalents) of
foreign and U.S. companies.
Prudential is the investment adviser for the assets of each of the portfolios of
the Series Fund. Prudential's principal business address is 751 Broad Street,
Newark, New Jersey 07102-3777. Prudential has a Service Agreement with its
wholly-owned subsidiary, The Prudential Investment Corporation ("PIC"). The
Service Agreement provides that, subject to Prudential's supervision, PIC will
furnish investment advisory services in connection with the management of the
Series Fund. In addition, Prudential has entered into a Subadvisory Agreement
with its wholly-owned subsidiary, Jennison Associates LLC ("Jennison"), under
which Jennison furnishes investment advisory services in connection with the
management of the Prudential Jennison Portfolio.
7
<PAGE>
AIM VARIABLE INSURANCE FUNDS, INC.:
o AIM V.I. VALUE FUND. Seeks to achieve long-term growth of capital by
investing primarily in equity securities judged by the fund's investment
adviser to be undervalued relative to the investment adviser's appraisal of
the current or projected earnings of the companies issuing the securities,
or relative to current market values of assets owned by the companies
issuing the securities or relative to the equity market generally. Income
is a secondary objective.
A I M Advisors, Inc. ("AIM") is the investment adviser for this fund. The
principal business address for AIM is 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.:
o AMERICAN CENTURY VP VALUE FUND. Seeks long-term capital growth with income
as a secondary objective. The fund seeks to achieve its objective by
investing primarily in equity securities of well-established companies with
intermediate-to-large market capitalizations that are believed by
management to be undervalued at the time of purchase.
American Century Investment Management, Inc. ("ACIM") is the investment adviser
for this fund. ACIM's principal business address is American Century Tower, 4500
Main Street, Kansas City, Missouri 64111. The Principal Underwriter of the fund
is American Century Services, Inc., located at 4500 Main Street, Kansas City,
Missouri 64111.
JANUS ASPEN SERIES:
o GROWTH PORTFOLIO. Seeks long-term growth of capital in a manner consistent
with the preservation of capital.
Janus Capital Corporation is the investment adviser and is responsible for the
day-to-day management of the portfolio and other business affairs of the
portfolio. Janus Capital Corporation's principal business address is 100
Fillmore Street, Denver, Colorado 80206-4928.
MFS(R) VARIABLE INSURANCE TRUST(SM):
o EMERGING GROWTH SERIES. Seeks to provide long-term growth of capital.
Dividend and interest income from portfolio securities, if any, is
incidental to the Series' investment objective of long-term growth of
capital.
Massachusetts Financial Services Company, a Delaware corporation, is the
investment adviser to this MFS Series. The principal business address for the
Massachusetts Financial Services Company is 500 Boylston Street, Boston,
Massachusetts 02116.
T. ROWE PRICE INTERNATIONAL SERIES, INC.:
o INTERNATIONAL STOCK PORTFOLIO. Long-term growth of capital through
investments primarily in common stocks of established, non-U.S. companies.
Rowe Price-Fleming International, Inc. is the investment manager for this fund.
The principal business address for Rowe Price-Fleming International, Inc. is 100
East Pratt Street, Baltimore, Maryland 21202.
Further information about Fund portfolios can be found in the attached
prospectuses and their statements of additional information for each Fund.
The investment advisers for the Funds charge a daily investment management fee
as compensation for their services. These fees are described in the table under
DEDUCTIONS FROM PORTFOLIOS in the CHARGES AND EXPENSES section, see page 15, and
are more fully described in the prospectus for each Fund.
8
<PAGE>
In the future it may become disadvantageous for both variable life insurance and
variable annuity contract separate accounts to invest in the same underlying
mutual funds. Although neither of the companies that invest in the Funds nor the
Funds currently foresee any such disadvantage, the Board of Directors for each
Fund intends to monitor events in order to identify any material conflict
between variable life insurance and variable annuity contract owners and to
determine what action, if any, should be taken. Material conflicts could result
from such things as: (1) changes in state insurance law; (2) changes in federal
income tax law; (3) changes in the investment management of any portfolio of the
Funds; or (4) differences between voting instructions given by variable life
insurance and variable annuity contract owners.
Pruco Life of New Jersey may be compensated by an affiliate of each of the Funds
(other than the Prudential Series Fund) based upon an annual percentage of the
average assets held in the Fund by Pruco Life of New Jersey under the Contracts.
These percentages vary by Fund, and reflect administrative and other services
provided by Pruco Life of New Jersey.
A FULL DESCRIPTION OF THE FUNDS, THEIR INVESTMENT OBJECTIVES, MANAGEMENT,
POLICIES, RESTRICTIONS, EXPENSES, INVESTMENT RISKS, AND ALL OTHER ASPECTS OF
THEIR OPERATION IS CONTAINED IN THE ATTACHED PROSPECTUSES FOR EACH FUND AND IN
THE RELATED STATEMENTS OF ADDITIONAL INFORMATION, WHICH SHOULD BE READ IN
CONJUNCTION WITH THIS PROSPECTUS. THERE IS NO ASSURANCE THAT THE INVESTMENT
OBJECTIVES OF THE FUNDS WILL BE MET.
WHICH INVESTMENT OPTION SHOULD BE SELECTED?
Historically, for investments held over relatively long periods, the investment
performance of common stocks has generally been superior to that of short or
long-term debt securities, even though common stocks have been subject to much
more dramatic changes in value over short periods of time. Accordingly,
portfolios such as the Stock Index, Equity Income, Equity, Prudential Jennison,
Global, AIM V.I. Value Fund, American Century VP Value Fund, Janus Growth, MFS
Emerging Growth Series or T. Rowe Price International Stock may be desirable
options if you are willing to accept such volatility in your Contract values.
Each of these equity portfolios involves different policies and investment
risks.
You may prefer the somewhat greater protection against loss of principal (and
reduced chance of high total return) provided by the Diversified Bond Portfolio.
You may want even greater safety of principal and may prefer the Money Market
Portfolio, recognizing that the level of short-term rates may change rather
rapidly. If you are willing to take risks and possibly achieve a higher total
return, you may prefer the High Yield Bond Portfolio, recognizing that the risks
are greater for lower quality bonds with normally higher yields. You may wish to
divide your invested premium among two or more of the portfolios. You may wish
to obtain diversification by relying on Prudential's judgment for an appropriate
asset mix by choosing the Conservative Balanced or Flexible Managed Portfolio.
Your choice should take into account your willingness to accept investment
risks, how your other assets are invested, and what investment results you may
experience in the future. You should consult your Pruco Life of New Jersey
representative from time to time about the choices available to you under the
Contract. Pruco Life of New Jersey recommends AGAINST frequent transfers among
the several options. Experience generally indicates that "market timing"
investing, particularly by non-professional investors, is likely to prove
unsuccessful.
DETAILED INFORMATION FOR
PROSPECTIVE CONTRACT OWNERS
REQUIREMENTS FOR ISSUANCE OF A CONTRACT
Pruco Life of New Jersey offers the Contract on a fully underwritten, a
simplified issue, and a guaranteed issue basis. Fully underwritten Contracts
require individualized evidence of the insured's insurability and rating class;
whereas, simplified issue Contracts are issued with less than full underwriting.
Conversely, guaranteed issue Contracts are issued with minimal underwriting but
may only be issued in certain circumstances on associated individuals, such as
employees of a company who meet criteria established by Pruco Life of New
Jersey.
Pruco Life of New Jersey sets minimum face amounts that it offers. The minimum
face amount offered may depend on whether the Contract is issued on a fully
underwritten, simplified issue or guaranteed issue basis. Currently, the minimum
face amount (basic insurance amount plus any Target Term Rider combined) that
can be applied for is
9
<PAGE>
$100,000 for all three aforementioned underwriting bases. If the Target Term
Rider is added to the Contract, neither the basic insurance amount nor the rider
coverage amount can be less than $5,000. See RIDERS, page 12. Pruco Life of New
Jersey may reduce the minimum face amounts of the Contracts it will issue.
Furthermore, the Contract owner may establish a schedule under which the basic
insurance amount increases on designated Contract anniversaries. See INCREASES
IN BASIC INSURANCE AMOUNT, page 22.
Generally, the Contract may be issued on insureds between the ages of 20 and 75
for fully underwritten Contracts and between the ages of 20 and 64 for
simplified and guaranteed issue Contracts. In its discretion, Pruco Life of New
Jersey may issue the Contract on insureds of other ages.
SHORT-TERM CANCELLATION RIGHT OR "FREE-LOOK"
Generally, you may return the Contract for a refund within 10 days after you
receive it. You can request a refund by mailing or delivering the Contract to
the representative who sold it or to the Home Office specified in the Contract.
A Contract returned according to this provision shall be deemed void from the
beginning. You will then receive a refund of all premium payments made, plus or
minus any change due to investment experience. However, if applicable law so
requires and you exercise your short-term cancellation right, you will receive a
refund of all premium payments made, with no adjustment for investment
experience.
TYPES OF DEATH BENEFIT
You may select from three types of death benefits. Generally, a Contract with a
Type A (fixed) death benefit has a death benefit equal to the basic insurance
amount. This type of death benefit does not vary with the investment performance
of the investment options you selected, except in certain circumstances. See HOW
A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL VARY, page 18. The payment of
additional premiums and favorable investment results of the subaccounts to which
the assets are allocated will generally increase the cash value. See HOW A
CONTRACT'S CASH VALUE WILL VARY, page 17.
A Contract with a Type B (variable) death benefit has a death benefit which will
generally equal the basic insurance amount plus the Contract Fund. Since the
Contract Fund is a part of the death benefit, favorable investment performance
and payment of additional premiums generally result in an increase in the death
benefit as well as in the cash value. Over time, however, the increase in the
cash value will be less than under a Type A (fixed) Contract. This is because,
given two Contracts with the same basic insurance amount and equal Contract
Funds, generally the cost of insurance charge for a Type B (variable) Contract
will be greater. Unfavorable investment performance will result in decreases in
the death benefit and in the cash value. But, as long as the Contract is not in
default, the death benefit may not fall below the basic insurance amount stated
in the Contract. See HOW A CONTRACT'S CASH VALUE WILL VARY, page 17 and HOW A
TYPE B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL VARY, page 19.
A Contract with a Type C (return of premium) death benefit has a death benefit
which will generally equal the basic insurance amount plus the total premiums
paid into the Contract less withdrawals, accumulated at an interest rate
(between 0% and 8%; in 1/2% increments) chosen by the Contract owner to the date
of death. This death benefit allows the Contract owner, in effect, to recover
the cost of the Contract, plus a predetermined rate of return, upon the death of
the insured. Under certain circumstances, it is possible for a Type C Contract's
death benefit to fall below the basic insurance amount. Favorable investment
performance and payment of additional premiums will generally increase the
Contract's cash value. Over time, however, the increase in cash value will be
less than under a Type A (fixed) Contract. See HOW A CONTRACT'S CASH VALUE WILL
VARY, page 17 and HOW A TYPE C (RETURN OF PREMIUM) CONTRACT'S DEATH BENEFIT WILL
VARY, page 20.
In choosing a death benefit type, you should also consider whether you intend to
use the withdrawal feature. Contract owners of Type A (fixed) Contracts should
note that any withdrawal may result in a reduction of the basic insurance
amount. In addition, we will not allow you to make a withdrawal that will
decrease the basic insurance amount below the minimum basic insurance amount.
Furthermore, the sum of the basic insurance amount and the Target Term Rider
must equal or exceed $100,000. See REQUIREMENTS FOR ISSUANCE OF A CONTRACT, page
9. For Type B (variable) and Type C (return of premium) Contracts, withdrawals
will not change the basic insurance amount. See WITHDRAWALS, page 21.
10
<PAGE>
CHANGING THE TYPE OF DEATH BENEFIT
You may change the type of death benefit on or after the first Contract
anniversary and subject to Pruco Life of New Jersey's approval. We will increase
or decrease the basic insurance amount so that the death benefit immediately
after the change matches the death benefit immediately before the change.
If you are changing your Contract's type of death benefit from a Type A (fixed)
to a Type B (variable) death benefit, we will reduce the basic insurance amount
by the amount in your Contract Fund on the date the change takes place.
If you are changing from a Type A (fixed) to a Type C (return of premium) death
benefit, we will change the basic insurance amount by subtracting the total
premiums paid on this Contract minus total withdrawals on the date the change
takes effect.
If you are changing from a Type B (variable) to a Type A (fixed) death benefit,
we will increase the basic insurance amount by the amount in your Contract Fund
on the date the change takes place.
If you are changing from a Type B (variable) to a Type C (return of premium)
death benefit, we first find the difference between (1) the amount in your
Contract Fund and (2) the total premiums paid on this Contract minus total
withdrawals, determined on the date the change takes effect. If (1) is larger
than (2), we will increase the basic insurance amount by that difference. If (2)
is larger than (1), we will reduce the basic insurance amount by that
difference.
If you are changing from a Type C (return of premium) to a Type A (fixed) death
benefit, we will change the basic insurance amount by adding the total premiums
paid minus total withdrawals to this Contract both accumulated with interest at
the rate(s) chosen by the Contract owner on the date the change takes place.
If you are changing from a Type C (return of premium) to a Type B (variable)
death benefit, we first find the difference between (1) the Contract Fund and
(2) the total premiums paid minus total withdrawals to this Contract both
accumulated with interest at the rate(s) chosen by the Contract owner as of the
date the change takes place. If (2) is larger than (1), we will increase the
basic insurance amount by that difference. If (1) is larger than (2), we will
reduce the basic insurance amount by that difference.
The basic insurance amount after a change may not be lower than the minimum
basic insurance amount applicable to the Contract. In addition, the sum of the
basic insurance amount and the Target Term Rider must equal or exceed $100,000.
See REQUIREMENTS FOR ISSUANCE OF A CONTRACT, page 9. We reserve the right to
make an administrative processing charge of up to $25 for any change in the
basic insurance amount, although we do not currently do so. See CHARGES AND
EXPENSES, page 15.
The following chart illustrates the changes in basic insurance amount with each
change of death benefit type described above. The chart assumes a $50,000
Contract Fund and a $300,000 death benefit. For changes to and from a Type C
death benefit, the chart assumes $40,000 in total premiums minus total
withdrawals and the rate chosen to accumulate premiums minus withdrawals is 0%.
===================================================================
Basic Insurance Amount
====================== ============================================
FROM TO
====================== ===================== ======================
TYPE A TYPE B TYPE C
$300,000 $250,000 $260,000
---------------------- --------------------- ----------------------
TYPE B TYPE A TYPE C
$250,000 $300,000 $260,000
---------------------- --------------------- ----------------------
TYPE C TYPE A TYPE B
$260,000 $300,000 $250,000
====================== ===================== ======================
11
<PAGE>
To request a change, fill out an application for change which can be obtained
from your Pruco Life of New Jersey representative or a Home Office. If the
change is approved, we will recompute the Contract's charges and appropriate
tables and send you new Contract data pages. We may require you to send us your
Contract before making the change.
RIDERS
Contract owners may be able to obtain extra benefits which may involve an extra
charge. These optional insurance benefits will be described in what is known as
a "rider" to the Contract. Charges applicable to riders will be deducted from
the Contract Fund on each Monthly date.
TARGET TERM RIDER
The Target Term Rider provides a flexible term insurance benefit to attained age
100 on the life of the insured. The Contract owner specifies the amount of term
rider coverage he or she desires. This amount is called the rider coverage
amount and is the maximum death benefit payable under the rider. The sum of the
base Contract's basic insurance amount and the rider coverage amount equals the
target coverage amount. The Rider death benefit fluctuates as the base
Contract's death benefit changes, as described below. See TAX TREATMENT OF
CONTRACT BENEFITS, page 27.
When the Contract Fund has not grown to the point where the base Contract's
death benefit is increased to satisfy the Internal Revenue Code's definition of
life insurance, the rider death benefit equals the rider coverage amount.
However, once the Contract Fund has grown to the point where the base Contract's
death benefit begins to vary as required by the Internal Revenue Code's
definition of life insurance, the rider's death benefit will decrease (or
increase) dollar for dollar as the base Contract's death benefit increases (or
decreases). It is possible for the Contract Fund and, consequently, the base
Contract's death benefit to grow to the point where the rider death benefit is
reduced to zero. As we state above, however, the rider death benefit will never
increase beyond the rider coverage amount. In addition, you may change the rider
coverage amount once each Contract year while the rider is inforce.
================================================================================
$500,000 BASIC INSURANCE AMOUNT AND $500,000 TARGET TERM RIDER
TYPE A DEATH BENEFIT
[GRAPHICAL REPRESENTATION OF CHART]
================================================================================
The following factors should be considered when adding a Target Term Rider to
your contract.
1. The sales expense charge for a Contract with a Target Term Rider is
less than that for an all base policy with the same death benefit.
This is because the sales expense charge is based on the Target
Premium (referred to as "segment allocation amount" in your Contract)
of the Contract's basic insurance amount (BIA) only. For example,
consider two identical $1,000,000 policies; the first with a
$1,000,000 BIA and the other with a $500,000 BIA and $500,000 of rider
coverage amount. The sales expense charge for the first policy will be
based on the Target Premium of a $1,000,000 BIA while the sales
expense charge for the second policy will be based on the Target
Premium of a $500,000 BIA only. See CHARGES AND EXPENSES, page 15.
12
<PAGE>
2. The current Cost of Insurance (COI) is different for the base policy
and for the rider coverage amount. Cost of Insurance is determined by
multiplying the COI rates by the Contract's "net amount of risk". The
"net amount of risk" is the amount by which the Contract's death
benefit exceeds the Contract Fund . The COI rates for both the base
policy and the Target Term Rider will increase annually. However,
current COI rates for the Target Term Rider are less than the current
rates for the base policy death benefit for the first ten years, but
are greater thereafter.
3. You may increase or decrease both your basic insurance amount and
rider coverage amount in later years subject to the underwriting
requirements determined by Pruco Life of New Jersey. See INCREASES IN
BASIS INSURANCE AMOUNT, page 22 and DECREASES IN BASIS INSURANCE
AMOUNT, page 23. Increasing your basic insurance amount in later years
increases your sales expense charges on any premiums paid after the
effective date of the increase for that portion of the premium
allocated to the new coverage segment.
4. The amount and timing of premium payments you make under the contract
will be a factor in determining the relative performance of a Contract
with and without a Target Term Rider.
5. Investment experience will be a factor in determining the relative
performance of a Contract with and without a Target Term Rider.
The five factors outlined above can have opposite effects on the financial
performance of a Contract, including the amount of the Contract's cash value and
death benefit. It is important that you ask your Pruco Life of New Jersey
representative to see illustrations based on different combinations of all of
the above. You can then discuss with your Pruco Life of New Jersey
representative how these combinations may address your objectives.
PREMIUMS
The Contract is a flexible premium contract. The minimum initial premium is due
on or before the Contract date. It is the premium needed to start the Contract.
There is no insurance under the Contract unless the minimum initial premium is
paid. Thereafter, you decide when to make premium payments and, subject to a $25
minimum, in what amounts. We reserve the right to refuse to accept any payment
that increases the death benefit by more than it increases the Contract Fund.
See HOW A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL VARY, page 18, HOW A TYPE
B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL VARY, page 19 and HOW A TYPE C
(RETURN OF PREMIUM) CONTRACT'S DEATH BENEFIT WILL VARY, page 19. There are
circumstances under which the payment of premiums in amounts that are too large
may cause the Contract to be characterized as a Modified Endowment Contract,
which could be significantly disadvantageous. See TAX TREATMENT OF CONTRACT
BENEFITS, page 27.
We can bill you for the amount you select annually, semi-annually, quarterly or
monthly. Because the Contract is a flexible premium contract, there are no
premium due dates. When you receive a premium notice, you are not required to
pay this amount. The Contract will remain inforce if the Contract Fund is
greater than zero and more than any Contract debt. When you apply for the
Contract, you should discuss with your Pruco Life of New Jersey representative
how frequently you would like to be billed (if at all) and for what amount.
ALLOCATION OF PREMIUMS
On the Contract date, we deduct the charge for sales expenses and the charge for
taxes attributable to premiums (in New York this is called a premium based
administrative charge) from the initial premium. See CHARGES AND EXPENSES, page
15. Also on the Contract date, the remainder of the initial premium and any
other premium received during the short-term cancellation right ("free-look")
period, will be allocated to the Money Market Subaccount and the first monthly
deductions are made. At the end of the "free-look" period, these funds will be
allocated among the subaccounts according to your desired allocation, as
specified in the application form. See SHORT-TERM CANCELLATION RIGHT OR
"FREE-LOOK", page 10. If the first premium is received before the Contract date,
there will be a period during which the Contract owner's initial premium will
not be invested.
The charge for sales expenses and the charge for taxes attributable to premiums
(in New York this is called a premium based administrative charge) also apply to
all subsequent premium payments. The remainder of each subsequent premium
payment will be invested as of the end of the valuation period in which it is
received at a Home Office, in accordance with the allocation you previously
designated. Provided the Contract is not in default, you may change the way in
which subsequent premiums are allocated by giving written notice to a Home
Office or by telephoning a Home
13
<PAGE>
Office, provided you are enrolled to use the Telephone Transfer System. There is
no charge for reallocating future premiums. All percentage allocations must be
in whole numbers. For example, 33% can be selected but 33 1/3% cannot. Of
course, the total allocation to all selected investment options must equal 100%.
TRANSFERS
You may, up to 12 times each Contract year, transfer amounts from one subaccount
to another subaccount without charge. There is an administrative charge of up to
$25 for each transfer made exceeding 12 in any Contract year. All or a portion
of the amount credited to a subaccount may be transferred.
Transfers will take effect as of the end of the valuation period in which a
proper transfer request is received at a Home Office. The request may be in
terms of dollars, such as a request to transfer $5,000 from one subaccount to
another, or may be in terms of a percentage reallocation among subaccounts. In
the latter case, as with premium reallocations, the percentages must be in whole
numbers. You may transfer amounts by proper written notice to a Home Office or
by telephone, provided you are enrolled to use the Telephone Transfer System.
You will automatically be enrolled to use the Telephone Transfer System unless
the Contract is jointly owned or you elect not to have this privilege. Telephone
transfers may not be available on Contracts that are assigned (see ASSIGNMENT,
page 29), depending on the terms of the assignment.
We will use reasonable procedures, such as asking you to provide certain
personal information provided on your application for insurance, to confirm that
instructions given by telephone are genuine. We will not be held liable for
following telephone instructions that we reasonably believe to be genuine. Pruco
Life of New Jersey cannot guarantee that you will be able to get through to
complete a telephone transfer during peak periods such as periods of drastic
economic or market change.
The Contract was not designed for professional market timing organizations,
other organizations, or individuals using programmed, large, or frequent
transfers. A pattern of exchanges that coincides with a "market timing" strategy
may be disruptive to the investment option or to the disadvantage of other
contract owners. If such a pattern were to be found, we may modify your right to
make transfers by restricting the number, timing and amount of transfers. We
also reserve the right to prohibit transfer requests made by an individual
acting under a power of attorney on behalf of more than one contract owner.
DOLLAR COST AVERAGING
Under this feature, either fixed dollar amounts or a percentage of the amount
designated for use under the DCA option will be transferred periodically from
the DCA Money Market Subaccount into other subaccounts available under the
Contract. You may choose to have periodic transfers made monthly, quarterly,
semi-annually or annually. DCA transfers will not begin until the end of the
"free-look" period. See SHORT-TERM CANCELLATION RIGHT OR "FREE-LOOK", page 10.
Each automatic transfer will take effect as of the end of the valuation period
on the date coinciding with the periodic timing you designate provided the New
York Stock Exchange is open on that date. If the New York Stock Exchange is not
open on that date, or if the date does not occur in that particular month, the
transfer will take effect as of the end of the valuation period which
immediately follows that date. Automatic transfers will continue until: (1) $50
or less remains of the amount designated for Dollar Cost Averaging, at which
time the remaining amount will be transferred; or (2) you give us notification
of a change in DCA allocation or cancellation of the feature. Currently, a
transfer that occurs under the DCA feature is not counted towards the 12 free
transfers permitted each Contract year. We reserve the right to change this
practice.
AUTO-REBALANCING
As an administrative practice, we are currently offering a feature called
Auto-Rebalancing. This feature allows you to automatically rebalance subaccount
assets at specified intervals based on percentage allocations that you choose.
For example, suppose your initial investment allocation of subaccounts X and Y
is split 40% and 60%, respectively. Then, due to investment results, that split
changes. You may instruct that those assets be rebalanced to your original or
different allocation percentages. Auto-Rebalancing is not available until the
end of the "free-look" period. See SHORT-TERM CANCELLATION RIGHT OR "FREE-LOOK",
page 10.
14
<PAGE>
Auto-Rebalancing can be performed on a monthly, quarterly, semi-annual or annual
basis. Each rebalance will take effect as of the end of the valuation period on
the date coinciding with the periodic timing you designate provided the New York
Stock Exchange is open on that date. If the New York Stock Exchange is not open
on that date, or if the date does not occur in that particular month, the
transfer will take effect as of the end of the valuation period which
immediately follows that date. Currently, a transfer that occurs under the
Auto-Rebalancing feature is not counted towards the 12 free transfers permitted
each Contract year. We reserve the right to change this practice, modify the
requirements or discontinue the feature.
CHARGES AND EXPENSES
This section provides a more detailed description of each charge that is
described briefly in the chart on page 3.
In several instances we will use the terms "maximum charge" and "current
charge." The "maximum charge," in each instance, is the highest charge that
Pruco Life of New Jersey is entitled to make under the Contract. The "current
charge" is the lower amount that Pruco Life of New Jersey is now charging. If
circumstances change, we reserve the right to increase each current charge, up
to the maximum charge, without giving any advance notice.
DEDUCTIONS FROM PREMIUM PAYMENTS
(a) We charge up to 7.5% for taxes attributable to premiums (in New York this
is called a premium based administrative charge). For these purposes,
"taxes attributable to premiums" shall include any federal, state or local
income, premium, excise, business or any other type of tax (or component
thereof) measured by or based upon the amount of premium received by Pruco
Life of New Jersey. That charge is made up of two parts which currently
equal a total of 3.75% of the premiums received. The first part is a
charge for state and local premium taxes. The current amount for this
first part is 2.5% of the premium. Tax rates vary from jurisdiction to
jurisdiction and generally range from 0.75% to 5%. Pruco Life of New
Jersey may collect more for this charge than it actually pays for state
and local premium taxes. The second part is for federal income taxes
measured by premiums, and it is currently equal to 1.25% of premiums. We
believe that this charge is a reasonable estimate of an increase in its
federal income taxes resulting from a 1990 change in the Internal Revenue
Code. It is intended to recover this increased tax.
(b) We will deduct a charge for sales expenses. This charge, often called a
"sales load", is deducted to compensate us for the cost of selling the
Contracts, including commissions, advertising and the printing and
distribution of prospectuses and sales literature. A portion of the sales
load may be returned to you if the Contract is surrendered during the
first four Contract years. See RETURN OF SALES CHARGES, below.
The amount used to determine the charge for sales expenses is called the
Target Premium (referred to as "segment allocation amount" in your
Contract). Target Premiums vary by the age, sex, smoking status, and
rating class of the insured and will drop to zero after 10 years. Each
coverage segment has its own Target Premium. Target Premiums for each
coverage segment are shown in the Segment Table located in the data pages
of your Contract.
For the first ten years of each coverage segment we charge up to 15% of
premiums received each year up to the Target Premium and up to 2% on any
excess. In years 11 and later of each coverage segment, we charge up to 2%
of premiums received. Currently, we charge 13 1/2% of premiums received up
to the Target Premium and 2% of any excess for the first 10 years of each
coverage segment. In years 11 and later of each coverage segment, we
currently charge 2% of premiums received. For information on determining
the sales expense charge if there are two or more coverage segments in
effect, see INCREASES IN BASIC INSURANCE AMOUNT, page 22.
Attempting to structure the timing and amount of premium payments to
reduce the potential sales load may increase the risk that your Contract
will lapse without value. In addition, there are circumstances where
payment of premiums that are too large may cause the Contract to be
characterized as a Modified Endowment Contract, which could be
significantly disadvantageous. See TAX TREATMENT OF CONTRACT BENEFITS,
page 27.
15
<PAGE>
RETURN OF SALES CHARGES
If the Contract is fully surrendered within the first four Contract years and it
is not in default, Pruco Life of New Jersey will return 50% of any sales charges
deducted from premiums paid within 24 months prior to the date Pruco Life of New
Jersey receives the surrender request at a Home Office.
DEDUCTIONS FROM PORTFOLIOS
We deduct an investment advisory fee daily from each portfolio of the Funds at a
rate, on an annualized basis, ranging from 0.35% for the Series Fund Stock Index
Portfolio to 1.05% for the T. Rowe Price International Stock Portfolio. The
expenses incurred in conducting the investment operations of the portfolios
(such as custodian fees and preparation and distribution of annual reports) are
paid out of the portfolio's income. These expenses also vary from portfolio to
portfolio.
The total expenses of each portfolio for the year ended December 31, 1998,
expressed as a percentage of the average assets during the year, are shown
below:
<TABLE>
<CAPTION>
============================================ ===================== =================== ===================
INVESTMENT ADVISORY
PORTFOLIO FEE OTHER EXPENSES TOTAL EXPENSES
============================================ ===================== =================== ===================
<S> <C> <C> <C>
SERIES FUND
MONEY MARKET 0.40% 0.01% 0.41%
DIVERSIFIED BOND 0.40% 0.02% 0.42%
CONSERVATIVE BALANCED 0.55% 0.02% 0.57%
FLEXIBLE MANAGED 0.60% 0.01% 0.61%
HIGH YIELD BOND 0.55% 0.03% 0.58%
STOCK INDEX 0.35% 0.02% 0.37%
EQUITY INCOME 0.40% 0.02% 0.42%
EQUITY 0.45% 0.02% 0.47%
PRUDENTIAL JENNISON 0.60% 0.03% 0.63%
GLOBAL 0.75% 0.11% 0.86%
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. VALUE FUND 0.61% 0.05% 0.66%
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP VALUE PORTFOLIO (1) 1.00% 0.00% 1.00%
JANUS ASPEN SERIES
GROWTH PORTFOLIO (2) 0.65% 0.03% 0.68%
MFS VARIABLE INSURANCE TRUST
EMERGING GROWTH SERIES 0.75% 0.10% 0.85%
T. ROWE PRICE INTERNATIONAL SERIES, INC.
INTERNATIONAL STOCK PORTFOLIO (3) 1.05% 0.00% 1.05%
============================================ ===================== =================== ===================
</TABLE>
- ----------
(1) Fees are all-inclusive.
(2) The fees and expenses in the table above are based on gross expenses of the
Portfolio before expense offset arrangements for the fiscal year ended
December 31, 1998. The information for the Portfolio is net of fee waivers
or reductions from Janus Capital. Fee reductions for the Portfolio reduce
the management fee to the level of the corresponding Janus retail fund.
Other waivers, if applicable, are first applied against the management fee
and then against other expenses. Without such waivers or reductions, the
management fee, other expenses and total operating expenses for the
Portfolio would have been 0.72%, 0.03% and 0.75%, respectively. Janus
Capital may modify or terminate the waivers or reductions at any time upon
at least 90 days' notice to the Trustees.
(3) The investment management fee includes the ordinary expenses of operating
the Fund.
THE EXPENSES RELATING TO THE FUNDS (OTHER THAN THOSE OF THE SERIES FUND) HAVE
BEEN PROVIDED TO PRUCO LIFE OF NEW JERSEY BY THE FUNDS. PRUCO LIFE OF NEW JERSEY
HAS NOT INDEPENDENTLY VERIFIED THEM.
16
<PAGE>
DAILY DEDUCTION FROM THE CONTRACT FUND
Each day we deduct a charge from the assets of each of the subaccounts in an
amount equivalent to an effective annual rate of up to 0.50%. Currently, we
intend to charge 0.20%. This charge is intended to compensate Pruco Life of New
Jersey for assuming mortality and expense risks under the Contract. The
mortality risk assumed is that insureds may live for shorter periods of time
than Pruco Life of New Jersey estimated when it determined what mortality charge
to make. The expense risk assumed is that expenses incurred in issuing and
administering the Contract will be greater than Pruco Life of New Jersey
estimated in fixing its administrative charges.
MONTHLY DEDUCTIONS FROM THE CONTRACT FUND
Pruco Life of New Jersey deducts the following monthly charges proportionately
from the dollar amounts held in each of the chosen investment option[s].
(a) An administrative charge based on the basic insurance amount is deducted.
The charge is intended to compensate us for things like processing claims,
keeping records and communicating with Contract owners. Currently, the
charge is equal to $10 per month. Pruco Life of New Jersey reserves the
right, however to charge up to $10 per Contract plus $0.05 per $1,000 of
basic insurance amount each month. For example, a Contract with a basic
insurance amount of $100,000 would currently have a charge equal to $10.
The maximum charge for this same Contract would be $10 plus $5 for a total
of $15 per month.
(b) A cost of insurance ("COI") charge is deducted. When an insured dies, the
amount payable to the beneficiary (assuming there is no Contract debt) is
larger than the Contract Fund - significantly larger if the insured dies in
the early years of a Contract. The cost of insurance charges collected from
all Contract owners enables Pruco Life of New Jersey to pay this larger
death benefit. The maximum COI charge is determined by multiplying the "net
amount at risk" under a Contract (the amount by which the Contract's death
benefit exceeds the Contract Fund) by maximum COI rates. The maximum COI
rates are based upon the 1980 Commissioners Standard Ordinary ("CSO")
Tables and an insured's current attained age, sex (except where unisex
rates apply), smoker/non-smoker status, and extra rating class, if any. At
most ages, Pruco Life of New Jersey's current COI rates are lower than the
maximum rates. For additional information, see INCREASES IN BASIC INSURANCE
AMOUNT, page 22.
(c) You may add a Target Term Rider to the Contract. If you add this rider to
the basic Contract, additional charges will be deducted.
(d) If an insured is in a substandard risk classification (for example, a
person in a hazardous occupation), additional charges will be deducted.
TRANSACTION CHARGES
(a) We currently charge an administrative processing fee equal to the lesser of
$25 or 2% of the withdrawal amount in connection with each withdrawal.
(b) We currently do not charge an administrative processing fee in connection
with a change in basic insurance amount. We reserve the right to make such
a charge in an amount of up to $25 for any change in basic insurance
amount.
(c) We will charge an administrative processing fee of up to $25 for each
transfer exceeding 12 in any Contract year.
(d) We may charge an administrative processing fee of up to $25 for any change
in the Target Term Rider coverage amount for Contracts with this rider.
HOW A CONTRACT'S SURRENDER VALUE WILL VARY
You may surrender the Contract for its surrender value. The Contract's surrender
value on any date will be the Contract Fund less any Contract debt plus any
return of sales charges. See CONTRACT LOANS, page 26 and RETURN OF SALES
CHARGES, page 16. The Contract Fund value changes daily, reflecting: (1)
increases or decreases in the value of the Fund portfolios in which the assets
of the subaccount[s] have been invested; (2) interest credited on any loan; and
(3) the daily asset charge for mortality and expense risks assessed against the
subaccounts. The Contract Fund value also changes to reflect the receipt of
premium payments and the monthly deductions described under CHARGES AND
EXPENSES, page 15. Upon request, Pruco Life of New Jersey will tell you the
surrender value of your Contract. It is possible for the surrender value of a
Contract to decline to zero because of unfavorable investment performance or
outstanding Contract debt.
17
<PAGE>
The tables on pages T1 through T10 of this prospectus illustrate approximately
what the surrender values would be for representative Contracts, assuming
hypothetical uniform investment results in the Fund portfolios. See
ILLUSTRATIONS OF SURRENDER VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS,
page 24.
HOW A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL VARY
As described earlier, there are three types of death benefit available under the
Contract: (1) Type A, a generally fixed death benefit; (2) Type B, a variable
death benefit and; (3) Type C, a return of premium death benefit. A Type B
(variable) death benefit varies with investment performance while Type A (fixed)
and Type C (return of premium) death benefits do not, unless they must be
increased to comply with the Internal Revenue Code's definition of life
insurance.
Under a Type A (fixed) Contract, the death benefit is generally equal to the
basic insurance amount. If the Contract is kept inforce for several years,
depending on how much premium you pay, and/or if investment performance is
reasonably favorable, the Contract Fund may grow to the point where Pruco Life
of New Jersey will increase the death benefit in order to ensure that the
Contract will satisfy the Internal Revenue Code's definition of life insurance.
The death benefit under a Type A (fixed) Contract will always be the greater of:
(1) the basic insurance amount; and
(2) the Contract Fund before the deduction of any monthly charges
due on that date plus any return of sales charges, multiplied by
the attained age factor that applies.
A listing of attained age factors can be found on the data pages of your
Contract. The second provision ensures that the Contract will always have a
death benefit large enough to be treated as life insurance for tax purposes
under current law. Before the Contract is issued, the Contract owner may choose
between two methods that we use to determine the tax treatment of the Contract.
See TAX TREATMENT OF CONTRACT BENEFITS, page 27, for a discussion of these
methods and the impact of each on the Contract's values, benefits and tax
status.
The following table illustrates at different ages how the attained age factor
affects the death benefit for different Contract Fund amounts. The table assumes
that a $250,000 Type A (fixed) Contract was issued when the insured was a male
nonsmoker, age 35.
TYPE A (FIXED) DEATH BENEFIT
- ------------------------------------------------------------------------------
IF THEN
- -------------------------- ---------------------------------------------------
THE THE CONTRACT FUND
THE AND THE ATTAINED MULTIPLIED BY
INSURED CONTRACT AGE THE ATTAINED AGE AND THE DEATH
IS AGE FUND IS FACTOR IS ** FACTOR IS BENEFIT IS
- ------------- ------------ -------------- ------------------- ----------------
40 $ 25,000 3.57 89,250 $250,000
40 $ 75,000 3.57 267,750 $267,750*
40 $100,000 3.57 357,000 $357,000*
- ------------- ------------ -------------- ------------------- ----------------
60 $ 75,000 1.92 144,000 $250,000
60 $125,000 1.92 240,000 $250,000
60 $150,000 1.92 288,000 $288,000*
- ------------- ------------ -------------- ------------------- ----------------
80 $150,000 1.26 189,000 $250,000
80 $200,000 1.26 252,000 $252,000*
80 $225,000 1.26 283,500 $283,500*
- ------------- ------------ -------------- ------------------- ----------------
* Note that the death benefit has been increased to comply with the Internal
Revenue Code's definition of life insurance.
** Assumes the Contract Owner selected the Cash Value Accumulation Test.
- ------------------------------------------------------------------------------
18
<PAGE>
This means, for example, that if the insured has reached the age of 60, and the
Contract Fund is $150,000, the death benefit will be $288,000, even though the
basic insurance amount is $250,000. In this situation, for every $1 increase in
the Contract Fund, the death benefit will be increased by $1.92. We reserve the
right to refuse to accept any premium payment that increases the death benefit
by more than it increases the Contract Fund.
HOW A TYPE B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL VARY
Under a Type B (variable) Contract, while the Contract is inforce, the death
benefit will never be less than the basic insurance amount, but will also vary,
immediately after it is issued, with the investment results of the selected
investment options. The death benefit may be further increased to ensure that
the Contract will satisfy the Internal Revenue Code's definition of life
insurance.
The death benefit under a Type B (variable) Contract will always be the greater
of:
(1) the basic insurance amount plus the Contract Fund before the
deduction of any monthly charges due on that date; and
(2) the Contract Fund before the deduction of any monthly charges
due on that date plus any return of sales charges, multiplied by
the attained age factor that applies.
For purposes of computing the death benefit, if the Contract Fund is less than
zero we will consider it to be zero. A listing of attained age factors can be
found on the data pages of your Contract. The latter provision ensures that the
Contract will always have a death benefit large enough to be treated as life
insurance for tax purposes under current law. Before the Contract is issued, the
Contract owner may choose between two methods that we use to determine the tax
treatment of the Contract. See TAX TREATMENT OF CONTRACT BENEFITS, page 27, for
a discussion of these methods and the impact of each on the Contract's values,
benefits and tax status.
The following table illustrates various attained age factors and Contract Funds
and the corresponding death benefits. The table assumes a $250,000 Type B
(variable) Contract was issued when the insured was a male nonsmoker, age 35.
TYPE B(VARIABLE) DEATH BENEFIT
- ------------------------------------------------------------------------------
IF THEN
- -------------------------- ---------------------------------------------------
THE THE CONTRACT FUND
THE AND THE ATTAINED MULTIPLIED BY
INSURED CONTRACT AGE THE ATTAINED AGE AND THE DEATH
IS AGE FUND IS FACTOR IS ** FACTOR IS BENEFIT IS
- ------------- ------------ -------------- ------------------- ----------------
40 $ 25,000 3.57 89,250 $275,000
40 $ 75,000 3.57 267,750 $325,000
40 $100,000 3.57 357,000 $357,000*
- ------------- ------------ -------------- ------------------- ----------------
60 $ 75,000 1.92 144,000 $325,000
60 $125,000 1.92 240,000 $375,000
60 $150,000 1.92 288,000 $400,000
- ------------- ------------ -------------- ------------------- ----------------
80 $150,000 1.26 189,000 $400,000
80 $200,000 1.26 252,000 $450,000
80 $225,000 1.26 283,500 $475,000
- ------------- ------------ -------------- ------------------- ----------------
* Note that the death benefit has been increased to comply with the Internal
Revenue Code's definition of life insurance.
** Assumes the Contract Owner selected the Cash Value Accumulation Test.
- ------------------------------------------------------------------------------
19
<PAGE>
This means, for example, that if the insured has reached the age of 40, and the
Contract Fund is $100,000, the death benefit will be $357,000, even though the
basic insurance amount is $250,000. In this situation, for every $1 increase in
the Contract Fund, the death benefit will be increased by $3.57. We reserve the
right to refuse to accept any premium payment that increases the death benefit
by more than it increases the Contract Fund.
HOW A TYPE C (RETURN OF PREMIUM) CONTRACT'S DEATH BENEFIT WILL VARY
Under a Type C (return of premium) Contract, while the Contract is inforce, the
death benefit will be the greater of:
(1) the basic insurance amount plus the total premiums paid into the
Contract less any withdrawals, accumulated at an interest rate
(between 0% and 8%; in 1/2% increments) chosen by the Contract
owner to the date of death; and
(2) the Contract Fund before the deduction of monthly charges due on
that date plus any return of sales charges, multiplied by the
attained age factor that applies.
A listing of attained age factors can be found on the data pages of your
Contract. The latter provision ensures that the Contract will always have a
death benefit large enough so that the Contract will be treated as life
insurance for tax purposes under current law. Before the Contract is issued, the
Contract owner may choose between two methods that we use to determine the tax
treatment of the Contract. See TAX TREATMENT OF CONTRACT BENEFITS, page 27, for
a discussion of these methods and the impact of each on the Contract's values,
benefits and tax status.
Unlike Type A and Type B Contracts, the death benefit of a Type C Contract may
be less than the basic insurance amount in the event total withdrawals plus
interest is greater than total premiums paid plus interest.
The following table illustrates various attained age factors and Contract Funds
and the corresponding death benefits. The table assumes a $250,000 Type C
(return of premium) Contract was issued when the insured was a male nonsmoker,
age 35.
<TABLE>
<CAPTION>
TYPE C (RETURN OF PREMIUM) DEATH BENEFIT
- ----------------------------------------------------------------------------------------------
IF THEN
- --------------------------------------------- ------------------------------------------------
AND THE
PREMIUMS PAID THE THE CONTRACT FUND
THE AND THE LESS ANY ATTAINED MULTIPLIED BY
INSURED CONTRACT WITHDRAWALS WITH AGE THE ATTAINED AGE AND THE DEATH
IS AGE FUND IS INTEREST EQUALS FACTOR IS ** FACTOR IS BENEFIT IS
- ------------- ------------ ------------------ -------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
40 $ 25,000 $ 15,000 3.57 89,250 $265,000
40 $ 75,000 $ 60,000 3.57 267,750 $310,000
40 $100,000 $ 80,000 3.57 357,000 $357,000*
------------- ------------ ----------------- -------------- ----------------- ---------------
60 $75,000 $ 60,000 1.92 144,000 $310,000
60 $125,000 $100,000 1.92 240,000 $350,000
60 $150,000 $125,000 1.92 288,000 $375,000
- ------------- ------------ ------- ---------- -------------- ----------------- ---------------
80 $150,000 $125,000 1.26 189,000 $375,000
80 $200,000 $150,000 1.26 252,000 $400,000
80 $225,000 $175,000 1.26 283,500 $425,000
- ------------- ------------ ------------------ -------------- ----------------- ---------------
* Note that the death benefit has been increased to comply with the Internal Revenue Code's
definition of life insurance.
** Assumes the Contract owner selected the Cash Value Accumulation Test.
---------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
This means, for example, that if the insured has reached the age of 40, and the
premiums paid with interest less any withdrawals equals $80,000, the death
benefit will be $357,000, even though the basic insurance amount is $250,000. In
this situation, for every $1 increase in the Contract Fund, the death benefit
will be increased by $3.57. We reserve the right to refuse to accept any premium
payment that increases the death benefit by more than it increases the Contract
Fund.
SURRENDER OF A CONTRACT
A Contract may be surrendered for its net cash value (or for a fixed reduced
paid-up insurance benefit in New York state) while the insured is living. To
surrender a Contract, we may require you to deliver or mail the Contract with a
written request in a form that meets Pruco Life of New Jersey's needs, to a Home
Office. The surrender value of a surrendered Contract will be determined as of
the end of the valuation period in which such a request is received in a Home
Office. If the Contract is fully surrendered within the first four Contract
years, you may be entitled to a return of sales charges. See CHARGES AND
EXPENSES, page 15. Surrender of a Contract may have tax consequences. See TAX
TREATMENT OF CONTRACT BENEFITS, page 27.
Fixed reduced paid-up insurance (available in New York state only) provides
paid-up insurance, the amount of which will be paid when the insured dies. There
will be cash values and loan values. The loan interest rate for fixed reduced
paid-up insurance is 5%. Upon surrender of the Contract, the amount of fixed
reduced paid-up insurance depends upon the net cash value and the insured's
issue age, sex, smoker/non-smoker status, and the length of time since the
Contract date.
WITHDRAWALS
Under certain circumstances, you may withdraw a portion of the Contract's net
cash value without surrendering the Contract. The withdrawal amount is limited
by the requirement that the net cash value after the withdrawal may not be zero
or less than zero. The amount withdrawn must be at least $500. There is an
administrative processing fee for each withdrawal which is the lesser of: (a)
$25 and; (b) 2% of the withdrawal amount. An amount withdrawn may not be repaid
except as a premium subject to the applicable charges. Upon request, we will
tell you how much you may withdraw. Withdrawal of the net cash value may have
tax consequences. See TAX TREATMENT OF CONTRACT BENEFITS, page 27.
Generally, whenever a withdrawal is made, the death benefit will be immediately
reduced by at least the amount of the withdrawal. Withdrawals under Type B
(variable) and Type C (return of premium) Contracts, will not change the basic
insurance amount. However, under a Type A (fixed) Contract, the withdrawal may
require a reduction in the basic insurance amount, unless you provide evidence
that the insured is insurable for the increase in net amount at risk. In
addition, no withdrawal will be permitted under a Type A (fixed) Contract if it
would result in a basic insurance amount of less than the minimum basic
insurance amount. Furthermore, the sum of the basic insurance amount and the
Target Term Rider must equal or exceed $100,000. See REQUIREMENTS FOR ISSUANCE
OF A CONTRACT, page 9. It is important to note, however, that if the basic
insurance amount is decreased, there is a possibility that the Contract might be
classified as a Modified Endowment Contract. See TAX TREATMENT OF CONTRACT
BENEFITS, page 27. Before making any withdrawal which causes a decrease in basic
insurance amount, you should consult with your tax adviser and your Pruco Life
of New Jersey representative.
When a withdrawal is made, the Contract Fund is reduced by the sum of the cash
withdrawn and the withdrawal fee. An amount equal to the reduction in the
Contract Fund will be withdrawn proportionally from the investment options
unless you direct otherwise.
Withdrawal of the cash value increases the risk that the Contract Fund may be
insufficient to provide Contract benefits. If such a withdrawal is followed by
unfavorable investment experience, the Contract may go into default.
21
<PAGE>
LAPSE AND REINSTATEMENT
Pruco Life of New Jersey will determine the value of the Contract Fund on each
Monthly date. If the Contract Fund is zero or less, the Contract is in default.
If the Contract debt ever grows to be equal to or more than the Contract Fund,
the Contract will be in default. Should this happen, Pruco Life of New Jersey
will send you a notice of default setting forth the payment which we estimate
will keep the Contract inforce for three months from the date of default. This
payment must be received at a Home Office within the 61-day grace period after
the notice of default is mailed or the Contract will end and have no value. A
Contract that lapses with an outstanding Contract loan may have tax
consequences. See TAX TREATMENT OF CONTRACT BENEFITS, page 27.
A Contract that ended in default may be reinstated within 5 years after the date
of default if the following conditions are met: (1) renewed evidence of
insurability is provided on the insured; (2) submission of certain payments
sufficient to bring the Contract up to date plus a premium that we estimate will
cover all charges and deductions for the next three months; and (3) any Contract
debt with interest to date must be restored or paid back. If the Contract debt
is restored and the debt with interest would exceed the loan value of the
reinstated Contract, the excess must be paid to us before reinstatement. The
reinstatement date will be the Monthly date that coincides with or next follows
the date we approve your request. We will deduct all required charges from your
payment and the balance will be placed into your Contract Fund.
INCREASES IN BASIC INSURANCE AMOUNT
Subject to state approval and subject to the underwriting requirements
determined by Pruco Life of New Jersey, you may increase the amount of insurance
by increasing the basic insurance amount of the Contract. We will allow up to 98
increases during the life of the Contract. The following conditions must be met:
(1) you must ask for the change in a form that meets Pruco Life of New Jersey's
needs; (2) the amount of the increase must be at least equal to the minimum
increase in basic insurance amount shown under CONTRACT LIMITATIONS in the data
pages of the Contract; (3) you must prove to us that the insured is insurable
for any increase; (4) the Contract must not be in default; and (5) if we ask you
to do so, you must send us the Contract to be endorsed.
If we approve the change, we will send you new Contract data pages showing the
amount and effective date of the change and the recomputed charges, values and
limitations. If the insured is not living on the effective date, the change will
not take effect. No administrative processing charge is currently being made in
connection with an increase in basic insurance amount. We reserve the right to
make such a charge in an amount of up to $25.
Furthermore, you may establish a schedule under which the basic insurance amount
increases on designated Contract anniversaries. The schedule of increases must
meet the following conditions:
(1) The amount of each scheduled increase must be at least equal to the
minimum increase in basic insurance amount shown under CONTRACT
LIMITATIONS in the data pages of the Contract.
(2) The amount of each scheduled increase cannot exceed:
(a) 20% of the underwritten death benefit (at issue, the underwritten
death benefit is equal to the face amount on the Contract date)
for increases scheduled to take place at attained ages up to and
including 65;
(b) 10% of the underwritten death benefit for increases scheduled to
take place at attained ages from 66 up to and including 70.
