Exhibit 27(h)(7)
FORM OF PARTICIPATION AGREEMENT BETWEEN PHOENIX LIFE
AND ANNUITY COMPANY & XXXXXX ADVISORS TRUST
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this ___ day of ___________,
by and between XXXXXX ADVISORS TRUST, an unincorporated business trust formed
under the laws of Massachusetts (the "Trust"), and PHOENIX LIFE AND ANNUITY
COMPANY, a Connecticut life insurance company (the "Company"), on its own behalf
and on behalf of each separate account of the Company identified herein.
WHEREAS, the Trust is a series-type mutual fund offering shares of
beneficial interest (the "Trust shares") consisting of one or more separate
series ("Series") of shares ("Series shares"), each such series representing an
interest in a particular managed portfolio of securities and other assets; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for (i) separate accounts supporting variable annuity
contracts and variable life insurance policies to be offered by insurance
companies, and (ii) certain pension and retirement plans receiving favorable tax
treatment under the Internal Revenue Code of 1986, as amended; and
WHEREAS, the Company desires that the Trust serve as an investment
vehicle for certain separate accounts of the Company;
NOW, THEREFORE, in consideration of their mutual promises, the Trust
and the Company agree as follows:
ARTICLE I. ADDITIONAL DEFINITIONS
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1.1. "Account" -- each separate account of the Company described more
specifically in Schedule 1 to this Agreement.
1.2. "Business Day" -- each day that the Trust is open for business
as provided in the Trust Prospectus.
1.3. "Code" -- the Internal Revenue Code of 1986, as amended.
1.4. "Contracts" -- the class or classes of variable annuity contracts
or variable life insurance contracts issued by the Company and described more
specifically on Schedule 2 to this Agreement.
1.5. "Contract Owners" -- the owners of the Contracts, as
distinguished from all Product Owners.
1.6. "Investment Adviser" -- the investment manager of the Trust.
1.7. "Participating Account" -- a separate account investing all or a
portion of its assets in the Trust, including the Account.
1.8. "Participating Insurance Company" -- any insurance company
investing in the Trust on its behalf or on behalf of a Participating Account,
including the Company.
1.9. "Products" -- variable annuity contracts and variable life
insurance policies supported by Participating Accounts investing assets
attributable thereto in the Trust, including the Contracts.
1.10. "Product Owners" -- owners of Products.
1.11. "Prospectus" -- with respect to a class of Contracts, each
version of the definitive prospectus or supplement thereto filed with the SEC
pursuant to Rule 497 under the 1933 Act ("Contracts Prospectus"). With respect
to Trust shares, each version of the definitive prospectus or supplement thereto
filed with the SEC pursuant to Rule 497 under the 1933 Act with respect to a
series of the Trust listed on Schedule 3 to this Agreement ("Trust Prospectus").
With respect to any provision of this Agreement requiring a party to take action
in accordance with a Prospectus, such reference thereto shall be deemed to be to
the version last filed prior to the taking of such action. For purposes of
Article VIII, the term "Prospectus" shall include any statement of additional
information incorporated therein.
1.12. "Qualified Entity" -- A person or plan, including a pension or
retirement plan receiving favorable tax treatment under the Code, that qualifies
to purchase shares of the Trust under Section 817(h) of the Code. A natural
person having an indirect interest in the Trust by virtue of such natural
person's participation in a Qualified Entity is a "Qualified Participant."
1.13. "Registration Statement" -- with respect to the Trust Shares
("Trust Registration Statement") or a class of Contracts ("Contracts
Registration Statement"), the registration statement filed with the SEC to
register the securities issued thereby under the 1933 Act, or the most recently
filed amendment thereto, in either case in the form in which it was declared or
became effective. The Contracts Registration Statement is described more
specifically on Schedule 2 to this Agreement. The Trust Registration Statement
was filed on Form N-1A (File No. 33-83548).
1.14. "1940 Act Registration Statement" -- with respect to the Trust or
the Account, the registration statement filed with the SEC to register such
entity as an investment company under the 1940 Act, or the most recently filed
amendment thereto. The Account 1940 Act Registration Statement is described more
specifically on Schedule 2 to this Agreement. The Trust 1940 Act
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Registration Statement was filed on Form N-1A (File No. 811-8748).
1.15. "Statement of Additional Information" -- with respect to the
Trust or a class of Contracts, each version of the definitive statement of
additional information or supplement thereto filed with the SEC pursuant to Rule
497 under the 0000 Xxx.
1.16. "SEC" -- the Securities and Exchange Commission.
1.17. "1933 Act" -- the Securities Act of 1933, as amended.
1.18. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II. SALE OF TRUST SHARES
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2.1. The Trust shall make shares of those Series listed on Schedule 3
to this Agreement available for purchase by the Company on behalf of the
Account, such purchases to be effected at net asset value in accordance with
Section 2.3 of this Agreement. Notwithstanding the foregoing, (i) Trust Series
in existence now or that may be established in the future and not listed on
Schedule 3 will be made available to the Company only as the Trust and the
Company may agree pursuant to Article XI hereof, and (ii) the Board of Trustees
of the Trust (the "Trust Board") may suspend or terminate the offering of Trust
shares of any Series in any jurisdiction, if such action is required by law or
by regulatory authorities having jurisdiction or if, in the sole discretion of
the Trust Board acting in good faith and in light of its fiduciary duties under
Federal and any applicable state laws, suspension or termination is necessary or
in the best interests of the shareholders of any Series (it being understood
that "shareholders" for this purpose shall mean Product Owners and Qualified
Participants).
