Exhibit h(72)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS
AND
A I M DISTRIBUTORS, INC.
AND
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
AND
PHOENIX EQUITY PLANNING CORPORATION
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
Section 1. Available Funds.............................................. 2
1.1 Availability............................................... 2
1.2 Addition, Deletion or Modification of Funds................ 2
1.3 No Sales to the General Public............................. 2
Section 2. Processing Transactions...................................... 3
2.1 Timely Pricing and Orders.................................. 3
2.2 Timely Payments............................................ 3
2.3 Applicable Price........................................... 3
2.4 Dividends and Distributions................................ 4
2.5 Book Entry................................................. 4
Section 3. Costs and Expenses........................................... 4
3.1 General.................................................... 4
3.2 Parties To Cooperate....................................... 4
Section 4. Legal Compliance............................................. 5
4.1 Tax Laws................................................... 5
4.2 Insurance and Certain Other Laws........................... 7
4.3 Securities Laws............................................ 7
4.4 Notice of Certain Proceedings and Other Circumstances...... 9
4.5 Phoenix To Provide Documents; Information About AVIF....... 9
4.6 AVIF To Provide Documents; Information About Phoenix....... 10
4.7 General.................................................... 12
Section 5. Mixed and Shared Funding..................................... 12
5.1 General.................................................... 12
5.2 Disinterested Trustees..................................... 12
5.3 Monitoring for Material Irreconcilable Conflicts........... 13
5.4 Conflict Remedies.......................................... 13
5.5 Notice to Phoenix.......................................... 15
5.6 Information Requested by Board of Trustees................. 15
5.7 Compliance with SEC Rules.................................. 15
5.8 Other Requirements......................................... 15
Section 6. Termination.................................................. 15
6.1 Events of Termination...................................... 15
6.2 Notice Requirement for Termination......................... 17
6.3 Funds To Remain Available.................................. 17
i
6.4 Survival of Warranties and Indemnifications................ 18
6.5 Continuance of Agreement for Certain Purposes.............. 18
Section 7. Parties To Cooperate Respecting Termination.................. 18
Section 8. Assignment................................................... 18
Section 9. Notices...................................................... 18
Section 10. Voting Procedures............................................ 19
Section 11. Foreign Tax Credits.......................................... 20
Section 12. Indemnification.............................................. 20
12.1 Of AVIF and AIM by Phoenix and UNDERWRITER................. 20
12.2 Of Phoenix and UNDERWRITER by AIM and Advisor.............. 22
12.3 Effect of Notice........................................... 25
12.4 Successors................................................. 25
Section 13. Applicable Law............................................... 25
Section 14. Execution in Counterparts.................................... 25
Section 15. Severability................................................. 25
Section 16. Rights Cumulative............................................ 25
Section 17. Headings..................................................... 25
Section 18. Confidentiality.............................................. 26
Section 19. Trademarks and Fund Names.................................... 26
Section 20. Parties to Cooperate......................................... 27
ii
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 29th day of March, 2001
("Agreement"), by and among AIM Variable Insurance Funds, a Delaware Trust
("AVIF"), A I M Distributors, Inc., a Delaware corporation ("AIM"), Phoenix Home
Life Mutual Insurance Company, a New York life insurance company ("Phoenix"), on
behalf of itself and each of its segregated asset accounts listed in Schedule A
hereto, as the parties hereto may amend from time to time (each, an "Account,"
and collectively, the "Accounts"), Phoenix Equity Planning Corporation
("PEPCO"), an affiliate of Phoenix and the principal underwriter of the
Contracts (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of sixteen separate series ("Series"),
shares ("Shares") each of which is registered under the Securities Act of 1933,
as amended (the "1933 Act") and is currently sold to one or more separate
accounts of life insurance companies to fund benefits under variable annuity
contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto
as the Parties hereto may amend from time to time (each a "Fund"; reference
herein to "AVIF" includes reference to each Fund, to the extent the context
requires) available for purchase by the Accounts; and
WHEREAS, Phoenix will be the issuer of certain variable annuity contracts
and variable life insurance contracts ("Contracts") as set forth on Schedule A
hereto, as the Parties hereto may amend from time to time, which Contracts
(hereinafter collectively, the "Contracts"), if required by applicable law, will
be registered under the 1933 Act; and
WHEREAS, Phoenix will fund the Contracts through the Accounts, each of
which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
WHEREAS, Phoenix will serve as the depositor of the Accounts, each of
which is registered as a unit investment trust investment company under the 1940
Act (or exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Contracts will be registered as securities under the 1933 Act
(or exempt therefrom); and
1
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Phoenix intends to purchase Shares in one or more of the Funds on
behalf of the Accounts to fund the Contracts; and
WHEREAS, PEPCO is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, AIM is a broker-dealer registered with the SEC under the 1934 Act
and a member in good standing of the NASD;
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
AVIF will make Shares of each Fund available to Phoenix for purchase and
redemption at net asset value and with no sales charges, subject to the terms
and conditions of this Agreement. The Board of Trustees of AVIF may refuse to
sell Shares of any Fund to any person, or suspend or terminate the offering of
Shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Trustees
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, such action is deemed in the best interests of the
shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
AVIF represents and warrants that no Shares of any Fund have been or will
be sold to the general public.
2
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its designated agent will use its best efforts to provide
Phoenix with the net asset value per Share for each Fund by 5:30 p.m. Central
Time on each Business Day. As used herein, "Business Day" shall mean any day on
which (i) the New York Stock Exchange is open for regular trading, (ii) AVIF
calculates the Fund's net asset value, and (iii) Phoenix is open for business.
(b) Phoenix will use the data provided by AVIF each Business Day
pursuant to paragraph (a) immediately above to calculate Account unit values and
to process transactions that receive that same Business Day's Account unit
values. Phoenix will perform such Account processing the same Business Day, and
will place corresponding orders to purchase or redeem Shares with AVIF by 9:00
a.m. Central Time the following Business Day; provided, however, that AVIF shall
provide additional time to Phoenix in the event that AVIF is unable to meet the
5:30 p.m. time stated in paragraph (a) immediately above. Such additional time
shall be equal to the additional time that AVIF takes to make the net asset
values available to Phoenix.
(c) With respect to payment of the purchase price by Phoenix and of
redemption proceeds by AVIF, Phoenix and AVIF shall net purchase and redemption
orders with respect to each Fund and shall transmit one net payment per Fund in
accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value
information (as determined under SEC guidelines), Phoenix shall be entitled to
an adjustment to the number of Shares purchased or redeemed to reflect the
correct net asset value per Share. Any material error in the calculation or
reporting of net asset value per Share, dividend or capital gain information
shall be reported promptly upon discovery to Phoenix. Materiality and
reprocessing cost reimbursement shall be determined in accordance with standards
established by the Parties as provided in Schedule B, attached hereto and
incorporated herein.
