PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1/st/ day of February, 2008
by and among PHL Variable Insurance Company (hereinafter the "Company"), a life
insurance company organized under the laws of the State of Connecticut_, on its
own behalf and on behalf of each separate account of the Company set forth on
Schedule B hereto as may be amended from time to time (each such account
hereinafter referred to as the "Account"), and ROYCE CAPITAL FUND (hereinafter
the "Fund"), a Delaware business trust, and ROYCE FUND SERVICES, INC., a New
York corporation (the "Distributor"). The Advisor should be part of this
Agreement.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as (i) the investment vehicle for separate
accounts established by insurance companies for individual and group life
insurance policies and annuity contracts with variable accumulation and/or
pay-out provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products") and (ii) the investment vehicle for certain
qualified pension and retirement plans (hereinafter "Qualified Plans"); and
WHEREAS, insurance companies desiring to utilize the Fund as an investment
vehicle under their Variable Insurance Products are required to enter into a
participation agreement with the Fund and the Distributor (the "Participating
Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares, each
representing the interest in a particular managed portfolio of securities and
other assets, any one or more of which may be made available for Variable
Insurance Products of Participating Insurance Companies; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule A (each such series hereinafter referred to as a "Portfolio"), as may
be amended from time to time by mutual agreement of the parties hereto, under
this Agreement to the Accounts of the Company; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated July 24, 1996 (File No. 812-9988), granting Participating
Insurance Companies and Variable Insurance Product separate accounts exemptions
from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended (hereinafter the "1940 Act"), and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Fund to be sold to and held by Variable Insurance Products
separate accounts of both affiliated and unaffiliated life insurance companies
and Qualified Plans (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC under
the Securities
Exchange Act of 1934, as amended (hereinafter the "1934 Act"), and is a member
in good standing of the Financial Industry
Regulatory Authority ("FINRA"); and
WHEREAS, the Distributor is the principal underwriter of the Portfolios of
the Fund; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated asset
account, established by resolution or under authority of the Board of Directors
of the Company, on the date shown for such Account on Schedule B hereto, to set
aside and invest assets attributable to the aforesaid Variable Insurance
Products; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Variable Insurance Products;
Where is there a discussion of the fee arrangement and who is paying us?
NOW, THEREFORE, in consideration of their mutual promises, the Company and the
Fund agree as follows:
ARTICLE I. Fund Shares
1.1. The Fund agrees to make available for purchase by the Company shares of
the Portfolios set forth on Schedule A and shall execute orders placed for each
Account on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of such order. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee of orders prior to the close of regular
trading on the New York Stock Exchange (generally 4:00 p.m. Eastern time) shall
constitute receipt by the Fund; provided that the Fund receives notice of such
order by 10:00 a.m. Eastern time on the next following Business Day.
Notwithstanding the foregoing, the Company shall use its best efforts to
provide the Fund with notice of such orders by 9:00 a.m. Eastern time on the
next following Business Day. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Fund calculates the
net asset value pursuant to the rules of the SEC, as set forth in the Fund's
Prospectus and Statement of Additional Information. Notwithstanding the
foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may
refuse to permit the Fund to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio, if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board acting in good faith and in light of their
fiduciary duties under federal and any applicable state
laws, necessary in the best interests of the shareholders of such Portfolio.
1.2. The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their Variable Insurance Products and to
certain Qualified Plans. No shares of any Portfolio will be sold to the general
public.
1.3. The Fund will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing provisions
substantially the same as Sections 2.4, 2.9, 3.4 and Article VII of this
Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on the Company's request, any full
or fractional shares of the Fund held by the Company, executing such requests
on a daily basis at the net asset value next computed after receipt by the Fund
or its designee of the request for redemption. For purposes of this
Section 1.4, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day in accordance with
the timing rules described in Section 1.1.
1.5. The Company agrees that purchases and redemptions of Portfolio shares
offered by the then current prospectus of the Fund shall be made in accordance
with the provisions of such prospectus, unless provided for differently in the
Rule 22c-2 Agreement governing the Portfolio shares. The Accounts of the
Company, under which amounts may be invested in the Fund, are listed on
Schedule B attached hereto and incorporated herein by reference, as such
Schedule B may be amended from time to time by mutual written agreement of all
of the parties hereto.
