PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this __th day of June, 1997, by
and among Hartford Life Insurance Company, Inc., a Connecticut Corporation
(hereinafter the "Company"), on its own behalf and on behalf of each separate
account of the Company (hereinafter the "Separate Account") named in Schedule
One to this Agreement, as may be amended from time to
time,__________________, an open-end diversified management investment
company organized under the laws of the Commonwealth of Massachusetts
(hereinafter the "Fund") and ______________________________, a registered
broker-dealer and organized as a __________________ corporation,
(hereinafter the "Underwriter") and ________________________________, a
registered investment advisor and organized as a
______________________corportion (hereinafter, the "Advisor").
WHEREAS, the Fund engages in business as an open-end diversified,
management investment company and was established for the purpose of serving
as the investment vehicle for separate accounts established for variable life
insurance contracts and variable annuity contracts to be offered by insurance
companies, and;
WHEREAS, beneficial interests in the Fund are divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has obtained an order from the Securities & Exchange
Commission (alternatively referred to as the "SEC" or the "Commission"),
dated__________________ (File No. _________ ), granting participating
insurance companies and variable annuity separate accounts and variable life
insurance separate accounts relief from the provisions of Sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended,
(hereinafter 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 Fund to be sold
to and held by variable annuity separate accounts and variable life insurance
separate accounts of both affiliated and unaffiliated participating insurance
companies and qualified pension and retirement plans (hereinafter the "Mixed
and Shared Funding Exemptive Order"), and ;
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"), and;
WHEREAS, the Company has registered or will register certain
variable annuity contracts (the "Contracts") under the 1933 Act, and;
WHEREAS, the Separate Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors
of the
Company under the insurance laws of the State of Connecticut to set aside and
invest assets attributable to the Contracts, and;
WHEREAS, the Company has registered the Separate Account as a unit
investment trust under the 1940 Act, and;
WHEREAS, the Underwriter is registered as a broker-dealer with the
SEC under the Securities Exchange Act of 1934, as amended (hereinafter the
"1934 Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD"), and;
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the portfolios named
in Schedule 2 on behalf of the Separate Account to fund the Contracts and the
Underwriter is authorized to sell such shares to unit investment trusts such
as the Separate Account at net asset value, and;
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund and the Underwriter agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1 The Underwriter agrees to sell to the Company those shares of the
Fund which the Company orders on behalf of the Separate Account, executing
such orders on a daily basis at the net asset value next computed after
receipt and acceptance by the Fund or its designee of the order for the
shares of the Fund. For purposes of this Section, the Company shall be the
designee of the Fund for receipt of such orders from each Separate Account
and receipt by such designee shall constitute receipt by the Fund; provided
that the Fund receives notice of such order by 10:00 a.m. Eastern 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 Fund calculates
its net asset value pursuant to the rules of the SEC.
1.2 The Company shall pay for Fund shares on the next Business Day
after it places an order to purchase Fund shares in accordance with this
Section. Payment shall be in federal funds transmitted by wire.
1.3 The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company on those
days on which the Fund calculates its net asset value pursuant to rules of
the SEC; provided, however, that the Board of Trustees of the Fund
(hereinafter 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
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jurisdiction or is, in the sole discretion of the Directors, 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 any
Portfolio.
1.4 The Fund and the Underwriter agree that shares of the Fund will be
sold only to participating insurance companies and their separate accounts,
qualified pension and retirement plans or such other persons as are permitted
under applicable provision of the Internal Revenue Code of 1986, as amended,
(the "Internal Revenue Code"), and regulations promulgated thereunder, the
sale to which will not impair the tax treatment currently afforded the
contracts. No shares of any Portfolio will be sold to the general public.
1.5 The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, and VII of this
Agreement are in effect to govern such sales. The Fund shall make available
upon-written request from the Company:
A. a list of all other participating insurance companies, and,
B. a copy of the Participation Agreement executed by any other
participating insurance company.
1.6 The Fund agrees to redeem for cash, upon the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt
and acceptance by the Fund or its designee of the request for redemption.
