EXHIBIT (h)(3)
PARTICIPATION AGREEMENT
BY AND AMONG
FIRST AMERICAN INSURANCE PORTFOLIOS, INC.,
FIRST AMERICAN ASSET MANAGEMENT,
A DIVISION OF U.S. BANK NATIONAL ASSOCIATION,
AND
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS.
TABLE OF CONTENTS
DESCRIPTION PAGE
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Section 1. Available Funds 2
1.1 Availability 2
1.2 Addition, Deletion or Modification of Funds 2
1.3 No Sales to the General Public 2
Section 2. Processing Transactions 2
2.1 Timely Pricing and Orders 2
2.2 Timely Payments 3
2.3 Applicable Price 3
2.4 Dividends and Distributions 4
2.5 Book Entry 4
Section 3. Costs and Expenses 4
3.1 General 4
3.2 Registration 4
3.3 Other (Non-Sales-Related) 5
3.4 Parties To Cooperate 6
Section 4. Legal Compliance 6
4.1 Tax Laws 6
4.2 Insurance and Certain Other Laws 7
4.3 Securities Laws 7
4.4 Notice of Certain Proceedings and Other Circumstances 9
4.5 Company To Provide Documents; Information About
FAIP 10
4.6 FAIP To Provide Documents; Information About
Company 11
Section 5. Mixed and Shared Funding 12
5.1 General 12
5.2 Disinterested Directors 12
5.3 Monitoring for Material Irreconcilable Conflicts 13
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DESCRIPTION PAGE
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5.4 Conflict Remedies 13
5.5 Notice to Company 15
5.6 Information Requested by Board of Directors 15
5.7 Compliance with SEC Rules 15
5.8 Other Requirements 15
Section 6. Termination 15
6.1 Events of Termination 15
6.2 Notice Requirement for Termination 17
6.3 Funds To Remain Available 17
6.4 Survival of Warranties and Indemnifications 17
6.5 Continuance of Agreement for Certain Purposes 18
Section 7. Parties To Cooperate Respecting Termination 18
Section 8. Assignment 18
Section 9. Notices 18
Section 10. Voting Procedures 19
Section 11. Foreign Tax Credits 20
Section 12. Indemnification 20
12.1 Of FAIP and the Advisor by Company 20
12.2 Of Company by FAIP and Advisor 22
12.3 Effect of Notice 25
12.4 Successors 25
Section 13. Applicable Law 25
Section 14. Execution in Counterparts 25
Section 15. Severability 25
Section 16. Rights Cumulative 26
Section 17. Headings 26
Section 18. Confidentiality 26
Section 19. Parties to Cooperate 27
Section 20. Amendments 27
Section 21. Assignment 27
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PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the _____ day of _________,
2000 ("Agreement"), by and among First American Insurance Portfolios, Inc., a
Minnesota corporation ("FAIP"); First American Asset Management, a division of
U.S. Bank National Association, a national banking association organized and
existing under the laws of the United States of America (the "Advisor"); and
Hartford Life and Annuity Insurance Company, a Connecticut life insurance
company ("Company"), on behalf of itself and each of its segregated asset
accounts listed in Schedule A hereto, as the parties hereto may amend said
Schedule A from time to time (each, an "Account," and collectively, the
"Accounts") (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, FAIP is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, FAIP currently consists of three separate series ("Series"),
shares ("Shares") of each of which are registered under the Securities Act of
1933, as amended (the "1933 Act") and may be sold to one or more separate
accounts of life insurance companies to fund benefits under variable annuity
contracts and variable life insurance contracts; and
WHEREAS, FAIP will make Shares of each Series listed on Schedule A
hereto as the Parties hereto may amend said Schedule A from time to time (each a
"Fund"; reference herein to "Fund" includes reference to each Fund, to the
extent the context requires) available for purchase by the Accounts; and
WHEREAS, Company will be the issuer of certain variable annuity
contracts and variable life insurance contracts ("Contracts") as set forth on
Schedule A hereto, as the Parties hereto may amend said Schedule A from time to
time, which Contracts, if required by applicable law, will be registered under
the 1933 Act; and
WHEREAS, Company will fund the Contracts through the Accounts, each of
which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
WHEREAS, Company will serve as the depositor of the Accounts, each of
which is registered as a unit investment trust investment company under the 1940
Act (or exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Contracts will be registered as securities under the 1933 Act
(or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, Company intends to purchase Shares in one or more of the Funds on
behalf of the Accounts to fund the Contracts.
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NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
FAIP will make Shares of each Fund available to Company for purchase
and redemption on behalf of the Accounts at net asset value and with no sales
charges, subject to the terms and conditions of this Agreement. The Board of
Directors of FAIP may refuse to sell Shares of any Fund to any person, or
suspend or terminate the offering of Shares of any Fund if such action is
required by law or by regulatory authorities having jurisdiction or if, in the
sole discretion of the Board of Directors acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, such action
is deemed in the best interests of the shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
FAIP represents and warrants that Shares of the Funds have been and
will be sold only to variable annuity separate accounts and variable life
insurance separate accounts of participating insurance companies for the purpose
of funding variable annuity contracts or variable life insurance policies and no
Shares of the Funds have been or will be sold to the general public.
Notwithstanding this, under Treas. Reg. 1.817-5(f)(3)(ii), shares may be held by
the Advisor in connection with the creation of FAIP (or by a person related to
the Advisor in a manner specified in Section 267(d) of the Code).
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) FAIP or its designated agent will use its best efforts to
provide Company with the net asset value per Share for each
Fund by 5:00 p.m. Central Time on each Business Day. As used
herein, "Business Day" shall mean any day on which (i) the New
York Stock Exchange is open for regular trading, and (ii) on
which FAIP calculates the Fund's net asset value pursuant to
the rules of the SEC.
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(b) Company will use the data provided by FAIP each Business Day
pursuant to paragraph (a) immediately above to calculate
Account unit values and to process transactions that receive
that same Business Day's Account unit values. Company will
perform such Account processing the same Business Day, and
will place corresponding orders to purchase or redeem Shares
with FAIP by 9:00 a.m. Central Time the following Business
Day; provided, however, that FAIP shall provide additional
time to Company in the event that FAIP is unable to meet the
5:00 p.m. time stated in paragraph (a) immediately above. Such
additional time shall be no more than the additional time that
FAIP took to make the net asset values available to Company.