(3) Increases cannot be scheduled to take place after attained age 70.
(4) The total face amount including scheduled increases can never exceed 4
times the underwritten death benefit for fully underwritten Contracts
or 2 times the underwritten death benefit for Contracts issued on a
simplified issue or guaranteed issue basis.
These are our current guidelines. We reserve the right to change these
conditions.
For sales load purposes, the Target Premium (referred to as "segment allocation
amount" in your Contract) is calculated separately for each coverage segment.
When premiums are paid, each premium payment is allocated to each coverage
segment based on the proportion of its Target Premium to the total of all Target
Premiums currently in effect. Currently, the sales load charge for each segment
is equal to 13 1/2% of the allocated premium paid in each Contract year up to
the Target Premium and 2% on any excess. See CHARGES AND EXPENSES, page 15.
22
<PAGE>
The COI rates for an increase in basic insurance amount are based upon 1980 CSO
Tables, the age at the increase effective date and the number of years since
then, sex (except where unisex rates apply), smoker/nonsmoker status, and extra
rating class, if any. The net amount at risk for the whole Contract (the death
benefit minus the Contract Fund) is allocated to each basic insurance amount
segment based on the proportion of its basic insurance amount to the total of
all basic insurance amount segments. In addition, the attained age factor for a
Contract with an increase in basic insurance amount is based on the Insured's
attained age for the initial basic insurance amount segment. For a description
of attained age factor, see HOW A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL
VARY, page 18, HOW A TYPE B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL VARY,
page 19 and HOW A TYPE C (RETURN OF PREMIUM) CONTRACT'S DEATH BENEFIT WILL VARY,
page 20.
Each Contract owner who elects to increase the basic insurance amount of his or
her Contract will receive a "free-look" right which will apply only to the
increase in basic insurance amount, not the entire Contract. This right is
comparable to the right afforded to a purchaser of a new Contract except that,
any cost of insurance charge for the increase in the basic insurance amount will
be returned to the Contract Fund instead of a refund of premium. See SHORT-TERM
CANCELLATION RIGHT OR "FREE-LOOK", page 10. Generally, the "free-look" right
would have to be exercised no later than 10 days after receipt of the Contract
as increased.
An increase in basic insurance amount may cause the Contract to be classified as
a Modified Endowment Contract. See TAX TREATMENT OF CONTRACT BENEFITS, page 27.
Therefore, before increasing the basic insurance amount, you should consult with
your tax adviser and your Pruco Life of New Jersey representative.
DECREASES IN BASIC INSURANCE AMOUNT
As explained earlier, you may make a withdrawal. See WITHDRAWALS, page 21. You
also have the option of decreasing the basic insurance amount of your Contract
without withdrawing any cash value. Contract owners who conclude that, because
of changed circumstances, the amount of insurance is greater than needed will be
able to decrease their amount of insurance protection, and the monthly
deductions for the cost of insurance. The amount of the decrease must be at
least equal to the minimum decrease in basic insurance amount shown under
CONTRACT LIMITATIONS in the data pages of your Contract. In addition, the basic
insurance amount after the decrease must be at least equal to the minimum basic
insurance amount shown under CONTRACT LIMITATIONS in the data pages of your
Contract. No administrative processing charge is currently being made in
connection with a decrease in basic insurance amount. We reserve the right to
make such a charge in an amount of up to $25. See CHARGES AND EXPENSES, page 15.
If we ask you to, you must send us your Contract to be endorsed. The Contract
will be amended to show the new basic insurance amount, charges, values in the
appropriate tables and the effective date of the decrease.
We may decline a reduction if we determine it would cause the Contract to fail
to qualify as "life insurance" for purposes of Section 7702 of the Internal
Revenue Code. See TAX TREATMENT OF CONTRACT BENEFITS, page 27. Furthermore, a
decrease will not take effect if the insured is not living on the effective
date.
It is important to note, however, that if the basic insurance amount is
decreased, there is a possibility that the Contract might be classified as a
Modified Endowment Contract. See TAX TREATMENT OF CONTRACT BENEFITS, page 27.
Before requesting any decrease in basic insurance amount, you should consult
with your tax adviser and your Pruco Life of New Jersey representative.
WHEN PROCEEDS ARE PAID
Pruco Life of New Jersey will generally pay any death benefit, cash value, loan
proceeds or withdrawal within seven days after all the documents required for
such a payment are received at a Home Office. Other than the death benefit,
which is determined as of the date of death, the amount will be determined as of
the end of the valuation period in which the necessary documents are received at
a Home Office. However, Pruco Life of New Jersey may delay payment of proceeds
from the subaccount[s] and the variable portion of the death benefit due under
the Contract if the disposal or valuation of the Account's assets is not
reasonably practicable because the New York Stock Exchange is closed for other
than a regular holiday or weekend, trading is restricted by the SEC, or the SEC
declares that an emergency exists.
23
<PAGE>
ILLUSTRATIONS OF SURRENDER VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS
The following tables show how a Contract's death benefit and surrender values
change with the investment experience of the Account. They are "hypothetical"
because they are based, in part, upon several assumptions, which are described
below. All the tables assume the following:
o a Contract bought by a 45 year old male, select, non-smoker, with no extra
risks or substandard ratings, issued on a Guaranteed Issue basis.
o a given premium amount is paid on each Contract anniversary for seven years
and no loans are taken.
o the Contract Fund has been invested in equal amounts in each of the 15
portfolios of the Funds.
The first two tables (pages T1 and T2) assume: (1) a Type A (fixed) Contract has
been purchased, (2) a $1,000,000 basic insurance amount and no riders have been
added to the Contract, and (3) a Cash Value Accumulation Test has been elected
for definition of life insurance testing. See TAX TREATMENT OF CONTRACT
BENEFITS, page 27 and TYPES OF DEATH BENEFIT, page 10. The first table assumes
current charges will continue for the indefinite future while the second table
assumes maximum contractual charges have been made from the beginning. See
CHARGES AND EXPENSES, page 15.
The third and fourth tables (pages T3 and T4) assume: (1) a Type A (fixed)
Contract has been purchased, (2) a $5,000 basic insurance amount and a $995,000
Target Term Rider has been added to the Contract, and (3) a Cash Value
Accumulation Test has been elected for definition of life insurance testing. See
TAX TREATMENT OF CONTRACT BENEFITS, page 27 and TYPES OF DEATH BENEFIT, page 10.
The third table assumes current charges will continue for the indefinite future
while the fourth table assumes maximum contractual charges have been made from
the beginning. See CHARGES AND EXPENSES, page 15.
The next two tables (pages T5 and T6) assume: (1) a Type A (fixed) Contract has
been purchased, (2) a $1,000,000 basic insurance amount and no riders have been
added to the Contract, and (3) a Guideline Premium Test has been elected for
definition of life insurance testing. See TAX TREATMENT OF CONTRACT BENEFITS,
page 27 and TYPES OF DEATH BENEFIT, page 10. The fifth table assumes current
charges will continue for the indefinite future while the sixth table assumes
maximum contractual charges have been made from the beginning. See CHARGES AND
EXPENSES, page 15.
The tables on pages T7 and T8 assume: (1) a Type B (variable) Contract has been
purchased, (2) a $1,000,000 basic insurance amount and no riders have been added
to the Contract, and (3) a Cash Value Accumulation Test has been elected for
definition of life insurance testing. See TAX TREATMENT OF CONTRACT BENEFITS,
page 27 and TYPES OF DEATH BENEFIT, page 10. The table on page T7 assumes
current charges will continue for the indefinite future while the table on page
T8 assumes maximum contractual charges have been made from the beginning. See
CHARGES AND EXPENSES, page 15.
The last two tables (pages T9 and T10) assume: (1) a Type C (return of premium)
Contract has been purchased with premiums accumulating at 6%, (2) a $1,000,000
basic insurance amount and no riders have been added to the Contract, and (3) a
Cash Value Accumulation Test has been elected for definition of life insurance
testing. See TAX TREATMENT OF CONTRACT BENEFITS, page 27 and TYPES OF DEATH
BENEFIT, page 10. The table on page T9 assumes current charges will continue for
the indefinite future while the table on page T10 assumes maximum contractual
charges have been made from the beginning. See CHARGES AND EXPENSES, page 15.
Finally, there are four assumptions, shown separately, about the average
investment performance of the portfolios. The first is that there will be a
uniform 0% gross rate of return with the average value of the Contract Fund
uniformly adversely affected by very unfavorable investment performance. The
other three assumptions are that investment performance will be at a uniform
gross annual rate of 4%, 8% and 12%. Actual returns will fluctuate from year to
year. In addition, death benefits and surrender values would be different from
those shown if investment returns averaged 0%, 4%, 8% and 12% but fluctuated
from those averages throughout the years. Nevertheless, these assumptions help
show how the Contract values will change with investment experience.
24
<PAGE>
The first column in the following 10 tables (pages T1 through T10) shows the
Contract year. The second column, to provide context, shows what the aggregate
amount would be if the premiums had been invested to earn interest, after taxes,
at 4% compounded annually. The next four columns show the death benefit payable
in each of the years shown for the four different assumed investment returns.
The last four columns show the surrender value payable in each of the years
shown for the four different assumed investment returns.
A gross return (as well as the net return) is shown at the top of each column.
The gross return represents the combined effect of investment income and capital
gains and losses, realized or unrealized, of the portfolios before any reduction
is made for investment advisory fees or other Fund expenses. The net return
reflects average total annual expenses of the 15 portfolios of 0.64%, and the
daily deduction from the Contract Fund of 0.20% per year for the tables based on
current charges and 0.5% per year for the tables based on maximum charges. Thus,
assuming current charges, gross returns of 0%, 4%, 8% and 12% are the equivalent
of net returns of -0.84%, 3.16%, 7.16% and 11.16%, respectively. Assuming
maximum charges, gross returns of 0%, 4%, 8% and 12% are the equivalent of net
returns of -1.14%, 2.86%, 6.86% and 10.86%, respectively. The actual fees and
expenses of the portfolios associated with a particular Contract may be more or
less than 0.64% and will depend on which subaccounts are selected. The death
benefits and surrender values shown reflect the deduction of all expenses and
charges both from the Funds and under the Contract.
The Contract allows you to invest your net premium dollars in a variety of
professionally managed funds. Fluctuating investment returns in these funds,
together with the actual pattern of your premium payments, our Contract charges,
and any loans and withdrawals you may make will generate different Contract
values than those illustrated, even if the averages of the investment rates of
return over the years were to match those illustrated. Because of this, we
strongly recommend periodic Contract reviews with your Pruco Life of New Jersey
representative. Reviews are an excellent way to monitor the performance of the
policy against your expectations and to identify adjustments that may be
necessary.
If you are considering the purchase of a variable life insurance contract from
another insurance company, you should not rely upon these tables for comparison
purposes. A comparison between two tables, each showing values for a 45 year old
man, may be useful for a 45 year old man but would be inaccurate if made for
insureds of other ages or sex. Your Pruco Life of New Jersey representative can
provide you with a hypothetical illustration for your own age, sex, and rating
class.
25
<PAGE>
ILLUSTRATIONS
-------------
<TABLE>
<CAPTION>
PRUSELECT III VARIABLE LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING CURRENT CHARGES
Death Benefit (1) Surrender Value (1)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-0.84% Net) (5.16% Net) (11.16% Net) (-0.84% Net) (5.16% Net) (11.16% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $1,000,000 $1,000,000 $ 1,000,000 $ 48,483 $ 51,197 $ 53,910
2 $ 116,115 $1,000,000 $1,000,000 $ 1,000,000 $ 95,154 $ 103,370 $ 111,914
3 $ 177,679 $1,000,000 $1,000,000 $ 1,000,000 $137,682 $ 154,274 $ 172,219
4 $ 241,705 $1,000,000 $1,000,000 $ 1,000,000 $179,763 $ 207,734 $ 239,208
5 $ 308,293 $1,000,000 $1,000,000 $ 1,000,000 $214,014 $ 256,507 $ 306,267
6 $ 377,544 $1,000,000 $1,000,000 $ 1,003,751 $255,225 $ 315,532 $ 389,051
7 $ 449,565 $1,000,000 $1,000,000 $ 1,201,896 $296,007 $ 377,585 $ 480,759
8 $ 467,547 $1,000,000 $1,000,000 $ 1,292,874 $291,337 $ 395,092 $ 532,047
9 $ 486,249 $1,000,000 $1,000,000 $ 1,383,477 $286,474 $ 413,367 $ 588,713
10 $ 505,699 $1,000,000 $1,000,000 $ 1,484,991 $281,409 $ 432,459 $ 651,312
15 $ 615,260 $1,000,000 $1,071,214 $ 2,130,891 $251,845 $ 541,017 $ 1,076,207
20 (Age 65) $ 748,558 $1,000,000 $1,164,409 $ 3,058,594 $210,928 $ 673,069 $ 1,767,973
25 $ 910,735 $1,000,000 $1,286,999 $ 4,463,920 $156,236 $ 835,714 $ 2,898,649
30 $1,108,049 $1,000,000 $1,434,385 $ 6,569,066 $ 68,741 $1,031,932 $ 4,725,947
35 $1,348,111 $ 0(2) $1,615,068 $ 9,765,705 $ 0(2) $1,261,772 $ 7,629,457
40 $1,640,183 $ 0 $1,835,817 $14,655,228 $ 0 $1,529,847 $12,212,690
45 $1,995,533 $ 0 $2,096,742 $22,097,161 $ 0 $1,839,247 $19,383,474
</TABLE>
- ----------
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 33, unless an additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more
or less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates
of inflation. The death benefit and cash surrender value for a contract would
be different from those shown if the actual rates of return averaged 0%, 6%,
and 12% over a period of years, but also fluctuated above or below those
averages for individual contract years. No representations can be made by
Pruco Life of New Jersey or the Series Fund that these hypothetical rates of
return can be achieved for any one year or sustained over any period of time.
T1
<PAGE>
<TABLE>
<CAPTION>
PRUSELECT III VARIABLE LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING MAXIMUM CONTRACTUAL CHARGES
Death Benefit (1) Surrender Value (1)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.14% Net) (4.86% Net) (10.86% Net) (-1.14% Net) (4.86% Net) (10.86% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $1,000,000 $1,000,000 $ 1,000,000 $ 42,042 $ 44,461 $ 46,882
2 $ 116,115 $1,000,000 $1,000,000 $ 1,000,000 $ 83,525 $ 90,767 $ 98,305
3 $ 177,679 $1,000,000 $1,000,000 $ 1,000,000 $120,352 $134,915 $ 150,684
4 $ 241,705 $1,000,000 $1,000,000 $ 1,000,000 $156,629 $181,116 $ 208,704
5 $ 308,293 $1,000,000 $1,000,000 $ 1,000,000 $184,149 $221,277 $ 264,812
6 $ 377,544 $1,000,000 $1,000,000 $ 1,000,000 $219,323 $271,929 $ 336,158
7 $ 449,565 $1,000,000 $1,000,000 $ 1,038,310 $253,928 $324,989 $ 415,324
8 $ 467,547 $1,000,000 $1,000,000 $ 1,107,268 $245,762 $335,843 $ 455,666
9 $ 486,249 $1,000,000 $1,000,000 $ 1,174,597 $237,173 $346,876 $ 499,829
10 $ 505,699 $1,000,000 $1,000,000 $ 1,249,718 $228,098 $358,065 $ 548,122
15 $ 615,260 $1,000,000 $1,000,000 $ 1,712,552 $172,942 $415,573 $ 864,925
20 (Age 65) $ 748,558 $1,000,000 $1,000,000 $ 2,336,628 $ 90,452 $471,897 $1,350,652
25 $ 910,735 $ 0(2) $1,000,000 $ 3,201,319 $ 0(2) $517,437 $2,078,778
30 $1,108,049 $ 0 $1,000,000 $ 4,379,173 $ 0 $532,776 $3,150,484
35 $1,348,111 $ 0 $1,000,000 $ 5,997,667 $ 0 $465,369 $4,685,677
40 $1,640,183 $ 0 $1,000,000 $ 8,248,146 $ 0 $148,192 $6,873,455
45 $1,995,533 $ 0 $ 0(2) $11,378,593 $ 0 $ 0(2) $9,981,222
</TABLE>
- ----------
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 6%, the Contract would go into default in
policy year 42, unless an additional premium payment was made. Based on a
gross return of 0%, the Contract would go into default in policy year 24,
unless an additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more
or less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates
of inflation. The death benefit and cash surrender value for a contract would
be different from those shown if the actual rates of return averaged 0%, 6%,
and 12% over a period of years, but also fluctuated above or below those
averages for individual contract years. No representations can be made by
Pruco Life of New Jersey or the Series Fund that these hypothetical rates of
return can be achieved for any one year or sustained over any period of time.
T2
<PAGE>
<TABLE>
<CAPTION>
PRUSELECT III VARIABLE LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 TARGET COVERAGE AMOUNT($5,000 BASIC INSURANCE AMOUNT, $995,000 TARGET TERM RIDER)
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING CURRENT CHARGES
Death Benefit (1) Surrender Value (1)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-0.84% Net) (5.16% Net) (11.16% Net) (-0.84% Net) (5.16% Net) (11.16% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $1,000,000 $1,000,000 $ 1,000,000 $ 51,562 $ 54,651 $ 57,741
2 $ 116,115 $1,000,000 $1,000,000 $ 1,000,000 $101,390 $ 110,752 $ 120,486
3 $ 177,679 $1,000,000 $1,000,000 $ 1,000,000 $150,157 $ 169,080 $ 189,544
4 $ 241,705 $1,000,000 $1,000,000 $ 1,000,000 $198,425 $ 230,345 $ 266,254
5 $ 308,293 $1,000,000 $1,000,000 $ 1,000,000 $245,081 $ 293,589 $ 350,377
6 $ 377,544 $1,000,000 $1,000,000 $ 1,147,997 $292,387 $ 361,246 $ 444,960
7 $ 449,565 $1,000,000 $1,080,607 $ 1,373,982 $339,222 $ 432,243 $ 549,593
8 $ 467,547 $1,000,000 $1,099,624 $ 1,478,030 $334,368 $ 452,520 $ 608,243
9 $ 486,249 $1,000,000 $1,113,122 $ 1,581,651 $329,354 $ 473,669 $ 673,043
10 $ 505,699 $1,000,000 $1,130,248 $ 1,697,748 $324,170 $ 495,723 $ 744,626
15 $ 615,260 $1,000,000 $1,228,472 $ 2,436,409 $291,699 $ 620,440 $ 1,230,509
20 (Age 65) $ 748,558 $1,000,000 $1,335,518 $ 3,497,315 $245,586 $ 771,976 $ 2,021,569
25 $ 910,735 $1,000,000 $1,476,275 $ 5,104,392 $182,058 $ 958,620 $ 3,314,540
30 $1,108,049 $1,000,000 $1,645,473 $ 7,511,734 $ 76,656 $1,183,794 $ 5,404,125
35 $1,348,111 $ 0(2) $1,852,871 $11,167,235 $ 0(2) $1,447,556 $ 8,724,403
40 $1,640,183 $ 0 $2,106,240 $16,758,614 $ 0 $1,755,200 $13,965,511
45 $1,995,533 $ 0 $2,405,711 $25,268,771 $ 0 $2,110,273 $22,165,589
</TABLE>
- ----------
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 33, unless an additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more
or less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates
of inflation. The death benefit and cash surrender value for a contract would
be different from those shown if the actual rates of return averaged 0%, 6%,
and 12% over a period of years, but also fluctuated above or below those
averages for individual contract years. No representations can be made by
Pruco Life of New Jersey or the Series Fund that these hypothetical rates of
return can be achieved for any one year or sustained over any period of time.
T3
<PAGE>
<TABLE>
<CAPTION>
PRUSELECT III VARIABLE LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 TARGET COVERAGE AMOUNT($5,000 BASIC INSURANCE AMOUNT, $995,000 TARGET TERM RIDER)
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING MAXIMUM CONTRACTUAL CHARGES
Death Benefit (1) Surrender Value (1)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.14% Net) (4.86% Net) (10.86% Net) (-1.14% Net) (4.86% Net) (10.86% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $1,000,000 $1,000,000 $ 1,000,000 $ 45,525 $ 48,371 $ 51,218
2 $ 116,115 $1,000,000 $1,000,000 $ 1,000,000 $ 90,440 $ 98,979 $ 107,866
3 $ 177,679 $1,000,000 $1,000,000 $ 1,000,000 $134,190 $ 151,389 $ 170,007
4 $ 241,705 $1,000,000 $1,000,000 $ 1,000,000 $177,348 $ 206,299 $ 238,905
5 $ 308,293 $1,000,000 $1,000,000 $ 1,000,000 $218,793 $ 262,725 $ 314,222
6 $ 377,544 $1,000,000 $1,000,000 $ 1,029,644 $260,782 $ 323,077 $ 399,087
7 $ 449,565 $1,000,000 $1,000,000 $ 1,231,001 $302,183 $ 386,390 $ 492,400
8 $ 467,547 $1,000,000 $1,000,000 $ 1,313,097 $293,761 $ 400,624 $ 540,369
9 $ 486,249 $1,000,000 $1,000,000 $ 1,393,272 $284,947 $ 415,266 $ 592,882
10 $ 505,699 $1,000,000 $1,000,000 $ 1,482,698 $275,681 $ 430,316 $ 650,306
15 $ 615,260 $1,000,000 $1,013,492 $ 2,033,504 $220,190 $ 511,864 $ 1,027,022
20 (Age 65) $ 748,558 $1,000,000 $1,043,508 $ 2,776,008 $138,897 $ 603,184 $ 1,604,629
25 $ 910,735 $1,000,000 $1,078,803 $ 3,804,597 $ 4,483 $ 700,522 $ 2,470,517
30 $1,108,049 $ 0(2) $1,113,542 $ 5,205,578 $ 0(2) $ 801,109 $ 3,745,020
35 $1,348,111 $ 0 $1,150,897 $ 7,130,562 $ 0 $ 899,138 $ 5,570,752
40 $1,640,183 $ 0 $1,194,559 $ 9,807,119 $ 0 $ 995,465 $ 8,172,599
45 $1,995,533 $ 0 $1,243,945 $13,530,182 $ 0 $1,091,180 $11,868,581
</TABLE>
- ----------
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in
policy year 26, unless an additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more
or less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates
of inflation. The death benefit and cash surrender value for a contract would
be different from those shown if the actual rates of return averaged 0%, 6%,
and 12% over a period of years, but also fluctuated above or below those
averages for individual contract years. No representations can be made by
Pruco Life of New Jersey or the Series Fund that these hypothetical rates of
return can be achieved for any one year or sustained over any period of time.
T4
<PAGE>
<TABLE>
<CAPTION>
PRUSELECT III VARIABLE LIFE INSURANCE CONTRACT
GUIDELINE PREMIUM TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS (3)
USING CURRENT CHARGES
Death Benefit (1) Surrender Value (1)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year(3) (-0.84% Net) (5.16% Net) (11.16% Net) (-0.84% Net) (5.16% Net) (11.16% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $1,000,000 $1,000,000 $ 1,000,000 $ 48,483 $ 51,197 $ 53,910
2 $ 116,115 $1,000,000 $1,000,000 $ 1,000,000 $ 95,154 $103,370 $ 111,914
3 $ 177,679 $1,000,000 $1,000,000 $ 1,000,000 $137,682 $154,274 $ 172,219
4 $ 241,705 $1,000,000 $1,000,000 $ 1,000,000 $179,763 $207,734 $ 239,208
5 $ 255,646 $1,000,000 $1,000,000 $ 1,000,000 $172,385 $212,359 $ 259,601
6 $ 265,872 $1,000,000 $1,000,000 $ 1,000,000 $168,828 $221,252 $ 286,585
7 $ 276,507 $1,000,000 $1,000,000 $ 1,000,000 $165,077 $230,421 $ 316,462
8 $ 287,567 $1,000,000 $1,000,000 $ 1,000,000 $161,123 $239,877 $ 349,572
9 $ 299,070 $1,000,000 $1,000,000 $ 1,000,000 $156,932 $249,610 $ 386,277
10 $ 311,032 $1,000,000 $1,000,000 $ 1,000,000 $152,495 $259,634 $ 427,011
15 $ 378,419 $1,000,000 $1,000,000 $ 1,000,000 $125,225 $313,804 $ 709,979
20 (Age 65) $ 460,404 $1,000,000 $1,000,000 $ 1,454,011 $ 84,602 $373,512 $ 1,191,812
25 $ 560,152 $1,000,000 $1,000,000 $ 2,322,243 $ 28,029 $441,561 $ 2,001,933
30 $ 681,510 $ 0(2) $1,000,000 $ 3,600,556 $ 0(2) $513,012 $ 3,365,005
35 $ 829,162 $ 0 $1,000,000 $ 5,951,349 $ 0 $577,792 $ 5,667,951
40 $1,008,802 $ 0 $1,000,000 $ 9,976,365 $ 0 $625,256 $ 9,501,300
45 $1,227,362 $ 0 $1,000,000(2) $16,592,333 $ 0 $624,317(2) $15,802,222
</TABLE>
- ----------
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 6%, the Contract would go into default in
policy year 54, unless an additional premium payment was made. Based on a
gross return of 0%, the Contract would go into default in policy year 27,
unless an additional premium payment was made.
(3) The Guideline Premium Test limits the premium payable in policy year 5 to
$4,108.12, and zero in years 6 and 7.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more
or less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates
of inflation. The death benefit and cash surrender value for a contract would
be different from those shown if the actual rates of return averaged 0%, 6%,
and 12% over a period of years, but also fluctuated above or below those
averages for individual contract years. No representations can be made by
Pruco Life of New Jersey or the Series Fund that these hypothetical rates of
return can be achieved for any one year or sustained over any period of time.
T5
<PAGE>
<TABLE>
<CAPTION>
PRUSELECT III VARIABLE LIFE INSURANCE CONTRACT
GUIDELINE PREMIUM TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS (3)
USING MAXIMUM CONTRACTUAL CHARGES
Death Benefit (1) Surrender Value (1)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year(3) (-1.14% Net) (4.86% Net) (10.86% Net) (-1.14% Net) (4.86% Net) (10.86% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $1,000,000 $1,000,000 $1,000,000 $ 42,042 $ 44,461 $ 46,882
2 $ 116,115 $1,000,000 $1,000,000 $1,000,000 $ 83,525 $ 90,767 $ 98,305
3 $ 177,679 $1,000,000 $1,000,000 $1,000,000 $120,352 $134,915 $ 150,684
4 $ 241,705 $1,000,000 $1,000,000 $1,000,000 $156,629 $181,116 $ 208,704
5 $ 255,646 $1,000,000 $1,000,000 $1,000,000 $145,181 $179,943 $ 221,114
6 $ 265,872 $1,000,000 $1,000,000 $1,000,000 $138,453 $183,659 $ 240,201
7 $ 276,507 $1,000,000 $1,000,000 $1,000,000 $131,364 $187,182 $ 261,097
8 $ 287,567 $1,000,000 $1,000,000 $1,000,000 $123,849 $190,449 $ 283,978
9 $ 299,070 $1,000,000 $1,000,000 $1,000,000 $115,832 $193,381 $ 309,037
10 $ 311,032 $1,000,000 $1,000,000 $1,000,000 $107,244 $195,908 $ 336,512
15 $ 378,419 $1,000,000 $1,000,000 $1,000,000 $ 52,947 $199,407 $ 521,353
20 (Age 65) $ 460,404 $ 0(2) $1,000,000 $1,015,673 $ 0(2) $174,339 $ 832,518
25 $ 560,152 $ 0 $1,000,000 $1,573,520 $ 0 $ 84,903 $1,356,482
30 $ 681,510 $ 0 $ 0(2) $2,369,493 $ 0 $ 0(2) $2,214,480
35 $ 829,162 $ 0 $ 0 $3,820,857 $ 0 $ 0 $3,638,912
40 $1,008,802 $ 0 $ 0 $6,218,175 $ 0 $ 0 $5,922,071
45 $1,227,362 $ 0 $ 0 $9,971,753 $ 0 $ 0 $9,496,907
</TABLE>
- ----------
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 6%, the Contract would go into default in
policy year 28, unless an additional premium payment was made. Based on a
gross return of 0%, the Contract would go into default in policy year 19,
unless an additional premium payment was made.
(3) The Guideline Premium Test limits the premium payable in policy year 5 to
$4,108.12, and zero in years 6 and 7.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more
or less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates
of inflation. The death benefit and cash surrender value for a contract would
be different from those shown if the actual rates of return averaged 0%, 6%,
and 12% over a period of years, but also fluctuated above or below those
averages for individual contract years. No representations can be made by
Pruco Life of New Jersey or the Series Fund that these hypothetical rates of
return can be achieved for any one year or sustained over any period of time.
T6
<PAGE>
<TABLE>
<CAPTION>
PRUSELECT III VARIABLE LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE B (VARIABLE) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING CURRENT CHARGES
Death Benefit (1) Surrender Value (1)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-0.84% Net) (5.16% Net) (11.16% Net) (-0.84% Net) (5.16% Net) (11.16% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $1,044,789 $1,047,503 $ 1,050,216 $ 48,483 $ 51,197 $ 53,910
2 $ 116,115 $1,087,625 $1,095,828 $ 1,104,358 $ 95,014 $103,217 $ 111,747
3 $ 177,679 $1,129,923 $1,146,463 $ 1,164,352 $137,311 $153,852 $ 171,741
4 $ 241,705 $1,171,667 $1,199,507 $ 1,230,831 $179,056 $206,895 $ 238,220
5 $ 308,293 $1,212,843 $1,255,062 $ 1,304,498 $212,843 $255,062 $ 304,498
6 $ 377,544 $1,253,445 $1,313,250 $ 1,386,144 $253,445 $313,250 $ 386,144
7 $ 449,565 $1,293,449 $1,374,174 $ 1,476,627 $293,449 $374,174 $ 476,627
8 $ 467,547 $1,287,940 $1,390,340 $ 1,526,582 $287,940 $390,340 $ 526,582
9 $ 486,249 $1,282,170 $1,407,023 $ 1,581,785 $282,170 $407,023 $ 581,785
10 $ 505,699 $1,276,132 $1,424,240 $ 1,642,812 $276,132 $424,240 $ 642,812
15 $ 615,260 $1,240,481 $1,517,697 $ 2,096,714 $240,481 $517,697 $ 1,058,946
20 (Age 65) $ 748,558 $1,191,025 $1,620,344 $ 3,009,434 $191,025 $620,344 $ 1,739,557
25 $ 910,735 $1,126,927 $1,732,923 $ 4,392,153 $126,927 $732,923 $ 2,852,048
30 $1,108,049 $1,030,374 $1,837,937 $ 6,463,437 $ 30,374 $837,937 $ 4,649,955
35 $1,348,111 $ 0(2) $1,897,334 $ 9,608,659 $ 0(2) $897,334 $ 7,506,764
40 $1,640,183 $ 0 $1,856,842 $14,419,537 $ 0 $856,842 $12,016,281
45 $1,995,533 $ 0 $1,614,159(2) $21,741,771 $ 0 $614,159(2) $19,071,729
</TABLE>
- ----------
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 6%, the Contract would go into default in
policy year 51, unless an additional premium payment was made. Based on a
gross return of 0%, the Contract would go into default in policy year 32,
unless an additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more
or less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates
of inflation. The death benefit and cash surrender value for a contract would
be different from those shown if the actual rates of return averaged 0%, 6%,
and 12% over a period of years, but also fluctuated above or below those
averages for individual contract years. No representations can be made by
Pruco Life of New Jersey or the Series Fund that these hypothetical rates of
return can be achieved for any one year or sustained over any period of time.
T7
<PAGE>
<TABLE>
<CAPTION>
PRUSELECT III VARIABLE LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE B (VARIABLE) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING MAXIMUM CONTRACTUAL CHARGES
Death Benefit (1) Surrender Value (1)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.14% Net) (4.86% Net) (10.86% Net) (-1.14% Net) (4.86% Net) (10.86% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $1,037,800 $1,040,210 $ 1,042,623 $ 41,904 $ 44,315 $ 46,728
2 $ 116,115 $1,074,892 $1,082,089 $ 1,089,580 $ 83,101 $ 90,298 $ 97,790
3 $ 177,679 $1,111,264 $1,125,697 $ 1,141,322 $119,473 $133,906 $ 149,531
4 $ 241,705 $1,146,895 $1,171,087 $ 1,198,335 $155,105 $179,297 $ 206,545
5 $ 308,293 $1,181,765 $1,218,316 $ 1,261,162 $181,765 $218,316 $ 261,162
6 $ 377,544 $1,215,831 $1,267,422 $ 1,330,381 $215,831 $267,422 $ 330,381
7 $ 449,565 $1,249,045 $1,318,436 $ 1,406,623 $249,045 $318,436 $ 406,623
8 $ 467,547 $1,239,413 $1,326,899 $ 1,443,555 $239,413 $326,899 $ 443,555
9 $ 486,249 $1,229,277 $1,335,141 $ 1,483,847 $229,277 $335,141 $ 483,847
10 $ 505,699 $1,218,574 $1,343,079 $ 1,527,788 $218,574 $343,079 $ 527,788
15 $ 615,260 $1,154,197 $1,374,853 $ 1,814,671 $154,197 $374,853 $ 814,671
20 (Age 65) $ 748,558 $1,062,224 $1,379,373 $ 2,254,175 $ 62,224 $379,373 $1,254,175
25 $ 910,735 $ 0(2) $1,324,163 $ 2,957,206 $ 0(2) $324,163 $1,920,263
30 $1,108,049 $ 0 $1,153,072 $ 4,043,686 $ 0 $153,072 $2,909,127
35 $1,348,111 $ 0 $ 0(2) $ 5,537,753 $ 0 $ 0(2) $4,326,370
40 $1,640,183 $ 0 $ 0 $ 7,615,256 $ 0 $ 0 $6,346,047
45 $1,995,533 $ 0 $ 0 $10,505,118 $ 0 $ 0 $9,215,016
</TABLE>
- ----------
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 6%, the Contract would go into default in
policy year 33, unless an additional premium payment was made. Based on a
gross return of 0%, the Contract would go into default in policy year 23,
unless an additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more
or less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates
of inflation. The death benefit and cash surrender value for a contract would
be different from those shown if the actual rates of return averaged 0%, 6%,
and 12% over a period of years, but also fluctuated above or below those
averages for individual contract years. No representations can be made by
Pruco Life of New Jersey or the Series Fund that these hypothetical rates of
return can be achieved for any one year or sustained over any period of time.
T8
<PAGE>
<TABLE>
<CAPTION>
PRUSELECT III VARIABLE LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE C (RETURN OF PREMIUM AT 6%) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING CURRENT CHARGES
Death Benefit (1) Surrender Value (1)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-0.84% Net) (5.16% Net) (11.16% Net) (-0.84% Net) (5.16% Net) (11.16% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $1,058,014 $1,058,014 $ 1,058,014 $ 48,483 $ 51,197 $ 53,910
2 $ 116,115 $1,119,508 $1,119,508 $ 1,119,508 $ 94,971 $103,181 $ 111,719
3 $ 177,679 $1,184,693 $1,184,693 $ 1,184,693 $137,186 $153,750 $ 171,668
4 $ 241,705 $1,253,788 $1,253,788 $ 1,253,788 $178,789 $206,686 $ 238,083
5 $ 308,293 $1,327,029 $1,327,029 $ 1,327,029 $212,357 $254,690 $ 304,280
6 $ 377,544 $1,404,665 $1,404,665 $ 1,404,665 $252,634 $312,644 $ 385,833
7 $ 449,565 $1,486,958 $1,486,958 $ 1,486,958 $292,175 $373,244 $ 476,224
8 $ 467,547 $1,516,176 $1,516,176 $ 1,516,176 $286,060 $389,000 $ 526,128
9 $ 486,249 $1,547,146 $1,547,146 $ 1,547,146 $279,507 $405,167 $ 581,351
10 $ 505,699 $1,579,975 $1,579,975 $ 1,579,975 $272,475 $421,740 $ 642,506
15 $ 615,260 $1,776,138 $1,776,138 $ 2,100,333 $226,786 $508,772 $ 1,060,774
20 (Age 65) $ 748,558 $2,038,647 $2,038,647 $ 3,014,713 $149,804 $593,128 $ 1,742,609
25 $ 910,735 $2,389,944 $2,389,944 $ 4,399,860 $ 24,905 $660,913 $ 2,857,052
30 $1,108,049 $ 0(2) $2,860,059 $ 6,474,781 $ 0(2) $645,653 $ 4,658,116
35 $1,348,111 $ 0 $3,489,179 $ 9,625,524 $ 0 $355,487 $ 7,519,940
40 $1,640,183 $ 0 $ 0(2) $14,444,848 $ 0 $ 0(2) $12,037,373
45 $1,995,533 $ 0 $ 0 $21,779,936 $ 0 $ 0 $19,105,207
</TABLE>
- ----------
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 6%, the Contract would go into default in
policy year 38, unless an additional premium payment was made. Based on a
gross return of 0%, the Contract would go into default in policy year 26,
unless an additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more
or less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates
of inflation. The death benefit and cash surrender value for a contract would
be different from those shown if the actual rates of return averaged 0%, 6%,
and 12% over a period of years, but also fluctuated above or below those
averages for individual contract years. No representations can be made by
Pruco Life of New Jersey or the Series Fund that these hypothetical rates of
return can be achieved for any one year or sustained over any period of time.
T9
<PAGE>
<TABLE>
<CAPTION>
PRUSELECT III VARIABLE LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE C (RETURN OF PREMIUM AT 6%) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING MAXIMUM CONTRACTUAL CHARGES
Death Benefit (1) Surrender Value (1)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-1.14% Net) (4.86% Net) (10.86% Net) (-1.14% Net) (4.86% Net) (10.86% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $1,058,014 $1,058,014 $ 1,058,014 $ 41,850 $ 44,262 $ 46,678
2 $ 116,115 $1,119,508 $1,119,508 $ 1,119,508 $ 82,906 $ 90,115 $ 97,621
3 $ 177,679 $1,184,693 $1,184,693 $ 1,184,693 $119,022 $133,491 $ 149,161
4 $ 241,705 $1,253,788 $1,253,788 $ 1,253,788 $154,243 $178,517 $ 205,876
5 $ 308,293 $1,327,029 $1,327,029 $ 1,327,029 $180,294 $217,005 $ 260,082
6 $ 377,544 $1,404,665 $1,404,665 $ 1,404,665 $213,495 $265,365 $ 328,762
7 $ 449,565 $1,486,958 $1,486,958 $ 1,486,958 $245,510 $315,359 $ 404,321
8 $ 467,547 $1,516,176 $1,516,176 $ 1,516,176 $234,337 $322,533 $ 440,487
9 $ 486,249 $1,547,146 $1,547,146 $ 1,547,146 $222,240 $329,147 $ 479,931
10 $ 505,699 $1,579,975 $1,579,975 $ 1,579,975 $209,064 $335,040 $ 522,953
15 $ 615,260 $1,776,138 $1,776,138 $ 1,776,138 $120,122 $346,058 $ 805,225
20 (Age 65) $ 748,558 $ 0(2) $2,038,647 $ 2,159,800 $ 0(2) $289,658 $1,248,440
25 $ 910,735 $ 0 $2,389,944 $ 2,958,528 $ 0 $ 54,663 $1,921,122
30 $1,108,049 $ 0 $ 0(2) $ 4,046,582 $ 0 $ 0(2) $2,911,210
35 $1,348,111 $ 0 $ 0 $ 5,541,723 $ 0 $ 0 $4,329,471
40 $1,640,183 $ 0 $ 0 $ 7,620,718 $ 0 $ 0 $6,350,599
45 $1,995,533 $ 0 $ 0 $10,512,657 $ 0 $ 0 $9,221,629
</TABLE>
- ----------
(1) Assumes no Contract loan has been made.
(2) Based on a gross return of 6%, the Contract would go into default in
policy year 26, unless an additional premium payment was made. Based on a
gross return of 0%, the Contract would go into default in policy year 20,
unless an additional premium payment was made.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more
or less than those shown and will depend on a number of factors including the
investment allocations made by an owner, prevailing interest rates, and rates
of inflation. The death benefit and cash surrender value for a contract would
be different from those shown if the actual rates of return averaged 0%, 6%,
and 12% over a period of years, but also fluctuated above or below those
averages for individual contract years. No representations can be made by
Pruco Life of New Jersey or the Series Fund that these hypothetical rates of
return can be achieved for any one year or sustained over any period of time.
T10
<PAGE>
CONTRACT LOANS
You may borrow from Pruco Life of New Jersey an amount up to the current loan
value of your Contract less any existing Contract debt using the Contract as the
only security for the loan. The loan value at any time is equal to 90% of the
Contract Fund value. A Contract in default has no loan value. The minimum loan
amount you may borrow is $200.
Interest charged on a loan accrues daily. Interest is due on each Contract
anniversary or when the loan is paid back, whichever comes first. If interest is
not paid when due, it becomes part of the loan and we will charge interest on
it, too. Except in the case of preferred loans, we charge interest at an
effective annual rate of 5%.
A portion of any amount you borrow on or after the 10th Contract anniversary may
be considered a preferred loan if the Contract has not been surrendered for
fixed reduced paid-up insurance. Fixed reduced paid-up insurance is available
only in the state of New York. See SURRENDER OF A CONTRACT, page 21. The maximum
preferred loan amount is the total amount you may borrow minus the total net
premiums paid (net premiums equal premiums paid less total withdrawals, if any).
If the net premium amount is less than zero, we will, for purposes of this
calculation, consider it to be zero. Only new loans borrowed after the 10th
Contract anniversary may be considered preferred loans. Standard loans will not
automatically be converted into preferred loans. Preferred loans are charged
interest at an effective annual rate of 4.25%.
The Contract debt is the amount of all outstanding loans plus any interest
accrued but not yet due. If at any time the Contract debt equals or exceeds the
Contract Fund, the Contract will go into default. See LAPSE AND REINSTATEMENT,
page 22. If the Contract debt equals or exceeds the Contract Fund and you fail
to keep the Contract inforce, the amount of unpaid Contract debt will be treated
as a distribution which may be taxable. See TAX TREATMENT OF CONTRACT BENEFITS,
page 27.
When a loan is made, an amount equal to the loan proceeds is transferred out of
the Account. Unless you ask us to take the loan amount from specific investment
options and we agree, the reduction will be made in the same proportions as the
value in each subaccount bears to the total value of the Contract. While a loan
is outstanding, the amount that was so transferred will continue to be treated
as part of the Contract Fund. It will be credited with an effective annual rate
of return of 4%. On each Monthly date, we will increase the portion of the
Contract Fund in the investment options by interest credits accrued on the loan
since the last Monthly date. The net cost of a standard loan is 1% and the net
cost of a preferred loan is 1/4%.
Loans from Modified Endowment Contracts may be treated for tax purposes as
distributions of income. See TAX TREATMENT OF CONTRACT BENEFITS, page 27.
Any Contract debt will directly reduce a Contract's cash value and will be
subtracted from the death benefit to determine the amount payable. In addition,
even if the loan is fully repaid, it may have an effect on future death benefits
because the investment results of the selected investment options will apply
only to the amount remaining invested under those options. The longer the loan
is outstanding, the greater the effect is likely to be. The effect could be
favorable or unfavorable. If investment results are greater than the rate being
credited on the amount of the loan while the loan is outstanding, values under
the Contract will not increase as rapidly as they would have if no loan had been
made. If investment results are below that rate, Contract values will be higher
than they would have been had no loan been made.
When you repay all or part of a loan, we will increase the portion of the
Contract Fund in the investment options by the amount of the loan you repay
using the investment allocation for future premium payments as of the loan
payment date, plus interest credits accrued on the loan since the last
transaction date. If loan interest is paid when due, it will not change the
portion of the Contract Fund allocated to the investment options. We reserve the
right to change the manner in which we allocate loan repayments.
26
<PAGE>
SALE OF THE CONTRACT AND SALES COMMISSIONS
Pruco Securities Corporation ("Prusec"), an indirect wholly-owned subsidiary of
Prudential, acts as the principal underwriter of the Contract. Prusec, organized
in 1971 under New Jersey law, is registered as a broker and dealer under the
Securities Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc. Prusec's principal business address is 751 Broad
Street, Newark, New Jersey 07102-3777. The Contract is sold by registered
representatives of Prusec who are also authorized by state insurance departments
to do so. The Contract may also be sold through other broker-dealers authorized
by Prusec and applicable law to do so. Registered representatives of such other
broker-dealers may be paid on a different basis than described below.
Generally, representatives will receive a commission of no more than: (1) 20% of
the premiums received in the first year on premiums up to the Target Premium
(referred to as "segment allocation amount" in your Contract); (2) 12% of
premiums received in years two through 10 on premiums up to the Target Premium;
and (3) 2% on premiums received in the first 10 years in excess of the Target
Premium or received after 10 years. If the basic insurance amount is increased,
representatives will generally receive a commission of no more than: (1) 20% of
the premiums received up to the Target Premium for the increase received in the
first year; (2) 12% of the premiums received up to the Target Premium for years
two through 10; and (3) 2% on other premiums received for the increase.
Moreover, trail commissions of up to 0.05% of the Contract Fund may be paid as
of the end of each calendar quarter for years six through 20 and .025%
thereafter. Representatives with less than 4 years of service may receive
compensation on a different basis. Representatives who meet certain productivity
or persistency standards may be eligible for additional compensation.
TAX TREATMENT OF CONTRACT BENEFITS
This summary provides general information on the federal income tax treatment of
the Contract. It is not a complete statement of what the federal income taxes
will be in all circumstances. It is based on current law and interpretations,
which may change. It does not cover state taxes or other taxes. It is not
intended as tax advice. You should consult your own qualified tax adviser for
complete information and advice.
TREATMENT AS LIFE INSURANCE. The Contract must meet certain requirements to
qualify as life insurance for tax purposes. These requirements include certain
definitional tests and rules for diversification of the Contract's investments.
For further information on the diversification requirements, see TAXATION OF THE
FUND in the statement of additional information for the Series Fund.
In order to meet the definition of life insurance rules for federal income tax
purposes, the Contract must satisfy one of the two following tests: (1) Cash
Value Accumulation Test or (2) Guideline Premium Test. At issue, the Contract
owner chooses which of these two tests will apply to their Contract. This choice
cannot be changed thereafter.
Under the Cash Value Accumulation Test, the Contract must maintain a minimum
ratio of death benefit to cash value. Therefore, in order to ensure that the
Contract qualifies as life insurance, the Contract's basic insurance amount may
increase as the Contract Fund value increases. The death benefit, at all times,
must be at least equal to the Contract Fund multiplied by the applicable
attained age factor. A listing of attained age factors can be found on the data
pages of your Contract.
Under the Guideline Premium Test, there is a limit as to the amount of premium
that can be paid into the Contract in relation to the death benefit. In
addition, there is a minimum ratio of death benefit to cash value associated
with this test. This ratio, however, is less than the required ratio under the
Cash Value Accumulation test. Therefore, the death benefit required under this
test is generally lower than that of the Cash Value Accumulation test.
The selection of the definition of life insurance test most appropriate for you
is dependent on several factors, including the insured's age at issue, actual
Contract earnings, and whether or not the Contract is classified as a Modified
Endowment Contract. You should consult your own qualified tax adviser for
complete information and advice with respect to the selection of the definition
of life insurance test.
27
<PAGE>
We believe we have taken adequate steps to insure that the Contract qualifies as
life insurance for tax purposes. Generally speaking, this means that:
o you will not be taxed on the growth of the funds in the Contract,
unless you receive a distribution from the Contract, and
o the Contract's death benefit will be income tax free to your
beneficiary.
Although we believe that the Contract should qualify as life insurance for tax
purposes, there are some uncertainties, particularly because the Secretary of
Treasury has not yet issued permanent regulations that bear on this question.
Accordingly, we reserve the right to make changes -- which will be applied
uniformly to all Contract owners after advance written notice -- that we deem
necessary to insure that the Contract will qualify as life insurance.
PRE-DEATH DISTRIBUTIONS. The tax treatment of any distribution you receive
before the insured's death depends on whether the Contract is classified as a
Modified Endowment Contract.
CONTRACTS NOT CLASSIFIED AS MODIFIED ENDOWMENT CONTRACTS
o If you surrender the Contract or allow it to lapse, you will be
taxed on the amount you receive in excess of the premiums you
paid less the untaxed portion of any prior withdrawals. For this
purpose, you will be treated as receiving any portion of the cash
value used to repay Contract debt. The tax consequences of a
surrender may differ if you take the proceeds under an income
payment settlement option.
o Generally, you will be taxed on a withdrawal to the extent the
amount you receive exceeds the premiums you paid for the Contract
less the untaxed portion of any prior withdrawals. However, under
some limited circumstances, in the first 15 Contract years, all
or a portion of a withdrawal may be taxed if the Contract Fund
exceeds the total premiums paid less the untaxed portions of any
prior withdrawals, even if total withdrawals do not exceed total
premiums paid.
o Loans you take against the Contract are ordinarily treated as
debt and are not considered distributions subject to tax.
However, there is some risk the Internal Revenue Service might
assert that the preferred loan should be treated as a
distribution for tax purposes because of the relatively low
differential between the loan interest rate and Contract's
crediting rate. Were the Internal Revenue Service to take this
position, Pruco Life of New Jersey would take reasonable steps to
avoid this result, including modifying the Contract's loan
provisions.
MODIFIED ENDOWMENT CONTRACTS
o The rules change if the Contract is classified as a Modified
Endowment Contract. The Contract could be classified as a
Modified Endowment Contract if premiums in amounts that are too
large are paid or a decrease in the face amount of insurance is
made (or a rider removed). The addition of a rider or an increase
in the face amount of insurance may also cause the Contract to be
classified as a Modified Endowment Contract. You should first
consult a qualified tax adviser and your Pruco Life of New Jersey
representative if you are contemplating any of these steps.
o If the Contract is classified as a Modified Endowment Contract,
then amounts you receive under the Contract before the insured's
death, including loans and withdrawals, are included in income to
the extent that the Contract Fund exceeds the premiums paid for
the Contract increased by the amount of any loans previously
included in income and reduced by any untaxed amounts previously
received other than the amount of any loans excludable from
income. An assignment of a Modified Endowment Contract is taxable
in the same way. These rules also apply to pre-death
distributions, including loans and assignments, made during the
two-year period before the time that the Contract became a
Modified Endowment Contract.
o Any taxable income on pre-death distributions (including full
surrenders) is subject to a penalty of 10 percent unless the
amount is received on or after age 59 1/2, on account of your
becoming disabled or as a life annuity. It is presently unclear
how the penalty tax provisions apply to Contracts owned by
businesses.
o All Modified Endowment Contracts issued by us to you during the
same calendar year are treated as a single Contract for purposes
of applying these rules.
28
<PAGE>
WITHHOLDING. You must affirmatively elect that no taxes be withheld from a
pre-death distribution. Otherwise, the taxable portion of any amounts you
receive will be subject to withholding. You are not permitted to elect out of
withholding if you do not provide a social security number or other taxpayer
identification number. You may be subject to penalties under the estimated tax
payment rules if your withholding and estimated tax payments are insufficient to
cover the tax due.
