JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
(Service Shares)
THIS AGREEMENT is made this 1st day of March, 2008, between JANUS ASPEN
SERIES, an open-end management investment company organized as a Delaware
statutory trust (the "Trust"), and PHL Variable Insurance Company, a life
insurance company organized under the laws of the State of Connecticut (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A, as may be amended from time to time (the
"Accounts").
W I T N E S S E T H:
WHEREAS, the Trust has registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the beneficial interest
in the Trust is divided into several series of shares, each series representing
an interest in a particular managed portfolio of securities and other assets
(the "Portfolios"); and
WHEREAS, the Trust has registered the offer and sale of a class of shares
designated the Service Shares ("Shares") of each of its Portfolios under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the Trust has received an order from the Securities and Exchange
Commission granting Participating Insurance Companies and their separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a) and
15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to
the extent necessary to permit shares of the Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Exemptive Order"); and
WHEREAS, the Company has registered or will register (unless registration is
not required under applicable law) certain variable life insurance policies
and/or variable annuity contracts under the 1933 Act (the "Contracts"); and
-1-
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Company desires to utilize the Shares of one or more Portfolios
as an investment vehicle of the Accounts;
NOW, THEREFORE, in consideration of their mutual promises, the parties agree
as follows:
ARTICLE I
Sale of Trust Shares
1.1 The Trust shall make Shares of its Portfolios listed on Schedule B
available to the Accounts at the net asset value next computed after receipt of
such purchase order by the Trust (or its agent), as established in accordance
with the provisions of the then current prospectus of the Trust. Shares of a
particular Portfolio of the Trust shall be ordered in such quantities and at
such times as determined by the Company to be necessary to meet the
requirements of the Contracts. The Trustees of the Trust (the "Trustees") may
refuse to sell Shares of any Portfolio to any person, or suspend or terminate
the offering of Shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of the
Trustees acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, necessary in the best interests of the
shareholders of such Portfolio. With respect to payment of purchase price by
the Company and of redemption proceeds by the Trust, the Company and the Trust
shall remit gross purchase and sale orders with respect to each Portfolio and
shall transmit one net payment per Portfolio in accordance with the provisions
of this Article I.
1.2 The Trust will redeem any full or fractional Shares of any Portfolio
when requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions of the then
current prospectus of the Trust. The Trust shall make payment for such Shares
in the manner established from time to time by the Trust, but in no event shall
payment be delayed for a greater period than is permitted by the 0000 Xxx.
1.3 For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints the
Company as its agent for the limited purpose of receiving and accepting
purchase and redemption orders resulting from investment in and payments under
the Contracts. Receipt by the Company shall constitute receipt by the Trust
provided that (i) such orders are received by the Company in good order prior
to the time the net asset value of each Portfolio is priced in accordance with
its prospectus and (ii) the Trust receives notice of such orders by 9:00 a.m.
New York time on the next following Business Day. "Business Day" shall mean any
day on which the New York Stock Exchange is open for trading and on which the
Trust calculates its net asset value pursuant to the rules of the Securities
and Exchange Commission.
-2-
1.4 Purchase orders that are transmitted to the Trust in accordance with
Section 1.3 shall be paid for no later than 12:00 p.m. New York time on the
same Business Day that the Trust receives notice of the order. Payments shall
be made in federal funds transmitted by wire.
1.5 Issuance and transfer of the Trust's Shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Shares
ordered from the Trust will be recorded in the appropriate title for each
Account or the appropriate subaccount of each Account.
1.6 The Trust shall furnish prompt notice to the Company of any income
dividends or capital gain distributions payable on the Trust's Shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's Shares in additional Shares of
that Portfolio. The Trust shall notify the Company of the number of Shares so
issued as payment of such dividends and distributions.