1.6. The Company will place separate orders to purchase or redeem shares of
each Portfolio. Each order shall describe the net amount of shares and dollar
amount of each Portfolio to be purchased or redeemed. In the event of net
purchases, the Company shall pay for Portfolio shares on the next Business Day
after an order to purchase Portfolio shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. In the event of net redemptions, the Portfolio shall use its best
efforts to pay the redemption proceeds in federal funds transmitted by wire on
the next Business Day, in any event redemption proceeds shall be wired to the
Company within three Business Days or such longer period permitted by the 1940
Act, after an order to redeem a Portfolio's shares is made in accordance with
the provision of Section 1.4 hereof. Notwithstanding the foregoing, if the
payment of redemption proceeds on the next Business Day would require the
Portfolio to dispose of securities or otherwise incur substantial additional
costs, and if the Portfolio has determined to settle redemption transactions
for all shareholders on a delayed basis, it reserves the right to suspend the
right of redemption or postpone the date of payment or satisfaction upon
redemption consistent with Section 22(e) of the 1940 Act and the Portfolio
shall notify in writing the person designated by the Company as the recipient
for such notice of such delay promptly.
1.7. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in
an appropriate title for each Account or the appropriate subaccount of each
Account.
1.8. The Fund shall make the dividends or capital gain distributions per
share payable on the Fund's shares available to the Company as soon as
reasonably practical after the dividends or capital gains are declared
(normally by 6:30 p.m. Eastern time) and shall use its best efforts to furnish
same day notice by 7:00 p.m. Eastern time (by wire or telephone, followed by
written confirmation) to the Company of any dividends or capital gain
distributions per share payable on the Fund's shares. The Company hereby elects
to receive all such dividends and capital gain distributions as are payable on
the Portfolio shares in additional shares of that Portfolio. The Company
reserves the right to revoke this election and to receive all such dividends
and capital gain distributions in cash. The Fund shall notify the Company of
the number of shares so issued as payment of such dividends and distributions.
1.9. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally by 6:30 p.m. Eastern
time) and shall use its best efforts to make such net asset value per share
available by 7:00 p.m. Eastern time. In the event that the Fund is unable to
meet the 7:00 p.m. time stated immediately above, then the Fund shall provide
the Company with additional time to notify the Fund of purchase or redemption
orders pursuant to Sections 1.1 and 1.4, respectively, above. Such additional
time shall be equal to the additional time that the Fund takes to make the net
asset values available to the Company; provided, however, that notification
must be made by 10:15 a.m. Eastern time on the Business Day such order is to be
executed regardless of when the net asset value is made available. If the Fund
provides the Company with materially incorrect share net asset value
information, the Separate Account(s) shall be entitled to any adjustment to the
number of shares purchased or redeemed necessary to make the Separate
Account(s) whole. Any material error in the calculation of the net asset value
per share, dividend or capital gain information shall be reported promptly upon
discovery to the Company. If such material error results in an overpayment to
the Separate Account(s), the Company will use its best efforts to collect such
overpayment. If, after such efforts, the Company is not able to recover all
such overpayment, the Company will cooperate with the attempts of the Fund
and/or Distributor to recover the overpayment. Furthermore, the Distributor
shall be liable for the reasonable administrative costs incurred by the Company
in relation to the correction of any material error, provided such error is
attributable to the Fund or the Distributor. Administrative costs shall include
reasonable allocation of staff time, costs of outside service providers,
printing and postage. Non-material errors will be corrected in the next
Business Day's net asset value per share.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the interests of the Accounts
(the "Contracts") are or will be registered and will maintain the registration
under the 1933 Act and the regulations thereunder to the extent required by the
1933 Act; that the Contracts will be issued in compliance in all material
respects with all applicable federal and state laws and regulations. The
Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally and
validly established each Account prior to any
issuance or sale thereof as a segregated asset account under the Connecticut
Insurance Law and the regulations thereunder and has registered or, prior to
any issuance or sale of the Contracts, will register and will maintain the
registration of each Account as a unit investment trust in accordance with and
to the extent required by the provisions of the 1940 Act and the regulations
thereunder to serve as a segregated investment account for the Contracts. The
Company shall amend its registration statement for its contracts under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act and the regulations thereunder
to the extent required by the 1933 Act, duly authorized for issuance in
accordance with the laws of the State of Delaware and sold in compliance with
all applicable federal and state securities laws and regulations and that the
Fund is and shall remain registered under the 1940 Act and the regulations
thereunder to the extent required by the 0000 Xxx. The Fund shall amend the
registration statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund.