(c) With respect to payment of the purchase price by Company and
of redemption proceeds by FAIP, Company and FAIP shall net
purchase and redemption orders with respect to each Fund and
shall transmit one total net payment for all Funds in
accordance with Section 2.2, below.
(d) If FAIP provides materially incorrect Share net asset value
information (as determined under SEC guidelines and the net
asset value error policy as approved by the Board of Directors
of FAIP), Company shall be entitled to an adjustment to the
number of Shares purchased or redeemed to reflect the correct
net asset value per Share. Any material error in the
calculation or reporting of net asset value per Share,
dividend or capital gain information shall be reported
promptly upon discovery to Company. If an Account, due to such
error has received amounts in excess of the amounts to which
it is entitled, the Company, when requested by FAIP or the
Advisor, shall make adjustments to the Account to reflect the
change in the values of the Shares as reflected in the unit
values of the affected contract owners who still have values
in the Funds.
2.2 TIMELY PAYMENTS.
Company will wire payment in federal funds for net purchases to a
custodial account designated by Fund by 1:00 p.m. Central Time on the same day
as the order for Shares is placed, to the extent practicable. FAIP will wire
payment for net redemptions in federal funds to an account designated by Company
by 1:00 p.m. Central Time on the same day as the order is placed.
Notwithstanding the foregoing, if the payment of redemption proceeds would
require the Fund to dispose of portfolio securities or otherwise incur
substantial additional costs, and if the Fund has determined to settle
redemption transactions for all shareholders on a delayed basis, proceeds in
federal funds shall be wired after the date the order is placed, but in any
event within three (3) calendar days after the date the order is placed in order
to enable Company to pay redemption proceeds within the time specified in
Section 22(e) of the 1940 Act or such shorter period of time as may be required
by law.
2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and all other
Participant transactions
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under Contracts (collectively, "Contract transactions") that
Company receives prior to the close of regular trading on the
New York Stock Exchange on a Business Day will be executed at
the net asset values of the appropriate Funds next computed
after receipt by Fund or its designated agent of the orders.
For purposes of this Section 2.3(a), Company shall be the
designated agent of FAIP for receipt of orders relating to
Contract transactions on each Business Day and receipt by such
designated agent shall constitute receipt by FAIP, provided
that FAIP receives notice of such orders by 9:00 a.m. Central
Time on the next following Business Day, or such later time as
computed in accordance with Section 2.1(b) hereof.
(b) Share purchases and redemptions by Company not received by
FAIP in accordance with Section 2.3(a) hereof, will be
effected at the net asset values of the appropriate Funds next
computed after receipt by FAIP of the order therefor, and such
orders will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
FAIP will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to Company of any income dividends
or capital gain distributions payable on the Shares of any Fund. Company hereby
elects to reinvest all dividends and capital gains distributions in additional
Shares of the corresponding Fund at the ex-dividend date net asset values until
Company otherwise notifies FAIP in writing, it being agreed by the Parties that
the ex-dividend date and the payment date with respect to any dividend or
distribution will be the same business day. Company reserves the right to revoke
this election and to receive all such income dividends and capital gain
distributions in cash.
2.5 BOOK ENTRY.
Issuance and transfer of FAIP Shares will be by book entry only. Stock
certificates will not be issued to Company. Shares ordered from FAIP will be
recorded in an appropriate title for Company, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.
3.2 REGISTRATION.
(a) FAIP will bear the cost of its registering as a management
investment company under the 1940 Act and registering its
Shares under the 1933 Act, and keeping such registrations
current and effective; including, without limitation, the
preparation of and filing with the SEC of Forms N-SAR and
Rule 24f-2 Notices
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with respect to FAIP and its Shares and, to the extent
required, payment of all applicable registration or filing
fees with respect to any of the foregoing.
(b) Company will bear the cost of registering, to the extent
required, each Account as a unit investment trust under the
1940 Act and registering units of interest under the Contracts
under the 1933 Act and keeping such registrations current and
effective; including, without limitation, the preparation and
filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with
respect to each Account and its units of interest and payment
of all applicable registration or filing fees with respect to
any of the foregoing.
3.3 OTHER (NON-SALES-RELATED).
(a) FAIP will provide camera-ready film or computer diskettes
containing the Funds' prospectus, statement of additional
information, reports to shareholders and, as required, other
communications to shareholders, for Company to print and
distribute to prospective and existing Contract owners.
(i) The Company, at its expense, will print and
distribute the Contract prospectuses for use with
prospective Contract owners.
(ii) The Company will print and deliver prospectuses,
statements of additional information, reports to
shareholders and other shareholder communications to
existing Contract owners and FAIP will pay that part
of the expense of printing and delivery of such
materials attributable to FAIP's prospectuses, FAIP's
statements of additional information, FAIP's reports
to shareholders and other FAIP shareholder
communications.
(iii) The Company may elect upon 10 (ten) days notice that,
in lieu of camera-ready film or computer diskettes
containing the Funds' prospectus, statement of
additional information, reports to shareholders or
other communications to shareholders, that FAIP, at
its expense, will provide as many printed copies of
such shareholder information as Company may
reasonably request to deliver, at FAIP's expense, to
existing Contract owners.
(b) The Company may elect to print prospectuses, statements of
additional information and reports to shareholders in
combination with other fund companies' prospectuses,
statements of additional information, and reports.
(c) FAIP, at its expense, will provide the Company with as many
printed copies of its proxy solicitations as may be required
to deliver to existing Contract owners. The Company, at FAIP's
expense, will distribute proxy materials in accordance with
the procedures set forth in Section 10 hereof.
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(d) Unregistered separate accounts subject to the Employee
Retirement Income Security Act of 1974 ("ERISA") will refrain
from voting shares for which no instructions are received if
such shares are held subject to the provisions of ERISA.
3.4 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of FAIP and the Accounts.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) FAIP and the Advisor represent and warrant (i) that each Fund
is currently qualified as a regulated investment company
("RIC") under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), and (ii) that they will
maintain qualification of each Fund as a RIC. FAIP and the
Advisor will notify Company immediately upon having a
reasonable basis for believing that a Fund has ceased to so
qualify or that it might not so qualify in the future.
