-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AROUGLsBds7ENlS56oX2OB9Atqp5VOCSlNVsAYSEeFHfuwBMum28mvgArqOYcL0t jYzyD4itCQHOZkBnUApQFg== 0000950110-96-000740.txt : 19970818 0000950110-96-000740.hdr.sgml : 19970818 ACCESSION NUMBER: 0000950110-96-000740 CONFORMED SUBMISSION TYPE: POS AMI PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19960624 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT CENTRAL INDEX KEY: 0000947703 STANDARD INDUSTRIAL CLASSIFICATION: IRS NUMBER: 221944557 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AMI SEC ACT: 1933 Act SEC FILE NUMBER: 333-06701 FILM NUMBER: 96584830 FILING VALUES: FORM TYPE: POS AMI SEC ACT: 1940 Act SEC FILE NUMBER: 811-07325 FILM NUMBER: 96584831 BUSINESS ADDRESS: STREET 1: PRUDENTIAL INSURANCE & FINANCIAL SERVICE STREET 2: 1111 DURHAM AVENUE CITY: SOUTH PLAINFIELD STATE: NJ ZIP: 07080 BUSINESS PHONE: 2018026000 MAIL ADDRESS: STREET 1: PRUCO LIFE INSURANCE CO STREET 2: 213 WASHINGTON STREET CITY: NEWARK STATE: NJ ZIP: 07102 N-4 EL 1 REGISTRATION STATEMENT AS FILED WITH THE SEC ON . REGISTRATION NO. 33- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] PRE-EFFECTIVE AMENDMENT NO. [ ] POST-EFFECTIVE AMENDMENT NO. 1 [ ] AND REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X] AMENDMENT NO. [ ] (Check appropriate box or boxes) --------------------- PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT (Exact Name of Registrant) PRUCO LIFE INSURANCE COMPANY (Name of Depositor) 213 WASHINGTON STREET NEWARK, NEW JERSEY 07102-2992 (800) 445-4571 (Address and telephone number of principal executive offices) --------------------- THOMAS C. CASTANO ASSISTANT SECRETARY PRUCO LIFE INSURANCE COMPANY 213 WASHINGTON STREET NEWARK, NEW JERSEY 07102-2992 (Name and address of agent for service) --------------------- Individual Variable Annuity Contracts -- The Registrant has registered an indefinite amount of securities pursuant to Rule 24f-2 under the Investment Company Act of 1940. The filing fee is $500. --------------------- 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 or dates 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 date as the Commission, acting pursuant to said Section 8(a), may determine. CROSS REFERENCE SHEET (AS REQUIRED BY RULE 495(A) UNDER THE 1933 ACT)
N-4 ITEM NUMBER AND CAPTION LOCATION - - --------------------------- -------- PART A 1. Cover Page Cover Page 2. Definitions Definitions of Special Terms Used in This Prospectus 3. Synopsis Brief Description of the Contract 4. Condensed Financial Information N/A 5. General Description of Registrant, Depositor, and General Information About Pruco Life, The Pruco Life Flexible Portfolio Companies Premium Variable Annuity Account, and The Investment Options Available Under the Contract; The Interest-Rate Investment Options and Investments by Pruco Life 6. Deductions and Expenses Brief Description of the Contract; Charges, Fees, and Deductions 7. General Description of Variable Annuity Contracts Part A: Brief Description of the Contract; Allocation of Purchase Payments; Transfers; Death Benefit; The Interest-Rate Investment Options and Investments by Pruco Life; Voting Rights; Ownership of the Contract; State Regulation 8. Annuity Period Brief Description of the Contract; Effecting an Annuity 9. Death Benefit Death Benefit; Effecting an Annuity 10. Purchases and Contract Value Brief Description of the Contract; Pruco Life Insurance Company; Requirements for Issuance of a Contract; Valuation of a Contract Owner's Contract Fund 11. Redemptions Brief Description of the Contract; Short-Term Cancellation Right or "Free Look"; Withdrawals; Charges, Fees and Deductions; Effecting an Annuity 12. Taxes Premium Taxes and Taxes Attributable to Purchase Payments; Federal Tax Status 13. Legal Proceedings Litigation 14. Table of Contents of the Statement of Additional Information Additional Information PART B 15. Cover Page Cover Page 16. Table of Contents Contents 17. General Information and History Not Applicable 18. Services Part A: Experts 19. Purchase of Securities Being Offered Part A: Brief Description of the Contract; Charges, Fees and Deductions; Sale of the Contract and Sales Commissions
N-4 ITEM NUMBER AND CAPTION LOCATION - - --------------------------- --------- 20. Underwriters Part A: Sale of the Contract and Sales Commissions Part B: Principal Underwriters 21. Calculation of Performance Data Performance Information 22. Annuity Payments. Part A: Valuation of a Contract Owner's Contract Fund; Effecting an Annuity 23. Financial Statements Part A: Consolidated Financial Statements of Pruco Life Insurance Company and Subsidiaries PART C Information required to be included in Part C is set forth under the appropriate Item, so numbered in Part C to this Registration Statement.
PART A INFORMATION REQUIRED IN A PROSPECTUS PROSPECTUS , 1996 PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT VARIABLE ANNUITY CONTRACTS PRUCO LIFE MARKET-VALUE ADJUSTMENT ANNUITY CONTRACTS DISCOVERY SELECT This prospectus describes the DISCOVERY(SM) SELECT Annuity Contract*, an individual variable annuity contract offered by Pruco Life Insurance Company ("Pruco Life", "we" or "us"), a stock life insurance company that is a wholly-owned subsidiary of The Prudential Insurance Company of America ("The Prudential"). The Contract is purchased by making an initial payment of $10,000 or more. Additional payments of $1,000 or more may also be made. Following the deduction for any applicable taxes, the purchase payments may be allocated as you direct in one or more of the following ways. o They may be allocated to one or more of nineteen subaccounts, each of which invests in one of the following portfolios of The Prudential Series Fund, Inc. (the "Prudential Series Fund") or other variable subaccounts (collectively, the "Funds"): THE PRUDENTIAL SERIES FUND, INC.
Money Market Portfolio Stock Index Portfolio Prudential Jennison Portfolio Diversified Bond Portfolio Equity Income Portfolio Global Portfolio High Yield Bond Portfolio Equity Portfolio
AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. Growth and Income Fund AIM V.I. Value Fund JANUS ASPEN SERIES Growth Portfolio International Growth Portfolio MFS VARIABLE INSURANCE TRUST Emerging Growth Series Research Series OCC ACCUMULATION TRUST Managed Portfolio Small Cap Portfolio T. ROWE PRICE EQUITY SERIES, INC. Equity Income Portfolio T. ROWE PRICE INTERNATIONAL SERIES, INC. International Stock Portfolio WARBURG PINCUS TRUST Post-Venture Capital Portfolio o They may be allocated to a fixed-rate option which guarantees a stipulated rate of interest for a one year period. o They may be allocated to a market-value adjustment option which guarantees a stipulated rate of interest if held for a seven year period. The value allocated to the subaccounts will vary daily with the investment performance of those accounts. If amounts allocated to a market-value adjustment option are withdrawn or transferred prior to the expiration of the interest rate period, the contract value will be subject to a Market-Value Adjustment, which could result in receipt of more or less than the original amount allocated to that option. On the annuity date, the cash value will be applied to effect a fixed-dollar annuity. Upon annuitization, your participation in the investment options ceases. Prior to that annuity date, you may withdraw in whole or in part the cash value of the Contract. ---------------------------------------------------------- This prospectus provides information a prospective investor should know before investing. Additional information about the Contract has been filed with the Securities and Exchange Commission in a Statement of Additional Information, dated ____________, 1996, which information is incorporated herein by reference, and is available without charge upon written request to Prudential Annuity Service Center, P.O. Box 561, Fort Washington, Pennsylvania 19034, or by telephoning (800) ________. The accompanying prospectuses for the Funds and the related statements of additional information describe the investment objectives and risks of investing in the portfolios. Additional portfolios and subaccounts may be offered in the future. The Contents of the Statement of Additional Information with respect to the Contract appear on page 29 of this prospectus. ---------------------------------------------------------- PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS ACCOMPANIED BY A CURRENT PROSPECTUS FOR EACH OF THE FUNDS. EACH OF THESE PROSPECTUSES SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PRUCO LIFE INSURANCE COMPANY PRUDENTIAL ANNUITY SERVICE CENTER 213 Washington Street P.O. Box 561 Newark, New Jersey 07102-2992 Fort Washington, Pennsylvania 19034 Telephone: (800) 445-4571 Telephone: (800) ________ *DISCOVERY is a service mark of The Prudential. SELECT Ed ___-96 Cat. No. _______ PROSPECTUS CONTENTS
PAGE DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS...........................................................................1 BRIEF DESCRIPTION OF THE CONTRACT..............................................................................................2 FEE TABLE......................................................................................................................4 GENERAL INFORMATION ABOUT PRUCO LIFE, THE PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT, AND THE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT.........................................................10 PRUCO LIFE INSURANCE COMPANY.............................................................................................10 PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT.....................................................................10 THE FUNDS................................................................................................................10 THE INTEREST-RATE INVESTMENT OPTIONS AND INVESTMENTS BY PRUCO LIFE.......................................................13 DETAILED INFORMATION ABOUT THE CONTRACT.......................................................................................13 REQUIREMENTS FOR ISSUANCE OF A CONTRACT..................................................................................13 SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK".............................................................................13 ALLOCATION OF PURCHASE PAYMENTS..........................................................................................13 ASSET ALLOCATION PROGRAM.................................................................................................14 CASH VALUE...............................................................................................................14 GUARANTEED INTEREST RATE PERIODS.........................................................................................14 WHAT HAPPENS WHEN AN INTEREST CELL REACHES ITS MATURITY DATE?............................................................14 TRANSFERS................................................................................................................14 DOLLAR COST AVERAGING....................................................................................................15 AUTO-REBALANCING.........................................................................................................15 WITHDRAWALS..............................................................................................................15 AUTOMATED WITHDRAWALS....................................................................................................16 MARKET-VALUE ADJUSTMENT..................................................................................................16 DEATH BENEFIT............................................................................................................16 VALUATION OF A CONTRACT OWNER'S CONTRACT FUND............................................................................17 CHARGES, FEES AND DEDUCTIONS..................................................................................................17 PREMIUM TAXES AND TAXES ATTRIBUTABLE TO PURCHASE PAYMENTS................................................................17 ADMINISTRATIVE CHARGE....................................................................................................17 CHARGE FOR ASSUMING MORTALITY AND EXPENSE RISKS..........................................................................18 EXPENSES INCURRED BY THE FUNDS...........................................................................................18 WITHDRAWAL CHARGE........................................................................................................18 TRANSACTION CHARGE.......................................................................................................19 CRITICAL CARE ACCESS.....................................................................................................19 FEDERAL TAX STATUS............................................................................................................19 DIVERSIFICATION AND INVESTOR CONTROL.....................................................................................19 TAXES PAYABLE BY CONTRACT OWNERS.........................................................................................19 WITHHOLDING..............................................................................................................20 IMPACT OF FEDERAL INCOME TAXES...........................................................................................21 IRS REQUIRED DISTRIBUTIONS ON DEATH OF OWNER.............................................................................21 TAXES ON PRUCO LIFE......................................................................................................22 CONTRACTS USED IN CONNECTION WITH TAX FAVORED PLANS......................................................................22 IRAS.....................................................................................................................22 PLANS FOR SELF-EMPLOYED INDIVIDUALS......................................................................................23 SEPS.....................................................................................................................23 TDAS.....................................................................................................................23 ELIGIBLE DEFERRED COMPENSATION PLANS OF STATE OR LOCAL GOVERNMENTS AND TAX EXEMPT ORGANIZATIONS..........................24 QUALIFIED PENSION AND PROFIT SHARING PLANS...............................................................................24 MINIMUM DISTRIBUTION OPTION..............................................................................................24 WITHHOLDING ON TAX FAVORED PLANS.........................................................................................24 ERISA DISCLOSURE.........................................................................................................25 ADDITIONAL ERISA REQUIREMENTS............................................................................................25 EFFECTING AN ANNUITY..........................................................................................................25 ANNUITY PAYMENTS FOR A FIXED PERIOD......................................................................................26 LIFE ANNUITY WITH 120 PAYMENTS CERTAIN...................................................................................26
INTEREST PAYMENT OPTION..................................................................................................26 LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT ANNUITY PURCHASE RATES.....................................................26 OTHER INFORMATION.............................................................................................................26 MISSTATEMENT OF AGE OR SEX...............................................................................................26 SALE OF THE CONTRACT AND SALES COMMISSIONS...............................................................................27 VOTING RIGHTS............................................................................................................27 SUBSTITUTION OF FUND SHARES..............................................................................................28 OWNERSHIP OF THE CONTRACT................................................................................................28 PERFORMANCE INFORMATION..................................................................................................28 REPORTS TO CONTRACT OWNERS...............................................................................................28 STATE REGULATION.........................................................................................................28 EXPERTS ................................................................................................................29 LITIGATION...............................................................................................................29 STATEMENT OF ADDITIONAL INFORMATION......................................................................................29 ADDITIONAL INFORMATION...................................................................................................29 FINANCIAL STATEMENTS.....................................................................................................29 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................................................................................................................31 DIRECTORS AND OFFICERS........................................................................................................34 EXECUTIVE COMPENSATION........................................................................................................35 FINANCIAL STATEMENTS OF THE PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT..............................................36 CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES............................................37 MARKET-VALUE ADJUSTMENT FORMULA..............................................................................................C-1
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS ACCOUNT--SEE THE PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT (THE "ACCOUNT"), BELOW. ANNUITANT--THE PERSON OR PERSONS, DESIGNATED BY THE CONTRACT OWNER, UPON WHOSE LIFE OR LIVES MONTHLY ANNUITY PAYMENTS ARE BASED AFTER AN ANNUITY IS EFFECTED. ANNUITY CONTRACT--A CONTRACT DESIGNED TO PROVIDE AN ANNUITANT WITH AN INCOME, WHICH MAY BE A LIFETIME INCOME, BEGINNING ON THE ANNUITY DATE. ANNUITY DATE--THE DATE, SPECIFIED IN THE CONTRACT, WHEN ANNUITY PAYMENTS BEGIN. BOARD--EITHER THE BOARD OF DIRECTORS OR BOARD OF TRUSTEES OF A FUND. CASH VALUE--THE SURRENDER VALUE OF THE CONTRACT, WHICH EQUALS THE CONTRACT FUND PLUS OR MINUS ANY MARKET-VALUE ADJUSTMENTS LESS ANY WITHDRAWAL CHARGE AND ANY ADMINISTRATIVE CHARGE DUE UPON SURRENDER. CHARGE-FREE AMOUNT--THE AMOUNT OF PURCHASE PAYMENTS IN YOUR CONTRACT FUND THAT IS NOT SUBJECT TO A WITHDRAWAL CHARGE. CONTRACT ANNIVERSARY--THE SAME DAY AND MONTH AS THE CONTRACT DATE IN EACH LATER YEAR. CONTRACT DATE--THE DATE PRUCO LIFE RECEIVED THE INITIAL PURCHASE PAYMENT AND NECESSARY DOCUMENTATION FOR THE CONTRACT. CONTRACT FUND--THE TOTAL VALUE ATTRIBUTABLE TO A SPECIFIC CONTRACT REPRESENTING AMOUNTS INVESTED IN ALL THE SUBACCOUNTS AND IN THE INTEREST-RATE INVESTMENT OPTIONS. CONTRACT OWNER--YOU. THE PERSON WHO PURCHASES A DISCOVERY SELECT CONTRACT AND MAKES THE PURCHASE PAYMENTS. THE OWNER WILL USUALLY ALSO BE AN ANNUITANT, BUT NEED NOT BE. THE OWNER HAS ALL RIGHTS IN THE CONTRACT BEFORE THE ANNUITY DATE. SUBJECT TO CERTAIN LIMITATIONS AND REQUIREMENTS DESCRIBED IN THIS PROSPECTUS, THESE RIGHTS INCLUDE THE RIGHT TO MAKE WITHDRAWALS OR SURRENDER THE CONTRACT, TO DESIGNATE AND CHANGE THE BENEFICIARIES WHO WILL RECEIVE THE PROCEEDS AT THE DEATH OF THE ANNUITANT BEFORE THE ANNUITY DATE, TO TRANSFER FUNDS AMONG THE INVESTMENT OPTIONS, AND TO DESIGNATE A MODE OF SETTLEMENT FOR THE ANNUITANT ON THE ANNUITY DATE. CONTRACT YEAR--A YEAR THAT STARTS ON THE CONTRACT DATE OR ON A CONTRACT ANNIVERSARY. FIXED-RATE OPTION--AN INVESTMENT OPTION UNDER WHICH PRUCO LIFE CREDITS INTEREST TO THE AMOUNT ALLOCATED AT A GUARANTEED INTEREST RATE PERIODICALLY DECLARED IN ADVANCE BY PRUCO LIFE BUT NOT LESS THAN 3%. GUARANTEED INTEREST RATE--THE EFFECTIVE ANNUAL INTEREST RATE CREDITED DURING THE INTEREST RATE PERIOD. INTEREST CELL--A DIVISION OF THE INTEREST-RATE INVESTMENT OPTIONS WHICH IS ESTABLISHED WHENEVER YOU ALLOCATE OR TRANSFER MONEY INTO AN INTEREST-RATE INVESTMENT OPTION. THE AMOUNT IN THE INTEREST CELL IS CREDITED WITH A GUARANTEED INTEREST RATE, DECLARED IN ADVANCE BY PRUCO LIFE AND NEVER LESS THAN 3%, IF HELD FOR THE DURATION OF THE CELL'S INTEREST RATE PERIOD. INTEREST-RATE INVESTMENT OPTIONS--THE FIXED-RATE OPTION AND THE MARKET-VALUE ADJUSTMENT OPTION. INTEREST RATE PERIOD--THE PERIOD FOR WHICH THE GUARANTEED INTEREST RATE IS CREDITED. MARKET-VALUE ADJUSTMENT--IF AMOUNTS ARE WITHDRAWN OR TRANSFERRED FROM A MARKET-VALUE ADJUSTMENT OPTION BEFORE THE END OF THE INTEREST RATE PERIOD, A MARKET-VALUE ADJUSTMENT WILL OCCUR. A MARKET-VALUE ADJUSTMENT MAY RESULT IN AN INCREASE, DECREASE OR NO CHANGE IN THE VALUE OF THE MONEY THAT WAS IN THE INTEREST CELL. FOR THE FORMULA USED TO CALCULATE THE ADJUSTMENT, SEE MARKET-VALUE ADJUSTMENT FORMULA, ON PAGE C1. MARKET-VALUE ADJUSTMENT OPTION ("MVA OPTION")--AN INTEREST-RATE INVESTMENT OPTION SUBJECT TO A MARKET-VALUE ADJUSTMENT. THE PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT (THE "ACCOUNT")--A SEPARATE ACCOUNT OF PRUCO LIFE REGISTERED AS A UNIT INVESTMENT TRUST UNDER THE INVESTMENT COMPANY ACT OF 1940. SUBACCOUNT--A DIVISION OF THE ACCOUNT, THE ASSETS OF WHICH ARE INVESTED IN SHARES OF THE CORRESPONDING PORTFOLIO OF THE FUNDS. 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 ARE CALCULATED, WHICH IS GENERALLY AT 4:15 P.M. NEW YORK CITY TIME ON EACH DAY DURING WHICH THE NEW YORK STOCK EXCHANGE IS OPEN. VARIABLE INVESTMENT OPTIONS--THE SUBACCOUNTS. 1 BRIEF DESCRIPTION OF THE CONTRACT The DISCOVERY SELECT Annuity Contract offers you a way to invest on a tax-deferred basis in a variety of investment options and provide income protection for later life by financing annuity payments commencing on the annuity date. The Contract is a variable annuity contract. The value of the Contract depends upon investment results of the investment option[s]. Currently, you may place the invested portion of your purchase payments into one or a combination of variable and interest-rate investment options. Amounts held under the Contract may be withdrawn, in whole or in part, prior to the annuity date. The Contract also provides for a death benefit. The Contract is purchased by making an initial payment of at least $10,000. Additional payments of $1,000 or more may also be made. After the deduction of any charge for taxes attributable to purchase payments is made, purchase payments are allocated to the subaccounts and/or the fixed-rate investment or Market-Value Adjustment Options in accordance with your instructions. Currently, there are nineteen variable investment options, each of which is called a subaccount. The assets of each subaccount are invested in a corresponding portfolio of one of the Funds. The FIXED-RATE OPTION guarantees a stipulated rate of interest for a one-year period. The MARKET-VALUE ADJUSTMENT OPTION (the "MVA option") guarantees a stipulated rate of interest if held for a seven-year period. The quoted interest rates will be expressed as an effective annual yield. Interest will be credited daily throughout the interest rate period at a rate that will provide the guaranteed annual effective yield over the period of one year. The MVA and fixed-rate options are made up of individual "interest cells" each of which is established whenever you allocate or transfer money into those options. Your Pruco Life representative will tell you the rates of interest currently in effect. This rate will never be below 3%. The value of each Market-Value Adjustment interest cell, prior to its maturity date, varies with changes in interest rates in the same way that the value of a bond changes. If interest rates have risen since the interest cell was established, its value will have decreased. If you make a withdrawal or transfer prior to the maturity date, the value of the interest cell will be adjusted up or down or not at all, depending upon the difference in interest rates between the date when the cell was established and the date of withdrawal or transfer. The maximum value of the factor used in determining the amount of adjustment, either positive or negative, is 0.40. See MARKET-VALUE ADJUSTMENT, page C-1. Pruco Life makes charges under the Contract for the costs of selling and distributing the Contract, for administering the Contract, and for assuming mortality and expense risks under the Contract. Moreover, a charge may be deducted for taxes attributable to purchase payments, including premium tax. In the case of premium tax, Pruco Life will deduct the tax, as provided by applicable law, either from the purchase payment when received, or from the Contract Fund at the time the annuity is effected. The deduction may be lower, or not made at all, for larger purchase payments. See PREMIUM TAXES AND TAXES ATTRIBUTABLE TO PURCHASE PAYMENTS, page 17. A charge against each of the Fund's assets is made by the investment adviser for providing investment advisory and management services. A mortality and expense risk charge equal to an annual rate of 1.25% is deducted from the assets held in the variable investment options. An administrative charge is deducted from the assets held in the variable investment options at an annual rate of 0.15%. There will be an additional administrative charge of $30 on each Contract anniversary and at the time of a full withdrawal for Contracts with Contract Funds less than $50,000. A withdrawal charge may be imposed upon withdrawals made in the first seven Contract years. The maximum withdrawal charge is 7% of the amount withdrawn. Further detail about charges may be found under CHARGES, FEES AND DEDUCTIONS, page 17. In the event that the sole or last surviving annuitant dies prior to the annuity date or the surrender of the Contract for its cash value, Pruco Life will pay a death benefit to the stated beneficiary. If the annuitant was the sole owner of the Contract and the sole beneficiary is the annuitant's spouse, the spouse may be able to continue the Contract. See DEATH BENEFIT, page 16. In the event that the annuitant dies after an annuity has been effected but before the entire value of the Contract is distributed, special distribution rules apply. See EFFECTING AN ANNUITY, page 25. Amounts may be transferred out of an investment option into any combination of other investment options available under the Contract. There are no minimum transfer dollar amount requirements. Market-Value Adjustments may apply. Restrictions apply on transfers made from the fixed-rate option. See TRANSFERS, page 14. For a limited time, a Contract may be returned for a refund in accordance with the terms of its "free look" provision. See SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK", page 13. You may withdraw all or part of the Contract Fund prior to the annuity date, subject to the possible withdrawal charge mentioned above. See WITHDRAWALS, page 15. If a full or partial withdrawal is requested, it may be wholly or partially 2 taxable. Certain withdrawals may be subject to a federal penalty tax as well as a federal income tax. See TAXES PAYABLE BY CONTRACT OWNERS, page 19. If a lump sum is requested, it will generally be paid within 7 days and deducted from the Contract Fund. See WITHDRAWALS, page 15. If an annuity option is selected, annuity payments will be in installments of guaranteed amounts. See EFFECTING AN ANNUITY, page 25. This Brief Description of the Contract is intended to provide a broad overview of the more significant features of the Contract. More detailed information will be found in subsequent sections of this prospectus and in the Contract document. 3 FEE TABLE CONTRACT OWNER TRANSACTION EXPENSES Sales Charge Imposed on Purchase Payments..................................None Maximum Withdrawal Charge:
- - ----------------------------------------------------------------------------------------------------------------------------------- THE WITHDRAWAL CHARGE WILL BE EQUAL TO THE FOLLOWING PERCENTAGE OF FOR WITHDRAWALS DURING THE CONTRACT YEAR INDICATED THE AMOUNT WITHDRAWN* - - ----------------------------------------------------------------------------------------------------------------------------------- FIRST CONTRACT YEAR 7% SECOND CONTRACT YEAR 6% THIRD CONTRACT YEAR 5% FOURTH CONTRACT YEAR 4% FIFTH CONTRACT YEAR 3% SIXTH CONTRACT YEAR 2% SEVENTH CONTRACT YEAR 1% EIGHTH AND SUBSEQUENT CONTRACT YEARS NO CHARGE - - -----------------------------------------------------------------------------------------------------------------------------------
* THE WITHDRAWAL CHARGE IS NOT IMPOSED ON ANY CHARGE-FREE WITHDRAWAL AMOUNTS, WITHDRAWALS MADE UNDER CRITICAL CARE ACCESS, SEE PAGE 19, OR ANY AMOUNT USED TO PROVIDE INCOME UNDER THE LIFE ANNUITY WITH 120 PAYMENTS CERTAIN OPTION. THERE WILL BE A REDUCTION IN SUCH WITHDRAWAL CHARGE IN THE CASE OF CONTRACTS ISSUED TO CONTRACT OWNERS ISSUE AGE 84 AND OLDER. ANNUAL CONTRACT FEE AND FEE UPON FULL WITHDRAWAL.........................$30** ** THIS CHARGE WILL BE APPORTIONED OVER ALL THE ACCOUNTS MAKING UP THE CONTRACT FUND AS OF THE EFFECTIVE DATE OF THAT DEDUCTION. AMOUNTS APPORTIONED TO THE TWO INTEREST-RATE INVESTMENT OPTIONS WILL REDUCE THE INTEREST CELLS ON A FIFO (FIRST IN/FIRST OUT) BASIS DETERMINED BY THE AGE OF THE CELL. THE CHARGE WILL NOT BE MADE UPON WITHDRAWALS UNDER CRITICAL CARE ACCESS OR IF THE CONTRACT FUND IS $50,000 OR MORE. TRANSFER CHARGE IMPOSED ONLY FOR TRANSFERS IN EXCESS OF TWELVE TRANSFERS IN A CONTRACT YEAR (EXCLUDING TRANSFERS IN CONNECTION WITH DOLLAR COST AVERAGING AND AUTO-REBALANCING)........................................................$25 SEPARATE ACCOUNT ANNUAL EXPENSES (as a Percentage of average Contract Fund) ALL SUBACCOUNTS MORTALITY AND EXPENSE RISK FEE........................... 1.25% ADMINISTRATIVE FEE....................................... 0.15% ----- TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES................... 1.40% =====
ANNUAL EXPENSES OF THE FUNDS (as a percentage of portfolio average net assets) =================================================================================================================================== INVESTMENT OTHER TOTAL FUND ANNUAL MANAGEMENT FEE EXPENSES EXPENSES (AFTER EXPENSE REIMBURSEMENTS) =================================================================================================================================== THE PRUDENTIAL SERIES FUND(1) - - ----------------------------------------------------------------------------------------------------------------------------------- Money Market Portfolio 0.40% 0.04% 0.44% - - ----------------------------------------------------------------------------------------------------------------------------------- Diversified Bond Portfolio 0.40% 0.04% 0.44% - - ----------------------------------------------------------------------------------------------------------------------------------- High Yield Bond Portfolio 0.55% 0.06% 0.61% - - ----------------------------------------------------------------------------------------------------------------------------------- Stock Index Portfolio 0.35% 0.03% 0.38% - - ----------------------------------------------------------------------------------------------------------------------------------- Equity Income Portfolio 0.40% 0.03% 0.43% ===================================================================================================================================
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==================================================================================================================================== INVESTMENT OTHER TOTAL FUND ANNUAL MANAGEMENT FEE EXPENSES EXPENSES (AFTER EXPENSE REIMBURSEMENTS) ==================================================================================================================================== Equity Portfolio 0.45% 0.03% 0.48% - - ------------------------------------------------------------------------------------------------------------------------------------ Prudential Jennison Portfolio 0.60% 0.19% 0.79% - - ------------------------------------------------------------------------------------------------------------------------------------ Global Portfolio 0.75% 0.31% 1.06% - - ------------------------------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS, INC.(2) - - ------------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Growth and Income Fund 0.65% 0.52% 1.17% - - ------------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Value Fund 0.65% 0.10% 0.75% - - ------------------------------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------------------------------ JANUS ASPEN SERIES(3) - - ------------------------------------------------------------------------------------------------------------------------------------ Growth Portfolio 0.65% 0.13% 0.78% - - ------------------------------------------------------------------------------------------------------------------------------------ International Growth Portfolio 0.00% 1.27% 1.27% - - ------------------------------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------------------------------ MFS VARIABLE INSURANCE TRUST(4) - - ------------------------------------------------------------------------------------------------------------------------------------ Emerging Growth Series 0.75% 0.25% 1.00% - - ------------------------------------------------------------------------------------------------------------------------------------ Research Series 0.75% 0.25% 1.00% - - ------------------------------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------------------------------ OCC ACCUMULATION TRUST(5) - - ------------------------------------------------------------------------------------------------------------------------------------ Managed Portfolio 0.80% 0.14% 0.94% - - ------------------------------------------------------------------------------------------------------------------------------------ Small Cap Portfolio 0.80% 0.20% 1.00% - - ------------------------------------------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------------------------------------------ T. ROWE PRICE (6) - - ------------------------------------------------------------------------------------------------------------------------------------ T. Rowe Price Equity Series, Inc., Equity Income Portfolio 0.85% 0.00% 0.85% - - ------------------------------------------------------------------------------------------------------------------------------------ T. Rowe Price International Series, Inc., International Stock Portfolio 1.05% 0.00% 1.05% - - ------------------------------------------------------------------------------------------------------------------------------------ ====================================================================================================================================
5
==================================================================================================================================== INVESTMENT OTHER TOTAL FUND ANNUAL MANAGEMENT FEE EXPENSES EXPENSES (AFTER EXPENSE REIMBURSEMENTS) ==================================================================================================================================== WARBURG PINCUS TRUST(7) - - ------------------------------------------------------------------------------------------------------------------------------------ Post-Venture Capital Portfolio 0.64% 0.76% 1.40% ====================================================================================================================================
The purpose of the foregoing tables is to assist Contract owners in understanding the expenses that they bear, directly or indirectly of the Pruco Life Flexible Premium Variable Annuity Account and the Funds. The expenses relating to the Funds (other than those in the Prudential Series Fund) have been provided to Pruco Life by the Funds and have not been independently verified by Pruco Life. See the sections on charges in this prospectus and the accompanying prospectuses for the Funds. The above tables do not include any taxes attributable to purchase payments nor any premium taxes. Currently, there is no deduction for such taxes at the time purchase payments are made, but in some states, a deduction is made when an annuity is effected. (1.) The Prudential Series Fund. With respect to The Prudential Series Fund portfolios, except for the Global Portfolio, The Prudential reimburses a portfolio when its ordinary operating expenses, excluding taxes, interest, and brokerage commissions exceed 0.75% of the portfolio's average daily net assets. The amounts listed for the portfolios under "Other Expenses" are based on amounts incurred in the last fiscal year. The Prudential Jennison Portfolio commenced operations in 1995. Consequently, for the fee table above and the examples that follow, the figures shown as "Other Expenses" and total expenses are based on actual amounts from May 1, 1995 through May 1, 1996. It is anticipated that as average net assets of the portfolio grow, the magnitude of "Other Expenses" will decrease and become comparable to that of other portfolios. (2.) AIM Variable Insurance Funds, Inc. AIM may from time to time voluntarily waive or reduce their respective fees. Fee waivers or reductions, other than those contained in the agreement with the adviser, may be modified or terminated at any time. Management fees and other expenses have been restated to reflect current agreements which do not include waivers or reductions. (3.) Janus Aspen Series. The fees and expenses for the Janus Aspen Series Growth Portfolio and International Growth Portfolio in the table above are based on gross expenses before expense offset arrangements for the fiscal year ended December 31, 1995, net of fee waivers or reductions from Janus Capital. Janus Capital has agreed to reduce each Portfolio's advisory fee to the extent such fee exceeds the effective rate of the Janus retail fund corresponding to such Portfolio. Janus Capital may terminate this fee reduction or any of the expense limitations set forth herein at any time upon 90 days' notice to the Trustees of the Janus Aspen Series. The fees and expenses for the International Growth Portfolio have been restated to reflect the 1.25% expense limitation in effect from June 3, 1996 through April 30, 1997. Without fee waivers or reductions, the Management Fee, Other Expenses and Total Fund Annual Expenses would have been 0.85%, 0.13% and 0.98% for the Growth Portfolio and 1.00%, 2.57% and 3.57% for the International Growth Portfolio. (4.) MFS Variable Insurance Trust. With respect to the MFS Trust Emerging Growth Series and Research Series the adviser has agreed to bear, subject to reimbursement, expenses for each of the MFS Funds such that each aggregate Funds' operating expenses shall not exceed, on an annualized basis, 1.00% of the average daily net assets of the MFS Funds from November 2, 1994 through December 31, 1996, 1.25% of the average daily net assets of the Series from January 1, 1997 through December 31, 1998, and 1.50% of the average daily net assets of the Series from January 1, 1999 through December 31, 2004; provided however, that this obligation may be terminated or revised at any time. Absent this expense arrangement, "Other Expenses" and "Total Fund Annual Expenses" would be 2.16% and 2.91%, respectively for the Emerging Growth Series and 3.15% and 3.90% respectively for the Research Series. (5.) OCC Accumulation Trust. The annual expenses of the OCC Accumulation Trust Portfolios as of December 31, 1995 have been restated to reflect new management fee and expense limitation arrangements in effect as of May 1, 1996. Effective May 1, 1996, the expenses of the Managed and Small Cap Portfolios of the OCC Accumulation Trust are contractually limited by OpCap Advisors so that their respective annualized operating expenses do not exceed 1.25% 6 of their respective average daily net assets. Furthermore, through April 30, 1997, the annualized operating expenses of the Managed and Small Cap Portfolios will be voluntarily limited by OpCap Advisors so that annualized operating expenses of these Portfolios do not exceed 1.00% of their respective average daily net assets. Without such voluntary expense limitations, and taking into account the revised contractual provisions effective May 1, 1996 concerning management fees and expense limitations, the Management Fees, Other Expenses and Total Portfolio Annual Expenses incurred for the fiscal year ended December 31, 1995 would have remained unchanged for the Managed Portfolio and would have been .80%, .39% and 1.19%, respectively, for the Small Cap Portfolio. (6.) T. Rowe Price Equity Series, Inc. and T. Rowe Price International Series, Inc. With respect to the T. Rowe Price Funds, the Investment Management Fees include the ordinary expenses of operating the Funds. (7.) Warburg Pincus Trust. With respect to the Warburg Trust Post-Venture Capital Portfolio, absent the anticipated waiver of fees by the Fund's investment adviser and co-administrator, the Investment Management Fee would equal 1.25%; Other Expenses would equal 0.81%, and Total Fund Annual Expenses would equal 2.06%. Other Expenses for the Fund are based on annualized estimates of expenses for the fiscal year ending December 31, 1996, net of any fee waivers or expense reimbursements. The investment adviser has undertaken to limit the Fund's Total Fund Annual Expenses through December 31, 1996. EXAMPLES OF FEES AND EXPENSES The following examples illustrate the cumulative dollar amount of all the above expenses that would be incurred on each $1,000 of your investment. o The examples assume a consistent 5% annual return on invested assets; o The examples do not take into consideration any taxes attributable to purchase payments nor any premium taxes which may be payable at the time of annuitization or at the time of purchase payments; For a term less than 10 years, the expenses shown in Table I describe applicable charges for the withdrawal of your entire Contract Fund or if you use your Contract Fund to effect an annuity assuming, in each case, that your Contract Fund is invested entirely in the designated portfolio. THE EXAMPLES SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES INCURRED IN ANY GIVEN YEAR MAY BE MORE OR LESS THAN THOSE SHOWN IN THE EXAMPLES. 7 TABLE I IF YOU WITHDRAW YOUR ENTIRE CONTRACT FUND JUST PRIOR TO THE END OF THE APPLICABLE TIME PERIOD OR IF YOU USE YOUR CONTRACT FUND TO EFFECT AN ANNUITY AT THE END OF THE APPLICABLE TIME PERIOD, YOU WOULD PAY THE FOLLOWING CUMULATIVE EXPENSES ON EACH $1,000 INVESTED. (NOTE: THE 1, 3 AND 5 YEAR COLUMNS REFLECT THE IMPOSITION OF THE WITHDRAWAL CHARGE; HOWEVER, IF YOU CHOOSE CERTAIN ANNUITY OPTIONS AFTER THE FIRST YEAR THIS CHARGE WILL NOT BE MADE. WHERE THIS IS THE CASE, THE EXPENSES SHOWN IN TABLE II BELOW WOULD BE APPLICABLE. SEE WITHDRAWAL CHARGE, ON PAGE 13.)