2.2. The Trust shall redeem, at the Company's request, any full or
fractional shares of the Trust held by the Company on behalf of the Account,
such redemptions to be effected at net asset value in accordance with Section
2.3 of this Agreement. Notwithstanding the foregoing, (i) the Company shall not
redeem Trust shares attributable to Contract Owners except in the circumstances
permitted in Section 2.7 of this Agreement, and (ii) the Trust may delay
redemption of Trust shares of any Series to the extent permitted by the 1940
Act, any rules, regulations or orders thereunder, or as described in the Trust
Prospectus.
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2.3.
(a) The Trust hereby appoints the Company as its designee for
the limited purpose of receiving purchase and redemption requests from
the Account based on allocations of net amounts to the Account or
subaccounts thereof under the Contracts and other transactions relating
to the Contracts or the Account. Purchase and redemption requests shall
be processed by the Trust at the net asset value per share next
calculated after the Trust receives and accepts such request. The Trust
shall calculate its net asset value per share at the Trust's close of
business on each Business Day (as defined from time to time in the
Trust Prospectus, and which as of the date of execution of this
Agreement is the time of the close of regular session trading on the
New York Stock Exchange, which is generally 4:00 p.m. Eastern Time.
Receipt of any such request on any Business Day by the Company as
designee of the Trust prior to the Trust's close of business shall
constitute receipt by the Trust on that same Business Day, provided
that the Trust receives notice of such request by 10 a.m. Eastern Time
on the next following Business Day.
(b) The Company shall pay for shares of each Series on the
same day that it notifies the Trust of a purchase request for such
shares. Payment for Series shares shall be made in Federal funds
transmitted to the Trust by wire to be received by the Trust by 12:00
p.m. Eastern Time on the day the Trust is notified of the purchase
request for Series shares (unless the Trust determines and so advises
the Company that sufficient proceeds are available from redemption of
shares of other Series effected pursuant to redemption requests
tendered by the Company on behalf of the Account). If payment in
Federal funds for any purchase is not received, or is received by the
Trust after 3 p.m. Eastern Time on such Business Day, the Company shall
promptly, upon the Trust's request, reimburse the Trust for any
charges, costs, fees, interest or other expenses incurred by the Trust
in connection with any advances to, or borrowings or overdrafts by, the
Trust, or any similar expenses incurred by the Trust, as a result of
non-payment or late payment.
(c) Payment for Series shares redeemed by the Account or the
Company shall be made in Federal funds transmitted by wire to the
Company or any other designated person by 3 p.m. Eastern Time on the
next Business Day after the Trust is properly notified of the
redemption order of Series shares (unless redemption proceeds are to be
applied to the purchase of Trust shares of other Series in accordance
with Section 2.3(b) of this Agreement), except that (i) if payment of
the redemption proceeds would require
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the Trust to dispose of portfolio securities or otherwise incur
additional costs, proceeds shall be wired to the company within seven
days and the Trust shall notify the Company of such delay by 3 p.m.
Eastern Time on such Business Day; and (ii) the Trust reserves the
right to delay payment of redemption proceeds to the extent permitted
under Section 22(e) of the 1940 Act; and (iii) the Trust reserves the
right to effect payment of redemptions in kind, but only to the extent
described in the Trust Prospectus. The Trust shall not bear any
responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by the Company; the Company alone shall be
responsible for such action.
2.4. The Trust shall use reasonable efforts to make the net asset value
per share for each Series available to the Company by 7 p.m. Eastern Time each
Business Day, and in any event, as soon as reasonably practicable after the net
asset value per share for such Series is calculated, and shall calculate such
net asset value in accordance with the Trust Prospectus. Neither the Trust, any
Series, the Investment Adviser, nor any of their affiliates shall be liable for
any information provided to the Company pursuant to this Agreement which
information is based on incorrect information supplied by the Company or any
other Participating Company to the Trust or the Investment Adviser.
2.5. The Trust shall furnish notice to the Company as soon as
reasonably practicable of any income dividends or capital gain distributions
payable on any Series shares. The Trust shall notify the Company promptly of the
number of Series shares so issued as payment of such dividends and
distributions. The Company, on its behalf and on behalf of the Account, hereby
elects to receive all such dividends and distributions as are payable on any
Series shares in the form of additional shares of that Series. The Company
reserves the right, on its behalf and on behalf of the Account, to revoke this
election and to receive all such dividends in cash.
2.6. Issuance and transfer of Trust shares shall be by book entry only.
Stock certificates will not be issued to the Company or the Account. Purchase
and redemption orders for Trust shares shall be recorded in an appropriate
ledger for the Account or the appropriate subaccount of the Account.