For purposes of this Section 1.6, the Company shall be the designee of the
Fund for receipt of requests for redemption from each Separate Account and
receipt by such designee shall constitute receipt by the Fund; provided the
Fund receives notice of request for redemption by 10:00 a.m. Eastern Time on
the next following Business Day. Payment shall be in federal funds
transmitted by wire to the Company's Separate Account as designated by the
Company in writing from time to time, on the same Business Day the Fund
receives notice of the redemption order from the Company.
1.7 The Company agrees to purchase and redeem the shares of the
Portfolios named in Schedule Two offered by the then current prospectus of
the Fund in accordance with the provisions of such prospectus.
1.8 Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Separate
Account. Purchase and redemption orders for Fund shares will be recorded in
an appropriate title for each Separate Account or the appropriate subaccount
of each Separate Account.
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1.9 The Fund shall furnish notice as soon as reasonably practicable to
the Company of any income, dividends or capital gain distributions payable on
the Fund's shares. The Company hereby elects to receive all such dividends
and distributions as are payable on the Portfolio shares in the form of
additional shares of that Portfolio. The Company reserves the right to
revoke this election and to receive all such dividends and distributions in
cash. The Fund shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.10 The Fund 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 and shall use its
best efforts to make such net asset value per share available by 5:30 p.m.,
Eastern Time, each business day.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act and that the Contracts will be issued and
sold in compliance with all applicable federal and state laws. The Company
further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally
and validly established each Separate Account as a segregated asset account
under applicable state law and has registered each Separate Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve
as segregated investment accounts for the Contracts, and that it will
maintain such registration for so long as any Contracts are outstanding. The
Company shall amend the registration statement under the 1933 Act for the
Contracts and the registration statement under the 1940 Act for the Separate
Account 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 register and qualify the Contracts for sale in accordance
with securities laws of the various states only if and to the extent deemed
necessary by the Company.
2.2 Subject to Article VI hereof, the Company represents that it
believes that the Contracts are currently and at the time of issuance will be
treated as annuity contracts under applicable provisions of the Internal
Revenue Code that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter 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.
2.3 The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law and that the Fund is and shall
remain registered under the 1940 Act for as long as the Fund shares are sold.
The Fund shall amend the
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registration statement for its shares 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 Fund shall register and qualify the shares for sales in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund or the Underwriter.
2.4 The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code, and that
it will make every effort to maintain such qualification (under Subchapter M
or any successor or similar provision) and that it will 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.
2.5 The Fund represents that its investment objectives, policies and
restrictions comply with applicable state investment laws as they may apply
to the Fund. To the extent feasible and consistent with market conditions,
the Fund will adjust its investments to comply with the insurance and other
applicable laws of the Company's state of domicile upon written notice from
the Company of such requirements and proposed adjustments, it being agreed
and understood that in any such case the Fund shall be allowed a reasonable
period of time under the circumstances after receipt of such notice to make
any such adjustment. The Company alone shall be responsible for informing
the Fund of any additional restrictions imposed by state laws which are
applicable to the Fund.
2.6 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1, the Fund
undertakes to have its Board of Trustees, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses. The Fund shall notify the Company
immediately upon determining to finance distribution expenses pursuant to
Rule 12b-1.
2.7 The Underwriter represents and warrants that it is a member in good
standing of the National Association of Securities Dealers, Inc., ("NASD")
and is registered as a broker-dealer with the SEC. The Underwriter further
represents that it will sell and distribute the Fund shares in accordance
with all applicable federal and state securities laws, including without
limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.8 The Fund represents that it is lawfully organized and validly
existing under the laws of Massachusetts and that it does and will comply
with applicable provisions of the 1940 Act.
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2.9 The Underwriter represents and warrants that the Fund's Investment
Adviser is and shall remain duly registered under all applicable federal and
state securities laws and that the adviser will perform its obligations to
the Fund in accordance with any applicable state and federal securities laws.
2.10 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of the Fund
are and continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid
Bond includes coverage for larceny and embezzlement and is issued by a
reputable bonding company.
