Exhibit No. 8(d)
PARTICIPATION AGREEMENT
Among
XXXXXXXX XXXXXXXX SERIES TRUST,
XXXXXXXX XXXXXXXX ASSET MANAGEMENT INC.,
and
HARTFORD LIFE INSURANCE COMPANY
TABLE OF CONTENTS
-----------------
ARTICLE I Fund Shares 5
ARTICLE II Representations and Warranties 7
ARTICLE III Prospectuses; Reports to Shareholders and Proxy
Statements; Voting 9
ARTICLE IV Sales Material and Information 10
ARTICLE V [RESERVED] 12
ARTICLE VI Diversification 12
ARTICLE VII Potential Conflicts 12
ARTICLE VIII Indemnification 14
ARTICLE IX Applicable Law 17
ARTICLE X Termination 18
ARTICLE XI Notices 20
ARTICLE XII Foreign Tax Credits 21
ARTICLE XIII Miscellaneous 21
PARTICIPATION AGREEMENT
-----------------------
Among
XXXXXXXX XXXXXXXX SERIES TRUST,
-------------------------------
XXXXXXXX XXXXXXXX ASSET MANAGEMENT INC.,
----------------------------------------
and
HARTFORD LIFE INSURANCE COMPANY
-------------------------------
THIS AGREEMENT, made and entered into as of the 5th day of December,
1998 by and among HARTFORD LIFE INSURANCE COMPANY (hereinafter the "Company"); a
Connecticut corporation, on its behalf and on behalf of each separate account of
the Company set forth on Schedule A hereto as may be amended from time to time
(each such account hereinafter referred to as the "Account") and Xxxxxxxx
Xxxxxxxx Series Trust, a Massachusetts business trust (hereinafter the "Fund"),
and Xxxxxxxx Xxxxxxxx Asset Management Inc. (hereinafter the "Adviser").
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established by insurance companies for annuity contracts with
variable accumulation and/or pay-out provision, (hereinafter referred to
individually and/or collectively as "Variable Insurance Products"); and
WHEREAS, insurance companies desiring to utilize the Fund as an
investment vehicle under their Variable Insurance Products are required to enter
into participation agreements with the Fund (the "Participating Insurance
Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares,
each representing the interest in a particular managed portfolio of securities
and other assets, any one or more of which may be made available for Variable
Insurance Products of Participating Insurance Companies; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B (each such series hereinafter referred to as a "Portfolio") as may be
amended from time to time by mutual agreement of the parties hereto, under this
Agreement to the Accounts of the Company; and
WHEREAS, the Fund intends to obtain, if necessary, an order from the
Securities and Exchange Commission, granting Participating Insurance Companies
and Variable Insurance Product separate accounts exemptions from the provisions
of Sections 9(a), 13(a), 15(a) and 15 (b) of the Investment Company Act of 1940,
as amended (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)b(15)
3
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by Variable Annuity Product separate accounts of both affiliated
unaffiliated life insurance companies hereinafter the "Shared Funding Exemptive
Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Adviser is the investment adviser of the Portfolios of the
Fund; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule A
hereto, to set aside and invest assets attributable to the aforesaid Variable
Insurance Products; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act unless exempt from such registration;
and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Variable Insurance Products and
the Fund is authorized to sell such shares to each such Account at net asset
value.
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Adviser agree as follows:
4
ARTICLE I FUND SHARES
-----------
1.1 The Fund agrees to make available for purchase by the Company
shares of the Portfolios and shall execute orders placed for each Account on a
daily basis at the net asset value next computed after receipt 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 Account and
receipt by such designee shall constitute receipt by the Fund; provided that the
Fund receives notice of such order by 9:30 a.m. (local time where the Fund
processes orders) on the next following Business Day and reflect instructions
received by the Company from Contract Owners in good order prior to the time the
net asset value of the respective Portfolio is calculated on the prior Business
Day. Notwithstanding the foregoing, the Company shall use its best efforts to
provide the Fund with notice of such orders by 8:30 a.m. on the next following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Fund calculates its net asset
value pursuant to the rules of the Securities and Exchange Commission, as set
forth in the Fund's prospectus and statement of additional information.
Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter
the "Board" may refuse to permit the Fund 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 Board 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 such Portfolio.
1.2 The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies for their Variable Insurance Products. No
shares of any Portfolio will be sold to the general public.
