FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st of October, 1998, by and among
HARTFORD LIFE INSURANCE COMPANY, a stock life insurance company organized under
the laws of Connecticut (hereinafter the "Company"), on its own behalf and on
behalf of each separate account of the Company set forth in Schedule A hereto,
as may be amended from time to time (each such account hereinafter referred to
as a "Separate Account"), FRANKLIN MUTUAL SERIES FUND INC., an open-end
diversified management investment company organized under the laws of Maryland
(hereinafter the "Fund"), and FRANKLIN/XXXXXXXXX DISTRIBUTORS, INC., a New York
corporation (hereinafter the "Underwriter").
WITNESSETH:
WHEREAS, beneficial interests in the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Fund is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (hereinafter the "1940
Act") and its shares are registered under the Securities Act of 1933, as amended
(hereinafter the "1933 Act"); and
WHEREAS, the Company issues certain group variable annuity contracts (the
"Contracts") in connection with pension or profit-sharing plans intended to meet
the qualification requirements of Section 401 of the Internal Revenue Code of
1986, as amended (the "Code"); and
WHEREAS, each Separate Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company under the insurance laws of the State of Connecticut to set aside and
invest assets attributable to the Contracts; and
WHEREAS, Franklin Mutual Advisers, Inc. (the "Adviser") is the investment
adviser of the Portfolios of the Fund and is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and any applicable state securities laws; and
WHEREAS, the Underwriter is the principal underwriter for the Fund and is
registered as a broker-dealer with the Securities and Exchange Commission
(hereinafter the "SEC") under the Securities Exchange Act of 1934, as amended
(hereinafter the "1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in the Portfolios set forth in Schedule A
on behalf of each corresponding Separate Account set forth on such Schedule A to
fund the Contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as the Separate Accounts at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund
and the Underwriter agree as follows:
ARTICLE I. Purchase and Redemption of Fund Shares.
1.1 The Fund and the Underwriter agree to sell to the Company those shares of
the Portfolios which the Company 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 1.1, the Company shall be the designee of the Fund for
receipt of such orders from each Separate Account and receipt by such designee
shall constitute receipt by the Fund; provided that the Fund or the Underwriter
receives notice of such order by 9:00 a.m. Eastern Time on the next following
Business Day. The Company shall pay for Portfolio shares by the scheduled close
of federal funds transmissions on such next following Business Day after it
places an order to purchase Portfolio shares in accordance with this Section and
the Company shall be liable for any loss to the Underwriter or the Fund in any
way arising from a cancellation or adjustment caused by the Company's failure to
pay for such shares by such close of federal funds transmissions; provided,
however, such liability of the Company shall not exceed the applicable increase
in share net asset value between the net asset value next determined after the
order was received and the net asset value next determined after the federal
funds payment for such order is received by the Fund's designated custodian.
Payment shall be in federal funds transmitted by wire to the Fund's designated
custodian. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Fund calculates its net asset
value pursuant to the rules of the SEC.
1.2 The Fund and the Underwriter agree to make shares of the Portfolios
available indefinitely for purchase at the applicable net asset value per share
by the Company on Business Days; provided, however, that the Board of Trustees
or Directors, as applicable, of the Fund (hereinafter the "Trustees/Directors")
may refuse to sell shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such action is required by
law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Trustees/Directors, acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of any Portfolio.
1.3 The Fund and the Underwriter agree to redeem for cash, upon the Company's
request, any full or fractional shares of the Fund held by the Company on behalf
of a Separate Account, executing such requests on a daily basis at the net asset
value next computed after
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receipt and acceptance by the Fund or its designee of the request for
redemption. For purposes of this Section 1.3, the Company shall be the designee
of the Fund for receipt of requests for redemption from each Separate Account
and receipt by such designee shall constitute receipt by the Fund; provided the
Fund or the Underwriter receives notice of such request for redemption by 9:00
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
Company, on the same Business Day the Fund or the Underwriter receives notice of
the redemption order from the Company provided that the Fund or the Underwriter
receives the notice by 9:00 am. Eastern Time on such Business Day.