2.3 The Fund and the Distributor represent that the Fund is currently
qualified as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and that the Fund will make
every effort to maintain such qualification (under Subchapter M or any
successor or similar provision) and that the Fund or its designee will notify
the Company immediately upon having a reasonable basis for believing that a
Portfolio has ceased to so qualify or that a Portfolio might not so qualify in
the future.
2.4. The Company represents that each Account is and will continue to be a
"segregated account" under applicable provisions of the Code and that each
Contract is and will be treated as a "variable contract" under applicable
provisions of the Code and that it will make every effort to maintain such
treatments and that it will notify the Fund immediately upon having a
reasonable basis for believing that the Account or Contract has ceased to be so
treated or that they might not be so treated in the future.
2.5. The Fund represents that to the extent it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
undertakes to have a board of trustees, a majority of who are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses in accordance with the 1940 Act.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
2.7. The Fund and the Distributor represent that the Fund is lawfully
organized and validly existing under the laws of Delaware and that the Fund
does and will comply in all material respects with the 1940 Act.
2.8. The Distributor represents and warrants that it is and shall remain
duly registered in all material respects under all applicable federal
securities laws and that it will perform its obligations for the Fund and the
Company in compliance in all material respects with the laws and regulations of
its state of domicile and any applicable state and federal securities laws and
regulations.
2.9. The Company represents and warrants that all of its trustees, officers,
employees, investment adviser, and other individuals/entities dealing with the
money and/or securities of the Fund are covered by a blanket fidelity bond or
similar coverage, in an amount equal to the greater of $5 million or any amount
required by applicable federal or state law or regulation. The aforesaid
includes coverage for larceny and embezzlement is issued by a reputable bonding
company. The Company agrees to make all reasonable efforts to see that this
bond or another bond containing these provisions is always in effect, and
agrees to notify the Fund in the event that such coverage no longer applies.
2.10. The Company represents and warrants that it will adhere to its own
policy intended to discourage shareholders from trading that could be
detrimental to long-term shareholders of the Fund (the "Policy"), as set forth
in the Variable Insurance Products current prospectus (. The aforesaid includes
among other things, the monitoring of shareholder/participant trading activity
and the restriction of shareholder/participant trading privileges at the
sub-account level if warranted and if such restriction is allowable under the
insurance contact. . The Fund and the Company represent that they will enter
into an information sharing agreement pursuant to Rule 22c-2 of the Investment
Company Act of 1940 so that the Fund may monitor and apply restrictions to
shareholders who the Fund determines to be disruptive.
2.11. The Company represents and warrants that it will adhere to all
applicable anti-money laundering rules and regulations in fulfilling its
obligations under this Agreement.
2.12. The Company, Fund and Distributor agree that all non-public records,
information, and data relating to the business of the other (including customer
names and information and portfolio holdings information) that are exchanged or
negotiated pursuant to this Agreement or in carrying out this Agreement shall
remain confidential, and shall not be voluntarily disclosed by either party
without the prior written consent of the other party, except as may be required
by law or by such party to carry out this Agreement or an order of an court,
governmental agency or regulatory body.
The Fund represents that it has obtained and will comply with the Shared
Funding Exemptive Order.
ARTICLE III. Prospectuses, Reports to Shareholders and Proxy Statements; Voting
3.1(a) The Fund or its designee shall provide the Company with as many
printed copies of the Fund Prospectus as the Company may reasonably request.
If requested by the Company, in addition to providing printed copies of the
Fund Prospectus, the Fund shall provide camera-ready film or computer
diskettes containing the Fund Prospectus, or shall provide the same
electronically in .pdf
format, and such other assistance as is reasonably necessary in order for
the Company once each year (or more frequently if the Fund Prospectus is
amended during the year) to have the prospectus for the Contracts (the
"Contract Prospectus") and the Fund Prospectus printed together in one
document or separately. The Company may elect to print the Fund Prospectus
in combination with other fund companies' prospectuses. For purposes hereof,
any combined prospectus including the Fund Prospectus along with the
Contract Prospectus or prospectus of other fund companies shall be referred
to as a "Combined Prospectus." For purposes hereof, the term "Fund Portion
of the Combined Prospectus" shall refer to the percentage of the number of
Fund Prospectus pages in the Combined Prospectus in relation to the total
number of pages of the Combined Prospectus.