2.7.
(a) The Company shall invest amounts available for investment
under the Contracts in the Series of the Trust specified in Schedule 3
in accordance with allocation instructions received from Contract
Owners, it being understood that no changes shall be made to Schedule 3
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without the prior written consent of the Trust and the Investment
Adviser. The Company may withdraw the Account's investment in the Trust
or a Series of the Trust only: (i) as necessary to facilitate Contract
Owner requests; (ii) upon a determination by a majority of the Trust
Board, or a majority of disinterested Trust Board members, that an
irreconcilable material conflict exists among the interests of (x) some
or all Product Owners or (y) the interests of some or all of the
Participating Insurance Companies and/or Qualified Entities investing
in the Trust; or (iii) in the event that the shares of another
investment company are substituted for series shares in accordance with
the terms of the Contracts upon the (x) requisite vote of the Contract
Owners having an interest in the affected Series and the written
consent of the Trust (unless otherwise required by applicable law); (y)
upon issuance of an SEC exemptive order pursuant to Section 26(b) of
the 1940 Act permitting such substitution; or (z) as may otherwise be
permitted under applicable law.
(b) The Company shall not, without the prior written consent
of the Trust (unless otherwise required by applicable law), take any
action to operate the Account as a management investment company under
the 1940 Act.
(c) The Trust shall not, without the prior written consent of
the Company (unless otherwise required by applicable law), take any
action to operate the Trust as a unit investment trust under the 1940
Act.
(d) The Company shall not, without the prior written consent
of the Trust (unless otherwise required by applicable law), solicit,
induce or encourage Contract Owners to change or modify the Trust or
change the Trust's investment adviser.
(e) The Company and the Trust acknowledge that the arrangement
contemplated by this Agreement is not exclusive; Trust shares may be
sold to other insurance companies; and the cash value of the Contracts
may be invested in other investment companies, provided, however, that
(a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the
investment objectives and policies of the Trust; or (b) the Company
gives the Trust 45 days written notice of its intention to make such
other investment company available as a funding vehicle for the
Contracts; or (c) such other investment company was available as a
funding vehicle for the Contracts prior to the date of this Agreement
and the Company so informs the Trust prior to the execution of this
Agreement; or (d) the Trust consents to
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the use of such other investment company, such consent not to
be unreasonably withheld.
2.8. The Trust shall sell Trust shares only to Participating Insurance
Companies and their separate accounts and to Qualified Entities. The Trust shall
not sell Trust shares to any insurance company or separate account unless an
agreement complying with Article VII of this Agreement is in effect to govern
such sales.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
------------------------------
3.1. The Company represents and warrants that: (i) the Company is an
insurance company duly organized and in good standing under applicable law; (ii)
the Account is a validly existing separate account, duly established and
maintained in accordance with applicable law; (iii) the Account 1940 Act
Registration Statement has been filed with the SEC in accordance with the
provisions of the 1940 Act and the Account is duly registered as a unit
investment trust thereunder; (iv) the Contracts Registration Statement has been
declared effective by the SEC; (v) the Contracts will be issued in compliance in
all material respects with all applicable Federal and state laws; and (vi) the
Contracts currently are and at the time of issuance will be treated as annuity
contracts under applicable provisions of the Code.
3.2. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed under Massachusetts law; (ii) the
Trust 1940 Act Registration Statement has been filed with the SEC in accordance
with the provisions of the 1940 Act and the Trust is duly registered as an
open-end management investment company thereunder; (iii) the Trust Registration
Statement has been declared effective by the SEC; (iv) Trust shares sold
pursuant to this Agreement have been duly authorized for issuance in accordance
with applicable law; (v) the Trust believes that it (x) currently qualifies as a
"regulated investment company" under Subchapter M of the Code and (y) currently
complies with Section 817(h) of the Code and regulations thereunder; and (vi)
the Trust's investment policies are in material compliance with any investment
restrictions set forth on Schedule 4 to this Agreement. The Trust, however,
makes no representation as to whether any aspect of its operations (including,
but not limited to, fees and expenses and investment policies) otherwise
complies with the insurance laws or regulations of any state.
3.3. Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as applicable, by
such party, and,
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when so executed and delivered, this Agreement will be the valid and binding
obligation of such party enforceable in accordance with its terms.
ARTICLE IV. FILINGS, INFORMATION AND EXPENSES
---------------------------------
4.1. The Trust shall amend the Trust Registration Statement and the
Trust 1940 Act Registration Statement from time to time as required in order to
effect the continuous offering of Trust shares and to maintain the Trust's
registration under the 1940 Act for so long as Trust shares are sold.
