QUALIFIED PLAN PARTICIPATION AND SHAREHOLDER SERVICES AGREEMENT
This Qualified Plan Participation and Shareholder Services Agreement (the
"Agreement") is dated as of June 24, 2005 by and between Hartford Life Insurance
Company, a stock life insurance company organized under the laws of Connecticut
(the "Firm"), and Ariel Distributors, Inc., an Illinois corporation ("Fund
Distributor").
WHEREAS, Fund Distributor serves as the distributor for several series of Ariel
Investment Trust, a registered investment company (the "Trust"), as set forth in
Exhibit A hereto (each a "Fund" and collectively the "Funds");
WHEREAS, the Firm issues certain group variable annuity contracts (the
"CONTRACTS") in connection with retirement plans intended to meet the
qualification requirements of Sections 403(b) or of the Internal Revenue Code of
1986, as amended (the "CODE");
WHEREAS, each Separate Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the Firm
under the insurance laws of the State of Connecticut to set aside and invest
assets attributable to the Contracts;
WHEREAS, the Firm and the Fund Distributor desire that shares of the Funds be
made available to the Separate Accounts to fund the Contracts and the Firm
provide certain shareholder, distribution and administrative services relating
to the Funds, including the receipt of orders for the purchase, exchange and
redemption of shares of the Funds ("Shares") (all such services shall be
hereinafter referred to as "Services");
WHEREAS, the Firm acts as (i) recordkeeper of employee benefit plans (the
"Plans");
WHEREAS, certain policies, procedures and information are necessary to enable
the Firm to purchase Shares for the benefit of the Separate Accounts; and
WHEREAS, the Firm is to receive compensation in consideration for the Firm's
performance of the Services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. SERVICES PROVIDED BY THE FIRM
a. The Firm agrees to perform the Services specified in Exhibit C
hereto, including providing for sales of Shares to, and related
servicing of, Separate Accounts, and receiving and transmitting
orders for the purchase, redemption and exchange of Shares
("Orders").
b. The Firm agrees to maintain and preserve all records as required by
law to be maintained and preserved in connection with providing the
Services, and will otherwise comply with all laws, rules and
regulations applicable to the Services. Upon the request of Fund
Distributor, and at Fund Distributor's expense, the Firm shall
provide copies of all the historical records relating to transactions
between a Fund and the Separate Accounts, written communications
regarding a Fund to or from the Plans, and any other materials, to
enable the Fund or its representatives, including without limitation
its
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auditors, investment adviser or transfer agent to monitor and review
the Services, or to comply with any request of a governmental body
or self-regulatory organization.
c. The Firm hereby agrees to promptly notify Fund Distributor if for
any reason it is unable to perform fully and promptly any of its
obligations with respect to the Funds under this Agreement.
d. In no way shall the provisions of the Agreement limit the authority
of the Trust to take such action as it may deem appropriate or
advisable in connection with all matters relating to the operations
of the Funds and the sale of shares.
e. Exhibit A lists the Funds offered as part of this Agreement. Exhibit
A may be amended unilaterally in writing by the Fund Distributor at
any time.
2. PURCHASES AND REDEMPTION OF FUND SHARES
a. The Fund Distributor agrees to sell to the Firm shares of the Funds
which the Firm orders on behalf of any Separate Account. For
purposes of this Section, the Firm shall be the designee of the Fund
for receipt of such orders from each Separate Account. Receipt by
such designee shall constitute receipt by the Fund; provided that
the Fund Distributor receives notice of such order via the National
Securities Clearing Corporation (the "NSCC") by 10:00 a.m. Eastern
Time on the next following Business Day. The Fund will receive all
orders to purchase shares of the Funds using the NSCC's Defined
Contribution Clearance & Settlement ("DCC&S") platform. The Fund
Distributor will also provide the Firm with account positions and
activity data using the NSCC's Networking platform. The Firm shall
pay for shares of the Funds by the scheduled close of federal funds
transmissions on the same Business Day it places an order to
purchase shares of the Funds in accordance with this section using
the NSCC's Fund/SERV System. Payment shall be in federal funds
transmitted by wire from the Fund's designated Settling Bank to the
NSCC. "BUSINESS DAY" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Fund calculates it net
asset value pursuant to the rules of the SEC. "NETWORKING" shall
mean the NSCC's product that allows Fund's and Companies to exchange
account level information electronically. "SETTLING BANK" shall mean
the entity appointed by the Fund to perform such settlement services
on behalf of the Fund and agrees to abide by the NSCC's Rules and
Procedures insofar as they relate to the same day funds settlement.