(b) FAIP and the Advisor represent and warrant that, at all times,
each Fund will comply with the diversification requirements
set forth in Section 817(h) of the Code and Section 1.817-5(b)
of the regulations under the Code. FAIP and the Advisor will
notify Company immediately upon having a reasonable basis for
believing that a Fund has ceased to so comply or that a Fund
might not so comply in the future. In the event a Fund ceases
to comply, FAIP and the Advisor will take all reasonable steps
to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Section 1.817-5 of the
regulations under the Code.
(c) The Parties hereto agree that if the Internal Revenue Service
("IRS") asserts, in connection with any governmental audit or
review of Company, FAIP or the Advisor, that any Fund has
failed to comply with the diversification requirements of
Section 817(h) of the Code and Section 1.817-5(b) of the
regulations under the Code, or if a Party otherwise becomes
aware of any facts that could give rise to any claim against
Company, FAIP or the Advisor as a result of such failure or
alleged failure to comply with these requirements:
(i) Such Party shall promptly notify the other Parties of
such potential claims;
(ii) The Parties shall consult with each other as to how
to minimize any liability that may arise as a result
of such failure or alleged failure; and
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(iii) The Parties shall provide each other with reasonable
access to books and records related to any such
failure or alleged failure, and shall provide any
written materials provided to the IRS associated with
any proceedings arising out of any such failure or
alleged failure.
(d) Company represents and warrants that the Contracts, upon
issuance, will be treated as annuity contracts or life
insurance contracts under applicable provisions of the Code
and that it will maintain such treatment. Company will notify
FAIP immediately upon having a reasonable basis for believing
that any of the Contracts have ceased to be treated as annuity
contracts or life insurance contracts under applicable
provisions of the Code or that they might not be so treated in
the future.
(e) Company represents and warrants that each Account is a
"segregated asset account" and that interests in each Account
are offered exclusively through the purchase of or transfer
into a "variable contract," within the meaning of such terms
under Section 817 of the Code and the regulations thereunder.
Company will notify FAIP immediately upon having a reasonable
basis for believing that such requirements have ceased to be
met or that they might not be met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) FAIP will comply with any applicable state insurance laws or
regulations, to the extent specifically requested in writing
by Company, including, the furnishing of information not
otherwise available to Company which is required by state
insurance law to enable Company to obtain the authority needed
to issue the Contracts in any applicable state.
(b) Company represents and warrants that (i) it is an insurance
company duly organized, validly existing and in good standing
under the laws of the State of Connecticut and has full
corporate power, authority and legal right to execute, deliver
and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established
and maintains each Account as a segregated asset account under
Connecticut Insurance Law and the regulations thereunder, and
(iii) the Contracts comply in all material respects with all
other applicable federal and state laws and regulations.
(c) FAIP and the Advisor represent and warrant that FAIP is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Minnesota and has full
power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this
Agreement.
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4.3 SECURITIES LAWS.
(a) Company represents and warrants that (i) interests in each
Account pursuant to the Contracts will be registered under the
1933 Act to the extent required by the 1933 Act, (ii) the
Contracts will be duly authorized for issuance and sold in
compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the
1940 Act and Connecticut law, (iii) each Account is and will
remain registered under the 1940 Act, to the extent required
by the 1940 Act, (iv) each Account does and will comply in all
material respects with the requirements of the 1940 Act and
the rules thereunder, to the extent required, (v) each
Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all
times comply in all material respects with the requirements of
the 1933 Act and the rules thereunder, (vi) Company will amend
the registration statement for its Contracts under the 1933
Act and for its Accounts under the 1940 Act from time to time
as required in order to effect the continuous offering of its
Contracts or as may otherwise be required by applicable law,
and (vii) each Account Prospectus will at all times comply in
all material respects with the requirements of the 1933 Act
and the rules thereunder.
(b) Company will at its expense register and qualify the Contracts
for sale in accordance with the laws of any state or other
jurisdiction if and to the extent reasonably deemed advisable
by Company.
(c) FAIP represents and warrants that (i) Shares sold pursuant to
this Agreement will be registered under the 1933 Act to the
extent required by the 1933 Act and duly authorized for
issuance and sold in compliance with Minnesota law, (ii) FAIP
is and will remain registered under the 1940 Act to the extent
required by the 1940 Act, (iii) FAIP will amend the
registration statement for its Shares under the 1933 Act and
itself under the 1940 Act from time to time as required in
order to effect the continuous offering of its Shares, (iv)
FAIP does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, (v)
FAIP's 1933 Act registration statement, together with any
amendments thereto, will at all times comply in all material
respects with the requirements of the 1933 Act and rules
thereunder, and (vi) FAIP's Prospectus will at all times
comply in all material respects with the requirements of the
1933 Act and the rules thereunder.
(d) FAIP will at its expense register and qualify its Shares for
sale in accordance with the laws of any state or other
jurisdiction if and to the extent reasonably deemed advisable
by FAIP.
(e) FAIP 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 reserves the right to make such
payments in the future. To the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1, FAIP
undertakes
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to have its Board of Directors, a majority of whom are not
"interested" persons of FAIP, formulate and approve any plan
under Rule 12b-1 to finance distribution expenses.
(f) FAIP represents and warrants that all of its directors,
officers, employees, investment advisers, and other
individuals/entities having access to the Funds and/or
securities of the Funds are and continue to be at all times
covered by a blanket fidelity bond or similar coverage for the
benefit of the Funds 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.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) FAIP will immediately notify Company of (i) the issuance by
any court or regulatory body of any stop order, cease and
desist order, or other similar order with respect to FAIP's
registration statement under the 1933 Act or FAIP Prospectus,
(ii) any request by the SEC for any amendment to such
registration statement or Fund Prospectus that may affect the
offering of Shares of FAIP, (iii) the initiation of any
proceedings for that purpose or for any other purpose relating
to the registration or offering of FAIP's Shares, or (iv) any
other action or circumstances that may prevent the lawful
offer or sale of Shares of any Fund in any state or
jurisdiction, including, without limitation, any circumstances
in which (a) such Shares are not registered and, in all
material respects, issued and sold in accordance with
applicable state and federal law, or (b) such law precludes
the use of such Shares as an underlying investment medium of
the Contracts issued or to be issued by Company. FAIP will
make every reasonable effort to prevent the issuance, with
respect to any Fund, of any such stop order, cease and desist
order or similar order and, if any such order is issued, to
obtain the lifting thereof at the earliest possible time.