1.4 The Company agrees to purchase and redeem the shares of the Portfolios
named in Schedule A offered by the then current prospectus of the Fund in
accordance with the provisions of the applicable prospectus.
1.5. The Company will place separate orders to purchase or redeem shares of
each Portfolio. Each order shall describe the net amount of shares and dollar
amount of each Portfolio to be purchased or redeemed.
1.6 Issuance and transfer of the Fund's shares will be by book entry only.
Share certificates will not be issued to the Company or any Separate Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Separate Account or the appropriate subaccount of
each Separate Account. The Company will create and maintain records of
transactions in Contracts and shares of the Fund and all other records required
by the Advisers Act and other applicable laws, rules and regulations. The
Company will provide the Fund, the Underwriter and the Adviser with access to
its records for transactions in Contracts related to the Fund and the purchase
and redemption by the Separate Accounts of shares of the Fund.
1.7 The Underwriter shall furnish notice as soon as reasonably practicable to
the Company of any income, dividends or capital gain distributions payable on
the Fund's shares. The Company hereby elects to receive all such dividends and
distributions as are payable on a Portfolio's shares in the form of additional
shares of that Portfolio. The Fund shall notify the Company of the number of
shares so issued as payment of such dividends and distributions. The Company
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.
1.8 The Underwriter shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 6:30 p.m., Eastern Time.
1.9 If the Underwriter provides incorrect share net asset value information
through no fault of the Company, the Company shall be entitled to an adjustment
with respect to the Fund
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shares purchased or redeemed to reflect the correct net asset value per share.
Any error in the calculation or reporting of net asset value per share, dividend
or capital gain information shall be reported promptly to the Company upon
discovery.
1.10 If the Company provides incorrect processing information through no fault
of the Fund, the Underwriter and the Adviser, the Fund shall be entitled to an
adjustment with respect to the Fund shares purchased or redeemed to reflect the
correct information. Any error in the information provided by the Company shall
be reported to the Fund, the Underwriter and the Adviser promptly upon
discovery.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will be
registered unless exempt and that it will maintain such registration under the
1933 Act to the extent required by the 1933 Act; that the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws. The Company further represents and warrants that it is
an insurance company duly organized and in good standing under applicable law
and that it has legally and validly established each Separate Account prior to
any issuance or sale of Contracts, shares or other interests therein, as a
segregated asset account under the insurance laws of the State of Connecticut
and has registered or, prior to any issuance or sale of the Contracts, will
register and will maintain the registration of each Separate Account as a unit
investment trust in accordance with and to the extent required by the provisions
of the 1940 Act, unless exempt therefrom, to serve as a segregated investment
account for the Contracts. Unless exempt, the Company shall amend its
registration statement for its Contracts under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
Contracts. The Company shall register and qualify the Contracts for sale in
accordance with securities laws of the various states only if and to the extent
deemed necessary by the Company.
2.2 The Fund and the Underwriter represent and warrant that (i) Fund shares
sold pursuant to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with applicable law and that the Fund is
and shall remain registered under the 1940 Act for as long as the Fund shares
are sold; (ii) the Fund shall amend the registration statement for its shares
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares; and (iii) the Fund shall register
and qualify its shares for sales in accordance with the laws of the various
states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3 The Fund represents that each Portfolio (a) is currently qualified as a
Regulated Investment Company under Subchapter M of the Code; (b) will make every
effort to maintain such qualification (under Subchapter M or any successor or
similar provision); and (c) will notify the Company immediately upon having a
reasonable basis for believing that such Portfolio has ceased to so qualify or
might not so qualify in the future.
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2.4 To the extent that the Fund finances distribution expenses pursuant to Rule
12b-1 under the 1940 Act, the Fund represents that its Board of Trustees or
Directors, as applicable, including a majority of its Trustees/Directors who are
not interested persons of the Fund, have formulated and approved a plan under
Rule 12b-1 to finance distribution expenses.
2.5 The Fund makes no representation as to whether any aspect of its operations
(including, but not limited to, fees and expenses and investment policies)
complies with the insurance laws or insurance regulations of the various states.