1.7 The Trust shall make the net asset value per Share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per Share is calculated. If the Trust provides the Company
with materially incorrect share net asset value information, the Trust shall
make an adjustment to the number of shares purchased or redeemed for the
Accounts to reflect the correct net asset value per share. The Trust shall make
the determination as to whether an error in net asset value has occurred and is
a material error in accordance with its own internal policies, which are
consistent with SEC materiality guidelines. Any material error in the
calculation or reporting of net asset value per share, dividend or capital
gains information shall be reported promptly upon discovery to the Company.
1.8 The Trust agrees that its Shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified
pension and retirement plans to the extent permitted by the Exemptive Order. No
Shares of any Portfolio will be sold directly to the general public. The
Company agrees that Trust Shares will be used only for the purposes of funding
the Contracts and Accounts listed in Schedule A, as amended from time to time.
1.9 The Trust agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.8 and
Article IV of this Agreement.
1.10 (a) All orders accepted by the Company shall be subject to the terms of
the then current prospectus of each Portfolio, including without limitation,
policies regarding minimum account sizes, market timing and excessive trading.
The Company shall use its commercially reasonable best efforts, and shall
reasonably cooperate with, the Trust to enforce stated prospectus policies
regarding transactions in Shares, particularly those related to market timing.
The Company acknowledges that orders accepted by it in violation of the Trust's
stated policies may be subsequently revoked or cancelled by the Trust and that
the Trust shall
-3-
not be responsible for any losses incurred by the Company or Contract or
Account as a result of such cancellation. The Trust or its agent shall notify
the Company of such cancellation prior to 12:00 p.m. EST on the next following
Business Day after any such cancellation.
(b) In addition, the Company acknowledges that the Trust has the right to
refuse any purchase order for any reason, particularly if the Trust
determines that a Portfolio would be unable to invest the money effectively
in accordance with its investment policies or would otherwise be adversely
affected due to the size of the transaction, frequency of trading by the
account or other factors.
1.11 The Company certifies that it is following all relevant rules and
regulations, as well as internal policies and procedures, regarding "forward
pricing" and the handling of mutual fund orders on a timely basis. As evidence
of its compliance, the Company, upon request, shall:
(a) permit the Trust or its agent to audit its operations, as well as any
books and records preserved in connection with its provision of services
under this Agreement;
(b) provide the Trust with the audited Separate Account Financial
Statements as soon as practicable following execution of this Agreement; or
(c) provide annual certification to the Trust that it is following all
relevant rules, regulations, and internal policies and procedures regarding
"forward pricing" and the handling of mutual fund orders on a timely basis.
ARTICLE II
Obligations of the Parties
2.1 The Trust shall prepare and be responsible for filing with the
Securities and Exchange Commission and any state regulators requiring such
filing all shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials), prospectuses and statements
of additional information of the Trust. The Trust shall bear the costs of
registration and qualification of its shares, preparation and filing of the
documents listed in this Section 2.1 and all taxes to which an issuer is
subject on the issuance and transfer of its shares.
2.2 At the option of the Company, the Trust shall either (a) provide the
Company (at the Company's expense) with as many copies of the Trust's Shares'
current prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the
foregoing, as the Company shall reasonably request for Contract owners of
policies for which Shares of the Trust are serving as an investment vehicle
until such time as the Company implements print on demand, at which time the
Trust will pay for the production cost; or (b) provide the Company with an
electronic PDF version of such documents in a form suitable for printing. The
Trust shall provide the Company with a copy of the Shares' statement of
additional information in a form suitable for duplication by
-4-
the Company. The Trust (at its expense) shall provide the Company with copies
of any Trust-sponsored proxy materials in such quantity as the Company shall
reasonably require for distribution to Contract owners.
2.3(a) The Company shall bear the costs of printing and distributing the
Trust's Shares' prospectus, statement of additional information, shareholder
reports and other shareholder communications to owners of and applicants for
policies for which Shares of the Trust are serving or are to serve as an
investment vehicle. The Company shall bear the costs of distributing proxy
materials (or similar materials such as voting solicitation instructions) to
Contract owners. The Company assumes sole responsibility for ensuring that such
materials are delivered to Contract owners in accordance with applicable
federal and state securities laws.