(e) Company will immediately notify FAIP of (i) the issuance by
any court or regulatory body of any stop order, cease and
desist order, or other similar order with respect to each
Account's registration statement under the 1933 Act relating
to the Contracts or each Account Prospectus, (ii) any request
by the SEC for any amendment to such registration statement or
Account Prospectus that may affect the offering of Shares of
FAIP, (iii) the initiation of any proceedings for that purpose
or for any other purpose relating to the registration or
offering of each Account's interests pursuant to the
Contracts, or (iv) any other action or circumstances that may
prevent the lawful offer or sale of said interests in any
state or jurisdiction, including, without limitation, any
circumstances in which said interests are not registered and,
in all material respects, issued and sold in accordance with
applicable state and federal law. Company will make every
reasonable effort to prevent the issuance of any such stop
order, cease and desist order or similar order and, if any
such order is issued, to obtain the lifting thereof at the
earliest possible time.
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4.5 COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT FAIP.
(a) Company will provide to FAIP or its designated agent at least
one (1) complete copy of all SEC registration statements,
Account Prospectuses, reports, any preliminary and final
voting instruction solicitation material, applications for
exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to each Account or the
Contracts, contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
(b) Company will provide to FAIP or its designated agent at least
one (1) complete copy of each piece of sales literature or
other promotional material in which FAIP or any of its
affiliates is named, at least ten (10) Business Days prior to
its use or such shorter period as the Parties hereto may, from
time to time, agree upon. No such material shall be used if
FAIP or its designated agent objects to such use within ten
(10) Business Days after receipt of such material or such
shorter period as the Parties hereto may, from time to time,
agree upon.
(c) Neither Company nor any of its affiliates, will give any
information or make any representations or statements on
behalf of or concerning FAIP or its affiliates in connection
with the sale of the Contracts other than (i) the information
or representations contained in the registration statement,
including the FAIP Prospectus contained therein, relating to
Shares, as such registration statement and FAIP Prospectus may
be amended from time to time; or (ii) in reports or proxy
materials for FAIP; or (iii) in published reports for FAIP
that are in the public domain and approved by FAIP for
distribution; or (iv) in sales literature or other promotional
material approved by FAIP, except with the express written
permission of FAIP.
(d) Company shall adopt and implement procedures reasonably
designed to ensure that information concerning FAIP and its
affiliates that is intended for use only by brokers or agents
selling the Contracts (i.e., information that is not intended
for distribution to Participants) ("broker only materials") is
so used, and neither FAIP nor any of its affiliates shall be
liable for any losses, damages or expenses relating to the
improper use of such broker only materials.
(e) For the purposes of this Section 4.5, 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, (e.g., on-line networks such as the
Internet or other electronic messages), 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
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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 the NASD rules, the 1933 Act
or the 0000 Xxx.
4.6 FAIP TO PROVIDE DOCUMENTS; INFORMATION ABOUT COMPANY.
(a) FAIP will provide to Company at least one (1) complete copy of
all SEC registration statements, FAIP Prospectuses, reports,
any preliminary and final proxy material, applications for
exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to FAIP or the Shares of a
Fund, contemporaneously with the filing of such document with
the SEC or other regulatory authorities.
(b) FAIP will provide to Company camera ready or computer diskette
copies of all FAIP shareholder communication information
(including prospectuses, statements of additional information
and reports to shareholders) pursuant to Section 3.3. FAIP
will provide such information to Company in a timely manner so
as to enable Company, as the case may be, to print and
distribute such materials within the time required by law to
be furnished to Participants.
(c) FAIP will provide to Company or its designated agent at least
one (1) complete copy of each piece of sales literature or
other promotional material in which Company, or any of its
respective affiliates is named, or that refers to the
Contracts, at least ten (10) Business Days prior to its use or
such shorter period as the Parties hereto may, from time to
time, agree upon. No such material shall be used if Company or
its designated agent objects to such use within ten (10)
Business Days after receipt of such material or such shorter
period as the Parties hereto may, from time to time, agree
upon. Company shall receive all such sales literature until
such time as it appoints a designated agent by giving notice
to FAIP in the manner required by Section 9 hereof.
(d) Neither FAIP nor any of its affiliates will give any
information or make any representations or statements on
behalf of or concerning Company, each Account, or the
Contracts other than (i) the information or representations
contained in the registration statement, including each
Account Prospectus contained therein, relating to the
Contracts, as such registration statement and Account
Prospectus may be amended from time to time; or (ii) in
published reports for the Account or the Contracts that are in
the public domain and approved by Company for distribution; or
(iii) in sales literature or other promotional material
approved by Company or its affiliates, except with the express
written permission of Company.
(e) FAIP and Advisor shall adopt and implement procedures
reasonably designed to ensure that information concerning
Company, and its respective affiliates that is intended for
use only by brokers or agents selling the Contracts (i.e.,
information that is not intended for distribution to
Participants) ("broker only materials") is so
11
used, and neither Company, nor any of its respective
affiliates shall be liable for any losses, damages or expenses
relating to the improper use of such broker only materials.
(f) For purposes of this Section 4.6, 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,
(e.g., on-line networks such as the Internet or other
electronic messages), 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 the NASD rules, the 1933 Act or the 1940
Act.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
FAIP has applied to the SEC for an order exempting it from certain
provisions of the 1940 Act and rules thereunder so that FAIP may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with Company,
and trustees of qualified pension and retirement plans (collectively, "Mixed and
Shared Funding"). The Parties recognize that the SEC may impose terms and
conditions for such orders that are substantially identical to many of the
provisions of this Section 5. FAIP hereby notifies Company that it intends to
include in the Fund Prospectus disclosure regarding the potential risks of Mixed
and Shared Funding.
5.2 DISINTERESTED DIRECTORS.
FAIP agrees that a majority of the Board of Directors of FAIP ("Board")
will consist of persons who are not "interested persons" of the Company, as
defined by Section 2(a)(19) of the 1940 Act and the rules thereunder and as
modified by any applicable orders of the SEC ("Disinterested Directors"), except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies may be filled by the Board; (b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
12
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
FAIP agrees that its Board of Directors will monitor the Funds for the
existence of any material irreconcilable conflict between the interests of the
Participants in all separate accounts of life insurance companies utilizing FAIP
("Participating Insurance Companies"), including each Account, and of
participants in qualified retirement and pension plans investing in the Funds
("Participating Plans") and determine what action, if any, should be taken in
response to such conflicts. A material irreconcilable conflict may arise for a
variety of reasons, including:
(a) an action by any state insurance or other 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 Fund are being
managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or
by Participants in Participating Plans;
(f) a decision by a Participating Insurance Company to disregard
the voting instructions of Participant; or
(g) a decision by a Participating Plan to disregard the voting
instructions of its Participants.