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- THE PRUDENTIAL SERIES FUND MONEY MARKET PORTFOLIO....................................... $ 82 $ 94 $117 $220 DIVERSIFIED BOND PORTFOLIO................................... $ 82 $ 94 $117 $220 HIGH YIELD BOND PORTFOLIO.................................... $ 84 $ 99 $126 $238 STOCK INDEX PORTFOLIO........................................ $ 82 $ 92 $114 $214 EQUITY INCOME PORTFOLIO...................................... $ 82 $ 94 $116 $219 EQUITY PORTFOLIO............................................ $ 83 $ 95 $119 $225 PRUDENTIAL JENNISON PORTFOLIO................................ $ 86 $ 105 $135 $257 GLOBAL PORTFOLIO............................................ $ 88 $ 113 $148 $284 AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. GROWTH AND INCOME FUND............................... $ 89 $ 116 $154 $294 AIM V.I. VALUE FUND.......................................... $ 85 $ 104 $133 $252 JANUS ASPEN SERIES GROWTH PORTFOLIO.............................................. $ 86 $ 105 $134 $255 INTERNATIONAL GROWTH PORTFOLIO................................ $ 90 $ 119 $159 $304 MFS VARIABLE INSURANCE TRUST EMERGING GROWTH SERIES........................................ $ 88 $ 111 $145 $278 RESEARCH SERIES............................................... $ 88 $ 111 $145 $278 OCC ACCUMULATION TRUST MANAGED PORTFOLIO............................................. $ 87 $ 109 $142 $272 SMALL CAP PORTFOLIO........................................... $ 88 $ 111 $145 $278 T. ROWE PRICE T. ROWE PRICE EQUITY SERIES, INC., EQUITY INCOME PORTFOLIO.... $ 86 $ 107 $138 $263 T. ROWE PRICE INTERNATIONAL SERIES, INC., INTERNATIONAL STOCK PORTFOLIO............................................. $ 88 $ 113 $148 $283 WARBURG PINCUS TRUST POST-VENTURE CAPITAL PORTFOLIO................................ $ 92 $ 123 $165 $317
8 TABLE II IF YOU DO NOT WITHDRAW ANY PORTION OF YOUR CONTRACT FUND AS OF THE END OF THE APPLICABLE TIME PERIOD, YOU WOULD PAY THE FOLLOWING CUMULATIVE EXPENSES ON EACH $1,000 INVESTED.
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- THE PRUDENTIAL SERIES FUND MONEY MARKET PORTFOLIO....................................... $ 19 $ 59 $102 $220 DIVERSIFIED BOND PORTFOLIO................................... $ 19 $ 59 $102 $220 HIGH YIELD BOND PORTFOLIO.................................... $ 21 $ 64 $111 $238 STOCK INDEX PORTFOLIO........................................ $ 19 $ 57 $ 99 $214 EQUITY INCOME PORTFOLIO...................................... $ 19 $ 59 $101 $219 EQUITY PORTFOLIO............................................. $ 20 $ 60 $104 $225 PRUDENTIAL JENNISON PORTFOLIO................................ $ 23 $ 70 $120 $257 GLOBAL PORTFOLIO............................................. $ 25 $ 78 $133 $284 AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. GROWTH AND INCOME FUND............................... $ 26 $ 81 $139 $294 AIM V.I. VALUE FUND.......................................... $ 22 $ 69 $118 $252 JANUS ASPEN SERIES GROWTH PORTFOLIO.............................................. $ 23 $ 70 $119 $255 INTERNATIONAL GROWTH PORTFOLIO................................ $ 27 $ 84 $144 $304 MFS VARIABLE INSURANCE TRUST EMERGING GROWTH SERIES........................................ $ 25 $ 76 $130 $278 RESEARCH SERIES............................................... $ 25 $ 76 $130 $278 OCC ACCUMULATION TRUST MANAGED PORTFOLIO............................................. $ 24 $ 74 $127 $272 SMALL CAP PORTFOLIO........................................... $ 25 $ 76 $130 $278 T. ROWE PRICE T. ROWE PRICE EQUITY SERIES, INC., EQUITY INCOME PORTFOLIO.... $ 23 $ 72 $123 $263 T. ROWE PRICE INTERNATIONAL SERIES, INC., INTERNATIONAL STOCK PORTFOLIO............................................. $ 25 $ 78 $133 $283 WARBURG PINCUS TRUST POST-VENTURE CAPITAL PORTFOLIO................................ $ 29 $ 88 $150 $317
NOTICE THAT IN BOTH OF THE ABOVE TABLES, THE LEVEL OF CUMULATIVE CHARGES IS IDENTICAL FOR THE 10 YEAR COLUMN. THIS IS BECAUSE AT THAT POINT THERE ARE NO WITHDRAWAL CHARGES TAKEN BY PRUCO LIFE UPON SURRENDER OR ANNUITIZATION. 9 GENERAL INFORMATION ABOUT PRUCO LIFE, THE PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT, AND THE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT PRUCO LIFE INSURANCE COMPANY Pruco Life Insurance Company ("Pruco Life") is a stock life insurance company, organized in 1971 under the laws of the State of Arizona. Pruco Life is licensed to sell life insurance and annuities in the District of Columbia, Guam, and in all states except New York. These Contracts are not offered in any state in which the necessary approvals have not yet been obtained. Pruco Life is a wholly-owned subsidiary of The Prudential, a mutual insurance company founded in 1875 under the laws of the State of New Jersey. As of December 31, 1995, The Prudential has invested over $442 million in Pruco Life in connection with Pruco Life's organization and operation. The Prudential intends from time to time to make additional capital contributions to Pruco Life as needed to enable it to meet its reserve requirements and expenses in connection with its business. The Prudential is under no obligation to make such contributions and its assets do not back the benefits payable under the Contract. Pruco Life's consolidated financial statements appear on page 37 and should be considered only as bearing upon Pruco Life's ability to meet its obligations under the Contracts. PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT The Pruco Life Flexible Premium Variable Annuity Account (the "Account") was established on June 16, 1995 under Arizona law as a separate investment account. The Account meets the definition of a "separate account" under federal securities laws. Pruco Life is the legal owner of the assets in the Account and is obligated to provide all benefits under the Contracts. Pruco Life will at all times 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 are segregated from all of Pruco Life's other assets and may not be charged with liabilities which arise from any other business Pruco Life conducts. In addition to these assets, the Account's assets may include funds contributed by Pruco Life to commence operation of the Account and may include accumulations of the charges Pruco Life makes against the Account. From time to time these additional assets will be transferred to Pruco Life's general account. Before making any such transfer, Pruco Life will consider any possible adverse impact the transfer might have on the Account. The Account is registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 ("1940 Act") as a unit investment trust, which is a type of investment company. 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. There are currently nineteen subaccounts within the Account which invest in corresponding portfolios of the Funds available under the Contracts. There are additional subaccounts which invest in other portfolios of the Prudential Series Fund which are not available under the Contracts. Additional subaccounts may be added in the future. Pursuant to the terms of the Contract, Pruco Life has the right to modify unilaterally the Contract to limit the number and/or type of funds. The Account's financial statements begin on page 36. THE FUNDS The following is a list of each Fund, its investment objectives and its investment adviser: THE PRUDENTIAL SERIES FUND, INC. MONEY MARKET PORTFOLIO. The maximum current income that is consistent with stability of capital and maintenance of liquidity through investment in high-quality short-term debt obligations. DIVERSIFIED BOND PORTFOLIO. A high level of income over the longer term while providing reasonable safety of capital through investment primarily in readily marketable intermediate and long-term fixed income securities that provide attractive yields but do not involve substantial risk of loss of capital through default. HIGH YIELD BOND PORTFOLIO. Achievement of a high total return through investment in high yield/high risk fixed income securities in the medium to lower quality ranges. STOCK INDEX PORTFOLIO. Achievement of investment results that correspond to the price and yield performance of publicly traded common stocks in the aggregate by following a policy of attempting to duplicate the price and yield performance of the Standard & Poor's 500 Composite Stock Price Index. 10 EQUITY INCOME PORTFOLIO. Both current income and capital appreciation through investment primarily in common stocks and convertible securities that provide favorable prospects for investment income returns above those of the Standard & Poor's 500 Composite Stock Price Index or the New York Stock Exchange Composite Index. EQUITY PORTFOLIO. Capital appreciation through investment primarily in common stocks of companies, including major established corporations as well as smaller capitalization companies, that appear to offer attractive prospects of price appreciation that is superior to broadly-based stock indices. Current income, if any, is incidental. PRUDENTIAL JENNISON PORTFOLIO. Long-term growth of capital through investment primarily in equity securities of established companies with above-average growth prospects. Current income, if any, is incidental. GLOBAL PORTFOLIO. Long-term growth of capital through investment primarily in common stock and common stock equivalents of foreign and domestic issues. Current income, if any, is incidental. The Prudential is the investment advisor for the assets of each of the portfolios of the Prudential Series Fund. The Prudential has a Service Agreement with its wholly-owned subsidiary The Prudential Investment Corporation ("PIC"), which provides that, subject to The Prudential's supervision, PIC will furnish investment advisory services in connection with the management of the Prudential Series Fund. In addition, The Prudential has entered into a Subadvisory Agreement with its wholly-owned subsidiary Jennison Associates Capital Corp. ("Jennison"), under which Jennison furnishes investment advisory services in connection with the management of the Prudential Jennison Portfolio. AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. GROWTH AND INCOME FUND. The Fund's investment objective is to seek growth of capital, with current income as a secondary objective. AIM V.I. VALUE FUND. The Fund's investment objective is to achieve long-term growth of capital by investing primarily in equity securities judged by A I M Advisors, Inc. to be undervalued relative to the current or projected earnings of the companies issuing the securities, or relative market values of assets owned by the companies issuing the securities or relative to the equity market generally. Income is a secondary objective and would be satisfied principally from the income (interest and dividends) generated by the common stocks, covertible bonds and convertible preferred stocks that make up the Fund's portfolio. A I M Advisors, Inc., serves as the investment adviser to the AIM V.I. Value Fund and the AIM V.I. Growth and Income Fund. JANUS ASPEN SERIES GROWTH PORTFOLIO. A diversified portfolio that seeks long-term growth of capital by investing primarily in common stocks, with an emphasis on companies with larger market capitalizations. INTERNATIONAL GROWTH PORTFOLIO. A diversified portfolio that seeks long-term growth of capital by investing primarily in common stocks of foreign issuers. Janus Capital Corporation is the investment adviser to the Growth Portfolio and the International Growth Portfolio and is responsible for the day-to-day management of the portfolios and other business affairs of the portfolios. MFS VARIABLE INSURANCE TRUST EMERGING GROWTH SERIES. This 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. RESEARCH SERIES. The Research Series' investment objective is to provide long-term growth of capital and future income. Massachusetts Financial Services Company, a Delaware corporation, is the investment adviser to each MFS Series. 11 OCC ACCUMULATION TRUST (formerly known as Quest for Value Accumulation Trust) MANAGED PORTFOLIO. Growth of capital over time through investment in a portfolio consisting of common stocks, bonds and cash equivalents, the percentages of which will vary based on management's assessments of relative investment. SMALL CAP PORTFOLIO. Capital appreciation through investment in a diversified portfolio of equity securities of companies with market capitalizations of under $1 billion. OpCap Advisors (formerly known as Quest for Value Advisors, the "OCC Manager") is responsible for management of the OCC Accumulation Trust's business. Pursuant to the investment advisory agreement with the OCC Accumulation Trust, and subject to the authority of the Board of Trustees, the OCC Manager supervises the investment operation of the Managed Portfolio and the Small Cap Portfolio, furnishes advice and recommendations with respect to investments, investment policies and the purchase and sale of securities and provides certain administrative services for the OCC Accumulation Trust. T. ROWE PRICE T. ROWE PRICE EQUITY SERIES, INC., EQUITY INCOME PORTFOLIO. The fund's objective is to provide substantial dividend income as well as long-term capital appreciation through investment in common stocks of established companies. T. ROWE PRICE INTERNATIONAL SERIES, INC., INTERNATIONAL STOCK PORTFOLIO. The fund's objective is long-term growth of capital through investment primarily in common stocks of established, non-U.S. companies. T. Rowe Price Associates, Inc. is the Investment Manager for the Equity Income Portfolio and Rowe Price-Fleming International, Inc. is the Investment Manager for the International Stock Portfolio. WARBURG PINCUS TRUST POST-VENTURE CAPITAL PORTFOLIO. Seeks long-term growth of capital by investing primarily in equity securities of issuers in their post-venture capital stage of development and pursues an aggressive investment strategy. The Warburg Pincus Trust employs Warburg, Pincus Counsellors, Inc. as investment adviser and Abbott Capital Management, L.P. as its sub-investment adviser with respect to a portion of the Post-Venure Capital Portfolio allocated to private limited partnerships or other investment funds. Further information about the Fund portfolios can be found in the accompanying prospectuses for each Fund. The investment advisors with respect to the various funds charge a daily investment management fee as compensation for their services, as set forth in the table beginning on page 4 and as more fully described in the prospectus for each Fund. It is conceivable that 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 fund. Although neither the companies which invest in the Funds, nor the Funds currently foresees any such disadvantage, the Funds' Boards intend 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 in response thereto. This might force a Fund to sell securities at disadvantageous prices. 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 will be compensated by an affiliate of each of the Funds (other than those in the Prudential Series Fund) based upon an annual percentage of the average assets held in the Fund by Pruco Life under the Contracts. These percentages vary by Fund, and reflect administrative and other services provided by Pruco Life. A FULL DESCRIPTION OF THE FUNDS, THEIR INVESTMENT OBJECTIVES, MANAGEMENT, POLICIES, AND RESTRICTIONS, THEIR EXPENSES, THE RISKS ATTENDANT TO INVESTMENT THEREIN, AND ALL OTHER ASPECTS OF THEIR OPERATION IS CONTAINED IN THE 12 ACCOMPANYING 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 WILL BE MET. THE INTEREST-RATE INVESTMENT OPTIONS AND INVESTMENTS BY PRUCO LIFE Purchase payments invested in the interest-rate investment options do not result in participation in the investment gains or losses of any designated portfolio of investments as is the case for payments invested in the variable investment options. The amounts invested in the interest-rate investment options are credited with interest at rates guaranteed by Pruco Life. All of Pruco Life's assets stand behind those guarantees. Assets of Pruco Life must be invested in accordance with requirements established by applicable state laws regarding the nature and quality of investments that may be made by life insurance companies and the percentage of their assets that may be committed to any particular type of investment. In general, these laws permit investments, within specified limits and subject to certain qualifications, in federal, state, and municipal obligations, corporate bonds, preferred and common stocks, real estate mortgages, real estate and certain other investments. DETAILED INFORMATION ABOUT THE CONTRACT REQUIREMENTS FOR ISSUANCE OF A CONTRACT The minimum initial purchase payment is $10,000. Purchase payments in excess of $2 million require prior approval of Pruco Life. The Contract may generally be issued on proposed annuitants below the age of 86. Contracts purchased in connection with Individual Retirement Annuity plans (IRAs) will generally be issued to annuitants below the age of 70. However, IRA Contracts may be issued up to age 80 provided that the Minimum Distribution Option or other appropriate IRS election is made. Before issuing any Contract, we require submission of certain information. Following our review of the information and approval of issuance, a Contract will be issued that sets forth precisely your rights and Pruco Life's obligations. You may thereafter make additional payments of $1,000 or more, but there is no obligation to do so. The Contract date will be the date the initial purchase payment and required information in good order are received at the Prudential Annuity Service Center. If the current underwriting requirements are not met and the issuance of the Contract is not approved, the purchase payment will promptly be returned. Pruco Life reserves the right to change these requirements on a non-discriminatory basis. SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK" Generally, you may return a Contract for refund within 10 days after you receive it. Some states allow a longer period of time during which a Contract may be returned for a refund. If you purchase the Contract as an IRA, federal law requires that you return the Contract for refund within 7 days. A refund may be requested by mailing or delivering the Contract to the representative who sold it or to the Prudential Annuity Service Center. As required by applicable law, you will then receive a refund of either (1) all purchase payments made, plus any interest credited, plus or minus any change in cash value due to investment experience or market value adjustment, which will include charges that have been made against the account or the underlying variable investment funds or (2) all purchase payments made. ALLOCATION OF PURCHASE PAYMENTS You determine how the initial purchase payment will be allocated among the subaccounts and interest-rate investment options by specifying the desired allocation on the application form for the Contract. You may choose to allocate nothing to a particular subaccount or interest-rate option. Unless you tell us otherwise, subsequent purchase payments will be allocated in the same proportions as the most recent purchase payment made (unless that was a purchase payment you directed us to allocate on a one time-only basis). You may change the way in which subsequent purchase payments are allocated by providing Pruco Life with proper written instruction or by telephoning the Prudential Annuity Service Center, once you have provided the appropriate identification to effect a telephone transfer. See TRANSFERS, page 14. 13 ASSET ALLOCATION PROGRAM An Asset Allocation Program is available to assist you in determining how to allocate your purchase payments. If you choose to participate in the program, your registered representative will provide you with an investor profile questionnaire. Based on your answers to the questionnaire, a software program, designed by The Prudential with the assistance of Ibbotson Associates, will identify an asset allocation model that is appropriate for investors that have investment objectives, risk tolerance and time horizons comparable to yours. The Asset Allocation Program is available at no charge to you. You are under no obligation to participate in the program or to invest according to the program recommendations. You may ignore, in whole or in part, the investment allocations provided by the program. The Asset Allocation Program is intended as an aid in making your purchase payment allocations. It is not a guarantee of investment return and there can be no assurance that any portfolio will attain its investment objectives. You should consider reviewing your investor profile questionnaire annually, and each time your investor profile changes. CASH VALUE The cash value of the Contract is the amount you will receive if you withdraw all of your Contract Fund. It is equal to the value of the Contract Fund plus or minus any applicable Market-Value Adjustment of all amounts in MVA option interest cells and minus any applicable withdrawal and administrative charges. A withdrawal will generally have federal income tax consequences, which could include tax penalties. You should consult with a tax adviser before making a withdrawal. See WITHDRAWALS, on page 15 and FEDERAL TAX STATUS, on page 19. GUARANTEED INTEREST RATE PERIODS Pruco Life determines the effective guaranteed annual interest rate ("guaranteed interest rate") that is available at any given time for the one year fixed-rate option and for the MVA option. This is the rate that the portion of the Contract Fund allocated to that option will earn throughout each interest rate period. The rates change frequently and you may learn what rate[s] are available from your Pruco Life representative. When you select an interest-rate investment option, your payment will be allocated to an interest rate cell and the interest rate will then not change until the cell's maturity date. Interest will be added to the amount in the cell daily at a rate that will provide the guaranteed effective yield over the period of one year. Although the guaranteed interest rates offered may change, the minimum guaranteed interest rate will never be less than an effective annual rate of 3%. WHAT HAPPENS WHEN AN INTEREST CELL REACHES ITS MATURITY DATE? On each maturity date, we will offer an election to transfer the amount maturing into either of the available interest-rate investment options or the subaccounts. A Market-Value Adjustment will not be made if this is done within the first 30 days after an interest cell within the MVA option matures. Any amount that you transfer into the same interest-rate investment option during the 30-day period will receive the appropriate rate for that option, effective as of the maturity date. Amounts that you withdraw or transfer into a variable investment option or into a different interest-rate investment option during the 30-day period will receive interest for the period between the maturity date and the date of withdrawal or transfer at the declared renewal rate for the matured cell (i.e. as if you had taken no action within the 30-day period) and will be effective on the date Pruco Life receives your request. If you do not make an election to transfer within the 30-day period following the maturity date, the amount maturing will ordinarily be transferred into a new interest cell of the same duration as the maturing cell at the prevailing interest rate. The transfer date will be the maturity date. TRANSFERS You may transfer out of an investment option into any combination of other investment options available under the Contract. The transfer request may be in dollars, such as a request to transfer $1,000 from one subaccount to another, or may be in terms of a percentage reallocation among subaccounts. In the latter case, the percentages must be whole numbers. You may make transfers by proper written notice to the Prudential Annuity Service Center, or by telephone, once you have provided appropriate identification to effect a telephone transfer. 14 You will automatically be enrolled to use the Telephone Transfer System. Pruco Life has adopted procedures designed to ensure that requests by telephone are genuine. We will not be held liable for following telephone instructions that we reasonably believe to be genuine. We 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. Transfers among subaccounts will take effect as of the end of the valuation period in which a proper transfer request is received at the Prudential Annuity Service Center. Transfers from interest-rate investment options will take effect on the day we receive your proper notice at the Prudential Annuity Service Center. Transfers out of an interest cell in the fixed-rate option are permitted only during the 30-day period following its maturity date. Amounts transferred from a Market-Value Adjustment Option interest cell may be subject to a Market-Value Adjustment if the transfer is not made in the 30-day period following the maturity date of the interest cell. You may make up to 12 transfers a year without charge. Thereafter, Pruco Life will assess a charge of $25 for each subsequent transfer during that Contract year. See TRANSACTION CHARGE, page 19. Dollar Cost Averaging and Auto- Rebalancing transfers do not count towards the 12 transfers per year that can be made without charge. DOLLAR COST AVERAGING Additionally, an administrative feature called Dollar Cost Averaging ("DCA") is available to Contract owners. This feature allows you to transfer amounts out of the fixed-rate option or one of the variable investment options (designated as the "DCA account") and into one or more other variable investment options. Transfers may be in specific dollar amounts or percentages of the amount in the DCA account at the time of the transfer. If the DCA account balance drops below $250, the entire remaining balance of the account will be transferred on the next transfer date. You may ask that transfers be made monthly, quarterly, semi-annually or annually. You can add to the DCA account at any time. Initial transfers must be at least 3% of the DCA account. These amounts are subject to change at Pruco Life's discretion. Any transfers made pursuant to DCA are not counted in determining the number of transfers subject to the transfer charge. Each automatic transfer will take effect as of the end of the valuation period in monthly, quarterly, semi-annual or annual intervals as designated by you based on the date the DCA account was established provided the New York Stock Exchange is open on that date. The DCA account can only be established on the 1st through the 28th of a month. If the New York Stock Exchange is not open on a transfer date, the transfer will take effect as of the end of the valuation period which immediately follows that date. Automatic transfers will continue until the amount in the DCA account has been transferred, or until you notify us of a change in allocation or cancellation of the feature. AUTO-REBALANCING This Contract offers another investment technique that you may find attractive. The Auto-Rebalancing 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 variable investment options A and B 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 can be performed on a one-time basis or periodically, as you choose. You may select that rebalancing occur on a monthly, quarterly, semi-annual or annual basis based on your Contract year. Any transfers made pursuant to Auto-Rebalancing are not counted in determining the number of transfers subject to the transfer charge. The interest-rate investment options cannot participate in this administrative feature. In addition, you should not include the DCA account as one of the subaccounts to be rebalanced. WITHDRAWALS You may at any time before the annuity date make a withdrawal from the Contract Fund of all or part of the cash value of the Contract. However, Pruco Life's consent will be required for a partial withdrawal if the amount requested is less than $500. For federal income tax purposes, withdrawals from Contracts other than IRAs are considered to have been made first from investment income. See TAXES PAYABLE BY CONTRACT OWNERS, page 19. You may specify from which investment options you would like the withdrawal processed. The withdrawal amount may be specified as a dollar amount or as a percentage of the Contract Fund. If you do not specify from where you would like the withdrawal processed, a partial withdrawal will be withdrawn proportionally from all investment options. Within 15 the interest-rate investment options, we will take the withdrawal first from the oldest eligible interest cell or cells. A Market-Value Adjustment may apply. See MARKET-VALUE ADJUSTMENT, page C-1. Only amounts withdrawn from purchase payments (including full withdrawals) are subject to a withdrawal charge. For purposes of determining withdrawal charges, withdrawals are considered as having been made first from purchase payments. See WITHDRAWAL CHARGE, page 18. The withdrawal will be effected as of the end of the valuation period in which a proper withdrawal request is received at the Prudential Annuity Service Center. Pruco Life will generally pay the amount of any withdrawal, less any required tax withholding, within 7 days after we receive a properly completed withdrawal request. We will adjust the Contract Fund to reflect any applicable sales and/or administrative charge and Market-Value Adjustment. We may delay payment of any withdrawal allocable to the subaccount[s] for a longer period 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. With respect to the amount of any withdrawal allocable to the interest-rate investment options, we expect to pay the withdrawal promptly upon request. AUTOMATED WITHDRAWALS Pruco Life also offers an Automated Withdrawal feature which enables you to receive periodic withdrawals either monthly, quarterly, semi-annually or annually. Withdrawals may be made from a designated investment option or proportionally from all investment options. Withdrawals may be expressed as a specified dollar amount or as a percentage of the Contract Fund. Market-value adjustments may apply, and withdrawal charges may apply if the withdrawals in any Contract year exceed the charge-free amount. Additionally, Pruco Life's consent will be required for any partial withdrawal of less than $500. MARKET-VALUE ADJUSTMENT An amount transferred or withdrawn from an MVA option before its maturity date will be subject to a Market-Value Adjustment. The amount of the Market-Value Adjustment depends upon the difference between the guaranteed interest rate for the interest cell from which the withdrawal or transfer is being made and the interest rate being declared on the date of the withdrawal or transfer by Pruco Life for interest rate periods approximately equal to one year longer than the time remaining until the maturity date of the interest cell. Pruco Life may not always offer MVA options at all durations. Rates for intermediate durations not currently offered will be declared as often as rates for durations which are offered. Such declared rates will be determined in a manner consistent with the offered rates, but reflecting the different investment horizon of the intermediate duration. If you specify your withdrawal or transfer as a dollar amount, the Market-Value Adjustment may increase or decrease the amount remaining in the MVA option. If you request the withdrawal or transfer as a percentage of the Contract Fund, the Market-Value Adjustment may increase or decrease the amount being withdrawn or transferred. If the current declared rate is higher than the guaranteed rate, there will be a decrease. If the current declared rate is lower than the guaranteed rate, there will be an increase. The adjustment--whether up or down--will never be greater than 40% of each amount subject to the adjustment. For a more precise description of how the Market-Value Adjustment is determined, and an example of how it affects the amount remaining after a partial withdrawal, see MARKET-VALUE ADJUSTMENT FORMULA on page C-1. DEATH BENEFIT If the last surviving or sole annuitant dies prior to the annuity date, Pruco Life will, upon receipt of all of the information necessary to make the payment (including due proof of death and election of a payment option), pay a death benefit to the beneficiary designated by the Contract owner. The death benefit will equal the greatest of: (1) the Contract Fund as of the date of due proof of death; (2) the sum of all invested purchase payments made less total withdrawals made (including withdrawal charges); and (3) the greatest of the Contract Fund values calculated on every third Contract anniversary reduced by all subsequent withdrawals and withdrawal charges. The beneficiary may receive this amount in one sum or under a payout option. Unless the beneficiary has been irrevocably designated, you may change the beneficiary at any time. If the annuitant dies after he or she has begun to receive annuity payments, the death benefit, if any, will be determined by the type[s] of payout provisions then in effect. 16 If the annuitant was the sole owner of the Contract, the annuitant's spouse was the sole beneficiary, and the spouse had an unrestricted right to receive the death benefit in one sum, then the spouse has the right to continue the Contract as annuitant and owner. VALUATION OF A CONTRACT OWNER'S CONTRACT FUND The value of your Contract Fund is the sum of your interests in the variable investment options and in the interest-rate investment options. The portion of the Contract Fund allocated to the Account is the sum of the interests in each subaccount. The values are measured in Units, for example, Money Market Units, Diversified Bond Units or High Yield Bond Units. Every purchase payment made by an owner is converted into Units of the subaccount or subaccounts selected by dividing the amount of the purchase payment by the Unit Value for the subaccount to which that amount has been allocated. The value of these Units changes each valuation period to reflect the investment results, expenses, and charges of the subaccount and the corresponding Fund. Further detail about Units is contained in the Statement of Additional Information. There is, of course, no guarantee that your Contract Fund will increase or that it will not fall below the amount of your total purchase payments. However, Pruco Life guarantees a minimum interest rate of 3% a year on that portion of the Contract Fund allocated to the interest-rate investment options. Excess interest on payments allocated to the interest-rate investment options may be credited in addition to the guaranteed interest rate. A Market-Value Adjustment may apply to amounts held in the MVA option, which could reduce effective annual yields below the guaranteed interest rate levels. CHARGES, FEES AND DEDUCTIONS PREMIUM TAXES AND TAXES ATTRIBUTABLE TO PURCHASE PAYMENTS A charge may be deducted for premium taxes and any taxes attributable to purchase payments. For these purposes, "premium taxes and taxes attributable to purchase payments" shall include any state or local premium taxes and any federal premium taxes and any federal, state or local income, excise, business or any other type of tax (or component thereof) measured by or based upon the amount of premium received by Pruco Life. If Pruco Life pays a state or local tax at the time purchase payments are made, the deduction will be made at the time based on the applicable rate. In many states, Pruco Life pays a premium tax when an annuity is effected. In those states, the tax will be deducted at that time. The tax rates currently in effect in those states that impose a tax range from 1% to 5%. The Prudential also reserves the right to deduct from each purchase payment a charge up to a maximum of 0.3% for federal income taxes measured by premiums in those states where approval has been obtained. Currently, no such charge is being made in any state. A deduction for any such taxes imposed on purchase payments will not be made, however, except to the extent that the total tax attributable to premiums is in excess of 4% when: (1) your total purchase payments, less any purchase payments withdrawn, equal or exceed $50,000; or (2) you purchase separate Contracts for each of your children or grandchildren as annuitants, each Contract has purchase payments totaling at least $25,000, and total purchase payments, less any purchase payments withdrawn, equal or exceed $50,000. Special tax rules apply to multiple annuity contracts issued by the same company (and affiliates) to the same Contract owner during any calendar year. See FEDERAL TAX STATUS, page 19. ADMINISTRATIVE CHARGE There is an administrative charge to reimburse Pruco Life for the expenses incurred in administering the Contracts. This includes such things as issuing the Contract, establishing and maintaining records, and providing reports to Contract owners. This charge is deducted daily from the assets in each of the variable subaccounts and is equivalent to an effective annual rate of 0.15% (.00041065% daily). There will be an additional charge of $30 annually and upon surrender on Contracts with less than $50,000 in the Contract Fund. This $30 charge will be apportioned over all investment options making up the Contract Fund as of the effective date of that deduction. The administrative charge contains no element of anticipated profit. 