(b) If the Company elects to include any materials provided by the Trust,
specifically prospectuses, statements of additional information, shareholder
reports and proxy materials, on its web site or in any other computer or
electronic format, the Company assumes sole responsibility for maintaining
such materials in the form provided by the Trust and for promptly replacing
such materials with all updates provided by the Trust.
2.4 The Company agrees and acknowledges that the Trust's adviser, Janus
Capital Management LLC or its affiliates ("Janus Capital") is the sole owner of
the name and xxxx "Xxxxx" and that all use of any designation comprised in
whole or part of Janus (a "Xxxxx Xxxx") under this Agreement shall inure to the
benefit of Janus Capital. Except as provided in Section 2.5, the Company shall
not use any Xxxxx Xxxx on its own behalf or on behalf of the Accounts or
Contracts in any registration statement, advertisement, sales literature or
other materials relating to the Accounts or Contracts without the prior written
consent of Janus Capital. All references contained in this Agreement to the
name or xxxx "Xxxxx" shall include but not be limited to the Janus logo, the
website xxx.xxxxx.xxx and any and all electronic links relating to such
website. The Company will make no use of the name or xxxx "Xxxxx" except as
expressly provided in this Agreement or expressly authorized by Janus Capital
in writing. All goodwill associated with the name and xxxx "Xxxxx" shall inure
to the benefit of Janus Capital or its affiliates. Upon termination of this
Agreement for any reason, the Company shall cease any and all use of any Xxxxx
Xxxx(s).
2.5 The Company shall furnish, or cause to be furnished, to the Trust or its
designee, a copy of each Contract prospectus or statement of additional
information in which the Trust or its investment adviser is named prior to the
filing of such document with the Securities and Exchange Commission. The
Company shall furnish, or shall cause to be furnished, to the Trust or its
designee, each piece of sales literature or other promotional material in which
the Trust or its investment adviser is named, at least fifteen (15) Business
Days prior to its use. No such material shall be used if the Trust or its
designee reasonably objects to such use within fifteen (15) Business Days after
receipt of such material.
2.6 The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust or its investment
adviser in
-5-
connection with the sale of the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Trust Shares (as such registration statement
and prospectus may be amended or supplemented from time to time), reports of
the Trust, Trust-sponsored proxy statements, or in sales literature or other
promotional material approved by the Trust or its designee, except as required
by legal process or regulatory authorities or with the written permission of
the Trust or its designee.
2.7 The Trust shall not give any information or make any representations or
statements on behalf of the Company or concerning the Company, the Accounts or
the Contracts other than information or representations contained in and
accurately derived from the registration statement or prospectus for the
Contracts (as such registration statement and prospectus may be amended or
supplemented from time to time), or in materials approved by the Company for
distribution including sales literature or other promotional materials, except
as required by legal process or regulatory authorities or with the written
permission of the Company.
2.8 So long as, and to the extent that the Securities and Exchange
Commission interprets the 1940 Act to require pass-through voting privileges
for variable policyowners, the Company will provide pass-through voting
privileges to owners of policies whose cash values are invested, through the
Accounts, in shares of the Trust. The Trust shall require all Participating
Insurance Companies to calculate voting privileges in the same manner and the
Company shall be responsible for assuring that the Accounts calculate voting
privileges in the manner established by the Trust. With respect to each
Account, the Company will vote Shares of the Trust held by the Account and for
which no timely voting instructions from policyowners are received as well as
Shares it owns that are held by that Account, in the same proportion as those
Shares for which voting instructions are received. The Company and its agents
will in no way recommend or oppose or interfere with the solicitation of
proxies for Trust shares held by Contract owners without the prior written
consent of the Trust, which consent may be withheld in the Trust's sole
discretion.
2.9 The Company has determined that the investment restrictions set forth in
the current Trust prospectus are sufficient to comply with all investment
restrictions under state insurance laws that are currently applicable to the
Portfolios as a result of the Accounts' investment therein. The Company shall
notify the Trust of any additional applicable state insurance laws that
restrict the Portfolios' investments, or otherwise affect the operation of the
Trust after the date of this Agreement.