Consistent with the SEC's requirements in connection with exemptive
orders of the type referred to in Section 5.1 hereof, FAIP and Company will
report any potential or existing conflicts to the Board and will be responsible
for assisting the Board in carrying out its responsibilities under these
conditions by providing the Board with all information reasonably necessary for
the Board to consider any issues raised. This responsibility includes, but is
not limited to, an obligation of Company to inform the Board whenever it has
determined to disregard Participant voting instructions. Company agrees that
such responsibilities will be carried out with a view only to the interests of
Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the
members of the Board of Directors or a majority of its
Disinterested Directors that a material irreconcilable
conflict exists, Company will, if it is a Participating
Insurance Company for which a material irreconcilable conflict
is relevant, at its own expense and to the extent reasonably
practicable (as determined by a majority of the Disinterested
Directors), take whatever steps are necessary to remedy or
eliminate the material irreconcilable conflict, which steps
may include, but are not limited to:
13
(i) withdrawing the assets allocable to some or all of
the Accounts from FAIP or any Fund and reinvesting
such assets in a different investment medium,
including another Fund of FAIP, or submitting the
question whether such segregation should be
implemented to a vote of all affected Participants
and, as appropriate, segregating the assets of any
particular group (e.g., variable annuity contract
owners or variable life insurance contract owners)
that votes in favor of such segregation, or offering
to the affected contract owners the option of making
such a change; and
(ii) establishing a new registered management investment
company or a new separate account that is operated as
a management company.
(b) If the material irreconcilable conflict arises because of
Company's decision to disregard Participants' voting
instructions and that decision represents a minority position
or would preclude a majority vote, Company may be required, at
FAIP's election, to withdraw each Account's investment in FAIP
or any Fund. No charge or penalty will be imposed as a result
of such withdrawal. Any such withdrawal must take place within
six (6) months after FAIP gives notice to Company that this
provision is being implemented, and until such withdrawal FAIP
shall continue to accept and implement orders by Company for
the purchase and redemption of Shares of FAIP.
(c) If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to
Company conflicts with the majority of other state regulators,
then Company will withdraw each Account's investment in FAIP
within six (6) months after FAIP's Board of Directors informs
Company that it has determined that such decision has created
a material irreconcilable conflict, and until such withdrawal
FAIP shall continue to accept and implement orders by Company
for the purchase and redemption of Shares of FAIP. No charge
or penalty will be imposed as a result of such withdrawal.
(d) Company agrees that any remedial action taken by it in
resolving any material irreconcilable conflict will be carried
out at its expense and with a view only to the interests of
Participants.
(e) For purposes hereof, a majority of the Disinterested Directors
will determine whether or not any proposed action adequately
remedies any material irreconcilable conflict. In no event,
however, will FAIP or any of its affiliates be required to
establish a new funding medium for any Contracts. Company will
not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been
declined by vote of a majority of Participants materially
adversely affected by the material irreconcilable conflict.
14
(f) The Board's determination of the existence of a material
irreconcilable conflict and its implications will be made
known promptly and in writing to all Participants.
5.5 NOTICE TO COMPANY.
FAIP will promptly make known in writing to Company the Board of
Directors' determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
Company and FAIP (or the Advisor) will, upon request, submit to the
Board of Directors of FAIP such reports, materials or data as the Board of
Directors may reasonably request so that the Board of Directors may fully carry
out the obligations imposed upon it by the provisions hereof or any exemptive
order granted by the SEC to permit Mixed and Shared Funding, and said reports,
materials and data will be submitted at any reasonable time deemed appropriate
by the Board of Directors. All reports received by the Board of Directors of
potential or existing conflicts, and all Board of Directors actions with regard
to determining the existence of a conflict, notifying Participating Insurance
Companies and Participating Plans of a conflict, and determining whether any
proposed action adequately remedies a conflict, will be properly recorded in the
minutes of the Board of Directors or other appropriate records, and such minutes
or other records will be made available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES.
If and to the extent that Rules 6e-2 and 6e-3(T) under the 1940 Act are
amended (or if Rule 6e-3 under the 1940 Act is adopted) to provide exemptive
relief from any provision of the 1940 Act, or the rules thereunder, with respect
to mixed or shared funding on terms and conditions materially different from any
exemptions granted in the order obtained by FAIP, then FAIP and/or Company, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, to the extent applicable.
5.8 OTHER REQUIREMENTS.
FAIP will require that each Participating Insurance Company and
Participating Plan enter into an agreement with FAIP that contains in substance
the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b),
4.5(a), 5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a
Fund:
15
(a) at the option of any Party, with or without cause with respect
to the Fund, upon six (6) months advance written notice to the
other Parties, unless otherwise agreed to in writing by the
Parties; or
(b) at the option of FAIP upon institution of formal proceedings
against Company or any of its affiliates by the NASD, the SEC,
any state insurance regulator or any other regulatory body
regarding Company's obligations under this Agreement or
related to the sale of the Contracts, the operation of any
Account, or the purchase of Shares, if, in each case, FAIP
reasonably determines that such proceedings, or the facts on
which such proceedings would be based, have a material
likelihood of imposing material adverse consequences on the
Fund with respect to which the Agreement is to be terminated;
or
(c) at the option of Company upon institution of formal
proceedings against FAIP, its principal underwriter, or its
investment adviser by the NASD, the SEC, or any state
insurance regulator or any other regulatory body regarding
FAIP's obligations under this Agreement or related to the
operation or management of FAIP or the purchase of Fund
Shares, if, in each case, Company reasonably determines that
such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material
adverse consequences on Company, or the Subaccount
corresponding to the Fund with respect to which the Agreement
is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's
Shares are not registered and, in all material respects,
issued and sold in accordance with any applicable federal or
state law, or (ii) such law precludes the use of such Shares
as an underlying investment medium of the Contracts issued or
to be issued by Company; or
(e) upon termination of the corresponding Subaccount's investment
in the Fund pursuant to Section 5 hereof; or
(f) at the option of Company if the Fund ceases to qualify as a
RIC under Subchapter M of the Code or under successor or
similar provisions, or if the Company reasonably believes that
the Fund may fail to so qualify or comply; or
(g) at the option of Company if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar
provisions, or if the Company reasonably believes that the
Fund may fail to so qualify or comply; or
(h) at the option of FAIP if the Contracts issued by Company cease
to qualify as annuity contracts or life insurance contracts
under the Code (other than by reason of the Fund's
noncompliance with Section 817(h) or Subchapter M of the
Code), or if FAIP reasonably believes that the Contracts
issued by Company may fail to so qualify or comply; or
16
(i) at the option of FAIP if interests in an Account under the
Contracts are not registered, where required, and, in all
material respects, are not issued or sold in accordance with
any applicable federal or state law, or if FAIP reasonably
believes that the interests in an Account under the Contracts
are not registered, issued, or sold in accordance with any
applicable federal and state law.