2.6 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance in all material respects with all applicable federal and state
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 0000 Xxx.
2.7 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will comply in all
material respects with applicable provisions of the 0000 Xxx.
2.8 The Fund represents and warrants that all of its Trustees/Directors,
officers, employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Fund in an amount not less than the minimal coverage as required by Rule
17g-1 under the 1940 Act or related provisions as may be promulgated from time
to time. The aforesaid Bond includes coverage for larceny and embezzlement and
is issued by a reputable bonding company.
2.9 The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities dealing with the
money and/or securities of the Fund are covered by a blanket fidelity bond or
similar coverage in an amount not less than $5 million. The aforesaid includes
coverage for larceny and embezzlement and is issued by a reputable bonding
company.
2.10 The foregoing representations and warranties shall he made, by the party
hereto that makes the representation or warranty as of the date first written
above and at the time of each purchase and each sale of the Fund's shares
pursuant to this Agreement.
ARTICLE III. Prospectuses; Reports and Proxy Statements; Voting
3.1 The Fund shall provide the Company at no charge with as many printed copies
of the Fund's current prospectus and statement of additional information as the
Company may reasonably request. If requested by the Company, in lieu of
providing printed copies of the Fund's current prospectus and statement of
additional information, the Fund may provide
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camera-ready film, computer diskettes or e-mail transmissions containing the
Fund's prospectus and statement of additional information, and such other
assistance as is reasonably necessary in order for the Company once each year
(or more frequently if the prospectus and/or statement of additional information
for the Fund hare amended during the year) to have the prospectus for the
Contracts and the Fund's prospectus printed together in one document or
separately. The Company may elect to print the Fund's prospectus and/or its
statement of additional information in combination with other fund companies'
prospectuses and statements of additional information.
3.2(a). The Fund shall provide the Company at no charge with copies of the
Fund's proxy statements, Fund reports to shareholders, and other Fund
communications (except for prospectuses and statements of additional
information, which are covered in Section 3.2(a) above) to shareholders in such
quantity as the Company shall reasonably require for distributing to Contract
owners. Neither the Fund nor the Underwriter shall pay any costs of distributing
such proxy-related material, reports to shareholders, and other communications
to prospective Contract owners.
3.2(b). The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of typesetting, printing or distributing any of
the foregoing documents other than those actually distributed to existing
Contract owners or, with respect to prospective customers, as permitted under
any Rule 12b-1 plan of the Fund.
3.3. The Fund's statement of additional information shall be obtainable by
Contract owners from the Fund, the Underwriter, the Company or such other person
as the Fund may designate.
3.4 If and to the extent required by law the Company shall distribute all proxy
material furnished by the Fund to Contract owners to whom voting privileges are
required to be extended and shall:
A. solicit voting instructions from Contract owners;
B. vote the Fund shares held in the Separate Account in accordance with
instructions received from Contract owners; and
C. so long as and to the extent that the SEC continues to interpret the 1940
Act to require pass through voting privileges for variable annuity contract
owners, vote Fund shares held in the Separate Account for which no timely
instructions have been received, in the same proportion as Fund shares of such
Portfolio for which instructions have been received from the Company's Contract
owners. The Company reserves the right to vote Fund shares held in any
segregated asset account for its own account, to
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the extent permitted by law. Notwithstanding the foregoing, with respect to the
Fund shares held by unregistered Separate Accounts that issue Contracts issued
in connection with employee benefit plans subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended, the Company shall
vote such Fund shares allocated to such Contracts only in accordance with the
Company's agreements with such Contract owners.
3.5 The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders. The Fund will not hold annual meetings but will hold such
special meetings as may be necessary from time to time. Further, the Fund will
act in accordance with the SEC interpretation of the requirements of Section
16(a) with respect to periodic elections of directors or trustees and with
whatever rules the SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the Fund, the
Underwriter or their designee, each piece of sales literature or other
promotional material prepared by the Company or any person contracting with the
Company in which the Fund, the Adviser or the Underwriter is described, at least
ten Business Days prior to its use. No such literature or material shall be used
without prior approval from the Fund, the Underwriter or their designee.
