Exhibit 3(c)
Master Service and Distribution
Compliance Agreement
MASTER SERVICE AND DISTRIBUTION COMPLIANCE AGREEMENT
THIS AGREEMENT, made this 31st day of December, 1996, by and among
Variable Insurance Company ("PHL Variable"), a Connecticut stock company, on
behalf of itself and the PHL Variable Accumulation Account (the "Account"), and
Phoenix Equity Planning Corporation ("PEPCO"), a Connecticut corporation.
WITNESSETH:
WHEREAS, PHL Variable offers for sale a variable annuity contract funded
through a Separate Account of PHL Variable registered as a unit investment trust
under the Investment Company Act of 1940, as amended ("1940 Act"), and pursuant
to a registration statement filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended ("Securities Act"), and listed on
Schedule A of this Agreement (the "Contract"), and
WHEREAS, PEPCO is registered as a broker-dealer with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as
amended ("1934 Act") and is a member of the National Association of Securities
Dealers, Inc. ("NASD"), and
WHEREAS, PHL Variable desires to engage PEPCO to perform certain services
with respect to the books and records to be maintained in connection with the
sale of the Contract and certain administrative and other functions as set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
I. Services of PEPCO
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A. APPOINTMENT. PHL Variable hereby appoints PEPCO, and PEPCO hereby
accepts the appointment as, Master Service and Distributor of the Contract.
B. DUTIES. PEPCO shall perform those administrative, compliance and other
services with respect to the Contract as described herein. PEPCO agrees to use
its best efforts in performing the activities outlined in paragraphs I. C and
I. F of this Agreement.
C. WRITTEN AGREEMENTS. PEPCO has and shall enter into written agreements
with broker-dealer firms whose registered representatives have been or shall be
properly licensed to sell registered securities and insurance products including
variable annuity licensed if required, and appointed as life insurance agents of
PHL Variable. PHL Variable shall pay all fees associated with the appointments
of such selected representatives as insurance agents of PHL Variable. Such
agreements with broker-dealers shall provide that such broker-dealer shall cause
applications to be solicited for the purchase of the Contract. Such agreements
shall include such terms and conditions as PEPCO may determine not inconsistent
with this Agreement, provided, however, that any broker-
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dealer with whom PEPCO has entered into a written agreement must comply with the
following terms which shall be included in all such agreements:
The broker-dealer must:
(a) be a registered broker-dealer under the 1934 Act and be a member of
the NASD; and
(b) agree that, in connection with the solicitation of applications for
the purchase of the Contract, the broker-dealer will in all respects
conform to the requirements of all state and federal laws and the
Rules of Fair Practice of the NASD relating to the sale of the
Contract and will indemnify and hold harmless PEPCO and PHL Variable
from any damage or expense of any nature whatsoever on account of the
negligence, misconduct or wrongful act of such broker-dealer or any
employee, representative or agent of such broker-dealer.
In obtaining and entering into written agreements with broker-dealers,
PEPCO will in all respects conform to the requirements of all state and federal
law, and the Rules of Fair Practice of the NASD.
D. RECORDKEEPING. PEPCO shall maintain and preserve, or cause to be
maintained and preserved, such accounts, books, and other documents as are
required of it under this Agreement, the 1934 Act and any other applicable laws
and regulations, including without limitation and to the extent applicable,
Rules 17a-3 and l7a-4 under the 1934 Act. The books, accounts and records of
PEPCO as to services provided hereunder, shall be maintained so as to disclose
clearly and accurately the nature and details of the transactions.
E. SUPERVISION. PEPCO shall select associated persons who are trained and
qualified persons, to solicit applications for purchase of the Contract in
conformance with applicable state and federal laws. Any such persons shall be
registered representatives of PEPCO in accordance with the rules of the NASD, be
licensed to offer the Contract in accordance with the insurance laws of any
jurisdiction in which such person solicits applications, be licensed with and
appointed by PHL Variable as an insurance agent to solicit applications for the
Contract and have entered into the appropriate Variable Contract Insurance
Commission Agreement with PHL Variable. PEPCO will train and supervise its
registered representatives to insure that the purchase of a Contract is not
recommended to an applicant in the absence of reasonable grounds to believe that
the purchase of the Contract is suitable for that applicant. PEPCO shall pay the
fees to regulatory authorities in connection with obtaining necessary securities
licenses and authorizations for its registered representatives to solicit
applications for the purchase of the Contract. PEPCO is not responsible
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for fees in connection with the appointment of registered representatives as
insurance agents of PHL Variable.