b. If the Firm is somehow prohibited from submitting purchase and
settlement instructions to the Fund Distributor for shares of the
Funds via the NSCC's DCC&S platform the following shall apply to this
Section:
The Fund Distributor agrees to sell the Firm those shares of the
Funds which the Firm orders on behalf of any 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
such order. For purposes of this Section, the Firm shall be the
designee of the Fund for the receipt of such orders from the
Separate Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund Distributor receives
notice of such order by 10:00 a.m. Eastern Time on the next
following Business Day. The Firm shall pay for shares of the Funds
by the scheduled close of federal funds transmissions on the same
Business Day it places an order to purchase shares of the Funds in
accordance with this section. Payment shall be in federal funds
transmitted by wire to the Fund's designated custodian.
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The Fund Distributor agrees to redeem for cash, upon the Firm's
request, any full or fractional shares of the Fund held by the Firm
on behalf of a Separate Account, 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, the Firm 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 Distributor receives notice
of such request for redemption via the NSCC by 10:00 a.m. Eastern
Time on the next following Business Day. The Fund will receive all
orders to redeem shares of the Funds using the NSCC's DCC&S
platform. The Fund will also provide the Firm with account positions
and activity data using the NSCC's Networking platform. Payment for
Fund shares redeemed shall be made in accordance with this section
using the NSCC's Fund/SERV System. Payment shall be in federal funds
transmitted by the NSCC to the Separate Account's Settling Bank as
designated by the Firm, on the same Business Day the Fund
Distributor receives notice of the redemption order from the Firm
provided that the Fund Distributor receives notice by 10:00 a.m.
Eastern Time on such Business Day.
c. If the Firm is somehow prohibited from submitting redemption and
settlement instructions to the Fund Distributor for shares of the
Funds via the NSCC's DCC&S platform the following shall apply to
this Section:
The Fund Distributor agrees to redeem for cash, upon the Firm's
request, any full or fractional shares of the Fund held by the Firm
on behalf of a Separate Account, 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, the Firm 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 Distributor receives notice
of such 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 Separate Account as designated by the
Firm, on the same Business Day the Fund Distributor receives notice
of the redemption order from the Firm provided that the Fund
Distributor receives notice by 10:00 a.m. Eastern Time on such
Business Day.
d. The Fund Distributor shall furnish prior day and same day notice to
the Firm of any income, dividends or capital gain distributions
payable on the Fund's shares. The Firm hereby elects to receive all
such dividends and distributions as are payable on shares of the
Funds in the form of additional shares of that Fund. The Fund shall
notify the Firm of the number of shares so issued as payment of such
dividends and distributions no later than one Business Day after
issuance. The Firm reserves the right to revoke this election and to
receive in cash all such dividends and distributions declared after
receipt of notice of revocation by the Fund.
e. The Fund Distributor shall make the net asset value per share of
each Series available to the Firm on a daily basis as soon as
reasonably practical after the close of trading each Business Day,
but in no event later than 6:30 p.m. Eastern time on such Business
Day.