ARTICLE III
Representations and Warranties
3.1 The Company represents and warrants that:
(a) it is an insurance company duly organized and in good standing under
the laws of the State of Connecticut and that it has legally and validly
established each Account as a segregated asset account under such law on the
date set forth in Schedule A;
-6-
(b) each Account has been registered or, prior to any issuance or sale of
the Contracts, will be registered as a unit investment trust in accordance
with the provisions of the 1940 Act;
(c) the Contracts or interests in the Accounts (1) are or, prior to
issuance, will be registered as securities under the 1933 Act or,
alternatively (2) are not registered because they are properly exempt from
registration under the 1933 Act or will be offered exclusively in
transactions that are properly exempt from registration under the 1933 Act.
The Company further represents and warrants that the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws; and the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements; and
(d) it is in compliance with all applicable anti-money laundering laws,
rules and regulations including, but not limited to, the U.S.A. PATRIOT Act
of 2001, P.L. 107-56. The Company further represents that it has policies
and procedures in place to detect money laundering and terrorist financing,
including the reporting of suspicious activity.
(e) The Company is a "financial intermediary" as defined by Rule 22C-2
and hereby agrees to the provisions set forth in Schedule C of this
Agreement, which are hereby expressly incorporated herein.
3.2 The Trust represents and warrants that:
(a) it is duly organized and validly existing under the laws of the State
of Delaware;
(b) the Trust Shares offered and sold pursuant to this Agreement will be
registered under the 1933 Act and the Trust shall be registered under the
1940 Act prior to any issuance or sale of such Shares. The Trust shall amend
its registration statement under the 1933 Act and the 1940 Act from time to
time as required in order to effect the continuous offering of its Shares.
The Trust shall register and qualify its Shares for sale in accordance with
the laws of the various states only if and to the extent deemed advisable by
the Trust; and
(c) The Trust represents and warrants that each Fund is currently
qualified, and will use its best efforts to continue to qualify, as a
regulated investment company ("RIC") under Subchapter M of the Code. The
Trust represents and warrants that it will use its best efforts to qualify
and to maintain qualification of each Portfolio. The Trust will notify the
Company immediately upon having a reasonable basis for believing that the
Trust has ceased to so qualify as a RIC or that it might not so qualify as a
RIC in the future.
(d) The Trust represents that it will use its best efforts to comply and
to maintain each Portfolio's compliance with the diversification
requirements set forth in
-7-
Section 817(h) of the Code and Section 1.817-5(b) of the regulations under
the Code. The Trust will notify the Company immediately upon having a
reasonable basis for belief that a Portfolio has ceased to comply or that a
Portfolio might not comply in the future. In the event the Trust breaches
this Section 3.2(d), the Trust will use its best efforts to adequately
diversify the Portfolio so as to achieve compliance within the grace period
afforded by Section 1.817-5 of the regulations under the Code.
(e) The Trust represents and warrants that no sales of the Portfolios
will be made to the general public.
ARTICLE IV
Potential Conflicts
4.1 The parties acknowledge that the Trust's shares may be made available
for investment to other Participating Insurance Companies. In such event, the
Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or
(f) a decision by an insurer to disregard the voting instructions of contract
owners. The Trustees shall promptly inform the Company if they determine that
an irreconcilable material conflict exists and the implications thereof.
4.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Exemptive Order by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
4.3 If it is determined by a majority of the Trustees, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation
with other Participating Insurance Companies whose contract owners are also
affected, at its expense and to the extent reasonably practicable (as
determined by the Trustees) take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, which steps could include:
(a) withdrawing the assets allocable to some or all of the Accounts from the
Trust or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Trust, or
submitting the question of whether or not such segregation should be
-8-
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity contract owners,
life insurance contract owners, or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such segregation, or
offering to the affected Contract owners the option of making such a change;
and (b) establishing a new registered management investment company or managed
separate account.