17 CHARGE FOR ASSUMING MORTALITY AND EXPENSE RISKS A deduction is made daily from the assets of each of the variable investment options to reimburse Pruco Life for assuming the risk that our estimates of longevity and of the expenses we expect to incur over the lengthy periods that the Contract may be in effect will turn out to be incorrect. The charge is made daily at an annual rate of 1.25% (.00340349% daily) of the assets held in the subaccounts. This charge is not assessed against amounts allocated to the interest-rate investment options. To the extent that the charge for these risks exceeds the actual cost of expenses and benefits, Pruco Life will realize a gain. These proceeds will become part of Pruco Life's general account and will be available to cover any deficiency to the extent to which withdrawal charges are less than sales expenses under the Contracts. EXPENSES INCURRED BY THE FUNDS The charges and expenses of the Funds are indirectly borne by the Contract owners. Detail about investment management fees and other underlying fund expenses are provided in the fee table and in the accompanying prospectuses for the Funds and the related statements of additional information. WITHDRAWAL CHARGE A withdrawal charge may be made upon full or partial withdrawals. The charge compensates Pruco Life for paying all of the expenses of selling and distributing the Contracts, including sales commissions, printing of prospectuses, sales administration, preparation of sales literature, and other promotional activities. No withdrawal charge is imposed whenever earnings are withdrawn. Withdrawals are deemed to be made first from purchase payments and then from earnings. A portion of the purchase payments to be withdrawn in any Contract year may be withdrawn without the imposition of any charge. That amount is referred to as the "charge-free amount". It is equal to 10% of the total of all purchase payments less all withdrawals of purchase payments previously made plus any charge-free amount still available from the immediately preceding Contract year. An example of how the charge-free amount and the withdrawal charge are determined is given on page C1 as part of the example of how the Market-Value Adjustment works. If your withdrawal exceeds the charge-free amount and it is made within the first seven Contract years, a percentage charge will be applied. The following table sets forth the rates that apply: - - -------------------------------------------------------------------------------- THE WITHDRAWAL CHARGE WILL BE EQUAL TO THE FOR WITHDRAWALS DURING FOLLOWING PERCENTAGE OF THE CONTRACT YEAR INDICATED THE AMOUNT WITHDRAWN* - - -------------------------------------------------------------------------------- FIRST CONTRACT YEAR 7% SECOND CONTRACT YEAR 6% THIRD CONTRACT YEAR 5% FOURTH CONTRACT YEAR 4% FIFTH CONTRACT YEAR 3% SIXTH CONTRACT YEAR 2% SEVENTH CONTRACT YEAR 1% EIGHTH AND SUBSEQUENT CONTRACT YEARS NO CHARGE - - -------------------------------------------------------------------------------- * SUBJECT TO CHARGE-FREE AMOUNT DESCRIBED ABOVE. - - -------------------------------------------------------------------------------- No withdrawal charge is made upon a withdrawal used to effect an annuity under the Life Annuity with 120 Payments Certain option. See EFFECTING AN ANNUITY, page 25. Also, at our discretion, we may reduce or waive withdrawal charges for certain classes of contracts (e.g., contracts purchased by Prudential employees or exchanged from existing contracts). Contracts issued to annuitants aged 84 or older are subject to a reduced withdrawal charge. The withdrawal charge will never be greater than permitted by applicable law or regulation. 18 To the extent that the contingent deferred sales charge is insufficient to recover all distribution expenses associated with the Contracts, the deficiency will be met from Pruco Life's surplus which is, in part, derived from the charges for the assumption of mortality and expense risks and from mortality gains from Contracts under which annuity payments are being made. TRANSACTION CHARGE There is a charge of $25 for each transfer you make after the first 12 (excluding DCA and Auto-Rebalancing transfers) in a Contract year. The charge is taken pro-rata from the investment options from which the transfer is made. Any affected MVA option cells will not undergo a Market-Value Adjustment as a result of this processing. CRITICAL CARE ACCESS All or part of any withdrawal and annual administrative charges associated with a full or partial withdrawal, or any withdrawal charge due on the annuity date, will be waived following the receipt of due proof that the annuitant or (if applicable) co-annuitant has been confined to an eligible nursing home or hospital for a period of at least 3 months or a physician has certified that the annuitant or co-annuitant has 6 months or less to live. FEDERAL TAX STATUS The following discussion is based on current law and interpretations which may change. The discussion is general in nature. It is not intended as tax advice. Nor does it consider any applicable state or other tax laws. A qualified tax adviser should be consulted for complete information and advice. The following rules do not generally apply to annuity contracts held by or for non-natural persons (e.g. corporations) or to contracts held under tax-favored retirement plans. Where a Contract is held by a non-natural person, unless the Contract owner is a nominee or agent for a natural person (or in other limited circumstances), the Contract will generally not be treated as an annuity for tax purposes. DIVERSIFICATION AND INVESTOR CONTROL Section 817(h) of the Internal Revenue Code (the "Code") provides that the underlying investments for a variable annuity must satisfy certain diversification requirements. For further detail on diversification requirements, see DIVIDENDS, DISTRIBUTIONS, AND TAXES in the accompanying prospectus for the Prudential Series Fund. IRS regulations issued to date do not provide guidance concerning the extent to which Contract owners may direct their investments to particular subaccounts of a separate account without causing the Contract owners instead of Pruco Life to be considered the owners of the underlying assets. Such guidance will be included in regulations or revenue rulings under Section 817(d) relating to the definition of a variable contract. The ownership rights under the Contract are similar to, but different in certain respects from, those addressed by the Internal Revenue Service in Rulings in which it was determined that Contract owners were not owners of separate account assets. For example, a Contract owner has the choice of more Funds, including Funds with similar broad investment strategies and different investment managers, and may be able to reallocate amounts between subaccounts more frequently than in such rulings. While Pruco Life believes it will be considered the owner of the Account assets, these differences could result in a Contract owner being considered the owner of the Account assets. Because of this uncertainty, Pruco Life reserves the right to make such changes as it deems necessary to assure that the Contract qualifies as an annuity for tax purposes. Any such changes will apply uniformly to affected Contract owners and will be made with such notice to affected Contract owners as is feasible under the circumstances. TAXES PAYABLE BY CONTRACT OWNERS Under current law, Pruco Life believes that the Contract will be treated as an annuity for Federal income tax purposes and that the issuing insurance company, Pruco Life, and not the Contract owner, will be treated as the owner of the underlying investments for the Contract. Accordingly, generally no tax should be payable by any Contract owner as a result of any increase in the value of the Contract until money is received by him or her. It is important, however, to consider how amounts that are received will be taxed. 19 The Code provides generally that amounts withdrawn by a Contract owner from his or her Contract, before annuity payments begin, will be treated for tax purposes as being first withdrawals of investment income, rather than withdrawals of purchase payments, until all investment income has been withdrawn. To the extent assignment is authorized by the Contract, the assignment or pledge of (or agreement to assign or pledge) any portion of the value of the Contract for a loan will be treated as a withdrawal subject to these rules. Amounts withdrawn before annuity payments begin which represent a distribution of investment income will be taxable as ordinary income and may be subject to a penalty tax. Amounts which represent a withdrawal of purchase payments will not be taxable as ordinary income or subject to a penalty tax. Moreover, all annuity contracts issued by the same company (and affiliates) to the same Contract owner during any calendar year shall be treated as one annuity contract for purposes of determining whether an amount is subject to tax under these rules. Different tax rules apply to your receipt of annuity payments. For Contracts other than individual retirement annuities, a portion of each annuity payment you receive under a Contract will be treated as a partial return of your purchase payments and will not be taxable. The remaining portion of the annuity payment will be taxed as ordinary income. Exactly how an annuity payment is divided into taxable and non-taxable portions depends upon the period over which annuity payments are expected to be received, which in turn is governed by the form of annuity selected and, where a lifetime annuity is chosen, by the life expectancy of the annuitant. Annuity payments which are received after the annuitant recovers the full amount of the purchase payments will be fully includible in income. Should annuity payments cease on account of the death of the annuitant before purchase payments have been fully recovered, the annuitant, on his or her last tax return, (or in certain cases the beneficiary) is allowed a deduction for the unrecovered amount. The Code provides that any amount received under an annuity contract which is included in income may be subject to a penalty tax. The amount of the penalty is equal to 10% of the amount that is includible in income. Some withdrawals will be exempt from the penalty. They include amounts: (1) made on or after the Contract owner reaches age 59 1/2, (2) made on or after the death of the Contract owner, (3) attributable to the Contract owner becoming disabled within the meaning of Code section 72(m)(7), (4) in the form of level annuity payments made not less frequently than annually under a lifetime annuity, (5) under a qualified funding asset (defined by Code section 130(d)), or (6) under an immediate annuity contract (within the meaning of section 72(u)(4)). Election of the interest pay option is not considered as an annuity payment for tax purposes. Accordingly, unless the Contract is held by an individual retirement annuity, such election will cause investment income under the Contract to be taxable. Generally, the same tax rules apply to amounts received by the beneficiary as those set forth above with respect to the Contract owner, except that the early withdrawal penalty tax does not apply. The election of an annuity payment option may defer taxes otherwise payable upon the receipt of a lump sum death benefit. Certain minimum distribution requirements apply in the case where the owner dies. See IRS REQUIRED DISTRIBUTIONS ON DEATH OF OWNER, page 21. In addition, a transfer of the Contract to or the designation of a beneficiary who is either 37 1/2 years younger than the Contract owner or a grandchild of the Contract owner may have Generation Skipping Transfer tax consequences under section 2601 of the Code. Certain transfers of a Contract for less than full consideration, such as a gift, will trigger tax on the investment income in the Contract. This rule does not apply to certain transfers between spouses or incident to divorce. See OWNERSHIP OF THE CONTRACT, page 28. WITHHOLDING Generally, unless you elect to the contrary, the portion of any amounts you receive under your Contract that are attributable to investment income will be subject to withholding to meet federal income tax obligations. The rate of withholding on annuity payments made to you will be determined on the basis of the withholding certificate you may file with Pruco Life. If you do not file such a certificate, you will be treated, for purposes of determining your withholding rate, as a married person with three exemptions. The rate of withholding on all other payments made to you under your Contract, such as amounts you receive upon withdrawals, will be 10%. Thus, if you fail to elect that Pruco Life not do so, it will withhold from withdrawal by, or annuity payment to, you the appropriate percentage of the amount of the payment that constitutes investment income and hence is taxable. Pruco Life will provide you with forms and instructions concerning your right to elect that no amount be withheld from payments to you. If you elect not to have withholding made, you are liable for payment of federal income taxes on the taxable portion of the distribution. You may be subject to penalties under the estimated tax payment rules if your withholding and estimated tax payments are not sufficient. If you do not provide a social security number or other taxpayer identification number, you will not be 20 permitted to elect out of withholding. Special withholding rules apply for nonresident aliens. Generally, there will be no withholding for taxes until you actually receive payments under your Contract. IMPACT OF FEDERAL INCOME TAXES In general, if you expect to accumulate savings over a relatively long period of time without making significant withdrawals, there should be tax advantages, regardless of your tax bracket, in purchasing a Contract rather than, for example, a mutual fund with a similar investment policy and approximately the same level of expected investment results. This is because little or no income taxes are incurred by you or by Pruco Life while you hold the Contract and it is generally advantageous to defer the payment of income taxes, so that the investment return is compounded without any deduction for income taxes. The advantage may be considerably greater if you decide to liquidate your investment in the form of monthly annuity payments after your retirement, and even more so if your income, and your tax rate, are lower at that time than they were during your working years. IRS REQUIRED DISTRIBUTIONS ON DEATH OF OWNER If the Contract owner dies before the entire interest in the Contract is distributed, the value of the Contract must be distributed to the designated beneficiary as described in this section so that the Contract qualifies as an annuity under the Internal Revenue Code. If the death occurs on or after the annuity date, the remaining portion of the interest in the Contract must be distributed at least as rapidly as under the method of distribution being used as of the date of death. If the death occurs before the annuity date, the entire interest in the Contract must be distributed within 5 years after date of death. However, if an annuity payment option is selected by the designated beneficiary and if annuity payments begin within 1 year of the owner's death, the value of the Contract may be distributed over the beneficiary's life or a period not exceeding the beneficiary's life expectancy. The owner's designated beneficiary is the person to whom ownership of the Contract passes by reason of death, and must be a natural person. Special additional rules apply to Contracts issued in conjunction with plans subject to Section 457 of the Code. For Contracts purchased in connection with a tax favored plan where the owner's spouse is the beneficiary, annuity payments need only begin on or before April 1 of the calendar year following the calendar year in which the owner would have attained age 70-1/2 or in some instances the remaining interest in the Contract may be rolled over to an IRA owned by the spouse. If any portion of the Contract owner's interest is payable to (or for the benefit of) the surviving spouse of the owner, the Contract may be continued with the surviving spouse as the owner. This rule does not apply to Contracts issued in connection with tax favored plans other than IRAs. 21 TAXES ON PRUCO LIFE The earnings of the Account are taxed as part of the operations of Pruco Life. No charge is being made currently against the Account for company federal income taxes. Pruco Life will review the question of a charge to the Account for company federal income taxes periodically. Such a charge may be made in future years for any federal income taxes that would be attributable to the Contract. Under current law, Pruco Life may incur state and local taxes (in addition to premium taxes) in several states. At present, these taxes are not significant and they are not charged against the Contract or the Account. If there is a material change in applicable state or local tax laws, the imposition of any such taxes upon Pruco Life that are attributable to the Account may result in a corresponding charge against the Account. CONTRACTS USED IN CONNECTION WITH TAX FAVORED PLANS The Contract may be purchased for use in connection with various retirement arrangements entitled to favorable federal income tax treatment ("tax favored plans"). These are individual retirement accounts and annuities ("IRAs") subject to Section 408(a) and 408(b) of the Code, simplified employee pension plans ("SEPs") under Section 408(k) of the Code, tax deferred annuities ("TDAs") under Section 403(b) of the Code, deferred compensation plans of state and local governments and tax exempt organizations under Section 457 of the Code, and pension, profit sharing and annuity plans qualified under Sections 401(a) and 403(a) of the Code. Such plans, accounts, and annuities must satisfy certain requirements of the Code in order to be entitled to the federal income tax benefits accorded to these plans. A discussion of these requirements is beyond the scope of this prospectus, and it is assumed that such requirements are met with respect to a Contract purchased for use in connection with a tax favored plan. In general, assuming the requirements and limitations of the Code provisions applicable to the particular type of tax favored plan involved are satisfied, purchase payments (other than after-tax employee payments) under the Contract will be deductible (or not includible in income) up to certain amounts each year and tax will not be imposed on the investment income and realized gains of the subaccounts in which the purchase payments have been invested until a distribution is received. Persons contemplating the purchase of a Contract in connection with a tax favored plan should consult their tax advisor before purchasing a Contract for such purposes. The comments which follow concerning specific tax favored plans are intended merely to call attention to certain of their features. No attempt has been made to discuss in full the tax ramifications involved or to offer tax advice. As suggested above, a qualified tax advisor should be consulted for advice and answers to any questions. IRAs Because the Contract's minimum initial payment of $10,000 is greater than the maximum annual contribution permitted to be made to an IRA (generally, $2,000), a Contract may be purchased as a Section 408(b) IRA only in connection with a "rollover" of the proceeds of a qualified plan, TDA or IRA. The Code permits persons who are entitled to receive certain qualifying distributions from a qualified pension or profit-sharing plan described in section 401(a) or 403(a), a tax-deferred section 403(b) annuity ("TDA"), or an IRA, to directly rollover or make, within 60 days, a tax-free "rollover" of all or any part of the amount of such distribution to an IRA which they establish. Additionally, the spouse of a deceased employee may roll over to an IRA certain distributions received by the spouse from a qualified pension or profit-sharing plan, TDA or IRA on account of the employee's death. Once the Contract has been purchased, regular IRA contributions will be accepted to the extent permitted by law. However, if regular IRA contributions are made, the Funds in the Contract cannot be used as a conduit IRA and may not later be placed in another plan that is qualified under Section 401 of the Code. In order to qualify as an IRA under Section 408(b) of the Code, a Contract (or an endorsement made a part of the Contract) must contain certain additional provisions: (1) the owner of the Contract must be the annuitant, except when a transfer is made to a former spouse in accordance with a divorce decree as provided in Section 408(d)(6) of the Code; (2) the rights of the owner cannot be forfeitable; (3) the Contract may not be sold, assigned, discounted or pledged for any purpose to any person except Pruco Life; and (4) annuity and death benefit payments must satisfy certain minimum distribution requirements. Contracts issued as Section 408(b) rollover IRAs will conform to such requirements. In general, the full amount distributed from an IRA (and not properly rolled over to another IRA) is subject to federal income tax and to the withholding rules described above. A 10% early distribution penalty applies to distributions made before the Contract owner reaches age 59-1/2, subject to exceptions (1) - (4) above (see TAXES PAYABLE BY CONTRACT OWNERS on page 19). If the owner borrows against the IRA or engages in certain prohibited transactions, the Contract ceases to qualify as an IRA and the full amount is deemed to be distributed. In addition, any amount pledged as security for a loan is deemed to be distributed. 22 PLANS FOR SELF-EMPLOYED INDIVIDUALS For self-employed individuals who establish qualified plans, contributions are deductible within the limits prescribed by the Code. Annual deductible contributions cannot exceed the lesser of $30,000 or 25% of "earned income". For this purpose "earned income" is computed after the deduction for contributions to the plan is considered. Under such tax qualified plans, payments generally may not begin before Participants attain age 59-1/2 (except in the event of total disability or death, if authorized by the plan). Payments must begin by April 1 of the year following attainment of age 70-1/2 and are subject to certain minimum distribution requirements. Any distribution to employees before age 59-1/2 may result in certain tax penalties. SEPs Under a SEP, annual employer contributions to an IRA established by an employee are not includible in income up to the lesser of $30,000 or 15% of the employee's earned income (excluding the employer's contribution to the SEP). In addition, a SEP must satisfy certain minimum participation requirements and contributions may not discriminate in favor of highly compensated employees. Contracts issued as Section 408(b) IRAs established under a SEP must satisfy the requirements described above for a Section 408(b) IRA. Certain SEP arrangements are permitted to allow employees to elect to reduce their salaries by as much as $9,500 (in 1996) and have their employer make contributions on their behalf to the SEP. These arrangements, called salary reduction SEPs, are available only if the employer maintaining the SEP has 25 or fewer employees and at least 50% of the eligible employees elect to make salary reduction contributions. Other limitations may reduce the permissible contribution level for highly compensated employees. In accordance with IRS regulations, persons who purchase a Contract used as an IRA, including one established under a SEP arrangement, are given disclosure material prepared by Pruco Life. The material includes this prospectus, a copy of the Contract, and a brochure containing information about eligibility, contribution limits, tax consequences, and other particulars concerning IRAs. The regulations require that such persons be given 7 days after making an initial contribution in which to affirm or reverse their decision to participate. Therefore, within 7 days after establishing the Contract, a person may cancel his or her Contract by notifying Pruco Life in writing, and Pruco Life will refund all of the purchase payments under the Contract or, if greater, the amount credited under the Contract (less any bonus) computed as of the valuation period that Pruco Life receives the notice for cancellation. This 7-day period may or may not coincide with any part of the 10-day free look period described under SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK", page 13. TDAs Section 403(b) of the Code permits employers and employees of Section 501(c)(3) tax-exempt organizations and public educational organizations to make, subject to certain limitations, contributions to an annuity in which the employee's rights are nonforfeitable (commonly referred to as a "tax deferred annuity"). The amounts contributed under a TDA and increments thereon are not taxable as income until distributed as annuity income or otherwise. Generally, contributions to a TDA may be made through a salary reduction arrangement up to a maximum of $9,500. However, under certain special rules, the limit could be increased as much as $3,000. In addition, the Code permits certain total distributions from a TDA to be "rolled over" to another TDA or IRA. Certain partial distributions from a TDA may be "rolled over" to an IRA. An annuity contract will not qualify as a TDA, unless under such contract distributions from salary reduction contributions and earnings thereon (other than distributions attributable to assets held as of December 31, 1988) may be paid only on account of attainment of age 59-1/2, severance of employment, death, total and permanent disability and, in limited circumstances, hardship. (Such hardship withdrawals are permitted, however, only to the extent of salary reduction contributions and not earnings thereon). The Section 403(b)(11) withdrawal restrictions referred to above do not apply to the transfer of all or part of a Contract owner's interest in his or her Contract among the available investment options offered by Pruco Life or to the direct 23 transfer of all or part of the Contract owner's interest in the Contract to a Section 403(b) tax-deferred annuity contract of another insurance company or to a mutual fund custodial account under Section 403(b)(7) of the Code. In imposing the restrictions on withdrawals as described above, Pruco Life is relying upon a no-action letter dated November 28, 1988 from the Chief of the Office of Insurance Products and Legal Compliance of the Securities and Exchange Commission to the American Council of Life Insurance. Employer contributions are subject generally to the same coverage, minimum participation and nondiscrimination rules applicable to qualified pension and profit-sharing plans. Distributions from a TDA attributable to benefits accruing after December 31, 1986 must commence by April 1 of the calendar year following the year in which an employee attains age 70-1/2. However, for governmental and church plans, distributions may be delayed until April 1 of the calendar year following the calendar year the participant retires if that is later. Distributions must satisfy minimum distribution requirements similar to those that apply to qualified plans generally. ELIGIBLE DEFERRED COMPENSATION PLANS OF STATE OR LOCAL GOVERNMENTS AND TAX EXEMPT ORGANIZATIONS A Contract may be used to fund an eligible deferred compensation plan of a state or local government or a tax-exempt organization. The amounts contributed under such plans and increments thereon are not taxable as income until distributed or otherwise made available to the employee or other beneficiary. If the requirements of Section 457 of the Code are not met, however, employees may be required to include in gross income all or part of the contributions and earnings thereon. The assets of deferred compensation plans are part of the employer's general assets. Contributions generally may not exceed the lesser of $7,500 or 33-1/3% of the employee's compensation. Distributions must begin by April 1 of the year following attainment of age 70-1/2. However, for governmental and church plans, distributions may be delayed until April 1 of the calendar year following the calendar year the participant retires if that is later. Distributions are subject to special minimum distribution rules. Rollovers are not permitted. QUALIFIED PENSION AND PROFIT SHARING PLANS A Contract may be used to fund a qualified pension or profit-sharing plan. The plan itself must satisfy the coverage, minimum participation nondiscrimination and minimum distribution and all other requirements applicable generally to qualified pension and profit-sharing plans. The Code also imposes dollar limitations on contributions that may be made to or benefits that may be received from a qualified pension or profit-sharing plan (including a limitation of $9,500 (in 1996) on the amount that an employee may contribute through a salary reduction arrangement in the case of a plan with a qualified "cash or deferred" arrangement). Generally, distributions from a qualified plan must begin by April 1 of the year following attainment of age 70-1/2. However, for governmental and church plans, distributions may be delayed until April 1 of the calendar year the participant retires, if that is later. Distributions are subject to certain minimum distribution requirements. MINIMUM DISTRIBUTION OPTION A Minimum Distribution Option is available under IRAs and certain other tax favored plans. This option enables the owner to satisfy IRS minimum distribution requirements without having to annuitize or cash surrender the Contract. Distributions from tax favored plans must begin by April 1 of the year following attainment of age 70 1/2. The owner can select either a "calculation" or "recalculation" method to determine the minimum distribution payout. Pruco Life will send the owner a check for the minimum distribution amount less any partial withdrawals made during the year and less any applicable withdrawal charges and plus or minus any applicable market value adjustment. Pruco Life's calculations are based on the cash value of this Contract, the calculation method chosen and the owner's age as specified on the application. Other calculation methods may be available for an owner/spouse combination. If the owner has other tax favored accounts, he or she will be responsible for taking the minimum distribution from each. WITHHOLDING ON TAX FAVORED PLANS Certain distributions from qualified retirement plans and 403(b) annuities will be subject to mandatory 20% federal income tax withholding unless the distribution is an eligible rollover distribution that is "directly" rolled over into another qualified plan, 403(b) annuity or IRA. Unless the Contract owner may elect to the contrary, the portion of any taxable amounts received under the Contract (except for Contracts issued in connection with plans that are subject to Section 457 of the Code) will be subject to withholding to meet federal income tax obligations. The rate of withholding on annuity payments where mandatory withholding is not required will be determined on the basis of the withholding certificate filed by the Contract owner with Pruco Life. For annuity payments not subject to mandatory withholding, if no such certificate is filed, the Contract owner will be treated, for purposes of determining the withholding rate, as a married person with three exemptions; the rate of withholding on all other payments made under the Contract, such as amounts received upon withdrawals, will be 10%. Thus, if the Contract owner fails to elect that there be no withholding, Pruco Life will withhold from every withdrawal or annuity payment the appropriate percentage of the amount of the payment that is taxable. Pruco Life will provide the Contract owner with forms and instructions concerning the right to elect that no amount be withheld from payments. Recipients who elect not to have withholding made are liable for payment of federal income taxes on the taxable portion of the distribution. All recipients may be subject to penalties under the estimated tax payment rules if withholding and estimated tax payments are not sufficient. Contract owners who do not provide a social security 24 number or other taxpayer identification number will not be permitted to elect out of withholding. Generally, there will be no withholding for taxes until payments are actually received under the Contract. Distributions to Contract owners under an eligible deferred compensation plan subject to Section 457 of the Code are treated as the payment of wages for federal income tax purposes and thus are subject to the general withholding requirements. Your employer, and not Pruco Life, is required to withhold on wage payments. ERISA DISCLOSURE The Employee Retirement Income Security Act of 1974 ("ERISA") prevents a fiduciary with respect to a pension or profit-sharing plan from receiving any benefit from any party dealing with the plan as a result of the sale of the Contract (other than benefits that would otherwise be provided in the plan). Administrative exemptions issued by the IRS and the Department of Labor under ERISA permit transactions between insurance agents and qualified pension and profit sharing plans under Section 401(a) and 403(a) of the Code and with SEP IRAs. To be able to rely on the exemption certain information must be disclosed to the plan fiduciary. The information that must be disclosed includes the relationship between the agent and the insurer, a description of any charges, fees, discounts, penalties or adjustments that may be imposed in connection with the purchase, holding, exchange or termination of the Contract, as well as the commissions received by the agent. Information about any applicable charges, fees, discounts, penalties or adjustments may be found under CHARGES, FEES AND DEDUCTIONS, page 17. Information about sales representatives and commissions may be found under SALE OF THE CONTRACT AND SALES COMMISSIONS, page 27. In addition to disclosure, other conditions apply to the use of the exemption. For example, a plan fiduciary may not be a partner or employee of The Prudential representative making the sale. The fiduciary must not be a relative of the representative (including spouse, direct descendant, spouse of a direct descendant, ancestor, brother, sister, spouse of a brother or sister). The representative may not be an employee, officer, director or partner of either the independent fiduciary or the employer establishing the plan. No relative of the representative may: (1) control, directly or indirectly, the corporation establishing or maintaining the plan; (2) be either a partner with a 10% or more interest in the partnership or the sole proprietor establishing or maintaining the plan; or (3) be an owner of a 5% or more interest in a Subchapter S Corporation establishing or maintaining the plan. In addition, no affiliate (including relatives) of the representative may be a trustee, administrator or a fiduciary with written authority to acquire, manage or dispose of the assets of the plan. ADDITIONAL ERISA REQUIREMENTS If your retirement arrangement is a plan governed by ERISA, additional requirements such as spousal consent to distributions may be necessary. Consult the terms of your retirement arrangement. EFFECTING AN ANNUITY Upon the annuity date, the cash value of the Contract will be converted into a fixed-dollar annuity payable to the annuitant[s] named in the Contract. In certain cases, any applicable withdrawal charge will be waived. If two annuitants are named in the Contract, you may decide how much of the amount is to be applied for each annuitant and under which form[s] of annuity. If the Contract is not large enough to produce an initial monthly payment of $50, you will be paid the cash value in a single sum. There is no minimum required monthly payment in New Jersey. When you choose to annuitize, all amounts held in the investment options will be withdrawn. An amount equal to the premium tax, if any, imposed by the state in which the annuitant resides is then deducted (unless deducted earlier). Many states do not impose a premium tax. In other states the tax ranges from 1% to 5% of the amount applied to effect an annuity. See PREMIUM TAXES, page 17. Some local jurisdictions also impose a tax. The amount remaining is applied to effect an annuity. This amount becomes part of Pruco Life's general account. The amount of the monthly payments will depend upon the amount applied and the table of rates set forth in the Contract which we guarantee will be used even if longevity has significantly improved since the Contract date. If Pruco Life is offering more favorable rates at that time, then those rates will be used. The annuity will be in one of three forms listed below and other forms may be available with our consent. All the annuity options under this Contract are fixed annuity options. Your participation in the variable investment options ceases when the annuity is effected. Unless we consent to a later date, an annuity must begin no later than the 25 Contract anniversary coinciding with or next following the annuitant's 90th birthday (or the younger annuitant's if there are two annuitants named in the Contract). We will then make payments to the annuitant on the first day of each period determined by the form of annuity selected. Unless applicable law states otherwise, if you have not selected an annuity option to take effect by the annuity date, the Interest Payment Option (see below) will become effective then. Special rules apply in the case of a Contract issued in connection with an IRA. ANNUITY PAYMENTS FOR A FIXED PERIOD Payments will be to the annuitant during his or her lifetime for up to 25 years. Payments may be in monthly, quarterly, semi-annual, or annual installments. If the annuitant dies during the annuity certain period, unless you designate otherwise, the beneficiary will receive a lump sum payment. The amount of the lump sum payment is determined by discounting each remaining unpaid payment at the interest rate used to compute the actual payments. If the payments were based on the table of rates set forth in the Contract, the interest rate used is 3 1/2% a year. LIFE ANNUITY WITH 120 PAYMENTS CERTAIN Payments will be made to the annuitant monthly during his or her lifetime. If the annuitant dies before the 120th monthly payment is due, monthly annuity payments do not continue to the beneficiary designated by the annuitant unless he or she so selects. Instead, the present value of the remaining unpaid installments, up to and including the 120th monthly payment, is payable to the beneficiary in one sum. In calculating the present value of the unpaid future payments, we will discount each such payment at the interest rate used to compute the amount of the actual 120 payments. If the payments were based on the table of rates set forth in the Contract, an interest rate of 3 1/2% a year is used. Once annuity payments have begun, an annuitant may withdraw the present value of any of the 120 payments certain that have not been paid. INTEREST PAYMENT OPTION The annuitant may choose to have Pruco Life hold a designated amount to accumulate at interest. Unless applicable law states otherwise, if no option has been selected by the annuity date, this option will automatically become effective. Pruco Life will pay interest at an effective rate of at least 3% a year, and we may pay a higher rate of interest. LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT ANNUITY PURCHASE RATES Although the Contract generally provides for sex-distinct annuity purchase rates for life annuities, those rates are not applicable to Contracts offered in states that have adopted regulations prohibiting sex-distinct annuity purchase rates. Rather, blended unisex annuity purchase rates for life annuities will be provided under all Contracts issued in those states, whether the annuitant is male or female. Other things being equal, such unisex annuity purchase rates will result in the same monthly annuity payments for male and female annuitants. Special provisions may apply if the Contract is issued in connection with an IRA. The necessary information will be provided by the plan sponsor or administrator. OTHER INFORMATION MISSTATEMENT OF AGE OR SEX If an annuitant's stated age or sex (except where unisex rates apply) or both are incorrect in the Contract, we will change each benefit and the amount of each annuity payment to that which the total purchase payment amounts would 26 have bought for the correct age and sex. Also, we will adjust for the amount of any overpayments we have already made. SALE OF THE CONTRACT AND SALES COMMISSIONS Pruco Securities Corporation ("Prusec"), an indirect wholly-owned subsidiary of The 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 1111 Durham Avenue, South Plainfield, New Jersey 07080. 