OTHER TAX CONSIDERATIONS. If you transfer or assign the Contract to someone
else, there may be gift, estate and/or income tax consequences. If you transfer
the Contract to a person two or more generations younger than you (or designate
such a younger person as a beneficiary), there may be Generation Skipping
Transfer tax consequences. Deductions for interest paid or accrued on Contract
debt or on other loans that are incurred or continued to purchase or carry the
Contract may be denied. Your individual situation or that of your beneficiary
will determine the federal estate taxes and the state and local estate,
inheritance and other taxes due if you or the insured dies.
BUSINESS-OWNED LIFE INSURANCE. If a business, rather than an individual, is the
owner of the Contract, there are some additional rules. Business Contract owners
generally cannot deduct premium payments. Business Contract owners generally
cannot take tax deductions for interest on Contract debt paid or accrued after
October 13, 1995. An exception permits the deduction of interest on policy loans
on Contracts for up to 20 key persons. The interest deduction for Contract debt
on these loans is limited to a prescribed interest rate and a maximum aggregate
loan amount of $50,000 per key insured person. The corporate alternative minimum
tax also applies to business-owned life insurance. This is an indirect tax on
additions to the Contract Fund or death benefits received under business-owned
life insurance policies.
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS
The Contract generally employs mortality tables that distinguish between males
and females. Thus, premiums and benefits differ under Contracts issued on males
and females of the same age. Employers and employee organizations considering
the purchase of a Contract should consult their legal advisers to determine
whether purchase of a Contract based on sex-distinct actuarial tables is
consistent with Title VII of the Civil Rights Act of 1964 or other applicable
law.
EXCHANGE RIGHT
In the state of New York, you have the right to exchange the Contract for a
fixed benefit insurance plan issued by The Prudential Insurance Company of
America on the insured's life. Such an exchange is permitted within the first 18
months after a Contract is issued, so long as the Contract is not in default.
This is a general account policy with guaranteed minimum values. No evidence of
insurability will be required to make an exchange. The new policy will have the
same issue date and risk classification for the insured as the original
Contract. The exchange may be subject to an equitable adjustment in premiums and
values, and a payment may be required. You may wish to obtain tax advice before
effecting such an exchange.
OTHER GENERAL CONTRACT PROVISIONS
ASSIGNMENT. This Contract may not be assigned if the assignment would violate
any federal, state or local law or regulation prohibiting sex distinct rates for
insurance. Generally, the Contract may not be assigned to an employee benefit
plan or program without Pruco Life of New Jersey's consent. Pruco Life of New
Jersey assumes no responsibility for the validity or sufficiency of any
assignment. We will not be obligated to comply with any assignment unless we
receive a copy at a Home Office.
BENEFICIARY. You designate and name your beneficiary in the application.
Thereafter, you may change the beneficiary, provided it is in accordance with
the terms of the Contract. Should the insured die with no surviving beneficiary,
the insured's estate will become the beneficiary.
INCONTESTABILITY. We will not contest the Contract after it has been inforce
during the insured's lifetime for two years from the issue date except when any
change is made in the Contract that requires Pruco Life of New Jersey's approval
and would increase our liability. We will not contest such change after it has
been in effect for two years during the lifetime of the insured.
29
<PAGE>
MISSTATEMENT OF AGE OR SEX. If the insured's stated age or sex or both are
incorrect in the Contract, Pruco Life of New Jersey will adjust the death
benefits payable and any amount to be paid, as required by law, to reflect the
correct age and sex. Any such benefit will be based on what the most recent
deductions from the Contract Fund would have provided at the insured's correct
age and sex.
SETTLEMENT OPTIONS. The Contract grants to most owners, or to the beneficiary, a
variety of optional ways of receiving Contract proceeds, other than in a lump
sum. Any Pruco Life of New Jersey representative authorized to sell this
Contract can explain these options upon request.
SUICIDE EXCLUSION. Generally, if the insured, whether sane or insane, dies by
suicide within two years from the Contract date, the Contract will end and Pruco
Life of New Jersey will return the premiums paid, less any Contract debt, and
less any withdrawals. Generally, if the insured dies by suicide after two years
from the issue date, but within two years of the effective date of an increase
in the basic insurance amount, we will pay, as to the increase in amount, no
more than the sum of the premiums paid on and after the effective date of an
increase.
VOTING RIGHTS
As described earlier, all of the assets held in the subaccounts will be invested
in shares of the corresponding portfolios of the Funds. Pruco Life of New Jersey
is the legal owner of those shares and as such has the right to vote on any
matter voted on at shareholders meetings of the Funds. However, Pruco Life of
New Jersey will, as required by law, vote the shares of the Funds in accordance
with voting instructions received from Contract owners at any regular and
special shareholders meetings. A Fund may not hold annual shareholders meetings
when not required to do so under the laws of the state of its incorporation or
the Investment Company Act of 1940. Fund shares for which no timely instructions
from Contract owners are received, and any shares attributable to general
account investments of Pruco Life of New Jersey will be voted in the same
proportion as shares in the respective portfolios for which instructions are
received. Should the applicable federal securities laws or regulations, or their
current interpretation, change so as to permit Pruco Life of New Jersey to vote
shares of the Funds in its own right, it may elect to do so.
Matters on which Contract owners may give voting instructions include the
following: (1) election of the Board of Directors of the Series Fund; (2)
ratification of the independent accountant of the Series Fund; (3) approval of
the investment advisory agreement for a portfolio of the Series Fund
corresponding to the Contract owner's selected subaccount[s]; (4) any change in
the fundamental investment policy of a portfolio corresponding to the Contract
owner's selected subaccount[s]; and (5) any other matter requiring a vote of the
shareholders of the Series Fund. With respect to approval of the investment
advisory agreement or any change in a portfolio's fundamental investment policy,
Contract owners participating in such portfolios will vote separately on the
matter, pursuant to the requirements of Rule 18f-2 under the Investment Company
Act of 1940.
The number of Fund shares for which a Contract owner may give instructions is
determined by dividing the portion of the value of the Contract derived from
participation in a subaccount, by the value of one share in the corresponding
portfolio of the applicable Fund. The number of votes for which each Contract
owner may give Pruco Life of New Jersey instructions will be determined as of
the record date chosen by the Board of Directors of the applicable Fund. Pruco
Life of New Jersey will furnish Contract owners with proper forms and proxies to
enable them to give these instructions. Pruco Life of New Jersey reserves the
right to modify the manner in which the weight to be given voting instructions
is calculated where such a change is necessary to comply with current federal
regulations or interpretations of those regulations.
Pruco Life of New Jersey may, if required by state insurance regulations,
disregard voting instructions if they would require shares to be voted so as to
cause a change in the sub-classification or investment objectives of one or more
of a Fund's portfolios, or to approve or disapprove an investment advisory
contract for a Fund. In addition, Pruco Life of New Jersey itself may disregard
voting instructions that would require changes in the investment policy or
investment adviser of one or more of a Fund's portfolios, provided that Pruco
Life of New Jersey reasonably disapproves such changes in accordance with
applicable federal regulations. If Pruco Life of New Jersey does disregard
voting instructions, it will advise Contract owners of that action and its
reasons for such action in the next annual or semi-annual report to Contract
owners.
30
<PAGE>
SUBSTITUTION OF FUND SHARES
Although Pruco Life of New Jersey believes it to be unlikely, it is possible
that in the judgment of its management, one or more of the portfolios of the
Funds may become unsuitable for investment by Contract owners because of
investment policy changes, tax law changes, or the unavailability of shares for
investment. In that event, Pruco Life of New Jersey may seek to substitute the
shares of another portfolio or of an entirely different mutual fund. Before this
can be done, the approval of the SEC, and possibly one or more state insurance
departments, may be required. Contract owners will be notified of any such
substitution.
REPORTS TO CONTRACT OWNERS
Once each year, Pruco Life of New Jersey will send you a statement that provides
certain information pertinent to your own Contract. This statement will detail
values, transactions made and specific Contract data that apply only to your
particular Contract. You will also be sent annual and semi-annual reports of the
Funds showing the financial condition of the portfolios and the investments held
in each portfolio.
STATE REGULATION
Pruco Life of New Jersey is subject to regulation and supervision by the
Department of Insurance of the State of New Jersey, which periodically examines
its operations and financial condition. It is also subject to the insurance laws
and regulations of all jurisdictions in which it is authorized to do business.
Pruco Life of New Jersey is required to submit annual statements of its
operations, including financial statements, to the insurance departments of the
various jurisdictions in which it does business to determine solvency and
compliance with local insurance laws and regulations.
In addition to the annual statements referred to above, Pruco Life of New Jersey
is required to file with New Jersey and other jurisdictions a separate statement
with respect to the operations of all its variable contract accounts, in a form
promulgated by the National Association of Insurance Commissioners.
EXPERTS
The consolidated financial statements of Pruco Life of New Jersey as of December
31, 1998 and 1997 and for each of the three years in the period ended December
31, 1998 and the financial statements of the Account as of December 31, 1998 and
for each of the three years in the period then ended included in this prospectus
have been so included in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting. PricewaterhouseCoopers LLP's principal business address
is 1177 Avenue of the Americas, New York, New York 10036.
Actuarial matters included in this prospectus have been examined by Nancy Davis,
FSA, MAAA, Vice President and Actuary of Prudential, whose opinion is filed as
an exhibit to the registration statement.
LITIGATION
Several actions have been brought against Pruco Life of New Jersey alleging that
Pruco Life of New Jersey and its agents engaged in improper life insurance sales
practices. Prudential has agreed to indemnify Pruco Life of New Jersey for
losses, if any, resulting from such litigation. No other significant litigation
is being brought against Pruco Life of New Jersey that would have a material
effect on its financial position.
31
<PAGE>
YEAR 2000 COMPLIANCE
The Year 2000 issue is best understood as a computer hardware and software
problem involving the way dates are stored and processed in computer systems.
The services provided to you as a purchaser of a PruSelectSM III life insurance
Contract depend on the smooth functioning of these computer systems. Many
computer systems in use today are programmed to recognize only the last two
digits of a date as the year. As a result, any system using this kind of
programming can not distinguish a date using "00" and may treat it as 1900
instead of 2000. This problem may impact computer systems that store business
information, but it could also affect other equipment used in our business such
as telephones, fax machines and elevators. If this problem is not corrected, the
"Year 2000" issue could affect the accuracy and integrity of business records.
Prudential's regular business operations could be interrupted as well as those
of other companies that deal with us.
In addition, the operations of the mutual funds associated with the PruSelectSM
III life insurance Contract could experience problems resulting from the Year
2000 issue. Please refer to the mutual fund prospectus for information regarding
their approach to Year 2000 concerns.
To address this potential problem Prudential, as the ultimate parent company of
Pruco Life of New Jersey, has organized its Year 2000 efforts around the
following three areas:
o BUSINESS APPLICATIONS - Computer programs directly used to support our
business.
o INFRASTRUCTURE - Computers and other business equipment such as telephones
and fax machines.
o BUSINESS PARTNERS - Year 2000 readiness of essential business partners.
BUSINESS APPLICATIONS. The business applications component includes a wide range
of computer programs that directly support Prudential's business operations
including applications used for insurance product administration, securities
trading, personnel record keeping and general accounting systems. All business
applications have been analyzed to determine whether each computer program with
a Year 2000 problem should be retired, replaced or renovated. Renovation,
replacement, and retirement of business applications are now substantially
complete. Newly developed or purchased programs are being tested prior to their
use.
INFRASTRUCTURE. As with business applications, we have established a specific
methodology and process for addressing infrastructure issues. The infrastructure
effort includes mainframe computer system hardware and operating system
software, mid-range systems and servers, telecommunications equipment and
systems, buildings and facilities systems, personal computers and vendor
hardware and software. With the exception of personal computers, which are
scheduled for completion in the third quarter of 1999, infrastructure systems
are substantially complete.
BUSINESS PARTNERS. - Early in the Year 2000 program, Prudential recognized the
importance of determining the Year 2000 readiness of external business
relationships, especially those that involve electronic data transfer services
and products that impact our essential business processes. We first classified
each business partner as a "priority" or "non-priority" to our business and then
began to develop risk assessment and contingency plans to address the
possibility that a business partner could experience a Year 2000 failure. All
priority and non-priority business partner relationships have been assessed and
contingency planning is complete. We will continue to assess our risk, review
and update our contingency planning and assess any new business partners until
2000 in an effort to minimize risk.
Prudential believes that its Year 2000 project is substantially on schedule. A
small number of the projects may not meet their targeted completion date but we
expect that these projects will be completed by September, 1999. Should there be
any delays, they will not significantly impact the timing of the project as a
whole.
THE COST OF YEAR 2000 READINESS
Prudential is funding the Year 2000 program from internal operating budgets, and
estimates that its total costs to address the Year 2000 issue will be
approximately $232 million. Because these expenses were part of the operating
budget, they do not impact the management of PruSelectSM III life insurance
Contracts. During the course of the Year 2000 program, some optional computer
projects have been delayed, but these delays have not had any material effect on
PruSelectSM III life insurance Contracts.
32
<PAGE>
YEAR 2000 RISKS AND CONTINGENCY PLANNING
Prudential believes that it is well positioned to lessen the impact of the Year
2000 problem. However, given the nature of this issue, we cannot be 100% certain
of Year 2000 readiness of third parties. As a result, we are unable to determine
at this time whether the consequences of Year 2000 failures may have a material
adverse effect on the results of Prudential's operations, liquidity or financial
condition. In the worst case, it is possible that a Year 2000 technology
failure, whether internal or external, could have a material impact of on
Prudential's results of operations, liquidity, or financial position. If
Prudential is unable to achieve Year 2000 compliance on a timely basis, we may
have difficulty in responding to your incoming phone calls, calculating your
unit values or processing withdrawals and purchase payment. It is also possible
that the mutual funds associated with the PruSelectSM III life insurance
Contract will be unable to value their securities, in turn creating difficulties
in purchasing or selling shares of the mutual fund and calculating corresponding
unit asset values. The objective of Prudential's Year 2000 program is to reduce
these risks as much as possible.
Most of the operations of the PruSelect(SM) III life insurance Contract involve
such a large number of individual transactions that they can only be handled
with the help of computers. As a result, our current contingency plans include
responses to the failure of specific business applications or infrastructure
components. Prudential will continue to review and update its contingency plans
until 2000 in an effort to reduce the level of uncertainty about the effect of
the Year 2000 issue and further minimize risk. Prudential believes that with the
completion of its Year 2000 program as scheduled, the possibility of significant
interruptions of normal operations will be reduced.
ADDITIONAL INFORMATION
Pruco Life of New Jersey has filed a registration statement with the SEC under
the Securities Act of 1933, relating to the offering described in this
prospectus. This prospectus does not include all the information set forth in
the registration statement. Certain portions have been omitted pursuant to the
rules and regulations of the SEC. The omitted information may, however, be
obtained from the SEC's principal office in Washington, D.C., upon payment of a
prescribed fee.
Further information may also be obtained from Pruco Life of New Jersey. Its
address and telephone number are set forth on the inside front cover of this
prospectus.
FINANCIAL STATEMENTS
The financial statements of the Account should be distinguished from the
consolidated financial statements of Pruco Life of New Jersey, which should be
considered only as bearing upon the ability of Pruco Life of New Jersey to meet
its obligations under the Contracts.
33
<PAGE>
DIRECTORS AND OFFICERS
The directors and major officers of Pruco Life of New Jersey, listed with their
principal occupations during the past 5 years, are shown below.
DIRECTORS OF PRUCO LIFE OF NEW JERSEY
JAMES J. AVERY, JR., CHAIRMAN AND DIRECTOR. -- Senior Vice President and Chief
Actuary, Prudential Individual Insurance Group since 1997; 1995 to 1997:
President of Prudential Select; Prior to 1995: Chief Operating Officer of
Prudential Select.
WILLIAM M. BETHKE, DIRECTOR. -- Chief Investment Officer since 1997; Prior to
1997: President, Prudential Capital Markets Group.
IRA J. KLEINMAN, DIRECTOR. -- Executive Vice President, Prudential International
Insurance Group since 1997; 1995 to 1997: Chief Marketing and Product
Development Officer, Prudential Individual Insurance Group; Prior to 1995:
President, Prudential Select.
ESTHER H. MILNES, PRESIDENT AND DIRECTOR. -- Vice President and Actuary,
Prudential Individual Insurance Group since 1996; Prior to 1996: Senior Vice
President and Chief Actuary, Prudential Insurance and Financial Services.
I. EDWARD PRICE, VICE CHAIRMAN AND DIRECTOR. -- Senior Vice President and
Actuary, Prudential Individual Insurance Group since 1995; Prior to 1995: Chief
Executive Officer, Prudential International Insurance.
OFFICERS WHO ARE NOT DIRECTORS
C. EDWARD CHAPLIN, TREASURER. -- Vice President and Treasurer of Prudential
since 1995; Prior to 1995: Managing Director and Assistant Treasurer of
Prudential.
JAMES C. DROZANOWSKI, SENIOR VICE PRESIDENT. -- Vice President and Operations
Executive, Prudential Individual Insurance Group since 1996; 1995 to 1996:
President and Chief Executive Officer of Chase Manhattan Bank; Prior to 1995:
Vice President, North America Customer Services, Chase Manhattan Bank.
CLIFFORD E. KIRSCH, CHIEF LEGAL OFFICER AND SECRETARY. -- Chief Counsel,
Variable Products, Law Department of Prudential since 1995; Prior to 1995:
Associate General Counsel with Paine Webber.
FRANK P. MARINO, SENIOR VICE PRESIDENT. -- Vice President, Policyowner Relations
Department, Prudential Individual Insurance Group since 1996; Prior to 1996:
Senior Vice President, Prudential Mutual Fund Services.
EDWARD A. MINOGUE, SENIOR VICE PRESIDENT. -- Vice President, Annuity Services,
Prudential Investments since 1997; Prior to 1997: Director, Merrill Lynch.
IMANTS SAKSONS, SENIOR VICE PRESIDENT. -- Vice President, Compliance, Prudential
Individual Financial Services since 1998; Prior to 1998: Vice President, Market
Conduct, U.S. Operations, Manulife Financial.
SHIRLEY H. SHAO, SENIOR VICE PRESIDENT AND CHIEF ACTUARY. -- Vice President and
Associate Actuary, Prudential.
DENNIS G. SULLIVAN, VICE PRESIDENT AND CHIEF ACCOUNTING OFFICER. -- Vice
President and Deputy Controller, Prudential since 1998; 1997 to 1998, Vice
President and Controller, ContiFinancial Corporation; Prior to 1997, Director,
Saloman Brothers.
The business address of all directors and officers of Pruco Life of New Jersey
is 213 Washington Street, Newark, New Jersey 07102-2992.
Pruco Life of New Jersey directors and officers are elected annually.
34
<PAGE>
PRUSELECT(SM) III
Variable Life
Insurance
[LOGO OMITTED]
Pruco Life Insurance Company of New Jersey
213 Washington Street, Newark, NJ 07102-2992
Telephone 800 286-7754
- -1 Ed. /99 CAT#
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
REPRESENTATION WITH RESPECT TO CHARGES
Pruco Life Insurance Company of New Jersey represents that the fees and charges
deducted under the Variable Universal Life Insurance Contracts registered by
this registration statement, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by Pruco Life Insurance Company of New Jersey.
UNDERTAKING WITH RESPECT TO INDEMNIFICATION
The Registrant, in conjunction with certain affiliates, maintains insurance on
behalf of any person who is or was a trustee, director, officer, employee, or
agent of the Registrant, or who is or was serving at the request of the
Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.
New Jersey, being the state or organization of Pruco Life Insurance Company of
New Jersey ("PLNJ"), permits entities organized under its jurisdiction to
indemnify directors and officers with certain limitations. The relevant
provisions of New Jersey law permitting indemnification can be found in Section
14A:3-5 of the New Jersey Statutes Annotated. The text of PLNJ's By-law, Article
V, which relates to indemnification of officers and directors, is filed as
Exhibit 1.A.(6)(c) to this registration statement.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 48 pages.
The undertaking to file reports.
The representation with respect to charges.
The undertaking with respect to indemnification.
The signatures.
Written consents of the following persons:
None.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-B-2:
A. (1) (a) Resolution of Board of Directors of Pruco Life
Insurance Company of New Jersey establishing the Pruco
Life of New Jersey Variable Appreciable Account. (Note
7)
(b) Amendment of Separate Account Resolution. (Note 1)
(2) Not Applicable.
(3) Distributing Contracts:
(a) Distribution Agreement between Pruco Securities
Corporation and Pruco Life Insurance Company of New
Jersey. (Note 7)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to the
Sale of the Contracts. (Note 1)
(c) Schedules of Sales Commissions. (Note 9)
(d) Participation Agreements and Amendments:
(i)(a) AIM Variable Insurance Funds, Inc., AIM V.I.
Value Fund. (Note 1)
(b) Amendment to the AIM Variable Insurance Funds,
Inc. Participation Agreement. (Note 9)
(ii)(a) American Century Variable Portfolios, Inc., VP
Value Portfolio. (Note 1)
(b) Amendment to the American Century Variable
Insurance Funds, Inc. Participation Agreement.
(Note 9)
(iii)(a) Janus Aspen Series, Growth Portfolio. (Note 1)
(b) Amendment to the Janus Aspen Series
Participation Agreement. (Note 9)
(iv)(a) MFS Variable Insurance Trust, Emerging Growth
Series. (Note 1)
(b) Amendment to the MFS Variable Insurance Trust
Participation Agreement. (Note 9)
(v)(a) T. Rowe Price International Series, Inc.,
International Stock Portfolio. (Note 1)
(b) Amendment to the T. Rowe Price International
Series, Inc. Participation Agreement. (Note 9)
(4) Not Applicable.
(5) Variable Universal Life Insurance Contract. (Note 1)
(6) (a) Articles of Incorporation of Pruco Life Insurance
Company of New Jersey, as amended March 11, 1983.
(Note 7)
(b) Certificate of Amendment of the Articles of
Incorporation of Pruco Life Insurance Company of New
Jersey, February 12, 1998. (Note 8)
II-2
<PAGE>
(c) By-laws of Pruco Life Insurance Company of New Jersey,
as amended August 4, 1999. (Note 1)
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) (a) New Jersey Application Form for Variable Universal Life
Insurance Contract. (Note 1)
(b) Supplement to the Application for Variable Universal
Life Insurance Contract.(Note 1)
(11) Not Applicable.
(12) Memorandum describing Pruco Life Insurance Company of New
Jersey's issuance, transfer, and redemption procedures for the
Contracts pursuant to Rule 6e-3(T)(b)(12)(iii). (Note 1)
(13) Rider for Flexible Term Insurance Benefit. (Note 1)
2. See Exhibit 1.A.(5).
3. Opinion and Consent of Clifford E. Kirsch, Esq., as to the legality of the
securities being registered. (Note 9)
4. None.
5. Not Applicable.
6. Opinion and Consent of Nancy D. Davis, FSA, MAAA, as to actuarial matters
pertaining to the securities being registered. (Note 9)
7. Powers of Attorney.
(a) William M. Bethke, Ira J. Kleinman, Esther H. Milnes, I. Edward
Price (Note 4)
(b) James J. Avery, Jr. (Note 6)
(c) Dennis G. Sullivan (Note 8)
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Post-Effective Amendment No. 24 to Form
S-6, Registration No. 2-81243, filed April 29, 1997 on behalf of the
Pruco Life of New Jersey Variable Insurance Account.
(Note 3) Incorporated by reference to Form 10-Q, Registration No. 333-18053,
filed August 15, 1997 on behalf of the Pruco Life Insurance Company of
New Jersey.
(Note 4) Incorporated by reference to Form N-4, Registration No. 333-18117,
filed December 18, 1996 on behalf of the Pruco Life of New Jersey
Flexible Premium Variable Annuity Account.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 25 to Form
S-6, Registration No. 2-89780, filed April 25, 1996 on behalf of the
Pruco Life of New Jersey Variable Appreciable Account.
(Note 6) Incorporated by reference to Post-Effective Amendment No. 10 to Form
S-1, Registration No. 33-20018, filed April 9, 1998 on behalf of the
Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 7) Incorporated by reference to Post-Effective Amendment No. 26 to Form
S-6, Registration No. 2-89780, filed April 28, 1997 on behalf of the
Pruco Life of New Jersey Variable Appreciable Account.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 12 for Form
S-1, Registration No. 33-20018, filed on April 19, 1999 on behalf of
the Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 9) To be filed by Pre-Effective Amendment.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant, the
Pruco Life of New Jersey Variable Appreciable Account, has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal hereunto affixed and attested, all in the city of
Newark and the State of New Jersey, on this 12th day of August, 1999.
(Seal) PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
(Registrant)
By: PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Depositor)
Attest: /s/ Thomas C. Castano By: /s/ Esther H. Milnes
--------------------------------- -------------------------
Thomas C. Castano Esther H. Milnes
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated on this 12th day of August, 1999.
SIGNATURE AND TITLE
/s/*
- ------------------------------------
Esther H. Milnes
President and Director
/s/*
- ------------------------------------
Dennis G. Sullivan
Vice President and Chief Accounting
Officer
/s/* *By: /s/ Thomas C. Castano
- ------------------------------------ ------------------------------
James J. Avery, Jr. Thomas C. Castano
Director (Attorney-in-Fact)
/s/*
- ------------------------------------
William M. Bethke
Director
/s/*
- ------------------------------------
Ira J. Kleinman
Director
/s/*
- ------------------------------------
I. Edward Price
Director
II-4
<PAGE>
EXHIBIT INDEX
1.A.(1)(b) Amendment of Separate Account Resolution.
1.A.(3)(b) Proposed form of Agreement between Pruco
Securities Corporation and independent brokers
with respect to the Sale of the Contracts.
1.A.(3)(d) Participation Agreements:
(i)(a) AIM Variable Insurance Funds, Inc.
Participation Agreement.
(ii)(a) American Century Variable
Portfolios, Inc.
Participation Agreement.
(iii)(a) Janus Aspen Series Participation
Agreement.
(iv)(a) MFS Variable Insurance Trust
Participation Agreement.
(v)(a) T. Rowe Price International
Series, Inc. Participation Agreement.
1.A.(5) Variable Universal Life Contract.
1.A.(6)(c) By-laws of Pruco Life Insurance Company of
New Jersey, as amended August 4, 1999.
1.A.(10)(a) New Jersey Application Form for Variable
Universal Life Insurance Contract.
(b) Supplement to the Application for Variable
Universal Life Insurance Contract
1.A.(12) Memorandum describing Pruco Life Insurance
Company of New Jersey's issuance, transfer,
and redemption procedures for the Contracts
pursuant to Rule 6e-3(T)(b)(12)(iii).
1.A.(13) Rider for Flexible Term Insurance Benefit.
II-5
Exhibit 1.A.(1)(b)
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Action by the
Executive Committee of the Board of Directors
Pursuant to Article II, Section 9 of the By-Laws of Pruco Life Insurance
Company of New Jersey, a New Jersey corporation (the "Company"), the undersigned
being all the members of the Executive Committee of the Board of Directors of
such Company hereby consent to and adopt the following resolution:
R-418 ESTABLISHMENT OF VARIABLE APPRECIABLE ACCOUNT
RESOLVED, that the Resolution (R-57) establishing the Pruco Life of New
Jersey Variable Appreciable Account (the "Account"), adopted January 13, 1984,
is hereby amended by the addition of the following provision:
RESOLVED, that the proper officers of the Company are hereby authorized to
establish such subaccounts of the Account as they may find necessary or
desirable to allow for purchase payments received in connection with the
Company's Pruselect III contracts, and with such other individual variable life
insurance contracts as they may determine from time to time, and the dividends,
interest and gains produced thereby, to be invested and reinvested in shares of
the various portfolios of The Prudential Series Fund, Inc. and in the following
investment company portfolios at the net asset value of such shares at the time
of acquisition:
FUND/SERIES PORTFOLIO
AIM Variable Insurance Funds, Inc. AIM V.I. Value Fund
American Century VP Value Portfolios, Inc. American Century VP Value Fund
Janus Aspen Series Growth Portfolio
MFS Variable Insurance Trust Emerging Growth Series
T. Rowe Price International Series, Inc. International Stock Portfolio
July 1, 1999
/s/ JAMES J. AVERY, JR.
-----------------------------
James J. Avery, Jr.
/s/ ESTHER H. MILNES
-----------------------------
Esther H. Milnes
/s/ I. EDWARD PRICE
-----------------------------
I. Edward Price
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.,
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
PRUCO SECURITIES CORPORATION
<PAGE>
TABLE OF CONTENTS
Description Page
- ----------- ----
Section 1. Available Funds ................................................ 2
1.1 Availability ....................................................... 2
1.2 Addition, Deletion or Modification of Funds ........................ 2
1.3 No Sales to the General Public ..................................... 2
Section 2. Processing Transactions ....................................... 3
2.1 Timely Pricing and Orders .......................................... 3
2.2 Timely Payments .................................................... 3
2.3 Applicable Price ................................................... 4
2.4 Dividends and Distributions ........................................ 4
2.5 Book Entry ......................................................... 4
Section 3. Costs and Expenses ............................................. 4
3.1 General ............................................................ 4
3.2 Registration ....................................................... 4
3.3 Other (Non-Sales-Related) .......................................... 5
3.4 Other (Sales-Related) .............................................. 5
3.5 Parties To Cooperate ............................................... 5
Section 4. Legal Compliance ............................................... 6
4.1 Tax Laws ........................................................... 6
4.2 Insurance and Certain Other Laws ................................... 8
4.3 Securities Laws .................................................... 8
4.4 Notice of Certain Proceedings and Other Circumstances .............. 9
4.5 Prudential and the Underwriter To Provide Documents; Information
About AVIF..........................................................10
4.6 AVIF or AIM To Provide Documents; Information About Prudential
and the Underwriter.................................................11
4.7 Definition of Sales Literature or Other Promotional Material .......12
Section 5. Mixed and Shared Funding .......................................12
5.1 General ............................................................12
5.2 Disinterested Directors ............................................12
5.3 Monitoring for Material Irreconcilable Conflicts ...................13
5.4 Conflict Remedies ..................................................13
5.5 Notice to Prudential ...............................................l5
5.6 Information Requested by Board of Directors ........................15
5.7 Compliance with SEC Rules ..........................................15
<PAGE>
Description Page
- ----------- ----
5.8 Other Requirements .................................................15
Section 6. Termination ....................................................15
6.1 Events of Termination ..............................................15
6.2 Notice Requirement for Termination .................................17
6.3 Funds To Remain Available ..........................................17
6.4 Survival of Warranties and Indemnifications ........................17
6.5 Continuance of Agreement for Certain Purposes ......................18
Section 7. Parties To Cooperate Respecting Termination ....................18
Section 8. Assignment .....................................................18
Section 9. Notices ........................................................18
Section 10. Voting Procedures .............................................19
Section 11. Foreign Tax Credits ...........................................20
Section 12. Indemnification ...............................................20
12.1 Of AVIF and AIM by Prudential and the Underwriter .................20
12.2 Of Prudential and the Underwriter by AVIF and AIM .................22
12.3 Effect of Notice ..................................................24
12.4 Successors ........................................................25
12.5 Assignments .......................................................25
Section 13. Applicable Law ................................................25
Section 14. Execution in Counterparts .....................................25
Section 15. Severability ..................................................25
Section 16. Rights Cumulative .............................................25
Section 17. Headings ......................................................25
<PAGE>
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 14th day of February, 1997
("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland
corporation ("AVIF"); A I M Distributors, Inc., a Delaware corporation ("AIM");
Pruco Life Insurance Company of New Jersey ("Prudential"), a New Jersey life
insurance company, on behalf of itself and each of its segregated asset accounts
listed in Schedule A hereto, as the parties hereto may amend from time to time
(each, an "Account," and collectively, the "Accounts"); and Pruco Securities
Corporation, a New Jersey corporation and the principal underwriter of the
Contracts and Policies referred to below ("Underwriter") (collectively, the
"Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of nine separate series ("Series"), shares
("Shares") of each of which are registered under the Securities Act of 1933, as
amended (the "1933 Act") and are currently sold to one or more separate accounts
of life insurance companies to fund benefits under variable annuity contracts;
and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto
as the Parties hereto may amend from time to time (each a "Fund"; reference
herein to "AVIF" includes reference to each Fund, to the extent the context
requires) available for purchase by the Accounts; and
WHEREAS, AIM is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 (the "1934 Act") and a member in good standing
of the National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, AIM currently serves as the distributor for the Shares; and
WHEREAS, Prudential will be the issuer of certain variable annuity
contracts ("Contracts") and/or variable life insurance policies ("Policies") as
set forth on Schedule A hereto, as the Parties hereto may amend from time to
time, which Contracts and Policies (hereinafter collectively, the "Policies"),
if required by applicable law, will be registered under the 1933 Act; and
WHEREAS, Prudential will fund the Policies through the Accounts, each of
which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
<PAGE>
WHEREAS, Prudential will serve as the depositor of the Accounts, each of
which is registered as a unit investment trust investment company under the 1940
Act (or exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Policies will be registered as securities under the 1933 Act
(or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Prudential intends to purchase Shares in one or more of the Funds
on behalf of the Accounts to fund the Policies; and
WHEREAS, the Underwriter is a broker-dealer registered with the SEC under
the 1934 Act and a member in good standing of the NASD;
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
AVIF will make Shares of each Fund available to Prudential for purchase and
redemption at net asset value and with no sales charges, subject to the terms
and conditions of this Agreement. The Board of Directors of AVIF may refuse to
sell Shares of any Fund to any person, or suspend or terminate the offering of
Shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Directors
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, such action is deemed in the best interests of the
shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Policies, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
AVIF represents and warrants that Shares of each Fund have been and will be
sold only to those entities listed under Section 817(h)(4) of the Code and the
regulations thereunder, as such Code Section and the regulations may be amended
from time to time.
<PAGE>
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its designated agent will use its best efforts to provide
Prudential with the net asset value per Share for each Fund by 5:30 p.m. Central
Time on each Business Day. As used herein, "Business Day" shall mean any day on
which (i) the New York Stock Exchange is open for regular trading, and (ii) AVIF
calculates the Fund's net asset value.
(b) Prudential will use the data provided by AVIF each Business Day
pursuant to paragraph (a) immediately above to calculate Account unit values and
to process transactions that receive that same Business Day's Account unit
values. Prudential will perform such Account processing the same Business Day,
and will place corresponding orders to purchase or redeem Shares with AVIF by
9:00 a.m. Central Time the following Business Day; provided, however, that AVIF
shall provide additional time to Prudential in the event that AVIF is unable to
meet the 5:30 p.m. time stated in paragraph (a) immediately above. Such
additional time shall be equal to the additional time that AVIF takes to make
the net asset values available to Prudential.
(c) Each order to purchase or redeem Shares will separately describe the
amount of Shares of each Fund to be purchased, redeemed or exchanged and will
not be netted; provided, however, with respect to payment of the purchase price
by Prudential and of redemption proceeds by AVIF, Prudential and AVIF shall net
purchase and redemption orders with respect to each Fund and shall transmit one
(1) net payment per Fund in accordance with Section 2.2, below. Each order to
purchase or redeem Shares shall also specify whether the order results from
purchase payments, surrenders, partial withdrawals, routine withdrawals of
charges, or requests for other transactions under Policies (collectively,
"Policy transactions").
(d) If AVIF provides materially incorrect Share net asset value
information, Prudential shall be entitled to an adjustment to the number of
Shares purchased or redeemed to reflect the correct net asset value per Share.
Any material error in the calculation or reporting of net asset value per Share,
dividend or capital gain information shall be reported promptly upon discovery
to Prudential.
2.2 TIMELY PAYMENTS.
Prudential will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by Prudential by 1:00 p.m. Central Time on
the same day as the Order is placed, to the extent practicable, but in any event
within five (5) calendar days after the date the order is placed in order to
enable Prudential to pay redemption proceeds within the time specified in
Section 22(e) of the 1940 Act or such shorter period of time as may be required
by law.
<PAGE>
2.3 APPLICABLE PRICE.
(a) Share purchase and redemption orders that result from Policy
transactions and that Prudential receives prior to the close of regular trading
on the New York Stock Exchange on a Business Day will be executed at the net
asset values of the appropriate Funds next computed after receipt by AVIF or its
designated agent of the orders. For purposes of this Section 2.3(a), the
Underwriter shall be the designated agent of AVIF for receipt of orders relating
to Policy transactions on each Business Day and receipt by such designated agent
shall constitute receipt by AVIF; PROVIDED, that AVIF receives notice of such
orders by 9:00 a.m. Central Time on the next following Business Day or such
later time as computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by Prudential will be
effected at the net asset values of the appropriate Funds next computed after
receipt by AVIF or its designated agent of the order therefor, and such orders
will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
AVIF will furnish notice promptly to Prudential of any income dividends or
capital gain distributions payable on the Shares of any Fund. Prudential hereby
elects to reinvest all dividends and capital gains distributions in additional
Shares of the corresponding Fund at the exdividend date net asset values until
Prudential otherwise notifies AVIF in writing, it being agreed by the Parties
that the ex-dividend date and the payment date with respect to any dividend or
distribution will be the same Business Day. Prudential reserves the right to
revoke this election and to receive all such income dividends and capital gain
distributions in cash.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to Prudential. Shares ordered from AVIF will be
recorded in an appropriate title for Prudential, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided herein, each Party will bear all
expenses incident to its performance under this Agreement.
3.2 REGISTRATION.
(a) AVIF will bear the cost of its registering as a management investment
company under the 1940 Act and registering its Shares under the 1933 Act, and
keeping such registrations
<PAGE>
current and effective; including, without limitation, the preparation of and
filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with respect to AVIF
and its Shares and payment of all applicable registration or filing fees with
respect to any of the foregoing.
(b) Prudential will bear the cost of registering, to the extent required,
each Account as a unit investment trust under the 1940 Act and registering units
of interest under the Policies under the 1933 Act and keeping such registrations
current and effective; including, without limitation, the preparation and filing
with the SEC of Forms N-SAR and Rule 24f-2 Notices with respect to each Account
and its units of interest and payment of all applicable registration or filing
fees with respect to any of the foregoing.
3.3 OTHER (NON-SALES-RELATED).
(a) AVIF will bear, or arrange for others to bear, the costs of preparing,
filing with the SEC and setting for printing AVIF's prospectus, statement of
additional information and any amendments or supplements thereto (collectively,
the "AVIF Prospectus"), periodic reports to shareholders, AVIF proxy material
and other shareholder communications.
(b) Prudential will bear the costs of preparing, filing with the SEC and
setting for printing each Account's prospectus, statement of additional
information and any amendments or supplements thereto (collectively, the
"Account Prospectus"), any periodic reports to Policy owners, annuitants or
participants under the Policies (collectively, "Participants"), voting
instruction solicitation material, and other Participant communications.
(c) Prudential or the Underwriter will print in quantity and deliver to
existing Participants the documents described in Section 3.3(b) above and the
documents provided by AVIF in camera ready or computer diskette form pursuant to
Section 4.6(b) hereof. The costs of printing in quantity and delivering to
existing Participants such documents will be borne by Prudential.
3.4 OTHER (SALES-RELATED).
The Underwriter will bear the expenses of distributing Fund Shares and the
Policies. These expenses would include by way of illustration, but are not
limited to, the costs of printing and distributing to offerees the AVIF
Prospectus and periodic reports of AVIF. These costs would also include the
costs of preparing, printing, and distributing sales literature and advertising
relating to the Funds, as well as filing such materials with, and obtaining
approval from, the SEC, the NASD, any state insurance regulatory authority, and
any other appropriate regulatory authority, to the extent required.
3.5 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable, in arranging
to print, mail and/or deliver, in a timely manner, combined or coordinated
prospectuses or other materials of AVIF and the Accounts.
<PAGE>
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF represents and warrants that each Fund is currently qualified as a
regulated investment company ("RIC") under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and represents that it will qualify and
maintain qualification of each Fund as a RIC. AVIF will notify Prudential
immediately upon having a reasonable basis for believing that a Fund has ceased
to so qualify or that it might not so qualify in the future.
(b) AVIF represents that it will comply and maintain each Fund's compliance
with the diversification requirements set forth in Section 817(h) of the Code
and Section 1.817-5(b) of the regulations under the Code. AVIF will notify
Prudential immediately upon having a reasonable basis for believing that a Fund
has ceased to so comply or that a Fund might not so comply in the future.
(c) Prudential agrees that if the Internal Revenue Service ("IRS") asserts
in writing in connection with any governmental audit or review of Prudential or,
to Prudential's knowledge, of any Participant, that any Fund has failed to
comply with the diversification requirements of Section 817(h) of the Code or
Prudential otherwise becomes aware of any facts that could give rise to any
claim against AVIF or its affiliates as a result of such a failure or alleged
failure:
(i) Prudential shall promptly notify AVIF of such assertion or
potential claim;
(ii) Prudential shall consult with AVIF as to how to minimize any
liability that may arise as a result of such failure or alleged failure;
(iii)Prudential shall use its best efforts to minimize any liability
of AVIF or its affiliates resulting from such failure, including, without
limitation, demonstrating, pursuant to Treasury Regulations Section 1.8
17-5(a)(2), to the Commissioner of the IRS that such failure was
inadvertent;
(iv) Prudential shall permit AVIF, its affiliates and their legal and
accounting advisors to participate in any conferences, settlement
discussions or other administrative or judicial proceeding or contests
(including judicial appeals thereof) with the IRS, any Participant or any
other claimant regarding any claims that could give rise to liability to
AVIF or its affiliates as a result of such a failure or alleged failure;
(v) any written materials to be submitted by Prudential to the IRS,
any Participant or any other claimant in connection with any of the
foregoing proceedings or contests (including, without limitation, any such
materials to be submitted to the
<PAGE>
IRS pursuant to Treasury Regulations Section 1.8 17-5(a)(2)), (a) shall be
provided by Prudential to AVIF (together with any supporting information or
analysis) at least ten (10) business days' prior to the day on which such
proposed materials are to be submitted, and (b) shall not be submitted by
Prudential to any such person without the express written consent of AVIF
which shall not be unreasonably withheld;
(vi) Prudential shall provide AVIF or its affiliates and their
accounting and legal advisors with such cooperation as AVIF shall
reasonably request (including, without limitation, by permitting AVIF and
its accounting and legal advisors to review the relevant books and records
of Prudential) in order to facilitate review by AVIF or its advisors of any
written submissions provided to it pursuant to the preceding clause or its
assessment of the validity or amount of any claim against its arising from
such a failure or alleged failure;
(vii) Prudential shall not with respect to any claim of the IRS or any
Participant that would give rise to a claim against AVIF or its affiliates
(a) compromise or settle any claim, (b) accept any adjustment on audit, or
(c) forego any allowable administrative or judicial appeals, without the
express written consent of AVIF or its affiliates, which shall not be
unreasonably withheld, provided that Prudential shall not be required,
after exhausting all administrative penalties, to appeal any adverse
judicial decision unless AVIF or its affiliates shall have provided an
opinion of independent counsel to the effect that a reasonable basis exists
for taking such appeal; and PROVIDED FURTHER that the costs of any such
appeal shall be borne equally by the Parties hereto; and
(viii) AVIF and its affiliates shall have no liability as a result of
such failure or alleged failure if Prudential fails to comply with any of
the foregoing clauses (i) through (vii), and such failure could be shown to
have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to
any compromise or settlement of any claim or liability hereunder, Prudential
may, in its discretion, authorize AVIF or its affiliates to act in the name of
Prudential in, and to control the conduct of, such conferences, discussions,
proceedings, contests or appeals and all administrative or judicial appeals
thereof, and in that event AVIF or its affiliates shall bear the fees and
expenses associated with the conduct of the proceedings that it is so authorized
to control; PROVIDED that in no event shall Prudential have any liability
resulting from AVIF's refusal to accept the proposed settlement or compromise
with respect to any failure caused by AVIF. As used in this Agreement, the term
"affiliates" shall have the same meaning as "affiliated person" as defined in
Section 2(a)(3) of the 1940 Act.
(d) Prudential represents and warrants that the Policies currently are and
will be treated as annuity, endowment, or life insurance contracts under
applicable provisions of the Code and that it will maintain such treatment;
Prudential will notify AVIF immediately upon having a
<PAGE>
reasonable basis for believing that any of the Policies have ceased to be so
treated or that they might not be so treated in the future.
(e) Prudential represents and warrants that each Account is a "segregated
asset account" and that interests in each Account are offered exclusively
through the purchase of or transfer into a "variable contract," within the
meaning of such terms under Section 817 of the Code and the regulations
thereunder. Prudential will continue to meet such definitional requirements, and
it will notify AVIF immediately upon having a reasonable basis for believing
that such requirements have ceased to be met or that they might not be met in
the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) AVIF and AIM will use their best efforts to comply with any applicable
state insurance laws or regulations, to the extent specifically requested in
writing by Prudential.
(b) Prudential represents and warrants that (i) it is an insurance company
duly organized, validly existing and in good standing under the laws of the
State of New Jersey and has full corporate power, authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains each
Account as a segregated asset account under the New Jersey Insurance Code and
the regulations thereunder, and (iii) the Policies comply in all material
respects with all other applicable federal and state laws and regulations.
(c) AVIF represents and warrants that it is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Maryland
and has full power, authority, and legal right to execute, deliver, and perform
its duties and comply with its obligations under this Agreement.
(d) AIM represents and warrants that it is a Delaware corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has full power, authority and right to execute, deliver and perform
its duties and comply with the its obligations under this Agreement.
(e) The Underwriter represents and warrants that it is a New Jersey
corporation duly organized, validly existing, and in good standing under the
laws of the State of New Jersey and has full power, authority, and legal right
to execute, deliver, and perform its duties and comply with its obligations
under this Agreement.
4.3 SECURITIES LAWS.
(a) Prudential and the Underwriter represent and warrant that (i) interests
in each Account pursuant to the Policies will be registered under the 1933 Act
to the extent required by the 1933 Act, (ii) the Policies will be duly
authorized for issuance and sold in compliance with all applicable federal and
state laws, including, without limitation, the 1933 Act, the 1934 Act, the 1940
<PAGE>
Act and New Jersey law, (iii) each Account is and will remain registered under
the 1940 Act, to the extent required by the 1940 Act, (iv) each Account does and
will comply in all material respects with the requirements of the 1940 Act and
the rules thereunder, to the extent required, (v) each Account's 1933 Act
registration statement relating to the Policies, together with any amendments
thereto, will at all times comply in all material respects with the requirements
of the 1933 Act and the rules thereunder, (vi) Prudential will amend the
registration statement for its Policies under the 1933 Act and for its Accounts
under the 1940 Act from time to time as required in order to effect the
continuous offering of its Policies or as may otherwise be required by
applicable law, and (vii) each Account Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act and the rules
thereunder.
(b) AVIF and AIM represent and warrant that (i) Shares sold pursuant to
this Agreement will be registered under the 1933 Act to the extent required by
the 1933 Act and duly authorized for issuance and sold in compliance with
Maryland law, (ii) AVIF is and will remain registered under the 1940 Act to the
extent required by the 1940 Act, (iii) AVIF will amend the registration
statement for its Shares under the 1933 Act and itself under the 1940 Act from
time to time as required in order to effect the continuous offering of its
Shares, (iv) AVIF does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, (v) AVIF's 1933 Act
registration statement, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933 Act and rules
thereunder, and (vi) AVIF Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder.
(c) AVIF will register and qualify its Shares for sale in accordance with
the laws of any state or other jurisdiction if and to the extent reasonably
deemed advisable by AVIF.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF and/or AIM will immediately notify Prudential of (i) the issuance
by any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to AVIFs registration statement under the 1933
Act or AVIF Prospectus, (ii) any request by the SEC for any amendment to such
registration statement or AVIF Prospectus, (iii) the initiation of any
proceedings for that purpose or for any other purpose relating to the
registration or offering of AVIFs Shares, or (iv) any other action or
circumstances that may prevent the lawful offer or sale of Shares of any Fund in
any state or jurisdiction, including, without limitation, any circumstances in
which (a) such Shares are not registered and, in all material respects, issued
and sold in accordance with applicable state and federal law, or (b) such law
precludes the use of such Shares as an underlying investment medium of the
Policies issued or to be issued by Prudential. AVIF will make every reasonable
effort to prevent the issuance, with respect to any Fund, of any such stop
order, cease and desist order or similar order and, if any such order is issued,
to obtain the lifting thereof at the earliest possible time.
(b) Prudential and the Underwriter will immediately notify AVIF of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar
<PAGE>
order with respect to each Account's registration statement under the 1933 Act
relating to the Policies or each Account Prospectus, (ii) any request by the SEC
for any amendment to such registration statement or Account Prospectus, (iii)
the initiation of any proceedings for that purpose or for any other purpose
relating to the registration or offering of each Account's interests pursuant to
the Policies, or (iv) any other action or circumstances that may prevent the
lawful offer or sale of said interests in any state or jurisdiction, including,
without limitation, any circumstances in which said interests are not registered
and, in all material respects, issued and sold in accordance with applicable
state and federal law. Prudential will make every reasonable effort to prevent
the issuance of any such stop order, cease and desist order or similar order
and, if any such order is issued, to obtain the lifting thereof at the earliest
possible time.
4.5 PRUDENTIAL AND THE UNDERWRITER TO PROVIDE DOCUMENTS; INFORMATION ABOUT
AVIF.
(a) Prudential or the Underwriter will provide to AVIF or its designated
agent at least one (1) complete copy of all SEC registration statements, Account
Prospectuses, reports, any preliminary and final voting instruction solicitation
material, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to each Account or the Policies,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) The Underwriter will provide to AVIF or its designated agent at least
one (1) complete copy of each piece of sales literature or other promotional
material in which AVIF or any of its affiliates is named, at least five (5)
business days' prior to its use or such shorter period as the Parties hereto
may, from time to time, agree upon. No such material shall be used if AVIF or
its designated agent objects to such use within five (5) business days after
receipt of such material or such shorter period as the Parties hereto may, from
time to time, agree upon. AVIF hereby designates its investment adviser as the
entity to receive such sales literature or other promotional material, until
such time as AVIF appoints another designated agent by giving notice to
Prudential in the manner required by Section 9 hereof.
(c) Neither Prudential, the Underwriter, nor any of their respective
affiliates will give any information or make any representations or statements
on behalf of or concerning AVIF or its affiliates in connection with the sale of
the Policies other than (i) the information or representations contained in the
registration statement, including the AVIF Prospectus contained therein,
relating to Shares, as such registration statement and AVIF Prospectus may be
amended from time to time; or (ii) in reports or proxy materials for AVIF; or
(iii) in sales literature or other promotional material approved by AVIF, except
with the express written permission of AVIF.
(d) Prudential and the Underwriter shall adopt and implement procedures
reasonably designed to ensure that information concerning AVIF and its
affiliates that is intended for use only by brokers or agents selling the
Policies (i.e., information that is not intended for distribution to
Participants or offerees) ("broker only materials") is so used, and neither AVIF
nor any of its affiliates shall be liable for any losses, damages or expense
relating to the improper use of such broker only materials.