4.2. The Company shall amend the Contracts Registration Statement and
the Account 1940 Act Registration Statement from time to time as required in
order to effect the continuous offering of the Contracts or as may otherwise be
required by applicable law. The Company shall maintain a current effective
Contracts Registration Statement and the Account's registration under the 1940
Act for so long as the Contracts are outstanding, unless (a) a no-action letter
from the SEC has been obtained by the Company to the effect that such
registration statement need no longer be maintained; or (b) the Company has
supplied the Trust with an opinion of counsel to the effect that maintaining
such registration statement is no longer required; or (c) the company has
notified the Trust in writing that, with respect to such registration statement,
the Company meets the terms and conditions of, and is relying on, Great West
Life & Annuity Insurance Company (pub. avail. Oct. 23, 1990), and any subsequent
no-action letter released by the staff of the SEC addressing the same subject
matter. The Company shall file, register, qualify and obtain approval of the
Contracts for sale to the extent required by applicable insurance and securities
laws of the various states.
4.3 The Trust shall provide the Company with as many copies of the
Trust Prospectus as the Company may reasonably request. If requested by the
Company in lieu thereof, the Trust shall provide such documentation (including a
final copy of the Trust Prospectus as set in type at the Trust's expense) and
other assistance as is reasonably necessary in order for the Company once each
year (or more frequently if the Trust Prospectus is more frequently amended) to
have the Contracts Prospectus and Trust Prospectus printed together in one
document.
4.4 The Company shall deliver Contracts, Contracts and Trust
Prospectuses, Contracts and Trust Statements of Additional Information, and all
amendments or supplements to any of the foregoing to Contract Owners and
prospective Contract Owners, as required by applicable federal securities laws.
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4.5. The Company shall:
(a) inform the Trust of any state in which the Trust is
required under such state's securities laws to register the offering of
its shares pursuant to this participation agreement; and
(b) inform the Trust of any investment restrictions imposed by
state insurance law that may become applicable to the Trust from time
to time as a result of the Account's investment therein (including, but
not limited to, restrictions with respect to fees and expenses and
investment policies), other than those set forth on Schedule 4 to this
Agreement.
4.6. Upon receipt of information from the Company pursuant to Section
4.5(b), the Trust shall determine whether it is in the best interests of
shareholders (it being understood that "shareholders" for this purpose shall
mean Product Owners and Qualified Participants) to comply with any such
restrictions. If the Trust determines that it is not in the best interests of
shareholders, the Trust shall so inform the Company, and the Trust and the
Company shall discuss alternative accommodations in the circumstances. If the
Trust determines that it is in the best interests of shareholders to comply with
such restrictions, the Trust and the Company shall amend Schedule 4 to this
Agreement to reflect such restrictions.
4.7. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to this
Agreement) shall be paid by the such party to the extent permitted by law.
(a) Expenses assumed by the Trust include, but are not limited
to, the costs of: registration and qualification of the Trust shares
under the federal securities laws; preparation and filing with the SEC
of the Trust Prospectus, Trust Registration Statement, Trust proxy
materials and shareholder reports; the printing and mailing of all
proxy statements and periodic reports; the preparation of camera-ready
copy of Trust Prospectuses and Statements of Additional Information
required to be provided by the Trust to its then-current shareholders;
preparation of all statements and notices required by any Federal or
state securities law; all taxes on the issuance or transfer of Trust
shares; and any expenses permitted to be paid or assumed by the Trust
pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act. The
Trust shall pay no fee or other compensation to the Company under this
Agreement, and shall not be charged for the costs of printing and
mailing to prospective Contract Owners copies of the Trust Prospectus,
Trust Statement of Additional Information,
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notices, proxy statements, periodic reports, or other printed
materials.
(b) Expenses assumed by the Company include, but are not
limited to, the costs of: registration and qualification of the
Contracts under the federal securities laws; preparation and filing with
the SEC of the Contracts Prospectus, Contracts Registration Statement,
and Contract Owner reports; and the printing and mailing of all periodic
reports, Contracts Prospectuses, Statements of Additional Information,
and notices to current and prospective Contract Owners required by any
Federal or state insurance law other than those paid for by the Trust.
4.8. No piece of advertising or sales literature or other promotional
material in which the Trust is named shall be used, except with the prior
written consent of the Trust. Any such piece shall be furnished to the Trust for
such consent prior to its use. The Trust shall respond to any request for
written consent on a prompt and timely basis, but failure to respond shall not
relieve the Company of the obligation to obtain the prior written consent of the
Trust. The Trust may at any time in its sole discretion revoke such written
consent, and upon notification of such revocation, the Company shall no longer
use the material subject to such revocation. The Trust may delegate its rights
and responsibilities under this provision to the Investment Adviser.
4.9. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust
other than the information or representations contained in the Trust
Registration Statement or Trust Prospectus or in reports or proxy statements for
the Trust which are in the public domain or approved in writing by the Trust for
distribution to Contract Owners, or in sales literature or other promotional
material approved in accordance with Section 4.8 of this Agreement, except with
the prior written consent of the Trust.
4.10. The Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account
or the Contracts other than the information or representations contained in the
Contracts Registration Statement or Contracts Prospectus or in reports of the
Account which are in the public domain or approved in writing by the Company for
distribution to Contract Owners, or in sales literature or other promotional
material approved in writing by the Company, except with the prior written
consent of the Company.