F. Sales Materials and Other Documents.
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(a) PEPCO's RESPONSIBILITIES. PEPCO shall be responsible for the approval
of promotional material by the SEC and the NASD, where required.
(b) PHL VARIABLE'S RESPONSIBILITIES. PHL Variable shall be responsible
for:
(i) the design, preparation and printing of all promotional material
to be used in the distribution of the Contract;
(ii) the approval of promotional material by state and other local
insurance regulatory authorities.
(iii) confirming the issuance of the Contract to the Contract Owner.
(c) RIGHT TO APPROVE. Neither party nor any of its agents or affiliates
shall print, publish or distribute any advertisement, circular or any
document relating to the Contract or relating to the other party
unless such advertisement, circular or document shall have been
approved in writing by the other party. However, nothing herein shall
prohibit any party from advertising annuities or life insurance in
general or on a generic basis subject to compliance with all
applicable laws, rules and regulations. Each party reserves the right
to require modification of any such material to comply with applicable
laws, rules and regulations and agrees to provide timely responses
regarding material submitted to it by the other party.
G. PAYMENTS TO BROKER-DEALERS. PEPCO shall serve as paying agent for
amounts due broker-dealers for sales commissions. PHL Variable shall forward to
PEPCO any such amounts due broker-dealers from PHL Variable and PEPCO shall be
responsible to pay such amounts to the persons entitled thereto as set forth in
the applicable written agreements with such broker-dealers subject to all
applicable state insurance laws and regulations and all applicable federal
and/or state securities laws and NASD rules. PEPCO shall reflect such amounts on
its books and records as required by Paragraph D hereto.
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H. COMPLIANCE. PEPCO shall, at all times, when performing its functions
under this Agreement, be registered as a securities broker-dealer with the SEC
and the NASD and be licensed or registered as a securities broker-dealer in any
jurisdiction where the performance of the duties contemplated by this Agreement
would require such licensing or registration. PEPCO represents and warrants that
it shall otherwise comply with provisions of federal and state law in performing
its duties hereunder.
I. PAYMENT OF EXPENSES BY PEPCO. PEPCO shall pay the expenses incurred
in connection with its provision of services hereunder and the distribution of
the Contract.
II. General Provisions
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A. INSPECTION OF BOOKS AND RECORDS. PEPCO and PHL Variable agree that all
records relating to services provided hereunder shall be subject to reasonable
periodic, special or other audit or examination by the SEC, NASD, or any state
insurance commissioner or any other regulatory body having jurisdiction. PEPCO
and PHL Variable agree to cooperate fully in any securities or insurance
regulatory or judicial investigation, inspection, inquiry or proceeding arising
in connection with the services provided under this Agreement, or with respect
to PEPCO or PHL Variable or their affiliates, to the extent related to the
distribution of the Contract. PEPCO and PHL Variable will notify each other
promptly of any customer compliant or notice of regulatory or judicial
proceeding, and, in the case of a customer complaint, will cooperate in arriving
at a mutually satisfactory resolution thereof.
B. INDEMNIFICATION. PEPCO will indemnify and hold harmless PHL Variable
and the Account, from any and all expenses, losses, claims, damages or
liabilities (including attorney fees) incurred by reason of any
misrepresentation, wrongful or unauthorized act or omission, negligence of, or
failure of PEPCO, including any employee of PEPCO, to comply with the terms of
this Agreement, provided however, PEPCO shall not be required to indemnify for
any such expenses, losses, claims, damages or liabilities which have resulted
from the negligence, misconduct or wrongful act of the party seeking
indemnification. PEPCO shall also hold harmless and indemnify PHL Variable and
the Account for any and all expenses, losses, claims, damages, or liability
(including attorneys fees) arising from any misrepresentation, wrongful or
unauthorized act or omission, negligence of, or failure of a broker-dealer or
its employees, agents or registered representatives, to comply with the terms of
the written agreement entered into between PEPCO and such broker-dealer but only
to the extent that PEPCO is indemnified by the broker-dealer under the terms of
the written agreement. PHL Variable will indemnify and hold harmless PEPCO, for
any expenses, losses, claims, damages or liabilities (including attorneys fees)
incurred by reason of any material misrepresentation or omission in a
registration statement or prospectus for the Contract, or on account of any
other misrepresentation, wrongful or unauthorized act or omission, negligence
of, or failure of PHL Variable, including any employee of PHL Variable, to
comply with the terms of
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this Agreement, provided however, PHL Variable shall not be required to
indemnify for any expenses, losses, claims, damages or liabilities which have
resulted from the negligence, misconduct or wrongful act of the party seeking
indemnification.