3.1(b) The Fund shall provide the Company with as many printed copies of
the Fund's current statement of additional information (the "Fund SAI") as
the Company may reasonably request. If requested by the Company in addition
to providing printed copies of the Fund SAI, the Fund shall provide
camera-ready film or computer diskettes containing the Fund SAI, or shall
provide the same electronically in .pdf format, and such other assistance as
is reasonably necessary in order for the Company once each year (or more
frequently if the Fund SAI is amended during the year) to have the statement
of additional information for the Contracts (the "Contract SAI") and the
Fund SAI printed together or separately. The Company may also elect to print
the Fund SAI in combination with other fund companies' statements of
additional information. For purposes hereof, any combined statement of
additional information including the Fund SAI along with the Contract SAI or
statement of additional information of other fund companies shall be
referred to as a "Combined SAI." For purposes hereof, the term "Fund Portion
of the Combined SAI" shall refer to the percentage of the number of Fund SAI
pages in the Combined SAI in relation to the total number of pages of the
Combined SAI.
3.1(c) The Fund shall provide the Company with as many printed copies of
the Fund's annual report and semi-annual report (collectively, the "Fund
Reports") as the Company may reasonably request. If requested by the Company
in lieu of providing printed copies of the Fund Reports, the Fund shall
provide camera-ready film or computer diskettes containing the Fund's
Reports, or shall provide the same electronically in .pdf format, and such
other assistance as is reasonably necessary in order for the Company once
each year to have the annual report and semi-annual report for the Contracts
(collectively, the "Contract Reports") and the Fund Reports printed together
or separately. The Company may also elect to print the Fund Reports in
combination with other fund companies' annual reports and semi-annual
reports. For purposes hereof, any combined annual reports and semi-annual
reports including the Fund Reports along with the Contract Reports or annual
reports and semi-annual reports of other fund companies shall be referred to
as "Combined Reports." For purposes hereof, the term "Fund Portion of the
Combined Reports" shall refer to the percentage of the number of Fund
Reports pages in the Combined Reports in relation to the total number or
pages of the Combined Reports.
3.2 Expenses
3.2(a) Expenses Borne by Company. Except as otherwise provided in this
Section 3.2., all expenses of preparing, setting in type and printing and
distributing (i) Contract Prospectuses, Fund
Prospectuses, and Combined Prospectuses; (ii) Fund SAIs, Contract SAIs, and
Combined SAIs; (iii) Fund Reports, Contract Reports, and Combined Reports,
and (iv) Contract proxy material that the Company may require in sufficient
quantity to be sent to Contract owners, annuitants, or participants under
Contracts (collectively, the "Participants"), shall be the expense of the
Company.
3.2(b) Expenses Borne by Fund
Fund Prospectuses, Proxy Statements and Statements of Additional Information
With respect to existing Participants, the Fund will bear the printing costs
(or duplicating costs with respect to the Statement of Additional Information)
and mailing costs associated with the delivery of the following Fund (or
individual Portfolio) documents, and any supplements thereto, to existing
Variable Contract owners of the Company (regardless of whether such documents
are printed together with, or separate from, the documents for other trusts in
the Variable Contracts):
(i) prospectuses and statements of additional information;
(ii) annual and semi-annual reports; and
(iii)proxy materials (including, but not limited to, the proxy cards, notice
and statement, as well as the costs associated with tabulating votes).
The Company will submit any bills for printing, duplicating and/or mailing
costs, relating to the Fund documents described above, to Fund for
reimbursement by Fund. Company shall monitor such costs and shall use its best
efforts to control these costs. Upon submission of any bills, Company will
provide Fund on a semi-annual basis, or more frequently as reasonably requested
by Fund, with a current tabulation of the number of existing Variable Contract
owners of Company whose Variable Contract values are invested in Fund. This
tabulation will be sent to Fund in the form of a letter signed by a duly
authorized officer of Company attesting to the accuracy of the information
contained in the letter. If requested by Company, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in type
or in camera-ready copy electronic PDF format) and other assistance as is
reasonably necessary in order for Company to print together in one document the
current prospectus for
the Variable Contracts issued by Company and the current prospectus for the
Fund. Should Company wish to print any of these documents in a format different
from that provided by Fund, the Company shall provide Fund with sixty
(60) days' prior written notice and Company shall bear the cost associated with
any format change.