<PAGE>
4.6 AVIF OR AIM TO PROVIDE DOCUMENTS; INFORMATION ABOUT PRUDENTIAL AND THE
UNDERWRITER.
(a) AVIF will provide to Prudential at least one (1) complete copy of all
SEC registration statements, AVIF Prospectuses, reports, any preliminary and
final proxy material, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to AVIF or the
Shares of a Fund, contemporaneously with the filing of such document with the
SEC or other regulatory authorities.
(b) AVIF will provide to Prudential or the Underwriter camera ready or
computer diskette copies of all AVIF Prospectuses, proxy materials, periodic
reports to shareholders and other materials required by law to be sent to
Participants who have allocated any Policy value to a Fund. AVIF will provide
such copies to Prudential or the Underwriter in a timely manner so as to enable
Prudential or the Underwriter, as the case may be, to print and distribute such
materials within the time required by law to be furnished to Participants.
(c) AIM will provide to Prudential or its designated agent at least one (1)
complete copy of each piece of sales literature or other promotional material in
which Prudential, the Underwriter or any of their respective affiliates is
named, or that refers to the Policies, at least five (5) business days' prior to
its use or such shorter period as the Parties hereto may, from time to time,
agree upon. No such material shall be used if Prudential or its designated agent
objects to such use within five (5) business days after receipt of such material
or such shorter period as the Parties hereto may, from time to time, agree upon.
Prudential shall receive all such sales literature or other promotional
material, until such time as it appoints a designated agent by giving notice to
AVIF in the manner required by Section 9 hereof.
(d) Neither AVIF nor any of its affiliates will give any information or
make any representations or statements on behalf of or concerning Prudential,
the Underwriter, each Account, or the Policies other than (i) the information or
representations contained in the registration statement, including each Account
Prospectus contained therein, relating to the Policies, as such registration
statement and Account Prospectus may be amended from time to time; or (ii) in
reports or voting instruction materials for each Account; or (iii) in sales
literature or other promotional material approved by Prudential or its
affiliates, except with the express written permission of Prudential.
(e) AIM shall adopt and implement procedures reasonably designed to ensure
that information concerning Prudential, the Underwriter, and their respective
affiliates that is intended for use only by brokers or agents selling the
Policies (i.e., information that is not intended for distribution to
Participants or offerees) ("broker only materials") is so used, and neither
Prudential, the Underwriter, nor any of their respective affiliates shall be
liable for any losses, damages or expense relating to the improper use of such
broker only materials.
<PAGE>
4.7 DEFINITION OF SALES LITERATURE OR OTHER PROMOTIONAL MATERIAL.
For purposes of this Section 4.7, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, video tape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circular, research reports, market
letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published articles), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, prospectuses, statements of additional
information, shareholder reports, and proxy materials and any other material
constituting sales literature of advertising under NASD rules, the 1940 Act or
the 1933 Act.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
AVIF has received an order from the SEC exempting it from certain
provisions of the 1940 Act and rules thereunder so that AVIF may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable life insurance contracts, separate accounts
of insurance companies unaffiliated with Prudential, and trustees of qualified
pension and retirement plans (collectively, "Mixed and Shared Funding"). The
Parties recognize that the SEC has imposed terms and conditions for such orders
that are substantially identical to many of the provisions of this Section 5.
Sections 5.2 through 5.8 below shall apply, if and only if AVIF continues to
implement Mixed and Shared Funding, pursuant to such an exemptive order or
otherwise. AVIF hereby notifies Prudential that it may be appropriate to include
in the prospectus pursuant to which a Policy is offered disclosure regarding the
potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED DIRECTORS.
AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the
Rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies may be filled by the Board, (b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies, or (c) for
such longer period as the SEC may prescribe by order upon application.
<PAGE>
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Directors will monitor for the existence of
any material irreconcilable conflict between the interests of the Participants
in all separate accounts of life insurance companies utilizing AVIF
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). Prudential agrees to inform the Board of Directors of AVIF of the
existence of or any potential for any such material irreconcilable conflict of
which it is aware. The concept of a "material irreconcilable conflict" is not
defined by the 1940 Act or the rules thereunder, but the Parties recognize that
such a conflict may arise for a variety of reasons, including, without
limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities
laws or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax or securities
regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Fund are being managed;
(e) a difference in voting instructions given by variable annuity contract
and variable life insurance contract Participants or by Participants of
different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the voting
instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting instructions
of Plan participants.
Consistent with the SEC's requirements in connection with exemptive orders
of the type referred to in Section 5.1 hereof, Prudential will assist the Board
of Directors in carrying out its responsibilities by providing the Board of
Directors with all information reasonably necessary for the Board of Directors
to consider any issue raised, including information as to a decision by
Prudential to disregard voting instructions of Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the members of
the Board of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, Prudential will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, at its own expense and to the extent reasonably practicable (as
determined by a majority
<PAGE>
of the Disinterested Directors), take whatever steps are necessary to remedy or
eliminate the material irreconcilable conflict, which steps may include, but are
not limited to:
(i) withdrawing the assets allocable to some or all of the
Accounts from AVIF or any Fund and reinvesting such assets in a
different investment medium, including another Fund of AVIF, or
submitting the question whether such segregation should be implemented
to a vote of all affected Participants and, as appropriate,
segregating the assets of any particular group (e.g., annuity
Participants, life insurance Participants or all Participants) that
votes in favor of such segregation, or offering to the affected
Participants the option of making such a change; and
(ii) establishing a new registered investment company of the type
defined as a "management company" in Section 4(3) of the 1940 Act or a
new separate account that is operated as a management company.
(b) If the material irreconcilable conflict arises because of Prudential's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, Prudential may
be required, at AVIF's election, to withdraw each Account's investment in AVIF
or any Fund. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal must take place within six (6) months after AVIF
gives notice to Prudential that this provision is being implemented, and until
such withdrawal AVIF shall continue to accept and implement orders by Prudential
for the purchase and redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to Prudential conflicts with the
majority of other state regulators, then Prudential will withdraw each Account's
investment in AVIF within six (6) months after AVIF's Board of Directors informs
Prudential that it has determined that such decision has created a material
irreconcilable conflict, and until such withdrawal AVIF shall continue to accept
and implement orders by Prudential for the purchase and redemption of Shares of
AVIF.
(d) Prudential agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Policies.
Prudential will not be required by the terms hereof to establish a new funding
medium for any Policies if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
<PAGE>
5.5 NOTICE TO PRUDENTIAL.
AVIF will promptly make known in writing to Prudential the Board of
Directors determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
Prudential and AVIF (or its investment adviser) will at least annually
submit to the Board of Directors of AVIF such reports, materials or data as the
Board of Directors may reasonably request so that the Board of Directors may
fully carry out the obligations imposed upon it by the provisions hereof or any
exemptive application filed with the SEC to permit Mixed and Shared Funding, and
said reports, materials and data will be submitted at any reasonable time deemed
appropriate by the Board of Directors. All reports received by the Board of
Directors of potential or existing conflicts, and all Board of Directors actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies and Participating Plans of a conflict, and determining
whether any proposed action adequately remedies a conflict, will be properly
recorded in the minutes of the Board of Directors or other appropriate records,
and such minutes or other records will be made available to the SEC upon
request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Policies, 1940 Act Rules 6e-3(T) or, if applicable, 6e-2
are amended or Rule 6e-3 is adopted to provide exemptive relief with respect to
Mixed and Shared Funding, AVIF agrees that it will comply with the terms and
conditions thereof and that the terms of this Section 5 shall be deemed modified
if and only to the extent required in order also to comply with the terms and
conditions of such exemptive relief that is afforded by any of said rules that
are applicable.
5.8 OTHER REQUIREMENTS.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b),
4.5(a), 5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of AVIF or Prudential upon the approval by (i) a majority
of the Disinterested Directors, or (ii) a majority vote of the Shares of the
affected Fund that are held in the
<PAGE>
corresponding Subaccount of an Account (pursuant to the procedures set forth in
Section 10 of this Agreement for voting Shares in accordance with Participant
instructions); PROVIDED, HOWEVER, that the approvals described in clauses (i)
and (ii) above shall not be required if (1) the aggregate account value under
the Policies is less than one million dollars ($1,000,000,000) at the date the
notice of termination is delivered, and (2) thirty-six (36) full calendar months
have expired following the date the first Policy invested in any Fund; or
(b) at the option of AVIF or AIM upon institution of formal proceedings
against Prudential or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding Prudential's obligations under
this Agreement or related to the sale of the Policies, the operation of each
Account, or the purchase of Shares, if, in each case, AVIF or AIM reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on the Fund with respect to which the Agreement is to be terminated; or
(c) at the option of Prudential upon institution of formal proceedings
against AVIF, its principal underwriter, or its investment adviser by the NASD,
the SEC, or any state insurance regulator or any other regulatory body regarding
AVIF's obligations under this Agreement or related to the operation or
management of AVIF or the purchase of AVIF Shares, if, in each case, Prudential
reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on Prudential, or the Subaccount corresponding to the Fund
with respect to which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares are
not registered and, in all material respects, issued and sold in accordance with
any applicable federal or state law, or (ii) such law precludes the use of such
Shares as an underlying investment medium of the Policies issued or to be issued
by Prudential; or
(e) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or
(f) at the option of Prudential if the Fund ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions, or if
Prudential reasonably believes that the Fund may fail to so qualify; or
(g) at the option of Prudential if the Fund fails to comply with Section
817(h) of the Code or with successor or similar provisions, or if Prudential
reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF or AIM if the Policies issued by Prudential cease
to qualify as annuity contracts or life insurance contracts under the Code
(other than by reason of the Fund's noncompliance with Section 817(h) or
Subchapter M of the Code) or if interests in an Account
<PAGE>
under the Policies are not registered, where required, and, in all material
respects, are not issued or sold in accordance with any applicable federal or
state law; or
(i) upon another Party's material breach of any provision of this
Agreement; or
(j) at the option of either party upon six (6) months' advance
written notice.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at
least six (6) months in advance of the effective date of termination unless a
shorter time is required by law or is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of
Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given at
least ninety (90) days in advance of the effective date of termination unless a
shorter time is required by law or is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions of
Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written
notice shall be given as soon as possible after the terminating Party learns of
the event causing termination to be required.
6.3 FUNDS TO REMAIN AVAILABLE.
Except (a) as necessary to implement Participant-initiated transactions,
(b) as required by state insurance laws or regulations, (c) as required pursuant
to Section 5 of this Agreement, or (d) with respect to any Fund as to which this
Agreement has terminated pursuant to Section 6.1 hereof, Prudential shall not
(i) redeem AVIF Shares attributable to the Policies (as opposed to AVIF Shares
attributable to Prudential's assets held in each Account), or (ii) prevent
Participants from allocating payments to or transferring amounts from a Fund
that was otherwise available under the Policies, until six (6) months after
Prudential shall have notified AVIF of its intention to do so.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of this
Agreement.
<PAGE>
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund pursuant to
Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, this
Agreement shall nevertheless continue in effect as to any Shares of that Fund
that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the date as of which an
Account owns no Shares of the affected Fund.
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance to one
another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Policies in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written
consent of each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted by Section 2 hereof will
be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
751 Broad Street - 21 Plaza
Newark, New Jersey 07102
Facsimile: (201) 643-5520
Attn: Mary Cavanaugh, Esq.
<PAGE>
PRUCO SECURITIES CORPORATION
751 Broad Street - 21 Plaza
Newark, New Jersey 07102
Facsimile: (201) 643-5520
Attn: Mary Cavanaugh, Esq.
AIM VARIABLE INSURANCE FUNDS, INC.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
A I M DISTRIBUTORS, INC.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Mr. W. Gary Littlepage
cc: Nancy L. Martin, Esq.
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof,
Prudential will distribute all proxy material furnished by AVIF to Participants
to whom pass-through voting privileges are required to be extended and will
solicit voting instructions from Participants. Prudential will vote Shares in
accordance with timely instructions received from Participants. Prudential will
vote Shares that are (a) not attributable to Participants to whom pass-through
voting privileges are extended, or (b) attributable to Participants, but for
which no timely instructions have been received, in the same proportion as
Shares for which said instructions have been received from Participants, so long
as and to the extent that the SEC continues to interpret the 1940 Act to require
pass through voting privileges for Participants. Neither Prudential nor any of
its affiliates will in any way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Participants. Prudential reserves the right to vote shares held in any Account
in its own right, to the extent permitted by law. Prudential shall be
responsible for assuring that each of its Accounts holding Shares calculates
voting privileges in a manner consistent with that of other Participating
Insurance Companies or in the manner required by any Mixed and Shared Funding
exemptive order that AVIF may obtain in the future. AVIF will notify Prudential
of any changes of
<PAGE>
interpretations or amendments to any Mixed and Shared Funding exemptive order it
obtains in the future.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with Prudential concerning any decision
to elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY PRUDENTIAL AND THE UNDERWRITER.
(a) Except to the extent provided in Sections 12. 1(b) and 12.1(c), below,
Prudential and the Underwriter each agree to indemnify and hold harmless AVIF,
its affiliates (including AIM), and each of their respective directors and
officers, and each person, if any, who controls AVIF or its affiliates
(including AIM) within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 12.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of Prudential) or actions in respect thereof (including, to
the extent reasonable, legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions are
related to the sale or acquisition of AVIF's Shares and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's 1933 Act
registration statement, any Account Prospectus, the Policies, or sales
literature or advertising for the Policies (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
PROVIDED, that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with information
furnished to Prudential or the Underwriter by or on behalf of AVIF for use
in any Account's 1933 Act registration statement, any Account Prospectus,
the Policies, or sales literature or advertising or otherwise for use in
connection with the sale of Policies or Shares (or any amendment or
supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations contained in
AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature
or advertising of AVIF, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or
<PAGE>
on behalf of Prudential or the Underwriter and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent conduct of
Prudential, the Underwriter or their respective affiliates or persons under
their control (including, without limitation, their employees and
"Associated Persons," as that term is defined in paragraph (m) of Article I
of the NASD's By-Laws), in connection with the sale or distribution of the
Policies or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933 Act
registration statement, AVIF Prospectus, sales literature or advertising of
AVIF, or any amendment or supplement to any of the foregoing, or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance upon and in
conformity with information furnished to AVIF or AIM by or on behalf of
Prudential, the Underwriter or their respective affiliates for use in
AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature
or advertising of AVIF, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by Prudential or the Underwriter
to perform the obligations, provide the services and furnish the materials
required of them under the terms of this Agreement, or any material breach
of any representation and/or warranty made by Prudential or the Underwriter
in this Agreement or arise out of or result from any other material breach
of this Agreement by Prudential or the Underwriter; or
(v) arise as a result of failure by the Policies issued by Prudential
to qualify as life insurance, endowment, or annuity contracts under the
Code, otherwise than by reason of any Fund's failure to comply with
Subchapter M or Section 817(h) of the Code.
(b) Neither Prudential nor the Underwriter shall be liable under this
Section 12.1 with respect to any losses, claims, damages, liabilities or actions
to which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement, or (ii) to
AVIF or AIM.
(c) Neither Prudential nor the Underwriter shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless AVIF
or AIM shall have notified Prudential or the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the action shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify Prudential or the
Underwriter of any such action shall not relieve Prudential or the Underwriter
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this Section 12.1. Except as
<PAGE>
otherwise provided herein, in case any such action is brought against an
Indemnified Party, Prudential or the Underwriter shall be entitled to
participate, at its own expense, in the defense of such action and also shall be
entitled to assume the defense thereof, with counsel approved by the Indemnified
Party named in the action, which approval shall not be unreasonably withheld.
After notice from Prudential or the Underwriter to such Indemnified Party of its
election to assume the defense thereof, the Indemnified Party will cooperate
fully with Prudential and shall bear the fees and expenses of any additional
counsel retained by it, and Prudential will not be liable to such Indemnified
Party under this Agreement for any legal or other expenses subsequently incurred
by such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.
12.2 OF PRUDENTIAL AND THE UNDERWRITER BY AVIF AND AIM.
(a) Except to the extent provided in Sections 4.l(c)(vii), 12.2(d), 12.2(e)
and 12.2(f), below, AVIF and AIM each agree to indemnify and hold harmless
Prudential, the Underwriter, their respective affiliates, and each of their
respective directors and officers, and each person, if any, who controls
Prudential, the Underwriter, or their respective affiliates within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section 12.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
AVIF and AIM) or actions in respect thereof (including, to the extent
reasonable, legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law, or otherwise,
insofar as such losses, claims, damages, liabilities or actions are related to
the sale or acquisition of AVIF's Shares and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933 Act
registration statement, AVIF Prospectus or sales literature or advertising
of AVIF (or any amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; PROVIDED, that this agreement to
indemnify shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to AVIF or its affiliates by
or on behalf of Prudential or its affiliates for use in AVIF's 1933 Act
registration statement, AVIF Prospectus, or in sales literature or
advertising (or any amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations contained in any
Account's 1933 Act registration statement, any Account Prospectus, sales
literature or advertising for the Policies, or any amendment or supplement
to any of the foregoing, not supplied for use therein by or on behalf of
AVIF or its affiliates and on which such persons have reasonably relied) or
the negligent, illegal or fraudulent conduct of AVIF, its affiliates or
persons under their control (including, without limitation, their employees
and "Associated Persons"), in connection with the sale or distribution of
AVIF Shares; or
<PAGE>
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's 1933 Act
registration statement, any Account Prospectus, sales literature or
advertising covering the Policies, or any amendment or supplement to any of
the foregoing, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission was made
in reliance upon and in conformity with information furnished to
Prudential, the Underwriter, or their respective affiliates by or on behalf
of AVIF or AIM for use in any Account's 1933 Act registration statement,
any Account Prospectus, sales literature or advertising covering the
Policies, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF or AIM to perform the
obligations, provide the services and furnish the materials required of it
under the terms of this Agreement, or any material breach of any
representation and/or warranty made by AVIF or AIM in this Agreement or
arise out of or result from any other material breach of this Agreement by
AVIF or AIM.
(b) Except to the extent provided in Sections 4.l(c)(vii), 12.2(d), 12.2(e)
and 12.2(f) hereof, AVIF and AIM each agree to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof with, except as set
forth in Section 12.2(c) below, the written consent of AVIF and AIM) or actions
in respect thereof (including, to the extent reasonable, legal and other
expenses) to which the Indemnified Parties may become subject directly or
indirectly under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or actions directly or indirectly result
from or arise out of the failure of any Fund to operate as a regulated
investment company in compliance with (i) Subchapter M of the Code and
regulations thereunder, or (ii) Section 817(h) of the Code and regulations
thereunder, including, without limitation, any income taxes and related
penalties, rescission charges, liability under state law to Participants
asserting liability against Prudential or the Underwriter pursuant to the
Policies, the costs of any ruling and closing agreement or other settlement with
the IRS, and the cost of any substitution by Prudential of Shares of another
investment company or portfolio for those of any adversely affected Fund as a
funding medium for each Account that Prudential reasonably deems necessary or
appropriate as a result of the noncompliance.
(c) The written consent of AVIF and AIM referred to in Section 12.2(b)
above shall not be required with respect to amounts paid in connection with any
ruling and closing agreement or other settlement with the IRS.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of such Indemnified Party's reckless disregard of its
<PAGE>
obligations and duties (i) under this Agreement, or (ii) to Prudential, each
Account, the Underwriter or Participants.
(e) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified AVIF or AIM in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify AVIF or AIM of any such action shall not relieve
AVIF or AIM from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
12.2. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, AVIF or AIM will be entitled to participate, at
its own expense, in the defense of such action and also shall be entitled to
assume the defense thereof (which shall include, without limitation, the conduct
of any ruling request and closing agreement or other settlement proceeding with
the IRS), with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from AVIF or AIM
to such Indemnified Party of its election to assume the defense thereof, the
Indemnified Party will cooperate fully with AVIF and shall bear the fees and
expenses of any additional counsel retained by it, and AVIF will not be liable
to such Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in connection with
the defense thereof, other than reasonable costs of investigation.
(f) In no event shall either AVIF or AIM be liable under the
indemnification provisions contained in this Agreement to any individual or
entity, including, without limitation, Prudential, the Underwriter, or any other
Participating Insurance Company or any Participant, with respect to any losses,
claims, damages, liabilities or expenses that arise out of or result from (i) a
breach of any representation, warranty, and/or covenant made by Prudential or
the Underwriter hereunder or by any Participating Insurance Company under an
agreement containing substantially similar representations, warranties and
covenants, (ii) the failure by Prudential or any Participating Insurance Company
to maintain its segregated asset account (which invests in any Fund) as a
legally and validly established segregated asset account under applicable state
law and as a duly registered unit investment trust under the provisions of the
1940 Act (unless exempt therefrom), or (iii) the failure by Prudential or any
Participating Insurance Company to maintain its variable annuity and/or variable
life insurance contracts (with respect to which any Fund serves as an underlying
funding vehicle) as life insurance, endowment or annuity contracts under
applicable provisions of the Code.
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party referred
to in Sections 12.1(c) or 12.2(e) above of participation in or control of any
action by the indemnifying Party will in no event be deemed to be an admission
by the indemnifying Party of liability, culpability or responsibility, and the
indemnifying Party will remain free to contest liability with respect to the
claim among the Parties or otherwise.
<PAGE>
12.4 SUCCESSORS.
This Agreement shall be binding on successors of any Party who shall be
entitled, among other things, to the benefits of the indemnification contained
in this Section 12.
12.5 ASSIGNMENTS.
This Agreement shall not be assigned by any party hereto without the prior
written consent of all the parties, which consent shall not be unreasonably
withheld.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland law, without regard for that state's
principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for purposes
of reference only and shall not limit or define the meaning of the provisions of
this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
AIM VARIABLE INSURANCE FUNDS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
-------------------------- -------------------------------
Nancy L. Martin Robert H. Graham
Assistant Secretary President
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ W.G. Littlepage
-------------------------- -------------------------------
Nancy L. Martin Name: W.G. Littlepage
Assistant Secretary Title: Sr. V.P.
PRUCO LIFE INSURANCE COMPANY OF
NEW JERSEY, on behalf of itself and
its separate
Attest: /s/ Thomas C. Castano By: /s/ Paul Haley
-------------------------- -------------------------------
Name: Thomas C. Castano Name: Paul Haley
Title: Assistant Secretary Title: Vice President & Actuary
PRUCO SECURITIES CORPORATION
Attest: /s/ Thomas C. Castano By: /s/ Richard A. Topp
-------------------------- -------------------------------
Name: Thomas C. Castano Name: Richard A. Topp
Title: Assistant Secretary Title: President
AMENDED AND RESTATED FUND PARTICIPATION AGREEMENT
THIS AMENDED AND RESTATED FUND PARTICIPATION AGREEMENT is made and entered
into as of June 30, 1998 by and among PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(the "Company") and AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. ("Manager").
WHEREAS, the Company offers to the public certain individual variable
universal life contracts, variable annuity contracts and individual variable
life insurance contracts (collectively, the "Contracts"); and
WHEREAS, the Company wishes to offer as investment options under the
Contracts, one or more of the finds listed on EXHIBIT A hereto (the "Funds"),
each of which is a series of mutual fund shares registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, on the terms and conditions hereinafter set forth, the Manager
desires to make shares of the Funds available as an investment option under the
Contracts and to retain the Company to perform certain administrative services
on behalf of the Funds;
NOW, THEREFORE, the Company and the Manager agree as follows:
1. TRANSACTIONS IN THE FUNDS. Subject to the terms and conditions of this
Agreement, the Manager will cause shares of the Funds to be made available to be
purchased, exchanged, or redeemed, by the Company on behalf of Contract owners
through the Accounts (defined in Section 6(a) below) through a single account
per Fund at the net asset value applicable to each order. The Funds' shares
shall be purchased and redeemed on a net basis in such quantity and at such time
as determined by the Company to satisfy the requirements of the Contracts for
which the Funds serve as underlying investment media. Dividends and capital
gains distributions will be automatically reinvested in full and fractional
shares of the Funds.
2. ADMINISTRATIVE SERVICES. The Company shall be solely responsible for
providing all administrative services for the Contract owners. The Company
agrees that it will maintain and preserve all records as required by law to be
maintained and preserved, and will otherwise comply with all laws, rules and
regulations applicable to the marketing of the Contracts and the provision of
administrative services to the Contract owners.
3. PROCESSING AND TIMING OF TRANSACTIONS.
(a) The Funds hereby appoint the Company as their agent for the limited
purpose of accepting purchase and redemption orders for Fund shares from the
Contract owners. On each day the New York Stock Exchange (the "Exchange") is
open for business (each, a "Business Day"), the Company may receive instructions
from the Contract owners for the purchase or redemption of shares of the Funds
("Orders"). Orders received and accepted by the Company prior to the close of
regular trading on the Exchange (the "Close of Trading") on any given Business
Day (currently, 3:00 p.m. Central time) and transmitted to the Funds' transfer
agent by 8:30 a.m. Central time on the next following Business Day will be
executed at the net asset value determined as of the Close of Trading on the
previous Business Day ("Day 1"). Any Orders received by the Company after the
Close of Trading, and all Orders that are transmitted by the Company after 8:30
a.m. Central time on the next following Business Day, will be executed at the
net asset value next determined following receipt of such Order. The day as of
which an Order is executed pursuant to the provisions set forth above is
referred to herein as the "Effective Trade Date".
<PAGE>
(b) By 5:30 p.m. Central time on each Business Day, the Manager or its
agent will provide to the Company, via facsimile or other electronic
transmission acceptable to the Company, the Funds' net asset value, dividend and
capital gain information and, in the case of income funds, the daily accrual for
interest rate factor (mil rate), determined at the Close of Trading. If the
Manager provides the Company with materially incorrect share net asset value
information through no fault of the Company, the Company on behalf of the
separate accounts shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any material
error in the calculation of net asset value per share, dividend or capital gain
information shall be reported to the Company promptly upon discovery.
(c) By 8:30 a.m. Central time on each Business Day, the Company will
provide to the Manager via facsimile or other electronic transmission acceptable
to the Manager a report stating whether the Orders received by the Company from
Contract owners by the Close of Trading on the preceding Business Day resulted
in the Accounts being a net purchaser or net seller of shares of the Funds. As
used in this Agreement, the phrase "other electronic transmission acceptable to
the Manager" includes the use of remote computer terminals located at the
premises of the Company, its agents or affiliates, which terminals may be linked
electronically to the computer system of The Manager, its agents or affiliates
(hereinafter, "Remote Computer Terminals").
(d) Upon the timely receipt from the Company of the report described in (c)
above, the Funds will execute the purchase or redemption transactions (as the
case may be) at the net asset value computed as of the Close of Trading on Day
1. Payment for net purchase transactions shall be made by wire transfer to the
custodial account designated by the Funds on the Business Day next following the
Effective Trade Date. Such wire transfers shall be initiated by the Company's
bank prior to 3:00 p.m. Central time and received by the Funds prior to 5:00
p.m. Central time on the Business Day next following the Effective Trade Date.
If payments for a purchase Order is not timely received, such Order will be
executed at the net asset value next computed following receipt of payment.
Payments for net redemption transactions shall be made by wire transfer by the
Funds to the account designated by the appropriate receiving party within the
time period set forth in the applicable Fund's then-current prospectus;
provided, however, the Funds will use all reasonable efforts to settle all
redemptions on the Business Day following the Effective Trade Date. Within one
week of the transaction, the Manager will send or cause to be sent a written
confirmation of all trades to the Company's Separate Accounts Department in the
form of a statement detailing the Company's total shares owned, Effective Trade
Date, shares purchased and sold and the net asset value of the shares. On any
Business Day when the Federal Reserve Wire Transfer System is closed, all
communication and processing rules will be suspended for the settlement of
Orders. Orders will be settled on the next Business Day on which the Federal
Reserve Wire Transfer System is open and the Effective Trade Date will apply.
4. PROSPECTUS AND PROXY MATERIALS.
(a) The Manager shall provide to the shareholder of record copies of the
Funds' proxy materials, periodic fund reports to shareholders and other
materials that are required by law to be sent to the Funds' shareholders. In
addition, the Manager shall provide the Company with a sufficient quantity of
prospectuses of the Funds to be used in conjunction with the transactions
contemplated by this Agreement, together with such additional copies of the
Funds' prospectuses as may be reasonably requested by Company. If the Company
provides for pass-through voting by the Contract owners, the Manager will
provide the Company with a sufficient quantity of proxy materials for each
Contract owner. If requested by the Company in lieu of printed prospectuses, the
Manager or its designee shall provide such documentation (including a "camera
ready" copy of the new prospectus as set in type or, at the request of the
Company, as a diskette in the form sent to the Funds' printer) and other
assistance as is reasonably necessary in order for the parties hereto once
<PAGE>
each year (or more frequently if the prospectus for the Shares is supplemented
or amended) to have the prospectus for the Contracts, prospectuses for other
mutual funds in which the Contracts may be invested, and the Funds' new
prospectus printed together in one document. Such documentation shall be
provided in electronic format no later than April 15 of each year. If the
Manager fails to provide such documentation in a timely manner through no fault
of its own and such delay causes the Company to incur additional costs, the
Manager shall reimburse the Company for any reasonable and actual out-of-pocket
expenses directly attributable to such delay upon submission of any expense
accounting the Manager reasonably may require. Such out-of-pocket expenses shall
not include overtime for employees of the Company.
(b) The cost of preparing, printing and shipping of the prospectuses, proxy
materials, periodic fund reports and other materials of the Funds to the Company
shall be paid by the Manager or its agents or affiliates; PROVIDED, HOWEVER,
that if at any time the Manager or its agent reasonably deems the usage by the
Company of such items to be excessive, it may, prior to the delivery of any
quantity of materials in excess of what is deemed reasonable, request that the
Company demonstrate the reasonableness of such usage. If the Manager believes
the reasonableness of such usage has not been adequately demonstrated, it may
request that the Company pay the cost of printing (including press time) and
delivery of any excess copies of such materials. Unless the Company agrees to
make such payments, the Manager may refuse to supply such additional materials
and this section shall not be interpreted as requiring delivery by the Manager
of any copies in excess of the number of copies to be provided to existing
Contract owners.
(c) The cost of distribution, if any, of any prospectuses, proxy materials,
periodic fund reports and other materials of the Funds to the Contract owners
shall be paid by the Company and shall not be the responsibility of the Manager
or the Funds.
5. COMPENSATION AND EXPENSES.
(a) The Accounts shall be the sole shareholder of Fund shares purchased for
the Contract owners pursuant to this Agreement (the "Record Owners"). The
Company and the Record Owners shall properly complete any applications or other
forms required by the Manager or the Funds' transfer agent from time to time.
(b) The Manager acknowledges that it will derive a substantial savings in
administrative expenses, such as a reduction in expenses related to postage,
shareholder communications and recordkeeping, by virtue of having a single
shareholder account per Fund for the Accounts rather than having each Contract
owner as a shareholder. In consideration of performance by the Company of the
administrative services and performance of all other obligations under this
Agreement by the Company, the Manager will pay the Company a fee (the
"Administrative Services Fee") equal to 25 basis points (0.25%) per annum of the
average aggregate amount invested by the Company in the Funds, based on the
average aggregate market value of investments (on behalf of the Contract owners)
in the Funds by the Company, its subsidiaries and affiliates that offer
insurance products, up to an average aggregate investment in the Funds of $100
million. For all assets invested in the Funds by the Company, its subsidiaries
and affiliates that offer insurance products, over $100 million, the Manager
will pay the Company an Administrative Services Fee of 30 basis points (0.3 0%)
per annum of the average aggregate market value of the investments over $100
million.
(c) The parties understand that the Manager customarily pays, out of its
management fee, another corporation for the type of administrative services to
be provided by the Company to the Contract owners. The parties agree that the
payments by the Manager to the Company, like its payments to such other
corporation, are for administrative services only and do not constitute payment
in any manner for investment advisory services or for costs of distribution.
<PAGE>
(d) For the purposes of computing the payment to the Company contemplated
by this SECTION 5, the average aggregate amount invested by the Accounts in the
Funds over a one month period shall be computed by totaling the Company's
aggregate investment (share net asset value multiplied by total number of shares
of the Funds held by the Company) on each Business Day during the month and
dividing by the total number of Business Days during such month.
(e) The Manager will calculate the amount of the payment to be made
pursuant to this SECTION 5 at the end of each calendar quarter and will make
such payment to the Company within 30 days thereafter. The check for such
payment will be accompanied by a statement showing the calculation of the
amounts being paid by the Manager for the relevant months and such other
supporting data as may be reasonably requested by the Company and shall be
mailed to:
Pruco Life Insurance Company of New Jersey
3 Gateway Center, 8th Floor
Newark, New Jersey 07102-4077
Attn: Joel Kesner
6. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants that: (i) this Agreement has been
duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established the
accounts set forth on EXHIBIT B hereto (the "Accounts"), which are separate
accounts under Arizona insurance law, and has to the extent required by law
registered the Accounts as unit investment trusts under the Investment Company
Act to serve as investment vehicles for the Contracts; (iii) each Contract
provides for the allocation of net amounts received by the Company to an Account
for investment in the shares of one of more specified investment companies
selected among those companies available through the Accounts to act as
underlying investment media; (iv) selection of a particular investment company
is made by the Contract owner under a particular Contract, who may change such
selection from time to time in accordance with the terms of the applicable
Contract; and (v) the activities of the Company contemplated by this Agreement
comply with all provisions of federal and state insurance, securities, and tax
laws applicable to such activities.
(b) The Manager represents that: (i) this Agreement has been duly
authorized by all necessary corporate action and, when executed and delivered,
shall constitute the legal, valid and binding obligation of the Manager,
enforceable in accordance with its terms; and (ii) the investments of the Funds
will at all times be adequately diversified within the meaning of Section 817(h)
of the Internal Revenue Service Code of 1986, as amended (the "Code"), and the
regulations thereunder, and that at all times while this Agreement is in effect,
all beneficial interests in each of the Funds will be owned by one or more
insurance companies or by any other party permitted under Section 1.817-5(f)(3)
of the Regulations promulgated under the Code. In the event of a breach of this
Section 6 (b)(ii) by the Funds or the Manager will take all reasonable steps (A)
to notify the Company of such breach and (B) to adequately diversify the Funds
so as to achieve compliance within the grace period afforded by Treasury
Regulation 1.817-5.
(c) The Manager represents that the Funds are currently qualified as
Regulated Investment Companies under Subchapter M of the Internal Revenue Code,
and that they will maintain such qualification (under Subchapter M or any
successor or similar provision) and that the Manager will notify the Company
immediately upon having a reasonable basis for believing that the Funds have
ceased to so qualify or that they might not qualify in the future.
<PAGE>
7. ADDITIONAL COVENANTS AND AGREEMENTS.
(a) Each party shall comply with all provisions of federal and state laws
applicable to its respective activities under this Agreement.
(b) Each party shall promptly notify the other parties in the event that it
is, for any reason, unable to perform any of its obligations under this
Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to the Accounts on any Business Day
will be based upon instructions that it received from the Contract owners in
proper form prior to the Close of Trading of the Exchange on that Business Day.
(d) The Company covenants and agrees that all Orders transmitted to the
Funds' transfer agent, whether by telephone, telecopy, or other electronic
transmission acceptable to the Manager, shall be sent by or under the authority
and direction of a person designated by the Company as being duly authorized to
act on behalf of the owner of the Account. Absent actual knowledge to the
contrary, the Manager shall be entitled to rely on the existence of such
authority and to assume that any person transmitting Orders for the purchase,
redemption or transfer of Fund shares on behalf of the Company is "an
appropriate person" as used in Sections 8-107 and 8-401 of the Uniform
Commercial Code with respect to the transmission of instructions regarding Fund
shares on behalf of the owner of such Fund shares. The Company shall maintain
the confidentiality of all passwords and security procedures issued, installed
or otherwise put in place with respect to the use of Remote Computer Terminals
and assumes full responsibility for the security therefor. The Company further
agrees to be solely responsible for the accuracy, propriety and consequences of
all data transmitted to the Manager by the Company by telephone, telecopy or
other electronic transmission acceptable to the Manager.
(e) The Company shall furnish, or shall cause to be furnished, to the
Manager, each piece of sales literature or other promotional material in which a
Fund or the Manager is named, at least eight business days prior to its use. No
such material shall be used if the Funds or the Manager reasonably objects in
writing to such use within eight business days after receipt of such material.
(f) The Company shall not give any information or make any representations
or statements on behalf of any Fund or concerning any Fund other than the
information or representations contained in the registration statement or
prospectus for the Fund shares, as such registration statement and prospectus
may be amended or supplemented from time to time, or in reports or proxy
statements for that Fund, or in sales literature or other promotional material
approved by the Manager, except with the permission of the Manager. The Manager
agrees to respond to any request for approval on a prompt and timely basis.
(g) The Manager shall furnish, or shall cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional
material in which the Company or the Accounts is named, at least ten business
days prior to its use. No such material shall be used if the Company reasonably
objects in writing to such use within ten business days after receipt of such
material.
(h) The Manager shall not give any information or make any representations
on behalf of the Company or concerning the Company, the Accounts, or the
Contracts other than the information or representations contained in a
registration statement or prospectus for the Contracts, as such registration
statement and prospectus may be amended or supplemented from time to time, or in
published reports for the Accounts which are in the public domain or approved by
the
<PAGE>
Company for distribution to Contract owners, or in sales literature or other
promotional material approved by the Company, except with the permission of the
Company. The Company agrees to respond to any request for approval on a prompt
and timely basis.
(i) The Manager will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials, and
all amendments to any of the above, that relate to that Fund or its shares, upon
the Company's request.
(j) The Company will provide to the Manager at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, and all amendments to any of the above, that relate to
the Contracts or the Accounts, upon the Manager's request.
(k) For purposes of this Section 7, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, prospectuses, statements of additional information, shareholder
reports, and proxy materials and any other material constituting sales
literature or advertising under NASD rules, the Investment Company Act or the
Securities Act of 1993 (the "1933 Act").
(1) For so long as the Manager maintains a web site on the Internet, the
Company may provide a hyperlink to such site. If the Manager discontinues such
web site or no longer maintains copies of Fund prospectuses therein for any
reason, the Manager shall provide an electronic version of the Funds'
prospectuses to the Company for use on the Company's web site, as reasonably
requested by the Company.
8. USE OF NAMES. Except as otherwise expressly provided for in this
Agreement, neither the Manager nor the Funds shall use any trademark, trade
name, service mark or logo of the Company, or any variation of any such
trademark, trade name, service mark or logo, without the Company's prior written
consent, the granting of which shall be at the Company's sole option. Except as
otherwise expressly provided for in this Agreement, the Company shall not use
any trademark, trade name, service mark or logo of the Manager or the Funds, or
any variation of any such trademarks, trade names, service marks, or logos,
without the prior written consent of either the Manager or the Funds, as
appropriate, the granting of which shall be at the sole option of the Manager
and/or the Funds.
9. PROXY VOTING.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the Investment Company
Act as requiring such privileges. It shall be the responsibility of the Company
to assure that it calculates voting privileges in a consistent manner.
(b) The Company will distribute to Contract owners all proxy material
furnished by the Manager and will vote shares in accordance with instructions
received from such Contract owners. The Company shall vote Fund shares for which
no instructions have been received in the same proportion as shares for which
such instructions have been received. The Company and its agents
<PAGE>
shall not oppose or interfere with the solicitation of proxies for Fund shares
held for such Contract owners.
10. INDEMNITY.
(a) The Manager agrees to indemnify and hold harmless the Company and its
officers, directors, employees, agents, affiliates and each person, if any, who
controls the Company within the meaning of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this SECTION 10(a)) against any losses,
claims, expenses, damages or liabilities (including amounts paid in settlement
thereof) or litigation expenses (including legal and other expenses)
(collectively, "Losses"), to which the Indemnified Parties may become subject,
insofar as such Losses (i) result from a breach by the Manager of a material
provision of this Agreement, or (ii) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement or prospectus of the Funds or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading.
The Manager will reimburse any legal or other expenses reasonably incurred by
the Indemnified Parties in connection with investigating or defending any such
Losses. The Manager shall not be liable for indemnification hereunder if such
Losses are attributable to the negligence or misconduct of the Company in
performing its obligations under this Agreement.
(b) The Company agrees to indemnify and hold harmless the Manager and the
Funds and their respective officers, directors, employees, agents, affiliates
and each person, if any, who controls the Funds or the Manager within the
meaning of the 1933 Act (collectively, the "Indemnified Parties" for purposes of
this SECTION 10(b)) against any Losses to which the Indemnified Parties may
become subject, insofar as such Losses (i) result from a breach by the Company
of a material provision of this Agreement, or (ii) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement or prospectus of the Company regarding
the Contracts, if any, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii) result from
the use by any person of a Remote Computer Terminal. The Company will reimburse
any legal or other expenses reasonably incurred by the Indemnified Parties in
connection with investigating or defending any such Losses. The Company shall
not be liable for indemnification hereunder if such Losses are attributable to
the negligence or misconduct of the Manager or the Funds in performing their
obligations under this Agreement.
(c) Promptly after receipt by an indemnified party hereunder of notice of
the commencement of action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party of the commencement thereof but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this SECTION 10. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this SECTION 10 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such action, the
indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or
<PAGE>
compromise the liability of the indemnified parties in such action, or permit a
default or consent to the entry of any judgment in respect thereof, unless in
connection with such settlement, compromise or consent, each indemnified party
receives from such claimant an unconditional release from all liability in
respect of such claim.
11. POTENTIAL CONFLICTS.
(a) The Company has received a copy of an application for exemptive relief,
as amended, filed by the Manager on December 21, 1987, with the SEC and the
order issued by the SEC in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the requested relief set
forth in such application for exemptive relief. As set forth in such
application, the Board of Directors of the Funds (the "Board") will monitor the
Funds for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts investing in the
Funds. An irreconcilable material conflict may arise for a variety of reasons,
including: (i) an action by any state insurance regulatory authority; (ii) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar actions by insurance, tax or securities
regulatory authorities; (iii) an administrative or judicial decision in any
relevant proceeding; (iv) the manner in which the investments of any portfolio
are being managed; (v) a difference in voting instructions given by variable
annuity contract owners and variable life insurance contract owners; or (vi) a
decision by an insurer to disregard the voting instructions of contract owners.
The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
(b) The Company will report any potential or existing conflicts of which it
is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order by providing the Board
with all information reasonably necessary for the Board to consider any issues
raised. This includes, but is not limited to, an obligation by the Company to
inform the Board whenever contract owner voting instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with regard
to contact owner investments in the Funds, the Board shall give prompt notice to
all Participating Companies. If the Board determines that the Company is
responsible for causing or creating said conflict, the Company shall at its sole
cost and expense, and to the extent reasonably practicable (as determined by a
majority of the disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict. Such necessary
action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Accounts from the Funds
and reinvesting such assets in a different investment medium or
submitting the question of whether such segregation should be
implemented to a vote of all affected contract owners and as
appropriate, segregating the assets of any appropriate group
(i.e., annuity contract owners, life insurance contract owners,
or variable contract owners of one or more Participating
Companies) that votes in favor of such segregation, or offering
to the affected contract owners the option of making such a
change; and/or
(ii) establishing a new registered management investment company or
managed separate account.
(d) If a material irreconcilable conflict arises as a result of a decision
by the Company to disregard its contract owner voting instructions and said
decision represents a minority position or would preclude a majority vote by all
of its contract owners having an interest in the Funds, the
<PAGE>
Company at its sole cost, may be required, at the Board's election, to withdraw
the Accounts' investment in the Funds and terminate this Agreement; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board.
(e) For the purpose of this SECTION 11, a majority of the disinterested
Board members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the Funds be
required to establish a new funding medium for any Contract. The Company shall
not be required by this Section 11 to establish a new funding medium for any
Contract if an offer to do so has been declined by vote of a majority of the
Contract owners materially adversely affected by the irreconcilable material
conflict.
12. TERMINATION. This agreement shall terminate as to the sale and issuance
of new Contracts:
(a) at the option of either the Company or the Manager upon six months'
advance written notice to the other;
(b) at the option of the Company if the Funds' shares are not available for
any reason to meet the requirement of Contracts as determined by the Company.
Reasonable advance notice of election to terminate shall be furnished by
Company;
(c) at the option of either the Company or the Manager, upon institution of
formal proceedings against the broker-dealer or broker-dealers marketing the
Contracts, any Account, the Company, the Manager, or the Funds by the National
Association of Securities Dealers, Inc. (the "NASD"), the SEC or any other
regulatory body;
(d) upon termination of the Management Agreement between the Funds and
Manager. Notice of such termination shall be promptly furnished to the Company.
This SUBSECTION (d) shall not be deemed to apply if contemporaneously with such
termination a new contract of substantially similar terms is entered into
between the Funds and Manager;
(e) upon the requisite vote of Contract owners having an interest in any of
the Funds to substitute for the Funds' shares the shares of another investment
company in accordance with the terms of Contracts for which the Funds' shares
had been selected to serve as the underlying investment medium. The Company will
give 60 days' written notice to the Funds and the Manager of any proposed vote
to replace the Funds' shares;
(f) upon assignment of this Agreement unless made with the written consent
of all other parties hereto;
(g) if the Funds' shares are not registered, issued or sold in conformance
with Federal law or such law precludes the use of Fund shares as an underlying
investment medium of Contracts issued or to be issued by the Company. Prompt
notice shall be given by either party should such situation occur;
(h) at the option of the Manager, if the Manager reasonably determines in
good faith that the Company is not offering shares of the Funds in conformity
with the terms of this Agreement or applicable law;
(i) at the option of any party hereto upon a determination that continuing
to perform under this Agreement would, in the reasonable opinion of the
terminating party's counsel, violate any applicable federal or state law, rule,
regulation or judicial order;
<PAGE>
(j) at the option of the Company if a Fund fails to meet the
diversification requirements specified in Section 6(b)(ii) hereof;
(k) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(1) at the option of the Company upon three months' advance written notice
if a Fund substantially changes its investment objective or investment style.
13. CONTINUATION OF AGREEMENT. Termination as the result of any cause
listed in SECTION 12 shall not affect the Manager's obligation to continue to
cause the Funds to furnish their shares under the terms of this Agreement to
Contracts then in force for which its shares serve or may serve as the
underlying medium (unless such further sale of Fund shares is proscribed by law
or the SEC or other regulatory body). Following termination, the Manager shall
not have any Administrative Services payment obligation to the Company (except
for payment obligations accrued but not yet paid as of the termination date).
14. NON-EXCLUSIVITY. Each of the parties acknowledges and agrees that this
Agreement and the arrangement described herein are intended to be non-exclusive
and that each of the parties is free to enter into similar agreements and
arrangements with other entities.
15. SURVIVAL. The provisions of SECTION 8 (use of names) and SECTION 10
(indemnity) of this Agreement shall survive termination of this Agreement.
16. AMENDMENT. Neither this Agreement, nor any provision hereof, may be
amended, waived, discharged or terminated orally, but only by an instrument in
writing signed by all of the parties hereto.
17. NOTICES. All notices and other communications hereunder shall be given
or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
Pruco Life Insurance Company of New Jersey
213 Washington Street
Newark, New Jersey 07102
Attention: Thomas C. Castano, Esq.
(201) 802-4708 (office number)
(201) 802-9560 (telecopy number)
<PAGE>
With a copy to:
Pruco Life Insurance Company of New Jersey
751 Broad Street, 21st Floor
Newark, New Jersey 07102
Attention: Kirk Montgomery
(973) 367-7728 (office number)
(973) 643-5520 (telecopy number)
To the Manager:
American Century Investments
4500 Main Street
Kansas City, Missouri 64111
Attention: Charles A. Etherington, Esq.
(816) 340-4051 (office number)
(816) 340-4964 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
SECTION 17 shall be deemed to have been delivered on receipt.
18. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned without the
written consent of all parties to the Agreement at the time of such assignment.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
20. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the matters dealt with herein, and
supersedes all previous agreements, written or oral, with respect to such
matters, specifically including that certain Fund Participation Agreement dated
May 16, 1997, by and among the Company, the Manager and American Century
Investment Services, Inc.
22. CONFIDENTIALITY. Subject to applicable law and regulatory authority,
each party hereto shall treat as confidential all information reasonably
identified as such in writing by any other party hereto (including without
limitation the names and addresses of the owners of the Contracts) and, except
as contemplated by this Agreement, shall not disclose, disseminate or utilize
such confidential information until such time as it may come into the public
domain without the expressed prior written consent of the affected party.
23. COOPERATION. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including without limitation the
SEC, the NASD, and state insurance regulators) and shall permit each other and
such authorities reasonable access to its books
<PAGE>
and records in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
AMERICAN CENTURY INVESTMENT PRUCO LIFE INSURANCE COMPANY
MANAGEMENT, INC. OF NEW JERSEY
By: /s/ William M. Lyons By: /s/ Edward A. Minogue
------------------------ ---------------------------
William M. Lyons Name: Edward A. Minogue
Executive Vice President Title: Senior Vice President
<PAGE>
EXHIBIT A
FUNDS AVAILABLE
================================================================================
ISSUER NAME OF FUND
================================================================================
American Century Variable Portfolios, Inc. VP Balanced
--------------------------
VP Capital Appreciation
--------------------------
VP Income & Growth
--------------------------
VP International
--------------------------
VP Value
================================================================================
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 21st day of January, 1997, between JANUS ASPEN
SERIES, an open-end management investment company organized as a Delaware
business trust (the "Trust"), JANUS CAPITAL CORPORATION, a Colorado corporation
(the "Adviser"), and PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY, a life
insurance company organized under the laws of the State of New Jersey (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A, as may be amended from time to time (the
"Accounts").
WITNESSETH:
WHEREAS, the Trust has registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and has registered the offer
and sale of its shares under the Securities Act of 1933, as amended (the "1933
Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Trust has received an order from the Securities and Exchange
Commission granting Participating Insurance Companies and their separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a) and 15(b)
of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the
extent necessary to permit shares of the Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Exemptive Order"); and
WHEREAS, the Company has registered or will register (unless registration
is not required under applicable law) certain variable life insurance policies
and/or variable annuity contracts under the 1933 Act (the "Contracts"); and
WHEREAS, the Company has registered or will register (unless registration
is not required under applicable law) each Account as a unit investment trust
under the 1940 Act; and
<PAGE>
WHEREAS, the Company desires to utilize shares of one or more Portfolios as
an investment vehicle of the Accounts; and
WHEREAS, the Adviser is registered as an investment adviser under the 1940
Act and serves as investment adviser to the Trust;
NOW THEREFORE, in consideration of their mutual promises, the parties agree
as follows:
ARTICLE I
Sale of Trust Shares
1.1 The Trust shall make shares of its Portfolios available to the Accounts
at the net asset value next computed after receipt of such purchase order by the
Trust (or its agent), as established in accordance with the provisions of the
then current prospectus of the Trust. Shares of a particular Portfolio of the
Trust shall be ordered in such quantities and at such times as determined by the
Company to be necessary to meet the requirements of the Contracts. The Trustees
of the Trust (the "Trustees") may refuse to sell shares of any Portfolio to any
person, or suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Trustees acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.2 The Trust will redeem any full or fractional shares of any Portfolio
when requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Trust. The Trust shall make payment for such shares in the
manner established from time to time by the Trust, but in no event shall payment
be delayed for a greater period than is permitted by the 1940 Act.