2.2 TIMELY PAYMENTS.
Phoenix will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by Phoenix by 1:00 p.m. Central Time on the
same day as the order is placed, to the extent practicable, but in any event
within five (5) calendar days after the date the order is placed in order to
enable Phoenix to pay redemption proceeds within the time specified in Section
22(e) of the 1940 Act and any rules thereunder.
2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Contracts (collectively, "Contract
3
transactions") and that Phoenix receives prior to the close of regular trading
on the New York Stock Exchange on a Business Day will be executed at the net
asset values of the appropriate Funds next computed after receipt by AVIF or its
designated agent of the orders. For purposes of this Section 2.3(a), Phoenix
shall be the designated agent of AVIF for receipt of orders relating to Contract
transactions on each Business Day and receipt by such designated agent shall
constitute receipt by AVIF; provided that AVIF receives notice of such orders by
9:00 a.m. Central Time on the next following Business Day or such later time as
computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by Phoenix not involving
Contract transactions will be effected at the net asset values of the
appropriate Funds next computed after receipt by AVIF or its designated agent of
the order therefor, and such orders will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
AVIF will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to Phoenix of any income dividends
or capital gain distributions payable on the Shares of any Fund. Phoenix hereby
elects to reinvest all dividends and capital gains distributions in additional
Shares of the corresponding Fund at the ex-dividend date net asset values until
Phoenix otherwise notifies AVIF in writing, it being agreed by the Parties that
the ex-dividend date and the payment date with respect to any dividend or
distribution will be the same Business Day. Phoenix reserves the right to revoke
this election and to receive all such income dividends and capital gain
distributions in cash.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to Phoenix. Shares ordered from AVIF will be
recorded in an appropriate title for Phoenix, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto
and made a part hereof, or as otherwise agreed to in writing by and among some
or all of the Parties, each Party will bear, or arrange for others to bear, all
expenses incident to its performance under this Agreement.
3.2 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of AVIF and the Accounts.
4
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF represents and warrants that each Fund is currently qualified
as a regulated investment company ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and represents that it will make
every effort to qualify and to maintain qualification of each Fund as a RIC.
AVIF will notify Phoenix immediately upon having a reasonable basis for
believing that a Fund has ceased to so qualify or that it might not so qualify
in the future.
(b) AVIF represents and warrants that each Fund currently complies with
the diversification requirements set forth in Section 817(h) of the Code and
Section 1.817-5(b) of the regulations under the Code ("diversification
requirements") and that it will make every effort to maintain each Fund's
compliance with the diversification requirements. AVIF will notify Phoenix
immediately upon having a reasonable basis for believing that a Fund has ceased
to so comply or that a Fund might not so comply in the future. In the event of a
breach of this Section 4.1(b) by AVIF, it will take all reasonable steps to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Section 1.817-5 of the regulations under the Code.
(c) Notwithstanding any other provision of this Agreement, Phoenix
agrees that if the Internal Revenue Service ("IRS") asserts in writing in
connection with any governmental audit or review of Phoenix or, to Phoenix's
knowledge, of any Contract owners, annuitants, insureds or participants (as
appropriate) under the Contracts (collectively, "Participants"), that any Fund
has failed to comply with the diversification requirements of Section 817(h) of
the Code or Phoenix otherwise becomes aware of any facts that could give rise to
any claim against AVIF or its affiliates as a result of such a failure or
alleged failure:
(i) Phoenix shall promptly notify AVIF of such assertion or
potential claim (subject to the Confidentiality provisions of
Section 18 as to any Participant);
(ii) Phoenix shall consult with AVIF as to how to minimize any
liability that may arise as a result of such failure or
alleged failure.
(iii) Phoenix shall use its best efforts to minimize any liability
of AVIF or its affiliates resulting from such failure,
including, without limitation, demonstrating, pursuant to
Treasury Regulations Section 1.817-5(a)(2), to the
Commissioner of the IRS that such failure was inadvertent;
(iv) Phoenix shall permit AVIF, its affiliates and their legal and
accounting advisors to participate in any conferences,
settlement discussions or other administrative or judicial
proceeding or contests (including judicial appeals thereof)
with the IRS, any Participant or any other claimant regarding
any claims that could give rise to liability to AVIF or its
affiliates as a result of
5
such a failure or alleged failure; provided, however, that
Phoenix will retain control of the conduct of such conferences
discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by Phoenix to the IRS,
any Participant or any other claimant in connection with any
of the foregoing proceedings or contests (including, without
limitation, any such materials to be submitted to the IRS
pursuant to Treasury Regulations Section 1.817-5(a)(2)), (a)
shall be provided by Phoenix to AVIF (together with any
supporting information or analysis); subject to the
confidentiality provisions of Section 18, at least ten (10)
business days or such shorter period to which the Parties
hereto agree prior to the day on which such proposed materials
are to be submitted, and (b) shall not be submitted by Phoenix
to any such person without the express written consent of AVIF
which shall not be unreasonably withheld;
(vi) Phoenix shall provide AVIF or its affiliates and their
accounting and legal advisors with such cooperation as AVIF
shall reasonably request (including, without limitation, by
permitting AVIF and its accounting and legal advisors to
review the relevant books and records of Phoenix) in order to
facilitate review by AVIF or its advisors of any written
submissions provided to it pursuant to the preceding clause or
its assessment of the validity or amount of any claim against
its arising from such a failure or alleged failure;
(vii) Phoenix shall not with respect to any claim of the IRS or any
Participant that would give rise to a claim against AVIF or
its affiliates (a) compromise or settle any claim, (b) accept
any adjustment on audit, or (c) forego any allowable
administrative or judicial appeals, without the express
written consent of AVIF or its affiliates, which shall not be
unreasonably withheld; provided that Phoenix shall not be
required, after exhausting all administrative remedies, to
appeal any adverse judicial decision unless AVIF or its
affiliates shall have provided an opinion of independent
counsel to the effect that a reasonable basis exists for
taking such appeal; and provided further that the costs of any
such appeal shall be borne equally by the Parties hereto; and
(viii) AVIF and its affiliates shall have no liability as a result
of such failure or alleged failure if Phoenix fails to comply
with any of the foregoing clauses (i) through (vii), and such
failure could be shown to have materially contributed to the
liability.