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4.11. Each party shall provide to the other at least one complete copy
of all Registration Statements, Prospectuses, Statements of Additional
Information, periodic and other shareholder or Contract Owner reports, proxy
statements, solicitations of voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments or supplements to any of the above, that relate to
the Trust, the Contracts or the Account, as the case may be, promptly after the
filing by or on behalf of such party of such document with the SEC or other
regulatory authorities.
4.12. Each party shall provide to the other upon request copies of
draft versions of any Registration Statements, Prospectuses, Statements of
Additional Information, periodic and other shareholder or Contract Owner
reports, proxy statements, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments or supplements to any of the
above, to the extent that the other party reasonably needs such information for
purposes of preparing a report or other filing to be filed with or submitted to
a regulatory agency. If a party requests any such information before it has been
filed, the other party will provide the requested information if then available
and in the version then available at the time of such request.
4.13. Each party hereto shall cooperate with the other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit each other and 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. However, such access shall not extend to attorney-client
privileged information.
4.14. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any material
constituting sales literature or advertising under the NASD rules, the 1940 Act
or the 1933 Act.
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ARTICLE V. VOTING OF TRUST SHARES
----------------------
With respect to any matter put to vote by the holders of Trust shares
or Series shares ("Voting Shares"), the Company shall:
(a) solicit voting instructions from Contract Owners to which
Voting Shares are attributable;
(b) vote Voting Shares of each Series attributable to Contract
Owners in accordance with instructions or proxies timely received from
such Contract Owners;
(c) unless permitted under applicable law, vote Voting Shares
of each Series attributable to Contract Owners for which no
instructions have been received in the same proportion as Voting Shares
of such Series for which instructions have been timely received; and
(d) unless permitted under applicable law, vote Voting Shares
of each Series held by the Company on its own behalf or on behalf of
the Account that are not attributable to Contract Owners in the same
proportion as Voting Shares of such Series for which instructions have
been timely received.
The Company shall be responsible for assuring that voting privileges
for the Account are calculated in a manner consistent with the provisions set
forth above.
ARTICLE VI. COMPLIANCE WITH CODE
--------------------
6.1. The Trust undertakes to comply with Section 817(h) of the Code,
and all regulations issued thereunder.
6.2. The Trust undertakes to maintain its qualification as a registered
investment company (under Subchapter M or any successor or similar provision),
and undertakes to notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future.
6.3. The Company undertakes to maintain the treatment of the Contracts
as annuity contracts or life insurance policies, whichever is appropriate, under
applicable provisions of the Code and shall notify the Trust immediately upon
having a reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
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ARTICLE VII. POTENTIAL CONFLICTS
-------------------
The parties to this Agreement acknowledge that the Trust may file an
application with the SEC to request an order granting relief from various
provisions of the 1940 Act and the rules thereunder to the extent necessary to
permit Trust shares to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated Participating
Insurance Companies, as well as by Qualified Entities. Any conditions or
undertakings that may be imposed on the Company and the Trust by virtue of such
order shall be incorporated herein by this reference, as of the date such order
is granted, as though set forth herein in full, and the parties to this
Agreement shall comply with such conditions and undertakings to the extent
applicable to each such party. The Trust will not enter into a participation
agreement with any other Participating Insurance Company unless it imposes the
same conditions and undertakings imposed by virtue of such order and
incorporated by reference herein on the parties to such agreement.
ARTICLE VIII. INDEMNIFICATION
---------------
8.1. The Company shall indemnify and hold harmless the Trust and each
person who controls or is associated with the Trust within the meaning of such
terms under the federal securities laws (but not any Participating Insurance
Companies or Qualified Entities) and any officer, trustee, director, employee or
agent of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Contracts Registration Statement, Contracts Prospectus, sales
literature or other promotional material for the Contracts or the
Contracts themselves (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 in
light of the circumstances in which they were made; provided that this
obligation to indemnify shall not apply if such statement or omission
or such alleged statement or alleged omission was made in reliance upon
and in conformity with information furnished in writing to the
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Company by the Trust for use in the Contracts Registration Statement,
Contracts Prospectus or in the Contracts or sales literature or
promotional material for the Contracts (or any amendment or supplement
to any of the foregoing) or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
(b) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Trust Registration
Statement, Trust Prospectus or sales literature or other promotional
material of the Trust (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 in light of the circumstances in
which they were made, if such statement or omission was made in
reliance upon and in conformity with information furnished in writing
to the Trust by or on behalf of the Company; or
(c) arise out of or are based upon any wrongful conduct of the
Company or persons under its control (or subject to its authorization
or supervision) with respect to the sale or distribution of the
Contracts or Trust shares; or
(d) arise as a result of any failure by the Company to perform
its obligations under the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to comply with the
undertaking specified in Article VI of this Agreement, unless such
failure is a result of the Trust's material breach of this Agreement);
or
(e) arise out of any material breach by the Company of this
Agreement, including but not limited to any failure to transmit a
request for redemption or purchase of Trust shares on a timely basis in
accordance with the procedures set forth in Article II.
This indemnification will be in addition to any liability that the Company may
otherwise have; provided, however, that no person otherwise entitled to
indemnification pursuant to this Section 8.1 shall be entitled to
indemnification if such loss, claim, damage or liability is due to the wilful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
person seeking indemnification.