The Company agrees to provide the Fund or its designee with such information
as may be reasonably requested by the Fund to assure that the Fund's expenses
do not include the cost of typesetting, printing or distributing any of the
foregoing documents other than as described above.
3.3. The Fund SAI shall be obtainable from the Fund, the Company or such
other person as the Fund may designate.
3.4. If and to the extent required by law the Company shall distribute all
proxy material furnished by the Fund to Participants to whom voting privileges
are required to be extended and shall:
(i) solicit voting instructions from Participants;
(ii) vote the Fund shares in accordance with instructions received from
Participants; and
(iii)vote Fund shares for which no instructions have been received in the
same proportion as Fund shares of such Portfolio for which instructions
have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act
to require pass-through voting privileges for variable contract owners. The
Company reserves the right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law. The Fund and the
Company shall follow the procedures, and shall have the corresponding
responsibilities, for the handling of proxy and voting instruction
solicitations, as set forth in Schedule C attached hereto and incorporated
herein by reference. Participating Insurance Companies shall be responsible for
ensuring
that each of their separate accounts participating in the Fund calculates
voting privileges in a manner consistent with the standards set forth on
Schedule C, which standards will also be provided to the other Participating
Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the Securities and Exchange Commission may
interpret Section 16 not to require such meetings) or comply with Section 16(c)
of the 1940 Act (although the Fund is not one of the trusts described in
Section 16(c) of that Act) as well as with Sections 16(a) and, if and when
applicable, 16(b). Further, the Fund will act in accordance with the Securities
and Exchange Commission's interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material
prepared by the Company or any person contracting with the Company in which the
Fund or the Distributor is named, at least ten Business Days prior to its use.
No such material shall be used if the Fund, the Distributor, or their designee
reasonably objects to such use within five Business Days after receipt of such
material.
4.2. Neither the Company nor any person contracting with the Company shall
give any information or make any representations or statements on behalf of the
Fund or concerning the Fund in connection with the sale of the Contracts other
than the information or representations contained in the registration statement
or the Fund Prospectus, as such registration statement or Fund Prospectus may
be amended or supplemented from time to time, or in reports or proxy statements
for the Fund, or in sales literature or other promotional material approved by
the Fund or its designee, except with the written permission of the Fund.
4.3. The Fund or its designee shall furnish, or shall cause to be furnished,
to the Company or its designee, each piece of sales literature or other
promotional material prepared by the Fund in which the Company or its
Account(s) are named at least ten Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to
such use within five Business Days after receipt of such material.
4.4. Neither the Fund nor the Distributor shall give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports or solicitations for voting instructions for
each Account which are in the public domain or approved by the Company for
distribution to Participants, or in sales literature or other promotional
material approved by the Company or its designee, except with the written
permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, , and all amendments to any of the above, that relate to
the investment in an Account or Contract contemporaneously with the filing of
such document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following:
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media), sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, and
registration statements, prospectuses, statements of additional information,
shareholder reports, and proxy materials.
ARTICLE V. [Reserved]
ARTICLE VI. Diversification
6.1. The Fund represents, that it and each Portfolio will use its best
efforts at all times to comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulations. In the event a Portfolio ceases
to so qualify, the Fund will take all reasonable steps (a) to notify the
Company of such breach and (b) to adequately diversify the Portfolio so as to
achieve compliance within the grace period afforded by Regulation 817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or regulations,
or a public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by variable annuity contract owners and
variable life insurance contract owners; or (f) a decision by a Participating
Insurance Company to disregard the voting instructions of Contract owners. The
Board shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing material
irreconcilable conflicts of which it is aware to the Board. The Company will
assist the Board in carrying out its responsibilities under the Shared Funding
Exemptive Order, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes, but is
not limited to, an obligation by the Company to inform the Board whenever
contract owner voting instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested directors, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including:
(1) withdrawing the assets allocable to some or all of the Separate Accounts
from the Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Fund, or submitting the question whether such segregation should be implemented
to a vote of all affected Contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., annuity contract owners, life insurance
policy owners, or variable Contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to
the affected Contract owners the option of making such a change; and
(2) establishing a new registered management investment company or managed
separate account. No charge or penalty will be imposed as a result of such
withdrawal. The Company agrees that it bears the responsibility to take
remedial action in the event of a Board determination of an irreconcilable
material conflict and the cost of such remedial action, and these
responsibilities will be carried out with a view only to the interests of
Contract owners.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such
Account (at the Company's expense); provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
members of the Board. No charge or penalty will be imposed as a result of such
withdrawal. The Company agrees that it bears the responsibility to take
remedial action in the event of a Board determination of an irreconcilable
material conflict and the cost of such remedial action, and these
responsibilities will be carried out with a view only to the interests of
Contract owners.