1.3 The Fund intends to apply for exemptive order that will, when
and if issued, require the Fund and Participating Insurance Companies to afford
the Company substantially the same protections currently provided by Sections
2.1, 2.4, 2.9 and 3.4 and Article VII of this Agreement.
1.4 The Fund agrees to redeem for cash, on the Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.4, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Company receives notice of
such request for redemption in accordance with the timing rules described in
Section 1. 1.
1.5 The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Accounts of the Company,
under which amounts may be invested in the Fund are listed on Schedule A
attached hereto and incorporated herein by reference, as such Schedule A may be
amended from time to time by mutual written agreement of all of the parties
5
hereto. The Company will give the Fund written notice of its intention to make
available in the future, as a funding vehicle under the Contracts, any other
investment company.
1.6 The Company will place separate orders to purchase or redeem
shares of each Portfolio by telephone or facsimile (or by such other means as
the Fund may reasonably determine). Each order shall describe the net amount of
shares and dollar amount of each Portfolio to be purchased or redeemed. In the
event of net purchases, the Company shall pay for Portfolio shares on the next
Business Day after an order to purchase Portfolio shares is made in accordance
with the provisions of Section 1. 1 hereof. Payment shall be in federal funds
transmitted by wire not later than 4:00 p.m. Eastern standard time. In the event
of net redemptions, the Portfolio shall pay the redemption proceeds in federal
funds transmitted by wire not later than 4:00 p.m. Eastern standard time on the
next Business Day after an order to redeem Portfolio shares is made in
accordance with the provisions of Section 1.4 hereof. Notwithstanding the
foregoing, if the payment of redemption proceeds on the next Business Day would
require the Portfolio to dispose of Portfolio securities or otherwise incur
substantial additional costs, and if the Portfolio has determined to settle
redemption transactions for all shareholders on a delayed basis, proceeds shall
be wired to the Company within the period required under the 1940 Act and the
Portfolio shall notify in writing the person designated by the Company as the
recipient for such notice of such delay by 3:00 p.m. Eastern Time on the same
Business Day that the Company transmits the redemption order to the Portfolio.
1.7 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 Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.8 The Fund or its designee shall use its reasonable best efforts
to furnish same day notice by 6:00 p.m. in its local time zone (by wire or
telephone, followed by written confirmation) to the Company of any dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such dividends and capital gain distributions as are
payable on the Portfolio shares in additional shares of that Portfolio. (The
Company may, upon 30 days prior written notice to the Fund, revoke this election
and receive all such dividends and capital gain distributions in cash.) The Fund
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.9 The Fund shall make the net asset value per share of 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 6:00 p.m.
Eastern Time.) In the event that the Fund is unable to meet the 6:00 p.m. time
stated immediately above, then the Fund shall provide the Company with
additional time to notify the Fund of purchase or redemption orders pursuant to
Sections 1. 1 and 1.4, respectively, above. Such additional time shall be equal
to the additional time that the Fund takes to make the net asset values
available to the Company; provided, however, that notification must be made by
11:00 a.m. Eastern Time on the Business Day such order is to be executed,
regardless of when net asset value is made available.
6
1.10 If the Fund provides materially incorrect share net asset value
information through no fault of the Company on behalf of the Accounts, the
Company shall be entitled to an adjustment with respect to the Fund shares
purchased or redeemed to reflect the correct net asset value per share. The
determination of the materiality of any net asset value pricing error shall be
based on the SEC's recommended guidelines regarding such errors. The correction
of any such errors shall be made at the Company level pursuant to the SEC's
recommended guidelines. 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 the Company.
ARTICLE II REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 The Company represents and warrants that the interests of the
Accounts which offer the Funds (the "Contracts") are or will be registered
unless exempt and that it will maintain such registration under the 1933 Act and
the regulations thereunder to the extent required by the 1933 Act; that the
Contracts will be issued and sold in compliance with all applicable federal and
state laws and regulations and further that the sale of the Contracts will
comply with all state insurance law suitability requirements. 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 Account prior to any issuance or sale thereof as a segregate
asset account under the Connecticut Insurance Code and the regulations
thereunder and has registered or, prior to any issuance or sale of the
Contracts, will register and will maintain the registration of each Account as a
unit investment trust in accordance with and to the extent required by the
provisions of the 1940 Act and the regulations thereunder, unless exempt
therefrom, to serve as a segregated investment account for the Contracts. 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.