Should AVIF or any of its affiliates refuse to give its written consent to
any compromise or settlement of any claim or liability hereunder, Phoenix may,
in its discretion, authorize AVIF or its affiliates to act in the name of
Phoenix in, and to control the conduct of, such conferences, discussions,
proceedings, contests or appeals and all administrative or judicial appeals
thereof, and in that event AVIF or its affiliates shall bear the fees and
expenses associated with the conduct of the
6
proceedings that it is so authorized to control; provided, that in no event
shall Phoenix have any liability resulting from AVIF's refusal to accept the
proposed settlement or compromise with respect to any failure caused by AVIF. As
used in this Agreement, the term "affiliates" shall have the same meaning as
"affiliated person" as defined in Section 2(a)(3) of the 1940 Act.
(d) Phoenix represents and warrants that the Contracts currently are and
will be treated as annuity contracts or life insurance contracts under
applicable provisions of the Code and that it will make every effort to maintain
such treatment; Phoenix will notify AVIF immediately upon having a reasonable
basis for believing that any of the Contracts have ceased to be so treated or
that they might not be so treated in the future.
(e) Phoenix represents and warrants that each Account is a "segregated
asset account" and that interests in each Account are offered exclusively
through the purchase of or transfer into a "variable contract," within the
meaning of such terms under Section 817 of the Code and the regulations
thereunder. Phoenix will make every effort to continue to meet such definitional
requirements, and it will notify AVIF immediately upon having a reasonable basis
for believing that such requirements have ceased to be met or that they might
not be met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) AVIF will use its best efforts to comply with any applicable state
insurance laws or regulations, to the extent specifically requested in writing
by Phoenix, including, the furnishing of information not otherwise available to
Phoenix which is required by state insurance law to enable Phoenix to obtain the
authority needed to issue the Contracts in any applicable state.
(b) Phoenix represents and warrants that (i) it is an insurance company
duly organized, validly existing and in good standing under the laws of the
State of New York and has full corporate power, authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains each
Account as a segregated asset account under such law and the regulations
thereunder, and (iii) the Contracts comply in all material respects with all
other applicable federal and state laws and regulations.
(c) AVIF represents and warrants that it is lawfully organized, validly
existing, and in good standing under the laws of the State of Delaware and has
full power, authority, and legal right to execute, deliver, and perform its
duties and comply with its obligations under this Agreement.
4.3 SECURITIES LAWS.
(a) Phoenix represents and warrants that (i) interests in each Account
pursuant to the Contracts will be registered under the 1933 Act to the extent
required by the 1933 Act, (ii) the Contracts will be duly authorized for
issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and the
law(s) of Phoenix's state(s) of organization and domicile, (iii) each Account is
and will remain registered under the 1940 Act, to the extent required by the
1940 Act, (iv) each Account does and will comply
7
in all material respects with the requirements of the 1940 Act and the rules
thereunder, to the extent required, (v) each Account's 1933 Act registration
statement relating to the Contracts, together with any amendments thereto, will
at all times comply in all material respects with the requirements of the 1933
Act and the rules thereunder, (vi) Phoenix will amend the registration statement
for its Contracts under the 1933 Act and for its Accounts under the 1940 Act
from time to time as required in order to effect the continuous offering of its
Contracts or as may otherwise be required by applicable law, and (vii) each
Account Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(b) AVIF represents and warrants that (i) Shares sold pursuant to this
Agreement will be registered under the 1933 Act to the extent required by the
1933 Act and duly authorized for issuance and sold in compliance with Delaware
law, (ii) AVIF is and will remain registered under the 1940 Act to the extent
required by the 1940 Act, (iii) AVIF will amend the registration statement for
its Shares under the 1933 Act and itself under the 1940 Act from time to time as
required in order to effect the continuous offering of its Shares, (iv) AVIF
does and will comply in all material respects with the requirements of the 1940
Act and the rules thereunder, (v) AVIF's 1933 Act registration statement,
together with any amendments thereto, will at all times comply in all material
respects with the requirements of the 1933 Act and rules thereunder, and (vi)
AVIF's Prospectus will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF.
(d) AVIF currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
AVIF undertakes to have its Board of Trustees, a majority of whom are not
"interested" persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
(e) AVIF represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having access to
the funds and/or securities of the Fund are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund in an amount not less than the minimal coverage as required currently by
Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
(f) AVIF agrees that AVIF and the Funds shall be managed consistent with
the investment objectives, policies, and restrictions as described in AVIF's and
the Funds' prospectuses and registration statements, as amended or modified from
time to time.
8
(g) AVIF and AIM shall sell and distribute the Shares of the Funds in
accordance with the applicable provisions of federal law, including the 1933
Act, 1934 Act, and 1940 Act; the NASD Conduct Rules; and state law.
(h) PEPCO shall sell and distribute the Contracts in accordance with the
applicable provisions of federal law, including the 1933 Act, 1934 Act, and 1940
Act; the NASD Conduct Rules; and state law.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF or AIM will immediately notify Phoenix of (i) the issuance by
any court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to AVIF's registration statement under the 1933 Act
or AVIF Prospectus, (ii) any request by the SEC for any amendment to such
registration statement or AVIF Prospectus that may affect the offering of Shares
of AVIF, (iii) the initiation of any proceedings for that purpose or for any
other purpose relating to the registration or offering of AVIF's Shares, or (iv)
any other action or circumstances that may prevent the lawful offer or sale of
Shares of any Fund in any state or jurisdiction, including, without limitation,
any circumstances in which (a) such Shares are not registered and, in all
material respects, issued and sold in accordance with applicable state and
federal law, or (b) such law precludes the use of such Shares as an underlying
investment medium of the Contracts issued or to be issued by Phoenix. AVIF and
AIM will make every reasonable effort to prevent the issuance, with respect to
any Fund, of any such stop order, cease and desist order or similar order and,
if any such order is issued, to obtain the lifting thereof at the earliest
possible time.
(b) Phoenix or PEPCO will immediately notify AVIF of (i) the issuance by
any court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to each Account's registration statement under the
1933 Act relating to the Contracts or each Account Prospectus, (ii) any request
by the SEC for any amendment to such registration statement or Account
Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Contracts,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. Phoenix or PEPCO will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
time.
4.5 PHOENIX AND PEPCO TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) Phoenix will provide to AVIF or its designated agent at least one
(1) complete copy of all SEC registration statements, Account Prospectuses,
reports, any preliminary and final voting instruction solicitation material,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
9
(b) Phoenix or PEPCO will provide to AVIF or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which AVIF or any of its affiliates is named, at least
five (5) Business Days prior to its use or such shorter period as the Parties
hereto may, from time to time, agree upon. No such material shall be used if
AVIF or its designated agent objects to such use within five (5) Business Days
after receipt of such material or such shorter period as the Parties hereto may,
from time to time, agree upon. AVIF hereby designates AIM as the entity to
receive such sales literature, until such time as AVIF appoints another
designated agent by giving notice to Phoenix in the manner required by Section 9
hereof.