4.2 Neither the Company nor any person contracting with the Company shall give
any information or make any representations or statements on behalf of the Fund
or concerning the Fund in connection with the sale of the Contracts other than
the information or representations contained in the registration statement or
prospectus for the Fund shares, as such registration statement and prospectus
may be amended or supplemented from time to time, or in reports to shareholders
or proxy statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee, except with the permission of the
Fund or its designee.
4.3 The Fund shall furnish, or shall cause to be furnished, to the Company or
its designee, each piece of sales literature or other promotional material in
which the Company or any Separate Account is named, at least ten Business Days
prior to its use. No such material shall be used without prior approval from the
Company.
4.4 Neither the Fund nor the Underwriter shall give any information or make any
representations on behalf of the Company or concerning the Company, each
Separate Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Separate Account which are in
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the public domain or approved by the Company for distribution to Contract owners
or participants, or in sales literature or other promotional material approved
by the Company, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one complete copy of all
prospectuses, statements of additional information, reports to shareholders,
proxy statements, and all amendments to any of the above, that relate to the
Fund or its shares, promptly after the filing of such document with the SEC or
other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
prospectuses, statements of additional information, reports, solicitations for
voting instructions, and all amendments to any of the above, that relate to the
investment in a Separate Account or Contract, contemporaneously with the filing
of such document with the SEC or other regulatory authorities.
4.7 For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, Internet, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, electronic mail, 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.
4.8 The Company agrees and acknowledges that the Company has no right, title or
interest in the names and marks of the Fund, Xxxxxxxx, Xxxxxxxx/Xxxxxxxxx or
Xxxxxxxxx and that all use of any designation comprised in whole or part or such
names or marks under this Agreement shall inure to the benefit of the Fund and
the Underwriter. Except as provided in Section 4.1, the Company shall not use
any such names or marks on its own behalf or on behalf of a Separate Account in
connection with marketing the Contracts without prior written consent of the
Fund and the Underwriter. Upon termination of this Agreement for any reason, the
Company shall cease all use of any such names or marks.
ARTICLE V. Fees and Expenses
5.1 The Fund shall pay no fee or other compensation to the Company under this
Agreement, except that if the Fund or any Portfolio adopts and implements a plan
pursuant to Rule 12b-1 to finance distribution expenses, then, subject to
obtaining any required exemptive orders or other regulatory approvals, the
Underwriter may make payments to the Company or, if
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applicable, to the underwriter for the Contracts if and in amounts agreed to by
the Underwriter in writing.
ARTICLE VI. Indemnification
6.1 Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Fund, the Underwriter
and each of their respective trustees, directors, officers, employees or agents
and each person, if any, who controls the Fund or the Underwriter within the
meaning of section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 6.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including reasonable legal and other expenses), to
which the Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Fund'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 the registration
statement, prospectus or statement of information for the Contracts
or contained in the Contracts or sales literature or other
promotional material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that this agreement to
indemnify shall not apply as to an Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished by
such Indemnified Party or the Fund to the Company on behalf of the
Fund for use in the registration statement, prospectus or statement
of additional information for the Contracts or in the Contracts or
sales literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of (a) statements or representations by
or on behalf of the Company (other than statements or
representations contained in the Fund registration statement, Fund
prospectus or sales literature or other promotional material of the
Fund not supplied by the Company, or persons under its control and
other than statements or representations authorized by the Fund, the
Underwriter or the Adviser); or (b) the willful misfeasance, bad
faith, gross negligence or reckless disregard of duty of the Company
or persons under its control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in the Fund
registration statement, Fund prospectus, statement of additional
information or sales literature or other promotional material of
the Fund
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(or any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, if such a statement or omission was made in reliance upon
and in conformity with information furnished to the Fund or the
Underwriter by the Company or persons under its control; or
(iv) arise as a result of any material failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach by the
Company of this Agreement; except to the extent provided in Sections
6.1(b) and 6.3 hereof.