If the Underwriter or the Fund provides materially incorrect share
net asset value information through no fault of the Company, the
Separate Accounts shall be entitled to an adjustment with respect to
the Series shares purchased or redeemed to reflect the correct net
asset value per share.
f. The determination of the materiality of any net asset value pricing
error and its correction shall be based on the SEC's recommended
guidelines regarding these errors. Any material error in the
calculation or reporting of net asset value per share, dividend or
capital gain information shall be reported promptly to the Firm upon
discovery. The Fund Distributor shall indemnify and hold
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harmless the Firm against any amount the Firm is legally required to
pay Contract Owners, participants or beneficiaries that have
selected a Fund as an investment option ("Contract owners"), and
which amount is due to the Fund's or its agents' material
miscalculation and/or incorrect reporting of or failure to report
the daily net asset value, dividend rate or capital gains
distribution rate. The Firm shall submit an invoice to the Trust or
its agents for such losses incurred as a result of the above which
shall be payable within sixty (60) days of receipt. Should a
material miscalculation by the Fund or its agents result in a gain
to the Firm, the Firm shall immediately reimburse the Fund or its
agents for any material losses incurred by the Fund or its agents as
a result of the incorrect calculation. Should a material
miscalculation by the Fund or its agents result in a gain to
Contract owners, the Firm will consult with the Fund or its designee
as to what reasonable efforts shall be made to recover the money and
repay the Fund or its agents. The Firm shall then make such
reasonable effort, at the expense of the Fund or its agents, to
recover the money and repay the Fund or its agents; but the Firm
shall not be obligated to take legal action against Contract owners.
With respect to the material errors or omissions described above, this section
shall control over other indemnification provisions in this Agreement.
3. NSCC FUND/SERV
a. If transactions in Shares are to be processed through the NSCC
Mutual Fund Settlement, Entry and Registration Verification
("Fund/SERV") system, then both the Firm and the Fund Distributor
will be bound by the terms of the Fund/SERV Agreement filed with the
NSCC. Without limiting the generality of the following provisions of
this section, the Firm, Fund Distributor and Funds' transfer agent
each will perform any and all duties, functions, procedures and
responsibilities assigned to it and as otherwise established by the
NSCC applicable to Fund/SERV and the Networking Matrix Level
("Networking") utilized.
b. Any information transmitted through Networking or through SunGard Mid
Atlantic ("SunGard"), as agent of the firm by any party to the other,
and pursuant to this Agreement, will be accurate, complete, and in
the format prescribed by the NSCC. Each party will adopt, implement
and maintain procedures reasonably designed to ensure the accuracy of
all transmissions through Networking and SunGard and to limit the
access to, and the inputting of data into, Networking and SunGard to
persons specifically authorized by such party.
c. For each omnibus account which shall hold shares for the Separate
Accounts, the Firm will provide Funds' transfer agent with all
information necessary or appropriate to establish and maintain the
omnibus account (and any subsequent changes to such information).
d. All information that is received by the Firm from a Fund for
inclusion in tax statements relating to a Separate Account will be
reported accurately, completely and in a timely manner by the Firm to
the Plan trustee, Plan sponsor or other entity responsible for tax
reporting.
e. The official Fund records of each omnibus account will be determined
by the Funds' transfer agent. The Firm and Fund Distributor will
reconcile any differences between these records. In the event of any
discrepancy between the records of the Firm and a Fund regarding an
omnibus account, the records of Fund will control pending resolution
of the discrepancy.
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4. REPRESENTATIONS AND WARRANTIES BY THE FIRM. The Firm hereby represents and
warrants that:
a. The parties agree that the Contracts are not intended to serve as
vehicles for frequent transfers among the Funds in response to
short-term stock market fluctuations. The Fund Distributor and the
Firm agree to cooperate to deter transfer activity in the Funds
where such activity occurs through the Contracts and has been
identified as abusive or following a "market timing" pattern
("Abusive Transfers").
b. Orders received before the close of the NYSE shall not be aggregated
with Orders received at or after the close of the NYSE.
c. Its internal systems for processing and transmitting orders are
designed to prevent Orders received at or after close of the NYSE
from being aggregated with Orders received before the close of the
NYSE and to prevent "market timing" transactions in violation of the
requirements of the Funds set forth in their prospectus.
d. It is authorized by applicable state and federal law to enter into,
and perform its obligations under, this Agreement.