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. The maximum commission that will be paid to the representative is 3.5% of the purchase payment received, and the amount paid to the broker-dealer to cover both the individual representative's commission and other distribution expenses will not exceed 6% of the purchase payment. In addition, trail commissions based on the size of the Contract Fund may be paid. Such commissions will be subject to reduction if Pruco Life issues a Contract on and after the annuitant's 84th birthday. The representative may be required to return all of the first year commission if the Contract is not continued through the first year. Representatives who meet certain productivity, profitability, and persistency standards with regard to the sale of the Contract will be eligible for additional compensation. Sales expenses in any year are not equal to the deduction for sales loads in that year. Pruco Life expects to recover its total sales expenses over the periods the Contracts are in effect. To the extent that the sales charges are insufficient to cover total sales expenses, the sales expenses will be recovered from Pruco Life's surplus. VOTING RIGHTS As stated above, all of the assets held in the subaccounts of the Account are invested in shares of the corresponding portfolios of the Funds. Pruco Life is the legal owner of those shares and as such has the right to vote on any matter voted on at any shareholders meetings of the Funds. However, as required by law, Pruco Life votes the shares of the Funds at any regular and special shareholders meetings the Funds are required to hold in accordance with voting instructions received from Contract owners. The Funds may not hold annual shareholders meetings when not required to do so under the laws of the state of their incorporation or the Investment Company Act of 1940. Fund shares for which no timely instructions from Contract owners are received, and any shares owned directly or indirectly by Pruco Life are 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 to vote shares of the Funds in its own right, it may elect to do so. Generally, you may give voting instructions on matters that would be changes in fundamental policies and any matter requiring a vote of the shareholders of the Funds. 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 Funds shares for which you 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 you may give Pruco Life instructions is determined as of the record date chosen by the Board of the applicable Fund. We furnish you with proper forms and proxies to enable you to give these instructions. We reserve 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 may, if required by state insurance regulations, disregard voting instructions if such instructions would require shares to be voted so as to cause a change in the sub-classification or investment objectives of one or more of the Funds' portfolios, or to approve or disapprove an investment advisory contract for a Fund. In addition, Pruco Life itself may disregard voting instructions that would require changes in the investment policy or investment adviser of one or more of the Funds' portfolios, provided that we reasonably disapprove such changes in accordance with applicable federal regulations. If we do disregard voting instructions, we will advise you of that action and our reasons for such action in the next annual or semi-annual report to Contract owners. 27 SUBSTITUTION OF FUND SHARES Although Pruco Life 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. This may occur because of investment policy changes, tax law changes, the unavailability of shares for investment or at the discretion of Pruco Life. In that event, we 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, will be required. You will be notified of such substitution. OWNERSHIP OF THE CONTRACT The Contract owner is entitled to exercise all the rights under the Contract. The Contract owner is usually, but not always, an annuitant. Ownership of the Contract may, however, be transferred to another person who need not be the person who is to receive annuity payments. Transfer of the ownership of a Contract may involve federal income tax consequences, or may be prohibited under certain Contracts, and you should consult with a qualified tax adviser before attempting any such transfer. Generally, ownership of the Contract is not assignable to a tax-qualified retirement plan or program without Pruco Life's consent. PERFORMANCE INFORMATION Performance information for the subaccounts may appear in advertising and reports to current and prospective Contract owners. Performance information is based on historical investment experience of the Funds, adjusted to take charges under the Contract into account, and does not indicate or represent future performance. Total returns are based on the overall dollar or percentage change in value of a hypothetical investment over a stipulated period, and assume a surrender of the Contract at the end of the period. Total return quotations reflect changes in unit values and the deduction of applicable charges including any applicable withdrawal charges. A cumulative total return reflects performance over a stated period of time. An average annual total return reflects the hypothetical annually compounded return that would have produced the same cumulative total return if the performance had been constant over the entire period. The Money Market Subaccount may advertise its current and effective yield. Current yield reflects the income generated by an investment in the subaccount over a specified seven-day period. Effective yield is calculated in a similar manner except that income earned is assumed to be reinvested. Reports or advertising may include comparative performance information, including, but not limited to: comparisons to market indices; comparisons to other investments; performance rankings; personalized illustrations of historical performance; and data presented by analysts or included in publications. See PERFORMANCE INFORMATION in the Statement of Additional Information for recent performance information. REPORTS TO CONTRACT OWNERS You will be sent quarterly statements that provide certain information pertinent to your Contract. These statements provide Contract data that apply only to each particular Contract, including Contract values and transactions during the period. You may request current Contract information at any time, however, we may limit the number of such requests or impose a reasonable charge if such requests are made too frequently. You will also be sent an annual report for the Account and annual and semi-annual reports for the Funds. STATE REGULATION Pruco Life is subject to regulation and supervision by the Department of Insurance of the State of Arizona, 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 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. 28 In addition to the annual statements referred to above, Pruco Life is required to file with Arizona 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 audited financial statements and the financial statements from which the Condensed Financial Information included in this prospectus have been derived, have been examined by Price Waterhouse LLP, independent auditors, as stated in their reports appearing herein. Such financial statements have been included herein in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. Price Waterhouse's principal business address is 1177 Avenue of the Americas, New York, New York 10036. LITIGATION Several actions have been brought against the Company on behalf of those persons who purchased life insurance policies based on complaints about sales practices engaged in by The Prudential, the Company and agents appointed by The Prudential and the Company. The Prudential has agreed to indemnify the Company for any and all losses resulting from such litigation. STATEMENT OF ADDITIONAL INFORMATION The contents of the Statement of Additional Information include: OTHER INFORMATION CONCERNING THE ACCOUNT PRINCIPAL UNDERWRITER DETERMINATION OF SUBACCOUNT UNIT VALUES PERFORMANCE INFORMATION COMPARATIVE PERFORMANCE INFORMATION ADDITIONAL INFORMATION A registration statement has been filed with the SEC under the Securities Act of 1933, relating to the offering described in this prospectus. This prospectus does not include all of 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, including statutory statements filed with the state insurance departments, may also be obtained from Pruco Life's office. The address and telephone number of Pruco Life are set forth on the cover of this prospectus. FINANCIAL STATEMENTS The consolidated financial statements of Pruco Life and subsidiaries should be distinguished from the financial statements of the Account, and should be considered only as bearing upon the ability of Pruco Life to meet its obligations under the Contracts. 29 Selected Financial Data Goes here 30 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Pruco Life Insurance Company consists of Pruco Life Insurance Company, Pruco Life Insurance Company of New Jersey and The Prudential Life Insurance Company of Arizona (collectively, the Company). The Company markets individual life insurance and single pay deferred annuities primarily through the Prudential's sales force. The Company held $7.8 billion in assets at December 31, 1995, $4.3 billion of which were held in Separate Accounts under variable life insurance policies and variable annuity contracts. The remaining assets were held in the general account for investment primarily in bonds, short-term investments and mortgage loans. Because of the large number of stock and mutual life insurance companies and other entities engaged in marketing insurance products, the Company is engaged in a business that is highly competitive. During the past several years, the insurance industry has suffered setbacks both financially and in public relations. The Company, however, remains sound. 1. RESULTS OF OPERATIONS (A) 1995 VERSUS 1994 Net income for 1995 was $158 million, representing a $105 million increase from the same period in 1994. Premiums and annuity considerations decreased $42 million in 1995, from $612 million for the year ended December 31, 1994, to $570 million for the same period in 1995. This decrease is primarily due to the decline in first year premiums for certain life insurance products. Net investment income increased $4 million for the twelve months ended December 31, 1995, from the same period in 1994. This is primarily due to an increase in income generated by policy loans. The Company had net realized investment gains of $4 million during 1995 compared to investment losses of $21 million during 1994. This increase is due to our newly structured portfolio aligned more closely with the company's liability duration and reduced the portfolio's interest rate risk. Following statutory Interest Maintenance Reserve (IMR) guidelines, net realized investment gains of $9 million were deferred for the period ended December 31, 1995. In comparison, $20 million of net realized investment losses were deferred for the period ending December 31, 1994. Amortized into net investment income were $4 million and $5 million of IMR for the twelve month period ended December 31, 1995 and 1994, respectively. Other income increased $28 million for the year ended December 31, 1995 from the year ended December 31,1994. This increase was partially due to a special provision for non-guaranteed policyholder credits. In addition, the company share of separate account improved from a loss of $4 million for the year ended December 31, 1994 to a gain of $7 million for the same period in 1995. Current and future benefits and claims decreased $47 million for the twelve months ended December 31, 1995, from the same period in 1994. This was driven by the decline in premiums during 1995, which reduces the level of reserves needed to be held. Total expenses for the year ended December 31, 1995 decreased by $5 million from the same period in 1994. This is primarily due to a decrease in commission expenses of $4 million, which correlates with the decrease in sales. Provision in lieu of federal income taxes decreased $38 million for the year ended December 31, 1995, as compared to December 31, 1994. Although operating income for 1995 was higher than the previous year, provision in lieu of federal income taxes includes a benefit to federal income taxes applicable to prior years. (B) 1994 VERSUS 1993 Net income for 1994 was $53 million, representing a $24 million decrease from the same period in 1993. Premiums and annuity considerations increased $48 million in 1994, from $564 million for the year ended December 31, 1993, to $612 million for the same period in 1994. An increase in unscheduled premium payments on two individual life insurance products together with an increase in renewal premiums, driven by these two products, account for this increase. Net investment income decreased $15 million for the twelve months ended December 31, 1994, from the same period in 1993. Reduced yields on the Company's fixed rate investment portfolio lead to reduced net investment income. In addition, net cash outflows to meet policyholder obligations resulted in a decrease in invested assets which, in turn, contributed to the lower investment income. The Company had net realized investment losses of $21 million during 1994 compared to investment gains of $9 million during 1993. Sales of Corporate and Mortgage-Backed Securities during the twelve months of 1994 generated realized 31 losses attributable to the increase in interest rates during this period. However, the expectation is that the newly structured portfolio will align more closely with the company's liability duration and reduce the portfolio's interest rate risk. Following statutory Interest Maintenance Reserve (IMR) guidelines, net realized investment losses of $20 million were deferred for the period ended December 31, 1994. In comparison, $19 million of net realized investment gains were deferred for the period ended December 31, 1993. Amortized into net investment income were $5 million and $7 million of IMR for the twelve month period ended December 31, 1994, and 1993, respectively. Current and future benefits and claims increased $25 million for the twelve months ended December 31, 1994, from the same period in 1993. An increase in benefits paid during 1994 as compared to 1993 combined with high surrender benefits, which can be attributed to contract maturities of annuity products as the Company's inforce ages, was more than offset by an increase in reserves resulting from the 1994 increase in premiums and annuity considerations. Total expenses for the year ended December 31, 1994 decreased by $8 million from the same period in 1993. General, administrative, and other expenses for the year ended December 31, 1994, decreased $9.8 million due to the decrease in allocation of costs from The Prudential. Allocations are primarily based on average compensation over a period of recent years and inforce. The average compensation and inforce amounts used in 1994 decreased from 1993 by 48% and 5%, respectively. This can be attributable to a decline in the sales of certain life insurance products between periods of allocation. Offsetting this decrease is an increase in commission expense of $1.8 million from the same period in 1993, which is consistent with the increase in first year premiums. Provision in lieu of federal income taxes increased $4 million for the year ended December 31, 1994, as compared to December 31, 1993. Although operating income for 1994 was lower than the previous year, provision in lieu of federal income taxes increased due to federal income taxes applicable to prior years. 2. LIQUIDITY For an insurance company, cash needs, for the purpose of paying current benefits, making policy loans, and paying expenses, are met primarily from premiums and investment income. Benefit expenses incurred in 1995, 1994 and 1993 were respectively, $684 million, $547 million and $584 million. Cash flows are anticipated to be ample to meet the Company's liquidity needs for the foreseeable future. 3. INVESTMENTS The Company maintains a well diversified portfolio consisting of fixed as well as equity investments. Of the Company's total assets of $7.8 billion as of December 31, 1995, 32.12% was invested in fixed maturities, 0.05% in equity securities, 2.92% in short-term investments, 0.82% in mortgage loans, 0.05% in real estate, 54.82% in separate account assets and the remaining 9.22% in other assets. Fixed Maturities. As of December 31, 1995 and 1994, the Company's investments in fixed maturities, which are primarily carried at amortized cost, were $2.5 billion and $2.6 billion, respectively. Included in fixed maturities are securities classified by the National Association of Insurance Commissioners (NAIC) as being in the lowest three rating categories. The lowest three NAIC categories represent, for the most part, high-yield securities. These approximate 1.0% of the Company's assets at December 31, 1995 and 1.5% at December 31, 1994. Mortgage Loans. As of December 31, 1995 and 1994, the Company's investments in mortgage loans were $64 million and $72 million, respectively. Mortgage loans are carried at the lower of unpaid principal balance or fair value of the underlying property. The decrease in mortgage loans is due to the payment of one loan totaling $6.0 million. As of December 31, 1995, the Company has two loans in the amount of $8.4 million in the process of foreclosure and two loans with restructured terms in the amount of $6.9 million. Real Estate. As of December 31, 1995 and 1994, the Company's investment in real estate was $4 million and $7 million, respectively. Real estate is carried at the lower of cost or fair value less disposition costs. The Company sold one property during the first quarter of 1995. 4. EMERGING ACCOUNTING ISSUES The accompanying audited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP), which are considered statutory accounting practices for a wholly owned stock subsidiary of a mutual life insurance company. The Financial Accounting Standards Board (the "FASB") issued Interpretation No. 40, "Applicability of Generally Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises", which as amended, is effective for fiscal years beginning after December 15, 1995. Interpretation No. 40 changes the current practice of mutual life insurance companies, with respect to utilizing statutory basis financial statements for general purposes, in not allowing such financial statements to be referred to as having been prepared in accordance with GAAP. Interpretation No. 40 requires GAAP financial statements of mutual life insurance companies to apply all GAAP pronouncements, unless specifically exempted. Implementation of Interpretation No. 40 will require significant effort and 32 judgement. The company is assessing the impact of Interpretation No. 40 on its consolidated financial statements, such effort has not been completed and management currently believes surplus will increase significantly. 33 DIRECTORS AND OFFICERS The directors and major officers of Pruco Life, listed with their principal occupations during the past 5 years, are shown below. DIRECTORS OF PRUCO LIFE E. MICHAEL CAULFIELD, Director. -- Chief Executive Officer, Prudential Money Management Group since 1995; 1993 to 1995: President, Prudential Preferred Financial Services; 1992 to 1993: President, Prudential Property and Casualty Insurance Company*; Prior to 1992: President of Investment Services of The Prudential. Age 49. GARNETT L. KEITH, JR., Director. -- Vice Chairman of The Prudential. Age 60. IRA J. KLEINMAN, Director. -- Chief Marketing and Product Development Officer, Prudential Individual Insurance Group since 1995; 1993 to 1995: President, Prudential Select; Prior to 1993: Senior Vice President of The Prudential. Age 49. ESTHER H. MILNES, President and Director. -- Vice President and Actuary, Prudential Individual Insurance Group since 1996; 1993 to 1996: Senior Vice President and Chief Actuary, Prudential Insurance and Financial Services; Prior to 1993: Vice President and Associate Actuary of The Prudential. Age 45. I. EDWARD PRICE, Vice Chairman and Director. -- Senior Vice President and Actuary, Prudential Individual Insurance Group since 1995; 1994 to 1995: Chief Executive Officer, Prudential International Insurance; 1993 to 1994: President, Prudential International Insurance; Prior to 1993: Senior Vice President and Company Actuary of The Prudential. Age 53. WILLIAM F. YELVERTON, Chairman of the Board and Director. -- Chief Executive Officer, Prudential Individual Insurance Group since 1995; Prior to 1995: Chief Executive Officer, New York Life Worldwide. Age 54. OFFICERS WHO ARE NOT DIRECTORS BEVERLY R. BARNEY, Senior Vice President. -- Vice President and Re-Engineering Officer, Prudential Individual Insurance Group since 1995; 1993 to 1995: Senior Vice President and Associate Actuary, Prudential Direct; Prior to 1993: Senior Vice President and Actuary of Pruco Life. Age 48. SUSAN L. BLOUNT, Secretary .-- Vice President and Secretary of The Prudential since 1995; Prior to 1995: Assistant General Counsel for Prudential Residential Services Company. Age 38. C. EDWARD CHAPLIN, Treasurer. -- Vice President and Treasurer of The Prudential since 1995; 1993 to 1995: Managing Director and Assistant Treasurer of The Prudential; 1992 to 1993: Vice President and Assistant Treasurer, Banking and Cash Management for The Prudential; Prior to 1992: Regional Vice President of Prudential Mortgage Capital Company. Age 39. CLIFFORD E. KIRSCH, Chief Legal Officer. -- Chief Counsel, Variable Products, Law Department of The Prudential since 1995; 1994 to 1995: Associate General Counsel with Paine Webber; Prior to 1994: Assistant Director in the Division of Investment Management with the Securities and Exchange Commission. Age 36. RICHARD F. LAMBERT, Senior Vice President and Chief Actuary. -- Vice President and Actuary, Prudential Individual Insurance Group since 1996; 1994 to 1996: Vice President and Chief Actuary, Prudential Preferred Financial Services; 1993 to 1994: Vice President and Actuary, Prudential Preferred Financial Services; Prior to 1993: Vice President and Associate Actuary of The Prudential. Age 39. FRANK MARINO, Senior Vice President. -- Vice President, Policyholder Relations Department, Prudential Individual Insurance Group since 1996; Prior to 1996: Senior Vice President, Prudential Mutual Fund Services. Age 51. MICHAEL R. SHAPIRO, Senior Vice President. -- Vice President, Marketing and Product Development, Prudential Individual Insurance Group since 1996; Prior to 1996: Senior Vice President, Prudential Select Brokerage. Age 48. STEPHEN P. TOOLEY, Vice President, Comptroller and Chief Accounting Officer. -- Vice President, Product Performance, Prudential Individual Insurance Group since 1996; 1993 to 1996: Vice President and Comptroller, Prudential Insurance and Financial Services; Prior to 1993: Director, Financial Analysis for The Prudential. Age 43. The business address of all directors and officers of Pruco Life is 213 Washington Street, Newark, New Jersey 07102-2992. - - -------------------------------------------------------------------------------- * SUBSIDIARY OF THE PRUDENTIAL - - -------------------------------------------------------------------------------- 34 EXECUTIVE COMPENSATION Executive Officers of Pruco Life may also serve one or more affiliated companies of Pruco Life. Allocations have been made as to each individual's time devoted to his duties as an executive officer of Pruco Life and its subsidiaries. The following table shows the cash compensation paid, based on these allocations, to the executive officers of Pruco Life as a group for services rendered in all capacities in Pruco Life and its subsidiaries during 1995. Directors of Pruco Life who are also employees of The Prudential do not receive compensation in addition to their compensation as employees of The Prudential. - - -------------------------------------------------------------------------------- NAME & PRINCIPAL POSITION Year Allocated Cash Compensation ($) - - -------------------------------------------------------------------------------- ESTHER H. MILNES 1995 $17,879 PRESIDENT 1994 $14,250 1993 $9,846 BEVERLY R. BARNEY 1995 $9,771 SENIOR VICE PRESIDENT 1994 $ 0 1993 $126,142 HELEN M. GALT **1995 $------- PRESIDENT **1994 $------- **1993 $13,382 - - -------------------------------------------------------------------------------- ** RESIGNED POSITION AS OF JULY, 1993. - - -------------------------------------------------------------------------------- 35 "A" PAGES TO BE INSERTED HERE - ACCOUNT FINANCIALS 36 "B" PAGES TO BE INSERTED HERE - PRUCO LIFE COMPANY FINANCIALS 37 MARKET-VALUE ADJUSTMENT FORMULA The Market-Value Adjustment, which is applied to withdrawals and transfers made at any time other than the 30-day period following the end of an interest rate period, involves three amounts: 1. The number of whole months remaining in the existing interest rate period. 2. The guaranteed interest rate. 3. The interest rate that Pruco Life declares for a duration of one year longer than the number of whole years remaining on the existing cell being withdrawn from. Stated as a formula, the Market Value Factor is equal to: (M/12) x (R-C), not to exceed +0.40 or be less than -0.40; Where, M = the number of whole months (not to be less than one) remaining in the interest rate period. R = the Contract's guaranteed interest rate expressed as a decimal. Thus 6.2% is converted to 0.062. C = the interest rate, expressed as a decimal, that Pruco Life declares for a duration equal to the number of whole years remaining in the present interest rate period, plus 1 year as of the date the request for a withdrawal or transfer is received. The Market-Value Adjustment is then equal to the Market Value Factor multiplied by the amount subject to a Market-Value Adjustment. The steps below explain how a Market-Value Adjustment is calculated. STEP 1: Divide the number of whole months left in the existing interest rate period (not to be less than one) by 12. STEP 2: Determine the interest rate Pruco Life declares on the date the request for withdrawal or transfer is received for a duration of years equal to the whole number of years determined in Step 1, plus 1 additional year. Subtract this interest rate from the guaranteed interest rate. The result could be negative. STEP 3: Multiply the results of Step 1 and Step 2. Again, the result could be negative. If the result is less than -0.4, use the value -0.4. If the result is in between -0.4 and 0.4, use the actual value. If the result is more than 0.4, use the value 0.4. STEP 4: Multiply the result of Step 3 (which is the Market Value Factor) by the value of the amount subject to a Market-Value Adjustment. The result is the Market-Value Adjustment. STEP 5: The result of Step 4 is added to the interest cell. If the Market-Value Adjustment is positive, the interest cell will go up in value. If the Market-Value Adjustment is negative, the interest cell will go down in value. Depending upon when the withdrawal request is made, a withdrawal charge may apply. The following example will illustrate the application of a Market-Value Adjustment and the determination of the withdrawal charge. Suppose a Contract owner made two invested purchase payments, the first in the amount of $10,000 on December 1, 1995, all of which was allocated to the Equity Subaccount, and the second in the amount of $5,000 on October 1, 1997, all of which was allocated to the MVA Option with a guaranteed interest rate of 8% (0.08) for 7 years. A request for withdrawal of $8,500 is made on February 1, 2000 (the Contract owner does not provide any withdrawal instructions) . On that date the amount in the Equity Subaccount is equal to $12,000 and the amount in the interest cell with a maturity date of September 30, 2004 is $5,985.23, so that the Contract Fund on that date is equal to $17,985.23. C-1 On February 1, 2000, the interest rate declared by Pruco Life for the duration of 5 years (4 whole years remaining until September 30, 2004, plus one year) is 11%. The following computations would be made: 1. Calculate the Contract Fund value as of the effective date of the transaction. This would be $17,985.23. 2. Calculate the charge-free amount (the amount of the withdrawal that is not subject to a withdrawal charge). DATE PAYMENT FREE ---- ------- ---- 12/1/95 $ 10,000 $1,000 12/1/96 $2,000 10/1/97 $ 5,000 $2,500 12/1/97 $4,000 12/1/98 $5,500 12/1/99 $7,000 The charge-free amount in the fifth Contract year is 10% of $15,000 (total purchase payments) plus $5,500 (the charge-free amount available in the fourth Contract year) for a total of $7,000. 3. Since the withdrawal request is in the fifth Contract year, a 3% withdrawal charge rate applies to any portion of the withdrawal which is not charge-free. $8,500.00 requested withdrawal amount - $7,000.00 charge-free ----------- $1,500.00 additional amount needed to complete withdrawal The Contract provides that the Contract Fund will be reduced by an amount which, when reduced by the withdrawal charge, will equal the amount requested. Therefore, in order to produce the amount needed to complete the withdrawal request ($1,500), we must "gross-up" that amount, before applying the withdrawal charge rate. This is done by dividing by 1 minus the withdrawal charge rate. $1,500.00 / (1-.03) = $1,500.00 / 0.97 = $1,546.39 grossed-up amount Please note that a 3% withdrawal charge on this grossed-up amount reduces it to $1,500, the balance needed to complete the request. $1,546.39 grossed-up amount X .03 withdrawal charge rate --------- $ 6.39 withdrawal charge 4. The Market Value Factor is determined as described in steps 1 through 5, above. In this case, it is equal to 0.08 (8% is the guaranteed rate in the existing cell) minus 0.11 (11% is the interest rate that would be offered for an interest cell with a duration of the remaining whole years plus 1), which is - - -0.03, multiplied by 4.58333 (55 months remaining until September 30, 2004, divided by 12) or -0.13750. Thus, there will be a negative Market-Value Adjustment of 14% of the amount in the interest cell that is subject to the adjustment. -0.13750 X $5,985.23 = - 822.97 negative MVA $ 5,985.23 unadjusted value ---------- $ 5,162.26 ajusted value $12,000.00 Equity value ---------- $17,162.26 adjusted Contract Fund C-2 5. The total amount to be withdrawn, $8,546.39, (sum of the surrender charge, $46.39, and the requested withdrawal amount of $8,500) is apportioned over all accounts making up the Contract Fund following the Market-Value Adjustments, if any, associated with the MVA option. Equity ($12,000 / $17,162.26) X $8,546.39 = $5,975.71 7-Yr MVA ($5,162.26 / $17,162.26) X $8,546.39 = $2,570.68 --------- $8,546.39 6. The adjusted value of the interest cell, $5,162.26, reduced by the withdrawal of $2,570.68 leaves $2,591.58. This amount must be "unadjusted" by dividing it by 0.86250 (1 plus the Market-Value Adjustment of -0.13750) to determine the amount remaining in the interest cell to which the guaranteed interest rate of 8% will continue to be credited until September 30, 2004 or a subsequent withdrawal. That amount is $3,004.73. C-3 O FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT O THE PRUDENTIAL SERIES FUND, INC. ============================================= - - ----------------------------------============================================= ---------------------- BULK RATE U.S. Postage PAID Jersey City, N.J. Permit No. 60 ---------------------- The Pruco Life Insurance Company of America 213 Washington Street Newark, New Jersey 07102-3777 PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION STATEMENT OF ADDITIONAL INFORMATION , 1996 PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT VARIABLE ANNUITY CONTRACTS The DISCOVERY(SM) SELECT Annuity Contract* (the "Contract") is an individual variable annuity contract issued by the Pruco Life Insurance Company ("Pruco Life"), a stock life insurance company that is a wholly-owned subsidiary of The Prudential Insurance Company of America ("The Prudential") and is funded through the Pruco Life Flexible Premium Variable Annuity Account (the "Account"). The Contract is purchased by making an initial purchase payment of $10,000 or more; subsequent payments must be $1,000 or more. This statement of additional information is not a prospectus and should be read in conjunction with the Contract's prospectus, dated __________, 1996, which is available without charge upon written request to the Pruco Life Insurance Company, 213 Washington Street, Newark, New Jersey 07102-2992, or by telephoning (800) 445-4571. PRUCO LIFE INSURANCE COMPANY 213 Washington Street Newark, New Jersey 07102-2992 Telephone: (800) 445-4571 *DISCOVERY is a service mark of The Prudential. Catalog No. CONTENTS PAGE OTHER INFORMATION CONCERNING THE ACCOUNT.......................................1 PRINCIPAL UNDERWRITER.................................................1 DETERMINATION OF SUBACCOUNT UNIT VALUES...............................1 PERFORMANCE INFORMATION...............................................1 COMPARATIVE PERFORMANCE INFORMATION...................................5 OTHER INFORMATION CONCERNING THE ACCOUNT PRINCIPAL UNDERWRITER Pruco Securities Corporation ("Prusec"), an indirectly wholly-owned subsidiary of The Prudential, performs all sales and distribution functions regarding the Contracts and may be deemed to be the "principal underwriter" of the Account under the Investment Company Act of 1940. DETERMINATION OF SUBACCOUNT UNIT VALUES The value for each Subaccount Unit is computed as of the end of each "valuation period" as defined in the prospectus (also referred to in this section as "business day"). On any given business day the value of a Unit in each subaccount will be determined by multiplying the value of a Unit of that subaccount for the preceding business day by the net investment factor for that subaccount for the current business day. The net investment factor for any business day is determined by dividing the value of the assets of the subaccount for that day by the value of the assets of the subaccount for the preceding business day (ignoring, for this purpose, changes resulting from new purchase payments and withdrawals), and subtracting from the result the daily equivalent of the 1.4% annual charge for administrative expenses and mortality and expense risks. (See CHARGES, FEES, AND DEDUCTIONS in the prospectus.) The value of the assets of a subaccount is determined by multiplying the number of shares of The Prudential Series Fund, Inc. (the "Series Fund") held by that subaccount by the net asset value of each share and adding the value of dividends declared by the Series Fund but not yet paid. PERFORMANCE INFORMATION The tables that follow provide performance information for each subaccount through June 30, 1996. The performance information is based on historical experience and does not indicate or represent future performance. AVERAGE ANNUAL TOTAL RETURN The DISCOVERY SELECT Annuity is a new contract. The returns shown below were calculated using historical investment returns of the portfolios of the Series Fund. All fees, expenses and charges associated with the DISCOVERY SELECT Annuity and the Series Fund have been reflected in these returns, as if the Contract had existed from the inception date of each Series Fund portfolio. Table 1 below shows the average annual rates of total return on hypothetical investments of $1,000 for periods ended June 30, 1996 in each subaccount other than the Money Market Subaccount. These figures assume withdrawal of the investments at the end of the period other than to effect an annuity under the Contract. 1 TABLE 1 AVERAGE ANNUAL TOTAL RETURN
FROM DATE FIVE TEN PORTFOLIO ONE YEAR YEARS YEARS ESTABLISHED FUND DATE ENDED ENDED ENDED THROUGH PORTFOLIO ESTABLISHED 06/30/96 06/30/96 06/30/96 06/30/96 ================================== ================ =============== =============== ============= =============== THE PRUDENTIAL SERIES FUND MONEY MARKET PORTFOLIO DIVERSIFIED BOND PORTFOLIO 6/83 HIGH YIELD BOND PORTFOLIO 2/87 N/A STOCK INDEX PORTFOLIO 10/87 N/A EQUITY INCOME PORTFOLIO 2/88 N/A EQUITY PORTFOLIO 6/83 PRUDENTIAL JENNISON 5/95 N/A N/A N/A PORTFOLIO GLOBAL PORTFOLIO 9/88 N/A AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. GROWTH AND INCOME FUND AIM V.I. VALUE FUND JANUS ASPEN SERIES GROWTH PORTFOLIO INTERNATIONAL GROWTH PORTFOLIO MFS VARIABLE INSURANCE TRUST EMERGING GROWTH SERIES RESEARCH SERIES OCC ACCUMULATION TRUST MANAGED PORTFOLIO SMALL CAP PORTFOLIO
2
FROM DATE FIVE TEN PORTFOLIOS ONE YEAR YEARS YEARS ESTABLISHED SERIES FUND DATE ENDED ENDED ENDED THROUGH PORTFOLIO ESTABLISHED 06/30/96 06/30/96 06/30/96 06/30/96 ================================== ================ =============== =============== ============= =============== T. ROWE PRICE EQUITY SERIES, INC. EQUITY INCOME PORTFOLIO T. ROWE PRICE INTERNATIONAL SERIES, INC. INTERNATIONAL STOCK PORTFOLIO WARBURG PINCUS TRUST POST-VENTURE CAPITAL PORTFOLIO
The average annual rates of total return shown above are computed by finding the average annual compounded rates of return over the periods shown that would equate the initial amount invested to the withdrawal value, in accordance with the following formula: P(1+T)"- ERA. In the formula, P is a hypothetical investment of $1,000; T is the average annual total return; " is the number of years; and ERA is the withdrawal value at the end of the periods shown. These figures assume deduction of the maximum withdrawal charge that may be applicable to a particular period. The rates of return for the Prudential Jennison and Small Capitalization Stock portfolios are for an eight month period and are not annualized. 3 NON-STANDARD TOTAL RETURN Table 2 below shows the average annual rates of return as in Table 1, but assumes that the investments are not withdrawn at the end of the period or that the Contract owner annuitizes at the end of the period.