2.11 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Fund are covered by a blanket
fidelity bond or similar coverage in an amount not less than $5 million. The
aforesaid includes coverage for larceny and embezzlement and is issued by a
reputable bonding company. The Company agrees that any amounts received
under such bond in connection with claims that derive from arrangements
described in this Agreement will be held by the Company for the benefit of
the Fund. The Company agrees to make all reasonable efforts to see that this
bond or another bond containing these provisions is always in effect, and
agrees to notify the Fund and the Underwriter in the event that such coverage
no longer applies.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1 The Underwriter shall provide the Company, at the Company's
expense, with as many copies of the Fund's current prospectus describing only
those Portfolios set forth on Schedule Two, as the Company may reasonably
request for use with prospective contract owners and applicants. The
Underwriter shall print and distribute, at the Fund's or Underwriter's
expense, as many copies of said prospectus as necessary for distribution to
existing contract owners or participants. If requested by the Company in
lieu thereof, the Fund shall provide such documentation including a final
copy of a current prospectus describing only those Portfolios set forth on
Schedule Two, set in type at the Fund's expense and other assistance as is
reasonably necessary in order for the Company at least annually (or more
frequently if the Fund prospectus is amended more frequently) to have the new
prospectus for the Contracts and Fund's new prospectus printed together in
one document, in such case the Fund shall bear its share of expenses as
described above.
3.2 The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or alternatively
from the
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Company (or, in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund), and the Underwriter (or the Fund)
shall provide such Statement, at its expense, to the Company and to any owner
of or participant under a Contract who requests such Statement or, at the
Company's expense, to any prospective contract owner and applicant who
requests such statement.
3.3 The Fund, at its expense, shall provide the Company with copies of
its proxy material, if any, reports to shareholders and other communications
to shareholders in such quantity as the Company shall reasonably require and
shall bear the costs of distributing them to existing contract owners or
participants.
3.4 If and to the extent required by law the Company shall:
A. solicit voting instructions from contract owners or
participants;
B. vote the Fund shares held in the Separate Account in
accordance with instructions received from contract owners or
participants; and
C. vote Fund shares held in the Separate Account for which no
timely instructions have been received, in the same proportion
as Fund shares of such Portfolio for which instructions have
been received from the Company's contract owners or
participants; so long as and to the extent that the SEC
continues to interpret the 1940 Act to require pass through
voting privileges for variable contract owners. The Company
reserves the right to vote Fund shares held in any segregated
asset account in its own right, to the extent permitted by
law. Other participating insurance companies shall be
responsible for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in a
manner consistent with other participating insurance companies
and as required by the Mixed and Shared Funding Exemptive
Order.
3.5 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular as required, the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of
that Act) as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Fund will act in accordance with the SEC interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors
and with whatever rules the Commission may promulgate with respect thereto.
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ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or the Underwriter, each piece of sales literature or other promotional
material in which the Fund or the Fund's adviser or the Underwriter is named,
at least fifteen business days prior to its use. No. such material shall be
used if the Fund or the Underwriter reasonably objects in writing to such use
within fifteen business days after receipt of such material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the
Fund, or in sales literature or other promotional material approved by the
Fund or by the Underwriter, except with the permission of the Fund or the
Underwriter. The Fund and the Underwriter agree to respond to any request
for approval on a prompt and timely basis.
4.3 The Fund or the Underwriter shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company or its separate account is
named, at least fifteen business days prior to its use. No such material
shall be used if the Company reasonably objects in writing to such use within
fifteen business days after receipt of such material.
4.4 The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Separate Account, or the Contracts other than the information or
representations contained in a registrations statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each Separate
Account which are in the public domain or approved by the Company for
distribution to contract owners or participants, or in sales literature or
other promotional material approved by the Company, except with the
permission of the company. The Company agrees to respond to any request for
approval on a prompt and timely basis.
4.5 The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or
its shares, contemporaneously with the filing of such document with the SEC
or other regulatory authorities.
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4.6 The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or each Separate Account, contemporaneously with the filing of such
document with the SEC or other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine,
or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public
media), sales literature (i.e., any written communication distributed or made
generally available to customers or the public, including brochures
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees,
registration statements, prospectuses, statements of additional information,
shareholder reports, and proxy materials and any other material constituting
sales literature or advertising under NASD rules, 1940 Act or the 0000 Xxx.