4.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees. Any such
withdrawal and termination must take place within six (6) months after the
Trust gives written notice that this provision is being implemented. Until the
end of such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of
the Trust.
4.5 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the affected
Account's investment in the Trust and terminate this Agreement with respect to
such Account within six (6) months after the Trustees inform the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination
shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. Until the end of such six (6) month period, the Trust shall continue
to accept and implement orders by the Company for the purchase and redemption
of Shares of the Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Company be required to establish a new funding medium for the Contracts if
an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Trustees determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within six
(6) months after the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees such reports,
materials or data as the Trustees may reasonably request so that the Trustees
may fully carry out the duties imposed upon them by the Exemptive Order, and
said reports, materials and data shall be submitted more frequently if deemed
appropriate by the Trustees.
-9-
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then the Trust and/or
the Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable.
ARTICLE V
Indemnification
5.1 Indemnification By the Company. The Company agrees to indemnify and hold
harmless the Trust and each of its Trustees, officers, employees and agents and
each person, if any, who controls the Trust within the meaning of Section 15 of
the 1933 Act (collectively, the "Trust Indemnified Parties" for purposes of
this Article V) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
indemnified party) or expenses (including the reasonable costs of investigating
or defending any alleged loss, claim, damage, liability or expense and
reasonable legal counsel fees incurred in connection therewith) (collectively,
"Losses"), to which the Trust Indemnified Parties may become subject under any
statute or regulation, or at common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration statement
or prospectus for the Contracts or in the Contracts themselves or in sales
literature for the Trust generated or approved by the Company on behalf of
the Contracts or Accounts (or any amendment or supplement to any of the
foregoing) (collectively, the "Company Documents" for the purposes of this
Article V), 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
indemnity shall not apply as to any Trust Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and was accurately derived from written information furnished
to the Company by or on behalf of the Trust for use in Company Documents or
otherwise for use in connection with the sale of the Contracts or the
Shares; or
(b) arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from the
Trust Documents as defined in Section 5.2(a)) or wrongful conduct of the
Company or persons under its control, with respect to the sale or
acquisition of the Contracts or the Shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in the Trust Documents 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 accurately derived
from written information furnished to the Trust by or on behalf of the
Company; or
-10-
(d) arise out of or result from any failure by the Company to provide the
services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or
result from any other material breach of this Agreement by the Company.
5.2 Indemnification By the Trust. The Trust agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees and agents
and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act (collectively, the "Company Indemnified Parties" for
purposes of this Article V) against any and all Losses,, to which the Company
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus for the Trust (or any amendment or supplement
thereto), (collectively, the "Trust Documents" for the purposes of this
Article V), 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
indemnity shall not apply as to any Company Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and was accurately derived from written information furnished
to the Trust by or on behalf of the Company for use in the Trust Documents
or otherwise for use in connection with the sale of the Contracts or the
Shares; or
(b) arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from the
Company Documents) or wrongful conduct of the Trust or persons under its
control, with respect to the sale or acquisition of the Contracts or the
Shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in the Company Documents 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 accurately derived
from written information furnished to the Company by or on behalf of the
Trust; or
(d) arise out of or result from any failure by the Trust to provide the
services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any representation
and/or warranty made by the Trust in this Agreement or arise out of or
result from any other material breach of this Agreement by the Trust.
-11-
5.3 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an indemnified party that arise from
such indemnified party's willful misfeasance, bad faith or negligence in the
performance of such indemnified party's duties or by reason of such indemnified
party's reckless disregard of obligations or duties under this Agreement.
5.4 Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any claim made against an indemnified party unless such indemnified party
shall have notified the other party in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim shall have been served upon or otherwise received by such
indemnified party (or after such indemnified party shall have received notice
of service upon or other notification to any designated agent), but failure to
notify the party against whom indemnification is sought of any such claim shall
not relieve that party from any liability which it may have to the indemnified
party in the absence of Sections 5.1 and 5.2.