8.2. The Trust shall indemnify and hold harmless the Company and each
person who controls or is associated with the Company within the meaning of such
terms under the federal securities laws and any officer, director, employee or
agent of the foregoing, against any and all losses, claims, damages or
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liabilities, joint or several (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Trust
Registration Statement, Trust Prospectus or sales literature or other
promotional material of the Trust (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 in light of the circumstances in which they were made;
provided that this obligation to indemnify shall not apply if such
statement or omission or alleged statement or alleged omission was made
in reliance upon and in conformity with information furnished in
writing by the Company to the Trust for use in the Trust Registration
Statement, Trust Prospectus or sales literature or promotional material
for the Trust (or any amendment or supplement to any of the foregoing);
or
(b) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Contracts Registration
Statement, Contracts Prospectus or sales literature or other
promotional material for 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 in light of the
circumstances in which they were made, if such statement or omission
was made in reliance upon information furnished in writing by the Trust
to the Company; or
(c) arise out of or are based upon wrongful conduct of the
Trust with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to perform
its obligations under the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to comply with the
undertakings specified in Article VI of this Agreement, unless such
failure is a result of the Company's material breach of this
Agreement); or
(e) arise out of any material breach by the Trust of this
Agreement.
- 15 -
This indemnification will be in addition to any liability that the Trust may
otherwise have; provided, however, that no person otherwise entitled to
indemnification pursuant to this Section 8.2 shall be entitled to
indemnification if such loss, claim, damage or liability is due to the wilful
misfeasance, bad faith, gross negligence or reckless disregard of duty by the
person seeking indemnification.
8.3. After receipt by a party entitled to indemnification ("indemnified
party") under this Article VIII of notice of the commencement of any action, if
a claim in respect thereof is to be made by the indemnified party against any
person obligated to provide indemnification under this Article VIII
("indemnifying party"), such indemnified party will notify the indemnifying
party in writing of the commencement thereof as soon as practicable thereafter,
provided that the failure to so notify the indemnifying party will not relieve
the indemnifying party from any liability under this Article VIII, except to the
extent that the omission results in a failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
the failure to give such notice. The indemnifying party, upon the request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent but if
settled with such consent, or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
- 16 -
ARTICLE IX. APPLICABLE LAW
--------------
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts, without giving effect to the principles of conflicts of laws.
9.2. This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act and Securities Exchange Act of 1934, as amended, and the rules and
regulations and rulings thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant, and the terms hereof
shall be limited, interpreted and construed in accordance therewith.
ARTICLE X. TERMINATION
-----------
10.1 This Agreement shall not terminate until the Trust is dissolved,
liquidated, or merged into another entity, or, as to any Series of the Trust,
an Account no longer invests in that Series. However, certain obligations of,
or restrictions on, the parties to this Agreement may terminate as provided in
Sections 10.2 and 10.3.
10.2. The obligation of the Trust to sell shares to the Company
pursuant to Article II of this Agreement shall terminate at the option of the
Trust upon 30 days notice to the Company:
(a) upon institution of formal proceedings against the Company
by the NASD, the SEC, the insurance commission of any state or any
other regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, the operation of the
Account, the administration of the Contracts or the purchase of Trust
shares, or an expected or anticipated ruling, judgment or outcome which
would, in the Trust's reasonable judgment, materially impair the
Company's ability to meet and perform the Company's obligations and
duties hereunder;
(b) in the event any of the Contracts are not registered,
issued or sold in accordance with applicable Federal and/or state law;
(c) if the Contracts cease to qualify as annuity contracts
under the Code, or if the Trust reasonably believes that the Contracts
may fail to so qualify;
(d) if the Trust shall determine, in its sole judgment
exercised in good faith, that either (1) the Company shall have
suffered a material adverse change in its business or financial
condition or (2) the Company shall
- 17 -
have been the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations of the
Trust;
(e) upon the Company's assignment of this Agreement
(including, without limitation, any transfer of the Contracts or the
Account to another insurance company pursuant to an assumption
reinsurance agreement) unless the Trust consents thereto; or
(f) upon termination pursuant to Section 10.1 or notice from
the Company pursuant to Section 10.3.
In exercising its option to terminate its obligation to sell Shares to the
Company, the Trust shall continue to make its shares available to the extent
required by applicable law and may elect to continue to make Trust shares
available to the extent necessary to permit owners of Contracts in effect on the
effective date of such termination (hereinafter referred to as "Existing
Contracts") to reallocate investments in the Trust, redeem investments in the
Trust and/or invest in the Trust upon the making of additional purchase payments
under the Existing Contracts. The Trust shall promptly notify the Company
whether the Trust is electing to make Trust shares so available after
termination.