(b) No party shall be entitled to indemnification to the extent that such loss,
claim, damage, liability or litigation is due to the willful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
(c) In accordance with Section 6.3 hereof, the Indemnified Parties will
promptly notify the Company of the commencement of any litigation or proceedings
against them in connection with the issuance or sale of the Fund shares or the
Contracts or the operation of the Fund.
6.2 Indemnification By the Underwriter
(a) The Underwriter agrees, with respect to each Portfolio that it distributes,
to indemnify and hold harmless the Company and each of its directors, officers,
employees or agents and each person, if any, who controls the Company within the
meaning of section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 6.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Underwriter) or litigation (including reasonable legal and other expenses)
to which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the shares of the Portfolios that it
distributes 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 the registration
statement, prospectus or statement of additional information for the
Fund or sales literature or other promotional material of the Fund
(or any amendment or supplement to any of the 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
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or such alleged statement or omission was made in reliance upon and
in conformity with information furnished by such Indemnified Party
or the Company to the Fund or the Underwriter on behalf of the
Company for use in the registration statement, prospectus or
statement of additional information for the Fund or in sales
literature of the Fund (or any amendment or supplement thereto) or
otherwise for use in connection with the sale of the Contracts or
the Portfolio shares; or
(ii) arise out of or as a result of (a) statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Contracts not supplied by the Fund or the Underwriter or persons
under their respective control and other than statements or
representations authorized by the Company); or (b) the willful
misfeasance, bad faith, gross negligence or reckless disregard of
duty of the Fund or the Underwriter or persons under the control of
the Fund or the Underwriter, respectively, with respect to the sale
or distribution of the Contracts or Portfolio shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus,
statement of additional information or sales literature or other
promotional material with respect to the Contracts (or any
amendment thereof or supplement thereto), or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in
reliance upon and in conformity with information furnished to the
Company by the Fund or the Underwriter or persons under the control
of the Fund or the Underwriter, respectively; or
(iv) arise as a result of any material failure by the Fund or the
Underwriter to provide the services and furnish the materials under
the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter or the Fund
in this Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter or the Fund; except to
the extent provided in Sections 6.2(b) and 6.3 hereof.
(b) No party shall be entitled to indemnification to the extent that such loss,
claim, damage, liability or litigation is due to the willful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party seeking
indemnification.
(c) In accordance with Section 6.3 hereof, the Indemnified Parties will
promptly notify the Underwriter of the commencement of any litigation or
proceedings against them in connection with the issuance or sale of the Fund
shares or the Contracts or the operation of the Separate Accounts.
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6.3. Indemnification Procedure
(a) Any person obligated to provide indemnification under this Article VI
("Indemnifying Party" for the purpose of this Section 6.3) shall not be liable
under the indemnification provisions of this Article VI with respect to any
claim made against a party entitled to indemnification under this Article VI
("indemnified Party" for the purpose of this Section 6.3) unless such
Indemnified Party shall have notified the Indemnifying Party in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such party shall have received notice of such
service on any designated agent), but failure to notify the Indemnifying Party
of any such claim shall not relieve the Indemnifying Party from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of the indemnification provision of this Article VI.
In case any such action is brought against the Indemnified Party, the
Indemnifying Party will be entitled to participate, at its own expense, in the
defense thereof. The Indemnifying Party also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Indemnifying Party to the Indemnified Party of the
Indemnifying Party's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by the
Indemnified Party, and the Indemnifying Party will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation, unless:
(i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded
parties) include both the Indemnifying Party and the Indemnified
Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests
between them.
A successor by law of the parties to this Agreement shall be entitled to the
benefits of the indemnification contained in this Article VI. The
indemnification provisions contained in this Article VI shall survive any
termination of this Agreement.
ARTICLE VII. Applicable Law
7.1 This Agreement shall he construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Connecticut.
7.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant and
the terms hereof shall be interpreted and construed in accordance therewith.
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ARTICLE VIII. Termination
8.1 This Agreement shall terminate:
(a) at the option of any party upon three months' advance written notice to the
other parties unless otherwise agreed in a separate written agreement among the
parties; or
(b) at the option of the Fund, the Underwriter or the Adviser upon institution
of formal proceedings against the Company by the NASD, NASD Regulation, Inc.