1.3 For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints the
Company as its agent for the limited purpose of receiving and accepting purchase
and redemption orders resulting from investment in and payments under the
Contracts. Receipt by the Company shall constitute receipt by the Trust provided
that i) such orders are received by the Company in good order prior to the time
the net asset value of each Portfolio is priced in accordance with its
prospectus and ii) the Trust receives notice of such orders by 11:00 a.m. New
York time on the next following Business Day. "Business Day" shall mean any day
on which the New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission.
<PAGE>
1.4 Purchase orders that are transmitted to the Trust in accordance with
Section 1.3 shall be paid for no later than 12:00 noon New York time on the same
Business Day that the Trust receives notice of the order. Payments shall be made
in federal funds transmitted by wire.
1.5 Issuance and transfer of the Trust's shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Shares
ordered from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
1.6 The Trust shall furnish prompt notice to the Company of any income
dividends or capital gain distributions payable on the Trust's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Trust shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.7 The Trust shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 6 p.m. New York time. If the
Trust provides the Company with materially incorrect share net asset value
information through no fault of the Company, the Company on behalf of the
separate accounts, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any material
error in the calculation of net asset value per share, dividend or capital gain
information shall be reported to the Company promptly upon discovery.
1.8 The Trust agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified pension
and retirement plans as provided under Section 817(h)(4) of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder ("Code"), to the extent
permitted by the Exemptive Order. No shares of any Portfolio will be sold
directly to the general public. The Company agrees that Trust shares will be
used only for the purposes of funding the Contracts and Accounts listed in
Schedule A, as amended from time to time.
1.9 The Trust agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting and conflicts
of interest corresponding to those contained in Section 2.8 and Article IV of
this Agreement.
ARTICLE II
Obligations of the Parties
2.1 The Trust shall prepare and be responsible for filing with the
Securities and Exchange Commission and any state regulators requiring such
filing all shareholder reports,
<PAGE>
notices, proxy materials (or similar materials such as voting instruction
solicitation materials), prospectuses and statements of additional information
of the Trust. The Trust shall bear the costs of registration and qualification
of its shares, preparation and filing of the documents listed in this Section
2.1 and all taxes to which an issuer is subject on the issuance and transfer of
its shares.
2.2 At the option of the Company, the Trust shall either (a) provide the
Company (at the Company's expense) with as many copies of the Trust's current
prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the foregoing,
as the Company shall reasonably request; or (b) provide the Company with a
camera ready copy of such documents in a form suitable for printing. The Trust
shall provide the Company with a copy of its statement of additional information
in a form suitable for duplication by the Company. The Trust (at its expense)
shall provide the Company with copies of any Trust-sponsored proxy materials in
such quantity as the Company shall reasonably require for distribution to
Contract owners.
2.3 The Company shall bear the costs of printing and distributing the
Trust's prospectus, statement of additional information, shareholder reports and
other shareholder communications to owners of and applicants for policies for
which the Trust is serving or is to serve as an investment vehicle. The Company
shall bear the costs of distributing proxy materials (or similar materials such
as voting solicitation instructions) to Contract owners. The Company assumes
sole responsibility for ensuring that such materials are delivered to Contract
owners in accordance with applicable federal and state securities laws.
2.4 The Company agrees and acknowledges that the Adviser is the sole owner
of the name and mark "Janus" and that all use of any designation comprised in
whole or part of Janus (a "Janus Mark") under this Agreement shall inure to the
benefit of the Adviser. Except as provided in Section 2.5, the Company shall not
use any Janus Mark on its own behalf or on behalf of the Accounts or Contracts
in any registration statement, advertisement, sales literature or other
materials relating to the Accounts or Contracts without the prior written
consent of the Adviser. Upon termination of this Agreement for any reason, the
Company shall cease all use of any Janus Mark(s) as soon as reasonably
practicable.
2.5 The Company shall furnish, or cause to be furnished, to the Trust or
its designee, a copy of each Contract prospectus or statement of additional
information in which the Trust or the Adviser is named prior to the filing of
such document with the Securities and Exchange Commission. The Company shall
furnish, or shall cause to be furnished, to the Trust or its designee, each
piece of sales literature or other promotional material in which the Trust or
the Adviser is named, at least ten Business Days prior to its use. No such
material shall be used if the Trust or its designee reasonably objects to such
use within ten Business Days after receipt of such material.
2.6 The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust or the Adviser in
connection with the
<PAGE>
sale of the Contracts other than information or representations contained in and
accurately derived from the registration statement or prospectus for the Trust
shares (as such registration statement and prospectus may be amended or
supplemented from time to time), reports of the Trust, Trust-sponsored proxy
statements, or in sales literature or other promotional material approved by the
Trust or its designee, except as required by legal process or regulatory
authorities or with the written permission of the Trust or its designee.
2.7 Neither the Trust nor the Adviser shall give any information or make
any representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Contracts (as such registration statement and prospectus may
be amended or supplemented from time to time), or in materials approved by the
Company for distribution including sales literature or other promotional
materials, except as required by legal process or regulatory authorities or with
the written permission of the Company.
2.8 So long as, and to the extent that the Securities and Exchange
Commission interprets the 1940 Act to require pass-through voting privileges for
variable policyowners, the Company will provide pass-through voting privileges
to owners of policies whose cash values are invested, through the Accounts, in
shares of the Trust. The Trust shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Trust. With respect to each Account, the
Company will vote shares of the Trust held by the Account and for which no
timely voting instructions from policyowners are received as well as shares it
owns that are held by that Account, in the same proportion as those shares for
which voting instructions are received. The Company and its agents will in no
way recommend or oppose or interfere with the solicitation of proxies for Trust
shares held by Contract owners without the prior written consent of the Trust,
which consent may be withheld in the Trust's sole discretion.
2.9 The Company shall notify the Trust of any applicable state insurance
laws that restrict the Portfolios' investments or otherwise affect the operation
of the Trust and shall notify the Trust of any changes in such laws.
2.10 For purposes of this Article, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, video tape display,
signs or billboards, motion pictures, or other public media), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published articles,) educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of
<PAGE>
additional information, shareholder reports, and proxy materials and any other
material constituting sales literature or advertising under NASD Rules, the 1940
Act or the 1933 Act.
ARTICLE III
Representations and Warranties
3.1 The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of New Jersey
and that it has legally and validly established each Account as a segregated
asset account under such law on the date set forth in Schedule A.
3.2 The Company represents and warrants that each Account (1) has been
registered or, prior to any issuance or sale of the Contracts, will be
registered as a unit investment trust in accordance with the provisions of the
1940 Act or, alternatively (2) has not been registered in proper reliance upon
an exclusion from registration under the 1940 Act.
3.3 The Company represents and warrants that the Contracts or interests in
the Accounts (1) are or, prior to issuance, will be registered as securities
under the 1933 Act or, alternatively (2) are not registered because they are
properly exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are properly exempt from registration under the
1933 Act. The Company further represents and warrants that the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws; and the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements.
3.4 The Trust represents and warrants that it is duly organized and validly
existing under the laws of the State of Delaware.
3.5 The Trust represents and warrants that the Trust shares offered and
sold pursuant to this Agreement will be registered under the 1933 Act and the
Trust shall be registered under the 1940 Act prior to any issuance or sale of
such shares. The Trust shall amend its registration statement under the 1933 Act
and the 1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Trust shall register and qualify its shares for sale
in accordance with the laws of the various states only if and to the extent
deemed advisable by the Trust.
3.6 The Trust represents and warrants that the investments of each
Portfolio will comply with the diversification requirements set forth in Section
817(h) of the Code. In the event of a breach of this Article by a Portfolio, the
Portfolio will take all reasonable steps to notify the Company of such breach
and to adequately diversify the Portfolio so as to achieve compliance with the
grace period afforded by Treasury Regulation 1.817-5.
<PAGE>
3.7 The Trust represents that it is currently qualified as a regulated
investment company under Subchapter M of the Code, that it will maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
ARTICLE IV
Potential Conflicts
4.1 The parties acknowledge that the Trust's shares may be made available for
investment to other Participating Insurance Companies. In such event, the
Trustees will monitor the Trust for the existence of any material irreconcilable
conflict between the interests of the contract owners of all Participating
Insurance Companies. An irreconcilable material conflict may arise for a variety
of reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial decision in
any relevant proceeding; (d) the manner in which the investments of any
Portfolio are being managed; (e) a difference in voting instructions given by
variable annuity contract and variable life insurance contract owners; or (f) a
decision by an insurer to disregard the voting instructions of contract owners.
The Trustees shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Exemptive Order by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
4.3 If it is determined by a majority of the Trustees, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its expense and to the extent reasonably practicable (as determined by the
Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to some or all of the Accounts from the Trust or any Portfolio
and reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Trust, or submitting the question of
whether or not such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any appropriate
group (i.e., annuity contract owners, life insurance contract owners, or
variable contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected Contract owners
the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
<PAGE>
4.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited
to the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees. Any such withdrawal and
termination must take place within six (6) months after the Trust gives written
notice that this provision is being implemented. Until the end of such six (6)
month period, the Trust shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Trust.
4.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the affected
Account's investment in the Trust and terminate this Agreement with respect to
such Account within six (6) months after the Trustees inform the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees. Until the
end of such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of the
Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Company be required to establish a new funding medium for the Contracts if
an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Trustees determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within six (6)
months after the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonable request so that the
Trustees may fully carry out the duties imposed upon them by the Exemptive
Order, and said reports, materials and data shall be submitted more frequently
if deemed appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Exemptive Order) on terms and conditions materially different
from those contained in the Exemptive Order, then the Trust
<PAGE>
and/or the Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable.
ARTICLE V
Indemnification
5.1 Indemnification By the Company. The Company agrees to indemnify and
hold harmless the Trust, the Adviser, and each of their Trustees or Directors,
officers, employees and agents and each person, if any, who controls the Trust
or the Adviser within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Article V) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or expenses (including the reasonable costs
of investigating or defending any alleged loss, claim, damage, liability or
expense and reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Indemnified Parties may become subject
under any statute or regulation, or at common law or otherwise, insofar as such
Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration
statement or prospectus for the Contracts or in the Contracts themselves or
in sales literature generated or approved by the Company on behalf of the
Contracts or Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the purposes of this
Article V), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
indemnity shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance upon
and was accurately derived from written information furnished to the
Company by or on behalf of the Trust or the Adviser for use in Company
Documents or otherwise for use in connection with the sale of the Contracts
or Trust shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Trust Documents as defined in Section 5.2(a)) or wrongful conduct of the
Company or persons under its control, with respect to the sale or
acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Trust Documents as defined in
Section 5.2(a) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was made in
reliance upon and accurately derived from written information furnished to
the Trust or the Adviser by or on behalf of the Company; or
<PAGE>
(d) arise out of or result from any failure by the Company to provide
the services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Company.
5.2 Indemnification By the Trust and the Adviser. The Trust and
Adviser agree to indemnify and hold harmless the Company and each of its
directors, the Adviser, officers, employees and agents and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Article V) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Adviser) or expenses (including the
reasonable costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which the Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise, insofar
as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus for the Trust (or any amendment or supplement
thereto), (collectively, "Trust Documents" for the purposes of this Article
V), or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, provided that this indemnity
shall not apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon and was
accurately derived from written information furnished to the Trust by or on
behalf of the Company for use in Trust Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Company Documents) or wrongful conduct of the Trust or the Adviser or
persons under their control, with respect to the sale or acquisition of the
Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company Documents or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon and accurately derived from
written information furnished to the Company by or on behalf of the Trust
or the Adviser; or
(d) arise out of or result from any failure by the Trust or the
Adviser to provide
<PAGE>
the services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Trust or Adviser in this
Agreement or arise out of or result from any other material breach of this
Agreement by the Trust or the Adviser.
5.3 None of the parties to this Agreement shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
5.4 None of the parties to this Agreement shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other parties in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim shall have been served upon or otherwise received by such
Indemnified Party (or after such Indemnified Party shall have received notice of
service upon or other notification to any designated agent), but failure to
notify the party against whom indemnification is sought of any such claim shall
not relieve that party from any liability which it may have to the Indemnified
Party in the absence of Sections 5.1 and 5.2.
5.5 In case any such action is brought against the Indemnified Parties, the
indemnifying party shall be entitled to participate, at its own expense, in the
defense of such action. The indemnifying party also shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to the party named in
the action. After notice from the indemnifying party to the Indemnified Party of
an election to assume such defense, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and the indemnifying
party will not be liable to the Indemnified Party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
5.6 The indemnifications provided by the parties hereunder are in addition
to any liability the parties may otherwise have.
ARTICLE VI
Termination
6.1 This Agreement may be terminated by any party for any reason by ninety
(90) days advance written notice delivered to the other parties.
6.2 Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional shares of the
Trust (or any Portfolio)
<PAGE>
pursuant to the terms and conditions of this Agreement for all Contracts in
effect on the effective date of termination of this Agreement, provided that the
Company continues to pay the costs set forth in Section 2.3.
6.3 The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.8 shall survive the
termination of this Agreement as long as shares of the Trust are held on behalf
of Contract owners in accordance with Section 6.2.
ARTICLE VII
Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Trust or the Adviser:
100 Fillmore Street, Suite 300
Denver, Colorado 80206
Attention: David C. Tucker, Esq.
If to the Company:
Pruco Life Insurance Company of New Jersey
751 Broad Street, 21 Plaza
Newark, New Jersey 07102
Attention: Mary L. Cavanaugh, Esq.
ARTICLE VIII
Miscellaneous
8.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
<PAGE>
8.4 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of State of Colorado.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
8.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc., and
state insurance regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
8.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
8.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations hereunder may be
assigned by any party without the prior written approval of the other parties.
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by each
party.
<PAGE>
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Participation Agreement as of the date and year first above
written.
PRUCO LIFE INSURANCE COMPANY OF
NEW JERSEY
By: /s/ Paul Haley
--------------------------------------------------
Name: Paul Haley
--------------------------------------------------
Title: Vice President & Actuary
--------------------------------------------------
JANUS ASPEN SERIES
By: /s/ Deborah E. Bielicke
--------------------------------------------------
Name: Deborah E. Bielicke
--------------------------------------------------
Title: Assistant Vice President
--------------------------------------------------
JANUS CAPITAL CORPORATION
By: /s/ Stephen L. Stieneker
--------------------------------------------------
Name: Stephen L. Stieneker
--------------------------------------------------
Title: Vice President of Compliance
--------------------------------------------------
PARTICIPATION AGREEMENT
AMONG
MFS VARIABLE INSURANCE TRUST,
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
AND
MASSACHUSETTS FINANCIAL SERVICES COMPANY
THIS AGREEMENT, made and entered into this 7th day of February 1997, by and
among MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust (the
"Trust"), PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY, a New Jersey corporation
(the "Company"), on its own behalf and on behalf of each of the segregated asset
accounts of the Company set forth in Schedule A hereto, as may be amended from
time to time (the "Accounts"), and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a
Delaware corporation ("MFS").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and its shares are registered or will be registered under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, shares of beneficial interest of the Trust are divided into
several series of shares, each representing the interests in a particular
managed pool of securities and other assets;
WHEREAS, the series of shares of the Trust offered by the Trust to the
Company and the Accounts are set forth on Schedule A attached hereto (each, a
"Portfolio," and, collectively, the "Portfolios");
WHEREAS, MFS is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
law, and is the Trust's investment adviser;
WHEREAS, the Company will issue certain variable annuity and/or variable
life insurance contracts (individually, the "Policy" or, collectively, the
"Policies") which, if required by applicable law, will be registered under the
1933 Act;
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolution of the Board of Directors of the Company, to
set aside and invest assets attributable to the aforesaid variable annuity
and/or variable life insurance contracts that are allocated to the Accounts (the
Policies and the Accounts covered by this Agreement, and each corresponding
Portfolio covered by this Agreement in which the Accounts invest, is specified
in Schedule A attached hereto as may be modified from time to time);
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless exempt therefrom);
WHEREAS, MFS Fund Distributors, Inc. (the "Underwriter") is registered as a
broker-dealer with the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), and is
a member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD");
WHEREAS, Pruco Securities Corporation ("Prusec"), the underwriter for the
individual variable annuity and the variable life policies, is registered as a
broker-dealer with the SEC under the 1934 Act and is a member in good standing
of the NASD; and
<PAGE>
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in one or more of the
Portfolios specified in Schedule A attached hereto (the "Shares") on behalf of
the Accounts to fund the Policies, and the Trust intends to sell such Shares to
the Accounts at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Trust, MFS,
and the Company agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust agrees to sell to the Company those Shares which the
Accounts order (based on orders placed by Policy holders on that Business
Day, as defined below) and which are available for purchase by such
Accounts, executing such orders on a daily basis at the net asset value
next computed after receipt by the Trust or its designee of the order for
the Shares. For purposes of this Section 1.1, the Company shall be the
designee of the Trust for receipt of such orders from Policy owners and
receipt by such designee shall constitute receipt by the Trust; provided
that the Trust receives notice of such orders by 9:30 a.m. New York time on
the next following Business Day. "Business Day" shall mean any day on which
the New York Stock Exchange, Inc. (the "NYSE") is open for trading and on
which the Trust calculates its net asset value pursuant to the rules of the
SEC.
1.2. The Trust agrees to make the Shares available indefinitely for
purchase at the applicable net asset value per share by the Company and the
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the SEC and the Trust shall calculate such net asset
value on each day which the NYSE is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Trust (the "Board") may refuse to
sell any Shares to the Company and the Accounts, or suspend or terminate
the offering of the Shares if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of
the Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, necessary in the best interest of
the Shareholders of such Portfolio.
1.3. The Trust and MFS agree that the Shares will be sold only to insurance
companies which have entered into participation agreements with the Trust
and MFS (the "Participating Insurance Companies") and their separate
accounts, qualified pension and retirement plans and MFS or its affiliates
in accordance with Section 817(h)(4) of the Internal Revenue Code of 1986,
as amended, and the regulations thereunder. The Trust and MFS will not sell
Trust shares to any insurance company or separate account unless an
agreement containing provisions substantially the same as Articles III and
VII of this Agreement is in effect to govern such sales. The Company will
not resell the Shares except to the Trust or its agents.
1.4. The Trust agrees to redeem for cash, on the Company's request, any
full or fractional Shares held by the Accounts (based on orders placed by
Policy holders on that Business Day), executing such requests on a daily
basis at the net asset value next computed after receipt by the Trust or
its designee of the request for redemption. For purposes of this Section
1.4, the Company shall be the designee of the Trust for receipt of requests
for redemption from Policy owners and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of
such request for redemption by 9:30 a.m. New York time on the next
following Business Day.
1.5. Each purchase, redemption and exchange order placed by the Company
shall be placed separately for each Portfolio and shall not be netted with
respect to any Portfolio. However, with respect to payment of the purchase
price by the Company and of redemption proceeds by the Trust, the Company
and the Trust shall net purchase and redemption orders with respect to each
Portfolio and shall transmit one net payment for all of the Portfolios in
accordance with Section 1.6 hereof.
<PAGE>
1.6. In the event of net purchases, the Company shall pay for the Shares by
2:00 p.m. New York time on the next Business Day after an order to purchase
the Shares is made in accordance with the provisions of Section 1.1. hereof
In the event of net redemptions, the Trust shall pay the redemption
proceeds by 2:00 p.m. New York time on the next Business Day after an order
to redeem the shares is made in accordance with the provisions of Section
1.4. hereof. All such payments shall be in federal funds transmitted by
wire.
1.7. Issuance and transfer of the Shares will be by book entry only. Stock
certificates will not be issued to the Company or the Accounts. The Shares
ordered from the Trust will be recorded in an appropriate title for the
Accounts or the appropriate subaccounts of the Accounts.
1.8. The Trust shall furnish same day notice (by wire or telephone followed
by written confirmation) to the Company of any dividends or capital gain
distributions payable on the Shares. The Company hereby elects to receive
all such dividends and distributions as are payable on a Portfolio's Shares
in additional Shares of that Portfolio. The Trust shall notify the Company
of the number of Shares so issued as payment of such dividends and
distributions.
1.9. The Trust or its custodian shall make the net asset value per share
for each Portfolio available to the Company on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and
shall use its best efforts to make such net asset value per share available
by 6:30 p.m. New York time. In the event that the Trust is unable to meet
the 6:30 p.m. time stated herein, it shall provide additional time for the
Company to place orders for the purchase and redemption of Shares. Such
additional time shall be equal to the additional time which the Trust takes
to make the net asset value available to the Company. If the Trust provides
materially incorrect share net asset value information, the Trust shall
make an adjustment to the number of shares purchased or redeemed for the
Accounts to reflect the correct net asset value per share. Any material
error in the calculation or reporting of net asset value per share,
dividend or capital gains information shall be reported promptly upon
discovery to the Company.
ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1. The Company represents and warrants that the Policies are or will be
registered under the 1933 Act or are exempt from or not subject to
registration thereunder, and that the Policies will be issued, sold, and
distributed in compliance in all material respects with all applicable
state and federal laws, including without limitation the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the 1940
Act. The Company further represents and warrants that it is an insurance
company duly organized and in good standing under applicable law and that
it has legally and validly established the Account as a segregated asset
account under applicable law and has registered or, prior to any issuance
or sale of the Policies, will register the Accounts as unit investment
trusts in accordance with the provisions of the 1940 Act (unless exempt
therefrom) to serve as segregated investment accounts for the Policies, and
that it will maintain such registration for so long as any Policies are
outstanding. The Company shall amend the registration statements under the
1933 Act for the Policies and the registration statements under the 1940
Act for the Accounts from time to time as required in order to effect the
continuous offering of the Policies or as may otherwise be required by
applicable law. The Company shall register and qualify the Policies for
sales accordance with the securities laws of the various states only if and
to the extent deemed necessary by the Company.
2.2. The Company represents and warrants that the Policies are currently
and at the time of issuance will be treated as life insurance, endowment or
annuity contract under applicable provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), that it will maintain such treatment and
that it will notify the Trust or MFS immediately upon having a reasonable
basis for believing that the Policies have ceased to be so treated or that
they might not be so treated in the future.
2.3. The Company represents and warrants that Prusec, the underwriter for
the individual variable annuity and the variable life policies, is a member
in good standing of the NASD and is a registered broker-dealer
<PAGE>
with the SEC. The Company represents and warrants that the Company and
Prusec will sell and distribute such policies in accordance in all material
respects with all applicable state and federal securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.4. The Trust and MFS represent and warrant that the Shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized
for issuance and sold in compliance with the laws of The Commonwealth of
Massachusetts and all applicable federal and state securities laws and that
the Trust is and shall remain registered under the 1940 Act. The Trust
shall amend the registration statement for its Shares under the 1933 Act
and the 1940 Act from time to time as required in order to effect the
continuous offering of its Shares. The Trust shall register and qualify the
Shares for sale in accordance with the laws of the various states only if
and to the extent deemed necessary by the Trust.
2.5. MFS represents and warrants that the Underwriter is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Trust and MFS represent that the Trust and the Underwriter will sell and
distribute the Shares in accordance in all material respects with all
applicable state and federal securities laws, including without limitation
the 1933 Act, the 1934 Act, and the 1940 Act.
2.6. The Trust represents that it is lawfully organized and validly
existing under the laws of The Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act and any
applicable regulations thereunder.
2.7. MFS represents and warrants that it is and shall remain duly
registered under all applicable federal securities laws and that it shall
perform its obligations for the Trust in compliance in all material
respects with any applicable federal securities laws and with the
securities laws of The Commonwealth of Massachusetts. MFS represents and
warrants that it is not subject to state securities laws other than the
securities laws of The Commonwealth of Massachusetts and that it is exempt
from registration as an investment adviser under the securities laws of The
Commonwealth of Massachusetts.
2.8. No less frequently than annually, the Company shall submit to the
Board such reports, material or data as the Board may reasonably request so
that it may carry out fully the obligations imposed upon it by the
conditions contained in the exemptive application pursuant to which the SEC
has granted exemptive relief to permit mixed and shared funding (the "Mixed
and Shared Funding Exemptive Order").
ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1. At least annually, the Trust or its designee shall provide the
Company, free of charge, with as many copies of the current prospectus
(describing only the Portfolios listed in Schedule A hereto) for the Shares
as the Company may reasonably request for distribution to existing Policy
owners whose Policies are funded by such Shares. The Trust or its designee
shall provide the Company, at the Company's expense, with as many copies of
the current prospectus for the Shares as the Company may reasonably request
for distribution to prospective purchasers of Policies. If requested by the
Company in lieu thereof, the Trust or its designee shall provide such
documentation (including a "camera ready" copy of the new prospectus as set
in type or, at the request of the Company, as a diskette in the form sent
to the financial printer) and other assistance as is reasonably necessary
in order for the parties hereto once each year (or more frequently if the
prospectus for the Shares is supplemented or amended) to have the
prospectus for the Policies and the prospectus for the Shares printed
together in one document; the expenses of such printing to be apportioned
between (a) the Company and (b) the Trust or its designee in proportion to
the number of pages of the Policy and Shares' prospectuses, taking account
of other relevant factors affecting the expense of printing, such as
covers, columns, graphs and charts; the Trust or its designee to bear the
cost of printing the Shares' prospectus portion of such document for
distribution to owners of existing Policies funded by the Shares and the
Company to bear the expenses of printing the portion of such document
relating to the Accounts; provided, however, that the Company shall bear
all printing expenses of such combined documents where used for
<PAGE>
distribution to prospective purchasers or to owners of existing Policies
not funded by the Shares. In the event that the Company requests that the
Trust or its designee provides the Trust's prospectus in a "camera ready"
or diskette format, the Trust shall be responsible for providing the
prospectus in the format in which it or MFS is accustomed to formatting
prospectuses and shall bear the expense of providing the prospectus in such
format (e.g., typesetting expenses), and the Company shall bear the expense
of adjusting or changing the format to conform with any of its
prospectuses.
3.2. The prospectus for the Shares shall state that the statement of
additional information for the Shares is available from the Trust or its
designee. The Trust or its designee, at its expense, shall print and
provide such statement of additional information to the Company (or a
master of such statement suitable for duplication by the Company) for
distribution to any owner of a Policy funded by the Shares. The Trust or
its designee, at the Company's expense, shall print and provide such
statement to the Company (or a master of such statement suitable for
duplication by the Company) for distribution to a prospective purchaser who
requests such statement or to an owner of a Policy not funded by the
Shares.
3.3. The Trust or its designee shall provide the Company free of charge
copies, if and to the extent applicable to the Shares, of the Trust's proxy
materials, reports to Shareholders and other communications to Shareholders
in such quantity as the Company shall reasonably require for distribution
to Policy owners.
3.4. Notwithstanding the provisions of Sections 3.1, 3.2, and 3.3 above, or
of Article V below, the Company shall pay the expense of printing or
providing documents to the extent such cost is considered a distribution
expense. Distribution expenses would include by way of illustration, but
are not limited to, the printing of the Shares' prospectus or prospectuses
for distribution to prospective purchasers or to owners of existing
Policies not funded by such Shares.
3.5. The Trust hereby notifies the Company that it may be appropriate to
include in the prospectus pursuant to which a Policy is offered disclosure
regarding the potential risks of mixed and shared funding.
3.6. If and to the extent required by law, the Company shall:
(a) solicit voting instructions from Policy owners;
(b) vote the Shares in accordance with instructions received from
Policy owners; and
(c) vote the Shares for which no instructions have been received in
the same proportion as the Shares of such Portfolio for which
instructions have been received from Policy owners;
so long as and to the extent that the SEC continues to interpret the 1940
Act to require pass through voting privileges for variable contract owners.
The Company will in no way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Policy owners. The Company reserves the right to vote shares held in any
segregated asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts holding Shares calculates voting privileges
in the manner required by the Mixed and Shared Funding Exemptive Order. The
Trust and MFS will notify the Company of any changes of interpretations or
amendments to the Mixed and Shared Funding Exemptive Order.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee, each piece of sales literature or other promotional
material in which the Trust, MFS, any other investment adviser to the
Trust, or any affiliate of MFS are named, at least three (3) Business Days
prior to its use. No such material
<PAGE>
shall be used if the Trust, MFS, or their respective designees reasonably
objects to such use within three (3) Business Days after receipt of such
material.
4.2. The Company shall not give any information or make any representations
or statement on behalf of the Trust, MFS, any other investment adviser to
the Trust, or any affiliate of MFS or concerning the Trust or any other
such entity in connection with the sale of the Policies other than the
information or representations contained in the registration statement,
prospectus or statement of additional information for the Shares, as such
registration statement, prospectus and statement of additional information
may be amended or supplemented from time to time, or in reports or proxy
statements for the Trust, or in sales literature or other promotional
material approved by the Trust, MFS or their respective designees, except
with the permission of the Trust, MFS or their respective designees. The
Trust, MFS or their respective designees each agrees to respond to any
request for approval on a prompt and timely basis. The Company shall adopt
and implement procedures reasonably designed to ensure that information
concerning the Trust, MFS or any of their affiliates which is intended for
use only by brokers or agents selling the Policies (i.e., information that
is not intended for distribution to Policy holders or prospective Policy
holders) is so used, and neither the Trust, MFS nor any of their affiliates
shall be liable for any losses, damages or expenses relating to the
improper use of such broker only materials.
4.3. The Trust or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature
or other promotional material in which the Company and/or the Accounts is
named, at least three (3) Business Days prior to its use. No such material
shall be used if the Company or its designee reasonably objects to such use
within three (3) Business Days after receipt of such material.
4.4. The Trust and MFS shall not give, and agree that the Underwriter shall
not give, any information or make any representations on behalf of the
Company or concerning the Company, the Accounts, or the Policies in
connection with the sale of the Policies other than the information or
representations contained in a registration statement, prospectus, or
statement of additional information for the Policies, as such registration
statement, prospectus and statement of additional information may be
amended or supplemented from time to time, or in reports for the Accounts,
or in sales literature or other promotional material approved by the
Company or its designee, except with the permission of the Company. The
Company or its designee agrees to respond to any request for approval on a
prompt and timely basis. The parties hereto agree that this Section 4.4. is
neither intended to designate nor otherwise imply that MFS is an
underwriter or distributor of the Policies.
4.5. The Company and the Trust (or its designee in lieu of the Company or
the Trust, as appropriate) will each provide to the other at least one
complete copy of all registration statements, prospectuses, statements of
additional information, reports, proxy statements, sales literature and
other promotional materials, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate to
the Policies, or to the Trust or its Shares, prior to or contemporaneously
with the filing of such document with the SEC or other regulatory
authorities. The Company and the Trust shall also each promptly inform the
other or the results of any examination by the SEC (or other regulatory
authorities) that relates to the Policies, the Trust or its Shares, and the
party that was the subject of the examination shall provide the other party
with a copy of relevant portions of any "deficiency letter" or other
correspondence or written report regarding any such examination.
4.6. The Trust and MFS will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Portfolio, and of
any material change in the Trust's registration statement, particularly any
change resulting in change to the registration statement or prospectus or
statement of additional information for any Account. The Trust and MFS will
cooperate with the Company so as to enable the Company to solicit proxies
from Policy owners or to make changes to its prospectus, statement of
additional information or registration statement, in an orderly manner. The
Trust and MFS will make
<PAGE>
reasonable efforts to attempt to have changes affecting Policy prospectuses
become effective simultaneously with the annual updates for such
prospectuses.
4.7. For purpose of this Article IV and Article VIII, the phrase "sales
literature or other promotional material" includes but is not limited to
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures, or
other public media), and sales literature (such as brochures, circulars,
reprints or excerpts or any other advertisement, sales literature, or
published articles), distributed or made generally available to customers
or the public, educational or training materials or communications
distributed or made generally available to some or all agents or employees.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust shall pay no fee or other compensation to the Company under
this Agreement, and the Company shall pay no fee or other compensation to
the Trust, except that if the Trust or any Portfolio adopts and implements
a plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution
and Shareholder servicing expenses, then, subject to obtaining any required
exemptive orders or regulatory approvals, the Trust may make payments to
the Company or to the underwriter for the Policies if and in amounts agreed
to by the Trust in writing. Each party, however, shall, in accordance with
the allocation of expenses specified in Articles III and V hereof,
reimburse other parties for expense initially paid by one party but
allocated to another party. In addition, nothing herein shall prevent the
parties hereto from otherwise agreeing to perform, and arranging for
appropriate compensation for, other services relating to the Trust and/or
to the Accounts.
5.2. The Trust or its designee shall bear the expenses for the cost of
registration and qualification of the Shares under all applicable federal
and state laws, including preparation and filing of the Trust's
registration statement, and payment of filing fees and registration fees;
preparation and filing of the Trust's proxy materials and reports to
Shareholders; setting in type and printing its prospectus and statement of
additional information (to the extent provided by and as determined in
accordance with Article III above); setting in type and printing the proxy
materials and reports to Shareholders (to the extent provided by and as
determined in accordance with Article III above); the preparation of all
statements and notices required of the Trust by any federal or state law
with respect to its Shares; all taxes on the issuance or transfer of the
Shares; and the costs of distributing the Trust's prospectuses and proxy
materials to owners of Policies funded by the Shares and any expenses
permitted to be paid or assumed by the Trust pursuant to a plan, if any,
under Rule 12b-l under the 1940 Act. The Trust shall not bear any expenses
of marketing the Policies.
5.3. The Company shall bear the expenses of distributing the Shares'
prospectus or prospectuses in connection with new sales of the Policies and
of distributing the Trust's Shareholder reports and proxy materials to
Policy owners. The Company shall bear all expenses associated with the
registration, qualification, and filing of the Policies under applicable
federal securities and state insurance laws; the cost of preparing,
printing and distributing the Policy prospectus and statement of additional
information; and the cost of preparing, printing and distributing annual
individual account statements for Policy owners as required by state
insurance laws.
5.4. MFS will quarterly reimburse the Company certain of the administrative
costs and expenses incurred by the Company as a result of operations
necessitated by the beneficial ownership by Policy owners of shares of the
Portfolios of the Trust, equal to 0.15% per annum of the net assets of the
Trust attributable to variable life or variable annuity contracts offered
by Company or its affiliates up to $100 million and 0.20% per annum of the
net assets of the Trust attributable to such contracts over $100 million.
In no event shall such fee be paid by the Trust, its shareholders or by the
Policy holders.
<PAGE>
ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS
6.1. The Trust and MFS represent and warrant that each Portfolio of the
Trust will meet the diversification requirements of Section 817(h)(1) of
the Code and Treas. Reg. 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts,
as they may be amended from time to time (and any revenue rulings, revenue
procedures, notices, and other published announcements of the Internal
Revenue Service interpreting these Sections), as if those requirements
applied directly to each such Portfolio. In the event that any Portfolio is
not so diversified at the end of any applicable quarter, the Trust and MFS
will make every effort to (a) adequately diversify the Portfolio so as to
achieve compliance within the grace period afforded by Treas. Reg. 1.817-5
and (b) notify the Company.
6.2 The Trust and MFS represent that each Portfolio of the Trust will elect
to be qualified as a Regulated Investment Company under Subchapter M of the
Code and that every effort will be made to maintain such qualification
(under Subchapter M or any successor or similar provision) and that the
Trust or its designee will notify the Company promptly upon having a
reasonable basis for believing that any Portfolio of the Trust has ceased
to so qualify or that any Portfolio might not so qualify in the future.
ARTICLE VII. POTENTIAL MATERIAL CONFLICTS
7.1. The Trust agrees that the Board, constituted with a majority of
disinterested trustees, will monitor each Portfolio of the Trust for the
existence of any material irreconcilable conflict between the interests of
the variable annuity contract owners and the variable life insurance policy
owners of the Company and/or affiliated companies ("contract owners")
investing in the Trust. The Board shall have the sole authority to
determine if a material irreconcilable conflict exists, and such
determination shall be binding on the Company only if approved in the form
of a resolution by a majority of the Board, or a majority of the
disinterested trustees of the Board. The Board will give prompt notice of
any such determination to the Company.
7.2. The Company agrees that it will be responsible for assisting the Board
in carrying out its responsibilities under the conditions set forth in the
Trust's exemptive application pursuant to which the SEC has granted the
Mixed and Shared Funding Exemptive Order by providing the Board, as it may
reasonably request, with all information necessary for the Board to
consider any issues raised and agrees that it will be responsible for
promptly reporting any potential or existing conflicts of which it is aware
to the Board including, but not limited to, an obligation by the Company to
inform the Board whenever contract owner voting instructions are disregard.
The Company also agrees that, if a material irreconcilable conflict arises,
it will at its own cost remedy such conflict up to and including (a)
withdrawing the assets allocable to some or all of the Accounts from the
Trust or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Trust, or submitting to a vote of all affected contract owners whether to
withdraw assets from the Trust or any Portfolio and reinvesting such assets
in a different investment medium and, as appropriate, segregating the
assets attributable to any appropriate group of contract owners that votes
in favor of such segregation, or offering to any of the affected contract
owners the option of segregating the assets attributable to their contracts
or policies, and (b) establishing a new registered management investment
company and segregating the assets underlying the Policies, unless a
majority of Policy owners materially adversely affected by the conflict
have voted to decline the offer to establish a new registered management
investment company.
7.3. A majority of the disinterested trustees of the Board shall determine
whether any proposed action by the Company adequately remedies any material
irreconcilable conflict. In the event that the Board determines that any
proposed action does not adequately remedy any material irreconcilable
conflict, the Company will withdraw from investment in the Trust each of
the Accounts designated by the disinterested trustees and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the
<PAGE>
foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required to remedy any such
material irreconcilable conflict as determined by a majority of the
disinterested trustees of the Board.
7.4. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or
shares funding (as defined in the Mixed and Shared Funding Exemptive Order)
on terms and conditions materially different from those contained in the
Mixed Shared Funding Exemptive Order, then (a) the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with Rule 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.5, 3.6, 7.1, 7.2, 7.3 and 7.4 of this Agreement shall continue in effect
only to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. Indemnification by the Company
The Company agrees to indemnify and hold harmless the Trust, MFS, any
affiliates of MFS, and each of their respective directors/trustees,
officers and each person, if any, who controls the Trust or MFS within the
meaning of Section 15 of the 1933 Act, and any agents or employees of the
foregoing (each an "Indemnified Party," or collectively, the "Indemnified
Parties" for purposes of this Section 8.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company) or expenses (including reasonable counsel
fees) to which an Indemnified Party may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Shares or the
Policies and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus or statement of additional
information for the Policies or contained in the Policies or
sales literature or other promotional material for the Policies
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the commission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reasonable
reliance upon and in conformity with information furnished to the
Company or its designee by or on behalf of the Trust or MFS for
use in the registration statement, prospectus or statement of
additional information for the Policies or in the Policies or
sales literature or other promotional material (or any amendment
or supplement) or otherwise for use in connection with the sale
of the Policies or Shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material of
the Trust not supplied by the Company or this designee, or
persons under its control and on which the Company has reasonably
relied) or wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Policies
or Shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the registration statement,
prospectus, statement of additional information, or sales
literature or other promotional literature of the Trust, or any
amendment thereof or
<PAGE>
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance
upon information furnished to the Trust by or on behalf of the
Company; or
(d) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company; or
(e) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.2. Indemnification by the Trust
The Trust agrees to indemnify and hold harmless the Company and each
of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act, and any agents or
employees of the foregoing (each an "Indemnified Party," or collectively,
the "Indemnified Parties" for purposes of this Section 8.2) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Trust) or expenses (including
reasonable counsel fees) to which any Indemnified Party may become subject
under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Shares or the
Policies and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reasonable
reliance upon and in conformity with information furnished to the
Trust, MFS, the Underwriter or their respective designees by or
on behalf of the Company for use in the registration statement,
prospectus or statement of additional information for the Trust
or in sales literature or other promotional material for the
Trust (or any amendment or supplement) or otherwise for use in
connection with the sale of the Policies or Shares; or
(b) arise out of or as a result of statements or representations
(other than statement or representations contained in the
registration statement, prospectus, statement of additional
information or sales literature or other promotional material for
the Policies not supplied by the Trust, MFS, the Underwriter or
any of their respective designees or persons under their
respective control and on which any such entity has reasonably
relied) or wrongful conduct of the Trust or persons under its
control, with respect to the sale or distribution of the Policies
or Shares; or
(c) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification
requirements or a failure to qualify as a registered investment
company, each as specified in Article VI of this Agreement) or
arise out of or result from any other material breach of this
Agreement by the Trust; or
<PAGE>
(d) arise out of or result from the materially incorrect or untimely
calculation or reporting of the daily net asset value per share
or dividend or capital gain distribution rate; or
(e) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of the
Agreement;
as limited by and in accordance with the provisions of this Article VIII.
8.3. In no event shall the Trust be liable under the indemnification
provisions contained in this Agreement to any individual or entity,
including without limitation, the Company, or any Participating Insurance
Company or any Policy holder, with respect to any losses, claims, damages,
liabilities or expenses that arise out of or result from (i) a breach of
any representation, warranty, and/or covenant made by the Company hereunder
or by any Participating Insurance Company under an agreement containing
substantially similar representations, warranties and covenants; (ii) the
failure by the Company or any Participating Insurance Company to maintain
its segregated asset account (which invests in any Portfolio) as a legally
and validly established segregated asset account under applicable state law
and as a duly registered unit investment trust under the provisions of the
1940 Act (unless exempt therefrom); or (iii) the failure by the Company or
any Participating Insurance Company to maintain its variable annuity and/or
variable life insurance contracts (with respect to which any Portfolio
serves as an underlying funding vehicle) as life insurance, endowment or
annuity contracts under applicable provisions of the Code.
8.4. Neither the Company nor the Trust shall be liable under the
indemnification provisions contained in this Agreement with respect to any
losses, claims, damages, liabilities or expenses to which an Indemnified
Party would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, willful misconduct, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement.
8.5. Promptly after receipt by an Indemnified Party under this Section 8.5.
of commencement of action, such Indemnified Party will, if a claim in
respect thereof is to be made against the indemnifying party under this
section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any Indemnified Party otherwise than under
this section. In case any such action is brought against any Indemnified
Party, and it notified the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, assume the defense thereof, with counsel
satisfactory to such Indemnified Party. After notice from the indemnifying
party of its intention to assume the defense of an action, the Indemnified
Party shall bear the expenses of any additional counsel obtained by it, and
the indemnifying party shall not be liable to such Indemnified Party under
this section for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation.
8.6. Each of the parties agrees promptly to notify the other parties of the
commencement of any litigation or proceeding against it or any of its
respective officers, directors, trustees, employees or 1933 Act control
persons in connection with the Agreement, the issuance or sale of the
Policies, the operation of the Accounts, or the sale or acquisition of
Shares.
8.7. A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII are in addition
to any liability the parties may otherwise have.
<PAGE>
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
SEC may grant and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. NOTICE OF FORMAL PROCEEDINGS
The Trust, MFS, and the Company agree that each such party shall promptly
notify the other parties to this Agreement, in writing, of the institution of
any formal proceedings brought against such party or its designees by the NASD,
the SEC, or any insurance department or any other regulatory body regarding such
party's duties under this Agreement or related to the sale of the Policies, the
operation of the Accounts, or the purchase of the Shares.
ARTICLE XI. TERMINATION
11.1. This Agreement shall terminate with respect to the Accounts, or one,
some, or all Portfolios:
(a) at the option of any party upon six (6) months' advance written
notice to the other parties; or
(b) at the option of the Company to the extent that the Shares of
Portfolios are not reasonably available to meet the requirements
of the Policies or are not "appropriate funding vehicles" for the
Policies, as reasonably determined by the Company. Without
limiting the generality of the foregoing, the Shares of a
Portfolio would not be "appropriate funding vehicles" if, for
example, such Shares did not meet the diversification or other
requirements referred to in Article VI hereof; or if the Company
would be permitted to disregard Policy owner voting instructions
pursuant to Rule 6e-2 or 6e-3(T) under the 1940 Act. Prompt
notice of the election to terminate for such cause and an
explanation of such cause shall be furnished to the Trust by the
Company; or
(c) at the option of the Trust or MFS upon institution of formal
proceedings against the Company by the NASD, the SEC, or any
insurance department or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of
the Policies, the operation of the Accounts, or the purchase of
the Shares; or
(d) at the option of the Company upon institution of formal
proceedings against the Trust by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body
regarding the Trust's or MFS' duties under this Agreement or
related to the sale of the Shares; or
(e) at the option of the Company, the Trust or MFS upon receipt of
any necessary regulatory approvals and/or the vote of the Policy
owners having an interest in the Accounts (or any subaccounts) to
substitute the shares of another investment company for the
corresponding Portfolio Shares in accordance with the terms of
the Policies for which those Portfolio Shares had been selected
to serve as the underlying investment media. The Company will
give thirty (30) days' prior written notice to the Trust of the
Date of any proposed vote or other action taken to replace the
Shares; or
<PAGE>
(f) termination by either the Trust or MFS by written notice to the
Company, if either one or both of the Trust or MFS respectively,
shall determine, in their sole judgment exercised in good faith,
that the Company has suffered a material adverse change in its
business, operations, financial condition, or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(g) termination by the Company by written notice to the Trust and
MFS, if the Company shall determine, in its sole judgment
exercised in good faith, that the Trust or MFS has suffered a
material adverse change in this business, operations, financial
condition or prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(h) at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
(i) upon assignment of this Agreement, unless made with the written
consent of the parties hereto.
11.2. The notice shall specify the Portfolio or Portfolios, Policies and,
if applicable, the Accounts as to which the Agreement is to be terminated.
11.3. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1 (a) may be exercised for
cause or for no cause.
11.4. Except as necessary to implement Policy owner initiated transactions,
or as required by state insurance laws or regulations, the Company shall
not redeem the Shares attributable to the Policies (as opposed to the
Shares attributable to the Company's assets held in the Accounts), and the
Company shall not prevent Policy owners from allocating payments to a
Portfolio that was otherwise available under the Policies, until thirty
(30) days after the Company shall have notified the Trust of its intention
to do so.
11.5. Notwithstanding any termination of this Agreement, the Trust and MFS
shall, at the option of the Company, continue to make available additional
shares of the Portfolios pursuant to the terms and conditions of this
Agreement, for all Policies in effect on the effective date of termination
of this Agreement (the "Existing Policies"), except as otherwise provided
under Article VII of this Agreement. Specifically, without limitation, the
owners of the Existing Policies shall be permitted to transfer or
reallocate investment under the Policies, redeem investments in any
Portfolio and/or invest in the Trust upon the making of additional purchase
payments under the Existing Policies.
11.6. If this Agreement terminates, the parties agree that Article VIII,
and to the extent that all or a portion of the assets of the Accounts
continue to be invested in the Trust, Articles I, II, III, VI and VII, will
remain in effect after termination.
<PAGE>
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Trust:
MFS VARIABLE INSURANCE TRUST
500 Boylston Street
Boston, Massachusetts 02116
Attn: Stephen E. Cavan, Secretary
If to the Company:
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
751 Broad Street, 21 Plaza
Newark, NJ 07 102-3777
Attn: Mary L. Cavanaugh,
Deputy Chief Legal Officer
If to MFS:
MASSACHUSETTS FINANCIAL SERVICES COMPANY
500 Boylston Street
Boston, Massachusetts 02116
Attn: Stephen E. Cavan, General Counsel
ARTICLE XIII. MISCELLANEOUS
13.1. Subject to the requirement of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of
the owners of the Policies and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted
by this Agreement or as otherwise required by applicable law or regulation,
shall not disclose, disseminate or utilize such names and addresses and
other confidential information without the express written consent of the
affected party until such time as it may come into the public domain.
13.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
13.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which taken together shall constitute one and the
same instrument.
13.4. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
13.5. The Schedule attached hereto, as modified from time to time, is
incorporated herein by reference and is part of this Agreement.
<PAGE>
13.6. Each party hereto shall cooperate with each other party in connection
with inquiries by appropriate governmental authorities (including without
limitation the SEC, the NASD, and state insurance regulators) relating to
this Agreement or the transactions contemplated hereby.
13.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
13.8. A copy of the Trust's Declaration of Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. The Company
acknowledges that the obligations of or arising out of this instrument are
not binding upon any of the Trust's trustees, officers, employees, agents
or shareholders individually, but are binding solely upon the assets and
property of the Trust in accordance with its proportionate interest
hereunder. The Company further acknowledges that the assets and liabilities
of each Portfolio are separate and distinct and that the obligations of or
arising out of this instrument are binding solely upon the assets or
property of the Portfolio on whose behalf the Trust has executed this
instrument. The Company also agrees that the obligations of each Portfolio
hereunder shall be several and not joint, in accordance with its
proportionate interest hereunder, and the Company agrees not to proceed
against any Portfolio for the obligations of another Portfolio.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified above.
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
By its authorized officer,
By: /s/ Paul Haley
--------------------------------------------------
Title: Vice President & Actuary
MFS VARIABLE INSURANCE TRUST, on behalf of the
Portfolios By its authorized officer and not
individually,
By: /s/ A. Keith Brodkin
--------------------------------------------------
A. Keith Brodkin, Chairman
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By its authorized officer,
By: /s/ Arnold D. Scott
--------------------------------------------------
Arnold D. Scott, Senior Executive Vice President
PARTICIPATION AGREEMENT
Among
T. ROWE PRICE INTERNATIONAL SERIES, INC.,
T. ROWE PRICE EQUITY SERIES, INC.,
T. ROWE PRICE INVESTMENT SERVICES, INC.,
and
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
THIS AGREEMENT, made and entered into as of this 14th day of February, 1997
by and among Pruco Life Insurance Company of New Jersey (hereinafter, the
"Company"), a New Jersey insurance company, on its own behalf and on behalf of
each segregated asset account of the Company set forth on Schedule A hereto as
may be amended from time to time (each account hereinafter referred to as the
"Account"), and the undersigned funds, each, a corporation organized under the
laws of Maryland (each hereinafter referred to as the "Fund") and T. Rowe Price
Investment Services, Inc. (hereinafter the "Underwriter"), a Maryland
corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is or will be available to act as the investment vehicle for
separate accounts established for variable life insurance and variable annuity
contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
Underwriter (hereinafter "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC") granting Participating Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company
Act of 1940, as amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T) (b)(15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies
(hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
<PAGE>
WHEREAS, T. Rowe Price Associates, Inc. and Rowe Price-Fleming
International, Inc. (each hereinafter referred to as the "Adviser") are each
duly registered as an investment adviser under the Investment Advisers Act of
1940, as amended, and any applicable state securities laws; and
WHEREAS, the Company has issued or will issue certain variable life
insurance or variable annuity contracts (including any certificates thereunder)
supported wholly or partially by the Account (the "Contracts"), and said
Contracts are listed in Schedule A hereto, as it may be amended from time to
time by mutual written agreement; and
WHEREAS, the Account is duly established and maintained as a segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid Contracts; and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act or will not register the Account in proper
reliance upon an exclusion from registration under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 The Underwriter agrees to sell to the Company those shares of the
Designated Portfolios which the Account orders, executing such orders on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Designated Portfolios.