TABLE 2 AVERAGE ANNUAL TOTAL RETURN ASSUMING NO WITHDRAWAL FROM DATE FIVE TEN PORTFOLIO ONE YEAR YEARS YEARS ESTABLISHED FUND DATE ENDED ENDED ENDED THROUGH PORTFOLIO ESTABLISHED 06/30/96 06/30/96 06/30/96 06/30/96 =================================== ================== =============== =============== ============= ============== THE PRUDENTIAL SERIES FUND MONEY MARKET PORTFOLIO DIVERSIFIED BOND PORTFOLIO 6/83 HIGH YIELD BOND PORTFOLIO 2/87 N/A STOCK INDEX PORTFOLIO 10/87 N/A EQUITY INCOME PORTFOLIO 2/88 N/A EQUITY PORTFOLIO 6/83 PRUDENTIAL JENNISON 5/95 N/A N/A N/A PORTFOLIO GLOBAL PORTFOLIO 9/88 N/A AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. GROWTH AND INCOME FUND AIM V.I. VALUE FUND JANUS ASPEN SERIES GROWTH PORTFOLIO INTERNATIONAL GROWTH PORTFOLIO MFS VARIABLE INSURANCE TRUST EMERGING GROWTH SERIES RESEARCH SERIES
4
FROM DATE FIVE TEN PORTFOLIOS ONE YEAR YEARS YEARS ESTABLISHED SERIES FUND DATE ENDED ENDED ENDED THROUGH PORTFOLIO ESTABLISHED 06/30/96 06/30/96 06/30/96 06/30/96 =================================== ================ =============== ================ ============= ============== OCC ACCUMULATION TRUST MANAGED PORTFOLIO SMALL CAP PORTFOLIO T. ROWE PRICE EQUITY SERIES, INC. EQUITY INCOME PORTFOLIO T. ROWE PRICE INTERNATIONAL SERIES, INC. INTERNATIONAL STOCK PORTFOLIO WARBURG PINCUS TRUST POST-VENTURE CAPITAL PORTFOLIO
5 Table 3 shows the cumulative total return for the portfolios, assuming no withdrawal.
TABLE 3 CUMULATIVE TOTAL RETURN ASSUMING NO WITHDRAWAL FROM DATE FIVE TEN PORTFOLIO ONE YEAR YEARS YEARS ESTABLISHED FUND DATE ENDED ENDED ENDED THROUGH PORTFOLIO ESTABLISHED 06/30/96 06/30/96 06/30/96 06/30/96 =================================== ================ =============== ================ ============= ============== THE PRUDENTIAL SERIES FUND MONEY MARKET PORTFOLIO DIVERSIFIED BOND 6/83 PORTFOLIO HIGH YIELD BOND 2/87 N/A PORTFOLIO STOCK INDEX PORTFOLIO 10/87 N/A EQUITY INCOME PORTFOLIO 2/88 N/A EQUITY PORTFOLIO 6/83 PRUDENTIAL JENNISON 5/95 N/A N/A N/A PORTFOLIO GLOBAL PORTFOLIO 9/88 N/A AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. GROWTH AND INCOME FUND AIM V.I. VALUE FUND JANUS ASPEN SERIES GROWTH PORTFOLIO INTERNATIONAL GROWTH PORTFOLIO MFS VARIABLE INSURANCE TRUST EMERGING GROWTH SERIES RESEARCH SERIES
6
FROM DATE FIVE TEN PORTFOLIOS ONE YEAR YEARS YEARS ESTABLISHED SERIES FUND DATE ENDED ENDED ENDED THROUGH PORTFOLIO ESTABLISHED 06/30/96 06/30/96 06/30/96 06/30/96 ================================ ================ ============== ============== ============= =================== OCC ACCUMULATION TRUST MANAGED PORTFOLIO SMALL CAP PORTFOLIO T. ROWE PRICE EQUITY SERIES, INC. EQUITY INCOME PORTFOLIO T. ROWE PRICE INTERNATIONAL SERIES, INC. INTERNATIONAL STOCK PORTFOLIO WARBURG PINCUS TRUST POST-VENTURE CAPITAL PORTFOLIO
MONEY MARKET SUBACCOUNT YIELD The "yield" and "effective yield" figures for the Money Market Subaccount shown below were calculated using historical investment returns of the Money Market Portfolio of the Series Fund. All fees, expenses and charges associated with the DISCOVERY SELECT Annuity and the Series Fund have been reflected. The "yield" and "effective yield" of the Money Market Subaccount for the seven days ended June 30, 1996 were __% and __% respectively. The yield is computed by determining the net change, exclusive of capital changes, in the value of a hypothetical pre-existing account having a balance of one accumulation unit of the Money Market Subaccount at the beginning of the period, subtracting a hypothetical charge reflecting deductions from contract owner accounts, and dividing the difference by the value of the subaccount at the beginning of the base period to obtain the base period return, and then multiplying the base period return by (365/7), with the resulting figure carried to the nearest ten-thousandth of 1%. The deduction referred to above consists of the 1.25% charge for mortality and expense risks and the 0.15% charge for administration. It does not reflect the withdrawal charge. The effective yield is obtained by taking the base period return, adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the result, according to the following formula: Effective Yield - ((base period return + 1) 365/7) - 1. The yields on amounts held in the Money Market Subaccount will fluctuate on a daily basis. Therefore, the stated yields for any given period are not an indication of future yields. 7 COMPARATIVE PERFORMANCE INFORMATION Reports or advertising may include comparative performance information, including, but not limited to: (1) comparisons to market indices such as the Dow Jones Industrial Average, the Standard & Poor's 500 Index, the Value Line Composite Index, the Russell 2000 Index, the Morgan Stanley World Index, the Lehman Brothers bond indices; (2) comparisons to other investments, such as certificates of deposit; (3) performance rankings assigned by services such as Morningstar, Inc. and Variable Annuity Research and Data Services (VARDS), and Lipper Analytical Services, Inc.; (4) data presented by analysts such as Dow Jones, A.M. Best, The Bank Rate Monitor National Index; and (5) data in publications such as The Wall Street Journal, Times, Forbes, Barrons, Fortune, Money Magazine, and Financial World. 8 FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT VARIABLE ANNUITY CONTRACTS PRUCO LIFE INSURANCE COMPANY 213 Washington Street Newark, New Jersey 07102-2992 Telephone: (800) 445-4571 PART C OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements To be added by pre-effective amendment. (b)Exhibits (1) Resolution of the Board of Directors of Pruco Life Insurance Company establishing the Pruco Life Flexible Premium Variable Annuity Account. (Note 2) (2) Agreements for custody of securities and similar investments--Not Applicable. (3) (a) Distribution Agreement between Pruco Securities Corporation (Underwriter) and Pruco Life Insurance Company (Depositor). (Note 1) (b) Form of Selected Broker Agreement between Prudential Securities Incorporated and Pruco Securities Corporation with respect to sale of the Contracts. (Note 1) (4) (a) The Prudential DISCOVERY SELECT Contract. (Note 1) (5) (a) Application form for the Contract. (Note 4) (6) (a) Articles of Incorporation of Pruco Life Insurance Company, as amended October 19, 1993. (Note 1) (b) By-laws of Pruco Life Insurance Company, as amended June 14, 1983. (Note 2) (7) Contract of reinsurance in connection with variable annuity contract--Not Applicable. (8) Other material contracts performed in whole or in part after the date the registration statement is filed: (a) Form of Fund Participation Agreement. (Note 1) (9) Opinion of Counsel and consent to its use as to legality of the securities being registered. (Note 4) (10) Written consent of Deloitte & Touche LLP, independent auditors. (Note 4) (11) All financial statements omitted from Item 23, Financial Statements--Not Applicable. (12) Agreements in consideration for providing initial capital between or among Registrant, Depositor, Underwriter, or initial Contract owners--Not Applicable. (13) Schedule of Performance Computations. (Note 4) (14) Powers of Attorney. (a) Linda S. Dougherty, Mendel A. Melzer (Note 1) (b) Garnett L. Keith, Jr., Ira J. Kleinman, Esther H. Milnes, I. Edward Price (Note 2) (c) William F. Yelverton (Note 3) (Note 1) Filed herewith. (Note 2) Incorporated by reference to Registrant's Form N-4, Registration No. 33-61125 filed July 19, 1995. (Note 3) Incorporated by reference to Pre-Effective Amendment No. 1, Registration No. 33-61125 filed November 17, 1995. (Note 4) To be filed by pre-effective amendment. C-1 ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR Incorporated by reference to the Pruco Life Flexible Premium Variable Annuity Account prospectus under "Directors and Officers" contained in Part A of this registration statement. ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT Pruco Life Insurance Company ("Pruco Life"), a corporation organized under the laws of Arizona, is a direct, wholly-owned subsidiary of The Prudential Insurance Company of America, ("The Prudential"), a mutual life insurance company organized under the laws of New Jersey. The subsidiaries of The Prudential and short descriptions of each are set forth on the following pages. Pruco Life may be deemed to control its two wholly-owned subsidiaries, Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey") and The Prudential Insurance Company of Arizona ("PLICA"). Pruco Life may also be deemed to control the following separate accounts which are registered as unit investment trusts under the Investment Company Act of 1940: the Pruco Life Variable Appreciable Account, the Pruco Life Variable Insurance Account, the Pruco Life Single Premium Variable Life Account, the Pruco Life Variable Universal Account, the Pruco Life PRUvider Variable Appreciable Account, the Pruco Life Single Premium Variable Annuity Account, the Pruco Life Flexible Premium Variable Annuity Account (Registrant) (separate accounts of Pruco Life), the Pruco Life of New Jersey Variable Appreciable Account, the Pruco Life of New Jersey Variable Insurance Account, the Pruco Life of New Jersey Single Premium Variable Life Account, and the Pruco Life of New Jersey Single Premium Variable Annuity Account (separate accounts of Pruco Life of New Jersey). The above-referenced separate accounts, along with The Prudential and certain of The Prudential's separate accounts, hold all the shares of The Prudential Series Fund, Inc., a Maryland corporation. In addition, The Prudential holds all the shares of Prudential's Gibraltar Fund, a Delaware Corporation, in three of its separate accounts. The Prudential Series Fund, Inc. and Prudential's Gibraltar Fund are registered as open-end diversified, management investment companies under the Investment Company Act of 1940. Additionally, the aforementioned separate accounts of The Prudential are registered as unit investment trusts under the Investment Company Act of 1940. In addition, Pruco Life may also be deemed to be under common control with The Prudential Variable Contract Account-2, The Prudential Variable Contract Account-10, and The Prudential Variable Contract Account-11, separate accounts of The Prudential, all of which are registered as open-end, diversified, management investment companies under the Investment Company Act of 1940. ITEM 27. NUMBER OF CONTRACT OWNERS No contracts offered by Registrant will be sold prior to the effective date of this Registration Statement. ITEM 28. INDEMNIFICATION The Prudential Directors' and Officers' Liability and Corporation Reimbursement Insurance Program, purchased by The Prudential from Aetna Casualty & Surety Company, CNA Insurance Companies, Lloyds of London, Great American Insurance Company, Reliance Insurance Company, Corporate Officers & Directors Assurance Ltd., A.C.E. Insurance Company, Ltd., XL Insurance Company, Ltd., and Zurich-American Insurance Company, provides reimbursement for "Loss" (as defined in the policies) which the Company pays as indemnification to its directors or officers resulting from any claim for any actual or alleged act, error, misstatement, misleading statement, omission, or breach of duty by persons in the discharge of their duties in their capacities as directors or officers of The Prudential, any of its subsidiaries, or certain investment companies affiliated with The Prudential. Coverage is also provided to the individual directors or officers for such Loss, for which they shall not be indemnified. Loss essentially is the legal liability on claims against a director or officer, including adjudicated damages, settlements and reasonable and necessary legal fees and expenses incurred in defense of adjudicatory proceedings and appeals therefrom. Loss does not include punitive or exemplary damages or the multiplied portion of any multiplied damage award, criminal or civil fines or penalties imposed by law, taxes or wages, or matters which are uninsurable under the law pursuant to which the policies are construed. There are a number of exclusions from coverage. Among the matters excluded are Losses arising as the result of (1) claims brought about or contributed to by the criminal or fraudulent acts or omissions or the willful violation of any law by a director or officer, (2) claims based on or attributable to directors or officers gaining personal profit or advantage to which they were not legally entitled, and (3) claims arising from actual or alleged performance of, or C-2 failure to perform, services as, or in any capacity similar to, an investment adviser, investment banker, underwriter, broker or dealer, as those terms are defined in the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment Company Act of 1940, any rules or regulations thereunder, or any similar federal, state or local statute, rule or regulation. The limit of coverage under the Program for both individual and corporate reimbursement coverage is $150,000,000. The retention for corporate reimbursement coverage is $10,000,000 per loss. The relevant provisions of New Jersey law permitting or requiring indemnification, New Jersey being the state of organization of The Prudential, can be found in Section 14A:3-5 of the New Jersey Statutes Annotated. The relevant provisions of Arizona law, Arizona being the state of organization of Pruco Life, can be found in Section 10-005 of the Arizona Statutes Annotated. The text of The Prudential's by-law 26, which relates to indemnification of officers and directors, is incorporated by reference to Exhibit 1.A.(6)(b) of Post-Effective Amendment No. 1 to Form S-6, Registration No. 33-61079, filed April 25, 1996, on behalf of The Prudential Variable Appreciable Account. The text of Pruco Life's by-laws, Article VIII, which relates to indemnification of officers and directors, is incorporated by reference to Exhibit (6)(b) to this Registration Statement. Insofar as indemnification for liabilities arising under the Securities Act of 1933 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. ITEM 29. PRINCIPAL UNDERWRITERS (a) Pruco Securities Corporation also acts as principal underwriter for the Pruco Life PRUvider Variable Appreciable Account, the Pruco Life Variable Insurance Account, the Pruco Life Variable Appreciable Account, the Pruco Life Variable Universal Account, the Pruco Life Single Premium Variable Life Account, the Pruco Life Single Premium Variable Annuity Account, the Pruco Life of New Jersey Variable Insurance Account, the Pruco Life of New Jersey Variable Appreciable Account, the Pruco Life of New Jersey Single Premium Variable Life Account, the Pruco Life of New Jersey Single Premium Variable Annuity Account, The Prudential Variable Appreciable Account, The Prudential Individual Variable Contract Account, The Prudential Qualified Individual Variable Contract Account, Prudential's Annuity Plan Account, Prudential's Investment Plan Account, Prudential's Annuity Plan Account-2, Prudential's Gibraltar Fund, and The Prudential Series Fund, Inc. (b) NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH UNDERWRITER ---------------- ---------------- William Frisby Yelverton* Chairman and Director Renwick Thomas Nelson** President and Director E. Michael Caulfield*** Director Joseph Mahoney* Director James Avery Jr.* Director Douglas Wade Henderson* Director Richard Painter** Director Dolores Marion** Chief Financial Officer Clifford E. Kirsch* Chief Legal Officer and Secretary * Principal Business Address: Prudential Plaza, Newark, NJ 07102 ** Principal Business Address: 1111 Durham Avenue, South Plainfield, NJ 07080 *** Principal Business Address: 477 Martinsville Road, Liberty Corner, NJ 07938 (c) Not applicable ITEM 30. LOCATION OF ACCOUNTS AND RECORDS All accounts, books or other documents required to be maintained by Section 31 (a) of the 1940 Act and the rules promulgated thereunder are maintained by the Registrant through The Prudential Insurance Company of America, Prudential Plaza, Newark, New Jersey 07102-3777. C-3 ITEM 31. MANAGEMENT SERVICES Summary of any contract not discussed in Part A or Part B of the registration statement under which management-related services are provided to the Registrant--Not Applicable. ITEM 32. UNDERTAKINGS (a) Registrant undertakes to file a post-effective amendment to this Registrant Statement as frequently as is necessary to ensure that the audited financial statements in the Registration Statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted. (b) Registrant undertakes to include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a statement of additional information, or (2) a postcard or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a statement of additional information. (c) Registrant undertakes to deliver any statement of additional information and any financial statements required to be made available under this Form promptly upon written or oral request. (d) Restrictions on withdrawal under Section 403(b) Contracts are imposed in reliance upon, and in compliance with, a no-action letter issued by the Chief of the Office of Insurance Products and Legal Compliance of the Securities and Exchange Commission to the American Council of Life Insurance on November 28, 1988. C-4 SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this Registration Statement to be signed on its behalf, in the city of Newark, and the State of New Jersey, on this 24th day of June, 1996. (Seal) THE PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT (Registrant) By: PRUCO LIFE INSURANCE COMPANY (Depositor) Attest: /s/ Clifford E. Kirsch By: /s/ Esther H. Milnes ------------------------ ------------------------- Clifford E. Kirsch Esther H. Milnes Chief Legal Officer President As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated. SIGNATURE AND TITLE ------------------- June 24, 1996 /s/ * - - ---------------------------------- Esther Milnes President and Director /s/ * - - ---------------------------------- Linda S. Dougherty Chief Accounting Officer, Vice President and Comptroller /s/ * - - ---------------------------------- Garnett L. Keith, Jr. Director *By: /s/ Clifford E. Kirsch /s/ * ---------------------------- - - ---------------------------------- Clifford E. Kirsch Ira J. Kleinman (Attorney-in-Fact) Director /s/ * - - ---------------------------------- Mendel A. Melzer Director /s/ * - - ---------------------------------- I. Edward Price Director /s/ * - - ---------------------------------- William F. Yelverton Director C-5
EXHIBIT INDEX (3)(a) Distribution Agreement between Pruco Securities Corporation Page C- (Underwriter) and Pruco Life Insurance Company (Depositor). (3)(b) Form of Selected Broker Agreement between Prudential Page C- Securities Incorporated and Pruco Securities Corporation with respect to sale of the Contracts. (4)(a) The Prudential Discovery Select Contract. Page C- (6)(a) Articles of Incorportion of Pruco Life Insurance Company, Page C- as amended October 19, 1993. (8)(a) Form of Fund Participation Agreement. Page C- (14) Powers of Attorney. Page C-
C-6 EX-99.3(A) 2 DISTRIBUTION AGREEMENT Exhibit 3(a) DISTRIBUTION AGREEMENT AGREEMENT made this 1st day of November 1995, by and between Pruco Life Insurance Company, an Arizona corporation ("Company"), on its own behalf and on behalf of Pruco Life Flexible Premium Variable Annuity Account ("Account") and Pruco Securities Corporation, a New Jersey corporation ("Distributor"). WITNESSETH: WHEREAS, the Company has established and maintains the Account, a separate investment account, pursuant to the laws of Arizona for the purpose of selling combination variable annuity, fixed annuity and modified guaranteed annuity contracts ("Contracts"), to commence after the effectiveness of the Registration Statement filed with the Securities and Exchange Commission on Forms N-4 and S-1 pursuant to the Securities Act of 1933, as amended ("1933 Act"); and WHEREAS, the Account will be registered as a unit investment trust under the Investment Company Act of 1940 ("1940 Act"); and WHEREAS, Distributor is registered as a broker-dealer under the Securities Exchange Act of 1934 (the "Securities Exchange Act") and is a member of the National Association of Securities Dealers, Inc. ("NASD"); and WHEREAS, the Company and the Distributor wish to enter into an agreement to have the Distributor act as the Company's principal underwriter for the sale of the Contracts through the Account; NOW THEREFORE, the parties agree as follows: 1. Appointment of the Distributor The Company agrees that during the term of this Agreement it will take all action which is required to cause the Contracts to comply as an insurance product and a registered security with all applicable federal and state laws and regulations. The Company appoints the Distributor and the Distributor agrees to act as the principal underwriter for the sale of Contracts to the public, during the term of this Agreement, in each state and other jurisdictions in which such Contracts may lawfully be sold. Distributor shall offer the Contracts for sale and distribution at premium rates set by the Company. Applications for the Contracts shall be solicited only by representatives duly and appropriately licensed or otherwise qualified for the sale of such Contracts in each state or other jurisdiction. Company shall undertake to appoint Distributor's qualified representatives as life insurance agents of Company. Completed applications for Contracts shall be transmitted directly to the Company for acceptance or rejection in accordance with underwriting rules established by the Company. Initial premium payments under the Contracts shall be make by check payable to the Company and shall be held at all times by Distributor or its representatives in a fiduciary capacity and remitted promptly to the Company. Anything in this Agreement to the contrary notwithstanding, the Company retains the ultimate right to control the sale of the Contracts and to appoint and discharge life insurance agents of the Company. The Distributor shall be held to the exercise of reasonable care in carrying out the provisions of this Agreement. 2. Sales Agreements Distributor is hereby authorized to enter into separate written agreements, on such terms and conditions as Distributor may determine not inconsistent with this Agreement, with one or more organizations which agree to participate in the distribution of the Contracts. Such organization (hereafter "Broker") shall be both registered as a broker/dealer under the Securities Exchange Act and a member of NASD. Broker and its agents or representatives soliciting applications for Contracts shall be duly and appropriately licensed, registered or otherwise qualified for the sale of such Contracts (and the riders and other policies offered in connection therewith) under the insurance laws and any applicable blue-sky laws of each state or other jurisdiction in which the Company is licensed to sell the Contracts. Distributor shall have the responsibility for ensuring that Broker supervises its representatives. Broker shall assume any legal responsibilities of Company for the acts, commissions or defalcations of such representatives insofar as they relate to the sale of the Contracts. Applications for Contracts solicited by such Broker through its agents or representatives shall be transmitted directly to the Company, and if received by Distributor, shall be forwarded to Company. All premium payments under the Contracts shall be made by check to Company and, if received by Broker, shall be held at all times in a fiduciary capacity and remitted promptly to Company. 3. Life Insurance Licensing Company shall be responsible for insuring that Brokers are duly qualified, under the insurance laws of the applicable jurisdictions, to sell the Contract. 4. Suitability Company wishes to ensure that Contracts sold by Distributor will be issued to purchasers for whom the Contract will be suitable. Distributor shall take reasonable steps to ensure that the various representatives appointed by it shall not make recommendations to an applicant to purchase a Contract in the absence of reasonable grounds to believe that the purchase of the Contract is suitable for such applicant. While not limited to the following, a determination of suitability shall be based on information furnished to a representative after reasonable inquiry of such applicant concerning the applicant's insurance and investment objectives, financial situation and needs, and the likelihood that the applicant will continue to make the premium payments contemplated by the Contracts. 5. Promotion Materials Company shall have the responsibility for furnishing to Distributor and its representatives sales promotion materials and individual sales proposals related to the sale of the Contracts. Distributor shall not use any such materials that have not been approved by Company. 6. Compensation Company shall arrange for the payment of commissions directly to those registered representatives of Distributor who are entitled thereto in connection with the sale of the Contracts on behalf of Distributor, in the amounts and on such terms and conditions as Company and Distributor shall determine; provided that such terms, conditions and commissions shall be as are set forth in or as are not inconsistent with the Prospectus included as part of the Registration Statement for the Contracts and effective under the 1933 Act. Company shall arrange for the payment of commissions directly to those Brokers who sell Contracts under agreements entered into pursuant to paragraph 2. hereof, in amounts as may be agreed to by the Company and specified in such written agreements. Company shall reimburse Distributor for the costs and expenses incurred by Distributor in furnishing or obtaining the services, materials and supplies required by the terms of this Agreement in the initial sales efforts and the continuing obligations hereunder. 7. Records Distributor shall have the responsibility for maintaining the records of representatives licensed, registered and otherwise qualified to sell the Contracts. Distributor shall maintain such other records as are required of it by applicable laws and regulations. The books, accounts,and records of Company, the Account and Distributor shall be maintained so as to clearly and accurately disclose the nature and details of the transactions. All records maintained by the Distributor in connection with this Agreement shall be the property of the Company and shall be returned to the Company upon termination of this Agreement, free from all claims or retention of rights by the Distributor. The Distributor shall keep confidential any information obtained pursuant to this Agreement and shall disclose such information, only if the Company has authorized such disclosure, or if such disclosure is expressly required by applicable federal or state regulatory authorities. 8. Investigation and Proceeding (a) Distributor and Company agree to cooperate fully in any insurance regulatory investigation or proceeding or judicial proceeding arising in connection with the Contracts distributed under this Agreement. Distributor and Company further agree to cooperate fully in any securities regulatory investigation or proceeding with respect to Company, Distributor, their affiliates and their agents or representatives to the extent that such investigation or proceeding is in connection with Contracts distributed under this Agreement. The Distributor shall furnish applicable federal and state regulatory authorities with any information or reports in connection with its services under this Agreement which such authorities may request in order to ascertain whether the Company's operations are being conducted in a manner consistent with any applicable law or regulations. (b) In the case of a substantive customer complaint, Distributor and Company will cooperate in investigating such complaint and any response to such complaint will be sent to the other party to this Agreement for approval not less than five business days prior to its being sent to the customer or regulatory authority, except that if a more prompt response is required, the proposed response shall be communicated by telephone or telegraph. 9. Termination This Agreement shall terminate automatically upon its assignment without the prior written consent of both parties. This Agreement may be terminated at any time by either party on 60 days' written notice to the other party, without the payment of any penalty. Upon termination of this Agreement all authorizations, rights and obligations shall cease except the obligation to settle accounts hereunder, including commissions on premiums subsequently received for Contracts in effect at a time of termination, and the agreements contained in paragraph 8. hereof. 10. Regulation This Agreement shall be subject to the provisions of the 1940 Act and the Securities Exchange Act and of the rules, regulations, and rulings thereunder and of the applicable rules and regulations of the NASD, from time to time in effect, and the terms hereof shall be interpreted and construed in accordance therewith. 11. Severability If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. 12. Applicable Law This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Arizona. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. PRUCO LIFE INSURANCE COMPANY By: --------------------------------- PRUCO SECURITIES CORPORATION By: --------------------------------- EX-99.3(B) 3 SELECTED BROKER AGREEMENT Exhibit 3(b) SELECTED BROKER AGREEMENT This agreement is made on the 1ST day of November 1995 by and between PRUDENTIAL SECURITIES INCORPORATED, a New York corporation with its principal business address at One Seaport Plaza, New York, New York, 10292-0001 ("Broker") and PRUCO SECURITIES CORPORATION ("Distributor"), a New Jersey corporation with its principal place of business at 1111 Durham Avenue, South Plainfield, New Jersey 07080. This Agreement supersedes all previous Select-Broker Agreements between Broker and Distributor. WITNESSETH: In consideration of the mutual promises contained herein, the parties hereto agree as follows: A. DEFINITIONS (1) 1933 Act - The Securities Act of 1933, as amended. (2) 1934 Act - The Securities Exchange Act of 1934, as amended. (3) 1940 Act - The Investment Company Act of 1940, as amended. (4) SEC - The Securities and Exchange Commission. (5) Contracts - Variable life insurance contracts and/or variable annuity contracts and/or market-value adjusted annuity contracts, or combinations thereof, described in Schedule A attached hereto and issued by the applicable one of Pruco Life Insurance Company, Pruco Life Insurance Company of New Jersey, The Prudential Life Insurance Company of Arizona 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. From time to time Schedule A may be updated or amended. Such updates or amendments will be effective as of the date(s) specified in Schedule A, upon written notification to the Broker that a new or amended Schedule A has been issued. (6) 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 2 under the Contracts. (7) 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. (8) Registration Statement - The SEC registration statements and amendments thereto under the 1940 and/or 1933 Acts, relating to the Contracts, the Accounts, and the Fund, including financial statements and all exhibits. (9) Prospectus - The current prospectuses included within the Registration Statements referred to herein. 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 that any such solicitation is preceded or accompanied by delivery of a Prospectus to the applicant, 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 applications 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 any Contract in any state or jurisdiction. (3) During the term of this Agreement, Distributor shall advise Broker of any amendment to any Registration Statement or any amendment or supplement to any Prospectus. (4) Distributor hereby warrants that all advertising matter, prospectuses, circulars, letters, booklets, 3 schedules, stationary, broadcasting or sales materials it provides pursuant to this Agreement have been reviewed by Distributor, and that all such materials comply with all applicable laws. C. AGREEMENTS OF BROKER (1) Broker represents that it is a registered broker/dealer under the 1934 Act and a member in good standing of the National Association of Securities Dealers, Inc. ("NASD"). Broker represents that its agents or representatives who will be soliciting applications for the Contracts will be duly registered representatives of Broker and furthermore that each one will be a registered representative in good standing with accreditation to sell the Contracts as required by the NASD. (2) Commencing at such time as Distributor and Broker shall agree upon, Broker agrees to use its reasonable efforts to find purchasers for the Contracts acceptable to Company. In meeting its obligation to use its reasonable efforts to solicit applications for Contracts, Broker shall, during the term of this Agreement, engage in the following activities: (a) On an ongoing and exclusive basis, use training, sales, advertising 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 the Agent or Representative after reasonable inquiry of such applicant concerning the applicant's insurance and investment objectives, financial situation (including tax status) and needs, and the likelihood that the applicant will continue to make any continuing premium payments contemplated by the Contracts. 4 Each application obtained by a representative appointed by Broker shall bear the initials of a marketing principal of Broker indicating that the application has been reviewed by such marketing principal for suitability, completeness, and accuracy. (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 money orders in payment of premiums and/or purchase payments shall be drawn to the order of the applicable one of "Pruco Life Insurance Company", "Pruco Life Insurance Company of New Jersey", "The Prudential Insurance Company of America" or "The Prudential Life Insurance Company of Arizona". 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 a 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 a Contract pursuant to state law or 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 statute or 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 or 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, including generic advertising and/or training materials which may be used in connection with the sale of 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. 5 (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 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; or 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 the Company under 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 maintained by Broker under the terms of this Agreement that relate to the sale of the Contracts, the Company, the Accounts, Distributor and/or Broker 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 6 expressly required by applicable federal or state regulatory authorities. (9) With respect to the products covered by this Agreement, as amended from time to time, Broker shall notify Distributor of any material change or intention to materially change its marketing operations. A material change may arise from a change in terms of the number of people selling the products, the emphasis or method of any aspect of any marketing campaign, or otherwise. Such notice shall be given in the manner specified in Section J. of this Agreement. (10) Broker, each year during the term of this Agreement, shall, within 30 days of receipt, return to Distributor a Questionnaire regarding any regulatory, civil and/or criminal proceedings, including arbitrations, against the Broker or associated persons commenced or concluded by any state insurance or securities department, the NASD, the SEC, or other self-regulatory organization, and/or in any court of competent jurisdiction during the twelve month period prior to the date of the Questionnaire. Broker shall provide Distributor with a full explanation regarding matters disclosed in the Questionnaire. Broker also agrees to send to Distributor copies of all Disclosure Reporting Forms applicable to its agents or representatives authorized to solicit applications for and sell the Contracts simultaneously with filing such forms with the NASD. 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. The Compensation Schedule may thereafter be amended by Distributor. No compensation is payable unless the Broker and the Agent have first complied with all applicable insurance laws, rules and regulations. Company shall identify to Broker with each such payment the name of the agent or representative of Broker who solicited each Contract covered by the payment. Notwithstanding any other provision in the Compensation Schedule concerning chargebacks, if any 7 variable contract is tendered for redemption within seven business days after acceptance of the Contract application no compensation shall be paid. (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. (3) Upon the termination of this Agreement, the Company will pay commissions to the Broker on (a) net premiums which the Company receives within sixty (60) days of the termination date on applications written by the Broker on or before the termination date; and (b) any renewal commission which would otherwise be due on business placed with Distributor prior to the termination date of this Agreement unless such receipt of renewal commissions is determined to violate current directives to the contrary as provided by the NASD or a court of competent jurisdiction. E. COMPLAINTS AND INVESTIGATIONS (1) Broker and Distributor jointly agree to cooperate fully in any regulatory investigation or proceeding or judicial proceeding arising in connection with the Contracts marketed under this Agreement. Broker shall furnish applicable federal and state regulatory authorities with any information or reports in connection with its services or the services of its agents or representatives under this Agreement which such authorities may request in order to ascertain whether the Company's, Broker's or Distributor's operations are being conducted in a manner consistent with any applicable law or regulation. F. TERM OF AGREEMENT; ENTIRE 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, except 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 8 indemnity set forth in Section G hereof; and (c) compensation payable pursuant to Section D(3). 