(j) upon another Party's material breach of any provision of this
Agreement.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until the
Party terminating this Agreement gives prior written notice to the other Parties
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions
of Sections 6.1(a) or 6.1(e) hereof, such prior written notice
shall be given at least six (6) months in advance of the
effective date of termination unless a shorter time is agreed
to by the Parties hereto;
(b) in the event that any termination is based upon the provisions
of Sections 6.1(b) or 6.1(c) hereof, such prior written notice
shall be given at least sixty (60) days in advance of the
effective date of termination unless a shorter time is agreed
to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions
of Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h), 6.1(i) or 6.1(j)
hereof, such prior written notice may be given at any time
after the terminating Party learns of the event causing
termination to be required.
6.3 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, FAIP will, at the
option of Company, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"), unless such further sale of shares of the
Fund is proscribed by law, regulation of applicable regulating body.
Specifically, without limitation, the owners of the Existing Contracts will 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 6.3 will not apply
to any terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of
this Agreement.
17
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund
pursuant to Sections 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h),
6.1(i) or 6.1(j) hereof, this Agreement shall nevertheless continue in effect as
to any Shares of that Fund that are outstanding as of the date of such
termination (the "Initial Termination Date"). This continuation shall extend to
the date as of which an Account owns no Shares of the affected Fund (the "Final
Termination Date").
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance to
one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto. Such steps may include combining the affected Account
with another Account, substituting other mutual fund's shares for those of the
affected Fund, or otherwise terminating participation by the Contracts in such
Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the
written consent of each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted by Section 9 hereof
will be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
FIRST AMERICAN INSURANCE PORTFOLIOS, INC.
000 Xxxxxx Xxxxxx South, MPFP 1816
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxx Xxxxxx, Senior Vice President
FIRST AMERICAN ASSET MANAGEMENT
A DIVISION OF U.S. BANK NATIONAL ASSOCIATION
000 Xxxxxx Xxxxxx South, MPFP 1816
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxx Xxxxxx, Vice President
18
cc: FIRST AMERICAN ASSET MANAGEMENT
A DIVISION OF U.S. BANK NATIONAL ASSOCIATION
000 Xxxxxx Xxxxxx South, MPFP 2016
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxxxxxx X. Xxxxx, General Counsel
Hartford Life and Annuity Insurance Company
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxx Xxxxx, President
cc: Hartford Life and Annuity Insurance Company
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Xxxxxx, General Counsel
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3
hereof, Company will distribute all proxy material furnished by FAIP to
Participants to whom pass-through voting privileges are required to be extended
and will solicit voting instructions from Participants. Company will vote Shares
in accordance with timely instructions received from Participants. Company will
vote Shares that are (a) not attributable to Participants to whom pass-through
voting privileges are extended, or (b) attributable to Participants, but for
which no timely instructions have been received, in the same proportion as
Shares for which said instructions have been received from Participants, so long
as and to the extent that the SEC continues to interpret the 1940 Act to require
pass through voting privileges for Participants. Neither Company nor any of its
affiliates will in any way recommend action in connection with or oppose or
interfere with the solicitation of proxies for the Shares held for such
Participants. Company reserves the right to vote shares held in any Account in
its own right, to the extent permitted by law. Company shall be responsible for
assuring that each of its Accounts holding Shares calculates voting privileges
in a manner consistent with that of other Participating Insurance Companies or
in the manner required by the Mixed and Shared Funding exemptive order obtained
by FAIP. FAIP will notify Company of any changes of interpretations or
amendments to Mixed and Shared Funding exemptive order it has obtained. FAIP
will comply with all provisions of the 1940 Act requiring voting by
shareholders, and in particular, FAIP either will provide for annual meetings
(except insofar as the SEC may interpret Section 16 of the 1940 Act not to
require such meetings) or will comply with Section 16(c) of the 1940 Act
(although Fund is not one of the trusts described in Section 16(c) of that Act)
as well as with
19
Sections 16(a) and, if and when applicable, 16(b). Further, FAIP will act in
accordance with the SEC's interpretation of the requirements of Section 16(a)
with respect to periodic elections of directors and with whatever rules the SEC
may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
FAIP agrees to consult in advance with Company concerning any decision
to elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF FAIP AND THE ADVISOR BY COMPANY
(a) Except to the extent provided in Sections 12.1(b), 12.1(c),
and 12.1(d), hereof, Company agrees to indemnify and hold
harmless FAIP and the Advisor, and each person, if any, who
controls FAIP within the meaning of Section 15 of the 1933 Act
and each of its directors and officers, (collectively, the
"Indemnified Parties" for purposes of this Section 12.1)
against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent
of Company) or actions in respect thereof (including, to the
extent reasonable, legal and other expenses), to which the
Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise; provided, the Account
owns or at the relevant time owned shares of the Funds and
insofar as such losses, claims, damages, liabilities or
actions and are related to the sale or acquisition of Fund
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in any Account's 1933 Act registration
statement, any Account Prospectus, the Contracts, or
sales literature or advertising 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; 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 in writing to Company by or on behalf of
FAIP specifically for use in any Account's 1933 Act
registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising or
otherwise for use in connection with the sale of
Contracts or Shares (or any amendment or supplement
to any of the foregoing) or was consented to by FAIP
pursuant to Section 4.5(c); or
(ii) arise out of or as a result of any other statements
or representations (other than statements or
representations contained in FAIP's 1933 Act
20
registration statement, FAIP Prospectus, sales
literature or advertising of FAIP, or any amendment
or supplement to any of the foregoing, not supplied
for use therein by or on behalf of Company or its
affiliates and on which such persons have reasonably
relied) or the negligent, illegal or fraudulent
conduct of Company or its affiliates or persons under
their control (including, without limitation, their
employees and "Associated Persons," as that term is
defined in paragraph (m) of Article I of the NASD's
By-Laws), in connection with the sale or distribution
of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in FAIP's 1933 Act registration statement,
FAIP Prospectus, sales literature or advertising of
FAIP, 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 if such a statement or omission was
made in reliance upon and in conformity with
information furnished in writing to FAIP or its
affiliates by or on behalf of Company or its
affiliates specifically for use in FAIP's 1933 Act
registration statement, FAIP Prospectus, sales
literature or advertising of FAIP, or any amendment
or supplement to any of the foregoing or was
consented to by Company pursuant to Section 4.6 (d);
or
(iv) arise as a result of any failure by Company to
perform the obligations, provide the services and
furnish the materials required of them under the
terms of this Agreement, or any material breach of
any representation and/or warranty made by Company in
this Agreement or arise out of or result from any
other material breach of this Agreement by Company;
or
(v) arise as a result of failure by the Contracts issued
by Company to qualify as annuity contracts or life
insurance contracts under the Code, otherwise than by
reason of any Fund's failure to comply with
Subchapter M or Section 817(h) of the Code.