("NASDR"), the SEC, the insurance commission of any state or any other
regulatory body regarding the Company's duties under this Agreement or related
to the sale of the Contracts, the administration of the Contracts, the operation
of the Separate Accounts, or the purchase of the Fund shares, which in the
judgment of the Fund, the Underwriter or the Adviser are reasonably likely to
have a material adverse effect on the Company's ability to perform its
obligations under this Agreement; or
(c) at the option of the Company upon institution of formal proceedings against
the Fund, the Underwriter or the Adviser by the NASD, NASDR, the SEC. or any
state securities or insurance department or any other regulatory body, related
to the purchase or sale of the Fund shares or the operation of the Fund which in
the judgment of the Company are reasonably likely to have a material adverse
effect on the Underwriter's, the Fund's or the Adviser's ability to perform its
obligations under this Agreement; or
(d) at the option of the Company if a Portfolio delineated in Schedule A ceases
to qualify as a Regulated Investment Company under Subchapter M of the Code (a
"RIC"), or under any successor or similar provision, and the disqualification is
not cured within the period permitted for such cure, or if the Company
reasonably believes that any such Portfolio may fail to so qualify and be unable
to cure such disqualification within the period permitted for such cure; or
(e) at the option of any party to this Agreement, upon another party's material
breach of any provision of this Agreement; provided that the party not in breach
shall give the party in breach notice of the breach and the party in breach
shall not cure such breach within 30 days of receipt of such notice of breach;
or
(f) at the option of the Company, if the Company determines in its sole
judgment exercised in good faith, that either the Fund, the Underwriter or the
Adviser has suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Company; or
13
(g) at the option of the Fund, the Underwriter or the Adviser if the Fund, the
Underwriter or the Adviser respectively, shall determine in its sole judgment
exercised in good faith, that the Company has suffered a material adverse change
in its business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is likely to
have a material adverse impact upon the business and operations of the Fund or
Underwriter; or
(h) on October 31, 1998, in the event that the Board of Directors or Trustees,
as applicable, of the Fund (the "Board") shall not, by such date, have approved
and adopted the Fund's entry into and performance of this Agreement by the vote
of the Board at an in-person meeting of the Board in compliance with Section
15(c) of the 1940 Act; provided that such termination shall not be effective
until written notice of the failure, by such date, of the Board to approve and
adopt in such manner the Fund's entry into and performance of this Agreement
shall be furnished by the Fund to the other parties hereto.
8.2 Notice Requirement
(a) In the event that any termination of this Agreement is based upon the
provisions of Sections 8.1(b), 8.1(c) or 8.1(d), prompt written notice of the
election to terminate this Agreement for cause shall be furnished by the party
terminating the Agreement to the non-terminating parties, with said termination
to be effective upon receipt of such notice by the non-terminating parties;
provided that for any termination of this Agreement based on the provisions of
Section 8.1(d), said termination shall be effective upon the Portfolio's failure
to qualify as a RIC and to cure such disqualification within the period
permitted for such cure.
(b) In the event that any termination of this Agreement is based upon the
provisions of Sections 8.1(f) or 8.1(g), prior written notice of the election to
terminate this Agreement for cause shall be furnished by the party terminating
this Agreement to the non-terminating parties. Such prior written notice shall
be given by the party terminating this Agreement to the non-terminating parties
at least 60 days before the effective date of termination.
8.3 It is understood and agreed that the right to terminate this Agreement
pursuant to Section 8.1(a) may be exercised for any reason or for no reason.
8.4 Effect of Termination
(a) Notwithstanding any termination of this Agreement pursuant to Section
8.1(a) through 8.1(g) of this Agreement and subject to Section 1.2 of this
Agreement, the Company may require the Fund and the Underwriter to continue to
make available additional shares of the Fund for so long after the termination
of this Agreement as the Company desires pursuant to the terms and conditions of
this Agreement as provided in paragraph (b) below, for all Contracts in effect
on the effective date of termination of this Agreement (hereinafter referred to
as "Existing Contracts"), unless such further sale of Fund shares is proscribed
by law,
14
regulation or an applicable regulatory body. Specifically, without limitation,
the owners of the Existing Contracts shall be permitted to direct reallocation
of 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 unless such further sale of Fund Shares is proscribed by law,
regulation or an applicable regulatory body.