1.2 The Fund agrees to make shares of the Designated Portfolios available
for purchase at the applicable net asset value per share by the Company and the
Account on those days on which the Fund calculates its net asset value pursuant
to rules of the SEC, and the Fund shall use its best efforts to calculate such
net asset value on each day which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the Board of Directors of the Fund
(hereinafter the "Board") may refuse to sell shares of any Designated Portfolio
to any person, or suspend or terminate the offering of shares of any Designated
Portfolio if such action is required by law or by regulatory authorities having
jurisdiction, or is, in the sole discretion of the Board acting in good faith
and in
<PAGE>
light of their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Designated
Portfolio.
1.3 The Fund and the Underwriter agree that shares of the Fund will be sold
only to Participating Insurance Companies and their separate accounts as
provided under Section 817(h)(4) of the Internal Revenue Code of 1986, as
amended (the "Code"). No shares of any Designated Portfolios will be sold to the
general public. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Articles I and VII of this Agreement is in effect to
govern such sales.
1.4 The Fund agrees to redeem, on the Company's request, any full or
fractional shares of the Designated Portfolios held by the Company, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption, except that
the Fund reserves the right to suspend the right of redemption or postpone the
date of payment or satisfaction upon redemption consistent with Section 22(e) of
the 1940 Act and any sales thereunder, and in accordance with the procedures and
policies of the Fund as described in the then current prospectus.
1.5 For purposes of Sections 1.1 and 1.4, the Company shall be the designee
of the Fund for receipt of purchase and redemption orders from the Account, and
receipt by such designee shall constitute receipt by the Fund; provided that the
Company receives the order by 4:00 p.m. Baltimore time and the Fund receives
notice of such order by 9:30 a.m. Baltimore time on the next following Business
Day. "Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which the Fund calculates its net asset value pursuant
to the rules of the SEC.
1.6 The Company agrees to purchase and redeem the shares of each Designated
Portfolio offered by the then current prospectus of the Fund and in accordance
with the provisions of such prospectus.
1.7 The Company shall pay for Fund shares on the next Business Day after
receipt of an order to purchase Fund shares. Payment shall be in federal funds
transmitted by wire by 4:00 p.m. Baltimore time. If payment in Federal Funds for
any purchase is not received or is received by the Fund after 4:00 p.m.
Baltimore time on such Business Day, the Company shall promptly, upon the Fund's
request, reimburse the Fund for any charges, costs, fees, interest or other
expenses incurred by the Fund in connection with any advances to, or borrowings
or overdrafts by, the Fund, or any similar expenses incurred by the Fund, as a
result of portfolio transactions effected by the Fund based upon such purchase
request. For purposes of Section 2.8 and 2.9 hereof, upon receipt by the Fund of
the federal funds so wired, such funds shall cease to be the responsibility of
the Company and shall become the responsibility of the Fund.
1.8 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.9 The Fund shall furnish same day notice (by wire or telephone, followed
by written confirmation) to the Company of any income, dividends or capital gain
distributions payable on the Designated Portfolios' shares. Any material error
in the income dividend, or capital gain distribution
<PAGE>
information shall be reported to the Company promptly upon discovery. The
Company hereby elects to receive all such income, dividends, and capital gain
distributions as are payable on Designated Portfolio shares in additional shares
of that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions. The Fund shall use its best efforts to furnish
advance notice of the day such dividends and distributions are expected to be
paid.
1.10 The Fund shall make the net asset value per share for each Designated
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Baltimore time) and shall use its best efforts to make such net asset value
per share available by 7 p.m. Baltimore time. If the net asset value is
materially incorrect through no fault of the Company, the Company on behalf of
each Account, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct net asset value in accordance with
Fund procedures. Any material error in the net asset value shall be reported to
the Company promptly upon discovery. Any administrative or other costs or losses
incurred for correcting underlying Contract owner accounts shall be at Company's
expense.
1.11 The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Fund's shares may be sold to other
insurance companies (subject to Section 1.3 and Article VI hereof) and the cash
value of the Contracts may be invested in other investment companies.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act or that the Contracts are not registered because
the are properly exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are properly exempt from registration under the
1933 Act. The Company further represents and warrants that the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws and that the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly organized
and in good standing under applicable law and that it has legally and validly
established the Account prior to any issuance or sale thereof as a segregated
asset account under the New Jersey insurance laws and has registered or, prior
to any issuance or sale of the Contracts, will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts or that it has not registered
the Account in proper reliance upon an exclusion from registration under the
1940 Act.
2.2 The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
and sold in compliance with the laws of the state of New Jersey and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
<PAGE>
2.3 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, although it may
make such payments in the future. To the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1, the Fund will undertake to have a
Board, a majority of whom are not interested persons of the Fund, formulate and
approve any plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses.
2.4 The Fund makes no representations as to whether any aspect of its
operations, including but not limited to, investment policies, fees and
expenses, complies with the insurance and other applicable laws of the various
states, except that the Fund represents that the Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the laws
of the state of New Jersey to the extent required to perform this Agreement.
2.5 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will comply in all
material respects with the 1940 Act.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of New Jersey and any applicable state
and federal securities laws.
2.7 The Underwriter represents and warrants that the Adviser is and shall
remain duly registered under all applicable federal and state securities laws
and that the Adviser shall perform its obligations for the Fund in compliance in
all material respects with the laws of the State of New Jersey and any
applicable state and federal securities laws.
2.8 The Fund and the Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other individuals or
entities dealing with the money and/or securities of the Fund are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimum
coverage as required currently by Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.9 The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed or controlled by
the Company dealing with the money and/or securities of the Fund are covered by
a blanket fidelity bond or similar coverage in an amount not less than $5
million. The aforesaid bond includes coverage for larceny and embezzlement and
is issued by a reputable bonding company. The Company agrees that any amounts
received under such bond in connection with claims that arise from the
arrangements described in this Agreement will be held by the Company for the
benefit of the Fund. The Company agrees to make all reasonable efforts to see
that this bond or another bond containing these provisions is always in effect,
and agrees to notify the Fund and the Underwriter in the event that such
coverage no longer applies. The Company agrees to exercise its best efforts to
ensure that other individuals/entities not employed or controlled by the Company
and dealing with the money and/or securities of the Fund maintain a similar bond
or coverage in a reasonable amount.
<PAGE>
ARTICLE III. Prospectuses, Statements of Additional Information, and Proxy
Statements; Voting
3.1 The Underwriter shall provide the Company (at the Company's expense)
with as many copies of the Fund's current prospectus (describing only the
Designated Portfolios listed on Schedule A) as the Company may reasonably
request. If requested by the Company in lieu thereof, the Fund shall provide
such documentation (including a final copy of the new prospectus as set in type
or on a diskette, at the Fund's expense) and other assistance as is reasonably
necessary in order for the Company (at the Company's expense) once each year (or
more frequently if the prospectus for the Fund is amended) to have the
prospectus (which shall include an offering memorandum, if any) for the
Contracts, prospectuses for other mutual funds in which the Contracts may be
invested, and the Fund's prospectus printed together in one document.
3.2 The Fund's prospectus shall state that the current Statement of
Additional Information ("SAI") for the Fund is available from the Company (or,
in the Fund's discretion, from the Fund), and the Underwriter (or the Fund), at
its expense, shall print, or otherwise reproduce, and provide a copy of such SAI
free of charge to the Company for itself and for any owner of a Contract who
requests such SAI.
3.3 The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners in the Fund. The Underwriter (at the Company's
expense) shall provide the Company with copies of the Fund's annual and
semi-annual reports to shareholders in such quantity as the Company shall
reasonably request for use in connection with offering the Variable Contracts
issued by the Company. If requested by the Company in lieu thereof, the
Underwriter shall provide such documentation (which may include a final copy of
the Fund's annual and semi-annual reports as set in type or on diskette) and
other assistance as is reasonably necessary in order for the Company (at the
Company's expense) to print such shareholder communications for distribution to
Contract owners.
3.4 The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
Designated Portfolio for which instructions have been
received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company reserves the right to vote Fund
shares held in any segregated asset account in its own right, to the extent
permitted by law.
<PAGE>
3.5 Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated Portfolio
calculates voting privileges as required by the Shared Funding Exemptive Order
and consistent with any reasonable standards that the Fund may adopt.
3.6 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the Fund
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the SEC's interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors or trustees and with whatever
rules the SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material
that the Company develops or uses and in which the Fund (or a Portfolio thereof)
or the Adviser or the Underwriter is named, at least ten calendar days prior to
its use. No such material shall be used if the Fund or its designee reasonably
object to such use within ten calendar days after receipt of such material. The
Fund or its designee reserves the right to reasonably object to the continued
use of such material, and no such material shall be used if the Fund or its
designee so object.
4.2 The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus or SAI for the Fund
shares, as such registration statement and prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3 The Fund, Underwriter, or its designee shall furnish, or shall cause to
be furnished, to the Company, each piece of sales literature or other
promotional material in which the Company, and/or its Account, is named at least
ten calendar days prior to its use. No such material shall be used if the
Company reasonably objects to such use within ten calendar days after receipt of
such material. The Company reserves the right to reasonably object to the
continued use of such material and no such material shall be used if the Company
so objects.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus, or SAI for the Contracts, as
such registration statement, prospectus or SAI may be amended or supplemented
from time to time, or in published reports for the Account which are in the
public domain or approved by the Company for distribution to Contract owners, or
in sales literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
<PAGE>
4.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Fund or its shares, contemporaneously with the filing of such
document(s) with the SEC or other regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Account, contemporaneously with the
filing of such document(s) with the SEC or other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature and other
promotional materials" includes, but is not limited to, any of the following
that refer to the Fund or any affiliate of the Fund: advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature
(ie., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, reports, market
letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Funds.
ARTICLE V. Fees and Expenses
5.1 The Fund and the Underwriter shall pay no fee or other compensation to
the Company under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the Underwriter in
writing, and such payments will be made out of existing fees otherwise payable
to the Underwriter, past profits of the Underwriter, or other resources
available to the Underwriter. No such payments shall be made directly by the
Fund. Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund, except as otherwise provided herein. The Fund shall
see to it that all its shares are registered and authorized for issuance in
accordance with applicable federal law and, if and to the extent deemed
advisable by the Fund, in accordance with applicable state laws prior to their
sale. The Fund shall bear the expenses for the cost of registration and
qualification of the Fund's shares, preparation and filing of the Fund's
prospectus and registration statement, proxy materials and reports, setting the
prospectus in type, setting in type and printing the proxy materials and reports
to shareholders (including the costs of printing a prospectus that constitutes
an annual report), the preparation of all statements and notices required by any
federal or state law, and all taxes on the issuance or transfer of the Fund's
shares.
<PAGE>
5.3 The Company shall bear the expenses of printing the Fund's prospectus
(in accordance with 3.1) and of distributing the Fund's prospectus, proxy
materials, and reports to Contract owners and prospective Contract owners.
ARTICLE VI. Diversification and Qualification
6.1 Subject to the Company's maintaining the treatment of the Contracts as
life insurance, endowment, or annuity contracts under applicable provisions of
the Code and the regulations issued thereunder (or any successor provisions),
the Fund will invest its assets in such a manner as to ensure that the Contracts
will be treated as annuity, endowment, or life insurance contracts, whichever is
appropriate, under the Code and the regulations issued thereunder (or any
successor provisions). Without limiting the scope of the foregoing, the Fund
will comply with Section 817(h) of the Code and Treasury Regulation ss. 1.817-5,
and any Treasury interpretations thereof, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts, and
any amendments or other modifications or successor provisions to such Section or
Regulations. In the event of a breach of this Article VI by the Fund, it will
take all reasonable steps (a) to notify the Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 817.5.
6.2 The Fund represents that it is or will be qualified as a Regulated
Investment Company under Subchapter M of the Code, and that it will make every
effort to maintain such qualification (under Subchapter M or any successor or
similar provisions) and that it will notify the Company immediately upon having
a reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
6.3 Subject to the Fund's compliance with Section 817(h) of the Code and
Treasury Regulation ss. 1.817-5, and any Treasury interpretations thereof,
relating to the diversification requirements for variable annuity, endowment, or
life insurance contracts, any amendments or other modifications or successor
provisions to such Sections or Regulations, the Company represents that the
Contracts are currently, and at the time of issuance shall be, treated as life
insurance, endowment contracts, or annuity insurance contracts, under applicable
provisions of the Code, and that it will make every effort to maintain such
treatment, and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing the Contracts have ceased to be so
treated or that they might not be so treated in the future. The Company agrees
that any prospectus offering a contract that is a "modified endowment contract"
as that term is defined in Section 7702A of the Code (or any successor or
similar provision), shall identify such contract as a modified endowment
contract.
ARTICLE VII. Potential Conflicts.
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
<PAGE>
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever Contract owner voting instructions are
disregarded.
7.3 If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested Board members), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2), establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such Account
provided, however, that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as determined
by a majority of the disinterested members of the Board. Any such withdrawal and
termination must take place within six (6) months after the Fund gives written
notice that this provision is being implemented, and until the end of that six
month period the Fund shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Fund.
7.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account within six months after the Board informs the Company in writing
that it has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested members of the Board. Until the
end of the foregoing six month period, the Fund shall continue to accept and
implement orders by the company for the purchase (and redemption) of shares of
the Fund.
<PAGE>
7.6 For purposes of Section 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a new funding
medium for the Contract if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict. In the event that the Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in writing
of the foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board.
7.7 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this Agreement
shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE VIII. Indemnification
8.1 Indemnification By the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
the Underwriter and each of their officers and directors and each person,
if any, who controls the Fund or the Underwriter within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent
of the Company) or litigation (including legal and other expenses), to
which the Indemnified Parties may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
Registration Statement, prospectus (which shall include an
offering memorandum, if any), or statement of additional
information for the Contracts or contained in the Contracts or
sales literature or other promotional material for the Contracts
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such
<PAGE>
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on
behalf of the Fund for use in the Registration Statement,
prospectus or statement of additional information for the
Contracts or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature or other
promotional material of the Fund not supplied by the Company or
persons under its control) or wrongful conduct of the Company or
persons under its authorization or control, with respect to the
sale or distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement,
prospectus, or sales literature or other promotional material of
the Fund or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made
in reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of its obligations or
duties under this Agreement.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise
<PAGE>
than on account of this indemnification provision. In case any such action
is brought against an Indemnified Party, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The Company
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action and to settle the claim at
its own expense; provided, however, that no such settlement shall, without
the Indenmified Parties' written consent, include any factual stipulation
referring to the Indemnified Parties or their conduct. After notice from
the Company to such party of the Company's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be liable to
such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund Shares or the Contracts or
the operation of the Fund.
8.2 Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the
Company and each of it directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or
litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute or regulation, at common law
or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Fund's shares or the Contracts; and
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or SAI or sales literature
or other promotional material of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to the Underwriter or Fund by or on behalf
of the Company for use in the Registration Statement or
prospectus for the Fund or in sales literature (or any amendment
or supplement) or otherwise for use in connection with the sale
of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature or other
promotional material for the
<PAGE>
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund or Underwriter or
persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement, prospectus
or sales literature or other promotional material covering the
Contracts, or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the
Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company or the Account, whichever is
applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), but failure
to notify the Underwriter of any such claim shall not relieve the
Underwriter from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Party, the Underwriter will be entitled to participate, at its
own expense, in the defense thereof. The Underwriter also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named
in the action and to settle the claim at its own expense; provided,
however, that no such settlement shall, without the Indemnified Parties'
written consent,
<PAGE>
include any factual stipulation referring to the Indemnified Parties or their
conduct. After notice from the Underwriter to such party of the Underwriter's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Underwriter
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
8.3 Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.3) against any and
all losses, claims, expenses, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund) or litigation
(including legal and other expenses) to which the Indemnified Parties may
be required to pay or may become subject under any statute or regulation,
at common law or otherwise, insofar as such losses, claims, expenses,
damages, liabilities or expenses (or actions in respect thereof) or
settlements, are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company, the Fund, the Underwriter or
the Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Fund in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after
<PAGE>
such indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Fund of any such claim shall
not relieve the Fund from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The Fund also
shall be entitled to assume the expense thereof, with counsel satisfactory
to the party named in the action and to settle the claim at its own
expense; provided, however, that no such settlement shall, without the
Indemnified Parties' written consent, include any factual stipulation
referring to the Indemnified Parties or their conduct. After notice from
the Fund to such party of the Fund's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Fund will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceeding against it or any
of its respective officers or directors in connection with the Agreement,
the issuance or sale of the Contracts, the operation of the Account, or the
sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Maryland.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, any Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1 This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party, for any reason with respect to some or
all Designated Portfolios, by six (6) months' advance written
notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Designated Portfolio based upon
the Company's determination that shares of the Fund are not
reasonably available to meet the requirements of the Contracts;
provided that such termination shall apply only to the Designated
Portfolio not reasonably available; or
<PAGE>
(c) termination by the Company by written notice to the Fund and the
Underwriter in the event any of the Designated Portfolio's shares
are not registered, issued or sold in accordance with applicable
state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued
or to be issued by the Company; or
(d) termination by the Fund or Underwriter in the event that formal
administrative proceedings are instituted against the Company by
the NASD, the SEC, the Insurance Commissioner or like official of
any state or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase of the
Fund shares, provided, however, that the Fund or Underwriter
determines in its sole judgment exercised in good faith, that any
such administrative proceedings will have a material adverse
effect upon the ability of the Company to perform its obligations
under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund or
Underwriter by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body, provided,
however, that the Company determines in its sole judgment
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Fund
or Underwriter to perform its obligations under this Agreement;
or
(f) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Designated Portfolio in the event
that such Designated Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M or fails to comply with the
Section 817(h) diversification requirements specified in Article
VI hereof, or if the Company reasonably believes that such
Designated Portfolio may fail to so qualify or comply; or
(g) termination by the Fund or Underwriter by written notice to the
Company in the event that the Contracts fail to meet the
qualifications specified in Section 6.3 hereof; or
(h) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the
Underwriter respectively, shall determine, in their sole judgment
exercised in good faith, that the Company has suffered a material
adverse change in its business, operations, financial condition,
or prospects since the date of this Agreement or is the subject
of material adverse publicity; or
(i) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment
exercised in good faith, that the Fund or the Underwriter has
suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement
or is the subject of material adverse publicity; or
<PAGE>
(j) termination by any party upon the other party's material breach
of any provision of this Agreement.
10.2 Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, the owners of the Existing Contracts may be permitted
to reallocate investments in the Fund, redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.2 shall not apply to
any termination under Article VII and the effect of such Article VII termination
shall be governed by Article VII of this Agreement. The parties further agree
that this Section 10.2 shall not apply to any termination under Section 10.1(g)
of this Agreement.
10.3 Notwithstanding any termination of this Agreement, each party's
obligation under Article VIII to indemnify the other parties shall survive.
10.4 Any successor by law of the parties hereto shall be entitled to the
benefits of the indemnification provisions contained in Article VIII.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Henry H. Hopkins, Esq.
If to the Company:
Pruco Life Insurance Company of New Jersey
751 Broad Street
Newark, New Jersey 07102
Attention: Mary L. Cavanaugh, Esq.
If to Underwriter:
T. Rowe Price Investment Services
100 East Pratt Street
Baltimore, Maryland 21202
Attention: Henry H. Hopkins, Esq.
<PAGE>
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property of
such Fund, and in the case of a series company, the respective Designated
Portfolio listed on Schedule A hereto as though such Designated Portfolio had
separately contracted with the Company and the Underwriter for the enforcement
of any claims against the Fund. The parties agree that neither the Board,
officers, agents or shareholders assume any personal liability or responsibility
for obligations entered into by or on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the New Jersey Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable annuity
operations of the Company are being conducted in a manner consistent with New
Jersey variable annuity laws and regulations and any other applicable law or
regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies, and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
12.8 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
COMPANY: PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
By its authorized officer
By: /s/ Paul Haley
---------------------------------------
Title: Vice President & Actuary
-----------------------------------
Date: February 24, 1997
-----------------------------------
FUND: T. ROWE PRICE INTERNATIONAL
SERIES, INC.
By its authorized officer
By: [ILLEGIBLE]
---------------------------------------
Title: Vice President
-----------------------------------
Date: February 19, 1997
------------------------------------
FUND: T. ROWE PRICE EQUITY SERIES, INC.
By its authorized officer
By: [ILLEGIBLE]
---------------------------------------
Title: Vice President
-----------------------------------
Date: February 19, 1997
------------------------------------
<PAGE>
UNDERWRITER: T. ROWE PRICE INVESTMENT SERVICES, INC.
By its authorized officer
By: [ILLEGIBLE]
---------------------------------------
Title: Vice President
-----------------------------------
Date: February 19, 1997
------------------------------------
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Newark, New Jersey 07102-2992
A Stock Company of The Prudential Insurance Company of America
================================================================================
INSURED JOHN DOE
XX XXX XXX POLICY NUMBER
JULY 1, 1999 CONTRACT DATE
AGENCY R-NK 1
Flexible Premium Variable Life Insurance Policy. Insurance payable only upon
death. Cash values reflect premium payments, investment results, and charges.
Non-participating.
We will promptly pay the beneficiary the death benefit described under the Death
Benefit provision of this contract if we receive due proof that the Insured
died. We make this promise subject to all the provisions of this contract.
THE AMOUNT AND DURATION OF THE DEATH BENEFIT MAY BE FIXED OR VARIABLE, DEPENDING
ON THE PAYMENT OF PREMIUMS, THE INVESTMENT EXPERIENCE OF THE VARIABLE
INVESTMENT OPTIONS, AND THE CHARGES MADE.
THE CASH VALUE MAY INCREASE OR DECREASE DAILY, DEPENDING ON THE PAYMENT OF
PREMIUMS, THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS, AND THE
CHARGES MADE. THERE IS NO GUARANTEED MINIMUM CASH VALUE.
If there is ever a question about this contract, please see a Pruco Life
Insurance Company of New Jersey representative or contact one of our offices.
RIGHT TO CANCEL CONTRACT.--You may return this contract to us within 10 days
after you receive it. All you have to do is take the contract or mail it to one
of our offices or to the representative who sold it to you. It will be canceled
and we will return your money in accordance with applicable law.
Signed for Pruco Life Insurance Company of New Jersey,
a New Jersey Corporation.
SPECIMEN [stamp] SPECIMEN [stamp]
/s/SUSAN L. BLOUNT /s/ESTHER H. MILNES
--------------------- ---------------------
Susan L. Blount Esther H. Milnes
Secretary President
PLEASE READ YOUR POLICY CAREFULLY; it is a legal contract between you and Pruco
Life Insurance Company of New Jersey
CVUL--1999--NY
<PAGE>
- -------------------------=======================================================
GUIDE TO CONTENTS
PAGE
CONTRACT DATA ............................................................. 3
Insured's Information; Rating Class; Basic Contract Information; Type of
Death Benefit; Life Insurance on the Insured; Minimum Initial Premium;
Contract Limitations; Other Benefits (if applicable); Adjustments to
Premium Payments; Adjustments to the Contract Fund; Monthly Deductions
from the Contract Fund for Other Benefits (if applicable); Variable
Investment Options; Initial Allocation of Invested Premium Amounts;
Segment Table
TABLE OF MAXIMUM MONTHLY INSURANCE RATES PER $1000 ....................... 4
TABLE OF ATTAINED AGE FACTORS ............................................ 4
DEFINITIONS .............................................................. 5
THE CONTRACT ............................................................. 5
Entire Contract; Contract Modifications; Incontestability
OWNERSHIP ................................................................ 6
DEATH BENEFIT PROVISIONS ................................................. 6&7
Death Benefit; Changing the Type C Death Benefit Interest Rate;
Additional Death Benefits; Method of Payment; Net Amount at Risk; Suicide
Exclusion; Interest on Death Benefit
CHANGE IN BASIC INSURANCE AMOUNT ......................................... 7
COST OF INSURANCE ........................................................ 8
CHANGING THE TYPE OF DEATH BENEFIT ....................................... 8&9
Type A to B; Type A to C; Type B to A; Type B to C; Type C to A; Type C
to B
BENEFICIARY .............................................................. 9
PREMIUM PAYMENT .......................................................... 10&11
Payment of Premiums; Invested Premium Amount; Charge for Sales Expenses;
Crediting the Initial Premium Payment; Allocations
CONTRACT FUND ............................................................ 11
DEFAULT .................................................................. 11
Notice of Default
REINSTATEMENT ............................................................ 11
SEPARATE ACCOUNT ......................................................... 12
Separate Account; Variable Investment Options; Separate Account
Investments
(CVUL--1999)
<PAGE>
- -------------------------=======================================================
Page
TRANSFERS ................................................................ 13
SURRENDER ................................................................ 13
Cash Value; Net Cash Value; Return of Sales Charges
WITHDRAWALS .............................................................. 14
Effect on Contract Fund; Effect on Basic Insurance Amount
LOANS .................................................................... 15
Loan Value; Contract Debt; Loan Requirements; Interest Charge; Preferred
Loan; Maximum Preferred Loan Amount; Effect on Contract Fund
GENERAL PROVISIONS ....................................................... 16
Annual Report; Payment of Death Claim; Currency; Misstatement of Age or
Sex; Assignment; Factors Subject to Change; Non-Participating; Applicable
Tax Law
BASIS OF COMPUTATION ..................................................... 17
Mortality Basis and Interest Rate; Minimum Legal Values
SETTLEMENT OPTIONS ....................................................... 18
Options Described; Interest Rate
SETTLEMENT OPTIONS TABLES ................................................ 19
A copy of the application and any riders or endorsements can be found at
the end of the contract.
(CVUL--1999)--NJ
<PAGE>
- -------------------------=======================================================
[BLANK PAGE}
(CVUL--1999)
<PAGE>
PROCESSING DATE: JUL 10, 1999
CONTRACT DATA
INSURED
JOHN DOE Male, Issue Age 35
================================================================================
RATING CLASS
(See Segment Table on Page 4)
================================================================================
BASIC CONTRACT INFORMATION
Policy Number xx xxx xxx
Contract Date July 1, 1999
Premium Period Life
Beneficiary See Beneficiary Provision attached
Loan Interest Rate 5.00%
Preferred Loan Interest Rate 4.25%
================================================================================
TYPE OF DEATH BENEFIT (see Death Benefit Provisions)
Type B
================================================================================
LIFE INSURANCE ON THE INSURED
Basic Insurance
Effective Date Amount_________
-----------------------------------------------------
Contract Date $100,000.00__
-----------------------------------------------------
================================================================================
MINIMUM INITIAL PREMIUM
The minimum initial premium due on the Contract Date is $350.73.
================================================================================
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3 (99)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
CONTRACT LIMITATIONS
The minimum premium we will accept is $25.00.
The minimum basic insurance amount is $100,000.00.
The minimum increase in basic insurance amount is $5,000.00.
The minimum decrease in basic insurance amount is $5,000.00.
The minimum amount you may withdraw is $500.00.
The minimum amount you may borrow is $200.00.
================================================================================
ADJUSTMENTS TO PREMIUM PAYMENTS
From each premium paid we will:
Subtract a charge of up to 7.5% for any taxes attributable to premiums. For
purposes of this charge, the term "taxes attributable to premiums" shall
include: (a) any federal, state or local income tax, (b) any premium,
excise, or business tax, and (c) any other type of tax (or component
thereof) measured by or based upon the amount of premium received by us.
Subtract a charge for sales expenses from premiums paid as described in the
Charge For Sales Expenses provision.
The remainder of the premium is the invested premium amount.
================================================================================
ADJUSTMENTS TO THE CONTRACT FUND
On the Contract Date the contract fund is equal to the invested premium amount
credited on that date, minus
a charge for administrative expenses of up to $0.05 per $1,000 of the basic
insurance amount effective on the Contract Date plus $10.00.
a charge for the cost of insurance (see Cost of Insurance).
On each day after the contract date, we will adjust the contract fund by:
adding any invested premium amounts.
adding any increase due to investment results of the variable investment
options.
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3A (99)(NJ)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
adding guaranteed interest at an effective annual rate of 4% (0.01074598% a
day) on that portion of the contract fund that is attributable to any loan
amount (see Loans).
subtracting any decrease due to investment results of the variable investment
options.
subtracting a charge against the variable investment options at an effective
annual rate of not more than 0.50% (.00136646% a day) for mortality and
expense risks that we assume.
subtracting any withdrawals.
subtracting an administrative charge of up to $25.00 for any withdrawals.
subtracting an administrative charge of up to $25.00 for any change in basic
insurance amount.
subtracting an administrative charge of up to $25.00 for each transfer between
variable investment options exceeding twelve in any contract year.
And on each monthly date, we will adjust the contract fund by:
subtracting a charge for administrative expenses of up to $0.05 per $1,000 of
the basic insurance amount of each Basic Insurance Segment, totaled, plus
$10.00.
subtracting a deduction for the cost of any other benefits.
subtracting a charge for the cost of insurance (see Cost of Insurance).
================================================================================
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3B (99)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
VARIABLE INVESTMENT OPTIONS
THE PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
Each variable investment option of this account invests in a specific
portfolio of The Prudential Series Fund, Inc. and such other funds as we
may specify from time to time. We should the available variable investment
options of the account below. Unless we say otherwise, the variable
investment options invest in funds or fund portfolios with the same names.
This account is registered with the SEC under the Investment Company Act of
1940.
THE PRUDENTIAL SERIES FUND, INC.
Money Market Portfolio
Diversified Bond Portfolio
Conservative Balanced Portfolio
Flexible Managed Portfolio
High Yield Bond Portfolio
Stock Index Portfolio
Equity Income Portfolio
Equity Portfolio
Prudential Jennison Portfolio
Global Portfolio
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Value Fund
JANUS ASPEN SERIES
Janus Aspen Growth Portfolio
MFS VARIABLE INSURANCE TRUST
MFS Emerging Growth Series
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3C (99)(NJ)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
AMERICAN CENTURY VARIABLE PORTFOLIO, INC.
American Century VP Value Fund
================================================================================
INITIAL ALLOCATION OF INVESTED PREMIUM AMOUNTS
High Yield Bond Portfolio 40%
Money Market Portfolio 60%
================================================================================
END OF CONTRACT DATA
Page 3D (99)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
TABLE(S)
SEGMENT TABLE
This table is used to compute the charge for sales expenses and the cost of
insurance. See the Charge for Sales Expenses and Cost of Insurance provisions
for details. The information shown below for each segment starts on the
effective date of that segment.
SEGMENT,
ISSUE AGE, &
EFFECTIVE DATE RATING CLASS (RC) SEGMENT ALLOCATION AMOUNT
- --------------------------------------------------------------------------------
Contract Date $100,000.00 Basic Insurance $ 3,897.00
Amount changing on JUL 1, 2009 to $0.00.
Issue Age 35
RC = Preferred (non-smoker)
================================================================================
TABLE(S) CONTINUED ON NEXT PAGE
Page 4 (99)(NJ)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
TABLE OF MAXIMUM MONTHLY INSURANCE RATES PER $1,000
RATING CLASS: PREFERRED
INSURED'S MAXIMUM INSURED'S MAXIMUM
ATTAINED AGE* MONTHLY RATE ATTAINED AGE* MONTHLY RATE
- --------------------------------------------------------------------------------
35 0.14417 65 1.85417
36 0.15167 66 2.05167
37 0.16167 67 2.26333
38 0.17250 68 2.49333
39 0.18417 69 2.74833
40 0.19833 70 3.03667
41 0.21333 71 3.36583
42 0.22917 72 3.74583
43 0.24667 73 4.17583
44 0.26583 74 4.64833
45 0.28750 75 5.15333
46 0.31083 76 5.68667
47 0.33583 77 6.24417
48 0.36333 78 6.82917
49 0.39333 79 7.46000
50 0.42750 80 8.15667
51 0.46667 81 8.93750
52 0.51167 82 9.81833
53 0.56333 83 10.79500
54 0.62083 84 11.84833
55 0.68500 85 12.95416
56 0.75500 86 14.09833
57 0.82917 87 15.26333
58 0.91167 88 16.44416
59 1.00417 89 17.65750
60 1.10750 90 18.92083
61 1.22250 91 20.26333
62 1.35500 92 21.73500
63 1.50500 93 23.47917
64 1.67167 94 25.81917
TABLE(S) CONTINUED ON NEXT PAGE
Page 4A (99)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
INSURED'S MAXIMUM INSURED'S MAXIMUM
ATTAINED AGE* MONTHLY RATE ATTAINED AGE* MONTHLY RATE
- --------------------------------------------------------------------------------
95 29.32167 98 62.09583
96 35.08250 99 and above 83.33333
97 45.08333
---------------------------------------------------------------------------
* For the segment amount(s) effective on the contract date (see Segment
Table), the Insured's attained age is the issue age found on page 3
plus the length of time since the contract date.
For any segment amount(s) effective after the contract date, the
Insured's attained age is the issue age of that segment plus the length
of time since its effective date.
We may charge less than the maximum monthly rates. From time to time, we will
consider the need to change the rates we charge. We describe the factors we
use to determine such changes under General Provisions.
See the Basis of Computation for a description of the basis we use to compute
these rates.
================================================================================
TABLE(S) CONTINUED ON NEXT PAGE
Page 4B (99)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
TABLE OF ATTAINED AGE FACTORS
These factors are used to determine your death benefit as described under Death
Benefit Provisions.
These factors apply during each contract year starting on the contract
anniversary.
CONTRACT CONTRACT
YEAR FACTORS YEAR FACTORS
- --------------------------------------------------------------------------------
1 2.50 31 1.20
2 2.50 32 1.19
3 2.50 33 1.18
4 2.50 34 1.17
5 2.50 35 1.16
6 2.50 36 1.15
7 2.43 37 1.13
8 2.36 38 1.11
9 2.29 39 1.09
10 2.22 40 1.07
11 2.15 41 1.05
12 2.09 42 1.05
13 2.03 43 1.05
14 1.97 44 1.05
15 1.91 45 1.05
16 1.85 46 1.05
17 1.78 47 1.05
18 1.71 48 1.05
19 1.64 49 1.05
20 1.57 50 1.05
21 1.50 51 1.05
22 1.46 52 1.05
23 1.42 53 1.05
24 1.38 54 1.05
25 1.34 55 1.05
26 1.30 56 1.05
27 1.28 57 1.04
28 1.26 58 1.03
29 1.24 59 1.02
30 1.22 60 1.01
TABLE(S) CONTINUED ON NEXT PAGE
Page 4C (99)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
CONTRACT CONTRACT
YEAR FACTORS YEAR FACTORS
- --------------------------------------------------------------------------------
61 1.00 64 1.00
62 1.00 65 1.00
63 1.00 66 and above 1.00
- --------------------------------------------------------------------------------
================================================================================
END OF TABLE(S)
Page 4D (99)
<PAGE>
- -------------------------=======================================================
DEFINITIONS
WE, OUR and US.--Pruco Life Insurance Company.
YOU and YOUR.--The owner(s) of the contract.
INSURED.--The person named as the Insured on the first
page. He or she need not be the owner.
SEC.--The Securities and Exchange Commission.
ISSUE DATE.--The contract date shown on the first page.
ANNIVERSARY or CONTRACT ANNIVERSARY.--The same day and
month as the contract date in each later year.
CONTRACT YEAR.--A year that starts on the contract date
or on an anniversary.
MONTHLY DATE.--The contract date and the same day as
the contract date in each later month.
CONTRACT MONTH.--A month that starts on a monthly date.
TARGET YEAR.--A year beginning on the effective date of
a basic insurance amount segment (see Segment Table)
and on the same day and month in a later year.
- -------------------------=======================================================
THE CONTRACT
ENTIRE CONTRACT This policy, the attached copy of the application
(including any application for modification or
reinstatement of this contract), and any additional
riders, endorsements, and contract data pages added to
the policy, form the whole contract. We assume that all
statements in an application are made to the best of
the knowledge and belief of the person(s) who make
them; in the absence of fraud, they are deemed to be
representations and not warranties. We rely on those
statements when we issue or change the contract. We
will not use any statement, unless made in an
application, to try to void the contract, to contest a
modification, or to deny a claim.
The application for a modification to this contract
that requires you to provide facts necessary to satisfy
us that any life covered under this contract is
insurable will be attached to and become a part of this
contract. We may ask you to return the contract so that
we can attach the modification application.
CONTRACT MODIFICATIONS Only a Pruco Life Insurance Company officer with the
rank or title of vice president may agree to modify
this contract, and then only in writing.
INCONTESTABILITY Except as otherwise stated in this contract and except
for non-payment of enough premium to provide the
required charges, we will not contest this contract
after it has been in force during the Insured's
lifetime for two years from the issue date.
(CVUL--1999)--NJ
<PAGE>
- -------------------------=======================================================
OWNERSHIP
Unless a different owner is named in the application,
the owner of the contract is the Insured. If a
different owner is named, we will show that owner in an
endorsement to the contract. This ownership arrangement
will remain in effect unless you ask us to change it.
You may change the ownership of the contract by sending
us a request in a form that meets our needs. We may ask
you to send us the contract to be endorsed. If we
receive your request in a form that meets our needs,
and the contract if we ask for it, we will file and
record the change, and it will take effect as of the
date you signed the request.
While the Insured is living, the owner, with no one
else's consent, is entitled to any contract benefit and
value, and to the exercise of any right and privilege
granted by the contract or by us.
- -------------------------=======================================================
DEATH BENEFIT PROVISIONS
We will pay a benefit (described below) to the
beneficiary at the Insured's death if this contract is
in force at the time of that death; that is, if it has
not been surrendered and it is not in default past the
grace period.
If the contract is not in default, the amount we will
pay will be the death benefit determined as of the date
of the Insured's death reduced by any contract debt
(described under loans).
If the contract is in default, and the Insured's death
occurs in the grace period (described under Default),
we will pay the death benefit reduced by any contract
debt and the amount needed to pay charges through the
date of death.
If the Insured's death occurs past the grace period, no
death benefit is payable.
DEATH BENEFIT This contract has as Type A, Type B, or Type C death
benefit. We show the type of death benefit that applies
to this contract under Type of Death Benefit. We show
the basic insurance amount under Life Insurance on the
Insured. The attained age factors are shown in the
Table of Attained Age Factors.
If this contract has a Type A death benefit, the death
benefit on any date is equal to the greater of: (1) the
basic insurance amount, and (2) the contract fund
before deduction of any monthly charges due on that
date plus a return of sales charges as described under
Surrender, multiplied by the attained age factor that
applies.
If this contract has a Type B death benefit, the death
benefit on any date is equal to the greater of: (1) the
basic insurance amount plus the contact fund before
deduction of any monthly charges due on that date, and
(2) the contract fund before deduction of any monthly
charges due on that date plus a return of sales charges
as described under Surrender, multiplied by the
attained age factor that applies.
If this contract has a Type C death benefit, the death
benefit on any date is equal to the greater of: (1) the
basic insurance amount plus the total premiums paid
minus total withdrawals to this contract both
accumulated with interest at the rate(s) displayed in
the contract data pages, and (2) the contract fund
before deduction of any monthly charges due on that
date plus a return of sales charges as described under
Surrender, multiplied by the attained age factor that
applies. For the purpose of determining the Type C
death benefit, the total premiums paid will not include
any charge to reinstate this contract as described
under Reinstatement.
For the purposes of computing the death benefit, if the
contract fund is less than zero we will consider it to
be zero. Your basic insurance amount and attained age
factors are shown in the contract data pages.
CHANGING THE TYPE C You may change the interest rate for the Type C death
DEATH BENEFIT INTEREST benefit once each contract year. You may choose a rate
RATE between 0% and 8% in 1/2% increments. The change will
become effective on the monthly date on or after the
date we receive your request.
(CVUL--1999)
<PAGE>
- -------------------------=======================================================
ADDITIONAL DEATH This contract may provide additional benefits, which
BENEFITS may be payable on an Insured's death. If it does, they
will be listed on a contract data page in the section
captioned Other Benefits on the Insured, and a form
describing the benefit will be included in this
contract. Any such benefit will be payable only if the
contract is not in default past the grace period at the
time of the death.
METHOD OF PAYMENT You may choose to have any death benefit paid in a
single sum or under one of the optional modes of
settlement shown in the Settlement Options provision.
NET AMOUNT AT RISK The net amount at risk is used to determine the cost
of insurance as described under Adjustments to the
Contract Fund. It is equal to the death benefit (see
Death Benefit) minus the contract fund.
SUICIDE EXCLUSION If the Insured, whether sane or insane, dies by suicide
within two years from the issue date, this contract
will end and we will return the premiums paid, less any
contract debt, and less any withdrawals.
The following statement applies only with respect to an
increase in the basic insurance amount resulting from a
request you make in accordance with the Change in Basic
Insurance Amount provision of this contract. If the
Insured, whether sane or insane, dies by suicide after
two years from the issue date but within two years of
the effective date of an increase in the basic
insurance amount, we will pay, as to the increase in
amount, no more than the sum of the charges for the
increase.
INTEREST ON DEATH Any death benefit described above will be credited with
BENEFIT interest from the date of death in accordance with
applicable laws.
- -------------------------=======================================================
CHANGE IN BASIC INSURANCE AMOUNT
You may change the basic insurance amount, subject to
our approval and all these conditions and the
paragraphs that follow:
1. You must ask for the change in a form that meets
our needs.
2. The change must be one permitted by our current
underwriting rules.
3. The amount of an increase or decrease must be at
least equal to the minimum increase or decrease in
basic insurance amount shown under Contract
Limitations in the contract data pages.
4. The basic insurance amount after the decrease must
be at least equal to the minimum basic insurance
amount shown under Contract Limitations in the
contract data pages.
5. If we ask you to do so, you must send us the
contract to be endorsed.
6. You must prove to us that the Insured is insurable
for any increase.
7. The contract must not be in default.
8. We may deny any increase if it would cause the
number of segments shown in the Segment Table in
the contract data pages to exceed ninety-nine.
A change will take effect only if we approve your
request for it at our Home Office. Unless you ask us
otherwise, the change will take effect on the date we
approve it. You may request an earlier date, but it may
not be more than 90 days prior to the date of request.
If we approve the change, we will also recompute the
contract's charges, values and limitations. A change in
the basic insurance amount may also affect the amount
of any extra benefits this contract might have. We will
send you new contract data pages showing the amount and
effective date of the change and the recomputed
charges, values and limitations. If the Insured is not
living on the effective date, the change will not take
effect. We may deduct the administrative charge (shown
under Adjustments to the Contract Fund) for the change.
(CVUL--1999)--NJ
<PAGE>
- -------------------------=======================================================
COST OF INSURANCE
On each monthly date, we will deduct a charge for the
cost of insurance from the contract fund. To determine
the maximum charge for the cost of insurance, we use
the following method:
We determine the maximum cost of insurance rate for
each currently effective basic insurance segment amount
shown in the Segment Table in the data pages using the
maximum monthly rate shown under the Table of Maximum
Monthly Insurance Rates for the appropriate rating
class. If there is only one basic insurance segment
amount currently in effect, we multiply the rate by the
net amount at risk (the death benefit minus the
contract fund) divided by $1000 to compute the maximum
charge for the cost of insurance
If there are two or more basic insurance segments
currently in effect, we first allocate the total net
amount at risk (the death benefit minus the contract
fund) to each basic insurance segment based on the
proportion of its basic insurance amount to the total
of all basic insurance segment amounts currently in
effect. We multiply the rate by the allocated net
amount at risk divided by $1000 for each basic
insurance segment and add the results to determine the
total maximum charge for the cost of insurance.
- -------------------------=======================================================
CHANGING THE TYPE OF DEATH BENEFIT
This contract has a Type A, a Type B, or a Type C death
benefit (See Death Benefit). You may change the type of
death benefit. Except as we state below, we will adjust
the basic insurance amount so that the death benefit
immediately after the change will remain the same as
the death benefit immediately after the change. If the
basic insurance amount is scheduled to change in the
future (see Life Insurance on the Insured in the
contract data pages), we will similarly adjust those
future basic insurance amounts. When changing to the
Type C death benefit, you may choose an interest rate
between 0% and 8% in 1/2% increments. Interest will
begin to accumulate on the day the change takes effect.
When changing to or from a Type C death benefit, we
will not add any charge to reinstate to the total
premiums paid on this contract.
TYPE A TO B If you are changing from a Type A to a Type B death
benefit, we will reduce the basic insurance amount by
the contract fund on the date the change takes effect.
TYPE A TO C If you are changing from a Type A to a Type C death
benefit, we will change the basic insurance amount by
subtracting the total premiums paid on this contract
minus total withdrawals on the date the change takes
effect.
TYPE B TO A If you are changing from a Type B to a Type A death
benefit, we will increase the basic insurance amount by
the contract fund on the date the change takes effect.
TYPE B TO C If you are changing from a Type B to a Type C death
benefit, we first find the difference between (1) the
contract fund and (2) the total premiums paid on the
contract minus total withdrawals, determined on the
date the change takes effect. If (1) is larger than
(2), we will increase the basic insurance amount by
that difference. If (2) is large than (1), we will
reduce the basic insurance amount by that difference.
TYPE C TO A If you are changing from a Type C to a Type A death
benefit, we will change the basic insurance amount by
adding the total premiums paid minus total withdrawals
to this contract both accumulated with interest at the
rate(s) displayed in the contract data pages on the
date the change takes effect.
TYPE C TO B If you are changing from a Type C to a Type B death
benefit, we first find the difference between (1) the
contract fund and (2) the total premiums paid minus
total withdrawals to this contract both accumulated
with interest at the rate(s) displayed in the contract
data pages on the date the change takes effect. If (2)
is larger than (1), we will increase the basic
insurance amount by that difference. If (1) is larger
than (2), we will reduce the basic insurance amount by
that difference.
(CVUL--1999)--NJ
<PAGE>
If the change in the type of death benefit results in a
reduction in the basic insurance amount, the basic
insurance amount after the decrease must be at least
equal to the minimum basic insurance amount, which we
show under Contract Limitations in the contract data
pages.
We will recompute the contract's charges, values and
limitations shown in the contract data pages. The
change will take effect on the monthly date that
coincides with or next follows the date we receive your
request. We will send you new contract data pages
showing the amount and effective date of the change in
basic insurance amount and the recomputed charges,
values and limitations.
Your request for a change must be in a form that meets
our needs. We may require you to send us this contract
before we make the change.
- -------------------------=======================================================
BENEFICIARY
You may designate or change a beneficiary by sending us
a request in a form that meets our needs. We may ask
you to send us the contract to be endorsed. If we
receive your request, and the contract if we ask for
it, we will file and record the change and it will take
effect as of the date you signed the request. But if we
make any payment(s) before we receive the request, we
will not have to make the payment(s) again. Any
beneficiary's interest is subject to the rights of any
assignee we know of.
When a beneficiary is designated, any relationship
shown is to the Insured, unless otherwise stated. To
show priority, we may use numbered classes, so that the
class with first priority is called class 1, the class
with next priority is called class 2, and so on. When
we use numbered classes, these statements apply to
beneficiaries unless the form states otherwise.
1. One who survives the Insured will have the right
to be paid only if no one in a prior class
survives the Insured.
2. One who has the right to be paid will be the only
one paid if no one else in the same class survives
the Insured.
3. Two or more in the same class who have the right
to be paid will be paid in equal shares.
4. If no beneficiary survives the Insured, we will
pay in one sum to the Insured's estate.
Before we make a payment, we have the right to decide
what proof we need of the identity, age, or other facts
about any persons designated as beneficiaries. If
beneficiaries are not designated by name and we make
payment(s) based on that proof, we will not have to
make the payment(s) again.
(CVUL--1999)--NJ
<PAGE>
- -------------------------=======================================================
PREMIUM PAYMENT
PAYMENT OF PREMIUMS The minimum initial premium shown in the contract data
pages is due on or before the contract date. There is
no insurance under this contract until that premium is
paid. We may require an additional premium if
adjustments to premium payments plus any contract fund
charges due on or before the payment date exceed the
minimum initial premium.
Subject to the limitations below, additional premiums
may be paid at any time during the Insured's lifetime
as long as the contract is not in default beyond the
grace period. Premiums may be paid at one of our
offices or to one of our authorized representatives. We
will give a signed receipt upon request. The minimum
premium we will accept is shown on a contract data
page. We have the right to refuse to accept a premium
payment that would in our opinion cause this contract
to fail to qualify as life insurance under applicable
tax law. We also have the right to refuse to accept any
payment that increases the death benefit by more than
it increases the contract fund. We will not refuse a
premium necessary to keep this contract in force.
INVESTED PREMIUM The invested premium amount is the portion of each
AMOUNT premium you pay that we add to the contract fund. It
is equal to the premium paid minus the adjustments to
premium payments shown under Adjustments to Premium
Payments on a contract data page.
CHARGE FOR SALES We subtract a charge for sales expenses from each
EXPENSES premium paid.
If, on the day we receive a premium, the total of all
effective segment allocation amounts is greater than
zero (see the Segment Table), we may deduct a sales
expense charge of up to 15% on all or a portion of the
premium and a charge of up to 2% on any remainder.
To determine the premium amount subject to the 15%
maximum rate, we use the following method:
1. We allocate the premium to each basic insurance
segment based on the proportion of its segment
allocation amount to the total of all segment
allocation amounts currently in effect.
2. We determine the amount of any premium previously
allocated to each basic insurance segment during
the current Target Year. We subtract this amount,
if any, from the segment allocation amount of each
such basic insurance segment. If the result is
less than zero, we consider it to be zero.
We take the lesser of the amounts determined in (1) and
(2) above for each basic insurance segment currently in
effect and add them together. The total is the amount
of the premium subject to the maximum 15% rate. If the
premium is greater than this total, the excess will be
subject to the maximum 2% rate.
If, on the day we receive a premium, the total of all
effective segment allocation amounts is zero (see the
Segment Table), we will deduct a sales expense charge
of up to 2% of the entire premium amount.
CREDITING THE INITIAL If we receive the first premium payment on or before
PREMIUM PAYMENT the contract date, we will credit the invested premium
amount to the contract fund on the contract date.
If we receive the first premium payment after the
contract date, we will credit the premium amount to the
contract fund on the payment date.
ALLOCATIONS We will allocate 100% of any invested premium into the
Money Market Investment Option until the end of the
Right to Cancel Contract period described on the
contract jacket. At the end of this period, unless you
ask us otherwise, we will re-allocate the amount in the
Money market Investment Option in accordance with the
Initial Allocation of Invested Premium Amounts shown in
the contract data pages.
You may allocate all or a part of your invested premium
amount to one or more of the variable investment
options listed in the contract data pages. You may
choose to allocate nothing to a particular variable
investment option. You may not choose a fractional
percentage.
(CVUL--1999)--NJ
<PAGE>
The initial allocation of invested premium amounts is
shown on a contract data page. You may change the
allocation for future invested premium amounts at any
time if the contract is not in default. To change your
allocation, simply notify us in a form that meets our
needs. The change will take effect on the date we
receive your notice; we will send you a confirmation of
the transaction.