7.5. For purposes of Sections 7.3 and 7.4 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 or 7.4 to establish
a new funding medium for the Contracts if an offer to do so has been declined
by vote of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict.
7.6. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then the Fund and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable.
7.7 The Company and the Distributor shall at least annually submit to the
Board of the Fund such reports, materials or data as the Board may reasonably
request so that the Board may fully carry out the obligations imposed upon them
by the provisions hereof, and said reports, materials and data shall be
submitted more frequently if deemed appropriate by the Board. All reports
received by the Board of potential or existing conflicts, and all Board action
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies of a conflict, and determining whether any proposed action
adequately remedies a conflict, shall be properly recorded in the minutes of
the Board or other appropriate records, and such minutes or other records shall
be made available to the SEC upon request.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a) The Company agrees to indemnify and hold harmless the Fund and
each member of its Board and officers, and the Distributor and each director
and officer of the Distributor, and each person, if any, who controls the
Fund or the Distributor within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually, "Indemnified
Party," for purposes of this Section 8.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or
the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus for the Contracts or contained in the Contracts
or sales literature for the Contracts (or any amendment or supplement to
any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such statement
or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the registration statement or
prospectus for the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of any statements or representations
(other than statements or representations contained in the registration
statement, prospectus or sales literature of the Fund not supplied by
the Company or persons under its control and other than statements or
representations authorized by the Fund or the Distributor) or unlawful
conduct of the Company or persons under its control, with respect to the
sale or distribution of the Contracts or Fund shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Fund or any amendment
thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with information
furnished to the Fund by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company.
8.1(b). Notwithstanding Section 8.1(a) above, 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.
8.1(c). Notwithstanding Section 8.1(a) above, 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 unless the Company is materially
prejudiced by failure to notify. In case any such action is brought against
the Indemnified Parties, 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
shall bear the fees and expenses under this Agreement for any legal or other
expenses subsequently incurred by such Party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the
operation of the Fund.
8.2. Indemnification by the Distributor
8.2(a). The Distributor agrees, with respect to each Portfolio that it
serves as principal underwriter, to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" and individually, "Indemnified Party," for
purposes of this Section 8.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent
of the Distributor) or litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any statute, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the operation of the Distributor or the Fund and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or sales literature of the Fund (or any
amendment or supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such statement
or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Distributor or
the Fund by or on behalf of the Company for use in the registration
statement or prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Portfolio shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the registration
statement, prospectus or sales literature for the Contracts not supplied
by the Distributor or persons under its control and other than
statements or representations authorized by the Company) or unlawful
conduct of the Distributor or persons under its control, with respect to
the sale or distribution of the Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature covering the Contracts, or
any amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not misleading,
if such statement or omission was made in reliance upon information
furnished in writing to the Company by or on behalf of the Distributor;
or
(iv) arise as a result of any failure by the Distributor to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund or the Distributor; including without limitation
any failure by the Fund to comply with the conditions of Article VI
hereof.
8.2(b).The Distributor 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 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 and
duties under this Agreement.
8.2(c). The Distributor 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 Distributor 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
Distributor of any such claim shall not relieve the Distributor from any
liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, the Distributor will be entitled to participate, at its own
expense, in the defense thereof. The Distributor also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the Distributor to such Party of the
Distributor's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it,
and the Distributor will not be liable to such Party under this Agreement
for any legal or other expenses subsequently incurred by such Party
independently in connection with the defense thereof other than reasonable
costs of investigation.
8.2(d). The Company agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its
officers, trustees or directors in connection with this Agreement, the
issuance or sale of the Contracts with respect to the operation of each
Account, or the sale or acquisition of shares of the Fund.