5. RELATIONSHIP OF PARTIES. Except as specifically provided for in Section 1 of
this Agreement, nothing in this Agreement shall be deemed or construed to
constitute or create a partnership, association, or joint venture or agency
relationship between the Firm and the Fund Distributor.
6. TERMINATION. This Agreement may be terminated by either party upon 120 or
more day's written notice to the other party. This Agreement shall terminate
immediately if at any time it is found to create a violation of applicable state
or federal law.
7. LIMITATION OF LIABILITY. Neither party hereunder shall be liable to the
other for any special, indirect, incidental or consequential or similar
non-direct damages (including lost profits) that the other party may incur or
experience in connection with this agreement or the services to be provided
hereunder whether or not either party has been notified of the possibility of
such damages.
8. MISCELLANEOUS. The Firm shall promptly notify Fund Distributor of any name
changes, address changes, business combinations between the Firm and any other
third party, or other change that would cause any of the information about the
Firm contained in this Agreement to become inaccurate or out-of-date. Failure by
the Firm to promptly notify Fund Distributor of such changes may result in the
delay or non-payment of compensation due the Firm pursuant to this Agreement.
This Agreement shall not be amended except by written instrument signed by each
party. Neither party shall assign any of its rights, powers or duties under this
Agreement without the other parties' written consent (i) provided, however, that
such assignment may be made by a party to any entity which controls, is
controlled by or under common control with such party and that (ii) either party
(the "Delegating Party") may delegate its duties to an affiliate provided that
the Delegating Party shall remain primarily responsible for the performance of
such duties and the Delegating Party informs the other party hereto in writing
of such delegation. This Agreement may be executed in one or more counterparts,
each of which shall be an original and all of which together shall be deemed one
and the same document. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
9. COMPENSATION. The Firm shall receive compensation for its services at the
annual rate(s) set forth in Exhibit B. The Firm shall notify the Fund
Distributor or its designee in writing of the amount
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due and payable hereunder after the end of each calendar quarter, and shall
provide such documentation supporting its calculation as may be reasonably
requested by the Fund Distributor. Unless the Fund Distributor objects, it shall
pay or cause to be paid such fee to the Firm within 30 days after receiving
notice from the Firm of the amount due and payable. Please forward invoices to:
State Street Kansas City
000 Xxxxxxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxxx Xxxx
10. OTHER AGREEMENTS BY THE FIRM. It is agreed by the Firm that it shall not
knowingly propose the Funds to any Plan that is described in Section 457 of the
Internal Revenue Code. The Firm also agrees that as soon as practicable after
September 30th of each year, it will provide the Fund Distributor with the
number of Plans serviced by the Firm that are invested in the Funds.
11. CONFIDENTIALITY. The Firm and the Fund Distributor agree that all
non-public records, information, and data relating to the business of the other
(including customer names and information) that are exchanged or negotiated
pursuant to this Agreement or in carrying out this Agreement shall remain
confidential, and shall not be voluntarily disclosed by either party without the
prior written consent of the other party, except as may be required by law or by
such party to carry out this Agreement or an order of a court, governmental
agency or regulatory body.
12. NON-EXCLUSIVITY. Nothing in this Agreement shall be construed or is
intended to prohibit the Fund Distributor or the Funds from entering into
similar arrangements with other administrative or record-keeping firms. Nothing
in this Agreement shall be construed or is intended to prohibit the Firm from
entering into similar arrangements with any other person or entity regarding
other mutual funds or any other types of investments.
13. EXHIBITS AND SCHEDULES. All Exhibits and Schedules attached to this
Agreement, as they may be amended from time to time, are by this reference
incorporated into, and made a part of, this Agreement.
14. INDEMNIFICATION. Each party agrees to indemnify and hold harmless the other
party and its affiliates, directors, officers, employees and agents (the
"lndemnitees"), against any losses, claims, damages, liabilities or expenses to
which an Indemnitee may become subject insofar as those losses, claims, damages,
liabilities or expenses (or actions in respect thereof) directly arise out of or
are directly based upon (i) such party's violation of applicable law in
connection with the performance of its duties and obligations under this
Agreement, or (ii) any breach by such party of any material provision of this
Agreement. Such party will reimburse the Indemnitee for any legal or other
expenses reasonably incurred by him or her in connection with investigating or
defending such loss, claim or action. This indemnity agreement will be in
addition to any liability that the party may otherwise have.