5.5 In case any such action is brought against the indemnified parties, the
indemnifying party shall be entitled to participate, at its own expense, in the
defense of such action. The indemnifying party also shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to the party named in
the action. After notice from the indemnifying party to the indemnified party
of an election to assume such defense, the indemnified party shall bear the
fees and expenses of any additional counsel retained by it, and the
indemnifying party will not be liable to the indemnified party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
ARTICLE VI
Termination
6.1 This Agreement may be terminated by either party for any reason by
ninety (90) days advance written notice delivered to the other party.
6.2 Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional shares of the
Trust (or any Portfolio) pursuant to the terms and conditions of this Agreement
for all Contracts in effect on the effective date of termination of this
Agreement, provided that the Company continues to pay the costs set forth in
Section 2.3.
6.3 The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV, Section 2.8, and Schedule C shall
survive the termination of this Agreement as long as Shares of the Trust are
held on behalf of Contract owners in accordance with Section 6.2.
-12-
ARTICLE VII
Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Trust:
Janus Aspen Series
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to the Company:
PHL Variable Insurance Company
Xxx Xxxxxxxx Xxx
Xxxxxxxx, XX 00000
Attention: General Counsel
ARTICLE VIII
Miscellaneous
8.1 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
8.4 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of State of Colorado.
8.5 The parties to this Agreement acknowledge and agree that all liabilities
of the Trust arising, directly or indirectly, under this Agreement, of any and
every nature whatsoever, shall be satisfied solely out of the assets of the
Trust and that no Trustee, officer, agent or holder of shares of beneficial
interest of the Trust shall be personally liable for any such liabilities.
-13-
8.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Securities and
Exchange Commission, the Financial Industry Regulatory Authority, and state
insurance regulators) and shall permit such authorities reasonable access to
its books and records in connection with any investigation or inquiry relating
to this Agreement or the transactions contemplated hereby.
8.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
8.8 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other party.
8.10 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
[Remainder of page intentionally left blank.]
-14-
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Participation Agreement as of the date and year first above
written.
JANUS ASPEN SERIES
By: /s/ Xxxxxxxxx Xxxxxxxxxx-Xxxxxx
-------------------------------
Name: Xxxxxxxxx Xxxxxxxxxx-Xxxxxx
Title: VP, Assistant General Counsel
PHL VARIABLE INSURANCE COMPANY
By: /s/ Xxxx Xxxxxxx X'Xxxxxxx
-------------------------------
Name: Xxxx Xxxxxxx X'Xxxxxxx
Title: Senior Vice President
-15-
Schedule A
Separate Accounts
Name of Separate Account
PHL Variable Accumulation Account II
-16-
Schedule B
List of Portfolios
Name of Portfolio
All Portfolios of Janus Aspen Series open to new investors (as set forth in the
current prospectus of Janus Aspen Series).
-17-
Schedule C
Rule 22c-2 Provision of Shareholder Information
The parties hereby agree as follows:
1. Shareholder Information
1.1 Agreement to Provide Information. The Company agrees to provide the
Trust, upon written request, the taxpayer identification number ("TIN"), if
known, of any or all Contract owner(s) of the account and the amount, date,
name or other identifier of any investment professional(s) associated with the
Contract owner(s) or account (if known), and transaction type (purchase,
redemption, transfer, or exchange) of every purchase, redemption, transfer, or
exchange of Shares held through an Account during the period covered by the
request. ("Transaction Information")
1.1.1 Period Covered by Request. Requests must set forth a specific
period, not to exceed ninety (90) days from the date of the request, for
which Transaction Information is sought. The Trust may request Transaction
Information older than ninety (90) days from the date of the request as it
deems necessary to investigate compliance with policies established by the
Portfolio(s) for the purpose of eliminating or reducing any dilution of the
value of the outstanding shares issued by the Trust.