2.2 The Fund represents and warrants that Fund shares sold pursuant
to this Agreement shall be registered under the 1933 Act and the regulations
thereunder to the extent required by the 1933 Act, duly authorized for issuance
in accordance with the laws of the Commonwealth of Massachusetts and sold in
compliance with all applicable federal and state securities laws and regulations
and that the Fund is and shall remain registered under the 1940 Act and the
regulations thereunder to the extent required by the 0000 Xxx. 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. The Fund shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent deemed
advisable by the Fund.
2.3 The Fund represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") and that it will maintain such qualification
(under Subchapter M or any successor or similar provision) and that it will
notify the Company promptly upon having a reasonable basis for believing that
the Fund has ceased to so qualify or that the Fund might not so qualify in the
future.
7
2.4 The Company represents that each Account is and will continue
to be a "segregated account" under applicable provisions of the Code and that
each Contract is and will be treated as a "variable contract" under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund immediately upon having a reasonable
basis for believing that the Account or Contract has ceased to be so treated or
that they might not be so treated in the future.
2.5 The Fund represents that to the extent that it decides to
finance distribution expenses pursuant to Rule 12b- 1 under the 1940 Act, the
Fund undertakes to have a board of trustees, a majority of whom are not
interested persons of the Fund, formulate and approve any plan under Rule 12b-1
to finance distribution expenses.
2.6 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 regulations of the various states.
2.7 The Fund and the Adviser represent that the Fund is duly
organized and validly existing under applicable law and that the Fund does and
will comply in all material respects with the 0000 Xxx.
2.8 The Company represents and warrants that all of its trustees,
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 equal to the greater of $5 million or any
amount required by applicable federal or state law or regulation. The aforesaid
includes coverage for larceny and embezzlement is issued by a reputable bonding
company.
2.9 The Company represents that and warrants that it shall use its
best efforts to ensure that the principal underwriter for the Contracts,
Hartford Securities Distribution Company, Inc. ("HSD"), is and will be a member
in good standing of the NASD and is and will be registered as a broker/dealer
with the Securities and Exchange Commission. The Company furthers represents
that it will sell and distribute the variable contracts in accordance with all
applicable state and federal laws and regulations, including, without
limitation, the 1933 Act, 1940 Act and the Securities Exchange Act of 1934 ("
1934 Act"). The Company represents that it shall use its best efforts to ensure
that the operations of HSD are and shall at- all times remain in material
compliance with the laws of the State of Connecticut to the extent required to
perform this Agreement.
2.10 The Company represents and warrants that it will use its best
efforts to ensure that HSD is and will remain duly registered and licensed in
all material respects with all applicable federal and state securities laws and
shall perform its obligations hereunder in compliance in all material respects
with any applicable federal and state laws.
8
ARTICLE III PROSPECTUSES; REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING
------------------------------------------------------------------
3.1 The Fund shall provide the Company 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 the Fund shall provide camera-ready film or computer diskettes
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 is 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) Except as otherwise provided in this Section 3.2, all expenses
of preparing, setting in type and printing and distributing Fund prospectuses
and statements of additional information shall be the expense of the Company.
For prospectuses and statements of additional information provided by the
Company to its existing owners of Contracts in order to update disclosure as
required by the 1933 Act and/or the 1940, Act, the cost of setting in type,
printing and distributing shall be borne by the Fund. If the Company chooses to
receive camera-ready film or computer diskettes in lieu of receiving printed
copies of the Fund's prospectus and/or statement of additional information, the
Fund shall bear the cost of typesetting to provide the Fund's prospectus and/or
statement of additional information to the Company in the format in which the
Fund is accustomed to formatting prospectuses and statements of additional
information, respectively, and the Company shall bear the expense of adjusting
or changing the format to conform with any of its prospectuses and/or statements
of additional information. The Fund shall not pay any costs of typesetting,
printing and distributing the Fund's prospectus and/or statement of additional
information to prospective Contract owners.
3.2(b) The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other 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.
3.2(c) 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.
3.2(d) The Fund shall pay no fee or other compensation to the Company
under this Agreement, except to the extent that the Fund or any Portfolio adopts
and implements a plan pursuant to Rule 12b-1 to finance distribution expenses,
then the Fund's principal underwriter may make payments to the Company or to the
underwriter of the Contracts if and in amounts agreed to by the Fund's principal
underwriter in writing.
3.2(e) All expenses, including expenses to be borne by the Fund
pursuant to Section 3.2 hereof, incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
9
shares are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares.