8.2(e). It is understood that these indemnities shall have no effect on
any other agreement or arrangement between the Fund and/or its series and
the Distributor.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party for any reason upon six-months advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Distributor with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts. Reasonable advance notice of
election to terminate shall be furnished by the Company, said termination to
be effective ten (10) days after receipt of notice unless the Fund makes
available a sufficient number of shares to reasonably meet the requirements
of the Account within said ten (10) day period; or
(c) termination by the Company by written notice to the Fund and the
Distributor with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment medium of the Contracts issued or to be
issued by the Company. The terminating party shall give prompt notice to the
other parties of its decision to terminate; or
(d) termination by the Company by written notice to the Fund and the
Distributor with respect to any Portfolio in the event that such Portfolio
ceases to qualify as a Regulated Investment Company under Subchapter M of
the Code or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Distributor with respect to any Portfolio in the event that such Portfolio
fails to meet the diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Distributor by written notice
to the Company if the Distributor or the Fund shall determine, in its sole
judgment exercised in good faith, that the Company and/or its affiliated
companies has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity and as a result
ability to perform obligations under this Agreement is materially impaired,
provided that the Fund or the Distributor will give the Company sixty
(60) days' advance written notice of such determination of its intent to
terminate this Agreement, and provided further that after consideration of
the actions taken by the Company and any other changes in circumstances
since the giving of such notice, the determination of the Fund or the
Distributor shall continue to apply on the 60th day since giving of such
notice, then such 60th day shall be the effective date of termination; or
(g) termination by the Company by written notice to the Fund and the
Distributor, if the Company shall determine, in its sole judgment exercised
in good faith, that either the Fund or the Distributor (with respect to the
appropriate Portfolio) has suffered a material adverse change in its
business, operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity; provided
that the Fund or the Distributor will give the Company sixty (60) days'
advance written notice of such determination of its intent to terminate this
Agreement, and provided further that after consideration of the actions
taken by the Company and any other changes in circumstances since the giving
of such notice, the determination of the Company shall continue to apply on
the 60th day since giving of such notice, then such 60th day shall be the
effective date of termination; or
(h) termination by the Company in the event that formal administrative
proceedings are instituted against the Fund or Distributor by the FINRA, the
SEC, or any state securities or insurance department or any other regulatory
body in respect of the sale of shares of the Fund to the Company, provided,
however, that the Company determines in its sole judgment exercised in good
faith, that any such administrative proceedings will have a material adverse
effect upon the ability of the Fund or the Distributor to perform its
obligations under this Agreement; or
(i) termination by the Fund or the Distributor by written notice to the
Company, if the Company gives the Fund and the Distributor the written
notice specified in Section 1.6 hereof and at the time such notice was given
there was no notice of termination outstanding under any other provision of
this Agreement; provided, however any termination under this Section 10.1(h)
shall be effective sixty (60) days after the notice specified in Section 1.6
was given; or
(j) termination by any party upon the other party's breach of any
representation in Section 2 or any material provision of this Agreement,
which breach has not been cured to the satisfaction of the terminating party
within ten (10) days after written notice of such breach is delivered to the
Fund or the Company, as the case may be; or
(k) termination by the Fund or the Distributor by written notice to the
Company in the event an Account or Contract is not registered or sold in
accordance with applicable federal or state law or regulation, or the
Company fails to provide pass-through voting privileges as specified in
Section 3.4; provided that the Fund or the Distributor will give the Company
sixty (60) days' advance written notice of such intent.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund shall at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing Contracts")
unless such further sale of Fund shares is proscribed by law, regulation or
applicable regulatory body, or unless the Fund determines that liquidation of
the Fund following termination of this Agreement is in the best interests of
the Fund and its shareholders. Specifically, without limitation, the owners of
the Existing Contracts shall be permitted to direct reallocation of investments
in the Fund, redemption of investments in the Fund and/or investment in the
Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 10.2 shall not apply to any
terminations under Article VII and the effect of such Article VII terminations
shall be governed by Article VII of this Agreement.
10.3. The Company shall not redeem Fund shares attributable to the Contracts
(as distinct from Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act.
Upon request, the Company will promptly furnish to the Fund the opinion of
counsel for the Company (which counsel shall be reasonably satisfactory to the
Fund and the Distributor) to the effect that any redemption pursuant to clause
(ii) above is a Legally Required Redemption. Furthermore, except in cases where
permitted under the terms of the Contracts, the Company shall not prevent
Contract Owners from allocating payments to a Portfolio that was otherwise
available under the Contracts without first giving the Fund or the appropriate
Distributor 90 days prior written notice of its intention to do so.