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 of their current and former directors and officers 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 any Prospectus, or any sales literature provided by the Company or by the Distributor, or the failure of Company, Distributor, their officers, employees, or agents to comply with the provisions of this Agreement; and Company will reimburse Broker and any director or officer or controlling person thereof for any legal or other expenses reasonably incurred by Broker or such director, officer or 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 Company may otherwise have. (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, 1934 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 Broker, its registered representatives, agents, directors, officers, employees or other persons who are or should be under its control or 9 supervision; or (b) Claims by agents or representatives or employees of Broker for commissions, service fees, development allowances or other compensation or remuneration of any type; (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 or 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. J. NOTICE Any notice required under this Agreement shall be given when sent by first-class mail to the other party at its address shown below. If to Broker: Prudential Securities Incorporated One Seaport Plaza New York, New York 10292-0001 If to Distributor: The Prudential Insurance Company of America 213 Washington Street - 14th floor Newark, NJ 07102 Attention: Daria Benson K. CONFIDENTIALITY Each party shall treat as confidential all information 10 provided by one party to another, pursuant to this agreement, including but not limited to the names and addresses of the owners and annuitants of the Contracts. The foregoing shall not be applicable to any information that is required to be disclosed by judicial or administrative process or otherwise by applicable law. 11 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 By: ---------------------------------------- Kenneth Sanford Vice President PRUDENTIAL SECURITIES INCORPORATED By: ---------------------------------------- SCHEDULE A TO SELECTED BROKER AGREEMENT BY AND BETWEEN PRUDENTIAL SECURITIES, INC. AND PRUCO SECURITIES CORPORATION Contracts for Pruco Life Insurance Company o Discovery Life Plus (single payment variable life insurance policy) effective as of July 19, 1994 o PruSelect II (flexible payment variable life insurance policy) effective as of July 19, 1994 o Discovery Preferred (flexible payment variable annuity and market-value adjusted annuity contract) effective as of November 20, 1995 o Discovery Select (flexible payment variable annuity and market-value adjusted annuity contract) effective as of ___________, 1996 Contracts for Pruco Life Insurance Company of New Jersey o None Contracts for The Prudential Life Insurance Company of Arizona o None Contracts for The Prudential Insurance Company of America o Variable Appreciable Life (flexible payment variable whole life policy) effective as of July 19, 1994 o Discovery Plus (flexible payment deferred variable annuity) effective as of July 19, 1994 o Variable Investment Plan (flexible payment deferred variable annuity) effective as of July 19, 1994 o Survivorship Preferred (flexible payment survivorship variable life policy) effective as of December 31, 1995 EX-99.4(A) 4 DISCOVERY SELECT CONTRACT Exhibit 4(a) - - ------------------------------------------------------------------------------- PRUCO LIFE INSURANCE COMPANY Phoenix, Arizona 85014 [The Prudential Logo] A STOCK COMPANY SUBSIDIARY OF The Prudential Insurance Company of America ANNUITANT(S) JOHN DOE XX XXX XXX CONTRACT NUMBER MARY DOE SEPTEMBER 1, 1996 CONTRACT DATE ANNUITY DATE SEPTEMBER 1, 2051 AGENCY R-NK 1 - - ------------------------------------------------------------------------------- This is an annuity contract. Subject to the provisions of the contract, and in consideration of any purchase payment you make and we accept, we will make annuity payments starting on the Annuity Date we show above. Please read the contract carefully; it is a legal contract between you and Pruco Life Insurance Company. Expense charges applicable to the contract are shown on a Contract Data page. If you have a question about the contract, or a claim, see one of our representatives or get in touch with one of our offices. BENEFITS AND VALUES UNDER THIS CONTRACT MAY BE ON A VARIABLE BASIS. AMOUNTS DIRECTED INTO ONE OR MORE OF THE VARIABLE INVESTMENT OPTIONS WILL REFLECT THE INVESTMENT EXPERIENCE OF THOSE INVESTMENT OPTIONS. THEY ARE SUBJECT TO CHANGE BOTH UP AND DOWN AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. AMOUNTS DIRECTED INTO THE MARKET-VALUE-ADJUSTMENT OPTION(S) MAY BE ADJUSTED UPWARD OR DOWNWARD BY THE APPLICATION OF A MARKET-VALUE-ADJUSTMENT FORMULA. SEE THE MARKET-VALUE ADJUSTMENT (MVA) PROVISION FOR A DESCRIPTION OF THE FORMULA, AND THE VALUES AVAILABLE WITHOUT AN ADJUSTMENT. 10 DAY RIGHT TO CANCEL CONTRACT.--If you return this contract to us not later than 10 days after you receive it, we will return your money in accordance with applicable law and the contract will be canceled. All you have to do is take it or mail it to one of our offices or to the representative who sold it to you. Signed for Pruco Life Insurance Company, an Arizona Corporation. /s/ SUSAN L. BLOUNT /s/ ESTHER H. MILNES - - ---------------------------------- -------------------------------- Secretary President VARIABLE ANNUITY CONTRACT WITH FLEXIBLE PURCHASE PAYMENTS. ANNUITY PAYMENTS STARTING ON ANNUITY DATE. BENEFIT PAYABLE AS STATED UPON DEATH BEFORE ANNUITY DATE. CONTRACT VALUES REFLECT INVESTMENT RESULTS. MARKET-VALUE-ADJUSTMENT OPTION(S) SUBJECT TO MARKET-VALUE ADJUSTMENTS. ELIGIBLE FOR ANNUAL DIVIDENDS AS STATED UNDER PARTICIPATION. - - ------------------------------------------------------------------------------- VFM--96 GUIDE TO CONTENTS Page ---- CONTRACT DATA ............................................................. 3 Basic Contract Data, Including Individuals Covered by the Contract, Contract Minimums, Charges, Available Investment Options, and Initial Allocations DEFINITIONS ............................................................... 5 PURCHASE PAYMENTS ......................................................... 5 When Permitted; Invested Purchase Payments; Allocations INTEREST-RATE INVESTMENT OPTIONS .......................................... 6 Options Available; Interest Rates; Interest Cell VARIABLE INVESTMENT OPTIONS ............................................... 7 Variable Separate Account; Separate Account Investments; Variable Investment Options CONTRACT FUND ............................................................. 7 MARKET-VALUE ADJUSTMENT (MVA) ............................................. 8 Market-Value Adjustment (MVA); Market-Value Factor; Effect of Market-Value Adjustment TRANSFERS ................................................................. 9 WITHDRAWALS ............................................................... 10 Amount Available for Withdrawal; Withdrawal Charges; Allocation of Withdrawals; Charge-Free Amounts; Waiver of Withdrawal Charges BENEFICIARY ............................................................... 11 DEATH OF ANNUITANT BEFORE ANNUITY DATE .................................... 12 DEATH OF ANNUITANT ON OR AFTER ANNUITY DATE ............................... 12 PAYOUT PROVISIONS ......................................................... 13 Choosing an Option; Options Described; Other Payout Options; When No Option Chosen; Interest Rate; Withdrawal Charges ANNUITY SETTLEMENT TABLES ................................................. 14 Amounts Payable GENERAL PROVISIONS ........................................................ 15 Quarterly Report; The Contract; Contract Modifications; Change of Annuity Date; Ownership and Control; Currency; Misstatement of Age or Sex; Incontestability; Proof of Life or Death; Assignment; Deferring Payment; Changes; Participation (Dividends); Terminally Ill; Eligible Nursing Home; Eligible Hospital (VFM--96) Page 2 CONTRACT DATA Annuitants(s) First Annuitant JOHN DOE Male, Issue Age 35 Co-Annuitant MARY DOE Female, Issue age 35 - - ------------------------------------------------------------------------------- Basic Contract Information Contract Number xx xxx xxx Contract Date September 1, 1996 Annuity Date September 1, 2051 Beneficiary Class 1 Robert Doe, son of Annuitants Class 2 Susan Smith, sister of Mary Doe - - ------------------------------------------------------------------------------- Purchase Payments The purchase payment paid on the Contract Date is $10,000.00. The minimum initial purchase payment is $10,000.00. The minimum subsequent purchase payment is $1,000.00. - - ------------------------------------------------------------------------------- Other Minimums The minimum withdrawal amount is $500.00. The minimum Interest Crediting Rate on Interest-Rate Investment Options is 3%. - - ------------------------------------------------------------------------------- Expense Charges The expense charges deducted from the contract fund (see the Contract Fund provision for a complete description of the fund and how it increases and decreases) are: CONTRACT DATA CONTINUED ON NEXT PAGE (VFM--96) Page 3 CONTRACT NO. XX XXX XXX CONTRACT DATA CONTINUED Daily Mortality and Expense Risk Charge - the maximum daily charge is .00340349%, which is equivalent to an annual rate of 1.25%. Daily Administrative Charge - the maximum daily charge is .00041065%, which is equivalent to an annual rate of .15%. Annual Administrative Charge - the charge is $30.00. It is deducted on the Contract Anniversary and when a surrender (i.e., full withdrawal) of the contract occurs, if the contract fund at the time is then less than $50,000.00. - - ------------------------------------------------------------------------------- Transaction Charge The transaction charge for each transfer after the first 12 in a contract year is $25.00. We reserve the right to limit the number of transfers in order to comply with federal, state or local law. - - ------------------------------------------------------------------------------- Withdrawal Charge The withdrawal charge (see the Withdrawals provision for a full discussion of how this charge is applied) is a percentage of the amount withdrawn that is subject to the charge, and depends on the Contract Year in which the withdrawal is made. Year of Withdrawal Withdrawal Charqe ------------------ ----------------- 1 7% 2 6% 3 5% 4 4% 5 3% 6 2% 7 1% 8 and later 0% - - ------------------------------------------------------------------------------- CONTRACT DATA CONTINUED ON NEXT PAGE (VFM--96) Page 3A CONTRACT NO. XX XXX XXX CONTRACT DATA CONTINUED Investment Options Interest-Rate Investment Options As of the contract date, two interest-rate investment options are available, a one-year fixed-interest-rate option (the Fixed-Rate option) and a seven year market-value-adjustment option (the MVA option). Interest is credited at declared rates to amounts held in each of these options. For the MVA option, if money is withdrawn prior to the end of the maturity date, there will be a market-value adjustment, which may increase or decrease the value of amounts in that option. Variable Investment Options The following variable investment options are available through allocation to subaccounts of the Pruco Life Flexible Premium Variable Annuity Account. We reserve the right to limit the availability of the below options, if necessary, in order to comply with federal, state or local law. Variable Investment Options (Subaccounts) Available --------------------------------------------------- THE PRUDENTIAL SERIES FUND Money Market Portfolio Diversified Bond Portfolio Equity Portfolio Prudential Jennison Portfolio Global Portfolio Stock Index Portfolio High Yield Bond Portfolio Equity Income Portfolio T. ROWE PRICE Equity Income Portfolio International Stock Portfolio OPCAP ADVISORS OCC Accumulation Trust Managed Portfolio OCC Accumulation Trust Small Cap Portfolio AIM V.I. Value Fund V.I. Growth and Income Fund - - ------------------------------------------------------------------------------- CONTRACT DATA CONTINUED ON NEXT PAGE (VFM--96) Page 3B CONTRACT NO. XX XXX XXX CONTRACT DATA CONTINUED JANUS Aspen Growth Portfolio Aspen International Growth Portfolio MFS Emerging Growth Series Research Series WARBURG PINCUS Post-Venture Capital Portfolio XXXXXXXXXXXXXX XXXXXXXXXXXXXX - - ------------------------------------------------------------------------------- Initial Allocation of Invested Premium Amounts The Prudential Series Fund Global Portfolio 40% The Prudential Series Fund Equity Portfolio 30% Janus Aspen Growth Portfolio 10% One-Year Fixed-Rate Option 10% Seven-Year MVA Option 10% For any portion of the purchase payment allocated on the Contract Date to an interest-rate investment option, the interest rates are: One-Year Fixed-Rate Option 6% Seven-Year MVA Option 8% - - ------------------------------------------------------------------------------- END OF CONTRACT DATA (VFM--96) Page 3C CONTRACT NO. XX XXX XXX ENDORSEMENTS (Only we can endorse this contract.) (VFM--96) Page 4 - - ------------------------------------------------------------------------------- DEFINITIONS We, Our, and Us.--Pruco Life Insurance Company, an Arizona corporation, or any affiliated company. You and Your.--The owner of the contract. Annuitant(s).--The person or persons named on the first page. If two persons are named, one of the two is named on page 3 as First Annuitant, the other as Co-Annuitant. In that case, the Beneficiary provision of the contract will be based on the death of the last survivor of the persons so named. Payee.--A beneficiary who has a right to receive a settlement under this contract. SEC.--The Securities and Exchange Commission. Contract Date.--The date we receive the initial purchase payment. We show the Contract Date on page 3. Contract Anniversary.--The same day and month as the Contract Date in each later year. Contract Year.--A year which starts on the Contract Date or on a Contract Anniversary. Business Day.--Any day the New York Stock Exchange is open for business. Annuity Date.--The date our first annuity payment to you is due. We show the Annuity Date on page 3. - - ------------------------------------------------------------------------------- PURCHASE PAYMENTS WHEN PERMITTED The initial purchase payment must be paid on the Contract Date. Subsequent purchase payments may be made at any time before the Annuity Date. Minimum purchase payment amounts are shown on a Contract Data page; we reserve the right to establish a maximum amount. INVESTED PURCHASE Corresponding to each purchase payment, there is an PAYMENTS "invested purchase payment." This is the balance of the purchase payment after we make any applicable deduction for: (1) state and local premium taxes; and (2) any other type of tax (or component thereof) measured by or based upon the amount of the purchase payment we receive. ALLOCATIONS You may allocate all or a part of an invested purchase payment to one or more of the investment options described below. The allocation of the initial invested purchase payment is shown on a Contract Data page. You may change the allocation of future invested purchase payments at any time. The change will take effect on the date we receive your request. If, after the initial purchase payment, we receive a purchase payment without allocation instructions, we will allocate the corresponding invested purchase payment in the same proportion as the most recent purchase payment you made (unless that was a purchase payment you directed us to allocate on a one-time-only basis). We reserve the right to establish minimum percentage and dollar amounts for invested purchase payment allocations. (VFM--96) Page 5 - - ------------------------------------------------------------------------------- INTEREST-RATE INVESTMENT OPTIONS OPTIONS AVAILABLE As shown on a Contract Data page, two types of interest-rate investment options were available on the Contract Date: fixed-interest-rate option (Fixed-Rate option) and market-value adjustment option (MVA option). We may add other options in the future. Each option may be divided into interest cells (described below). INTEREST RATES The annual interest rates applicable to the interest-rate investment options on the Contract Date are shown on a Contract Data page. We will credit interest each day on amounts allocated to any of these options at the daily equivalent of the rate shown for that option. Interest rates for future allocations or transfers to interest-rate investment options will be declared when those allocations or transfers are made. The declared rates will never be less than the Minimum Interest Crediting Rate shown on a Contract Data page. INTEREST CELL An interest cell is created whenever you allocate or transfer an amount to an interest-rate investment option. We credit interest to the amount in each interest cell daily at a specific rate declared for that interest cell until the earliest of: the date it is withdrawn; the date it is transferred to another investment option; the maturity date (the date the cell was established plus the number of years it is expected to remain in effect); and the date as of which a death benefit is determined. An interest cell's declared rate is guaranteed if the amount in that cell is held to maturity. Withdrawals and transfers from an MVA interest cell are subject to market-value adjustments, which may increase or decrease the cell's value. Withdrawals may also be subject to a withdrawal charge, which is described in Withdrawals below. At the maturity date of an interest cell, you may elect to transfer the amount in the cell into any of the investment options available on that date. Once you have made an election and we have received it, it may not be reversed. If you do not make an election to transfer within 30 days following the maturity date, we will transfer the amount in the interest cell on the maturity date to an interest-rate investment option with the same duration to maturity as the maturing interest cell. Amounts that are transferred into the same interest-rate investment option during the 30-day period will receive the appropriate rate for that option, effective as of the maturity date. Amounts that you withdraw, or transfer into any different investment option, during the 30-day period will receive interest from the maturity date to the date of withdrawal or transfer at the rate that would have applied to those amounts if you had taken no action within the 30-day period. (VFM--96) Page 6 - - ------------------------------------------------------------------------------- VARIABLE INVESTMENT OPTIONS VARIABLE SEPARATE "Variable Separate Account" refers to the Pruco Life ACCOUNT Flexible Premium Variable Annuity Account, its successors, if any, and any other variable separate accounts we add in the future. We established this account to hold and invest the assets that support this contract and variable annuity contracts like this one. The Variable Separate Account is divided into divisions called "subaccounts," and the subaccounts available to you on the Contract Date are listed on a Contract Data page. We may establish additional subaccounts. Any income and realized or unrealized gains and losses in a subaccount are credited to or charged against that subaccount. This is without regard to income, gains, or losses in other investment options. SEPARATE ACCOUNT We may invest the assets of different subaccounts in INVESTMENTS different ways than are shown on a Contract Data page. We will do so only with the consent of the SEC and, if required, of the insurance regulator where this contract is delivered. We will always keep assets in the Variable Separate Account with a total value at least equal to the amount credited to all the subaccounts under contracts like this one. That portion of the assets of the Variable Separate Account equal to the reserves and other contract liabilities with respect to the Variable Separate Account shall not be chargeable with liabilities or obligations arising out of any other business we conduct. To the extent that those assets exceed that amount, we may use them in any way we choose. VARIABLE INVESTMENT We show the options available on the Contract Date OPTIONS on a Contract Data page. We may offer additional options. - - ------------------------------------------------------------------------------- CONTRACT FUND The term "contract fund" refers to the total of all amounts credited to your contract as of any date as a result of your initial purchase payment and the increases and decreases described below. Note that this is not the same as the "cash value" of the contract, which is described under Withdrawals below. On the contract date, the contract fund is equal to the initial invested purchase payment. After that, the fund as of any day is determined by starting with the fund at the end of the previous day and adjusting it for items that increase it or decrease it. Items that increase the contract fund are: invested purchase payments; positive investment results in a variable investment option; interest credited to an interest-rate investment option; and any positive market-value adjustment associated with a transfer or withdrawal. Items that decrease the contract fund are: withdrawals and the charges associated with them; negative investment results in a variable investment option; mortality and expense risk charges; administration charges; any applicable federal, state, or local taxes charged to the contract; and any negative market-value adjustment associated with a transfer or withdrawal. Investment results are credited daily. Mortality and expense risk charges are deducted daily. There are two administration charges: one is deducted daily, and one is deducted on the Contract Anniversary and at the time of a surrender. Other charges may be assessed only if the appropriate event occurs. The maximum charges we may deduct are shown on a Contract Data page. (VFM--96) Page 7 - - ------------------------------------------------------------------------------- MARKET-VALUE ADJUSTMENT (MVA) MARKET-VALUE The market-value adjustment (MVA) is made when a ADJUSTMENT (MVA) withdrawal or transfer is requested from an MVA option. It is used to calculate the amount available for withdrawal or transfer, and the amount remaining after the withdrawal or transfer. It applies only to the interest cell from which the withdrawal or transfer is made (no market-value adjustment will apply to an interest cell in the event of a withdrawal or transfer within the 30-day period following the cell's maturity). We determine the amount available for withdrawal from a cell in two steps. We first determine a "market-value factor." This is based on the time remaining to maturity of the interest cell and the difference between the declared interest rate for that cell and a current rate that we establish. We then multiply that interest cell's portion of the contract fund by the sum of 1 plus the market-value factor. The formula for the market-value factor is shown below. To calculate the interest cell's portion of the contract fund after the withdrawal or transfer, we first subtract the amount withdrawn or transferred (including any charges) from the interest cell's original portion of the contract fund. The remaining amount, divided by the sum of 1 plus the market-value factor, is the interest cell's portion of the contract fund after the withdrawal or transfer. MARKET-VALUE FACTOR The market-value factor is determined as: (M/12)x(R-C), where: (M) is the number of whole months (not less than one) to the interest cell's maturity date; (R) is the interest cell's declared interest rate expressed as a decimal; for example, 5 percent = .05; and (C) is the current rate referred to above, in effect on the date of the withdrawal or transfer, for a period to maturity one year longer than the number of whole years remaining until the interest cell's maturity date as of the date we receive your request. This rate is also expressed as a decimal. The market-value factor will never be greater than 0.4 or less than minus 0.4. EFFECT OF MARKET-VALUE If the current interest rate is higher than the ADJUSTMENT interest cell's declared interest rate, the market-value factor will be negative, and we will reduce the contract fund by more than the sum of the withdrawal and the withdrawal charge. If the current rate is lower, the market-value factor will be positive, and we will reduce the contract fund by less than the sum of the withdrawal and the withdrawal charge. (VFM--96) Page 8 - - ------------------------------------------------------------------------------- TRANSFERS You may transfer amounts into or out of investment options, subject to the following restrictions: 1. We impose a transaction charge, shown on a Contract Data page, if you make more than 12 transfers in a Contract Year. The charge is taken pro-rata from the investment options from which the transfer is made. 2. You may not make a transfer from an interest cell in the Fixed-Rate option, except during the 30-day period following the cell's maturity date, or under a plan for periodic transfers that we make available to all owners of contracts like this one. 3. You may not make a transfer from an investment option to the same investment option. The transfer will take effect as of the end of the valuation period on the date we receive valid notification from you, if that is a Business Day. Otherwise, it will take effect on the next Business Day. A valuation period is the period of time from one determination of the value of the amount invested in a subaccount to the next such determination. Such determinations are made once each Business Day, generally at 4:15 p.m., New York City time. Any amount transferred from an MVA cell is subject to a market-value adjustment, unless the transfer is made in the 30-day period following the maturity date of the interest cell. If you do not direct us otherwise, when we transfer money from a Fixed-Rate option or MVA option, we will take the money first from the oldest eligible interest cell in the option. (VFM--96) Page 9 - - ----------------------------==================================================== WITHDRAWALS Amount Available for You may make a withdrawal at any time prior to the Withdrawal Annuity Date while at least one Annuitant is living (the minimum withdrawal amount is shown on a Contract Data page). The total amount available for withdrawal at any time is the "cash value" of the contract. The cash value is equal to the contract fund, plus or minus the market-value adjustment of all amounts in MVA options, minus the withdrawal charge and the administrative charge that may apply for a surrender of the contract. Withdrawal Charges A withdrawal charge may apply if you make a withdrawal during the first seven Contract Years. The amount of the charge is a percentage, shown on a Contract Data page, of any amount to be withdrawn in excess of the applicable charge-free amount described below. If you ask for a withdrawal of a specific dollar amount, we will deduct enough from the contract fund to provide the withdrawal charge and provide you the amount you asked for. If you request a percentage withdrawal, unless you direct otherwise, we will apply that withdrawal pro-rata across all investment options. The requested percentage will be applied to each investment option in determining the gross amount withdrawn. In this instance, any applicable withdrawal charge, in addition to the withdrawal, will be applied pro-rata across all investment options. The withdrawal charge will never be greater than that permitted by any applicable law or regulation. Allocation of You may direct that a withdrawal be made from either Withdrawals an interest-rate investment option, a variable investment option, or both. If you direct that some or all of a withdrawal be made from an interest-rate investment option, you may direct that the withdrawal be made from a specific interest cell or cells. If you do not specify the investment option or options from which the withdrawal is to be made, here is how we will allocate the withdrawal. We will take the withdrawal (and the withdrawal charge) on a pro-rata basis from all investment options. Within the interest-rate investment options, we will take the withdrawal first from the oldest eligible interest cell or cells in those options. Charge-Free Amounts Certain amounts (the charge-free amounts) may be withdrawn without incurring a withdrawal charge. The charge-free amount available in any current Contract Year is equal to: (a) 10% of any portion of total purchase payments made in the current and all prior Contract Years in excess of total purchase payments withdrawn in prior Contract Years; plus (b) any charge-free amount available in the prior Contract Year that has not been withdrawn; plus (c) any portion of the withdrawal amount in excess of: the sum of all purchase payments made reduced by the amount of all prior withdrawals. For purposes of determining withdrawal charges and charge-free amounts, withdrawals are always assumed to come first from purchase payments. Waiver of Withdrawal We will waive all withdrawal charges upon receipt of Charges due proof that a sole or last surviving Annuitant is Terminally Ill, or has been confined to an Eligible Nursing Home or Hospital continuously for at least three months. See the General Provisions for definitions of these terms. This waiver is not available if the contract has been assigned. Page 10 (VFM-96) - - ----------------------------==================================================== BENEFICIARY You may designate or change a beneficiary to receive any amount due if the sole or last surviving Annuitant dies before the Annuity Date. You may initiate a change to the beneficiary designation by completing a change form, which you can obtain from us or from your representative. We may also ask you to send us the contract. The change will take effect only when we process the request. Then any previous beneficiary's interest will end as of the date of the request, even if no Annuitant is living when we process the request. 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 Annuitant (First Annuitant if two Annuitants are named on page 3) unless otherwise specified. To show priority among beneficiaries, we will 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. If two Annuitants are named on page 3, the term "Annuitant" refers to the last surviving Annuitant. The following statements apply to beneficiaries unless a Contract Data page, contract endorsement or change request that we have processed specifies otherwise: 1. One who survives the Annuitant will have the right to be paid only if no one in a prior class survives the Annuitant. 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 Annuitant. 3. Two or more in the same class who have the right to be paid will be paid in equal shares. 4. If none survives the Annuitant, we will pay in one sum to the Annuitant's estate. Before we make a payment, we have the right to decide what proof we need of the identity, age or any 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. Page 11 (VFM--96) - - ----------------------------==================================================== DEATH OF ANNUITANT BEFORE ANNUITY DATE If a sole or last surviving Annuitant dies before the Annuity Date, then, when we receive due proof of death and any other documentation we need, the beneficiary is entitled to receive a death benefit equal to the greatest of: (a) the contract fund as of the date we receive due proof of death and any other documentation we need; (b) the total invested purchase payments made less the total withdrawals made (including withdrawal charges); and (c) The minimum guaranteed death benefit less certain withdrawals described below. On the third Contract Anniversary, we set the minimum guaranteed death benefit equal to the contract fund. On each subsequent triennial Contract Anniversary, the minimum guaranteed death benefit is reset to the greater of: (1) the previous minimum guaranteed death benefit less total withdrawals made in the prior three Contract Years; and (2) the contract fund as of that Contract Anniversary. For death occurring between triennial Contract Anniversaries, we subtract from the minimum guaranteed death benefit any withdrawals made since the latest triennial Contract Anniversary. - - ----------------------------==================================================== DEATH OF ANNUITANT ON OR AFTER ANNUITY DATE If an Annuitant dies on or after the Annuity Date, the payout provision then in effect will govern whether and to whom we will make any payment. Page 12 (VFM--96) - - ----------------------------==================================================== PAYOUT PROVISIONS Choosing an Option You may use the contract fund as of the Annuity Date, plus or minus any market-value adjustment, to provide an income to the Annuitant(s) by choosing one or more of the options we describe below at any time before the Annuity Date. But, for any annuity option, we will first deduct any charge for taxes attributable to premiums, and any applicable withdrawal charges, described below. We offer the same annuity options to the Payee that we offer to an Annuitant. And we determine monthly payments for the Payee in the same way we do for an Annuitant. Your right to choose an option is subject to all these conditions: (1) You must ask for the option in writing and in a form which meets our needs. (2) You must send the contract to us to be endorsed. (3) If we require it, you must give us due proof of the date of birth of the person on whose life an annuity payment is based. (4) We must have your request, the contract and any required due proof(s) of the date(s) of birth before the Annuity Date. The option you choose will take effect on the Annuity Date if: (1) the person on whose life the annuity is to be based is living on that date; (2) the first payment under the option will be at least $50; and (3) you do not void the choice by making a later choice before the Annuity Date. If two Annuitants are named in the contract and both are living, payment will be based on the life of the First Annuitant, as named on page 3. Options Described When we use the word Annuitant in the following paragraphs we mean the Annuitant for whom the annuity described was chosen and who is to receive payment under the annuity. For an Annuitant, the first payment under these options will be made on the Annuity Date. For a Payee, unless a later date is requested, the first payment will be made on the first day of the earliest calendar month on or after the day we have received the request for the payout and due proof of the Annuitant's death and such claim forms and other evidence as may be satisfactory to us. Here are the options we offer. We may also consent to other arrangements. Option 1 (Installments 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 monthly payments for as long as the person on whose life the payout is based lives, with payments certain for 120 months. The Option 2 Table shows the minimum amounts we will pay. Option 3 (Interest We will hold an amount at interest at the rate Payment) indicated below. At your choice, we will pay the interest annually, semi-annually, quarterly, or monthly. Other Payout Options We may offer other payout options. Contact one of our representatives or one of our offices for information. When No Option If no choice takes effect on the Annuity Date, Chosen payout under Option 3 (Interest Payment Option) will become effective. Interest Rate Payments under any of the options will be calculated assuming an effective interest rate of at least 3% a year. We may include more interest. Withdrawal Charges If you choose Option 1 or Option 3, we will apply a withdrawal charge in the same way as we would if you had made a withdrawal (see Withdrawals). Any amount used to provide income under Option 2 may be withdrawn without charge. If you choose any other method of payment not described in this contract, we will tell you if it is subject to a withdrawal charge. Page 13 (VFM--96) - - ----------------------------==================================================== ANNUITY SETTLEMENT TABLES Amounts Payable For Options 1 and 2, we will use the table below to compute the minimum amount of the annuity payment. If the Annuity Date is not a Contract Anniversary, we will adjust the amounts accordingly. When we computed the amounts we show in the Option 2 Table, we adjusted the 1983 Table a to an age last birthday basis, less three years; we used an interest rate of 3 1/2% per year. If the age is over 80, the rate for age 80 will be used. 