(c) Neither Phoenix, PEPCO, nor any of their respective affiliates, will
give any information or make any representations or statements on behalf of or
concerning AVIF or its affiliates in connection with the sale of the Contracts
other than (i) the information or representations contained in the registration
statement, including the AVIF Prospectus contained therein, relating to Shares,
as such registration statement and AVIF Prospectus may be amended from time to
time; or (ii) in reports or proxy materials for AVIF; or (iii) in published
reports for AVIF that are in the public domain and approved by AVIF for
distribution; or (iv) in sales literature or other promotional material approved
by AVIF, except with the express written permission of AVIF.
(d) Phoenix shall adopt and implement procedures reasonably designed to
ensure that information concerning AVIF and its affiliates that is intended for
use only by brokers or agents selling the Contracts (i.e., information that is
not intended for distribution to Participants) ("broker only materials") is so
used, and neither AVIF nor any of its affiliates shall be liable for any losses,
damages or expenses relating to the improper use of such broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales literature
or other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media, (e.g.,
on-line networks such as the Internet or other electronic messages), 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, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.
4.6 AVIF AND AIM TO PROVIDE DOCUMENTS; INFORMATION ABOUT PHOENIX.
(a) AVIF will provide to Phoenix at least one (1) complete copy of all
SEC registration statements, AVIF Prospectuses, reports, any preliminary and
final proxy material, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to AVIF or the
Shares of a Fund, contemporaneously with the filing of such document with the
SEC or other regulatory authorities.
10
(b) AVIF will provide to Phoenix a camera ready copy of all AVIF
Prospectuses and printed copies, in an amount specified by Phoenix, of AVIF
statements of additional information, proxy materials, periodic reports to
shareholders and other materials required by law to be sent to Participants who
have allocated any Contract value to a Fund. AVIF will provide such copies to
Phoenix in a timely manner so as to enable Phoenix, as the case may be, to print
and distribute such materials within the time required by law to be furnished to
Participants.
(c) AVIF or AIM will provide to Phoenix or its designated agent at least
one (1) complete copy of each piece of sales literature or other promotional
material in which Phoenix, or any of its respective affiliates is named, or that
refers to the Contracts, at least five (5) Business Days prior to its use or
such shorter period as the Parties hereto may, from time to time, agree upon. No
such material shall be used if Phoenix or its designated agent objects to such
use within five (5) Business Days after receipt of such material or such shorter
period as the Parties hereto may, from time to time, agree upon. Phoenix shall
receive all such sales literature until such time as it appoints a designated
agent by giving notice to AVIF in the manner required by Section 9 hereof.
(d) Neither AVIF, AIM, nor any of their respective affiliates will give
any information or make any representations or statements on behalf of or
concerning Phoenix, each Account, or the Contracts other than (i) the
information or representations contained in the registration statement,
including each Account Prospectus contained therein, relating to the Contracts,
as such registration statement and Account Prospectus may be amended from time
to time; or (ii) in published reports for the Account or the Contracts that are
in the public domain and approved by Phoenix for distribution; or (iii) in sales
literature or other promotional material approved by Phoenix or its affiliates,
except with the express written permission of Phoenix.
(e) AIM shall adopt and implement procedures reasonably designed to
ensure that information concerning Phoenix and its respective affiliates that is
intended for use only by brokers or agents selling the Contracts (i.e.,
information that is not intended for distribution to Participants) ("broker only
materials") is so used, and neither Phoenix, nor any of its respective
affiliates shall be liable for any losses, damages or expenses relating to the
improper use of such broker only materials.
(f) For purposes of this Section 4.6, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media, (e.g.,
on-line networks such as the Internet or other electronic messages), 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, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.
11
4.7 GENERAL.
Each of the Parties represent and warrant that they shall perform their
obligations hereunder in compliance with any applicable state and federal laws.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
(a) The SEC has granted an order to AVIF exempting it from certain
provisions of the 1940 Act and rules thereunder so that AVIF may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with Phoenix,
and trustees of qualified pension and retirement plans (collectively, "Mixed and
Shared Funding"). The Parties recognize that the SEC has imposed terms and
conditions for such orders that are substantially identical to many of the
provisions of this Section 5. Sections 5.2 through 5.8 below shall apply
pursuant to such an exemptive order granted to AVIF.
(b) AVIF hereby notifies Phoenix that, in the event that AVIF implements
Mixed and Shared Funding, it may be appropriate to include in the prospectus
pursuant to which a Contract is offered disclosure regarding the potential risks
of Mixed and Shared Funding.
(c) To the extent applicable, AVIF shall disclose in its Prospectus, in
substance, that: (i) Shares of the Funds are offered to affiliated and
unaffiliated insurance company separate accounts that fund both annuity and life
insurance contracts and are offered to qualified pension and retirement plans;
(ii) Mixed and Shared Funding may present certain conflicts of interest; (iii)
due to differences in tax treatment or other considerations, the interests of
various variable contract owners investing in separate accounts investing in
AVIF or a Fund and the interests of qualified pension and retirement plan
participants might at some time be in irreconcilable conflict; and (iv) the
Board of Trustees of AVIF will monitor for any material irreconcilable conflicts
and determine what action, if any, should be taken.
5.2 DISINTERESTED TRUSTEES.
AVIF agrees that its Board of Trustees shall at all times consist of
trustees a majority of whom are not interested persons of AVIF (the
"Disinterested Trustees") within the meaning of Section 2(a)(19) of the 1940 Act
and the rules thereunder and as modified by any applicable orders of the SEC,
except that if this condition is not met by reason of the death,
disqualification, or bona fide resignation of any director, then the operation
of this condition shall be suspended (a) for a period of forty-five (45) days if
the vacancy or vacancies may be filled by the Board; (b) for a period of sixty
(60) days if a vote of shareholders is required to fill the vacancy or
vacancies; or (c) for such longer period as the SEC may prescribe by order upon
application.