(b) Company shall not be liable under this Section 12.1 with
respect to any losses, claims, damages, liabilities or actions
to which an Indemnified Party would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence
in the performance by that Indemnified Party of its duties or
by reason of that Indemnified Party's reckless disregard of
obligations or duties under this Agreement;
(c) Company shall not be liable under this Section 12.1 with
respect to any action against an Indemnified Party unless the
Indemnified Party shall have notified Company in writing
within a reasonable time after the summons or other first
legal process giving information of the nature of the action
shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received
21
notice of such service on any designated agent), but failure
to notify Company of any such action shall not relieve Company
from any liability which they may have to the Indemnified
Party against whom such action is brought unless the ability
of Company to defend such action is materially impaired
thereby, except as otherwise provided herein, in case any such
action is brought against an Indemnified Party, Company shall
be entitled to participate, at their own expense, in the
defense of such action and also shall be entitled to assume
the defense thereof, with counsel approved by the Indemnified
Party named in the action, which approval shall not be
unreasonably withheld. After notice from Company to such
Indemnified Party of Company's election to assume the defense
thereof (which shall include, without limitation, the conduct
of any ruling request or closing agreement or offer settlement
proceeding with the IRS), the Indemnified Party will cooperate
fully with Company and shall bear the fees and expenses of any
additional counsel retained by it, and Company will not be
liable to such Indemnified Party under this Agreement for any
legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense
thereof, other than reasonable costs of investigation.
(d) In no event shall the Company be liable under the
indemnification provisions contained in this Agreement to any
Indemnified Party with respect to any losses, claims, damages,
liabilities or expenses that arise out of or result from (i) a
breach of any representation, warranty, and/or covenant made
by FAIP or Advisor hereunder; (ii) the failure by FAIP to
qualify as a legally and validly established corporation under
applicable state law and as duly registered under the 1940
Act; or (iii) the failure by FAIP or Advisor to maintain the
qualification of any Fund under Subchapter M of the Code or
Section 817 of the Code.
12.2 OF COMPANY BY FAIP AND ADVISOR
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), hereof, FAIP and the Advisor agree to indemnify and
hold harmless Company, its affiliates, and each person, if
any, who controls Company or its affiliates within the meaning
of Section 15 of the 1933 Act and each of their respective
directors and officers, (collectively, the "Indemnified
Parties" for purposes of this Section 12.2) against any and
all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of FAIP) or
actions in respect thereof (including, to the extent
reasonable, legal and other expenses), to which the
Indemnified Parties may become subject under any statute,
regulation, at common law, or otherwise; provided, insofar as
such losses, claims, damages, liabilities or actions are
related to the sale or acquisition of FAIP's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in FAIP's 1933 Act registration statement,
FAIP Prospectus or sales literature or advertising of
FAIP (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
22
material fact required to be stated therein or
necessary to make the statements therein not
misleading; 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 in writing
to FAIP or its affiliates by or on behalf of Company
or its affiliates specifically for use in FAIP's 1933
Act registration statement, FAIP Prospectus, or in
sales literature or advertising or otherwise for use
in connection with the sale of Contracts or Shares
(or any amendment or supplement to any of the
foregoing) or was consented to by Company pursuant to
Section 4.6(d); or
(ii) arise out of or as a result of any other statements
or representations (other than statements or
representations contained in any Account's 1933 Act
registration statement, any Account Prospectus, sales
literature or advertising for the Contracts, or any
amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of FAIP or
its affiliates and on which such persons have
reasonably relied) or the negligent, illegal or
fraudulent conduct of FAIP or its affiliates or
persons under their control (including, without
limitation, their employees and "Associated Persons"
as that Term is defined in Section (ee) of Article 1
of the NASD By-Laws), in connection with the sale or
distribution of FAIP Shares; or
(iii) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature
or advertising covering 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, if such statement or omission was made in
reliance upon and in conformity with information
furnished in writing to Company or its affiliates by
or on behalf of FAIP or its affiliates specifically
for use in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature
or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing or
was consented to by FAIP pursuant to Section 4.5(c);
or
(iv) arise as a result of any failure by FAIP or the
Advisor to perform the obligations, provide the
services and furnish the materials required of it
under the terms of this Agreement, or any material
breach of any representation and/or warranty made by
FAIP or the Advisor in this Agreement or arise out of
or result from any other material breach of this
Agreement by FAIP or the Advisor.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, FAIP and the Advisor agree to indemnify and
hold harmless the Indemnified
23
Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof
with, the written consent of FAIP) or actions in respect
thereof (including, to the extent reasonable, legal and other
expenses) to which the Indemnified Parties may become subject
directly or indirectly under any statute, at common law or
otherwise, insofar as such losses, claims, damages,
liabilities or actions directly or indirectly result from or
arise out of the failure of any Fund to operate as a regulated
investment company in compliance with (i) Subchapter M of the
Code and regulations thereunder, or (ii) Section 817(h) of the
Code and regulations thereunder, including, without
limitation, any income taxes and related penalties, rescission
charges, liability under state law to Participants asserting
liability against Company pursuant to the Contracts, the costs
of any ruling and closing agreement or other settlement with
the IRS, and the cost of any substitution by Company of Shares
of another investment company or portfolio for those of any
adversely affected Fund as a funding medium for each account
that Company reasonably deems necessary or appropriate as a
result of the noncompliance.