4.8 The Company agrees and acknowledges that the Fund is the sole owner
of its the name and xxxx and that all use of any designation comprised in
whole or part or such name or xxxx under this Agreement shall inure to the
benefit of the Fund. Except as provided in Section 4.1, the Company shall not
use any such name or xxxx on its own behalf or on behalf of each Separate
Account in connection with marketing the Contracts without prior written
consent of the Fund. Upon termination of this Agreement for any reason, the
Company shall cease all use of any such name or xxxx.
ARTICLE V. FEES AND EXPENSES
5.1 The Fund and Underwriter shall pay no fee or other compensation to
the Company under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then, subject to obtaining any required exemptive orders or other
regulatory approvals, the Underwriter may make payments to the Company or to
the underwriter for the Contracts if and in amounts agreed to by the
Under-writer in writing. Currently, no such payments are contemplated.
5.2 All expenses incident to performance by the Fund of this Agreement
shall be paid by the Fund to the extent permitted by law. All Fund shares
will be duly authorized for issuance and registered in accordance with
applicable federal law and to the extent deemed advisable by the Fund, in
accordance with applicable state law, prior
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to sale. The Fund shall bear the expenses for the cost of registration and
qualification of the Fund's shares, preparation and filing of the Fund's
prospectus and registration statement, Fund proxy materials and reports,
setting type, printing and distributing the prospectuses, the proxy materials
and reports to existing shareholders and contract owners, the preparation of
all statements and notices required by any federal or state law, all taxes on
the issuance or transfer of the Fund's shares, and any expenses permitted to
be paid or assumed by the Fund pursuant to a plan, if any, under Rule 12b-1
under the 1940 Act.
ARTICLE VI. DIVERSIFICATION
6.1 The Fund will at all times invest money from the Contracts in such
a manner as to ensure that the Contracts will be treated as variable
contracts under the Internal Revenue Code and regulations issued thereunder.
Without limiting the scope of the foregoing, the Fund will comply with
Section 817(h) of the Internal Revenue Code and Treasury Regulation 1.817-5,
relating to the diversification requirements for variable annuity, endowment,
or life insurance contracts and any amendments or other modifications to such
Section or Regulations. In the event of a breach of this Article VI by the
Fund, it will take all reasonable steps:
A. to notify the Company of such breach and
B. to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Treasury Regulation
1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1 The Board of Trustees of the Fund (the "Fund Board") will monitor
the Fund for the existence of any material irreconcilable conflict among the
interests of the contract owners of all separate accounts investing in the
Fund. Al 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;
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E. a difference in voting instructions given by participating
iInsurance companies or 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 Board shall promptly inform the
Company if it determines that an irreconcilable material
conflict exists and the implications thereof. A majority of
the Fund Board shall consist of persons who are not
"interested" persons of the Fund.
7.2 The Company has reviewed a copy of the Mixed and Shared Funding
Exemptive Order, and in particular, has reviewed the conditions to the
requested relief set forth therein. As set forth in the Mixed and Shared
Funding Exemptive Order, the Company will report any potential or existing
conflicts of which it is aware to the Fund Board. The Company agrees to
assist the Fund Board in carrying out its responsibilities under the Mixed
and Shared Funding Exemptive Order, by Providing the Fund Board with all
information reasonably necessary for the Fund Board to consider any issues
raised. This includes, but is not limited to, an obligation by the Company
to inform the Fund Board whenever contract owner voting instructions are
disregarded. The Fund Board shall record in its minutes or other appropriate
records, all reports received by it and all action with regard to a conflict.
7.3 If it is determined by a majority of the Fund Board, or a majority
of its disinterested Directors, that an irreconcilable material conflict
exists, the Company other participating insurance companies shall, at their
expense and tot he extent reasonable practicable (as determined by a majority
of the disinterested Directors), take whatever steps are necessary to remedy
or eliminate the irreconcilable material conflict, up to and including:
A. withdrawing the assets allocable to some or all of the
separate accounts from the Fund or any Portfolio and reinvesting such assets
in a different investment medium, including (but not limited to) another
Portfolio of the Fund, or submitting the question 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., variable
annuity contractowners or variable life insurance contractowners, 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 the Company's disregard of voting instructions could conflict
with the majority of a contract owner voting instructions, and the Company's
judgment
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represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Separate Account's
investment in the Fund and terminate this Agreement with respect to such
Separate Account. Any such withdrawal and termination shall take place
within six (6) months after written notice is given that this provision is
being implemented. Until such withdrawal and termination is implemented, the
Underwriter and Fund shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Fund. Such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of
disinterested Directors.