12
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Trustees will monitor for the existence of
any material irreconcilable conflict between the interests of the Participants
in all separate accounts of life insurance companies utilizing AVIF
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in AVIF ("Participating
Plans"). Phoenix agrees to inform the Board of Trustees of AVIF of the existence
of or any potential for any such material irreconcilable conflict of which it is
aware. The concept of a "material irreconcilable conflict" is not defined by the
1940 Act or the rules thereunder, but the Parties recognize that such a conflict
may arise for a variety of reasons, including, without limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities
laws or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax or securities
regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Fund are being managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or by Participants of
different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the
voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive orders
of the type referred to in Section 5.1 hereof, Phoenix will assist the Board of
Trustees in carrying out its responsibilities by providing the Board of Trustees
with all information reasonably necessary for the Board of Trustees to consider
any issue raised, including information as to a decision by Phoenix to disregard
voting instructions of Participants. Phoenix's responsibilities in connection
with the foregoing shall be carried out with a view only to the interests of
Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the members
of the Board of Trustees or a majority of the Disinterested Trustees that a
material irreconcilable conflict exists, Phoenix will, if it is a Participating
Insurance Company for which a material irreconcilable conflict is relevant, at
its own expense and to the extent reasonably practicable (as determined by
13
a majority of the Disinterested Trustees), take whatever steps are necessary to
remedy or eliminate the material irreconcilable conflict, which steps may
include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the
Accounts from AVIF or any Fund and reinvesting such assets in
a different investment medium, including another Fund of AVIF,
or submitting the question whether such segregation should be
implemented to a vote of all affected Participants and, as
appropriate, segregating the assets of any particular group
(e.g., annuity Participants, life insurance Participants or
all Participants) that votes in favor of such segregation, or
offering to the affected Participants the option of making
such a change; and
(ii) establishing a new registered investment company of the type
defined as a "management company" in Section 4(3) of the 1940
Act or a new separate account that is operated as a management
company.
(b) If the material irreconcilable conflict arises because of Phoenix's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, Phoenix may be
required, at AVIF's election, to withdraw each Account's investment in AVIF or
any Fund. No charge or penalty will be imposed as a result of such withdrawal.
Any such withdrawal must take place within six (6) months after AVIF gives
notice to Phoenix that this provision is being implemented, and until such
withdrawal AVIF shall continue to accept and implement orders by Phoenix for the
purchase and redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to Phoenix conflicts with the
majority of other state regulators, then Phoenix will withdraw each Account's
investment in AVIF within six (6) months after AVIF's Board of Trustees informs
Phoenix that it has determined that such decision has created a material
irreconcilable conflict, and until such withdrawal AVIF shall continue to accept
and implement orders by Phoenix for the purchase and redemption of Shares of
AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) Phoenix agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Trustees will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Contracts.
Phoenix will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
14
5.5 NOTICE TO PHOENIX.
AVIF will promptly make known in writing to Phoenix the Board of Trustees'
determination of the existence of a material irreconcilable conflict, a
description of the facts that give rise to such conflict and the implications of
such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES.
Phoenix and AVIF (or its investment adviser) will at least annually submit
to the Board of Trustees of AVIF such reports, materials or data as the Board of
Trustees may reasonably request so that the Board of Trustees may fully carry
out the obligations imposed upon it by the provisions hereof or any exemptive
order granted by the SEC to permit Mixed and Shared Funding, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by the Board of Trustees. All reports received by the Board of Trustees of
potential or existing conflicts, and all Board of Trustees actions with regard
to determining the existence of a conflict, notifying Participating Insurance
Companies and Participating Plans of a conflict, and determining whether any
proposed action adequately remedies a conflict, will be properly recorded in the
minutes of the Board of Trustees or other appropriate records, and such minutes
or other records will be made available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.
5.8 OTHER REQUIREMENTS.
AVIF will require that each Participating Insurance Company and
Participating Plan enter into an agreement with AVIF that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.1(e), 4.3(a),
4.4(b), 4.5(a), 5, 10 and 12.2(e) of this Agreement, but with respect to Section
12.2(e), only as to agreements with Participating Insurance Companies and Plans
that are entered into after the execution of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.3 below, this Agreement will terminate as to a Fund:
15
(a) at the option of any Party, upon 90 days advance written notice to
the other Parties, unless a shorter time is agreed to by the Parties; or
(b) at the option of Phoenix if Shares of the Funds are not reasonably
available to meet the requirements of the Contracts issued by Phoenix, as
determined by Phoenix, and upon written notice by Phoenix to the other Parties;
or
(c) at the option of AVIF upon institution of formal proceedings against
Phoenix or PEPCO by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body if AVIF shall determine, in its sole
judgment exercised in good faith, that Phoenix or PEPCO has suffered a material
adverse change in its business, operations, financial condition, or prospects
since the date of this Agreement or is the subject of material adverse
publicity; or
(d) at the option of Phoenix or PEPCO upon institution of formal
proceedings against AVIF, its principal underwriter, or its investment adviser
by the NASD, the SEC, or any state securities or insurance department or any
other regulatory body if Phoenix or PEPCO shall determine, in its sole judgment
exercised in good faith, that AVIF, its principal underwriter, or its investment
adviser has suffered a material adverse change in its business, operations,
financial condition, or prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(e) at the option of any Party in the event that (i) the Fund's Shares
are not registered and, in all material respects, issued and sold in accordance
with any applicable federal or state law, or (ii) such law precludes the use of
such Shares as an underlying investment medium of the Contracts issued or to be
issued by Phoenix; or
(f) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or
(g) at the option of Phoenix if the Fund ceases to qualify as a RIC
under Subchapter M of the Code or under successor or similar provisions, or if
Phoenix reasonably believes that the Fund may fail to so qualify; or
(h) at the option of Phoenix if the Fund fails to comply with Section
817(h) of the Code or with successor or similar provisions, or if Phoenix
reasonably believes that the Fund may fail to so comply; or
(i) at the option of AVIF if the Contracts issued by Phoenix cease to
qualify as annuity contracts or life insurance contracts under the Code (other
than by reason of the Fund's noncompliance with Section 817(h) or Subchapter M
of the Code) or if interests in an Account under the Contracts are not
registered, where required, and, in all material respects, are not issued or
sold in accordance with any applicable federal or state law; or
16
(j) at the option of Phoenix upon any substitution of the shares of
another investment company or series thereof for Shares of AVIF or a Fund in
accordance with the terms of the Contracts, provided that Phoenix has given at
least 30 days prior written notice to AVIF or AIM of the date of the
substitution; or
(k) upon another Party's material breach of any provision of this
Agreement.
6.2 RIGHT TO SUBSTITUTE.
Under the terms of the Contracts, Phoenix reserves the right, subject to
compliance with the law as then in effect, to make substitutions for the
securities that are held by an Account under certain circumstances. The Parties
acknowledge that Phoenix has the right to substitute other securities for the
Shares of AVIF or a Fund already purchased or to be purchased in the future.
Phoenix will provide 30 days written notice to AVIF or to AIM prior to effecting
any such substitution.