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. OPTION 2 TABLE Amount of Annuity Payment for each $1,000 applied on the Annuity Date AGE MALE FEMALE AGE MALE FEMALE --- ---- ------ --- ---- ------ 41 $3.88 $3.67 61 $5.25 $4.79 42 3.92 3.70 62 5.36 4.89 43 3.97 3.74 63 5.48 4.98 44 4.01 3.78 64 5.60 5.09 45 4.06 3.82 65 5.73 5.20 46 4.12 3.86 66 5.87 5.31 47 4.17 3.90 67 6.01 5.43 48 4.23 3.94 68 6.15 5.56 49 4.28 3.99 69 6.30 5.70 50 4.35 4.04 70 6.46 5.84 51 4.41 4.09 71 6.62 5.99 52 4.48 4.15 72 6.79 6.15 53 4.55 4.21 73 6.96 6.31 54 4.62 4.27 74 7.13 6.49 55 4.70 4.33 75 7.30 6.67 56 4.78 4.40 76 7.48 6.85 57 4.86 4.47 77 7.66 7.04 58 4.95 4.54 78 7.83 7.24 59 5.05 4.62 79 8.00 7.44 60 5.15 4.71 80 8.17 7.64 Page 14 (VFM-96) - - ----------------------------==================================================== GENERAL PROVISIONS Quarterly Report We will send you a report four times each calendar year until the Annuity Date. It will show the contract fund, the cash value, the death benefit as of the report date, the guaranteed minimum death benefit as of the report date, interest and any other credits applied during the period covered by the report, and charges and withdrawals during the period covered by the report. The report will include any other data that may be required where this contract is delivered. You may ask for a report like this at any time. But, except for the four reports we send you during the year, we have the right to charge a fee for each report. The Contract This document forms the whole contract. Contract Modifications Only one of our officers with the rank or title of vice president or above may agree to modify this contract, and then only in writing. Change of Annuity You may change your Annuity Date if we consent. Any Date such change will be subject to conditions that we then determine. Ownership and Control Unless we endorse this contract to say otherwise: (1) the Annuitant (the First Annuitant, if two are named) is the owner of the contract; (2) while any Annuitant is living the owner alone is entitled to any contract benefit and value, and the exercise of any right or privilege granted by the contract or by us; (3) if two Annuitants are named and the First Annuitant dies while the Co-Annuitant is living, the Co-Annuitant will become the owner; and (4) if there is no Co-Annuitant and no contingent owner has been named, on the death of the owner, the beneficiary becomes the owner for purposes of Section 72(s) of the Internal Revenue Code of 1986, as amended, or any successor provision. Currency Any money we pay, or which is paid to us, must be in United States currency. Misstatement of Age If any Annuitant's stated sex or date of birth or or Sex both are not correct, we will change each benefit and the amount of each annuity payment to that which the total purchase payment amounts would have bought for the correct sex and date of birth. Also, we will adjust the amount of any payments we have already made. Here is how we will do it: (1) We will deduct any overpayments, with interest at 5% a year, from any payment(s) due then or later. (2) We will add any underpayments, with interest at 5% a year, to the next payment we make after we receive proof of the correct sex and date of birth. Incontestability We will not contest this contract. We consider all statements made in the application for this contract to be representations, not warranties. Proof of Life or Death Before we make a payment, we have the right to require proof of continued life or proof of death, and any other documentation we need to make the payment, for any person whose life or death determines whether or to whom we must make the payment. Page 15 (VFM--96) Assignment We are under no obligation to comply with or honor an assignment unless we receive it, or a copy of it. We are not obliged to see that an assignment is valid or sufficient. If any Annuitant is living on the Annuity Date and an assignment is in effect on that date, we have the right to pay the cash value in one sum to the assignee. This contract may not be assigned to a tax-qualified retirement plan or program without our approval. Deferring Payment We will usually pay any death benefit or withdrawal promptly. If the death benefit or withdrawal is to be paid from a variable investment option, we have the right to defer that payment for any period during which the New York Stock Exchange is closed for trading (except for normal holiday closing) or when the Securities and Exchange Commission has determined that a state of emergency exists which may make payment of the death benefit or withdrawal impractical. Changes We reserve the right, upon 90 days notice to you to: 1. restrict or refuse to accept any purchase payment; 2. establish minimum percentage and dollar amounts for invested purchase payment allocations; 3. change any or all terms and provisions of the Annuity Settlement Tables, but only with respect to any portion of an annuity settlement deriving from purchase payments made on or after the effective date of the change and from earnings on those purchase payments; and 4. make any changes required by law. Participation This contract is eligible to participate in our (Dividends) divisible surplus. We do not expect that any dividends will be payable on or before the Annuity Date. While any payout provision or arrangement is in effect, the contract will share in our surplus to the extent and in the way we decide. Page 16 (VFM--96) Terminally Ill We consider someone terminally ill who has a life expectancy of six months or less. Proof of Terminal Illness must include a certification by a licensed physician. Eligible Nursing Home An institution or special nursing unit of a hospital that meets at least one of the following requirements: 1. It is Medicare approved as a provider of skilled nursing care services; 2. It is licensed as a skilled nursing home or as an intermediate care facility by the state it is located in; or 3. It meets all the following requirements: (a) It is licensed as a nursing home by the state it is located in; (b) Its main function is to provide skilled, intermediate, or custodial nursing care; (c) It is engaged in providing continuous room and board accommodations to 3 or more persons; (d) It is under the supervision of a registered nurse (RN) or licensed practical nurse (LPN); (e) It maintains a daily medical record of each patient; and (f) It maintains control and records for all medications dispensed. Institutions that primarily provide residential facilities are not eligible nursing homes. Eligible Hospital An institution that meets either of the following requirements: 1. It is accredited as a hospital under the Hospital Accreditation Program of the Joint Commission on Accreditation of Healthcare Organizations; or 2. It is legally operated, has 24-hour a day supervision by a staff of doctors, has 24-hour a day nursing service by registered graduate nurses, and either: (a) It mainly provides general inpatient medical care and treatment of sick and injured persons by the use of medical, diagnostic and major surgical facilities. All such facilities are located in it or are under its control; or (b) It mainly provides specialized inpatient medical care and treatment of sick or injured persons by the use of medical and diagnostic facilities (including x-ray and laboratory). All such facilities are located in it, are under its control, or are available to it under a written agreement with a hospital (as defined above) or with a specialized provider of these facilities. An eligible hospital is not an institution, or part of one, that: (a) furnishes mainly homelike or custodial care, or training in the routines of daily living; or (b) is mainly a school. Page 17 (VFM--96) - - ----------------------------==================================================== Variable Annuity Contract with Flexible Purchase Payments. Annuity payments starting on Annuity Date. Benefit payable as stated upon death before Annuity Date. Contract values reflect investment results. Market-Value-Adjustment option subject to market-value adjustments. Eligible for annual dividends as stated under Participation. Page 18 (VFM--96) EX-99.6(A) 5 ARTICLES OF INCORPORATION Exhibit 6(a) ARTICLES OF INCORPORATION OF PRUCO LIFE INSURANCE COMPANY ---------- KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, having associated ourselves together for the purpose of forming a corporation under the laws of the State of Arizona, hereby adopt the following articles of incorporation. I. The names of the incorporators and their residences and post office addresses are as shown at the foot hereof. The name of the corporation shall be Pruco Life Insurance Company and its principal place of business shall be at Phoenix, Arizona, but the Board of Directors may designate other places of business either within or outside the State of Arizona where offices may be established, any or all business of the corporation transacted and the meetings of the Board of Directors and stockholders held. II. The nature of the business to be transacted and the objects and purposes for which this corporation is formed are: (a) To engage in business as a domestic stock life and disability insurer under the laws of the State of Arizona and to conduct such business in other jurisdictions where it may qualify; to deal in life insurance, endowments, annuities, accident insurance, health insurance and any combinations thereof, the benefits of which may be fixed or variable, or both, and to engage in any other business or type of business which any other corporation now or hereafter incorporated under the laws of the State of Arizona and empowered to conduct a life or disability insurance business may lawfully do; to issue policies or other contracts with or without participation in profits, savings or unabsorbed portions of premiums; to accept and cede reinsurance of any such risks or hazards; (b) To make investments of any kind permitted under the insurance laws of the State of Arizona as such laws exist from time to time; (c) To establish and maintain separate investment accounts of any type or amount in accordance with resolutions adopted by the Board of Directors; (d) To purchase, acquire, own, hold, guarantee, sell, assign, transfer, pledge or otherwise deal in and dispose of shares, bonds, notes, debentures or other securities or evidences of indebtedness of any other person, corporation, partnership, limited partnership or other association, whether domestic or foreign, and whether now or hereafter organized and existing, and while the holder thereof to exercise all the rights, powers and privileges of ownership, including the right to vote thereon, to the same extent as a natural person could do; bonds, notes, debentures or other evidences of indebtedness purchased or otherwise acquired may be secured or unsecured; (e) To acquire by purchase, lease or otherwise and to own, hold, use, sell, assign, transfer, pledge or otherwise deal in and dispose of any other kind of personal property; (f) To acquire by purchase, lease or otherwise, real property, and interests in real property, and to own, hold, improve, develop, manage and dispose of any real property or interests so acquired; to erect or cause to be erected on any such real property, buildings or other structures with their appurtenances; and to mortgage, rent, sell or otherwise hold or dispose of any such property; -2- (g) To foreclose by entry or otherwise, extend, assign or give partial releases from and discharge mortgages, deeds of trust or pledges and to bid for and become the purchaser of any real or personal property sold at any foreclosure or other sale. (h) To borrow money for any of the purposes of this corporation, and to issue the corporation's note or notes therefor in series or otherwise; to execute and issue bonds, debentures or other obligations, in series or otherwise; and to issue or cause to be issued certificates and other negotiable or transferable instruments; to mortgage or pledge any or all of the assets of the corporation as security for the performance of the covenants of such bonds, notes, debentures, certificates or other instruments, upon such terms and conditions as may be set out in such instrument or instruments, mortgaging or pledging the same, or in any deed, contract or instrument relating thereto. (i) To act as trustee, broker or in any fiduciary capacity; to become surety for others and to endorse commercial paper. (j) To promote or to aid in any manner, financially or otherwise, any person, corporation, partnership, limited partnership or other association of which any shares, bonds, notes, debentures or other securities or evidences of indebtedness are held, directly or indirectly, by this corporation; and for this purpose to guarantee the contracts, dividends, shares, bonds, debentures, notes and other obligations of such other persons, corporations, partnerships, limited partnerships or associations, and to do any other act or things designed to protect, preserve, improve or enhance the value of such shares, bonds, notes, debentures or other securities or evidences of indebtedness. (k) To do all and every thing necessary, suitable or proper for the accomplishment of any of the purposes, or attainment of any of the objects hereinbefore enumerated, either alone or in association with other persons, corporations, partnerships, limited partnerships or other associations, as principal, agent, broker, contractor, partner, limited partner, joint venturer, trustee or otherwise, and in general to engage in any and all lawful business that may be necessary or convenient in carrying out the business of the corporation and to do any and every other act or acts, -3- thing or things, incidental to, growing out of or connected with the business or any part or parts thereof. The designation of any object or purpose herein shall not be construed to be a limitation or qualification or in any manner to limit or restrict the purposes and objects of the corporation. The powers enumerated shall be exercisable only to the extent permitted by law. III. The authorized amount of capital stock of the corporation shall be one hundred thousand (100,000) shares of common stock with Ten Dollar ($10.00) par value. The common stock shall be issued and paid for at such time or times and in such manner as the Board of Directors shall determine and when issued and paid for shall be non-assessable except as provided by Article 14, Section 11, of the Constitution of Arizona. IV. The time of the commencement of this corporation shall be the day of issuance to it of a certificate of incorporation by the Arizona Corporation Commission, and its existence shall be perpetual. V. The business and affairs of this corporation shall be conducted by a Board of Directors of not less than five (5) nor more than fifteen (15) members, the exact number to be determined, within these limits, in -4- accordance with the By-laws. The first Board of Directors and the initial officers of the corporation, to serve until the first annual meeting, shall be: Name Position Address - - ---- -------- ------- Kenneth C. Foster Director and President Prudential Plaza Newark, N. J. 07101 Robert A. Beck Director and Vice President Prudential Plaza Newark, N. J. 07101 Frank J. Hoenemeyer Director Prudential Plaza Newark, N. J. 07101 Fredrick E. Rathgeber Director Prudential Plaza Newark, N. J. 07101 Jack T. Kvernland Director, Prudential Plaza Vice President and Newark, N J. 07101 Actuary Alan M. Thaler Director and Vice 3003N. Central Ave. President Phoenix, Ariz. 85012 Clifford H. Whitcomb Comptroller Prudential Plaza Newark, N. J. 07101 Bryan Wilson Treasurer Prudential Plaza Newark, N. J. 07101 David H. Fredericks Secretary Prudential Plaza Newark, N. J. 07101 The directors, who need not be stockholders, shall be elected at the annual meeting of the stockholders, which shall be held at the principal office of the corporation in Phoenix, Arizona, or at any other place determined by the Board of Directors on the first Wednesday in May of each year, -5- commencing with the year 1972, at an hour to be named in the notice or waiver of notice of the meeting. If the date of the annual meeting falls on a legal holiday, the meeting shall be held on the next succeeding business day. A director shall serve until the next annual meeting of the stockholders and until his successor is duly elected and qualified. The Board of Directors shall have exclusive power to elect, at any regular or special meeting, such officers as permitted by the By-laws for the management of corporate business, such officers to serve at the pleasure of the Board. The offices may include, but are not limited to, those of President, Vice-President, Secretary, Treasurer, Actuary and Comptroller. The Board of Directors shall have power, without the assent or vote of the shareholders, to make, alter and repeal By-laws, but By-laws made by the Board may be altered or repealed and new By-laws made by the shareholders. -6- VI. The highest amount of the indebtedness or liability, direct or contingent, to which the corporation shall at any time subject itself shall be the maximum allowed under the laws of the State of Arizona. VII. The private property of the stockholders, directors and officers of the corporation shall at all times be exempt from all corporate debts and liabilities whatsoever. VIII. Thomas W. Wiley, whose address is 1700 First National Bank Plaza, Phoenix, Arizona 85003, and who has been a bona fide resident of the State of Arizona for more than three (3) years last past, is hereby appointed and designated statutory agent for the corporation for the State of Arizona upon whom service of process may be had. IN WITNESS WHEREOF, the undersigned incorporators have hereunto affixed their signatures as of -7- this ___________ day of December, 1971. Incorporator Address ------------ ------- - - ---------------------------- Prudential Plaza John T. Andrews, Jr. Newark, N. J. 07101 - - ---------------------------- 1700 First National Bank Plaza Thomas W. Wiley Phoenix, Arizona 85003 - - ---------------------------- 1700 First National Bank Plaza Calvin H. Udall Phoenix, Arizona 85003 - - ---------------------------- 1700 First National Bank Plaza Richard A. Miller Phoenix, Arizona 85003 - - ---------------------------- 1700 First National Bank Plaza Robert P. Robinson Phoenix, Arizona 85003 PRUCO, INC., a New Jersey corporation By__________________________ Prudential Plaza Newark, N.J. 07101 -8- STATE OF NEW JERSEY ) ) SS. County of Essex ) The foregoing instrument was acknowledged before me this _________ day of December, 1971, bv John T. Andrews, Jr. --------------------------------- Notary Public My commission expires: - - ------------------------------------ STATE OF ARIZONA ) ) SS. County of Maricopa ) The foregoing instrument was acknowledged before me this __________ day of December, 1971, by Thomas W. Wiley. --------------------------------- Notary Public My commission expires: - - ------------------------------------ STATE OF ARIZONA ) ) SS. County of Maricopa ) The foregoing instrument was acknowledged before me this __________ day of December, 1971, by Calvin H. Udall. --------------------------------- Notary Public My commission expires: - - ------------------------------------ -9- STATE OF ARIZONA ) ) SS. County of Maricopa ) The foregoing instrument was acknowledged before me this __________ day of December, 1971, by Richad A. Miller. --------------------------------- Notary Public My commission expires: - - ------------------------------------ STATE OF ARIZONA ) ) SS. County of Maricopa ) The foregoing instrument was acknowledged before me this __________ day of December, 1971, by Robert P. Robinson. --------------------------------- Notary Public My commission expires: - - ------------------------------------ -10- STATE OF NEW JERSEY ) ) SS. County of Essex ) The foregoing instrument was acknowledged before me this __________ day of December, 1971, by ______________, ______________ of Pruco, Inc., a New Jersey corporation, on behalf of the corporation. --------------------------------- Notary Public My commission expires: - - ------------------------------------ -11- STATE OF ARIZONA CORPORATION COMMISSION [SEAL OF THE ARIZONA CORPORATION COMMISSION] TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING: BE IT KNOWN THAT PRUCO LIFE INSURANCE COMPANY HAVING SUBMITTED TO THE ARIZONA CORPORATION COMMISSION EVIDENCE OF COMPLIANCE WITH THE LAWS OF THE STATE OF ARIZONA GOVERNING THE INCORPORATION OF COMPANIES, IS, BY VIRTUE OF THE POWER VESTED IN THE COMMISSION UNDER THE CONSTITUTION AND THE LAWS OF THE STATE OF ARIZONA, HEREBY GRANTED THIS CERTIFICATE OF INCORPORATION AUTHORIZING SAID COMPANY TO EXERCISE THE FUNCTIONS OF A CORPORATION, UNDER THE LAWS NOW IN EFFECT IN THE STATE OF ARIZONA, AND SUBJECT TO SUCH LAWS AS MAY HEREAFTER BE ENACTED, AND SHALL HAVE PERPETUAL EXISTENCE FROM THE DATE HEREOF, UNLESS SOONER REVOKED BY AUTHORITY OF LAW. BY ORDER OF THE ARIZONA CORPORATION COMMISSION. IN WITNESS WHEREOF, I, RUSSELL WILLIAMS THE CHAIRMAN, HAVE HEREUNTO SET MY HAND AND CAUSED THE OFFICIAL SEAL OF THE ARIZONA CORPORATION COMMISSION TO BE AFFIXED AT THE CAPITOL, IN THE CITY OF PHOENIX, THIS 23rd DAY OF DECEMBER A.D. 1971. /s/ RUSSELL WILLIAMS ---------------------------- Chairman. ATTEST: /s/ WILLIAM R. JOHNSON - - ------------------------------ Secretary. NO. 85396 BY ___________________________ Assistant Secretary. Inc. 382A [Union Label] (7-62)2M R-20 Amendment of Articles of Incorporation Resolution ------------------------------------------------- The Chairman then stated that it was advisable and to the best interests of the Corporation to amend the Articles of Incorporation to expand the powers of the Corporation and increase the authorized shares of capital stock to l,000,000 shares of common stock with a par value of $10 per share. He recommended that the Board authorize the submission of these proposed amendments to the stockholder of the Corporation, for consideration and approval. On motion duly made, seconded and unanimously carried, it was RESOLVED, that it is hereby declared advisable and in the best interest of the Corporation to amend the Articles of Incorporation of the Corporation in the following respects: (1) Enlarging the objects and purposes for which the Corporation has been formed, and for that purpose substituting for the present Paragraph (a) of Article II of the Articles of Incorporation a new Paragraph (a) reading as follows: "(a) To engage in business as a domestic stock life and disability insurer under the laws of the State of Arizona and to conduct such business in other jurisdictions where it may qualify; to deal in life insurance, endowments, annuities, accident insurance, health insurance and any combinations thereof, the benefits of which may be fixed or variable, or both; to issue policies or other contracts with or without participation in profits, savings or unabsorbed portions of premiums; to accept and cede reinsurance of any such risks or hazards; and to engage in any other business or type of business which any other corporation now or hereafter incorporated under the laws of the State of Arizona and empowered to conduct a life and disability insurance business may lawfully do, such as the performance of services, independently of any insurance or annuity contract, of the kinds it performs in the normal conduct of its insurance or annuity business, including, but not limited to, consultative, administrative, investment, actuarial, loss prevention, data processing, accounting, safety engineering, claims, appraisal and collection services." (2) Increasing the authorized capital stock of the Corporation, and for that purpose substituting for the present Article III of the Articles of Incorporation a new Article III reading as follows: "The authorized amount of capital stock of the corporation shall be one million (1,000,000) shares of common stock with Ten Dollar ($10.00) par value. The common stock shall be issued and paid for at such time or times and in such manner as the Board of Directors shall determine and when issued and paid for shall be non-assessable except as provided by Article 14, Section 11, of the Constitution of Arizona." FURTHER RESOLVED, that the proposed amendments be submitted for the consideration and approval to the sole stockholder of the Corporation, which approval shall be in the form of a written consent of the stockholder in lieu of a meeting; and that the proper officers of the Corporation are, upon approval of such amendments by the stockholder, hereby authorized and directed, in the name and on behalf of the Corporation, to execute and acknowledge and to file, record and publish, or cause to be filed, recorded and published in the name of the Corporation, a Certificate of Amendment of the Corporation's Articles of Incorporation, giving effect to the above-described amendments, all in accordance with the provisions of the insurance Code of the State of Arizona, and to do all other acts or things necessary, desirable or appropriate to be done in order to effectuate the purposes of the preceding resolutions. 93-44 PRUCO LIFE INSURANCE COMPANY Action by Board of Directors by Unanimous Consent Pursuant to Section 4.12 of Article IV of the By-Laws of Pruco Life Insurance Company, an Arizona corporation, and under Section 10-044 of the Arizona General Corporation Law, the undersigned being all of the members of the Board of Directors of such Company, hereby consent to and adopt the following resolutions: R-693 Amendment to Articles of Incorporation -------------------------------------- WHEREAS, the Arizona General Corporation Law permits the elimination of directors' personal liability for monetary damages under certain circumstances; and WHEREAS, the elimination of directors' liability may be accomplished through an amendment to the Company's Articles of Incorporation; and WHEREAS, it is deemed by this Board to be in the best interests of the Company so to amend the Company's Articles of Incorporation; NOW, THEREFORE, BE IT RESOLVED, that this Board deems it advisable that the Articles of Incorporation of the Company be amended in the following manner: A new Article IX shall be added to the Articles of Incorporation of Pruco Life Insurance Company which shall read in its entirety as follows: (a) Under no circumstances shall a director of the Corporation be held personally liable to the Corporation or to its stockholders for monetary damages as a result of that director's breach of fiduciary duty as a director; provided, however, that this Article shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) for authorizing the unlawful payment of a dividend or other distribution of the 93-45 corporation's capital stock or the unlawful purchase of its capital stock; (iv) for any transaction from which the director derives any improper personal benefit; and (v) for violation of ss. 10-041 of the Arizona Revised Statutes or any successor statute thereof dealing with director conflicts of interest. (b) This Article shall eliminate the liability of a director for any act or omission occurring on or after the effective date hereof, the date upon which this Article is filed with the Arizona Secretary of State. (c) Neither the amendment or repeal of this Article nor the adoption of any provision of these Amended Articles of Incorporation which is inconsistent with this Article shall apply to or have any effect on the liability or alleged liability of any Director of the corporation for or with respect to any act or omission of such Director occurring prior to such amendment, repeal or adoption. FURTHER RESOLVED, that this amendment be presented to the Company's sole stockholder for consideration and adoption thereof; and FURTHER RESOLVED, that the officers of the Company are hereby authorized to do all acts and things from time to time necessary, desirable and appropriate to be done in order to effectuate the purposes of this and the immediately preceding resolutions. Dated: October 19, 1993 /s/ ESTHER H. MILNES /s/ IRA J. KLEINMAN - - ---------------------------------- ---------------------------------- Esther H. Milnes Ira J. Kleinman /s/ ROBERT P. HILL /s/ I. EDWARD PRICE - - ---------------------------------- ---------------------------------- Robert P. Hill I. Edward Price /s/ E. MICHAEL CAULFIELD /s/ DONALD G SOUTHWELL - - ---------------------------------- ---------------------------------- E. Michael Caulfield Donald G. Southwell /s/ GARNETT L. KEITH, JR. - - ---------------------------------- Garnett L. Keith, Jr. 93-46 PRUCO LIFE INSURANCE COMPANY ACTION BY STOCKHOLDER BY UNANIMOUS CONSENT ------------------------------------------ THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, being the owner and holder of all of the issued and outstanding stock of Pruco Life Insurance Company, an Arizona corporation, acting pursuant to the laws of the State of Arizona and Section 3.08 of Article III of the By-Laws of Pruco Life Insurance Company, hereby votes such stock in favor of the following amendment to the Articles of Incorporation of Pruco Life Insurance Company: A new Article IX shall be added to the Articles of Incorporation of Pruco Life Insurance Company which shall read in its entirety as follows: (a) Under no circumstances shall a director of the Corporation be held personally liable to the Corporation or to its stockholders for monetary damages as a result of that director's breach of fiduciary duty as a director; provided, however, that this Article shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) for authorizing the unlawful payment of a dividend or other distribution of the corporation's capital stock or the unlawful purchase of its capital stock; (iv) for any transaction from which the director derives any improper personal benefit; and (v) for violation of ss. 10-041 of the Arizona Revised Statutes or any successor statute thereof dealing with director conflicts of interest. (b) This Article shall eliminate the liability of a director for any act or omission occurring on or after the effective date hereof, the date upon which this Article is filed with the Arizona Secretary of State. 93-47 (c) Neither the amendment or repeal of this Article nor the adoption of any provision of these Amended Articles of Incorporation which is inconsistent with this Article shall apply to or have any effect on the liability or alleged liability of any Director of the corporation for or with respect to any act or omission of such Director occurring prior to such amendment, repeal or adoption. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By /s/ ROBERT C. WINTERS ----------------------------------------- Robert C. Winters Chairman and Chief Executive Officer October 19, 1993 AFFIDAVIT OF PUBLICATION Number _______________________ Amend Articles of Incorporation THE PRUDENTIAL LIFE INSURANCE COMPANY OF ARIZONA THE RECORD REPORTER STATE OF ARIZONA SS. COUNTY OF MARICOPA WHITNEY PIRLOT, being first sworn, upon oath deposes and says: That she is the associate publisher of THE RECORD REPORTER a newspaper of general circulation in the County of Maricopa, State of Arizona at Phoenix, Arizona, and that the copy hereto attached is a true copy of the advertisement as published daily except Sunday and Legal Holidays in The Record Reporter on the following dates: APR. 16, 18, 19, 1994 - - -------------------------------------------------------------------------------- /s/ WHITNEY PIRLOT --------------------------------------------------- Subscribed and sworn to before me on the __ day of 04/19/94 _____________________________________ A.D. 19/_____ /s/ TANYA KAY HOWARD --------------------------------------------------- Tanya Kay Howard My Commission Expires: August 11, 1996 State of Arizona Articles of Amendment to the Articles of Incorporation of The Prudential Life Insurance Company of Arizona Pursuant to the provisions of A.R.S. Section 10-061, the undersigned corporation adopts the following articles of amendment to its articles of incorporation: FIRST: The name of the corporation is The Prudential Life Insurance Company of Arizona. SECOND: The document attached hereto as Exhibit A sets forth an amendment to the articles of incorporation. THIRD: The date of adoption of the amendment by the sole shareholder of the corporation was October 19, 1993. FOURTH: The number of shares outstanding and entitled to vote with regard to this amendment is 200,000. FIFTH: The number of shares voted in favor of the amendment was 200,000 and the number of shares voted against the amendment was none. Dated: October 19, 1993 The Prudential Life Insurance Company of Arizona By /s/ Esther H. Milnes President By /s/ (illegible) Assistant Secretary Subscribed to and sworn before me a Notary Public for the State of New Jersey. /s/Patricia Encinas Notary Public My Commission Expires: June 2, 1994 Exhibit A liability or any Director of the corporation for or with respect to any act or omission of such Director occurring prior to such amendment, repeal or adoption. Published: Apr. 16, 18, 19, 1994 Request of: The Prudential C12463-2A AFFIDAVIT OF PUBLICATION Number _______________________ Amend Articles of Incorporation PRUCO LIFE INSURANCE COMPANY THE RECORD REPORTER STATE OF ARIZONA SS. COUNTY OF MARICOPA WHITNEY PIRLOT, being first sworn, upon oath deposes and says: That she is the associate publisher of THE RECORD REPORTER a newspaper of general circulation in the County of Maricopa, State of Arizona at Phoenix, Arizona, and that the copy hereto attached is a true copy of the advertisement as published daily except Sunday and Legal Holidays in The Record Reporter on the following dates: APR. 16, 18, 19, 1994 - - -------------------------------------------------------------------------------- /s/ WHITNEY PIRLOT --------------------------------------------------- Subscribed and sworn to before me on the __ day of 04/19/94 _____________________________________ A.D. 19/_____ /s/ TANYA KAY HOWARD --------------------------------------------------- Tanya Kay Howard My Commission Expires: August 11, 1996 State of Arizona Articles of Amendment to the Articles of Incorporation of Pruco Life Insurance Company Pursuant to the provisions of A.R.S. Section 10-061, the undersigned corporation adopts the following articles of amendment to its articles of incorporation: FIRST: The name of the corporation is Pruco Life Insurance Company. SECOND: The document attached hereto as Exhibit A sets forth an amendment to the articles of incorporation. THIRD: The date of adoption of the amendment by the sole stockholder of the corporation was October 19, 1993. FOURTH: The number of shares outstanding and entitled to vote with regard to this amendment is 250,000. FIFTH: The number of shares voted in favor of the amendment was 250,000 and the number of shares voted against the amendment was none. Dated: October 19, 1993 Pruco Life Insurance Company by /s/Esther H. Milnes President By /s/(illegible) Assistant Secretary Subscribed to and sworn before me a Notary Public for the State of New Jersey. /s/ Patricia Encinas Notary Public My Commission Expires: June 2, 1994 Exhibit A PRUCO LIFE INSURANCE COMPANY Amendment to Articles of Incorporation A new Article IX shall be added to the Articles of Incorporation of Pruco Life Insurance Company which shall read in its entirety as follows: (a) Under no circumstances shall a director of the Corporation be held personally liable to the Corporation or to its stockholders for monetary damages as a result of that director's breach of fiduciary duty as a State of Arizona Articles of Amendment to the Articles of Incorporation of Pruco Life Insurance Company Pursuant to the provisions of A.R.S. Section 10-061, the undersigned corporation adopts the following articles of amendment to its articles of incorporation: FIRST: The name of the corporation is Pruco Life Insurance Company. SECOND: The document attached hereto as Exhibit A sets forth an amendment to the articles of incorporation. THIRD: The date of adoption of the amendment by the sole stockholder of the corporation was October 19, 1993. FOURTH: The number of shares outstanding and entitled to vote with regard to this amendment is 250,000. FIFTH: The number of shares voted in favor of the amendment was 250,000 and the number of shares voted against the amendment was none. Dated: October 19, 1993 Pruco Life Insurance Company By /s/ ESTER H. MILNES --------------------------------- President By /s/ THOMAS CASTANO --------------------------------- Assistant Secretary Subscribed to and sworn before me a Notary Public for the State of New Jersey. PATRICIA ENCINAS --------------------------------- Notary Public Patricia Encinas Notary Public of New Jersey My Commission Expires June 2, 1994 Exhibit A PRUCO LIFE INSURANCE COMPANY Amendment to Articles of Incorporation A new Article IX shall be added to the Articles of Incorporation of Pruco Life Insurance Company which shall read in its entirety as follows: (a) Under no circumstances shall a director of the Corporation be held personally liable to the Corporation or to its stockholders for monetary damages as a result of that director's breach of fiduciary duty as a director; provided, however, that this Article shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) for authorizing the unlawful payment of a dividend or other distribution of the corporation's capital stock or the unlawful purchase of its capital stock; (iv) for any transaction from which the director derives any improper personal benefit; and (v) for violation of ss10-041 of the Arizona Revised Statutes or any successor statute thereof dealing with director conflicts of interest. (b) This Article shall eliminate the liability of a director for any act or omission occurring on or after the effective date hereof, the date upon which this Article is filed with the Arizona Secretary of State. (c) Neither the amendment or repeal of this Article nor the adoption of any provision of these Amended Articles of Incorporation which is inconsistent with this Article shall apply to or have any effect on the liability or alleged liability of any Director of the corporation for or with respect to any act or omission of such Director occurring prior to such amendment, repeal or adoption. 93-48 PRUCO LIFE INSURANCE COMPANY Action by the Executive Committee of the Board of Directors By Unanimous Consent Pursuant to Section 4.12 of Article IV of the By-Laws of Pruco Life Insurance, an Arizona corporation, and under Section 10-044 of the Arizona General Corporation Law, the undersigned, being or acting for all of the regular members of the Executive Committee of the Board of Directors of such Company, hereby consent to and adopt the following resolution: R-694 Amendment to The Prudential Life Insurance Company of Arizona's Articles of Incorporation RESOLVED, that the Company as sole stockholder of The Prudential Life Insurance Company of Arizona hereby approves the execution of written stockholder consents or proxies to amend the Articles of Incorporation of The Prudential Life Insurance Company of Arizona, which amendment limits the liability of the Directors of The Prudential Life Insurance Company of Arizona; and FURTHER RESOLVED, that authority is hereby delegated to the Chairman of the Board and Chief Executive Officer, President or any Vice President of the Company to act for and in the name of the Company as holder of all the common stock of The Prudential Life Insurance Company of Arizona, either by executing proxies or written consents, to vote such common stock in favor of the amendments to the Articles of Incorporation as described in the immediately preceding resolution, in such form as shall be approved by the officer giving the proxies or executing the written consents, such approval to be conclusively evidenced by the execution thereof; and FURTHER RESOLVED, that the officers of the Company are hereby authorized to do all acts and things from time to time necessary, desirable and appropriate to be done in order to effectuate the purposes of this and the immediately preceding resolutions. Dated: October 19, 1993 /s/ ESTHER H. MILNES --------------------------------- Esther H. Milnes /s/ ROBERT P. HILL --------------------------------- Robert P. Hill /s/ I. EDWARD PRICE --------------------------------- I. Edward Price 93-49 PRUCO LIFE INSURANCE COMPANY Action by the Executive Committee of the Board of Directors By Unanimous Consent Pursuant to Section 4.12 of Article IV of the By-Laws of Pruco Life Insurance Company, an Arizona corporation, the undersigned, being or acting for all of the regular members of the Executive Committee of the Board of Directors of such Company, hereby consent to and adopt the following resolution: R-695 Amendment to Pruco Life Insurance Company of New Jersey's Certificate of Incorporation RESOLVED, that the Company as sole stockholder of Pruco Life Insurance Company of New Jersey hereby approves the execution of written shareholder consents or proxies to amend the Certificate of Incorporation of Pruco Life Insurance Company of New Jersey, which amendment limits the liability of the Directors and officers of Pruco Life Insurance Company of New Jersey; and FURTHER RESOLVED, that authority is hereby delegated to the Chairman of the Board and Chief Executive Officer, President or any Vice President of the Company to act for and in the name of the Company as holder of all the common stock of Pruco Life Insurance Company of New Jersey, either by executing proxies or written consents, to vote such common stock in favor of the amendments to the Certificate of Incorporation as described in the immediately preceding resolution, in such form as shall be approved by the officer giving the proxies or executing the written consents, such approval to be conclusively evidenced by the execution thereof; and FURTHER RESOLVED, that the officers of the Company are hereby authorized to do all acts and things from time to time necessary, desirable and appropriate to be done in order to effectuate the purposes of this and the immediately preceding resolutions. Dated: October 19, 1993 /s/ ESTHER H. MILNES --------------------------------- Esther H. Milnes /S/ ROBERT P. HILL --------------------------------- Robert P. Hill /S/ I. EDWARD PRICE --------------------------------- I. Edward Price EX-99.8(A) 6 FUND PARTICIPATION AGREEMENT Exhibit 8(a) FUND PARTICIPATION AGREEMENT THIS AGREEMENT made as of the _____ day of ___________, _____, by and between _____________________ ("TRUST"), a _____________________, trust, _____________________ ("ADVISER"), a_____________________, and_____________________ INSURANCE COMPANY ("the COMPANY"), a life insurance company organized under the laws of the State of _____________________. WHEREAS, TRUST is registered with the Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940, as amended (the "'40 Act"), as an open-end, diversified management investment company; and WHEREAS, TRUST is organized as a series fund comprised of several Funds ("Funds"), those currently available are listed on Appendix A hereto; and WHEREAS, TRUST was organized to act as the funding vehicle for certain variable life insurance and/or variable annuity contracts ("Variable Contracts") offered by life insurance companies through separate accounts ("Separate Accounts") of such life insurance companies ("Participating Insurance Companies") and also offers its shares to certain qualified pension and retirement plans ("Qualified Plans"); and WHEREAS, TRUST has applied for an order from the SEC, 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 '40 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Funds of the TRUST to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated Participating Insurance Companies and Qualified Plans ("Exemptive Order"); and WHEREAS, the COMPANY has established or will establish one or more separate accounts ("Separate Accounts") to offer Variable Contracts and is desirous of having TRUST as one of the underlying funding vehicles for such Variable Contracts; and WHEREAS, ADVISER is registered with the SEC as an investment adviser under the investment Advisers Act of 1940 and as a broker-dealer under the Securities Exchange Act of 1934, as amended and acts as the TRUST's investment adviser and principal underwriter; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the COMPANY intends to purchase shares of TRUST to fund the aforementioned Variable 1 Contracts and TRUST is authorized to sell such shares to the COMPANY at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the COMPANY, TRUST, and ADVISER agree as follows: Article I. SALE OF TRUST SHARES 1.1 TRUST agrees to make available to the Separate Accounts of the COMPANY shares of the selected Funds as listed on Appendix B for investment of purchase payments of Variable Contracts allocated to the designated Separate Accounts as provided in TRUST'S Registration Statement. 