7.5 If a particular state insurance regulator's decision applicable to
the Company conflicts with the majority of other state insurance regulators,
then the Company will withdraw the Separate Account's investment in the Fund
and terminate this Agreement with respect to such Separate Account within six
(6) months after the Fund informs the Company in writing that it has
determined that such decision has created an irreconcilable material
conflict. Until such withdrawal and termination is implemented, the
Underwriter and the Fund shall continue to accept and implement orders by the
company for the purchase and redemption of shares of the Fund. Such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of
disinterested Directors.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Fund Board shall determine
whether any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund 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 any offer
to do so has been declined by vote of a majority of contractowners materially
adversely affected by and the irreconcilable material conflict.
7.7 The Company shall at least annually submit to the Fund Board such
reports, materials or data as the Fund Board may reasonably request so that
the Fund Board may fully carry out the duties imposed upon it as delineated
in the Mixed and Shared Funding Exemptive Order, and said reports, materials
and data shall be submitted more frequently if deemed appropriate by the Fund
Board.
7.8 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 Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Mixed and Shared Funding
Exemptive order, (a) the Fund 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; and (b) Sections 3.4,
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3.5, 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.
ARTICLE VIII. INDEMNIFICATION
8.1 Indemnification By The Company
A. The Company agrees to indemnify and hold harmless the Fund,
the Underwriter, and each of the Fund's or the Underwriter's directors,
officers, employees or agents and each person, if any, who controls the Fund
or the Underwriter within the meaning of such terms under the federal
securities laws (collectively, the "indemnified parties" for purposes of this
Section 8.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Company) or litigation (including reasonable legal and other expenses), to
which the indemnified parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the registration
statement, prospectus or statement of information for the Contracts or
contained in the Contracts or sales literature or other promotional material
for the Contracts (or any amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances in
which they were made; provided that this agreement to indemnify shall not
apply as to any indemnified party if such statement or omission or such
alleged statement or omission was made in reliance upon and in conformity
with information furnished to the Company by or on behalf of the Fund for use
in the registration statement, prospectus or statement of information for the
Contracts or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the Contracts
or Fund shares; or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Company (other than state or
representations contained in the Fund registration statement, Fund prospectus
or sales literature or other promotional material of the Fund not supplied by
the Company or persons under its control) or wrongful conduct of the Company
or persons under its control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund registration statement,
Fund
13
prospectus, statement of additional information or sales literature or other
promotional material of the Fund or any amendment thereof or supplement
thereto 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 a
statement or omission was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of the Company or persons
under its control; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials or to make any payments under the
terms of this Agreement; or
(v) arise out of 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 by the Company of this Agreement;
except to the extent provided in Sections 8.1(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Company may
otherwise have.
B. No party shall be entitled to indemnification if such loss,
claim, damage, liability or litigation is due to the willful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
C. The indemnified parties will promptly notify the Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the
operation of the Fund.
8.2 Indemnification By the Underwriter
A. The Underwriter, on its own behalf and on behalf of the Fund,
agrees to indemnify and hold harmless the Company and each of its directors,
officers, employees or agents and each person, if any, who controls the
Company within the meaning of such terms under the federal securities laws
(collectively, the "indemnified parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or litigation
(including reasonable legal and other expenses) to which the indemnified
parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement, prospectus or statement of additional information for the Fund or
sales literature or other promotional material of the Fund (or any amendment
or supplement to any of the
14
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 agreement to
indemnify shall not apply as to any indemnified party if such statement or
omission or such alleged statement or omission was made in reliance upon and
in conformity with information furnished to the Underwriter or Fund by or on
behalf of the Company for use in the registration statement, prospectus or
statement of additional information for the Fund or in sales literature of
the Fund (or any amendment or supplement thereto) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in the
Contracts or in the Contract or Fund registration statement, the Contract or
Fund prospectus, statement of additional information, or sales literature or
other promotional material for the Contracts or of the Fund not supplied by
the Underwriter or the Fund or persons under the control of the Underwriter
or the Fund respectively) or wrongful conduct of the Underwriter or the Fund
or persons under the control of the Underwriter or the Fund respectively,
with respect to the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, statement of additional information or sales literature or other
promotional material covering the Contracts (or any amendment thereof or
supplement thereto), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement or 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 to the Company by or on
behalf of the Underwriter or the Fund or persons under the control of the
Underwriter or the Fund; or
(iv) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms of this Agreement
(including a failure, whether unintentional or in good faith or otherwise, to
comply with the diversification requirements and procedures related thereto
specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter or the Fund in this
Agreement or arise out of or result from any other material breach of this
Agreement by the Underwriter or the Fund; except to the extent provided in
Sections 8.2(b) and 8.3 hereof. This indemnification shall be in addition to
any liability which the Underwriter may otherwise have.