6.3 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) hereof, such prior written notice shall be given at least ninety
(90) days in advance of the effective date of termination unless a shorter time
is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of
Sections 6.1(c) or 6.1(d) hereof, such prior written notice shall be given at
least ninety (90) days in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;
(c) in the event that any termination is based upon the provisions of
6.1(j) hereof, such prior written notice shall be given at least thirty (30)
days in advance of the effective date of the substitution unless a shorter time
is agreed to by the Parties hereto;
(d) in the event that any termination is based upon the provisions of
Sections 6.1(b), 6.1(e), 6.1(f), 6.1(g), 6.1(h), 6.1(i), or 6.1(k) hereof, such
prior written notice shall be given as soon as possible within twenty-four (24)
hours after the terminating Party learns of the event causing termination to be
required.
6.4 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, AVIF will, at the
option of Phoenix, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation, the
owners of the
17
Existing Contracts will be permitted to reallocate investments in the Fund (as
in effect on such date), redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 6.5 will not apply to any
terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.
6.5 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications and Section 6.2 will survive the
termination of this Agreement.
6.6 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund pursuant
to Sections 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.1(e), 6.1(g), 6.1(h), 6.1(i),
6.1(j), or 6.1(k) hereof, this Agreement shall nevertheless continue in effect
as to any Shares of that Fund that are outstanding as of the date of such
termination (the "Initial Termination Date"). This continuation shall extend to
the earlier of the date as of which an Account owns no Shares of the affected
Fund or a date (the "Final Termination Date") six (6) months following the
Initial Termination Date or such longer time as is necessary for Phoenix to
obtain a substitution order from the SEC, the application for which Phoenix will
diligently pursue, except that Phoenix may, by written notice, shorten said six
(6) month period.
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance to
one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Contracts in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written
consent of each other Party; provided that the contemplated demutualization of
Phoenix Home Life Mutual Insurance Company will not be considered an assignment
within the meaning of this Section 8.
SECTION 9. NOTICES
Notices and communications required or permitted will be given by means
mutually acceptable to the Parties concerned. Each other notice or communication
required or permitted by
18
this Agreement will be given to the following persons at the following addresses
and facsimile numbers, or such other persons, addresses or facsimile numbers as
the Party receiving such notices or communications may subsequently direct in
writing:
AIM VARIABLE INSURANCE FUNDS
A I M DISTRIBUTORS, INC.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
Xxx Xxxxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx
PHOENIX EQUITY PLANNING CORPORATION
00 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Xxxxxxx
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof,
Phoenix will distribute all proxy material furnished by AVIF to Participants to
whom pass-through voting privileges are required to be extended and will solicit
voting instructions from Participants. Phoenix will vote Shares in accordance
with timely instructions received from Participants. Phoenix will vote Shares
that are (a) not attributable to Participants to whom pass-through voting
privileges are extended, or (b) attributable to Participants, but for which no
timely instructions have been received, in the same proportion as Shares for
which said instructions have been received from Participants, so long as and to
the extent that the SEC continues to interpret the 1940 Act to require pass
through voting privileges for Participants. Neither Phoenix nor any of its
affiliates will in any way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Participants. Phoenix reserves the right to vote shares held in any Account in
its own right, to the extent permitted by law. Phoenix shall be responsible for
assuring that each of its Accounts holding Shares calculates voting privileges
in a manner consistent with that of other Participating Insurance Companies or
in the manner required by the Mixed and Shared Funding exemptive order
19
obtained by AVIF. AVIF will notify Phoenix of any changes of interpretations or
amendments to Mixed and Shared Funding exemptive order it has obtained. AVIF
will comply with all provisions of the 1940 Act requiring voting by
shareholders, and in particular, AVIF either will provide for annual meetings
(except insofar as the SEC may interpret Section 16 of the 1940 Act not to
require such meetings) or will comply with Section 16(c) of the 1940 Act
(although AVIF 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, AVIF
will act in accordance with the SEC's interpretation of the requirements of
Section 16(a) with respect to periodic elections of trustees and with whatever
rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with Phoenix concerning any decision to
elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY PHOENIX AND PEPCO.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, Phoenix and PEPCO agree to indemnify and hold harmless AVIF, AIM, their
affiliates, and each person, if any, who controls AVIF, AIM, or their affiliates
within the meaning of Section 15 of the 1933 Act and each of their respective
trustees and officers, (collectively, the "Indemnified Parties" for purposes of
this Section 12.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of Phoenix and
PEPCO) or actions in respect thereof (including, to the extent reasonable, legal
and other expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any
Account's 1933 Act registration statement, any Account
Prospectus, the Contracts, or sales literature or advertising
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 Phoenix or PEPCO by or on behalf of
AVIF or AIM for use in any Account's 1933 Act registration
statements, any Account Prospectuses, the Contracts, or sales
literature or advertising or otherwise for use in connection
with the sale of
20
Contracts or Shares (or any amendment or supplement to any of
the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in AVIF's 1933 Act registration statements, AVIF's
Prospectuses, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing, not supplied
for use therein by or on behalf of Phoenix, PEPCO, or their
respective affiliates and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent
conduct of Phoenix, PEPCO, or their respective affiliates or
persons under their control (including, without limitation,
their employees and "persons associated with a member," as
that term is defined in paragraph (q) of Article I of the
NASD's By-Laws), in connection with the sale or distribution
of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statements, AVIF Prospectuses, sales
literature or advertising of AVIF, or any amendment or
supplement to any of the foregoing, or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in
reliance upon and in conformity with information furnished to
AVIF, AIM or their affiliates by or on behalf of Phoenix,
PEPCO, or their respective affiliates for use in AVIF's 1933
Act registration statements, AVIF's Prospectuses, sales
literature or advertising of AVIF, or any amendment or
supplement to any of the foregoing; or
(iv) arise as a result of any failure by Phoenix or PEPCO to
perform the obligations, provide the services and furnish the
materials required of them under the terms of this Agreement,
or any material breach of any representation and/or warranty
made by Phoenix or PEPCO in this Agreement or arise out of or
result from any other material breach of this Agreement by
Phoenix or PEPCO; or
(v) arise as a result of failure by the Contracts issued by
Phoenix to qualify as annuity contracts or life insurance
contracts under the Code, otherwise than by reason of any
Fund's failure to comply with Subchapter M or Section 817(h)
of the Code.
(b) Neither Phoenix nor PEPCO shall be liable under this Section 12.1
with respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of that Indemnified Party's reckless disregard of
obligations or duties (i) under this Agreement, or (ii) to AVIF or AIM.