C. COMPENSATION. PHL Variable shall compensate PEPCO for the services
PEPCO performs hereunder as the parties shall agree from time to time and as
listed on Schedule A of this Agreement. PEPCO agrees to return promptly to PHL
Variable all compensation received for any Contract returned within the "free
look" period as specified in the Contract.
D. TERMINATION. This Agreement shall become effective on the date of this
Agreement and shall continue to be in effect, except that:
(a) Any party hereto may terminate this Agreement on any date by
giving the other party at least thirty (30) days' prior written
notice of such termination specifying the date fixed therefor.
(b) This Agreement may not be assigned by PEPCO without the consent
of PHL Variable.
E. REGISTRATION. PHL Variable and the Account agree to use their best
efforts to effect and maintain the registration of the Contract under the
Securities Act and the Account under the 1940 Act, and to qualify the Contract
under the state securities and insurance laws as applicable, and to qualify the
Contract as annuities under the Internal Revenue Code. PHL Variable will pay or
cause to be paid expenses (including the fees and disbursements of its own
counsel) of the registration and maintenance of the Contracts under the
Securities Act and of the Account under the 1940 Act, and to qualify the
Contract under the state securities and insurance laws.
F. AUTHORITY. PEPCO shall have authority hereunder only as expressly
granted in this Agreement.
G. MISCELLANEOUS. PHL Variable agrees to advise PEPCO immediately in the
case of an issuance by the SEC of any stop order suspending the effectiveness of
the Prospectus for the Contracts, of all actions of the SEC with respect to any
amendments to the registration statement(s) which may from time to time be filed
with the SEC and of any material event which makes untrue any statement made in
the registration statement for the Contract, or which requires the making of a
change in the registration statement in order to make the statement therein not
misleading. PHL Variable agrees to advise PEPCO in the event that formal
administrative proceedings are instituted against PHL Variable by the SEC, or
any state securities or insurance department or any other regulatory body
regarding PHL Variable's duties under this Agreement, unless PHL Variable
determines in its sole judgment, exercised in good faith, that any such
administrative proceeding will not have a material adverse effect upon its
ability to perform its obligations under this Agreement.
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PEPCO agrees to advise PHL Variable in the event that formal administrative
proceedings are instituted against PEPCO by the SEC, NASD, or any state
securities or insurance department or any other regulatory body regarding
PEPCO's duties under this Agreement, unless PEPCO determines in its sole
judgment exercised in good faith, that any such administrative proceedings will
not have a material adverse effect upon its ability to perform its obligations
under this Agreement.
H. INDEPENDENT CONTRACTOR. PEPCO shall undertake and discharge its
obligations hereunder as an independent contractor and nothing herein shall be
construed as establishing: (I) an employer-employee relation between the parties
hereto; or (ii) a joint venture.
I. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
IN WITNESS WHEREOF, the parties have hereunto set their hands on the date
first above written.
PHL VARIABLE INSURANCE COMPANY
For itself and PHL VARIABLE ACCUMULATION ACCOUNT
By: /s/ Xxxx X. Xxxxx
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Title:
PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Xxxxxx X. XxXxxxxxxx
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Title
Schedule A
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PEPCO has been appointed by PHL Variable to perform certain administrative,
compliance and other services with respect to the following variable annuity
contract ("Contract") issued by PHL Variable Insurance Company:
THE BIG EDGE CHOICE - Individual Deferred Variable
Accumulation Annuity Contract issued by the PHL Variable
Accumulation Account of PHL Variable. PEPCO shall receive
payments for services performed under this Agreement equal to
up to 7.25% of purchase or premium payments made under The
Big Edge Choice Contract. In addition, PEPCO shall receive an
underwriting fee of 75-100 bps on deposits under The Big Edge
Choice Contract, for sales assistance attributable to
broker-dealers, other than XX Xxxxxxxx and Co. Inc. and
PLANCO Financial Services Inc.