(b) If shares of the Fund continue to be made available after termination of
this Agreement pursuant to this Section 8.4, the provisions of this Agreement
shall remain in effect exclusively with respect to Existing Contracts unless
such further sale of Fund Shares is proscribed by law, regulation or an
applicable regulatory body.
8.5 Until 90 days after the Company shall have notified the Fund, the
Underwriter or the Adviser of its intention to do so, or except as necessary to
implement Contract owner initiated or approved transactions, or as required by
state insurance laws or regulations, the Company shall not redeem Fund Shares
attributable to the Contracts (as opposed to Fund shares attributable to the
Company's assets held in the Separate Account), and the Company shall not
prevent Contract owners from allocating payments to a Portfolio that was
otherwise available under the Contracts.
ARTICLE IX. Notices
9.1 (a) Any notice shall be deemed duly given only if sent by hand or
overnight express delivery, evidenced by written receipt or by certified mail,
return receipt requested, to the other party at the address of such party set
forth below or at such other address as such party may from time to time specify
in writing to the other party. All notices shall be deemed given three business
days after the date received or rejected by the addressee.
If to the Company:
Hartford Life Insurance Company
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx
with a copy to:
Xxxxx Xxxxxx, General Counsel
Hartford Life Insurance Company
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
15
If to the Fund:
Franklin Mutual Series Fund Inc.
00 Xxxx X. Xxxxxxx Xxxxxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxx
If to the Underwriter:
Franklin Xxxxxxxxx Distributors, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Senior Vice President
with a copy to:
Franklin Institutional Services Corporation
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx Xxxxxxx, Xx., Vice President
ARTICLE X Miscellaneous
10.1 Subject to law and regulatory authority, each party hereto shall treat as
confidential all information reasonably identified as such in writing by any
other party hereto (including without limitation the names and addresses of the
owners of the Contracts) and, except as contemplated by this Agreement, shall
not disclose, disseminate or utilize such confidential information without the
express prior written consent of the affected party until such time as it may
come into the public domain.
10.2 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
10.3 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
10.4 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
10.5 This Agreement shall not be assigned by any party hereto without the prior
written consent of all the parties.
16
10.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, NASDR and state insurance regulators) and shall permit each other and such
authorities (and the parties hereto) reasonable access to its books and records
in connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
10.7 Each party represents that (a) the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as applicable, by
such party and when so executed and delivered this Agreement will be the valid
and binding obligation of such party enforceable in accordance with its terms
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights and to
general equity principles; provided that the foregoing representation by the
Fund is subject to approval and adoption of the Fund's entry into and
performance of this Agreement by the vote of the Board at an in-person meeting
of the Board in compliance with Section 15(c) of the 1940 Act as provided in
Section 8.1(h) of this Agreement; (b) the party has obtained, and during the
term of this Agreement will maintain, all authorizations, licenses,
qualifications or registrations required to be maintained in connection with the
performance of its duties under this Agreement; and (c) the party will comply in
all material respects with all applicable laws, rules and regulations.
10.8 The parties to this Agreement may amend the Schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts, the
Separate Accounts or the Portfolios of the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative as of the
date first written above.
HARTFORD LIFE INSURANCE COMPANY FRANKLIN MUTUAL SERIES FUND INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
----------------------------- -----------------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: Vice President RPS Title: Vice President & Secretary
FRANKLIN/XXXXXXXXX DISTRIBUTORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
17
SCHEDULE A
SEPARATE ACCOUNTS PORTFOLIOS
--------------------------------------------------------------------------
Separate Account TK, Separate Account Mutual Shares Fund Class I
TK-1, Separate Account TK-2, Separate Shares
Account TK-3, and Separate Account TK-4
18