10.3. The restrictions on the Company under Section 2.7 of this
Agreement shall terminate at the option of the Company upon 30 days notice to
the Trust:
(a) if shares of any Series are not reasonably available to
meet the requirements of the Contracts as determined by the Company,
and the Trust, after receiving written notice from the Company of such
non-availability, fails to make available a sufficient number of Trust
shares to meet the requirements of the Contracts within 5 days after
receipt thereof;
(b) upon institution of formal proceedings against the Trust
by the NASD, the SEC or any state securities or insurance commission or
any other regulatory body;
(c) if the Trust ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code, or under any successor or
similar provision, or if the Company reasonably believes based on an
opinion of counsel satisfactory to the Trust that the Trust may fail to
so qualify, and the Trust, upon written request, fails to provide
reasonable assurance that it will take action to cure or correct such
failure;
- 18 -
(d) if the Trust fails to meet the diversification
requirements specified in Section 817(h) of the Code and any
regulations thereunder and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure; or
(e) if the Trust informs the Company pursuant to Section 4.6
that the Trust will not comply with investment restrictions as
requested by the Company and the Trust and the Company are unable to
agree upon any reasonable alternative accommodations.
10.4. This Article X shall not apply to any termination made pursuant
to Article VII or any conditions or undertakings incorporated by reference in
Article VII, and the effect of such Article VII termination shall be governed by
the provisions set forth or incorporated by reference therein.
ARTICLE XI. APPLICABILITY TO NEW ACCOUNTS AND NEW CONTRACTS
-----------------------------------------------
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts or Series, or additions of new classes of Contracts to be issued by
the Company through separate accounts investing in the Trust. The provisions of
this Agreement shall be equally applicable to each such class of Contracts,
Series and Accounts, effective as of the date of amendment of such Schedule,
unless the context otherwise requires.
ARTICLE XII. NON-LIABILITY OF TRUSTEES AND SHAREHOLDERS
------------------------------------------
Any obligation of the Trust hereunder shall be binding only upon the
assets of the Trust (or applicable Series thereof) and shall not be binding upon
any trustee, officer, employee, agent or shareholder of the Trust. Neither the
authorization of any action by the Trust Board or shareholders of the Trust, nor
the execution of this Agreement on behalf of the Trust, shall impose any
liability upon any trustee, officer, or shareholder of the Trust.
ARTICLE XIII. 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.
- 19 -
If to the Trust:
Name:
-----------------------------
Title:
----------------------------
Xxxxxx Advisors Trust
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
If to the Company:
Name:
-----------------------------
Title:
----------------------------
Phoenix Life and Annuity Company
Xxx Xxxxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxxx 00000
ARTICLE XIV. MISCELLANEOUS
-------------
14.1. 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.
14.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
14.3. 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.
- 20 -
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized officer
on the date specified below.
PHOENIX LIFE AND ANNUITY COMPANY
(COMPANY)
Date: By:
------------------ --------------------------
Name:
Title:
XXXXXX ADVISORS TRUST
(TRUST)
Date: By:
------------------ --------------------------
Name:
Title: S
- 21 -
AMENDMENT NO. 1 TO THE PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 1 TO THE PARTICIPATION AGREEMENT ("Amendment No.
1"), made and entered into as of this ____day of _________, supplementing
and amending the Participation Agreement made and entered into the ____ day of
__________- (the "Original Participation Agreement," and together with this
Amendment No. 1, the "Agreement") by and between XXXXXX ADVISORS TRUST, an
unincorporated business trust formed under the laws of Massachusetts (the
"Trust"), and PHOENIX LIFE AND ANNUITY COMPANY, a Connecticut life insurance
company (the "Company"), on its own behalf and on behalf of each separate
account of the Company identified in the Agreement.
WHEREAS, the Trust currently serves as an investment vehicle for
certain accounts of the Company pursuant to the Original Participation
Agreement; and
WHEREAS, the Trust has applied for an order from the Securities and
Exchange Commission (the "SEC") (File No. 812-10198), granting Participating
Insurance Companies (as defined in the Original Participation Agreement) and
variable annuity and variable life separate accounts exemptions from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act (as defined
in the Original Participation Agreement) and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust
and each Series thereof to be sold to and held by variable annuity and variable
life insurance separate accounts of life insurance companies that may or may not
be affiliated with one another and qualified pension and retirement plans
outside of the separate account context (the "Exemptive Order"); and
WHEREAS, the Company and the Trust have agreed to hereby supplement and
amend the Original Participation Agreement in order to reflect the conditions
and undertakings that are expected to be imposed on the Company and the Trust by
virtue of such Exemptive Order;
NOW, THEREFORE, in consideration of their mutual promises, the Trust
and the Company agree as follows:
SECTION 1. DEFINITIONS
-----------
For all purposes of this Amendment No. 1, except as otherwise expressly
provided or unless the context otherwise requires:
(1) All references in this Amendment No. 1 and the Original
Participation Agreement to designated "Articles" and other subdivisions are to
the designated Articles and other subdivisions of the Original Participation
Agreement. The words "herein," "hereof," "hereto," "hereby" and "hereunder" and
other words of similar import refer to this Amendment No. 1 as a whole and not
to any particular "Section" or other subdivision.
(2) All terms used herein and not otherwise defined shall have the same
meanings as those given to such terms in the Original Participation Agreement,
and include the plural as well
as the singular, and the Original Participation Agreement is hereby amended to
include any terms defined herein.