21
(c) Neither Phoenix nor PEPCO shall be liable under this Section 12.1
with respect to any action against an Indemnified Party unless AVIF or AIM shall
have notified Phoenix and PEPCO in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify Phoenix and PEPCO of any such action shall not
relieve Phoenix and PEPCO from any liability which they may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this Section 12.1. Except as otherwise provided herein, in case any such
action is brought against an Indemnified Party, Phoenix and PEPCO shall be
entitled to participate, at their own expense, in the defense of such action and
also shall be entitled to assume the defense thereof, with counsel approved by
the Indemnified Party named in the action, which approval shall not be
unreasonably withheld. After notice from Phoenix or PEPCO to such Indemnified
Party of Phoenix's or PEPCO's election to assume the defense thereof, the
Indemnified Party will cooperate fully with Phoenix and PEPCO and shall bear the
fees and expenses of any additional counsel retained by it, and neither Phoenix
nor PEPCO will be liable to such Indemnified Party under this Agreement for any
legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof, other than reasonable
costs of investigation.
12.2 OF PHOENIX AND PEPCO BY AVIF AND AIM.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d), and
12.2(e) below, AVIF and AIM agree to indemnify and hold harmless Phoenix, PEPCO,
and their respective affiliates, the Accounts and each person, if any, who
controls Phoenix, PEPCO, their respective affiliates, or the Accounts within the
meaning of Section 15 of the 1933 Act and each of their respective trustees and
officers, (collectively, the "Indemnified Parties" for purposes of this Section
12.2) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of AVIF and/or AIM) or
actions in respect thereof (including, to the extent reasonable, legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law, or otherwise, insofar as such losses,
claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statements, AVIF's Prospectuses or sales
literature or advertising of AVIF (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to AVIF or its
affiliates by or on behalf of Phoenix, PEPCO, or their
respective affiliates for use in AVIF's 1933 Act registration
statements, AVIF Prospectuses, or in sales literature or
advertising or otherwise for use in connection with the sale
of Contracts or Shares (or any amendment or supplement to any
of the foregoing); or
22
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statements,
any Account Prospectuses, sales literature or advertising for
the Contracts, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of
AVIF, AIM, or their affiliates and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent
conduct of AVIF, AIM, or their affiliates or persons under
their control (including, without limitation, their employees
and "persons associated with a member" as that term is defined
in Section (q) of Article I of the NASD By-Laws), in
connection with the sale or distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any
Account's 1933 Act registration statements, any Account
Prospectuses, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon and in
conformity with information furnished to Phoenix, PEPCO, or
their respective affiliates by or on behalf of AVIF or AIM for
use in any Account's 1933 Act registration statements, any
Account Prospectuses, sales literature or advertising covering
the Contracts, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by AVIF or AIM to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any
material breach of any representation and/or warranty made by
AVIF or AIM in this Agreement or arise out of or result from
any other material breach of this Agreement by AVIF or AIM.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d), and
12.2(e) hereof, AVIF and AIM agree to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof with, the written
consent of AVIF and/or AIM) or actions in respect thereof (including, to the
extent reasonable, legal and other expenses) to which the Indemnified Parties
may become subject directly or indirectly under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions
directly or indirectly result from or arise out of the failure of any Fund to
operate as a regulated investment company in compliance with (i) Subchapter M of
the Code and regulations thereunder, or (ii) Section 817(h) of the Code and
regulations thereunder, including, without limitation, any income taxes and
related penalties, rescission charges, liability under state law to Participants
asserting liability against Phoenix pursuant to the Contracts, the costs of any
ruling and closing agreement or other settlement with the IRS, and the cost of
any substitution by Phoenix of Shares of another investment company or portfolio
for those of any adversely affected Fund as a
23
funding medium for each Account that Phoenix reasonably deems necessary or
appropriate as a result of the noncompliance.
(c) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of such Indemnified Party's reckless disregard of its
obligations and duties (i) under this Agreement, or (ii) to Phoenix, PEPCO, each
Account, or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified AVIF and/or AIM in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify AVIF or AIM of any such action shall not relieve
AVIF or AIM from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
12.2. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, AVIF and/or AIM will be entitled to participate,
at its own expense, in the defense of such action and also shall be entitled to
assume the defense thereof (which shall include, without limitation, the conduct
of any ruling request and closing agreement or other settlement proceeding with
the IRS), with counsel approved by the Indemnified Party named in the action,
which approval shall not be unreasonably withheld. After notice from AVIF and/or
AIM to such Indemnified Party of AVIF's or AIM's election to assume the defense
thereof, the Indemnified Party will cooperate fully with AVIF and AIM and shall
bear the fees and expenses of any additional counsel retained by it, and neither
AVIF nor AIM shall be liable to such Indemnified Party under this Agreement for
any legal or other expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof, other than reasonable
costs of investigation.
(e) In no event shall AVIF or AIM be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including,
without limitation, Phoenix, PEPCO or any other Participating Insurance Company
or any Participant, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any representation,
warranty, and/or covenant made by Phoenix or PEPCO hereunder or by any
Participating Insurance Company under an agreement containing substantially
similar representations, warranties and covenants; (ii) the failure by Phoenix
or any Participating Insurance Company to maintain its segregated asset account
(which invests in any Fund) as a legally and validly established segregated
asset account under applicable state law and as a duly registered unit
investment trust under the provisions of the 1940 Act (unless exempt therefrom);
or (iii) the failure by Phoenix or any Participating Insurance Company to
maintain its variable annuity or life insurance contracts (with respect to which
any Fund serves as an underlying funding vehicle) as annuity contracts or life
insurance contracts under applicable provisions of the Code.
24
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1(c) or 12.2(d) above of participation in or control
of any action by the indemnifying Party will in no event be deemed to be an
admission by the indemnifying Party of liability, culpability or responsibility,
and the indemnifying Party will remain free to contest liability with respect to
the claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Delaware law, without regard for that state's
principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for purposes
of reference only and shall not limit or define the meaning of the provisions of
this Agreement.