(c) FAIP and the Advisor shall not be liable under this Section
12.2 with respect to any losses, claims, damages, liabilities
or actions to which an Indemnified Party would otherwise be
subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance by that Indemnified Party of its
duties or by reason of such Indemnified Party's reckless
disregard of its obligations and duties under this Agreement.
(d) FAIP and the Advisor shall not be liable under this Section
12.2 with respect to any action against an Indemnified Party
unless the Indemnified Party shall have notified FAIP in
writing within a reasonable time after the summons or other
first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify
FAIP of any such action shall not relieve FAIP from any
liability which it may have to the Indemnified Party against
whom such action is brought unless the ability of Company to
defend such action is materially impaired thereby, except as
otherwise provided herein, in case any such action is brought
against an Indemnified Party and/or FAIP will be entitled to
participate, at its own expense, in the defense of such action
and also shall be entitled to assume the defense thereof
(which shall include, without limitation, the conduct of any
ruling request and closing agreement or other settlement
proceeding with the IRS), with counsel approved by the
Indemnified Party named in the action, which approval shall
not be unreasonably withheld. After notice from FAIP to such
Indemnified Party of FAIP's election to assume the defense
thereof, the Indemnified Party will cooperate fully with FAIP
and shall bear the fees and expenses of any additional counsel
retained by it, and FAIP will not be liable to such
Indemnified Party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party
independently in connection with the defense thereof, other
than reasonable costs of investigation.
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(e) In no event shall FAIP and the Advisor be liable under the
indemnification provisions contained in this Agreement to any
Indemnified Party, with respect to any losses, claims,
damages, liabilities or expenses that arise out of or result
from (i) a breach of any representation, warranty, and/or
covenant made by Company; (ii) the failure by Company to
maintain its segregated asset account (which invests in any
Fund) as a legally and validly established segregated asset
account under applicable state law and as a duly registered
unit investment trust under the provisions of the 1940 Act
(unless exempt therefrom); or (iii) the failure by Company to
maintain its variable annuity or life insurance contracts
(with respect to which any Fund serves as an underlying
funding vehicle) as annuity contracts or life insurance
contracts under applicable provisions of the Code other than
where such failure arises from the Funds' non-compliance with
Subchapter M of the Code or Section 817 of the Code.
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1(c) or 12.2(d) above of participation in or control
of any action by the indemnifying Party will in no event be deemed to be an
admission by the indemnifying Party of liability, culpability or responsibility,
and the indemnifying Party will remain free to contest liability with respect to
the claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of
the indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Minnesota law, without regard for that state's
principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
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SECTION 16. RIGHTS CUMULATIVE
The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, that the Parties are entitled to under federal and state
laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
SECTION 18. CONFIDENTIALITY
FAIP and the Advisor acknowledge that the identities of the customers
of Company or any of its affiliates (collectively, the "Company Protected
Parties" for purposes of this Section 18), information maintained regarding
those customers, and all computer programs and procedures or other information
developed by the Company Protected Parties or any of their employees or agents
in connection with Company's performance of its duties under this Agreement are
the valuable property of the Company Protected Parties. FAIP agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the Company Protected Parties' customers, or any other
information or property of the Company Protected Parties, other than such
information as may be independently developed or compiled by FAIP from
information supplied to it by the Company Protected Parties' customers who also
maintain accounts directly with FAIP, FAIP will hold such information or
property in confidence and refrain from using, disclosing or distributing any of
such information or other property except: (a) with Company's prior written
consent; or (b) as required by law or judicial process. Company acknowledges
that the identities of the customers of FAIP or any of its affiliates
(collectively the "FAIP Protected Parties" for purposes of this Section 18),
information maintained regarding those customers, and all computer programs and
procedures or other information developed by the FAIP Protected Parties or any
of their employees or agents in connection with FAIP's performance of its duties
under this Agreement are the valuable property of the FAIP Protected Parties.
Company agrees that if it comes into possession of any list or compilation of
the identities of or other information about the FAIP Protected Parties'
customers or any other information or property of the FAIP Protected Parties,
other than such information as may be independently developed or compiled by
Company from information supplied to it by the FAIP Protected Parties' customers
who also maintain accounts directly with Company, Company will hold such
information or property in confidence and refrain from using, disclosing or
distributing any of such information or other property except: (a) with FAIP's
prior written consent; or (b) as required by law or judicial process. Each party
acknowledges that any breach of the agreements in this Section 18 would result
in immediate and irreparable harm to the other parties for which there would be
no adequate remedy at law and agree that in the event of such a breach, the
other parties will be entitled to equitable relief by way of temporary and
permanent injunctions, as well as such other relief as any court of competent
jurisdiction deems appropriate.
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SECTION 19. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including, without limitation, the
SEC, the NASD and state insurance regulators) and will permit each other and
such authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
SECTION 20. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner
except by a written agreement executed by all parties hereto.
SECTION 21. ASSIGNMENT
This Agreement may not be assigned without the prior written consent of
all parties hereto.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers signing below.
FIRST AMERICAN INSURANCE
PORTFOLIOS, INC.
By
---------------------------------------
Its
------------------------------------
FIRST AMERICAN ASSET MANAGEMENT,
a division of U.S. Bank National
Association
By
---------------------------------------
Its
------------------------------------
HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
By
---------------------------------------
Its
------------------------------------
27
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
* First American Insurance Portfolios, Inc.:
Large Cap Growth Portfolio
Technology Portfolio
International Portfolio
SEPARATE ACCOUNTS UTILIZING THE FUNDS
* Hartford Life and Annuity Insurance Company Separate Account One
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
* Contract Form # LAVA99
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