15
B. No party shall be entitled to indemnification if such loss,
claim, damage, liability or litigation is due to the willful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
C. The indemnified parties will promptly notify the Underwriter
of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Contracts or the operation of the
Separate Account.
8.3. Indemnification Procedure
A. Any person obligation to provide indemnification under this
Article VIII ("indemnifying party" for the purpose of this Section 8.3) shall
not be liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification under
this Article VIII ("indemnified party" for the purpose of this Section 8.3)
unless such indemnified party shall have notified the indemnifying party in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon such indemnified party (or after such party shall have received notice
of such service on any designated agent), but failure to notify the
indemnifying party of any such claim shall not relieve the indemnifying party
from any liability which it may have to the indemnified party against whom
such action is brought under the indemnification provision of this Article
VIII, except to the extent that the failure to notify results in the failure
of actual notice to the indemnifying party and such indemnifying party is
damaged solely as a result of failure to give such notice. In case any such
action is brought against the indemnified party, the indemnifying party will
be entitled to participate, at its own expense, in the defense thereof. The
indemnifying party also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
indemnifying party to the indemnified party of the indemnifying party's
election to assume the defense thereof, 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 such 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, 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.
16
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.
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 State of Connecticut.
9.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
SEC may grant (including, but not limited to the Mixed and Shared Funding
Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. TERMINATION
10.1 This Agreement shall terminate:
A. at the option of any party upon six months advance written
notice to the other parties unless otherwise agreed in a separate written
agreement among the parties; or
B. at the option of the Company if shares of the Portfolios
delineated in Schedule Two are not reasonably available to meet the
requirements of the Contracts as determined by the Company; or
C. at the option of the Fund upon institutional 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
administration of the Contracts, the operation of the Separate Account, or
the purchase of the Fund shares, which would have a material adverse effect
on the Company's ability to perform its obligations under this Agreement; or
D. at the option of the Company upon institution of formal
proceedings against the Fund or the Underwriter by the NASD, the SEC, or any
state securities or insurance department or any other regulatory body, which
would have a material adverse effect on the Underwriter's or the Fund's
ability to perform its obligations under this Agreement; or
17
E. at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals or the vote of the contract owners having an
interest in the Separate Account (or any subaccount) to substitute the shares
of another investment company for the corresponding Portfolio shares of the
Fund in accordance with the terms of the Contracts for which those Portfolio
shares had been selected to serve as the underlying investment media. The
Company will give 30 days prior written notice to the Fund of the date of any
proposed vote or other action taken to replace the Fund's shares; or
F. at the option of the Company or the Fund upon a determination
by a majority of the Fund Board, or a majority of the disinterested Fund
Board members, that an irreconcilable material conflict exists among the
interests of (i) all contract owners of variable insurance products of all
separate accounts or (ii) the interests of the Participating Insurance
Companies investing in the Fund as delineated in Article VII of this
Agreement; or
G. at the option of the Company if the Fund ceases to qualify as
a Regulated Investment Company under Subchapter M of the Internal Revenue
Code, or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
H. at the option of the Company if the Fund fails to meet the
diversification requirements specified in Article VI hereof or if the Company
reasonably believes that the Fund will fail to meet such requirements; or
I. at the option of any party to this Agreement, upon another
party's material breach of any provision of this Agreement; or
J. at the option of the Company, if the Company determines in
its sole judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have a material
adverse impact upon the business and operations of the Company; or
K. at the option of the Fund or Underwriter, if the Fund or
Underwriter respectively, shall determine in its sole judgment exercised in
good faith, that the Company has suffered a material adverse change in its
business, operations or financial condition since the date of this Agreement
or is the subject of material adverse publicity which is likely to have a
material adverse impact upon the business and operations of the Fund or
Underwriter; or
18
L. subject to the Fund's compliance with Article VI hereof, at
the option of the Fund in the event any of the Contracts are not issued or
sold in accordance with applicable requirements of federal and/or state law.