- -------------------------=======================================================
CONTRACT FUND
When you make your first premium payment, the invested
premium amount, less any charges due on or before that
day, becomes your contract fund. Amounts are added and
subtracted from the contract fund as shown under
Adjustments to the Contract Fund in the contract data
pages. The contract fund is used to pay charges under
this contract and will determine, in part, whether this
contract will remain in force or go into default. The
contract fund is also used to determine your loan and
surrender values, the amount you may withdraw, and the
death benefit.
- -------------------------=======================================================
DEFAULT
On each monthly date, we will determine the net cash
value. If the net cash value is greater than zero, the
contract will remain in force until the next monthly
date. If the net cash value is zero or less, the
contract is in default.
NOTICE OF DEFAULT If the contract is in default, we will mail you a
notice stating the amount we will need to keep the
contract in force. That amount will equal a premium
which we estimate will keep the contract in force for
three months from the date of default. We grant a 61-
day grace period from the date we mail the notice to
pay this charge. The contract will remain in force
during this period. If that amount is not paid to us by
the end of the 61-day grace period, the contract will
end and have no value.
- -------------------------=======================================================
REINSTATEMENT
If this contract ends without value, as described under
Default, you may reinstate it. The following conditions
must be satisfied;
1. The contract must not have been in default for
more than 5 years.
2. You must prove to us that the Insured is insurable
for the contract.
3. You must pay us a charge equal to: (a) an amount,
if any, required to bring the contract fund to
zero on the date the contract went into default,
plus (b) the deductions from the contract fund
during the grace period following the date of
default, plus (c) a premium that we estimate will
be sufficient after administrative charges to
cover the deductions from the contract fund for
three monthly dates starting on the date of
reinstatement.
4. Any contract debt (with interest to date at the
rate(s) we set for loans as we state under Loans)
must be restored or paid back. If that debt with
interest would exceed the loan value of the
reinstated contract, the excess must be paid to us
before reinstatement.
(CVUL--1999)--NJ
<PAGE>
If we approve the reinstatement, these statements
apply. All conditions, exclusions, exceptions and other
provisions of the contract will remain in effect. The
date of reinstatement will be the beginning of the
contract month that coincides with or next follows the
date we approve your request. We will deduct all
required charges from your payment and put the balance
in your contract fund. The contract fund immediately
after reinstatement will be equal to the remainder plus
the contract fund immediately before reinstatement.
If the contract is reinstated within two years from the
issue date, the contract will remain contestable (see
Incontestability) for statements and information
contained in the application for the contract, and
subject to the suicide provision (see Suicide
Exclusion) until it has been inforce during the
Insured's lifetime for two years from the issue date.
Additionally, the contract will be contestable until it
has been inforce during the Insured's lifetime for two
years from the date of reinstatement for statements and
information contained in the application for
reinstatement. We may require you to return the
contract so we may attach the reinstatement
application.
- -------------------------=======================================================
SEPARATE ACCOUNT
SEPARATE ACCOUNT The words "separate account", when we use them in this
contract without qualification, mean any separate
account we establish to support variable life insurance
contracts like this one. We list the separate accounts
available to you in the contract data pages. We may
establish additional separate accounts. We will notify
you within one year if we do so.
VARIABLE INVESTMENT A separate account may offer one or more variable
OPTIONS investment options. We list them in the contract data
pages. We may establish additional variable investment
options. We will notify you within one year if we do
so. We may also eliminate existing variable investment
options, but only with the consent of the SEC and,
where required, of the insurance regulator of our state
of domicile and/or where this contract is delivered.
Income and realized and unrealized gains and losses
from assets in each variable investment option are
credited to, or charged against, that variable
investment option. This is without regard to income,
gains, or losses in other variable investment options.
SEPARATE ACCOUNT We may invest the assets of different separate accounts
INVESTMENTS in different ways. But we will do so only with the
consent of the SEC and, where required, of the
insurance regulator of our state of domicile and/or
where this contract is delivered.
The assets of the separate account shall be available
to cover the liabilities of the general account only to
the extent that the assets exceed the liabilities of
the separate account arising under the variable life
insurance policies supported by the separate account.
We will determine the value of the assets in each
separate account registered with the SEC under the
Investment Company Act of 1940 and any variable
investment option on each day the New York Stock
Exchange is open for business.
(CVUL--1999)--NJ
<PAGE>
- -------------------------=======================================================
TRANSFERS
You have the right to transfer amounts into or out of
variable investment options up to twelve times in each
contract year without charge if the contract is not in
default. Additional transfers may be made during each
contract year, but only with our consent. We may charge
for additional transfers as we state under Adjustments
to the Contract Fund.
We may restrict the number, timing and amount of
transfers in accordance with our rules if your transfer
activity is determined by us to be disruptive to the
variable investment option or to the disadvantage of
other contract owners. We may prohibit transfer
requests made by an individual acting under a power of
attorney on behalf of more than one contract owner.
To make a transfer, you must ask us in a form that
meets our needs. Unless otherwise restricted, the
transfer will take effect on the date we receive your
notice at our Home Office.
- -------------------------=======================================================
SURRENDER
You may surrender this contract for its net cash value.
To do so, you must ask us in a form that meets our
needs. We may require you to send us the contract.
We will usually pay any net cash value within seven
days after we receive your request and the contract (if
we require it) at our Home Office. But we have the
right to postpone paying you the part of the net cash
value that is to come from any variable investment
option provided by a separate account registered under
the Investment Company Act of 1940 if: (1) the New York
Stock Exchange is closed; or (2) the SEC requires that
trading be restricted or declares an emergency.
CASH VALUE The cash value at any time is the contract fund.
NET CASH VALUE The net cash value at any time is the cash value less
any contract debt.
After the grace period and within thirty days after an
anniversary, the net cash value will not be less than
the net cash value on that anniversary adjusted for any
loan you take out or pay back during those thirty days.
If the contract is in default, the net cash value is
zero.
RETURN OF SALES If the contract is not in default, we will, upon
CHARGES surrender within four years of the contract date,
return 50% of any sales charges we deducted from
premiums paid within 24 months prior to the date we
receive your surrender request at our Home Office.
(CVUL--1999)--TX
<PAGE>
- -------------------------=======================================================
WITHDRAWALS
You may make withdrawals from the contract subject to
all these conditions and the paragraph that follows:
1. You must ask for the withdrawal in a form that
meets our needs.
2. The net cash value after withdrawal may not be
less than or equal to zero after deducting any
charges associated with the withdrawal.
3. You may not withdraw less than the minimum amount
shown under Contract Limitations.
4. The basic insurance amount after withdrawals must
be at least equal to the minimum basic insurance
amount shown under Contract Limitations.
5. If you have a type A death benefit, we may ask for
proof that the Insured is insurable for an
increase in the net amount at risk. See Effect on
Basic Insurance Amount for details.
Any amount withdrawn may not be repaid except as a
premium subject to charges.
EFFECT ON CONTRACT On the date we approve your request for withdrawal, we
FUND will reduce your contract fund by the withdrawal amount
and any charges listed under Adjustments to the
Contract Fund. Unless you request otherwise, we will
take any withdrawal proportionately from all variable
investment options that apply to the contract.
We may charge an administrative fee as stated under
Adjustments to the Contract Fund.
EFFECT ON BASIC If you have a Type B or Type C death benefit,
INSURANCE AMOUNT withdrawals will not affect the basic insurance amount.
If you have a Type A death benefit and the withdrawal
would cause the net amount at risk (see Net Amount at
Risk) to increase, you must prove to us that the
Insured is insurable for the increase. Otherwise, we
will reduce the basic insurance amount and,
consequently, your death benefit to offset this
increase. If the basic insurance amount is scheduled to
change (see Life Insurance on the Insured in the
Contract Data pages), we will similarly adjust all
remaining basic insurance amounts. The reduction in the
basic insurance amount will never be more than the
withdrawal amount. If we reduce the basic insurance
amount, we will recompute the contract's charges,
values and limitations. We will send you new contract
data pages showing these changes.
We will usually pay any withdrawal amount within seven
days after we receive your request and the contract (if
we require it) at our Home Office. But we have the
right to postpone paying you the part of the withdrawal
that is to come from any variable investment option
provided by a separate account registered under the
Investment Company Act of 1940 if: (1) the New York
Stock Exchange is closed; or (2) the SEC requires that
trading be restricted or declares an emergency.
(CVUL--1999)
<PAGE>
- -------------------------=======================================================
LOANS
Subject to the minimum loan requirement and the
requirements of this provision, you may at any time
borrow any amount up to the current loan value less any
existing contract debt.
LOAN VALUE If the contract is not in default, the loan value at
any time is equal to 90% of the cash value.
If the contract is in default, it has no loan value.
CONTRACT DEBT Contract debt at any time means the loan on the
contract at that time, plus the interest we have
charged that is not yet due and that we have not yet
added to the loan.
LOAN REQUIREMENTS For us to approve a loan, the following requirements
must be met: you must assign this contract to us as
sole security for the loan; the Insured must be living;
and the resulting contract debt must not be more than
the loan value.
If there is already contract debt when you borrow from
us, we will add the new amount you borrow to that debt.
INTEREST CHARGE We will charge interest daily on any loan. Interest is
due on each contract anniversary, or when the loan is
paid back. whichever comes first If interest is not
paid when due, it becomes part of the loan. Then we
start to charge interest on it, too. Except as stated
below, we charge interest at an effective annual rate
shown under Loan Interest Rate in the contract data
pages.
PREFERRED LOAN Unless you ask us otherwise, a portion of the amount
you may borrow on or after the 10th contract
anniversary will be considered a Preferred Loan up to
an amount equal to the maximum preferred loan amount
described below. Preferred Loans are charged interest
at an effective annual rate shown under Preferred Loan
Interest Rate in the contract data pages.
MAXIMUM PREFERRED The maximum preferred loan amount available starting on
LOAN AMOUNT the 10th contract anniversary is (A) minus (B), where
(A) is the total amount you may borrow, and (B) is the
total premiums paid less total withdrawals, if any. If
(B) is less than zero, we will consider it to be zero.
EFFECT ON CONTRACT When you take a loan, the amount of the loan continues
FUND to be a part of the contract fund and is credited with
interest at an effective rate of 4% a year.
We will reduce the portion of the contract fund
allocated to the variable investment options by the
amount you borrow, and by loan interest that becomes
part of the loan if it is not paid when due.
We will take any loan proportionately from all variable
investment options that apply to the contract unless
you ask us otherwise.
On each monthly date, if there is a contract loan
outstanding, we will increase the portion of the
contract fund in the variable investment options by
interest credits accrued on the loan since the last
monthly date. When you repay all or part of a loan, we
will increase the portion of the contract fund in the
variable investment options by the amount of that
repayment plus the interest credits accrued on the loan
since the last transaction date. To do this, we will
use your investment allocation for future premium
payments on file as of the loan payment date. We will
also decrease the portion of the contract fund on which
we credit the guaranteed interest rate of 4% a year by
the amount of loan you repay.
We will not increase the portion of the contract fund
allocated to the variable investment options by loan
interest that is paid before we make it part of the
loan. We reserve the right to change the manner in
which we allocate loan repayments. If we make such a
change, we will do so for all contracts like this one.
We will send you notice of any change.
(CVUL--1999)
<PAGE>
- -------------------------=======================================================
GENERAL PROVISIONS
ANNUAL REPORT At least once each contract year we will send you a
report. It will show: the death benefit, the amount of
the contract fund in each variable investment option;
the net cash value; any contract debt and the interest
rate we are charging, premiums paid, investment
results, charges deducted, and withdrawals taken since
the last report. The report may also show any other
data that may be required where this contract is
delivered.
PAYMENT OF DEATH If we settle this contract in one sum as a death claim
CLAIM we will usually pay the proceeds within seven days
after we receive at our Home Office proof of the
Insured's death and any other information we need to
pay the claim. But we have the right to postpone paying
the part of the proceeds that is to come from a
variable investment option provided by a separate
account registered under the Investment Company Act of
1940 if: (1) the New York Stock Exchange is closed; or
(2) the SEC requires that trading be restricted or
declares an emergency.
CURRENCY Any money we pay, or that is paid to us, must be in
United States currency. Any amount we owe will be
payable at our Corporate Office.
MISSTATEMENT OF If the Insured's stated age or sex or both are not
AGE OR SEX correct, we will change each benefit and any amount to
be paid to what the most recent deductions from the
contract fund would have provided at the Insured's
correct age and sex.
ASSIGNMENT We will not be deemed to know of an assignment unless
we receive it, or a copy of it, at our Home Office. We
are not obliged to see that an assignment is valid or
sufficient. This contract may not be assigned to any
employee benefit plan or program without our consent.
This contract may not be assigned if such assignment
would violate any federal, state, or local law or
regulation prohibiting sex distinct rates for
insurance.
FACTORS SUBJECT TO Charges deducted from premium payments and the contract
CHANGE fund may change from time to time, subject to the
maximums shown in the contract data pages. In deciding
whether to change any of these charges, we will
periodically consider factors such as mortality,
persistency, expenses, taxes and interest and/or
investment experience to see if a change in our
assumptions is needed. Changes in factors will be by
class.
NON-PARTICIPATING This contract will not share in our profits or surplus
earnings. We will pay no dividends on it.
APPLICABLE TAX LAW This contract has been designed to satisfy the
definition of life insurance for Federal income tax
purposes under Section 7702 of the Internal Revenue
Code of 1986, as amended. We reserve the right,
however, to decline any change we determine would cause
this contract to fail to qualify as life insurance
under the applicable tax law. This includes, but is not
limited to, changing the basic insurance amount,
withdrawals, and changing the type of death benefit. We
have the right to change this contract, to require
additional premium payments, or to make distributions
from this contract to the extent necessary to continue
to qualify this contract as life insurance. We also
have the right to refuse to accept a premium payment
that would in our opinion cause this contract to fail
to qualify as life insurance under applicable tax law.
(CVUL--1999)--NJ
<PAGE>
- -------------------------=======================================================
BASIS OF COMPUTATION
MORTALITY BASIS AND We compute maximum monthly insurance rates using:
INTEREST RATE
1. the Commissioners 1980 Standard Ordinary Smoker
and Nonsmoker Mortality Tables without Ten Year
Select Mortality Factors;
2. the rating class of the Insured;
3. the issue age of the Insured and the length of
time since the contract date or segment effective
date;
4. age last birthday; and
5. an effective interest rate of 4% a year.
MINIMUM LEGAL VALUES The surrender values provided by this contract are at
least as large as those set by law where it is
delivered. Where required, we have given the insurance
regulator a detailed statement of how we compute values
and benefits.
x
(CVUL--1999)
<PAGE>
- -------------------------=======================================================
SETTLEMENT OPTIONS
OPTIONS DESCRIBED You may choose to have the proceeds (that is, any death
benefit or any amount payable upon surrender of the
contract) paid in a single sum or under one of the
optional modes of settlement described below.
If the person who is to receive the proceeds of this
contract wishes to take advantage of one of these
optional modes, we will furnish, on request, details of
the options we describe below or any others we may have
available at the time the proceeds become payable.
OPTION 1 (INSTALMENTS We will make equal payments for up to 25 years. The
FOR A FIXED PERIOD) Option 1 Table shows the minimum amounts we will pay.
OPTION 2 (LIFE INCOME) We will make equal monthly payments for as long as the
person on whose life the settlement is based lives,
with payments certain for 120 months or until the sum
of the payments equals the amount put under this
option. The Option 2 Table shows the minimum amounts we
will pay. But, we must have proof of the date of birth
of the person on whose life the settlement is based.
The settlement will share in our surplus to the extent
and in the way we decide.
OPTION 3 (INTEREST We will hold an amount at interest. We will pay the
PAYMENT) interest annually, semi-annually, quarterly, or
monthly.
OPTION 4 (INSTALMENTS We will make equal annual, semi-annual, quarterly, or
OF A FIXED AMOUNT) monthly payments for as long as the available proceeds
provide.
OPTION 5 (NON- We will make payments like those of any annuity we then
PARTICIPATING INCOME) regularly issue that: (1) is based on United States
currency; (2) is bought by a single sum; (3) does not
provide for dividends; and (4) does not normally
provide for deferral of the first payment. Each payment
will be at least equal to what we would pay under that
kind of annuity with its first payment due on its
contract date. If a life income is chosen, we must have
proof of the date of birth of any person on whose life
the option is based. Option 5 cannot be chosen more
than 30 days before the due date of the first payment.
INTEREST RATE Payments under Options 1 and 4 will be calculated
assuming an effective interest rate of at least 3-1/2%
a year. Under Option 3 it will be at an effective rate
of at least 3% a year.
(CVUL--1999)
<PAGE>
- -------------------------=======================================================
SETTLEMENT OPTIONS TABLES
OPTION 1 TABLE
- ---------------------------
MINIMUM AMOUNT OF
MONTHLY PAYMENT FOR
EACH $1,000, THE FIRST
PAYABLE IMMEDIATELY
- ---------------------------
Number Monthly
of Years Payment
- ---------------------------
1 $84.65
2 43.05
3 29.19
4 22.27
5 18.12
6 15.35
7 13.38
8 11.90
9 10.75
10 9.83
11 9.09
12 8.46
13 7.94
14 7.49
15 7.10
16 6.76
17 6.47
18 6.20
19 5.97
20 5.75
21 5.56
22 5.39
23 5.24
24 5.09
25 4.96
- ---------------------------
Multiply the monthly amount
by 2.989 for quarterly,
5.952 for semi-annual or
11.804 for annual.
- ---------------------------
<TABLE>
<CAPTION>
OPTION 2 TABLE
- ------------------------------------------------------------------------------------------------
MINIMUM AMOUNT OF MONTHLY PAYMENT FOR EACH $1,000, THE FIRST
PAYABLE IMMEDIATELY
- ------------------------------------------------------------------------------------------------
KIND OF LIFE INCOME KIND OF LIFE INCOME
------------------------------------ ------------------------------------
AGE 10-Year Instalment AGE 10-Year Instalment
LAST Certain Refund LAST Certain Refund
BIRTHDAY Male Female Male Female BIRTHDAY Male Female Male Female
- ---------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 $3.18 $3.11 $3.17 $3.10 45 $4.06 $3.82 $3.99 $3.78
and under 46 4.12 3.86 4.03 3.81
11 3.19 3.12 3.18 3.11 47 4.17 3.90 4.08 3.85
12 3.20 3.13 3.19 3.12 48 4.23 3.94 4.13 3.90
13 3.21 3.14 3.20 3.13 49 4.28 3.99 4.18 3.94
14 3.22 3.15 3.21 3.14
50 4.35 4.04 4.24 3.98
15 3.24 3.16 3.23 3.15 51 4.41 4.09 4.29 4.03
16 3.25 3.17 3.24 3.16 52 4.48 4.15 4.36 4.08
17 3.27 3.19 3.25 3.18 53 4.55 4.21 4.41 4.13
18 3.28 3.20 3.27 3.19 54 4.62 4.27 4.48 4.19
19 3.30 3.21 3.28 3.20
55 4.70 4.33 4.55 4.24
20 3.31 3.22 3.30 3.21 56 4.78 4.40 4.62 4.30
21 3.33 3.24 3.32 3.23 57 4.86 4.47 4.69 4.37
22 3.35 3.25 3.33 3.24 58 4.95 4.54 4.77 4.43
23 3.36 3.26 3.35 3.25 59 5.05 4.62 4.86 4.50
24 3.38 3.28 3.37 3.27
60 5.15 4.71 4.94 4.58
25 3.40 3.30 3.39 3.29 61 5.25 4.79 5.03 4.66
26 3.42 3.31 3.41 3.30 62 5.36 4.89 5.13 4.74
27 3.45 3.33 3.43 3.32 63 5.48 4.98 5.23 4.82
28 3.47 3.35 3.45 3.34 64 5.60 5.09 5.34 4.92
29 3.49 3.37 3.47 3.35
65 5.73 5.20 5.45 5.01
30 3.52 3.39 3.49 3.37 66 5.87 5.31 5.57 5.11
31 3.54 3.41 3.52 3.39 67 6.01 5.43 5.70 5.22
32 3.57 3.43 3.54 3.41 68 6.15 5.56 5.83 5.34
33 3.60 3.45 3.57 3.44 69 6.30 5.70 5.97 5.46
34 3.63 3.47 3.60 3.46
70 6.46 5.84 6.11 5.58
35 3.66 3.50 3.63 3.48 71 6.62 5.99 6.27 5.72
36 3.69 3.52 3.66 3.50 72 6.79 6.15 6.43 5.86
37 3.72 3.55 3.69 3.53 73 6.96 6.31 6.60 6.01
38 3.76 3.58 3.72 3.56 74 7.13 6.49 6.78 6.18
39 3.80 3.61 3.75 3.58
75 7.30 6.67 6.97 6.35
40 3.84 3.64 3.79 3.61 76 7.48 6.85 7.17 6.53
41 3.88 3.67 3.82 3.64 77 7.66 7.04 7.38 6.72
42 3.92 3.70 3.86 3.67 78 7.83 7.24 7.60 6.93
43 3.97 3.74 3.90 3.71 79 8.00 7.44 7.83 7.15
44 4.01 3.78 3.94 3.74
80 8.17 7.64 8.07 7.38
and over
</TABLE>
(CVUL--1999)
<PAGE>
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY. INSURANCE PAYABLE ONLY UPON
DEATH. CASH VALUES REFLECT PREMIUM PAYMENTS, INVESTMENT RESULTS, AND CHARGES.
NON-PARTICIPATING.
CVUL--1999
BY-LAWS
OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
August 4, 1999
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders of the
corporation shall be held at such time as may from time to time be fixed by the
Board of Directors, at an hour to be named in the notice or waiver of notice of
the meeting for the election of directors and for the transaction of such other
business as may properly come before the meeting. If the date of the annual
meeting falls upon a legal holiday, the meeting shall be held on the next
succeeding business day. The meeting shall be held at such place, either within
or without the State of New Jersey, as the Board of Directors shall determine.
In the event the Board of Directors does not determine otherwise, the annual
meeting of shareholders shall be held at the office of the corporation in
Newark, New Jersey.
1
<PAGE>
SECTION 2. VOTING. Each shareholder shall be entitled to one vote, in
person, or by proxy, for each share entitled to vote held by such shareholder.
No proxy shall be voted after eleven months from its date unless such proxy
provides for a longer period, but in no event shall a proxy by valid after three
years from the date of execution. Upon the demand of any shareholder made before
the voting begins, the vote for directors shall be by ballot. All elections for
directors shall be decided by plurality vote; all other questions shall be
decided by majority vote except as otherwise provided by law or the Certificate
of Incorporation.
A complete list of the shareholders entitled to vote at a shareholders'
meeting or any adjournment, arranged in alphabetical order, with the address of
each, and the number of shares held by each, shall be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any shareholder who is present.
SECTION 3. QUORUM. Except as otherwise required by law, by the Certificate
of Incorporation or by the By-Laws, the presence, in person or by proxy, of
shareholders holding a majority of the shares of the corporation entitled to
vote shall constitute a quorum at all meetings of the shareholders. In case a
quorum shall not be present at any meeting, a majority in interest of the
shareholders entitled to vote thereat, present in person or by proxy,
2
<PAGE>
shall have power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until the requisite number of shares entitled
to vote shall be present. At any such adjourned meeting at which the requisite
number of shares entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed.
SECTION 4. SPECIAL MEETINGS. Special meetings of the shareholders for any
purpose or purposes may be called by the President or the Chairman of the Board
of Directors, if one be elected, or by resolution of the Board of Directors, and
may be held at such place, within or without the State of New Jersey, as shall
be fixed by the Board and stated in the notice or waiver of notice of the
meeting. If no other place is so fixed, such meetings may be held at the office
of the corporation in Newark, New Jersey.
SECTION 5. NOTICE OF MEETINGS. Written notice, stating the place, date,
time and purpose or purposes of the meeting, shall be given to each shareholder
entitled to vote thereat, either personally or by mail, not less than ten nor
more than sixty days before the date of the meeting.
3
<PAGE>
SECTION 6. ACTION WITHOUT MEETING. Any action required or permitted to be
taken at a meeting of shareholders by law or the Certificate of Incorporation or
the By-Laws, may be taken without a meeting if all the shareholders entitled to
vote thereon consent thereto in writing.
ARTICLE II
DIRECTORS
SECTION 1. NUMBER AND TERM. The Board of Directors shall have not less
than five nor more than fifteen members. The Directors shall be elected at the
annual meeting of shareholders. Each Director shall be elected to hold office
until the next succeeding annual meeting and, subject to law and the By-Laws,
shall hold office for the term which elected and until his successor shall be
elected and shall qualify. Directors need not be shareholders.
SECTION 2. RESIGNATIONS. Any director, member of a Committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time of its receipt by the corporation or at such
subsequent time as shall be specified therein.
4
<PAGE>
SECTION 3. VACANCIES. If the office of any director, member of a Committee
or other officer becomes vacant, the remaining directors in office, though less
than a quorum, by a majority vote may elect or appoint any qualified person to
fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. INCREASE OF NUMBER. In case of any increase in the number of
directors, the additional directors may be chosen by vote by the Board of
Directors at any meeting of the Board, or by vote of the shareholders at an
annual or special meeting of the shareholders, and shall hold office until the
next annual election and until their successors shall be elected and shall
qualify.
SECTION 5. POWERS. The Board of Directors shall exercise all the powers of
the corporation except such as are conferred upon or reserved to the
shareholders by law, by the Certificate of Incorporation or by the by-laws.
SECTION 6. COMMITTEES. The Board of Directors may, by resolution or
resolutions adopted by a majority of the entire Board, appoint an Executive
Committee and one or more other Committees, each Committee to consist of three
or more directors of the corporation. The Executive Committee shall have and may
exercise in the intervals between meetings of the Board of Directors all the
authority of the Board not delegated to other
5
<PAGE>
Committees or reserved to the Board either by virtue of the By-Laws or
otherwise, provided that no committee, including the Executive Committee, shall
(a) make, alter or repeal any By-Laws of the corporation;
(b) elect or appoint any director, or remove any officer or director;
(c) submit to shareholders any action that requires shareholders'
approval; or
(d) amend or repeal any resolution theretofore adopted by the Board which
by its terms is amendable or repealable only by the Board.
At each meeting of any Committee there shall be present to constitute a
quorum for the transaction of business at least one-third of the members but in
no event less than three members. The vote of a majority of the members present
at a meeting of any Committee at the time of the vote, if a quorum is present at
such time, shall be the act of such Committee. All action of each Committee
shall be reported to the Board and shall, except in cases in which the rights of
third parties would be affected, be subject to the direction of the Board.
SECTION 7. MEETINGS. The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of shareholders; or the
time and place of such meeting may be fixed by consent in writing of all the
directors.
The President, the Chairman of the Board, if one be elected, or a Vice
President may,
6
<PAGE>
and at the request of two directors shall, call a special meeting of the Board
of Directors, at least two days notice of which shall be given in person or by
mail, telegraph, telephone or cable. Regular meetings of the Board of Directors
may be held without notice at such times and places as the Board may determine
by prior resolution.
SECTION 8. QUORUM. A majority of the Directors but no less than three
shall constitute a quorum for the transaction of business.
SECTION 9. ACTION WITHOUT MEETING. Any action required or permitted to be
taken pursuant to authorization voted at any meeting of the Board of Directors,
or of any Committee thereof, may be taken without a meeting if, prior or
subsequent to such action a written consent thereto is signed by all members of
the Board or of such Committee, as the case may be, and such written consent is
filed with the minutes of the proceedings of the Board or Committee.
SECTION 10. CONFERENCE TELEPHONE MEETINGS. Any or all directors may
participate in a meeting of the Board or any Committee thereof, as the case may
be, by means of a conference telephone or any means of communication by which
all persons participating in the meeting are able to hear each other.
Participation by such means shall constitute presence in person at such meeting.
7
<PAGE>
ARTICLE III
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation shall be a President,
one or more Vice Presidents, a Secretary, a Comptroller and a Treasurer, all of
whom shall be elected by the Board of Directors and who shall hold office,
subject to the By-Laws, until their successors are elected and qualified. In
addition, the Board of Directors may elect a Chairman of the Board and such
Assistant Secretaries, Assistant Treasurers and Assistant Comptrollers as the
Board may deem advisable. None of the officers of the corporation, other than
the Chairman of the Board of Directors, if one be elected, need be directors.
The officers shall be elected at the organization meeting of the Board and may
be elected at other times. One person may hold two or more offices, except that
the offices of President and Secretary or Assistant Secretary may not be held by
the same person. Vacancies occurring among the officers shall be filled by the
directors. Any officer may be removed by the Board of Directors, with or without
cause at any time.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint
such other officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
8
<PAGE>
SECTION 3. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board
of Directors, if one be elected, shall preside at all meetings of the Board of
Directors. He shall also perform such other duties and have such other powers as
may be prescribed or assigned to him from time to time by the Board of Directors
or the By-Laws.
SECTION 4. PRESIDENT. The President shall be the chief executive officer
of the corporation. He shall exercise all the powers and perform all the duties
usual to such office and shall preside at all meetings of the shareholders if
present thereat and, in the absence or non-election of the Chairman of the
Board, at all meetings of the Board of Directors. Subject to the Board of
Directors, the President shall have general supervision of the business of the
corporation. The President may execute any contract, agreement or instrument,
not prohibited by law, the Certificate of Incorporation or the By-Laws,
necessary for the conduct of the business of the corporation. He shall also
perform such other duties and have such other powers as may be prescribed or
assigned to him from time to time by the Board of Directors or the by-laws.
9
<PAGE>
SECTION 5. VICE PRESIDENT. The Vice President or, if more than one, the
Vice Presidents in the order established by the Board of Directors shall, in the
absence or incapacity of the President, exercise all the powers and perform all
the duties of the President. The Vice President shall also perform such other
duties and have such other powers as may be prescribed or assigned to them,
respectively, from time to time by the President, the Board of Directors or the
By-Laws. Any Vice President may, in the discretion of the Board, be designated
as "executive", "senior" or by any succeeding ordinal number or by departmental
or functional classification.
SECTION 6. SECRETARY. The Secretary shall exercise all the powers and
perform all the duties usual to such office, including keeping the minutes of
the meetings of the Board of Directors and of the shareholders, having custody
of the seal of the corporation and affixing the seal to documents when
authorized to do so. He shall also perform such other duties and have such other
powers as may be prescribed or assigned to him from time to time by the
President, the Board of Directors or the by-laws.
SECTION 7. COMPTROLLER. The Comptroller shall exercise all the powers and
perform all the duties usual to such office, including supervising the accounts
of the corporation, having supervision over and responsibility for the books,
records, accounting and system of accounting and auditing in each office of the
corporation.
10
<PAGE>
He shall also perform such other duties and have such other powers as may be
prescribed or assigned to him from time to time by the President, the Board of
Directors or the By-Laws; and him from time to time by the President, the Board
of Directors or the by-laws.
SECTION 8. TREASURER. The Treasurer shall exercise all the powers and
perform all the duties usual to such office, including having the care and
custody of the funds and securities of the corporation and depositing the same
with such depositories as the Board may designate. The Treasurer shall also
perform such other duties and have such other powers as may be prescribed or
assigned to him from time to time by the President, the Board of Directors or
the by-laws.
SECTION 9. ASSISTANT SECRETARY. Each Assistant Secretary shall have the
power to execute on behalf of the corporation such instruments as may be
required to be executed by the Secretary and to affix the seal of the
corporation to corporate instruments and to attest the same, except as otherwise
provided by law or the By-Laws. Each Assistant Secretary shall also perform such
other duties and have such other powers as may be prescribed or assigned to him
from time to time by the President, the Board of Directors or the by-laws.
11
<PAGE>
SECTION 10. ASSISTANT COMPTROLLERS AND ASSISTANT TREASURERS. Assistant
Comptrollers and Assistant Treasurers, if any, shall be elected and shall have
the such powers and shall perform such duties as shall be assigned to them,
respectively, by the President, the Board of Directors or the By-Laws.
ARTICLE IV
MISCELLANEOUS
SECTION 1. CERTIFICATES. The shares of the corporation shall be
represented by certificates signed by, or in the name of the corporation by, the
Chairman of the Board or the President or a Vice President and by the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary.
SECTION 2. LOST CERTIFICATES. No certificate representing shares of the
corporation shall be issued in place of any certificate alleged to have been
lost, stolen or destroyed except on prior approval in each case of the Board of
Directors or such officer or officers as the Board from time to time may
designate and on submission to the corporation of satisfactory evidence of such
loss, theft or destruction and, unless otherwise ordered by the Board of
Directors, on delivery to the corporation of a bond of indemnity, in such form
and amount or unlimited as to amount as the Board from time to time may
prescribe, against any
12
<PAGE>
loss or claim in respect or by reason of such lost, stolen or destroyed
certificate, or the issuance of a new certificate in lieu thereof.
SECTION 3. REGISTRATION OF TRANSFERS. Transfers of shares shall be
registered upon the books of the corporation by the registered holder in person
or by attorney, duly authorized, and on surrender of the certificate or
certificates for such shares, properly assigned for transfer.
SECTION 4. SEAL. The corporate seal shall be circular in form and shall
contain the name of the corporation around the circumference and "New Jersey
1981" in the center.
SECTION 5. FISCAL YEAR. The fiscal year of the corporation shall be a
calendar year.
SECTION 6. CHECKS, ETC. All checks, drafts or orders for the payment of
money shall be signed by such officer or officers or agent or agents, and in
such manner, as shall be determined from time to time by the Board of Directors.
SECTION 7. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by
these By-Laws to be given, personal notice is not meant unless expressly so
stated. Any notice required to be given under the provisions of these By-Laws
may be waived by any person entitled thereto.
13
<PAGE>
ARTICLE V
INDEMNIFICATION
The corporation shall indemnify each corporate agent (as defined in
Section 14A:3-5 of the New Jersey Business Corporation Act) against his expenses
(including reasonable costs, disbursements and counsel fees) and his liabilities
(including amounts paid or incurred in satisfaction of settlements, judgments,
fines and penalties) in connection with any proceeding (as defined in said
Section), including any proceeding by or in the right of the corporation to
procure a judgment in its favor, involving the corporate agent by reason of his
being or having been such a corporate agent, if, as and to the full extent
authorized by law. Any such indemnification shall not exclude any other rights
to which any corporate agent may be entitled under the Certificate of
Incorporation, By-Laws, agreement, vote of shareholders, or otherwise.
14
<PAGE>
ARTICLE VI
CONFLICTING INTERESTS
No director, officer or employee of the Corporation at Manager level or
higher shall have any position with or a substantial interest in any other
enterprise operated for profit, (other than The Prudential Insurance Company of
America or any direct or indirect subsidiary thereof) the existence of which
would conflict or might reasonably be supposed to conflict with the proper
performance or his or her Corporate responsibilities, or, which might tend to
affect his or her independence of judgment with respect to transactions between
the Corporation and such other enterprise.
If a director or any such officer or employee has a position with or
substantial interest in another such enterprise, which, when acquired, did not
create such an actual or apparent conflict of interest, he or she shall make
timely disclosure of such position or interest to the Board of Directors when he
or she learns that there is an impending transaction between such enterprise and
the Corporation or The Prudential Insurance Company of America or any subsidiary
or affiliate of either the Corporation or Prudential that might create such an
actual or apparent conflict.
15
<PAGE>
The Board of Directors, which may act through an appropriate committee or
sub-committee, shall adopt such regulations and procedures as shall from time to
time appear to it sufficient to secure compliance with the above policy.
ARTICLE VII
AMENDMENTS
The By-Laws may be altered or repealed and new By-Laws may be made by vote
of the shareholders at any meeting of the shareholders. The Board of Directors
may also alter or repeal the By-Laws and make new By-Laws at any meeting of the
Board of Directors; provided, however, that any By-Laws made by the Board of
Directors may be altered or repealed, and new by-laws made, by the shareholders.
16
[LOGO] PRUDENTIAL APPLICATION FOR LIFE INSURANCE
OR POLICY CHANGE
[ ] The Prudential Insurance Company of America
[ ] Pruco Life Insurance Company*
[X] Pruco Life Insurance Company of New Jersey*
*A SUBSIDIARY OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
PART 1 POLICY NUMBER XX XXX XXX [ ] CHECK HERE IF POLICY CHANGE.
================================================================================
A ABOUT THE 1. Name of primary proposed insured (OR CURRENT INSURED PERSON, IF
PRIMARY POLICY CHANGE) John Doe
PROPOSED --------------------------------------------------------------
INSURED (FIRST NAME, MIDDLE INITIAL, LAST NAME)
2. Social Security number XXX-XX-XXXX
--------------------------
3. Sex [ ] female [X] male
4. Marital status [ ] single [X] married [ ] widowed
[ ] separated [ ] divorced
5. Date of birth 3/1/64
------
MONTH DAY YEAR
6. Age 35
--
7. State of birth (COUNTRY IF NOT U.S.) (name of State)
---------------
8. Billing address 123 Main Street
---------------------------------------------
(STREET, CITY, STATE, ZIP)
Any City, Any State XXXXX
---------------------------------------------
9. Home address _______________________________________________
(IF DIFFERENT) (STREET, CITY, STATE, ZIP)
_______________________________________________
10. Home telephone number (XXX) XXX-XXXX
---------------------
11. Business telephone number (XXX) XXX-XXXX
---------------------
12. Current employer _____________________________________________
13. List all existing life insurance coverage. [ ] Check here if
none.
Year Type of To be
Company Amount Issued insurance replaced?
----------------------------------------------------------------
[ ] Individual [ ] Yes
$ [ ] Group [ ] No
------------------------------------------- --------------- ------
[ ] Individual [ ] Yes
$ [ ] Group [ ] No
------------------------------------------- --------------- ------
[ ] Individual [ ] Yes
$ [ ] Group [ ] No
------------------------------------------- --------------- ------
[ ] Individual [ ] Yes
$ [ ] Group [ ] No
------------------------------------------- --------------- ------
[ ] Individual [ ] Yes
$ [ ] Group [ ] No
----------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
B ALL OTHER Name relationship to primary sex date of birth age state of birth total life insurance
PROPOSED (FIRST, proposed insured (F/M) (M/D/Y) (COUNTRY IF NOT in all companies
INSUREDS INITIAL, LAST) U.S.)
<S> <C> <C> <C> <C> <C> <C> <C>
(INCLUDE ___________________________________________________________________________________________________________________
APPLICANT IF ___________________________________________________________________________________________________________________
REQUESTING ___________________________________________________________________________________________________________________
APPLICANT'S ___________________________________________________________________________________________________________________
WAIVER OF ___________________________________________________________________________________________________________________
PREMIUM ___________________________________________________________________________________________________________________
[AWP] ___________________________________________________________________________________________________________________
BENEFIT) ___________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________
</TABLE>
================================================================================
ORD 96200-98 New Jersey
<PAGE>
PART 1 APPLICATION FOR LIFE INSURANCE OR POLICY CHANGE
================================================================================
C COVERAGE 1. Plan of insurance Variable Universal Life
INFORMATION ------------------------------------------
if applicable to the plan, check one. [ ] Level Death Benefit
[X] Variable Death Benefit
2. Initial amount of insurance $100,000
-----------------
3. Supplementary benefits and riders
[ ] Waiver of Premium
[ ] Accidental Death Benefit $_________________
[ ] Applicant's Waiver of Premium
[ ] Option to Purchase Additional Insurance (OPAI) $__________
[ ] Automatic Premium Loan
[ ] Option to Purchase Paid-up Life Insurance Additions
(INCLUDE DETAILS IN SECTION G, SPECIAL REQUESTS)
[ ] Acceleration of Death Benefits
(Living Needs Benefit)
Other riders and benefits (INDICATE AMOUNT WHERE APPLICABLE)
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
================================================================================
D BENEFICIARIES 1. BENEFICIARY INFORMATION Relationship to primary
AND Name proposed insured Age
__________________________________________________
OWNERSHIP Primary Mary Doe Spouse 35
(IF TRUST, (CLASS 1) __________________________________________________
PROVIDE NAME __________________________________________________
OF TRUST, Contingent Robert Doe Son 10
TRUSTEE AND (CLASS 2) __________________________________________________
DATE OF __________________________________________________
TRUST)
2. Is the policyowner someone other than the primary proposed
insured? [ ] Yes [X] No
(IF YES, PROVIDE INFORMATION REQUESTED BELOW.)
Name __________________________________Date of birth __/__/__
(FIRST NAME, MIDDLE INITIAL, LAST NAME) MONTH DAY YEAR
Address _____________________________________________________
(STREET, CITY, STATE, ZIP)
_____________________________________________________
================================================================================
E PAYMENT 1a. Within the past 90 days, has any proposed insured been
INFORMATION hospitalized or been advised by a member of the medical
profession that he or she needs hospitalization for any
reason other than for normal pregnancy or well-baby care?
[ ] Yes [X] No
b. Within the past 12 months, has any proposed insured received
treatment or advice from a member of the medical profession
for heart disease, chest pain, stroke or cancer (except
skin)? [ ] Yes [X] No
2. Is a medical examination required on the primary proposed
insured? [ ] Yes [X] No
second proposed insured? [ ] Yes [X] No
3. Premium payment mode (COLLECT FULL MODAL PREMIUM IF PREPAID)
[X] Annual [ ] Semiannual [ ] Quarterly [ ] Monthly
[ ] Electronic Funds Transfer (EFT) [ ] Payroll Budget
[ ] Government Allotment
4. Amount of prepayment submitted with this application
$350.73 (INCLUDE ANY UNSCHEDULED PREMIUM PAYMENTS)
[ ] None (MUST BE NONE IF 1a OR 1b IS YES, EXCEPT FOR
GIBRALTAR [GIB] PRODUCTS)
5. Date prepayment collected, 7/1/99
--------------
MONTH DAY YEAR
================================================================================
F REPLACEMENT For any proposed insured, would this insurance replace or cause
a change in any existing insurance or annuity in any company?
(IF YES, ENCLOSE ALL REQUIRED REPLACEMENT FORMS.)
[ ] Yes [ ] No
================================================================================
G SPECIAL
REQUESTS
================================================================================
ORD 96200-98 New Jersey
<PAGE>
PART 1 APPLICATION FOR LIFE INSURANCE OR POLICY CHANGE
================================================================================
H BACKGROUND 1. Has either the primary proposed insured or second proposed
ON PROPOSED insured (if any) ever used tobacco or other nicotine products
INSUREDS such as cigarettes, cigars, pipe, chewing tobacco, snuff,
nicotine gum or nicotine patch? (IF YES, PROVIDE DATE WHEN
LAST USED AND INDICATE ALL TYPES OF PRODUCTS.) [ ] Yes [X] No
DATE (MO., YR.) PRODUCT(S)
Primary proposed insured _______________ __________________
_______________ __________________
Second proposed insured _______________ __________________
_______________ __________________
2. What are the occupation and duties of the primary proposed
insured? Manager & Administrative Duties
--------------------------------------------------------------
3. Within the last two years, has any proposed insured done or
does he or she plan to do the following:
a. operate or have any duties aboard an aircraft, glider,
balloon or similar device? [ ] Yes [X] No
(IF YES, COMPLETE AVIATION QUESTIONNAIRE.)
b. participate in hazardous sports, such as auto, motorcycle,
snowmobile or powerboat competitions/exhibitions, scuba
diving, mountain climbing, parachuting, skydiving or any
other such sport or hobby? (IF YES, COMPLETE AVOCATION
QUESTIONNAIRE.) [ ] Yes [X] No
4. Is any proposed insured applying for or requesting
reinstatement or policy change(s) of any other life or health
insurance policy? (IF YES, PROVIDE INSURANCE COMPANY, POLICY
PLAN AND AMOUNT.) [ ] Yes [X] No
______________________________________________________________
______________________________________________________________
5. Has any proposed insured been convicted of, or currently
charged with, the commission of any criminal offense - other
than the violation of a motor vehicle law - within the last
10 years? [ ] Yes [X] No
(IF YES, PROVIDE DETAILS.) ___________________________________
______________________________________________________________
6. a. Driver's license number and state of issue of primary
proposed insured _____________________________________________
XXXXX-XXXXX-XXXXX (name of State)
--------------------------------------------------------------
b. In the last three years, has any proposed insured
(1) had a driver's license denied, suspended or revoked?
[ ] Yes [X] No
(2) been convicted of or cited for
(a) three or more moving violations? [ ] Yes [X] No
(b) driving under the influence of alcohol or drugs?
[ ] Yes [X] No
(3) been involved as a driver in two or more auto
accidents? [ ] Yes [X] No
(IF YES TO ANY OF THE ABOVE, PROVIDE DETAILS, INCLUDING
TYPE OF VIOLATION, ACCIDENT, OR REASON FOR DENIAL,
SUSPENSION OR REVOCATION.) ________________________________
______________________________________________________________
______________________________________________________________
7. Does any proposed insured plan to live or travel outside the
United States or Canada within the next 12 months? (IF YES,
LIST COUNTRIES AND PURPOSE AND DURATION OF EACH TRIP.)
[ ] Yes [X] No
______________________________________________________________
______________________________________________________________
================================================================================
I ADDITIONAL COMPLETE ONLY IF THIS IS AN APPLICATION FOR ADDITIONAL COVERAGE
COVERAGE ON A PERSON ALREADY COVERED BY A PRUDENTIAL OR PRUCO POLICY WITH
AN APPLICATION DATE WITHIN THREE MONTHS OF THE DATE OF THIS
APPLICATION.
To the best of your knowledge, has the health or the mental or
physical condition of any person proposed for insurance changed
since the answers and statements were given in the application
included in policy number __________? [ ] Yes [ ] No
(IF YES, COMPLETE THE APPROPRIATE PART 2 MEDICAL INFORMATION
SECTION.)
================================================================================
J CHANGES Changes made by the Company
================================================================================
ORD 96200-98 New Jersey
<PAGE>
PART 2 MEDICAL INFORMATION APPLICATION FOR LIFE INSURANCE OR POLICY CHANGE
================================================================================
K PHYSICIAN PRIMARY PROPOSED INSURED
INFORMATION PHYSICIAN LAST CONSULTED
------------------------
Name Dr. William Smith
---------------------------------------------------------
Address 23 Main Street
---------------------------------------------------------
(STREET, CITY, STATE, ZIP)
Any City, Any State XXXXX
---------------------------------------------------------
Telephone number (XXX) XXX-XXXX Date last seen 10-1-97
---------------- ----------------
Reason last seen Cold
-------------------------------------------------
PRIMARY PHYSICIAN
-----------------
Name Dr. William Smith
---------------------------------------------------------
Address 23 Main Street
---------------------------------------------------------
(STREET, CITY, STATE, ZIP)
Any City, Any State XXXXX
---------------------------------------------------------
Telephone number (XXX) XXX-XXXX Date last seen 10-1-97
---------------- ----------------
Reason last seen Cold
-------------------------------------------------
SECOND PROPOSED INSURED OR APPLICANT FOR APPLICANT'S WAIVER OF
PREMIUM (AWP)
PHYSICIAN LAST CONSULTED
------------------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
(STREET, CITY, STATE, ZIP)
---------------------------------------------------------
Telephone number ( ) Date last seen
---------------- ----------------
Reason last seen
-------------------------------------------------
PRIMARY PHYSICIAN
-----------------
Name
---------------------------------------------------------
Address
---------------------------------------------------------
(STREET, CITY, STATE, ZIP)
---------------------------------------------------------
Telephone number ( ) Date last seen
---------------- ----------------
Reason last seen
-------------------------------------------------
================================================================================
L PHYSICAL Height Weight
MEASUREMENTS -----------------------------------------------------------------
Primary proposed insured 5'11" 180
-----------------------------------------------------------------
Second proposed insured
-----------------------------------------------------------------
AWP applicant
-----------------------------------------------------------------
================================================================================
ORD 96200-98 New Jersey
<PAGE>
PART 2 MEDICAL INFORMATION APPLICATION FOR LIFE INSURANCE OR POLICY CHANGE
================================================================================
M CATEGORY II 1. Family record
CHANGES Current age or Year and cause
AND PLANS age at death of death
OTHER THAN -----------------------------------------------------------------
GIBRALTAR Father 65
(GIB) -----------------------------------------------------------------
Brother 30
-----------------------------------------------------------------
Brother
-----------------------------------------------------------------
Brother
-----------------------------------------------------------------
Current age or Year and cause
age at death of death
-----------------------------------------------------------------
Mother 65
-----------------------------------------------------------------
Sister 25
-----------------------------------------------------------------
Sister
-----------------------------------------------------------------
Sister
-----------------------------------------------------------------
2. Has anyone proposed for coverage been diagnosed with or
treated by a member of the medical profession for
a. chest pain or any disorder of the heart or
blood vessels? [ ] yes [x] no
b. high blood pressure? [ ] yes [x] no
c. cancer, tumor, leukemia, melanoma or
lymphoma? [ ] yes [x] no
d. diabetes or high blood sugar? [ ] yes [x] no
e. mental or psychiatric illness? [ ] yes [x] no
f. acquired immune deficiency syndrome (aids)
or aids-related complex (arc)? [ ] yes [x] no
g. any sexually transmitted diseases? [ ] yes [x] no
h. asthma or any disorder of the lungs? [x] yes [ ] no
i. any disorder of the brain or nervous system? [ ] yes [x] no
j. hepatitis or any disorder of the liver,
stomach or intestines? [ ] yes [x] no
k. any disorder of the kidney or urinary tract? [ ] Yes [X] No
3. Is anyone proposed for coverage currently taking prescription
medication? [ ] Yes [X] No
4. Other than above, has anyone proposed for coverage
a. been a patient in a hospital or other medical facility?
[ ] yes [x] no
b. in the last five years, had or been advised to have
surgery, medical tests (other than HIV) or diagnostic
procedures such as ECGs, stress tests, X-rays, blood tests
urine tests? [ ] Yes [X] No
5. Has anyone proposed for coverage
a. used, or is he or she now using, cocaine, tranquilizers,
amphetamines, barbiturates, hallucinogens, marijuana,
heroin, opiates, or methadone except as prescribed by a
member of the medical profession? [ ] yes [x] no
b. had or been advised to have treatment or counseling for
alcohol or drug use? [ ] Yes [X] No
6. Does anyone proposed for coverage have any disease, disorder
or condition not previously mentioned? [ ] Yes [X] No
7. Has anyone proposed for coverage had life or health insurance
declined, postponed or issued with an increased premium?
[ ] Yes [X] No
8. Is anyone proposed for coverage currently unable to perform
his or her normal daily activities or all normal occupational
duties on a full-time basis at the customary place of
employment? [ ] Yes [X] No
9. Has anyone proposed for coverage requested or received
disability or compensation benefits? [ ] Yes [X] No
(CONTINUED ON NEXT PAGE)
================================================================================
ORD 96200-98 New Jersey
<PAGE>
PART 2 MEDICAL INFORMATION APPLICATION FOR LIFE INSURANCE OR POLICY CHANGE
================================================================================
M CATEGORY II 10. Details of "Yes" answers for questions 2-9
CHANGES Question number Indicate illness, hospitalization, reason
AND PLANS and name of proposed for checkup, medication and any advice
OTHER THAN insured or treatment given by a medical
GIBRALTAR professional
(GIB) -----------------------------------------------------------------
(CONTINUED) 2.h. John Cold
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
Dates and Name, address and telephone
duration number of medical
of illness professionals and hospitals
10/97 Dr. Wm. Smith
-----------------------------------------------------------------
23 Main Street
-----------------------------------------------------------------
Any City, Any State
-----------------------------------------------------------------
XXXXX
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
For additional medical details, use another application.