(3) Any references to the "Agreement" in the Original Participation
Agreement are hereby amended to include, collectively, the Original
Participation Agreement and this Amendment No. 1.
SECTION 2. AMENDMENT TO ARTICLE VII
------------------------
Article VII of the Original Participation Agreement is hereby amended
to read as follows:
"ARTICLE VII. Potential Conflicts and Compliance With
---------------------------------------
Exemptive Order
---------------
7.1. The Trust Board will monitor the Trust for the existence of any
material irreconcilable conflict between the interests of the Contract Owners of
all Participating Accounts and of Qualified Participants investing in the Trust
and each Series thereof. A material irreconcilable 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 Series
are managed; (e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract owners; (f) a decision by a
Participating Insurance Company to disregard the voting instructions of contract
owners; or (g) if applicable, a decision by a Qualified Entity to disregard the
voting instructions of Qualified Participants. The Trust Board shall promptly
inform the Company in writing if it determines that a material irreconcilable
conflict exists and the implications thereof.
7.2 The Company shall report any potential or existing conflicts to the
Trust Board. The Company will be responsible for assisting the Trust Board in
carrying out its responsibilities by providing the Trust Board with all
information reasonably necessary for the Trust Board to consider any issues
raised. This responsibility includes, but is not limited to, an obligation by
the Company to inform the Trust Board whenever it has determined to disregard
Contract Owner voting instructions. Such responsibilities shall be carried out
by the Participants with a view only to the interests of Contract Owners.
7.3. If it is determined by a majority of the Trust Board, or a
majority of the members of the Trust Board who are not interested persons of the
Trust, the Investment Adviser or any sub-adviser to any of the Series (the
"Independent Trustees"), that a material irreconcilable conflict exists between
the interests of the Contract Owners of the Company's Participating Accounts and
of other Participating Accounts and Qualified Participants investing in the
Trust and each
2
Series thereof, the Company shall, at its expense and to the extent reasonably
practicable (as determined by a majority of the Independent Trustees), take
whatever steps are necessary to remedy or eliminate the material irreconcilable
conflict. Such measures may include: (a) withdrawing, without charge or penalty
to the Company, the assets allocable to some or all of the separate accounts
from the Trust or any Series and reinvesting such assets in a different
investment medium, which may include another Series of the Trust, or submitting
the question of whether such segregation should be implemented to a vote of all
affected Contract Owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance 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.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract Owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the Account's investment
in the Trust and terminate this Agreement and no charge or penalty will be
imposed as a result of such withdrawal. Any such withdrawal and termination must
take place within six (6) months after the Trust gives written notice that this
provision is being implemented, and until the end of that six month period the
Investment Adviser and the Trust shall continue to accept and implement orders
by the Company for the purchase (and redemption) of shares of the Trust.
7.5. 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
Account's investment in the Trust and terminate this Agreement within six months
after the Trust Board informs the Company in writing that it has determined that
such decision has created a material irreconcilable conflict, and that said
conflict cannot be remedied by any other means. Until the end of the foregoing
six month period, the Investment Adviser and the Trust shall continue to accept
and implement orders by the Company for the purchase (and redemption) of shares
of the Trust.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the Independent Trustees shall determine whether any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the Trust or the Investment Adviser be required to establish a new funding
medium for the Contracts. The Company shall not be required by Section 7.3 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 material irreconcilable conflict. In the event that the Trust Board
determines that
3
any proposed action does not adequately remedy any material irreconcilable
conflict, then the Company will withdraw the Account's investment in the Trust
and terminate this Agreement within six (6) months after the Trust Board informs
the Company in writing of the foregoing determination, without charge or penalty
to the Company.
7.7. 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 (a) the Trust and/or
the Company, 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; and (b) Article V and Sections 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
7.8 The Company shall at least annually submit to the Trust Board such
reports, materials or data as the Trust Board may reasonably request so that the
Trust Board may fully carry out its obligations under the Exemptive Order;
provided, however, that the Board may require the submission of such reports on
data on a more frequent basis if it so deems appropriate.
7.9 The Company, or any affiliate, will maintain at its home office,
available to the SEC, (a) a list of its officers, directors and employees who
participate directly in the management of administration of any Account and/or
(b) a list of its agents who, as registered representatives, offer and sell
Contracts."
SECTION 3. SCHEDULES
---------
Schedules 1, 2 and 3 to the Original Participation Agreement are hereby
amended to read as Schedules 1, 2 and 3 to this Amendment No. 1, respectively.
SECTION 4. MISCELLANEOUS
-------------
4.1 The captions in this Amendment No. 1 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.
4.2 This Amendment No. 1 may be executed simultaneously in two or more
counterparts, each of which together shall constitute one and the same
instrument.
4.3 If any provision of this Amendment No. 1 shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
4
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 1 to be executed in its name and behalf by its duly authorized
office on the date specified below.
Date:
Date:
PHOENIX LIFE AND ANNUITY COMPANY
COMPANY
(Company)
By:
Name:
Title:
XXXXXX ADVISORS TRUST
(Trust)
By:
Name:
Title:
6
