EXHIBIT (3)(a)
MASTER SERVICE AND DISTRIBUTION COMPLIANCE AGREEMENT
MASTER SERVICE AND DISTRIBUTION COMPLIANCE AGREEMENT
THIS AGREEMENT, made effective as of the first day of November 2000, by
and between Phoenix Home Life Mutual Insurance Company (Phoenix), a New York
domiciled life insurance company, and Phoenix Equity Planning Corporation
("PEPCO"), a Connecticut corporation.
WITNESSETH:
WHEREAS, Phoenix offers for sale variable annuity contracts and
variable life policies funded through separate accounts (the "Separate
Accounts") registered as unit investment trusts under the Investment Company Act
of 1940, as amended ("1940 Act"), and pursuant to registration statements filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended ("Securities Act") (the "Contracts/Policies"); 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, Phoenix desires to engage PEPCO to perform certain services with
respect to the books and records to be maintained in connection with the sale of
Contracts/Policies 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.
1.0 Services of PEPCO.
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1.01 Appointment. Phoenix hereby appoints PEPCO, and PEPCO hereby
accepts the appointment as, Master Service and Distributor of the
Contracts/Policies.
1.02 Duties. PEPCO shall perform those administrative, compliance and
other services with respect to the Contracts/Policies as described herein. PEPCO
agrees to use its best efforts in performing the activities outlined in
paragraphs 1.03 and 1.06 of this Agreement.
1.03 Written Agreements. PEPCO has and shall enter into written
agreements with broker-dealer firms whose registered representatives have been
or shall be properly licensed under applicable federal and state laws and NASD
rules to sell registered securities and insurance products, including variable
annuity contracts and variable life policies, and appointed as life insurance
agents of Phoenix. Phoenix shall pay all fees associated with the appointments
of such selected representatives as insurance agents of Phoenix. Such agreements
with broker-dealers shall provide that such broker-dealer shall cause
applications to be solicited for the purchase of the Contracts/Policies. Such
agreements shall include such terms and conditions as PEPCO may determine not
inconsistent with this Agreement, provided, however, that any broker-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 Contracts/Policies, 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 Contracts/Policies and will
indemnify and hold harmless PEPCO and Phoenix from any damage or expense of any
nature whatsoever on account of the negligence, misconduct or wrongful act of
such broker-dealer and 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.
1.04 Recordkeeping. PEPCO shall maintain and preserve, or cause to be
maintained and preserved, such accounts, books and other documents as are
required of it with respect to the services provided 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 17a-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. Phoenix agrees that certain of the books and
records required herein will be created and maintained by Phoenix on behalf of
PEPCO. Phoenix agrees that with respect to this section 1.04 that it is acting
as agent for PEPCO, and that these books and records remain the property of
PEPCO.
1.05 Supervision. PEPCO shall, upon request, sponsor the NASD
registrations of Phoenix employees and officers, who are trained and qualified
persons, to market Contracts/Policies to broker-dealers and institutions in
conformance with applicable state and federal laws. PEPCO reserves the right to
decline to sponsor the NASD registration of any such employee or officer who,
upon review of various background checks and in the reasonable estimation of
PEPCO and Phoenix, is inappropriate for such registration. PEPCO shall maintain
the NASD registrations of employees and officers it sponsors in accordance with
the rules of the NASD until notified of termination of employment by Phoenix.
Phoenix shall ensure that its employees and officers are appropriately licensed,
contracted and appointed under applicable state insurance laws to market the
Contract/Policies. PEPCO agrees to supervise the securities activities of those
persons whose NASD registrations it sponsors. PEPCO shall pay the fees to
regulatory authorities in connection with obtaining necessary securities
licenses and authorizations for its registered representatives, provided,
however, that Phoenix shall promptly reimburse PEPCO for such fees. PEPCO is not
responsible for fees in connection with the licensing or appointment of
registered representatives as insurance agents of Phoenix.
1.06 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) Phoenix's Responsibilities. Phoenix shall be responsible
for: (i) the design, preparation and printing of all promotional material to be
used in the distribution of the Contracts/Policies; (ii) the approval of
promotional material by state and other local insurance regulatory authorities;
and (iii) confirming the issuance of the Contract/Policy to the Contract/Policy
owner.
(c) Right to Approve. Neither party hereto nor any of its
agents or affiliates shall print, publish or distribute any advertisement,
circular or any document relating to the Contracts/Policies 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.
1.07 Payments to Broker-Dealers. Phoenix shall serve as paying agent
for amounts due broker-dealers for sales commissions and 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 created and maintained by Phoenix) as required by Paragraph 1.04
hereto.
1.08 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.
1.09 Performance Support. PEPCO will provide to Phoenix the performance
support services outlined on Schedule 1.09 attached hereto. The timeliness and
level of such services will be as indicated on such schedule or, if not so
indicated, shall be provided at the same level and timeliness as currently
provided.
1.10 Payment of Expenses. Phoenix shall reimburse PEPCO for its
allocable share of the expenses incurred by PEPCO in connection with its
provision of services hereunder and the distribution of the Contracts/Policies,
as outlined on Schedule 1.10 attached hereto.
2.0 General Provisions.
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2.01 Inspection of Books and Records. PEPCO and Phoenix 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 Phoenix 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 Phoenix or their affiliates, to the extent related to the distribution
of the Contracts/Policies. PEPCO and Phoenix will notify each other promptly of
any customer complaint 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.