1.2 TRUST agrees to sell to the COMPANY those shares of the selected Funds of TRUST which the COMPANY orders, executing such orders on a daily basis at the net asset value next computed after receipt by TRUST or its designee of the order for the shares of TRUST. For purposes of this Section 1.2, the COMPANY shall be the designee of TRUST for receipt of such orders from the designated Separate Account and receipt by such designee shall constitute receipt by TRUST; provided that the COMPANY receives the order by 4:00 p.m. New York time and TRUST receives notice from the COMPANY by telephone or facsimile (or by such other means as TRUST and the COMPANY may agree in writing) of such order by 9:00 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 TRUST calculates its net asset value pursuant to the rules of the SEC. 1.3 TRUST agrees to redeem on the COMPANY'S request, any full or fractional shares of TRUST held by the COMPANY, executing such requests on a daily basis at the net asset value next computed after receipt by TRUST or its designee of the request for redemption, in accordance with the provisions of this agreement and TRUST's Registration Statement. For purposes of this Section 1.3, the COMPANY shall be the designee of TRUST for receipt of requests for redemption from the designated Separate Account and receipt by such designee shall constitute receipt by TRUST; provided that the COMPANY receives the request for redemption by 4:00 p.m. New York time and TRUST receives notice from the COMPANY by telephone or facsimile (or by such other means as TRUST and the COMPANY may agree in writing) of such request for redemption by 9:00 a.m. New York time on the next following Business Day. 1.4 TRUST shall furnish, on or before the ex-dividend date, notice to the COMPANY of any income dividends or capital gain distributions payable on the shares of any Fund of TRUST. The COMPANY hereby elects to receive all such income dividends and capital gain distributions as are payable on a Fund's shares in additional shares of the 2 Fund. TRUST shall notify the COMPANY or its designee of the number of shares so issued as payment of such dividends and distributions. 1.5 TRUST shall make the net asset value per share for the selected Fund(s) available to the COMPANY on a daily basis as soon as reasonably practicable after the net asset value per share is calculated but shall use its best efforts to make such net asset value available by 6:30 p.m. New York time. In the event that 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 TRUST takes to make the net asset value available to the COMPANY. If 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 promptly upon discovery to the COMPANY. 1.6 At the end of each Business Day, the COMPANY shall use the information described in Section 1.5 to calculate Separate Account unit values for the day. Using these unit values, the COMPANY shall process each such Business Day's Separate Account transactions based on requests and premiums received by it by the close of trading on the floor of the New York Stock Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount of TRUST shares which shall be purchased or redeemed at that day's closing net asset value per share. The net purchase or redemption orders so determined shall be transmitted to TRUST by the COMPANY by 9:00 a.m. New York Time on the Business Day next following the COMPANY's receipt of such requests and premiums in accordance with the terms of Sections 1.2 and 1.3 hereof. 1.7 If the COMPANY's order requests the purchase of TRUST shares, the COMPANY shall pay for such purchase by wiring federal funds to TRUST or its designated custodial account on the day the order is transmitted by the COMPANY. If the COMPANY'S order requests a net redemption resulting in a payment of redemption proceeds to the COMPANY, TRUST shall use its best efforts to wire the redemption proceeds to the COMPANY by the next Business Day, unless doing so would require TRUST to dispose of Fund securities or otherwise incur additional costs. In any event, proceeds shall be wired to the COMPANY within three Business Days or such longer period permitted by the '40 Act or the rules, orders or regulations thereunder and TRUST shall notify the person designated in writing by the COMPANY as the recipient for such notice of such delay by 3:00 p.m. New York time the same Business Day that the COMPANY transmits the redemption order to TRUST. If the COMPANY'S order requests the application of redemption proceeds from the redemption of shares to the purchase of shares of another Fund advised by ADVISER, TRUST shall so apply such proceeds the same Business Day that the COMPANY transmits such order to TRUST. 3 1.8 TRUST agrees that all shares of the Funds of TRUST will be sold only to Participating Insurance Companies which have agreed to participate in TRUST to fund their Separate Accounts and/or to Qualified Plans, all in accordance with the requirements of Section 817(h) of the Internal Revenue Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of the Funds of TRUST will not be sold directly to the general public. 1.9 TRUST may refuse to sell shares of any Fund to any person, or suspend or terminate the offering of the shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board of Trustees of the TRUST (the "Board"), acting in good faith and in light of its duties under federal and any applicable state laws, deemed necessary, desirable or appropriate and in the best interests of the shareholders of such Funds. 1.10 Issuance and transfer of Fund shares will be by book entry only. Stock certificates will not be issued to the COMPANY or the Separate Accounts. Shares ordered from Fund will be recorded in appropriate book entry titles for the Separate Accounts. Article II. REPRESENTATIONS AND WARRANTIES 2.1 The COMPANY represents and warrants that it is an insurance company duly organized and in good standing under the laws of Indiana and that it has legally and validly established each Separate Account as a segregated asset account under such laws. 2.2 The COMPANY represents and warrants that it has registered or, prior to any issuance or sale of the Variable Contracts, will register each Separate Account as a unit investment trust ("UIT") in accordance with the provisions of the '40 Act and cause each Separate Account to remain so registered to serve as a segregated asset account for the Variable Contracts, unless an exemption from registration is available. 2.3 The COMPANY represents and warrants that the Variable Contracts will be registered under the Securities Act of 1933 (the "'33 Act") unless an exemption from registration is available prior to any issuance or sale of the Variable Contracts and that the Variable Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and further that the sale of the Variable Contracts shall comply in all material respects with state insurance law suitability requirements. 2.4 The COMPANY represents and warrants that the Variable Contracts are currently and at the time of issuance will be treated as life insurance, endowment or annuity contracts under applicable provisions of the Code, that it will maintain such treatment and that it will notify TRUST immediately upon having a reasonable basis for believing that the Variable Contracts have ceased to be so treated or that they might not be so treated in the future. 4 2.5 TRUST represents and warrants that the Fund shares offered and sold pursuant to this Agreement will be registered under the '33 Act and sold in accordance with all applicable federal and state laws, and TRUST shall be registered under the '40 Act prior to and at the time of any issuance or sale of such shares. TRUST, subject to Section 1.9 above, shall amend its registration statement under the '33 Act and the '40 Act from time to time as required in order to effect the continuous offering of its shares. 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 TRUST. 2.6 TRUST represents and warrants that each Fund will comply with the diversification requirements set forth in Section 817(h) of the Code, and the rules and regulations thereunder, including without limitation Treasury Regulation 1.817-5, and will notify the COMPANY immediately upon having a reasonable basis for believing any Fund has ceased to comply or might not so comply and will immediately take all reasonable steps to adequately diversify the Fund to achieve compliance. 2.7 TRUST represents and warrants that each Fund invested in by the Separate Account intends to elect to be treated as a "regulated investment company" under Subchapter M of the Code, and to qualify for such treatment for each taxable year and will notify the COMPANY immediately upon having a reasonable basis for believing it has ceased to so qualify or might not so qualify in the future. 2.8 ADVISER represents and warrants that it is and will be a member in good standing of the National Association of Securities Dealers, Inc. ("NASD") and is and will be registered as a broker-dealer with the SEC. ADVISER further represents that it will sell and distribute Fund shares in accordance with all applicable state and federal laws and regulations, including without limitation the '33 Act, the '34 Act and the '40 Act. ADVISER represents that its operations are and shall at all times remain in material compliance with the laws of the State of Delaware to the extent required to perform this Agreement. 2.9 ADVISER represents and warrants that it is and will remain duly registered and licensed in all material respects under all applicable federal and state securities laws and shall perform its obligations hereunder in compliance in all material respects with any applicable state and federal laws. Article III. PROSPECTUS AND PROXY STATEMENTS 3.1 TRUST shall prepare and be responsible for filing with the SEC and any state regulators requiring such filing all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of TRUST. TRUST shall bear the costs of registration and qualification of shares of the Funds, preparation and filing of the documents listed in this 5 Section 3.1 and all taxes and filing fees to which an issuer is subject on the issuance and transfer of its shares. 3.2 At least annually, TRUST or its designee shall provide the COMPANY, free of charge, with as many copies of the current prospectus for the shares of the Funds as the COMPANY may reasonably request for distribution to existing Variable Contract owners whose Variable Contracts are funded by such shares. 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 Variable Contracts. If requested by the COMPANY in lieu thereof. 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 a year (or more frequently if the prospectus for the shares is supplemented or amended) to have the prospectus for the Variable Contracts and the prospectus for the TRUST shares printed together in one document. The expenses of such printing will be apportioned between (a) the COMPANY and (b) TRUST in proportion to the number of pages of the Variable Contract and shares' prospectus, taking account of other relevant factors affecting the expense of printing, such as covers, columns, graphs and charts; TRUST to bear the cost of printing the shares' prospectus portion of such document for distribution only to owners of existing Variable Contracts funded by the TRUST shares and the COMPANY to bear the expense of printing the portion of such documents relating to the Separate Account; provided, however, the COMPANY shall bear all printing expenses of such combined documents where used for distribution to prospective purchasers or to owners of existing Variable Contracts not funded by the shares. In the event that the COMPANY requests that TRUST or its designee provide TRUST's prospectus in a "camera ready" or diskette format, TRUST shall be responsible for providing the prospectus in the format in which it is accustomed to formatting prospectuses and shall bear the expense of providing the prospectus in such format (e.g. typesetting expenses), and Life Company shall bear the expense of adjusting or changing the format to conform with any of its prospectuses. 3.3 TRUST will provide the COMPANY with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to the Funds promptly after the filing of each such document with the SEC or other regulatory authority, the COMPANY will provide TRUST with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to a Separate Account promptly after the filing of each such document with the SEC or other regulatory authority. 6 Article IV. SALES MATERIALS 4.1 The COMPANY will furnish, or will cause to be furnished, to TRUST and ADVISER, each piece of sales literature or other promotional material in which TRUST or ADVISER is named, at least fifteen (15) Business Days prior to its intended use. No such material will be used if TRUST or ADVISER objects to its use in writing within ten (10) Business Days after receipt of such material. 4.2 TRUST and ADVISER will furnish, or will cause to be furnished, to the COMPANY, each piece of sales literature or other promotional material in which the COMPANY or its Separate Accounts are named, at least fifteen (15) Business Days prior to its intended use. No such material will be used if the COMPANY objects to its use in writing within ten (10) Business Days after receipt of such material. 4.3 TRUST and its affiliates and agents shall not give any information or make any representations on behalf of the COMPANY or concerning the COMPANY, the Separate Accounts, or the Variable Contracts issued by the COMPANY, other than the information or representations contained in a registration statement or prospectus for such Variable Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports of the Separate Accounts or reports prepared for distribution to owners of such Variable Contracts, or in sales literature or other promotional material approved by the COMPANY or its designee, except with the written permission of the COMPANY. 4.4 The COMPANY and its affiliates and agents shall not give any information or make any representations on behalf of TRUST or concerning TRUST other than the information or representations contained in a registration statement or prospectus for TRUST, as such registration statement and prospectus may be amended or supplemented from time to time, or in sales literature or other promotional material approved by TRUST or its designee, except with the written permission of TRUST. 4.5 For purposes of this Agreement, the phrase "sale literature or other promotional material" or words of similar import include, without limitation, 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 (such as any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, or 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, registration statements, prospectuses, statements of additional information, shareholder reports and proxy materials, and any 7 other material constituting sales literature or advertising under National Association of Securities Dealers, Inc. rules, the '40 Act or the '33 Act. Article V. POTENTIAL CONFLICTS 5.1 The parties acknowledge that TRUST has filed an application with the SEC to request and order granting relief from various provisions of the '40 Act and the rules thereunder to the extent necessary to permit TRUST shares to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated Participating Insurance Companies and Qualified Plans. It is anticipated that the Exemptive Order, when and if issued, shall require TRUST and each Participating Insurance Company to comply with conditions and undertakings substantially as provided in this Section 5. If the Exemptive Order imposes conditions materially different from those provided for in this Section 5, the conditions and undertakings imposed by the Exemptive Order shall govern this Agreement and the parties hereto agree to amend this Agreement consistent with the Exemptive Order. The Fund will not enter into a participation agreement with any other Participating Insurance Company unless it imposes the same conditions and undertakings as are imposed on the COMPANY hereby. 5.2 The Board will monitor TRUST for the existence of any material irreconcilable conflict between the interests of Variable Contract owners of all separate accounts investing in TRUST. An irreconcilable material conflict may arise for a variety of reasons, which may include: (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 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 TRUST are being managed; (e) a difference in voting instructions given by variable annuity and variable life insurance contract owners; (f) a decision by a Participating Insurance Company to disregard the voting instructions of Variable Contract owners and (g) if applicable, a decision by a Qualified Plan to disregard the voting instructions of plan participants. 5.3 The COMPANY will report any potential or existing conflicts to the Board. The COMPANY will be responsible for assisting the Board in carrying out its duties in this regard by providing the Board with all information reasonably necessary for the Board to consider any issues raised. The responsibility includes, but is not limited to, an obligation by the COMPANY to inform the Board whenever it has determined to disregard Variable Contract owner voting instructions. These responsibilities of the COMPANY will be carried out with a view only to the interests of the Variable Contract owners. 5.4 If a majority of the Board or majority of its disinterested trustees, determines that a material irreconcilable conflict exists, affecting the COMPANY, the COMPANY, at its expense and to the extent reasonably practicable (as determined by a majority of the 8 Board's disinterested trustees), will take any steps necessary to remedy or eliminate the irreconcilable material conflict, including; (a) withdrawing the assets allocable to some or all of the Separate Accounts from TRUST or any Fund thereof and reinvesting those assets in a different investment medium, which may include another Fund of TRUST, or another investment company; (b) submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and as appropriate, segregating the assets of any appropriate group (i.e. variable annuity or variable life insurance Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected Variable Contract owners the option of making such a change; and (c) establishing a new registered management investment company (or series thereof) or managed separate account. If a material irreconcilable conflict arises because of the COMPANY's decision to disregard Variable Contract owner voting instructions, and that decision represents a minority position or would preclude a majority vote, the COMPANY may be required, at the election of TRUST to withdraw the Separate Account's investment in TRUST, and no charge or penalty will be imposed as a result of such withdrawal. The responsibility to take such remedial action shall be carried out with a view only to the interests of the Variable Contract owners. For the purposes of this Section 5.4, a majority of the disinterested members of the Board shall determine whether or not any proposed action adequately remedies any irreconcilable material conflict but in no event will TRUST or ADVISER (or any other investment adviser of TRUST) be required to establish a new funding medium for any Variable Contract. Further, the COMPANY shall not be required by this Section 5.4 to establish a new funding medium for any Variable Contracts if any offer to do so has been declined by a vote of a majority of Variable Contract owners materially and adversely affected by the irreconcilable material conflict. 5.5 The Board's determination of the existence of an irreconcilable material conflict and its implications shall be made known promptly and in writing to the COMPANY. 5.6 No less than annually, the COMPANY shall submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out its obligations. Such reports, materials, and data shall be submitted more frequently if deemed appropriate by the Board. Article VI. VOTING 6.1 The COMPANY will provide pass-through voting privileges to all Variable Contract owners so long as the SEC continues to interpret the '40 Act as requiring pass-through voting privileges for Variable Contract owners. Accordingly, the COMPANY, where applicable, will vote shares of the Fund held in its Separate Accounts in a manner consistent with voting instructions timely received from its Variable Contract owners. The COMPANY will be responsible for assuring that each of its Separate Accounts that 9 participates in TRUST calculates voting privileges in a manner consistent with other Participating Insurance companies. The COMPANY will vote shares for which it has not received timely voting instructions, as well as shares it owns, in the same proportion as its votes those shares for which it has received voting instructions. 6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if Rule 6e-3 is adopted, to provide exemptive relief from any provision of the '40 Act or the rules thereunder with respect to mixed and shared funding on terms and conditions materially different from any exemptions granted in the Exemptive Order, then TRUST, and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable. Article VII. INDEMNIFICATION 7.1 Indemnification by the COMPANY. The COMPANY agrees to indemnify and hold harmless TRUST, ADVISER and each of their Trustees, directors, principals, officers, employees and agents and each person, if any, who controls TRUST or ADVISER within the meaning of Section 15 of the '33 Act (collectively, the "Indemnified Parties" for purposes of this Article VII) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the COMPANY, which consent shall not be unreasonably withheld) or litigation (including 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 expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of TRUST's shares or the Variable Contracts and; (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 Variable Contracts or contained in the Variable 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 alleged statement or omission was made in reliance upon and in conformity with information furnished to the COMPANY by or on behalf of TRUST for use in the registration statement or prospectus for the Variable Contracts or in the Variable Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or TRUST shares; or 10 (b) 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 of TRUST not supplied by the COMPANY, or persons under its control) or wrongful conduct of the COMPANY or persons under its control, with respect to the sale or distribution of the Variable Contracts or TRUST shares; or (c) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, or sales literature of TRUST 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 statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to TRUST by or on behalf of the COMPANY; or (d) arise as a result of any failure by the COMPANY to provide substantially the services and furnish the materials 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. 7.2 The COMPANY shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from 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 or duties under this Agreement. 7.3 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 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. After notice from the COMPANY to such party of the COMPANY's election to assume the defense thereof, the Indemnified Party 11 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. 7.4 Indemnification by ADVISER. ADVISER agrees to indemnify and hold harmless the COMPANY and each of its directors, officers, employees, and agents and each person, if any, who controls the COMPANY within the meaning of Section 15 of the '33 Act (collectively, the "Indemnified Parties" for the purposes of this Article VII) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of ADVISER which consent shall not be unreasonably withheld) 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 TRUST's shares or the Variable Contracts 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 or prospectus or sales literature of 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 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 ADVISER or TRUST by or on behalf of the COMPANY for use in the registration statement or prospectus for TRUST or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable contracts or TRUST 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 or sales literature for the Variable Contracts not supplied by ADVISER or persons under its control) or wrongful conduct of TRUST or ADVISER or persons under their control, with respect to the sale or distribution of the Variable Contracts or TRUST shares; or (c) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, or sales literature covering the Variable Contracts, or any amendment 12 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 statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the COMPANY for inclusion therein by or on behalf of TRUST; or (d) arise as a result of (i) a failure by TRUST to provide substantially the services and furnish the materials under the terms of this Agreement, or (ii) a failure by a Fund(s) invested in by the Separate Account to comply with the diversification requirements of Section 817(h) of the Code; or (iii) a failure by a Fund(s) invested in by the Separate Account to qualify as a "regulated investment company" under Subchapter M of the Code; or (e) arise out of or result from any material breach of any representation and/or warranty made by TRUST or ADVISER in this Agreement or arise out of or result from any other material breach of this Agreement by TRUST or ADVISER. 7.5 ADVISER 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. 7.6 ADVISER 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 ADVISER 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 ADVISER of any such claim shall not relieve ADVISER 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, ADVISER shall be entitled to participate at its own expense in the defense thereof. ADVISER also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from ADVISER to such party of ADVISER election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and ADVISER 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. 13 Article VIII. TERM: TERMINATION 8.1 This Agreement shall be effective as of the date hereof and shall continue in force until terminated in accordance with the provisions herein. 8.2 This Agreement shall terminate in accordance with the following provisions: (a) At the option of the COMPANY or TRUST at any time from the date hereof upon 180 days' notice, unless a shorter time is agreed to by the parties; (b) At the option of the COMPANY, if TRUST shares are not reasonably available to meet the requirements of the Variable Contracts as determined by the COMPANY. Prompt notice of election to terminate shall be furnished by the COMPANY, said termination to be effective ten days after receipt of notice unless TRUST makes available a sufficient number of shares to reasonably meet the requirements of the Variable Contracts within said ten-day period; (c) At the option of the COMPANY, upon the institution of formal proceedings against TRUST by the SEC, the National Association of Securities Dealers, Inc., or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in the COMPANY's reasonable judgment, materially impair TRUST's ability to meet and perform TRUST's obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by the COMPANY with said termination to be effective upon receipt of notice; (d) At the option of TRUST, upon the institution of formal proceedings against the COMPANY by the SEC, the National Association of Securities Dealers, Inc., or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in TRUST's reasonable judgment, materially impair the COMPANY's ability to meet and perform its obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by TRUST with said termination to be effective upon receipt of notice; (e) In the event TRUST's shares are not registered, issued or sold in accordance with applicable state or federal law, or such law precludes the use of such shares as the underlying investment medium of Variable Contracts issued or to be issued by the 14 COMPANY. Termination shall be effective upon such occurrence without notice; (f) At the option of TRUST if the Variable Contracts cease to qualify as annuity contracts or life insurance contracts, as applicable, under the Code, or if TRUST reasonably believes that the Variable Contracts may fail to so qualify. Termination shall be effective upon receipt of notice by the COMPANY; (g) At the option of the COMPANY, upon TRUST's breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the COMPANY within ten days after written notice of such breach is delivered to TRUST; (h) At the option of TRUST, upon the COMPANY's breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of TRUST within ten days after written notice of such breach is delivered to the COMPANY; (i) At the option of TRUST, if the Variable Contracts are not registered, issued or sold in accordance with applicable federal and/or state law. Termination shall be effective immediately upon such occurrence without notice; (j) In the event this Agreement is assigned without the prior written consent of the COMPANY, TRUST, and ADVISER, termination shall be effective immediately upon such occurrence without notice. 8.3 Notwithstanding any termination of this Agreement pursuant to Section 8.2 hereof, TRUST at the option of the COMPANY will continue to make available additional TRUST shares, as provided below, pursuant to the terms and conditions of this Agreement, for all Variable Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts or the COMPANY, whichever shall have legal authority to do so, shall be permitted to reallocate investments in TRUST, redeem investments in TRUST and/or invest in TRUST upon the payment of additional premiums under the Existing Contracts. 15 Article IX. NOTICES Any notice hereunder shall be given by registered or certified mail return receipt requested 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 TRUST, or ADVISER. If to the COMPANY: Attention: Notice shall be deemed given on the date of receipt by the addressee as evidenced by the return receipt. Article X. MISCELLANEOUS 10.1 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. 10.2 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 10.3 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. 10.4 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Indiana. It shall also be subject to the provisions of the federal securities laws and the rules and regulations thereunder and to any orders of the SEC granting exemptive relief therefrom and the conditions of such orders. 10.5 It is understood and expressly stipulated that neither the shareholders of shares of any Fund nor the Trustees or officers of TRUST or any Fund shall be personally liable hereunder. No Fund shall be liable for the liabilities of any other Fund. All persons dealing with TRUST or a Fund must look solely to the property of TRUST or that Fund, respectively, for enforcement of any claims against TRUST or that Fund. It is also 16 understood that each of the Funds shall be deemed to be entering into a separate Agreement with the COMPANY so that it is as if each of the Funds had signed a separate Agreement with the COMPANY and that a single document is being signed simply to facilitate the execution and administration of the Agreement. 10.6 Each party shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, 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. 10.7 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. 10.8 No provision of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by TRUST, ADVISER and the COMPANY. IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Fund Participation Agreement as of the date and year first above written. TRUST By: ________________________________________ Name: Title: ADVISER By: ________________________________________ Name: Title: INSURANCE COMPANY By: ________________________________________ Name: Title: 17 APPENDIX A Trust and its Funds - - ------------------- APPENDIX B Separate Accounts Selected Funds - - ----------------- -------------- EX-99.14 7 POWER OF ATTORNEY Exhibit (14) POWER OF ATTORNEY Know all men by these presents: That I, LINDA S. DOUGHERTY, of NEWARK, NEW JERSEY, Comptroller of Pruco Life Insurance Company, do hereby make, constitute and appoint as my true and lawful attorneys in fact CLIFFORD E. KIRSCH, THOMAS C. CASTANO, RICHARD E. MEADE, and THOMAS J. LOFTUS, or any of them severally for me and in my name, place and stead to sign registration statements on the appropriate forms prescribed by the Securities and Exchange Commission for the registration under the Investment Company Act of 1940, where applicable, and the Securities Act of 1933, respectively, and any and all amendments thereto executed on behalf of Pruco Life Insurance Company and filed with the Securities and Exchange Commission for the following: The Pruco Life PRUvider Variable Appreciable Account and variable life insurance contracts, to the extent they represent participating interests in said Account; The Pruco Life Variable Appreciable Account and flexible premium variable life insurance contracts, to the extent they represent participating interests in said Account; The Pruco Life Variable Insurance Account and scheduled premium variable life insurance contracts, to the extent they represent participating interests in said Account; The Pruco Life Single Premium Variable Life Account and flexible premium variable life insurance contracts, to the extent they represent participating interests in said Account; The Pruco Life Variable Universal Account and flexible premium variable universal life insurance contracts, to the extent they represent participating interests in said Account; The Pruco Life Single Premium Variable Annuity Account and single payment variable annuity contracts, to the extent they represent participating interests in said Account; The Pruco Life Flexible Premium Variable Annuity Account and flexible premium variable annuity contracts, to the extent they represent participating interests in said Account; Market value adjustment annuity contracts; and The Pruco Life Variable Contract Real Property Account and individual variable life insurance contracts and variable annuity contracts, to the extent they represent participating interests in said Account. IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of June,1996. LINDA S. DOUGHERTY ------------------------------------ Signature State of New Jersey ) ) SS County of Union ) On this 17th day of June, 1996, before me personally appeared Linda S. Dougherty known to me to be the person mentioned and described in and who executed the foregoing instrument and he duly acknowledged to me that he executed the same. My commission expires: 3/31/98 CLEMENTINA FERRIGNO ------------------------------------ POWER OF ATTORNEY Know all men by these presents: That I, MENDEL A. MELZER, of NEWARK, NEW JERSEY, a member of the Board of Directors of Pruco Life Insurance Company, do hereby make, constitute and appoint as my true and lawful attorneys in fact CLIFFORD E. KIRSCH, THOMAS C. CASTANO, RICHARD E. MEADE, and THOMAS J. LOFTUS, or any of them severally for me and in my name, place and stead to sign registration statements on the appropriate forms prescribed by the Securities and Exchange Commission for the registration under the Investment Company Act of 1940, where applicable, and the Securities Act of 1933, respectively, and any and all amendments thereto executed on behalf of Pruco Life Insurance Company and filed with the Securities and Exchange Commission for the following: The Pruco Life PRUvider Variable Appreciable Account and variable life insurance contracts, to the extent they represent participating interests in said Account; The Pruco Life Variable Appreciable Account and flexible premium variable life insurance contracts, to the extent they represent participating interests in said Account; The Pruco Life Variable Insurance Account and scheduled premium variable life insurance contracts, to the extent they represent participating interests in said Account; The Pruco Life Single Premium Variable Life Account and flexible premium variable life insurance contracts, to the extent they represent participating interests in said Account; The Pruco Life Variable Universal Account and flexible premium variable universal life insurance contracts, to the extent they represent participating interests in said Account; The Pruco Life Single Premium Variable Annuity Account and single payment variable annuity contracts, to the extent they represent participating interests in said Account; The Pruco Life Flexible Premium Variable Annuity Account and flexible premium variable annuity contracts, to the extent they represent participating interests in said Account; Market value adjustment annuity contracts; and The Pruco Life Variable Contract Real Property Account and individual variable life insurance contracts and variable annuity contracts, to the extent they represent participating interests in said Account. IN WITNESS WHEREOF, I have hereunto set my hand this 13th day of June, 1996. MENDEL A. MELZER ------------------------------------ Signature State of New Jersey ) ) SS County of Essex ) On this 13th day of June, 1996, before me personally appeared Mendel A. Melzer known to me to be the person mentioned and described in and who executed the foregoing instrument and he duly acknowledged to me that he executed the same. My commission expires: 8-14-99 LORA A. MCPARTLAND ------------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----