Termination shall be effective immediately upon such occurrence without
notice.
10.2 Notice Requirement
A. In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice shall be given
in advance of the effective date of termination as required by such
provisions.
B. In the event that any termination of this Agreement is based
upon the provisions of Sections 10.1(b)-(d) or 10.1(g)-(i), prompt written
notice of the election to terminate this Agreement for cause shall be
furnished by the party terminating the Agreement to the non-terminating
parties, with said termination to be effective upon receipt of such notice by
the non-terminating parties.
C. In the event that any termination of this Agreement is based
upon the provisions of Sections 10.1(j) or 10.1(k), prior written notice of
the election to terminate this Agreement for cause shall be furnished by the
party terminating this Agreement to the non-terminating parties. Such prior
written notice shall be given by the party terminating this Agreement to the
non-terminating parties at least 30 days before the effective date of
termination.
10.3 It is understood and agreed that the right to terminate this
Agreement pursuant to Section 10.1(a) may be exercised for any reason or for
no reason.
10.4 Effect of Termination
A. Notwithstanding any termination of this Agreement pursuant to
Section 10.1 of this Agreement and subject to Section 1.3 of this Agreement,
the Company may require the Fund and the Underwriter to, continue to make
available additional shares of the Fund for so long after the termination of
this Agreement as the Company desires pursuant to the terms and conditions of
this Agreement as provided in paragraph B below, for all Contracts in effect
on the effective date of termination of this Agreement (hereinafter referred
to as "Existing Contracts"). Specifically, without limitation, the owners of
the Existing Contracts shall be permitted to reallocate investments in the
Fund, redeem investments in the Fund and/or invest in the Fund upon the
making of additional purchase payments under the Existing Contracts. The
parties agree that this Section 10.4 shall not apply to any terminations
under Article VII and the effect of such Article VII terminations shall be
governed by Article VII of this Agreement.
19
B. If shares of the Fund continue to be made available after
termination of this Agreement pursuant to this Section 10.4, the provisions
of this Agreement shall remain in effect except for Section 10.1(a) and
thereafter the Fund, the Underwriter, or the Company may terminate the
Agreement, as so continued pursuant to this Section 10.4, upon written notice
to the other party, such notice to be for a period that is reasonable under
the circumstances but need not be for more than 90 days.
10.5 Except as necessary to implement contract owner initiated or
approved transactions, or as required by state insurance laws or regulations,
the Company shall not redeem Fund Shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the
Separate Account), and the Company shall not prevent contract owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts, until 90 days after the Company shall have notified the Fund or
Underwriter of its intention to do so.
ARTICLE XI. NOTICES
A. Any notice shall be deemed duly given only if sent by hand,
evidenced by written receipt or by certified mail, return receipt requested,
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. All notices shall be deemed given three business days after the
date received or rejected by the addressee.
If to the Fund:
If to the Company
If to the Underwriter
ARTICLE XII. MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither the
Directors, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2 Subject to law and regulatory authority, each party hereto shall
treat as confidential all information reasonably identified as such in
writing by any other party hereto (including without limitation the names and
addresses of the owners of the Contracts) and, except as contemplated by this
Agreement, shall not disclose,
20
disseminate or utilize such confidential information until such time as it
may come into the public domain without the express prior written consent of
the affected party.
12.3 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.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5 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.
12.6 This Agreement shall not be assigned by any party hereto without
the prior written consent of all the parties.
12.7 Each party hereto shall cooperate with each 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.
12.8 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 when so executed and delivered this agreement
will be the valid and binding obligation of such party enforceable in
accordance with its terms.
12.9 The parties to this Agreement may amend the schedules to this
Agreement from time to time to reflect changes in or relating to the
Contracts, the Separate Accounts or the Portfolios of the Fund.
21