2.02 Indemnification. PEPCO will indemnify and hold harmless Phoenix
and the Separate Accounts, from any and all expenses, losses, claims, damages or
liabilities (including attorney fees) incurred by reason of any
misrepresentations, 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 Phoenix and the
Separate Accounts for any and all expenses, losses, claims, damages or
liabilities (including attorney fees) arising from any misrepresentation,
wrongful or unauthorized act or omission, negligence of, or a 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. Phoenix will indemnify
and hold harmless PEPCO, for any expenses, losses, claims, damages or
liabilities (including attorney fees) incurred by reason of any material
misrepresentation or omission in a registration statement or prospectus for the
Contracts/Policies, or on account of any other misrepresentation, wrongful or
unauthorized act or omission, negligence of or failure by Phoenix, including any
employee of Phoenix, to comply with the terms of this Agreement, provided,
however, Phoenix 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.
2.03 Termination. This Agreement shall become effective on the date
first above written and shall remain 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; and
(b) this Agreement may not be assigned by PEPCO without the
consent of Phoenix.
2.04 Registration. Phoenix agrees to use its best efforts to effect and
maintain the registration of the Contracts/Policies under the Securities Act and
the Separate Accounts under the 1940 Act, and to qualify the Contracts/Policies
under the state securities and insurance laws, and to qualify the
Contracts/Policies as annuities/life insurance under the Internal Revenue Code.
Phoenix 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/Policies under the Securities Act and of the Separate Accounts under
the 1940 Act, and to qualify the Contracts/Policies under the state securities
and insurance laws.
2.06 Authority. PEPCO shall have authority hereunder only as expressly
granted in this Agreement.
2.07 Miscellaneous. Phoenix agrees to advise PEPCO immediately in the
case of an issuance by the SEC of any stop order suspending the effectiveness of
any prospectus for the Contracts/Policies, 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 statements for the Contracts/Policies, or
which requires the making of a change in the registration statements in order to
make the statement therein not misleading. Phoenix agrees to advise PEPCO in the
event that formal administrative proceedings are instituted against Phoenix by
the SEC, or any state securities or insurance department or any other regulatory
body regarding Phoenix's duties under this Agreement, unless Phoenix 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. PEPCO agrees to advise Phoenix 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.
2.08 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.
2.09 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
2.10 Sole Agreement. This Agreement supersedes all prior agreements
relating to the subject matter hereof, including, without limitation, the Master
Service and Distribution Compliance Agreement dated December 31, 1996.
IN WITNESS WHEREOF, the parties have hereunto set their hands on the
date first above written.
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxxxxxx, Xx.
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Its: Sr. Vice President
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PHOENIX EQUITY PLANNING CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Its: EVP, CFO, Treasurer
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SCHEDULE 1.09
THE PERFORMANCE AND ANALYTICS UNIT PROVIDES THE FOLLOWING SERVICES TO VARIABLE:
[diamond] Daily performance for all subaccounts (currently 806 active, 470
pending, will be 1276 possible by end of first quarter 2001) - NAV, 1
DAY, MTD, QTD, YTD, 12 MOS, ITD
[diamond] Monthly performance for all supporting mutual funds and subaccounts -
cumulative and average annual for MTD, YTD, 1, 3, 5, 10 and since
inception periods. Returns are provided with and without load. Now
provided for all inactive subaccounts as well. Requires monthly
back-projecting for all inactive subaccounts.
[diamond] Verification of external performance reporting by Morningstar, or
other such or additional rating/ranking services as may be mutually
agreed.
[diamond] Provide month-end unit values to variable actuarial on a quarterly
basis for VUL products - for all subaccounts (active and inactive).
For any inactive subaccounts that started within quarter, month-end
unit values are provided back to inception.
[diamond] New Products
o Hypothetical back-projected performance for all subaccounts for
prospectus filing
o Revised hypothetical back-projections when subaccounts actually
received money
o Establish new subaccounts with external reporting entities,
including historical hypothetical data
[diamond] New Investment Options
o Hypothetical back-projected performance for all funds and subaccounts
for prospectus filing
o Revised hypothetical back-projections with funds and subaccounts
actually receive money
o If clone fund, hypothetical back-projection of fund performance
adjusted for appropriate expense structure
o Establish funds and subaccounts with external reporting entities,
including historical hypothetical data
[diamond] Ad Hoc Requests - subject to availability
[diamond] Annual Prospectus Filings:
Mutual Funds
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o NAV performance for 1, 5, 10 and since inception for Fund and
Benchmark
o Best/worst quarter returns - FUND
o Annual returns for past 10 years
o Growth of $10,000
UITS
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o Standardized performance for 1, 5, 10 and since inception for all UITS
o Annual returns for all UITS - (Non-Standardized) back to inception of
each subaccount
o Money Market subaccount yield illustration for every product
NEW
[diamond] Quarterly statistics for Xxxxxx Xxxxxx
[diamond] Quarterly Xxxxx Xxxxxx ad-hoc reports
[diamond] Daily unit values sent to various reporting agencies (Xxxxxx Xxxxxx,
S&P Fund Services, Annuity Pricing Center
SCHEDULE 1.10
ANNUAL COST
Compliance $89,300
Performance 164,800 (1)
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Total $254,100 (2)
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(1) Assumes an average of 800 UITs for the year. Any change of +/- 5% in this
amount would result in an increase/decrease in the amount paid equal to
that amount over/under the 5%.
(2) Payable at a rate of $21,175 monthly, promptly following the end of each
month commencing as of November 2000.