10.4. Notwithstanding any termination of this Agreement pursuant to Article
X hereof, all rights and obligations arising under Article VIII of this
Agreement shall survive.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
Royce Capital Fund
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
If to the Distributor:
Royce Fund Services, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
If to the Company:
PHL Variable Insurance Company
Xxx Xxxxxxxx Xxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxx
ARTICLE XII. Foreign Tax Credits
The Fund and the Distributor agree to consult with the Company concerning
whether any Portfolio of the Fund qualifies to provide a foreign tax credit
pursuant to Section 853 of the Code.
ARTICLE XIII. Miscellaneous
13.1. All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents nor shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
13.2. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come
into the public domain without the express written consent of the affected
party.
13.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
13.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.5. 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.
13.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
FINRA 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.
13.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are
in addition to any and all rights, remedies and obligations at law or in
equity, which the parties hereto are entitled to under state and federal laws.
13.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Distributor may assign this Agreement or
any rights or obligations hereunder to any affiliate of or company under common
control with the Distributor, if such assignee is duly licensed and registered
to perform the obligations of the Distributor under this Agreement.
13.9 Upon request, the Company shall furnish, or shall cause to be
furnished, to the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted accounting
principles ("GAAP"), if any), as soon as practical and in any event within
90 days after the end of each fiscal year;
(b) the Company's June 30th quarterly statements (statutory) (and GAAP,
if any), as soon as practical and in any event within 45 days after the end
of each semi-annual period:
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as practical
after the delivery thereof to stockholders and/or policyholders;
(d) any registration statement (without exhibits) and financial reports
of the Company filed with the SEC or any state insurance regulator, as soon
as practical after the filing thereof;
(e) any other public report submitted to the Company by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Company, as soon as practical after the receipt
thereof.
13.10
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
hereto as of the date specified above.
PHL Variable Insurance Company on behalf of itself and each of its Accounts
named in Schedule B hereto, as amended from time to time.
PHL VARIABLE INSURANCE COMPANY
By:
--------------------------
Name: Xxxx Xxxxxxx
X'Xxxxxxx
Title: Senior Vice
President
ROYCE FUND SERVICES, INC.
By:
--------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President
ROYCE CAPITAL FUND
By:
--------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
Investment Advisor's signature...
SCHEDULE A
PORTFOLIOS OF ROYCE CAPITAL FUND
FUNDS AVAILABLE FOR
PURCHASE BY PHL VARIABLE INSURANCE COMPANY
Royce Capital Fund - Micro-Cap Portfolio
Royce Capital Fund - Small-Cap Portfolio
SCHEDULE B
SEPARATE ACCOUNTS
Separate Account
----------------
PHL Variable Accumulation Account II
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for
the handling of proxies and voting instructions relating to the Fund. The
defined terms herein shall have the meanings assigned in the Participation
Agreement except that the term "Company" shall also include the department or
third party assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of units
which are attributed to each contract owner/policyholder (the "Customer") as
of the Record Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers' accounts as
of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call in
the number of Customers to the Fund, as soon as possible, but no later than
two weeks after the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, shall produce and
personalize the Voting Instruction Cards at the Fund's expense. The Fund or
its affiliate must approve the Card before it is printed. Allow
approximately 2-4 business days for printing information on the Cards.
Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
4. During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices and
statements will be sent to Company for insertion into envelopes (envelopes
and return envelopes are provided and paid for by the Company). Contents of
envelope sent to Customers by the Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and approved
in advance by the Fund.
5. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Fund.
6. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company as the
shareowner. (A 5-week period is recommended.) Solicitation time is calculated
as calendar days from (but not including,) the meeting, counting backwards.
7. Collection and tabulation of Cards begins. Tabulation usually takes place in
another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.
8. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card and is
the signature needed on the Card.
9. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.
10. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
11. The actual tabulation of votes is done in units which are then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) The Fund must review
and approve tabulation format.
12. Final tabulation in shares is verbally given by the Company to the Fund on
the morning of the meeting not later than 10:00 a.m. Eastern time. The Fund
may request an earlier deadline if reasonable and if required to calculate
the vote in time for the meeting.
13. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.
14. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will be
permitted reasonable access to such Cards.
15. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