1.1.2 Form and Timing of Response. The Company agrees to transmit the
requested information that is on its books and records to the Trust or its
designee promptly, but in any event not later than three (3) business days,
after receipt of a request. If the requested information is not on the
Company's books and records, the Company agrees to: (i) provide or arrange
to provide to the Trust the requested information from shareholders who hold
an account with an indirect intermediary; or (ii) if directed by the Trust,
block further purchases of Shares from the indirect intermediary. In such
instance, the Company agrees to inform the Trust whether it plans to perform
(i) or (ii). Responses required by this paragraph must be communicated in
writing and in a format mutually agreed upon by the parties. To the extent
practicable, the format for any Transaction Information provided to the
Trust should be consistent with the NSCC Standardized Data Reporting Format.
For purposes of this provision, an "indirect intermediary" has the same
meaning as provided for in the Rule.
1.1.3 Limitations on Use of Transaction Information-
(a) Limitations. The Trust shall only request and use Transaction
Information that is consistent with Rule 22c-2 or to fulfill other regulatory
or legal requirements subject to the privacy provisions of Title V of the
Xxxxx-Xxxxx-Xxxxxx Act (Public Law 106-102) and comparable state laws. The
Trust agrees that the Transaction Information is confidential and that the
Trust will not share the Transaction Information externally, unless the
Intermediary provides the Fund with prior written consent of the Company.
-18-
The parties agree that the Trust may disclose Transaction Information
provided by the Company pursuant to this Schedule/Agreement to a third party
service provider hired by the Trust to assist the Trust with its obligations
under this Schedule/Agreement and Rule 22c-2
(b) Breach of Confidentiality. If the Trust becomes aware of any disclosure
to an unauthorized third party of any non-public personal financial information
of a consumer provided by the Company or received by the Trust in response to a
request for information pursuant to the terms of this Schedule/Agreement, the
Trust shall promptly, notify the Company and take commercially reasonable steps
to mitigate the effects of such unauthorized access, use or disclosure and to
prevent any reoccurrence.
1.2 Agreement to Restrict Trading. The Company agrees to execute written
instructions from the Trust to restrict or prohibit further purchases or
exchanges of Shares by a Contract owner that has been identified by the Trust
as having engaged in transactions of the fund's Shares (directly or indirectly
through the Company's account) that violate policies established by the Trust
for the purpose of eliminating or reducing any dilution of the value of the
outstanding Shares issued by the Trust.
1.2.1 Form of Instructions. Instructions must include the TIN, if known,
and the specific restriction(s) to be executed. If the TIN is not known, the
instructions must include an equivalent identifying number of the Contract
owner(s) or Account(s) or other agreed upon information to which the
instruction relates.
1.2.2 Timing of Response. The Company agrees to execute instructions as
soon as reasonably practicable, but not later than five (5) business days
after receipt of the instructions by the Company.
1.2.3 Confirmation by the Company. The Company must provide written
confirmation to the Trust that instructions have been executed. The Company
agrees to provide confirmation as soon as reasonably practicable, but not
later than ten (10) business days after the instructions have been executed.
1.2.4 Scope of this Agreement. The purpose of this Schedule/Agreement is
to share Transaction Information with the Trust to allow the Trust to
administer its own definition of disruptive trading. The Company's
obligations or its service provider's obligations under this
Schedule/Agreement are limited to providing Transaction Information and
executing restrictions on trading when instructed to do so.
1.3. Definitions For purposes of this Schedule C:
1.3.1 The term "Shares" means the interests of Contract owners
corresponding to the redeemable securities of record issued by the Trust
under the 1940 Act that are held by the Company.
-19-
1.3.2 The term "Shareholder" means:
a. the beneficial owner of Shares, whether the Shares are held
directly or by the Company in nominee name;
b. as this Letter Agreement relates to retirement plan accounts, the
Plan participant notwithstanding that the Plan may be deemed to be the
beneficial owner of the Shares; and
c. as this Letter Agreement relates to accounts of variable annuities
or variable life insurance contracts, the holder of interest in a
variable annuity or variable life insurance contract issued by the
Service Provider.
1.3.3 The term "written" includes electronic writings and facsimile
transmissions.
-20-