15. PROSPECTUSES, SEMI-ANNUAL AND ANNUAL REPORTS. The Firm shall be responsible
for sending, in either paper or electronic form, Trust prospectuses to Plans
and/or participants who request them. The Fund Distributor shall provide the
Firm with a reasonable supply of printed copies of the Trust's current
prospectus, semi-annual or annual reports, not to exceed 5,000 copies of each
document per year. Thereafter, the Fund Distributor shall provide an electronic
copy of these documents. The maximum of 5,000 copies will be reviewed on a
periodic basis, as needed.
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16. SALES MATERIAL AND INFORMATION. The Firm shall furnish, or shall cause to be
furnished, to the Fund Distributor or its designee, each piece of sales
literature or other promotional material in which the Funds, their investment
adviser or the Fund Distributor is named, at least fifteen business days prior
to its use. No such materials shall be used until the Fund Distributor or its
designee approves such use in writing (which may be electronic), however, the
failure to object in writing within fifteen business days will be deemed
approval. Such approval process shall not apply to subsequent usage of materials
that are substantially similar to prior approved materials.
17. NOTICES. Any notice required or permitted under this Agreement shall be
given in writing and shall be addressed and delivered to:
To the Firm: To the Fund Distributor:
Hartford Life Insurance Company Ariel Distributors, Inc.
000 Xxxxxxxxx Xxxxxx 000 X. Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx Attn: Xxxxxxxxx X. Xxxxxx
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first set forth above.
FIRM: HARTFORD LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxx
-------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
FUND DISTRIBUTOR: ARIEL DISTRIBUTORS, INC.
By: /s/ Xxxxxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxxxxx X. Xxxxxx
Title: President
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EXHIBIT A
FUND TICKER
--------------------------------------------------------------------------------
Ariel Fund ARGFX
Ariel Appreciation Fund CAAPX
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EXHIBIT B
FEE ARRANGEMENT
The Funds and applicable annual fees are as follows:
FUND ANNUAL RATE OF FEE
--------------------------------------------------------------------------------
Ariel Fund 35 bps
Ariel Appreciation Fund 35 bps
Such fees shall be based upon the average daily net asset values of the Shares
outstanding in the Separate Accounts.
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EXHIBIT C
Pursuant to this Agreement, the Firm shall perform the following Services in
respect to the Shares and the participant accounts:
1. The Firm shall maintain a Single omnibus account for a Plan or group of
Plans or a group of participant accounts with the transfer agent of the
Fund on behalf of the Separate Account. Each such omnibus account shall be
in the name of the Firm or its nominee as the record owner of the Shares
owned. The Firm will maintain separate records for each participant.
2. Disburse or credit all proceeds of redemptions not reinvested.
3. Post dividends and/or capital gain distributions for each participant
account. The Fund Distributor or its designee is responsible for notifying
the Firm of the dividend, including the declaration date, record date,
dividend factor, payment date and NAV, and any other necessary dividend
information.
4. Prepare and transmit periodic statements showing the total participant
account balance as of the statement closing date, purchases and redemptions
by the participant during the period covered by the statement and the
dividends and other distributions paid during the statement period (whether
paid in cash or reinvested).
5. Transmit prospectuses, proxy materials, reports, and other information
required to be sent to Plans or participants pursuant to the federal
securities laws.
6. Create and transmit all forms and reports required to be sent to
participants pursuant to the federal tax laws.
7. Provide such other transfer agent services for participants as are deemed
necessary or advisable to ensure proper maintenance and servicing of each
participant account.
8. Provide for distribution-related services, including receiving and
transmitting orders for the purchase, redemption and exchange of Shares on
behalf of each Plan or Separate Accounts.
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