25
SECTION 18. CONFIDENTIALITY
AVIF and AIM acknowledge that the identities of the customers of Phoenix
or any of its affiliates (collectively, the "Phoenix Protected Parties" for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by the
Phoenix Protected Parties or any of their employees or agents in connection with
Phoenix's performance of its duties under this Agreement are the valuable
property of the Phoenix Protected Parties. AVIF and AIM agree that if they come
into possession of any list or compilation of the identities of or other
information about the Phoenix Protected Parties' customers, or any other
information or property of the Phoenix Protected Parties, other than such
information as may be independently developed or compiled by AVIF or AIM from
information supplied to it by the Phoenix Protected Parties' customers who also
maintain accounts directly with AVIF, AVIF and AIM will hold such information or
property in confidence and refrain from using, disclosing or distributing any of
such information or other property except: (a) with Phoenix's prior written
consent; or (b) as required by law or judicial process. Phoenix acknowledges
that the identities of the customers of AVIF or any of its affiliates
(collectively, the "AVIF Protected Parties" for purposes of this Section 18),
information maintained regarding those customers, and all computer programs and
procedures or other information developed by the AVIF Protected Parties or any
of their employees or agents in connection with AVIF's performance of its duties
under this Agreement are the valuable property of the AVIF Protected Parties.
Phoenix agrees that if it comes into possession of any list or compilation of
the identities of or other information about the AVIF Protected Parties'
customers or any other information or property of the AVIF Protected Parties,
other than such information as may be independently developed or compiled by
Phoenix from information supplied to it by the AVIF Protected Parties' customers
who also maintain accounts directly with Phoenix, Phoenix will hold such
information or property in confidence and refrain from using, disclosing or
distributing any of such information or other property except: (a) with AVIF's
prior written consent; or (b) as required by law or judicial process. Each party
acknowledges that any breach of the agreements in this Section 18 would result
in immediate and irreparable harm to the other parties for which there would be
no adequate remedy at law and agree that in the event of such a breach, the
other parties will be entitled to equitable relief by way of temporary and
permanent injunctions, as well as such other relief as any court of competent
jurisdiction deems appropriate.
SECTION 19. TRADEMARKS AND FUND NAMES
(a) Except as may otherwise be provided in a License Agreement among A I
M Management Group Inc., Phoenix and PEPCO, neither Phoenix nor PEPCO or any of
their respective affiliates shall not use any trademark, trade name, service
xxxx or logo of AVIF, AIM or any of their respective affiliates, or any
variation of any such trademark, trade name, service xxxx or logo, without
AVIF's or AIM's prior written consent, the granting of which shall be at AVIF's
or AIM's sole option.
26
(b) Except as otherwise expressly provided in this Agreement, neither
AVIF, its investment adviser, its principal underwriter, or any affiliates
thereof shall use any trademark, trade name, service xxxx or logo of Phoenix,
PEPCO, or any of their affiliates, or any variation of any such trademark, trade
name, service xxxx or logo, without Phoenix's or PEPCO's prior written consent,
the granting of which shall be at Phoenix's or PEPCO's sole option.
SECTION 20. PARTIES TO COOPERATE
Each Party to this Agreement will cooperate with each other Party and all
appropriate governmental authorities (including, without limitation, the SEC,
the NASD and state insurance regulators) and will permit each other and such
authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
SECTION 21. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner
except by a written agreement executed by all parties hereto.
27
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
----------------------------- ---------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxx
----------------------------- ---------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxx
Title: Assistant Secretary Title: President
PHOENIX HOME LIFE MUTUAL INSURANCE
COMPANY, on behalf of itself and its
separate accounts
Attest: /s/ Xxxx X. Xxxxx By: /s/ Xxxx Xxxxxxx
----------------------------- ---------------------------------
Name: Xxxx X. Xxxxx Name: Xxxx Xxxxxxx
------------------------------ -------------------------------
Title: Secretary Title: Vice President
------------------------------ ------------------------------
PHOENIX EQUITY PLANNING CORPORATION
Attest: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
----------------------------- ---------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxx
------------------------------ -------------------------------
Title: Secretary Title: EVP, CFO, Treasurer
------------------------------ ------------------------------
28
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Capital Appreciation Fund
AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Phoenix Home Life Variable Accumulation Account
Phoenix Home Life Variable Universal Life Account
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
The Big Edge Plus - Form 2646
The Group Strategic Edge - Form GD603
Retirement Planners Edge for New York - Form D603NY
Phoenix Edge - VA for New York - Form D602 NY
Flex Edge Success - Form V603
Joint Edge - Form V601
Phoenix Individual Edge - Form V603
Estate Edge - Form V604
Phoenix Corporate Edge - Form V609
Phoenix Edge - SPVL - Form V610
29
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net
asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered
immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following
thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and
the correct net asset value is less than .5% of the correct net
asset value, AIM will reimburse the affected Fund to the extent of
any loss resulting from the error. No other adjustments shall be
made.
b. If the amount of the difference in the erroneous net asset value and
the correct net asset value is .5% of the correct net asset value or
greater, then AIM will determine the impact of the error to the
affected Fund and shall reimburse such Fund (and/or Phoenix, as
appropriate, such as in the event that the error was not discovered
until after Phoenix processed transactions using the erroneous net
asset value) to the extent of any loss resulting from the error. To
the extent that an overstatement of net asset value per share is
detected quickly and Phoenix has not mailed redemption checks to
Participants, Phoenix and AIM agree to examine the extent of the
error to determine the feasibility of reprocessing such redemption
transaction (for purposes of AIM reimbursing the Fund to the extent
of any such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to
paragraph (b), above, AIM shall reimburse Phoenix for Phoenix's reprocessing
costs in an amount not to exceed $1.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by its
Board of Trustees. AIM agrees to use its best efforts to notify Phoenix at least
five (5) days prior to any such meeting of the Board of Trustees of AVIF to
consider such proposed changes.
30
SCHEDULE C
EXPENSE ALLOCATIONS
PHOENIX AVIF / AIM
preparing and filing the Account's Preparing and filing the Fund's
registration statement registration statement
text composition for Account text composition for Fund prospectuses
prospectuses and supplements and supplements
text alterations of prospectuses text alterations of prospectuses (Fund)
(Account) and supplements (Account) and supplements (Fund)
printing Account and Fund prospectuses a camera ready Fund prospectus
and supplements
text composition and printing Account text composition and printing Fund SAIs
SAIs
mailing and distributing Account SAIs mailing and distributing Fund SAIs to
to policy owners upon request by policy owners upon request by policy
policy owners owners
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal
Securities Laws and to prospective
purchasers
text composition (Account), printing, text composition of annual and
mailing, and distributing annual and semi-annual reports (Fund)
semi-annual reports for Account (Fund
and Account as, applicable)
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction statements and voting instruction
solicitation materials to policy solicitation materials to policy
owners with respect to proxies related owners with respect to proxies related
to the Account to the Fund
preparation, printing and distributing
sales material and advertising
relating to the Funds, insofar as such
materials relate to the Contracts and
filing such materials with and
obtaining approval from, the SEC, the
NASD, any state insurance regulatory
authority, and any other appropriate
regulatory authority, to the extent
required
31