(CONTINUED ON NEXT PAGE)
================================================================================
ORD 96200-98 New Jersey
<PAGE>
TERMS AND CONDITIONS
================================================================================
The words "I" and "my" refer to the primary proposed insured and
policyowner or applicant, if other than the primary proposed insured. The
word "Company" refers to the company checked at the beginning of this
application.
Unless I have specified a policy date or special payment plan (e.g.,
government allotment, payroll budget) in this application, I understand
that if the initial premium is not paid with this request for coverage,
the policy will become effective when all of the following conditions are
met:
o the policy is issued, delivered and I accept it,
o the health of all persons proposed for insurance remains as stated in
the application and
o the first premium is paid in full and the check or other form of
payment is good and can be collected.
If the Company enters any change in section J, I approve the change by
accepting the policy unless the law requires written consent to changes.
No Company representative can make or change a policy, or waive any of the
Company's rights or requirements.
The Company will pay the beneficiary named in the application (or in the
policy if requesting a policy change and no beneficiary has been named in
the application) any applicable insurance benefit either at the death of
the primary insured or at the death of an insured child after the death of
the primary insured if there is no insured spouse.
For policy changes, the existing policyowner and beneficiary designation
will be used unless a new policyowner or beneficiary designation is
provided in this application.
The policyowner is either the primary proposed insured or the applicant
unless a different policyowner is named in the application. This is
subject to any provisions for the automatic transfer of ownership stated
in the policy.
If joint policyowners are named, in the event of the death of one
policyowner, the survivor(s) shall be the policyowner(s), unless otherwise
specified.
SIGNATURES
================================================================================
I certify, affirm and understand the following:
o To the best of my knowledge and belief, the statements in this
application, as well as any forms that the Company designates to be
part of the application and that are attached to the policy, are
complete, true and correctly recorded.
o Except for failure to pay premium, the Company will not contest the
validity of this policy or change request after it has been in force
during the insured's lifetime for two years from the date it takes
effect.
o I will inform the Company of any changes in my or any proposed
insured's health, mental or physical condition, or of any changes to
any answers on this application, prior to or upon delivery of this
policy.
o If I have requested the Acceleration of Death Benefits (Living Needs
Benefit), I have read the disclosures in the brochure (ORD 87246).
o I have received and read the Terms and Conditions shown above and the
Important Notice About Your Application for Insurance.
o I believe this policy meets my insurance needs and financial
objectives. For a variable product: I acknowledge receipt of a current
prospectus for the policy. I understand that the policy's value and
death benefit may vary depending on the policy's investment experience.
o My original signature has been affixed to this application, the
original application will be retained by the Company and I will receive
a copy identical in form and substance to the original, attached to my
policy.
(CONTINUED ON NEXT PAGE)
================================================================================
ORD 96200-98 New Jersey
<PAGE>
SIGNATURES (CONTINUED)
================================================================================
ANY PERSON WHO INCLUDES ANY FALSE OR MISLEADING INFORMATION ON AN
APPLICATION FOR AN INSURANCE POLICY IS SUBJECT TO CRIMINAL AND CIVIL
PENALTIES.
Signed at (Name or City, State) on 7/1/99
-------------------------------------- ----------
(CITY, STATE) MONTH DAY YEAR
SIGNATURE OF PRIMARY PROPOSED INSURED, IF AGE 8 OR OVER,
OR OF CURRENTLY INSURED PERSON, IF POLICY CHANGE X /s/ JOHN DOE
------------------------
SIGNATURE OF POLICYOWNER (IF DIFFERENT FROM THE PRIMARY
PROPOSED INSURED) OR OF EXISTING POLICYOWNER IF A POLICY
CHANGE. IF THE POLICYOWNER IS A FIRM OR CORPORATION,
GIVE THAT COMPANY'S NAME AND HAVE AN OFFICER SIGN
BELOW. X
-------------------------
SIGNATURE AND TITLE OF OFFICER OF FIRM OR CORPORATION X
-------------------------
SIGNATURE OF APPLICANT, IF DIFFERENT FROM PRIMARY
PROPOSED INSURED OR POLICYOWNER X
-------------------------
SIGNATURE OF BENEFICIARY, IF POLICY CHANGE AND RIGHTS
ARE LIMITED X
-------------------------
SIGNATURE OF WITNESS
(LICENSED WRITING REPRESENTATIVE MUST WITNESS.) X /s/ RICHARD ROE
-------------------------
================================================================================
LICENSED WRITING REPRESENTATIVE'S CERTIFICATION
Do you have any information, other than that stated in this application, which
indicates that any proposed insured may replace or change any current insurance
or annuity in any company? [ ] Yes [ ] No
SIGNATURE OF WRITING REPRESENTATIVE X /s/ RICHARD ROE
-------------------------
================================================================================
ORD 96200-98 New Jersey
SUPPLEMENT TO THE APPLICATION
[ ] The Prudential Insurance Company of America
[ ] Pruco Life Insurance Company*
[X] Pruco Life Insurance Company of New Jersey
*A Subsidiary of The Prudential Insurance Company of
America
| No. XX XXX XXXX
------------------------------------------------------------
A Supplement to the Application for a variable contract in which John Doe
- ------------------------- is named as the proposed Insured. ---------------
- --------------------------------------------------------------------------------
I BELIEVE THIS CONTRACT MEETS MY INSURANCE NEEDS AND FINANCIAL OBJECTIVES. I
ACKNOWLEDGE RECEIPT OF A CURRENT PROSPECTUS FOR THE CONTRACT. I UNDERSTAND THAT
THE CONTRACT'S VALUE AND DEATH BENEFIT MAY VARY DEPENDING ON THE CONTRACT'S
INVESTMENT EXPERIENCE ........................................... YES [X] NO [ ]
An illustration of values is available upon request.
|Date |Signature of Applicant
| |
| July 1, 1999 | John Doe
- --------------------------------------------------------------------------------
ORD 96200-98 New Jersey
Description of Pruco Life of New Jersey's Issuance,
Increases in or Addition of Insurance Benefits,
Transfer and Redemption Procedures for
Variable Universal Life Insurance Contracts
Pursuant to Rule 6e-3(T)(b)(12)(iii)
This document sets forth the administrative procedures that will be followed by
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey") in
connection with the issuance of its PruSelect III Variable Life Insurance
Contract ("Contract"), the increase in or addition of benefits, the transfer of
assets held thereunder, and the redemption by Contract owners of their interests
in said Contracts. The document also explains the method that Pruco Life of New
Jersey will follow in making a cash adjustment when a Contract is exchanged for
a fixed benefit insurance Contract pursuant to Rule 6e-3(T)(b)(13)(v)(B).
I. Procedures Relating to Issuance and Purchase of the Contracts and to the
Increase in or Addition of Benefits
A. Premium Schedules and Underwriting Standards
The Contract has Flexible Premiums - no premiums are required to be paid by a
certain date except for the minimum initial premium required to start the
Contract. The minimum initial premium for the Contract, and the charges from the
Contract Fund to reflect the cost of insurance, will not be the same for all
owners. Insurance is based on the principle of pooling and distribution of
mortality risks, which assumes that each owner is charged a cost commensurate
with the Insured's mortality risk as actuarially determined utilizing factors
such as age, sex (in most cases), smoking status, health and occupation. Uniform
premiums or charges for all Insureds would discriminate unfairly in favor of
those Insureds representing greater risks. However, for a given face amount of
insurance, Contracts issued on insureds in a given risk classification will have
the same minimum initial premium and charges.
The underwriting standards and premium processing practices
<PAGE>
followed by Pruco Life of New Jersey are similar to those followed in connection
with the offer and sale of fixed-benefit life insurance, modified where
necessary to meet the requirements of the federal securities laws.
B. Application and Initial Premium Processing
Upon receipt of a completed application form from a prospective owner, Pruco
Life of New Jersey will follow certain insurance underwriting (i.e., evaluation
of risk) procedures designed to determine whether the proposed Insured is
insurable. The process may involve such verification procedures as medical
examinations and may require that further information be provided by the
proposed Insured before a determination can be made. Pruco Life of New Jersey
may in certain circumstances offer these contracts on a guaranteed basis on
certain individuals, such as employees of a company, who meet certain criteria
established by Pruco Life of New Jersey. In these cases the underwriting will be
simplified, i.e. no medical examination, and a short question application form
may be used. A Contract cannot be issued, i.e., physically issued through Pruco
Life of New Jersey's computerized issue system, until this underwriting
procedure has been completed.
These processing procedures are designed to provide immediate benefits to every
prospective owner who pays the minimum initial premium at the time the
application is submitted. Since a Contract cannot be issued until after the
underwriting process has been completed, we will provide immediate insurance
coverage through use of a Limited Insurance Agreement. This coverage is for the
total death benefit applied for, up to the maximum described by the Limited
Insurance Agreement.
The Contract Date is the date as of which the insurance age of the proposed
Insured is determined. It represents the first day of the Contract year and
therefore determines the Contract anniversary and also the Monthly dates.
It also represents the commencement of the suicide and contestable periods for
purposes of the Basic Insurance Amount.
If the minimum initial premium is paid with the application and no medical
examination is required, the Contract Date will ordinarily be the date of the
application. If an unusual delay is encountered (for example, if a request for
further information is not met promptly), the Contract Date will be 21 days
prior to the date on which the Contract is physically issued. If a
<PAGE>
medical examination is required, the Contract Date will ordinarily be the date
the examination is completed, subject to the same qualification as that noted
above.
If the premium paid with the application is less than the minimum initial
premium, the Contract Date will be determined as described above. Upon receipt
of the balance of the minimum initial premium, the total premiums received will
be applied as of the date that the minimum initial premium was satisfied.
If no premium is paid with the application, the Contract Date will be the
Contract Date stated in the Contract, which will generally be the date the
minimum initial premium is received from the owner and the Contract is
delivered.
There is one principal variation from the foregoing procedure. If permitted by
the insurance laws of the state in which the Contract is issued, the Contract
may be back dated up to six months. In any event, the Contract may not be
backdated before the product introduction date.
In situations where the Contract Date precedes the date that the minimum initial
premium is received, charges due prior to the initial premium receipt date will
be deducted from the initial premium.
In general, the invested portion of the minimum initial premium will be placed
in the Contract Fund (as described under Premium Processing below) as of the
later of (1) the Contract Date and (2) the date we receive the premium.
C. Premium Processing
Whenever a premium is received, Pruco Life of New Jersey will subtract the
front-end charges. What is left will be invested in the selected investment
option(s) after the Right to Cancel Contract period has ended (see below).
Premiums other than those received prior to the Contract Date, will be invested
(less front-end charges) as of the date received (or, if that is not a business
day, as of the next business day).
The Contract has a Right to Cancel Contract provision which gives the Owners the
right to cancel the contract within ten days of its delivery. During this
period, the premium (less front-end charges) is invested in the Money Market
Investment Option. At the end of this period the funds are re-allocated in
accordance with the Owner's current allocation instructions.
<PAGE>
D. Reinstatement
The Contract may be reinstated within five years after default (this period will
be longer if required by state law). The Contract will not be reinstated if it
was surrendered for its cash surrender value. A Contract will be reinstated upon
receipt by Pruco Life of New Jersey of a written application for reinstatement,
production of evidence of insurability satisfactory to Pruco Life of New Jersey
and payment of at least (a) any amount required to bring the cash value to zero
on the date the Contract went into default, plus (b) the deductions from the
Contract Fund during the grace period following the date of default, plus (c) a
premium that would be sufficient, after front-end charges, to cover the
deductions from the Contract Fund for three Monthly dates starting on the date
of reinstatement. In addition, any Contract debt (with interest to date) must be
restored or paid back. If debt with interest exceeds the value of a loan that we
would otherwise permit on the reinstated Contract, the excess must be paid back
to Pruco Life of New Jersey at the time of reinstatement.
Except for any such loan repayments, Pruco Life of New Jersey will treat the
amount paid upon reinstatement as a premium. It will deduct the front-end
charges plus any amount required to bring the cash value to zero on the date the
Contract went into default plus any deductions from the Contract Fund that would
have been made during the grace period. The Contract Fund of the reinstated
Contract will, immediately upon reinstatement, be equal to this net premium
payment.
The reinstatement will take effect as of the Monthly date that coincides with or
next follows the date Pruco Life of New Jersey approves the request for
reinstatement.
There is an alternative to this reinstatement procedure that applies only if
reinstatement is requested within three months after the Contract went into
default. In such a case evidence of insurability may not be required and the
amount of the required payment will be an amount Pruco Life of New Jersey
estimates will keep the Contract inforce for three months from the date of
default.
E. Repayment of Loan
A loan made under the Contract may be repaid with an amount equal to the monies
borrowed plus interest which accrues daily at a
<PAGE>
fixed annual rate which depends on whether the loan is a "regular loan" or
"preferred loan." A regular loan is available at any time and can equal up to
the loan value (90% of the cash value). The effective annual rate that we charge
on regular loans is 5%. A preferred loan is available starting on the tenth
Contract anniversary, and can equal up to the maximum amount that may still be
borrowed (loan value less existing loans) less cost basis (subject to a minimum
of zero, premiums paid less total withdrawals). The effective annual rate that
we charge on preferred loans is 4.25%. A regular loan remains a regular loan -
it will not automatically rollover when a preferred loan is available. However,
any capitalization of interest on a regular loan will be treated as a preferred
loan IF the conditions for a preferred loan are met.
When a loan is made, Pruco Life of New Jersey will transfer an amount equal to
the loan from the investment option(s). While a loan is outstanding, the amount
of Contract Fund attributable to the outstanding loans, whether they are regular
loans or preferred loans, will be credited with interest at an annual rate of
4%. On each Monthly date, we will increase the portion of the Contract Fund in
the investment options by interest credits accrued on the loan since the last
Monthly date. Pruco Life of New Jersey thus will realize the difference between
that rate and the fixed loan interest rate(s), which will be used to cover the
loan investment expenses, income taxes, if any, and processing costs.
Upon repayment of Contract debt, the loan portion of the payment (i.e., not the
portion of the payment for accrued interest which has not yet been made part of
the loan) will be added to the investment option(s) using the investment
allocation currently in effect for premium payments, as selected by the Contract
owner. Pruco Life of New Jersey reserves the right to change the manner in which
it allocates loan repayments.
F. Increases in or Addition of Insurance Benefits
After issue, Pruco Life of New Jersey may permit Owners to increase or add to
the existing insurance amounts in a way similar to our new business procedures
outlined above and in the prospectus.
II. Transfers
Currently, fifteen subaccounts are available for investment by Contract owners
of Pruco Life of New Jersey Variable Appreciable
<PAGE>
Account ("Account"), each of which is invested in shares of a corresponding
portfolio of The Prudential Series Fund, Inc. or other such funds which we
specify ("Funds"). The Funds are registered under the 1940 Act as open-end
diversified management investment companies.
Provided the Contract is not in default, the owner may, up to twelve times in
each Contract year, transfer amounts from one subaccount to another subaccount
without charge. Additional transfers are subject to an administrative charge
deducted from the Contract Fund of up to $25. Pruco Life of New Jersey currently
charges $25. All or a portion of the amount credited to a subaccount may be
transferred.
In addition, we may restrict the number, timing, and amount of transfers in
accordance with our rules if we find the transfer activity to be disruptive to
the variable investment option or to the disadvantage of other Owners. We may
prohibit transfer requests made by an individual acting under a power of
attorney on behalf of more than one Owner.
Transfers among subaccounts will take effect at the end of the valuation period
in which a proper transfer request is received at a Pruco Life of New Jersey
Home Office. The request may be in terms of dollars, such as a request to
transfer $5,000 from one subaccount to another, or may be in terms of a
percentage reallocation among subaccounts. In the latter case, as with premium
reallocations, the percentages must be in whole numbers.
III. "Redemption" Procedures: Surrender and Related Transactions
A. Surrender for Cash Surrender Value
If the insured under a Contract is alive, Pruco Life of New Jersey will pay,
within seven days, the Contract's cash surrender value as of the date of receipt
at its Home Office of the Contract, a signed request for surrender, and any tax
withholding information required under federal or state law. Pruco Life of New
Jersey reserves the right to postpone paying that part of the cash surrender
value that is to come from any variable investment option (provided by a
separate account registered under the Investment Company Act of 1940) if; (1)
the New York Stock Exchange is closed; or (2) the SEC requires that trading be
restricted or declares an emergency. If this is done for more than thirty days,
Pruco Life of New Jersey will pay interest at the rate of 3% a year.
<PAGE>
The Contract's cash surrender value is the Contract Fund, minus any Contract
debt. Also, if the contract is surrendered within four years of the Contract
Date, we will return 50% of any sales charges we deducted from premium paid
within 24 months prior to the date we received the surrender request.
In lieu of the payment of the cash surrender value in a single sum upon
surrender of a Contract, an election may be made by the owner to apply all or a
portion of the proceeds under one of the fixed benefit settlement options
described in the Contract. The fixed benefit settlement options are subject to
the restrictions and limitations set forth in the Contract.
B. Withdrawals from the Contract Fund
A withdrawal from the Contract may be made only if the following conditions are
satisfied. First, Pruco Life of New Jersey must receive a request for the
withdrawal in a form that meets its need. Second, the cash surrender value after
withdrawal may not be less than or equal to zero after deducting any charges
associated with the withdrawal. Third, the amount withdrawn must be at least
$500. Fourth, the basic insurance amount after withdrawal must be at least equal
to the minimum basic insurance amount shown in the Contract. There is a fee of
up to $25 for each withdrawal. We currently charge the lesser of $25 and 2% of
the withdrawal amount. An amount withdrawn may not be repaid except as a premium
subject to the Contract charges.
Whenever a withdrawal is made, the death benefit payable will generally be
reduced by at least the amount of the withdrawal. This will not change the Basic
Insurance Amount (minimum face amount specified in the Contract) under a Type B
(variable) Contract or Type C (return of premium) Contract. However, under a
Type A (fixed) Contract, a withdrawal usually requires a reduction in the Basic
Insurance Amount. No withdrawal will be permitted under a Type A (fixed)
Contract if it would result in a Basic Insurance Amount less than the minimum
Basic Insurance Amount of $100,000.
The Contract Fund is reduced by the sum of the cash withdrawn and the fee for
the withdrawal. An amount equal to the reduction in the Contract Fund will be
withdrawn from the investment options.
C. Death Claims
Pruco Life of New Jersey will pay a death benefit to the beneficiary at the
insured's death if the Contract is in force at
<PAGE>
the time of that death. The proceeds will be paid within seven days after
receipt at Pruco Life of New Jersey's Home Office of proof of death of the
Insured and all other requirements necessary to make payment. State insurance
laws impose various requirements, such as receipt of a tax waiver, before
payment of the death benefit may be made.
Pruco Life of New Jersey reserves the right to postpone payment of that part of
the proceeds that is to come from any variable investment option (provided by a
separate account registered under the Investment Company Act of 1940) if; (1)
the New York Stock Exchange is closed; or (2) the SEC requires that trading be
restricted or declares an emergency.
In addition, payment of the death benefit is subject to the provisions of the
Contract regarding suicide and incontestability. In the event Pruco Life of New
Jersey should contest the validity of a death claim, an amount up to the portion
of the Contract Fund in the variable investment options will be withdrawn, if
appropriate, and held in Pruco Life of New Jersey's general account.
If the Contract is not in default past its days of grace, the amount Pruco Life
of New Jersey will pay will be the death benefit determined as of the date of
the Insured's death reduced by any Contract debt.
There may be an additional amount payable from an extra benefit added to the
Contract by rider.
No death benefit is payable if the insured's death occurs past the grace period.
On any date, the death benefit under a Type A (fixed) Contract is the greater of
(1) the Basic Insurance Amount, and (2) the Contract Fund before deduction of
any monthly charges due on that date plus any return of sales charges,
multiplied by attained age factors. These factors vary by the insured's attained
age and are shown in the Contract.
On any date, the death benefit under a Type B (variable) Contract is the greater
of (1) the Basic Insurance Amount plus the Contract Fund before deduction of any
monthly charges due on that date, and (2) the Contract Fund before deduction of
any monthly charges due on that date plus any return of sales charges,
multiplied by attained age factors. These factors vary by the insured's attained
age and are shown in the Contract. For the
<PAGE>
purposes of this calculation, the Contract Fund will be considered to be zero if
it is less than zero.
On any date, the death benefit under a Type C (return of premium) Contract is
the greater of (1) the Basic Insurance Amount plus the total premiums paid minus
total withdrawals to the Contract both accumulated with interest at a rate
between 0% and 8% chosen by the Owner, and (2) the Contract Fund before
deduction of any monthly charges due on that date plus any return of sales
charges, multiplied by attained age factors. For the purposes of determining the
Type C death benefit, we will not consider any charge to reinstate the Contract.
The proceeds payable on death also will generally include interest (at a rate
determined by Pruco Life of New Jersey) from the date of death until the date of
payment. However, state insurance laws may impose additional or different
requirements.
Pruco Life of New Jersey will make payment of the death benefit out of its
general account, and will transfer assets, if appropriate, from the Account to
the general account in an amount up to the Contract Fund.
In lieu of payment of the death benefit in a single sum, an election may be made
to apply all or a portion of the proceeds under one of the fixed benefit
settlement options described in the Contract or, with the approval of Pruco Life
of New Jersey, a combination of options. The election may be made by the owner
during the Insured's lifetime, or, at death, by the beneficiary. An option in
effect at death may not be changed to another form of benefit after death. The
fixed benefit settlement options are subject to the restrictions and limitations
set forth in the Contract.
D. Default and Options on Lapse
The Contract can go into default if either (1) the Contract debt ever grows to
be equal to or more than the cash value, or (2) on any Monthly date, the cash
value is equal to or less than zero. Monthly dates occur on the Contract Date
and in each later month on the same day of the month as the Contract Date. The
Contract provides for a grace period extending 61 days after the mailing date of
the notice of default. The insurance coverage continues in force during the
grace period, but if the Insured dies during the grace period, any charges due
to the date of the death are deducted from the amount payable to the
beneficiary.
<PAGE>
E. Loans
The Contract provides that an owner may take out a loan at any time a loan value
is available providing (1) the Contract is assigned to Pruco Life of New Jersey
as the only security for the loan, (2) the Insured must be living, (3) the
contract must not be in default and (4) the resulting Contract debt must not be
more than the loan value (90% of the cash value).
The investment options will be debited in the amount of the loan on the date the
loan is approved. The percentage of the loan withdrawn from each investment
option will normally be equal to the percentage of the value of such assets held
in the investment option unless otherwise requested and Pruco Life of New Jersey
agreed. An owner may borrow up to the Contract's full loan value. The loan
provision is described in the Contract and in the prospectus.
A loan does not affect charges. When a loan is made, the Contract Fund is not
reduced, but the value of the assets relating to the Contract held in the
investment option(s) is reduced. Accordingly, the daily changes in the cash
surrender value will be different from what they would have been had no loan
been taken. Cash surrender values, and possibly death benefits, are thus
permanently affected by any Contract debt, whether or not repaid.
On settlement, the amount of any Contract debt is subtracted from the insurance
proceeds. If Contract debt ever becomes equal to or more than the cash value,
all the Contract's benefits will end 61 days after notice is mailed to the owner
and any known assignee (when required by law), unless payment of an amount
sufficient to end the default is made within that period.
- ----------------------------====================================================
RIDER FOR FLEXIBLE TERM INSURANCE BENEFIT
ON LIFE OF INSURED
This rider is a part of this contract only if it is
listed on a contract data page.
RIDER DEATH BENEFIT We will pay an amount under this benefit if we
receive due proof that the Insured died; (1) in the
term period for this benefit; and (2) while this
contract is in force and not in default past the
last day of the grace period. The term period starts
on the effective date for this rider shown under
Other Benefit(s) on the Insured in the contract data
pages. The term period ends on the contract
anniversary on or after the Insured's one hundredth
birthday. Our payment is subject to all the
provisions of the benefit and of the rest of the
contract.
To determine the rider death benefit on any date, we
first take the effective Target Coverage Amount
shown in the Life Insurance on the Insured section
of the contract data pages and subtract from it the
death benefit as calculated in the Death Benefit
provision. If this contract has a Type A death
benefit (see Type of Death Benefit in the contract
data pages), the resultant amount is the rider death
benefit. If this contract has a Type B death
benefit, the rider death benefit is the resultant
amount plus the contract fund before deduction of
any monthly charges due on that date. If this
contract has a Type C death benefit, the rider death
benefit is the resultant amount plus the total
premiums paid minus total withdrawals to this
contract both accumulated with interest at the
rate(s) displayed in the contract data pages. The
total premiums paid will not include any charge to
reinstate this contract as described under
Reinstatement.
If the rider death benefit is less than zero, we
consider it to be zero.
RIDER CHARGES On each monthly date, we will deduct a charge for
this rider from the contract fund. To determine the
maximum charge for this rider, we use the following
method:
We determine the maximum cost of insurance rate for
each currently effective rider coverage segment
amount shown in the Segment Table in the contract
data pages using the maximum monthly rate shown
under the Table of Maximum Monthly Insurance Rates
for the appropriate rating class. If there is only
one rider coverage segment amount currently in
effect, we multiply the rate by the rider death
benefit amount divided by $1000 and add an
administrative charge of up to $0.05 multiplied by
the rider coverage amount divided by $1000 to
determine the maximum charge for this rider.
If there are two or more rider coverage segment
amounts currently in effect, we first allocate the
rider death benefit amount to each rider coverage
segment based on the proportion of its rider
coverage amount to the total of all rider coverage
amounts currently in effect. We multiply the rate by
the apportioned rider death benefit amount for each
rider segment component amount divided by $1000 and
add the results. To this amount, we add an
administrative charge of up to $0.05 multiplied by
the rider coverage amount for each rider segment
currently in effect divided by $1000 to determine
the total maximum charge for this rider.
REQUESTED CHANGES IN You may change the Rider Coverage Amount, while this
RIDER COVERAGE rider is in force, subject to our approval and the
AMOUNT following conditions:
1. You must ask for the change in a form that
meets our needs.
2. The change must be one permitted by our current
underwriting rules.
3. The amount of an increase or decrease must be
at least equal to the minimum increase or
decrease in the Rider Coverage Amount shown
under Contract Limitations in the contract data
pages.
4. The Rider Coverage Amount after a decrease must
be at least equal to the minimum Rider Coverage
Amount shown under Contract Limitations in the
contract data pages.
- -----------------
| PLIY 128-1999 |
- -----------------
<PAGE>
5. The sum of the basic insurance amount and the
Rider For Flexible Term Insurance Benefit on
Life of Insured coverage amount must equal or
exceed the amount shown under Contract
Limitations.
6. If we ask you to do so, you must send us the
contract to be endorsed.
7. You must prove to us that the Insured is
insurable for any increase.
8. The contract must not be in default.
9. We may deny an increase if it would cause the
number of segments shown in the Segment Table
in the contract data pages to exceed
ninety-nine.
A change will take effect only if we approve your
request for it at our Home Office. Unless you ask us
otherwise, the change will take effect on the
monthly date immediately following the date we
approve the change. You may request an earlier date,
but it may not be more than 90 days prior to the
date of request. If we approve the change, we will
also recompute the contracts charges, values and
limitations. We will send you new contract data
pages showing the amount and effective date of the
change and the recomputed charges, values and
limitations. If the Insured is not living on the
effective date, the change will not take effect. We
may deduct the administrative charge (shown under
Adjustments to the Contract Fund) for the change.
SUICIDE The Suicide Exclusion provision of the contract
applies to this rider as issued.
If the Insured, whether sane or insane, dies by
suicide after two years from the issue date but
within two years of the effective date of an
increase in the Rider Coverage Amount, we will pay,
as to the increase in the Rider Coverage Amount, no
more than the sum of the premiums paid on and after
the effective date of the increase.
TERMINATION This rider will end on the earliest of:
1. the end of its term period;
2. the end of the grace period if the contract is
in default and the premium required to bring it
out of default has not been paid;
3. the date the contract is surrendered for its
net cash value if it has one; and
4. the date the contract ends for any other
reason.
We will allow you to cancel this rider only if the
Basic Insurance Amount equals or exceeds the minimum
amount shown under Contract Limitations for the sum
of both the basic insurance amount and the rider
coverage amount. We will then cancel the rider as of
the monthly date on or after the date we receive
your request. If we do so, monthly charges due then
and later will be reduced accordingly.
THIS SUPPLEMENTARY BENEFIT RIDER ATTACHED TO THIS
CONTRACT ON THE CONTRACT DATE
Pruco Life Insurance Company of New Jersey,
SPECIMEN [stamp]
BY /s/SUSAN L. BLOUNT
---------------------
Susan L. Blount
Secretary
- -----------------
| PLIY 128-1999
- -----------------
<PAGE>
PROCESSING DATE: JUL 10, 1999
CONTRACT DATA
INSURED
JOHN DOE Male, Issue Age 35
================================================================================
RATING CLASS
(See Segment Table on Page 4)
================================================================================
BASIC CONTRACT INFORMATION
Policy Number xx xxx xxx
Contract Date July 1,1999
Premium Period Life
Beneficiary See Beneficiary Provision attached
Loan Interest Rate 5.00%
Preferred Loan Interest Rate 4.25%
================================================================================
TYPE OF DEATH BENEFIT (SEE DEATH BENEFIT PROVISIONS)
Type B
================================================================================
LIFE INSURANCE ON THE INSURED
Rider for Flexible
Term Insurance
on Life of Insured Target
Basic Insurance (Target Term Rider) Coverage
Effective Date Amount_______ Coverage Amount Amount
- --------------------------------------------------------------------------------
Contract Date $5,000.00 $95,000.00 $100,000.00
================================================================================
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3 (99)
<PAGE>
PROCESSING DATE. JUL 10, 1999
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
OTHER BENEFIT(S) ON THE INSURED (see appropriate form for details)
Rider PLIY 128 - Rider for Flexible Term Insurance Benefit on Life of Insured
- Variable Benefit (Target Term rider).
The Term Period starts on the Contract Date.
================================================================================
Minimum Initial Premium
The minimum initial premium due on the Contract Date is $17.54.
================================================================================
CONTRACT LIMITATIONS
The minimum premium we will accept is $25.00.
The minimum basic insurance amount is $5,000.00.
The minimum increase in basic insurance amount is $5,000.00.
The minimum decrease in basic insurance amount is $5,000.00.
The sum of the basic insurance amount and the Rider for Flexible Term
Insurance Benefit on Life of Insured Rider Coverage Amount must equal or
exceed $100,000.00.
The minimum decrease in the Rider for Flexible Term Insurance Benefit on Life
of Insured Rider Coverage Amount is $5,000.00.
The minimum increase in the Rider for Flexible Term Insurance Benefit on Life
of Insured Rider Coverage Amount is $5,000.00.
The minimum the Rider for Flexible Term Insurance Benefit on Life of Insured
Rider Coverage Amount is $5,000.00.
The minimum amount you may withdraw is $500.00.
The minimum amount you may borrow is $200.00.
================================================================================
ADJUSTMENTS TO PREMIUM PAYMENTS
From each premium paid we will:
Subtract a charge of up to 7.5% for any taxes attributable to premiums. For
purposes of this charge, the term "taxes attributable to premiums" shall
include: (a) any federal, state or local income tax. (b) any premium,
excise, or business tax, and (c) any other type of tax (or component
thereof) measured by or based upon the amount of premium received by us.
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3A (99) (NJ)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
Subtract a charge for sales expenses from premiums paid as described in
the Charge For Sales Expenses provision.
The remainder of the premium is the invested premium amount.
================================================================================
ADJUSTMENTS TO THE CONTRACT FUND
On the Contract Date the contract fund is equal to the invested premium
amount credited on that date, minus
a charge for administrative expenses of up to $0.05 per $1,000 of the
basic insurance amount effective on the Contract Date plus $10.00.
a charge for the cost of insurance (see Cost of Insurance).
a charge for the Rider for Flexible Term Insurance Benefit on Life of
Insured using the method described in the rider under Rider Charges.
On each day after the contract date, we will adjust the contract fund by:
adding any invested premium amounts.
adding any increase due to investment results of the variable investment
options.
adding guaranteed interest at an effective annual rate of 4% (0.01074598%
a day) on that portion of the contract fund that is attributable to any
loan amount (see Loans).
subtracting any decrease due to investment results of the variable
investment options.
subtracting a charge against the variable investment options at an
effective annual rate of not more than 0.50% (.00136646% a day) for
mortality and expense risks that we assume.
subtracting any withdrawals.
subtracting an administrative charge of up to $25.00 for any withdrawals.
subtracting an administrative charge of up to $25.00 for any change in
basic insurance amount.
subtracting an administrative charge of up to $25.00 for any change in the
coverage amount for the Rider for Flexible Term Insurance Benefit on Life
of Insured.
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3B (99) (NJ)
<PAGE>
PROCESSING DATE. JUL 10, 1999
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
subtracting an administrative charge of up to $25.00 for each transfer
between variable investment options exceeding twelve in any contract year.
And on each monthly date, we will adjust the contract fund by:
subtracting a charge for administrative expenses of up to $0.05 per $1,000
of the basic insurance amount of each Basic Insurance Segment, totaled,
plus $10.00.
subtracting a deduction for the cost of any other benefits.
subtracting a charge for the cost of insurance (see Cost of Insurance).
subtracting a charge for the Rider for Flexible Term Insurance Benefit on
Life of Insured using the method described in the rider under Rider
Charges.
================================================================================
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3C (99) (NJ)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
VARIABLE INVESTMENT OPTIONS
THE PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
Each variable Investment option of this account invests in a specific
portfolio of The Prudential Series Fund, Inc. and such other funds as we
may specify from time to time We show the available variable investment
options of the account below. Unless we say otherwise, the variable
investment options invest in funds or fund portfolios with the same names.
This account is registered with the SEC under the Investment Company Act
of 1940.
THE PRUDENTIAL SERIES FUND, INC.
Money Market Portfolio
Diversified Bond Portfolio
Conservative Balanced Portfolio
Flexible Managed Portfolio
High Yield Bond Portfolio
Stock Index Portfolio
Equity Income Portfolio
Equity Portfolio
Prudential Jennison Portfolio
Global Portfolio
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Value Fund
JANUS ASPEN SERIES
Janus Aspen Growth Portfolio
MFS VARIABLE INSURANCE TRUST
MFS Emerging Growth Series
T. ROWE PRICE INTERNATIONAL SERIES, INC.
T. Rowe Price International Stock Portfolio
CONTRACT DATA CONTINUED ON NEXT PAGE
Page 3D (99) (NJ)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
CONTRACT DATA CONTINUED
AMERICAN CENTURY VARIABLE PORTFOLIO, INC.
American Century VP Value Fund
================================================================================
INITIAL ALLOCATION OF INVESTED PREMIUM AMOUNTS
High Yield Bond Portfolio 40%
Money Market Portfolio 60%
================================================================================
END OF CONTRACT DATA
Page 3E (99)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
TABLE(S)
SEGMENT TABLE
This table is used to compute the charge for sales expenses and the cost of
insurance. See the Charge for Sales Expenses and Cost of Insurance provisions
for details. The information shown below for each segment starts on the
effective date of that segment.
SEGMENT,
ISSUE AGE, &
EFFECTIVE DATE RATING CLASS (RC) SEGMENT ALLOCATION AMOUNT
- --------------------------------------------------------------------------------
Contract Date $5,000.00 Basic Insurance $194.85
Amount changing on JUL 1, 2009
Issue Age 35 to $0.00.
RC = Preferred (non-smoker)
Contract Date $95,000.00 Rider Coverage Not applicable.
Amount (see the Rider for
Flexible Term Insurance
Benefit on Life of Insured)
Issue Age 35
RC = Preferred (non-smoker)
================================================================================
TABLE(S) CONTINUED ON NEXT PAGE
Page 4 (99) (NJ)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
TABLE OF MAXIMUM MONTHLY INSURANCE RATES PER $1,000
RATING CLASS: PREFERRED
INSURED'S MAXIMUM INSURED'S MAXIMUM
ATTAINED AGE* MONTHLY RATE ATTAINED AGE* MONTHLY RATE
- --------------------------------------------------------------------------------
35 0.14417 65 1.85417
36 0.15167 66 2.05167
37 0.16167 67 2.26333
38 0.17250 68 2.49333
39 0.18417 69 2.74833
40 0.19833 70 3.03667
41 0.21333 71 3.36583
42 0.22917 72 3.74583
43 0.24667 73 4.17583
44 0.26583 74 4.64833
45 0.28750 75 5.15333
46 0.31083 76 5.68667
47 0.33583 77 6.24417
48 0.36333 78 6.82917
49 0.39333 79 7.46000
50 0.42750 80 8.15667
51 0.46667 81 8.93750
52 0.51167 82 9.81833
53 0.56333 83 10.79500
54 0.62083 84 11.84833
55 0.68500 85 12.95416
56 0.75500 86 14.09833
57 0.82917 87 15.26333
58 0.91167 88 16.44416
59 1.00417 89 17.65750
60 1.10750 90 18.92083
61 1.22250 91 20.26333
62 1.35500 92 21.73500
63 1.50500 93 23.47917
64 1.67167 94 25.81917
TABLE(S) CONTINUED ON NEXT PAGE
Page 4A (99)
<PAGE>
PROCESSING DATE. JUL 10, 1999
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
INSURED'S MAXIMUM INSURED'S MAXIMUM
ATTAINED AGE* MONTHLY RATE ATTAINED AGE* MONTHLY RATE
- --------------------------------------------------------------------------------
95 29.32167 98 62.09583
96 35.08250 99 and above 83.33333
97 45.08333
- --------------------------------------------------------------------------------
* For the segment amount(s) effective on the contract date (see Segment Table),
the Insured's attained age is the issue age found on page 3 plus the length of
time since the contract date.
For any segment amount(s) effective after the contract date, the Insured's
attained age is the issue age of that segment plus the length of time since
its effective date.
We may charge less than the maximum monthly rates. From time to time, we will
consider the need to change the rates we charge. We describe the factors we use
to determine such changes under General Provisions.
See the Basis of Computation for a description of the basis we use to compute
these rates.
- --------------------------------------------------------------------------------
TABLE(S) CONTINUED ON NEXT PAGE
Page 4B (99)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
TABLE OF ATTAINED AGE FACTORS
These factors are used to determine your death benefit as described under Death
Benefit Provisions.
These factors apply during each contract year starting on the contract
anniversary.
CONTRACT CONTRACT
YEAR FACTORS YEAR FACTORS
- -------------------------------------------------------------------------------
1 2.50 31 1.20
2 2.50 32 1.19
3 2.50 33 1.18
4 2.50 34 1.17
5 2.50 35 1.16
6 2.50 36 1.15
7 2.43 37 1.13
8 2.36 38 1.11
9 2.29 39 1.09
10 2.22 40 1.07
11 2.15 41 1.05
12 2.09 42 1.05
13 2.03 43 1.05
14 1.97 44 1.05
15 1.91 45 1.05
16 1.85 46 1.05
17 1.78 47 1.05
18 1.71 48 1.05
19 1.64 49 1.05
20 1.57 50 1.05
21 1.50 51 1.05
22 1.46 52 1.05
23 1.42 53 1.05
24 1.38 54 1.05
25 1.34 55 1.05
26 1.30 56 1.05
27 1.28 57 1.04
28 1.26 58 1.03
29 1.24 59 1.02
30 1.22 60 1.01
TABLE(S) CONTINUED ON NEXT PAGE
Page 4C (99)
<PAGE>
PROCESSING DATE: JUL 10, 1999
POLICY NO. XX XXX XXX
TABLE(S) CONTINUED
CONTRACT CONTRACT
YEAR FACTORS YEAR FACTORS
----------------------------------------------------
61 1.00 64 1.00
62 1.00 65 1.00
63 1.00 66 and above 1.00
----------------------------------------------------
===============================================================================
END OF TABLE(S)
Page 4D (99)
EXHIBIT 1.A.(3)(b)
SELECTED BROKER AGREEMENT
This agreement is made on ________________, 19__ among:
NAME:__________________________________________________________________________
ADDRESS:_______________________________________________________________________
_______________________________________________________________________
CITY, STATE, ZIP:______________________________________________________________
SS OR TAX ID NUMBER:___________________________________________________________
(hereinafter called the "Broker")
AND
PRUCO SECURITIES CORPORATION, a New Jersey Corporation
(hereinafter called the "Distributor")
WITNESSETH:
In consideration of the mutual promises contained herein, the parties
hereto agree as follows:
A. DEFINITIONS
(1) Contracts - Variable life insurance contracts and/or variable annuity
contracts described in Schedule A attached hereto and issued by the
applicable one of Pruco Life Insurance Company, Pruco Life Insurance
Company of New Jersey or The Prudential Insurance Company of America
(hereinafter collectively called the "Company") and for which
Distributor has been appointed the principal underwriter pursuant to
Distribution Agreements, copies of which have been furnished to Broker.
(2) Accounts - Separate accounts established and maintained by the Company
pursuant to the laws of Arizona or New Jersey, whichever is applicable,
to fund the benefits under the Contracts.
(3) The Prudential Series Fund, Inc., or the "Fund" - An open-end management
investment company registered under the 1940 Act, shares of which are
sold to the Accounts in connection with the sale of the Contracts.
(4) Registration Statement - The registration statements and amendments
thereto relating to the Contracts, the Accounts, and the Fund,
Standard SB 11/88
<PAGE>
-2-
including financial statements and all exhibits.
(5) Prospectus - The prospectuses included within the Registration
Statements referred to herein.
(6) 1933 Act - The Securities Act of 1933, as amended.
(7) 1934 Act - The Securities Exchange Act of 1934, as amended.
(8) 1940 Act - The Investment Company Act of 1940, as amended.
(9) SEC - The Securities and Exchange Commission.
B. AGREEMENTS OF DISTRIBUTOR
(1) Pursuant to the authority delegated to it by Company, Distributor hereby
authorizes Broker during the term of this Agreement to solicit
applications for Contracts from eligible persons, provided that there is
an effective Registration Statement relating to such Contracts and
provided further that Broker has been notified by Distributor that the
Contracts are qualified for sale under all applicable securities and
insurance laws of the state or jurisdiction in which the application
will be solicited. In connection with the solicitation of applications
for Contracts, Broker is hereby authorized to offer riders that are
available with the Contracts in accordance with instructions furnished
by Distributor or Company.
(2) Distributor, during the term of this Agreement, will notify Broker of
the issuance by the SEC of any stop order with respect to the
Registration Statement or any amendments thereto or the initiation of
any proceedings for that purpose or for any other purpose relating to
the registration and/or offering of the Contracts and of any other
action or circumstance that may prevent the lawful sale of the Contracts
in any state or jurisdiction.
(3) During the term of this Agreement, Distributor shall advise Broker of
any amendment to the Registration Statement or any amendment or
supplement to any Prospectus.
Standard SB 11/88
<PAGE>
-3-
C. AGREEMENTS OF BROKER
(1) It is understood and agreed that Broker is a registered broker/dealer
under the 1934 Act and a member of the National Association of
Securities Dealers, Inc. and that the agents or representatives of
Broker who will be soliciting applications for the Contracts also will
be duly registered representatives of Broker.
(2) Commencing at such time as Distributor and Broker shall agree upon,
Broker agrees to use its best efforts to find purchasers for the
contracts acceptable to Company. In meeting its obligation to use its
best efforts to solicit applications for contracts, Broker shall, during
the term of this Agreement, engage in the following activities:
(a) Continuously utilize training, sales and promotional materials
which have been approved by Company;
(b) Establish and implement reasonable procedures for periodic
inspection and supervision of sales practices of its agents or
representatives and submit periodic reports to Distributor as may
be requested on the results of such inspections and the compliance
with such procedures.
(c) Broker 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 Contract.
(3) All payments for Contracts collected by agents or representatives of
Broker shall be held at all times in a fiduciary capacity and shall be
remitted promptly in full together with such applications, forms and
other required documentation to an office of the Company designated by
Distributor. Checks or
Standard SB 11/88
<PAGE>
-4-
money orders in payment of initial premiums shall be drawn to the order
of the applicable one of "Pruco Life Insurance Company", (for contracts
issued by Pruco Life Insurance Company and/or Pruco Life Insurance
Company of New Jersey) or "The Prudential Insurance Company of America".
Broker acknowledges that the Company retains the ultimate right to
control the sale of the Contracts and that the Distributor or Company
shall have the unconditional right to reject, in whole or part, any
application for the Contract. In the event Company or Distributor
rejects an application, Company immediately will return all payments
directly to the purchaser and Broker will be notified of such action. In
the event that any purchaser of a Contract elects to return such
Contract pursuant to either Rule 6e-2(b) (13) (viii) or Rule 6e-3(T)(b)
(13) (viii) of the 1940 Act, the purchaser will receive a refund in
accordance with the provisions of the applicable Rule.
(4) Broker shall act as an independent contractor, and nothing herein
contained shall make Broker, or any one of its employees, agents or
representatives, an employee of Company or Distributor in connection
with the solicitation of applications for Contracts. Broker, its agents
or representatives, and its employees shall not hold themselves out to
be employees of Company or Distributor in this connection or in any
dealings with the public.
(5) Broker agrees that any material it develops, approves or uses for sales,
training, explanatory or other purposes in connection with the
solicitation of applications for Contracts hereunder (other than generic
advertising materials which do not make specific reference to the
Contracts) will not be used without the prior written consent of
Distributor and, where appropriate, the endorsement of Company to be
obtained by Distributor.
(6) Solicitation and other activities by Broker shall be undertaken only in
accordance with applicable laws and regulations. No agent or
representative of Broker shall solicit applications for the Contracts
until duly licensed and appointed by Company as a life insurance and
variable contract broker or agent of Company in the appropriate states
or other jurisdictions. Broker shall ensure that such agents or
representatives fulfill any training requirements necessary to be
licensed. Broker understands and acknowledges that neither it nor its
agents or representatives is authorized by Distributor or
Standard SB 11/88
<PAGE>
-5-
Company to give any information or make any representation in
connection with this Agreement or the offering of the Contracts other
than those contained in the Prospectus or other solicitation material
authorized in writing by Distributor or Company.
(7) Broker shall not have authority on behalf of Distributor or Company to:
make, alter or discharge any Contract or other form; waive any
forfeiture, extend the time of paying any premium; receive any monies
or premiums due, or to become due, to Company, except as set forth in
Section C(3) of this Agreement. Broker shall not expend, nor contract
for the expenditure of the funds of Distributor, nor shall Broker
possess or exercise any authority on behalf of Broker by this
Agreement.
(8) Broker shall have the responsibility for maintaining the records of its
representatives licensed, registered and otherwise qualified to sell
the Contracts. Broker shall maintain such other records as are required
of it by applicable laws and regulations. The books, accounts and
records of Company, the Account, Distributor and Broker relating to the
sale of the Contracts shall be maintained so as to clearly and
accurately disclose the nature and details of the transactions. All
records maintained by the Broker 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 Broker. Nothing in this Section C(8) shall
be interpreted to prevent the Broker from retaining copies of any such
records which the Broker, in its discretion, deems necessary or
desirable to keep. The Broker 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.
D. COMPENSATION
(1) Pursuant to the Distribution Agreement between Distributor and Company,
Distributor shall cause Company to arrange for the payment of
commissions to Broker as compensation for the sale of each contract sold
by an agent or representative of Broker. The amount of such commission
shall be based on a Compensation Schedule to be determined by agreement
of Company and Distributor. Company shall
Standard SB 11/88
<PAGE>
-6-
identify to Broker with each such payment the name of the agent or
representative of Broker who solicited each Contract covered by the
payment.
(2) Neither Broker nor any of its agents or representatives shall have any
right to withhold or deduct any part of any premium it shall receive for
purposes of payment of commission or otherwise. Neither Broker nor any
of its agents or representatives shall have an interest in any
compensation paid by Company to Distributor, now or hereafter, in
connection with the sale of any Contracts hereunder.
E. COMPLAINTS AND INVESTIGATIONS
(1) Broker and Distributor jointly agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with the Contracts marketed under this Agreement. Broker and
Distributor further agree to cooperate fully in any securities
regulatory investigation or proceeding or judicial proceeding with
respect to Broker, Distributor, their affiliates and their agents or
representatives to the extent that such investigation or proceeding is
in connection with Contracts marketed under this Agreement. Broker 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.
F. TERM OF AGREEMENT
(1) This Agreement shall continue in force for one year from its effective
date and thereafter shall automatically be renewed every year for a
further one year period; provided that either party may unilaterally
terminate this Agreement upon thirty (30) days' written notice to the
other party of its intention to do so.
(2) Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except (a) the agreements contained in Section E
hereof; (b) the indemnity set forth
Standard SB 11/88
<PAGE>
-7-
in Section G hereof; and (c) the obligations to settle accounts
hereunder, including commission payments on premiums subsequently
received for Contracts in effect at the time of termination or issued
pursuant to applications received by Broker prior to termination.
G. INDEMNITY
(1) Broker shall be held to the exercise of reasonable care in carrying out
the provisions of this Agreement.
(2) Distributor agrees to indemnify and hold harmless Broker and each
officer or director of Broker against any losses, claims, damages or
liabilities, joint or several, to which Broker or such officer or
director become subject, under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact, required to be stated therein or
necessary to make the statements therein not misleading, contained in
any Registration Statement or any post-effective amendment thereof or in
the Prospectus, or any sales literature provided by the Company or by
the Distributor.
(3) Broker agrees to indemnify and hold harmless Company and Distributor and
each of their current and former directors and officers and each person,
if any, who controls or has controlled Company or Distributor within the
meaning of the 1933 Act or the 1934 Act, against any losses, claims,
damages or liabilities to which Company or Distributor and any such
director or officer or controlling person may become subject, under the
1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon:
(a) Any unauthorized use of sales materials or any verbal or written
misrepresentations or any unlawful sales practices concerning the
Contracts by Brokers; or
(b) Claims by agents or representatives or employees of Broker for
commissions, service fees, development allowances or other
compensation or renumeration of any type;
Standard SB 11/88
<PAGE>
-8-
(c) The failure of Broker, its officers, employees, or agents to comply
with the provisions of this Agreement; and Broker will reimburse
Company and Distributor and any director or officer or controlling
person of either for any legal or other expenses reasonably
incurred by Company, Distributor, or such director, officer of
controlling person in connection with investigating or defending
any such loss, claims, damage, liability or action. This indemnity
agreement will be in addition to any liability which Broker may
otherwise have.
H. ASSIGNABILITY
This Agreement shall not be assigned by either party without the written
consent of the other.
I. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with 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.
PRUCO SECURITIES CORPORATION
(Distributor)
By:_________________________________________________
Meyer Okun, President
_________________________________________________
(Broker)
By:_________________________________________________
Standard SB 11/88
<PAGE>
SCHEDULE A
CONTRACTS COVERED UNDER SELECTED BROKER AGREEMENT
Contracts Issued by Pruco Life Insurance Company of New Jersey
O Variable Universal Life Insurance (Flexible premium variable universal
life insurance)