3.3 The Fund's statement of additional information shall be
obtainable from the Fund and 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:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
Portfolio for which instructions have been received, so
long as and to the extent that the Securities and
Exchange Commission continues to interpret the 1940 Act
to require pass-through voting privileges for variable
contract owners. The Company reserves the right to vote
Fund shares held in any segregated asset account in its
own right, to the extent permitted by law. The Fund and
the Company shall follow the procedures, and shall have
the corresponding responsibilities, for the handling of
proxy and voting instruction solicitations, as set forth
in Schedule C attached hereto and incorporated herein by
reference. Participating Insurance Companies shall be
responsible for ensuring that each of their separate
accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set
forth on Schedule C, which standards will also be
provided to the other Participating Insurance Companies.
(iv) For unregistered separate accounts subject to the
Employee Retirement Income Security Act of 1974
("ERISA") refrain from voting shares for which no
instructions are received if such shares are held in an
unregistered segregated asset account subject to ERISA.
3.5 The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders.
ARTICLE IV SALES MATERIAL AND INFORMATION
-----------------------------------------
4.1 The Company shall furnish, or shall cause to be furnished, to
the Fund or its 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 or Adviser is described, at least ten Business Days prior to its
10
use. No such material shall be used if the Fund or Adviser or their designee
reasonably objects to such use within ten Business Days after receipt of such
material.
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 Fund prospectus, as such registration statement or Fund 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 prepared by the Fund in which the Company or its Accounts, are
mentioned at least ten Business Days prior to its use. No such material shall be
used if the Company or its designee reasonably objects to such use within ten
Business Days after receipt of such material.
4.4 The Fund shall not give any information or make any
representations on behalf of the Company or concerning the Company, each
Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement or prospectus may be amended or supplemented from time to
time, or in published reports or solicitations for voting instruction for each
Account which are in the public domain or approved by the Company for
distribution to Contract owners, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission of
the Company.
4.5 The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, statements of additional
information, annual and semi-annual reports, proxy statements, sales literature
and other promotional materials that mention the Company, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Fund or its shares, contemporaneously with the filing
of such document with the Securities and Exchange Commission or other regulatory
authorities.
4.6 The Company will provide to the Fund, upon the Fund's request,
at least one complete copy of all registration statements, prospectuses,
statements of additional information reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no action letters, and all amendments to any of the
above, that relate to the investment in an Account or Contract,
contemporaneously with the filing of such document with the Securities and
Exchange Commission 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, any of the
following: advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media), sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
11
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, and registration
statements, prospectuses, statements of additional information, shareholder
reports, and proxy materials.
ARTICLE V [RESERVED]
----------
ARTICLE VI DIVERSIFICATION
---------------
6.1 The Fund represents and warrants that, at all times, the Fund
will comply with Section 817(h) of the Code and Treasury Regulation 1.817-5,
relating to the diversification requirements for variable annuity, endowment, or
life insurance contracts and any amendments or other modifications to such
Section or Regulations. In the event the Fund ceases to so qualify, it will take
all reasonable steps (a) to notify Company of such event and (b) to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Regulation 817-5.
ARTICLE VII POTENTIAL CONFLICTS
-------------------
7.1 The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract owners and variable life
insurance contract owners; or (f) a decision by a Participating Insurance
Company to disregard the voting instructions of contract owners. The Board shall
promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
7.2 The Company will report any potential or existing material
irreconcilable conflict of which it is aware to the Board. The Company will
assist the Board in carrying out its responsibilities under Section 7 of this
Agreement, by providing the Board with all information reasonably necessary for
the Board to consider any issues raised. This includes, but is not limited to,
an obligation by the Company to inform the Board whenever contract owner voting
instructions are disregarded.
7.3 If it is determined by a majority of the Board, or a majority
of its disinterested trustees, that a material irreconcilable conflict exists,
the Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
12
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance policy
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account. No charge
or penalty will be imposed as a result of such withdrawal. The Company agrees
that it bears the responsibility to take remedial action in the event of a Board
determination of an irreconcilable material conflict and the cost of such
remedial action, and these responsibilities will be carried out with a view only
to the interests of Contract owners.
7.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, or
because a particular state insurance regulator's decision applicable to the
Company conflicts with that of the majority of other state regulators, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account (at the Company's expense); provided, however that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. No charge or penalty will be imposed as a
result of such withdrawal. The Company agrees that it bears the responsibility
to take remedial action in the event of a Board determination of an
irreconcilable material conflict and the cost of such remedial action, and these
responsibilities will be carried out with a view only to the interests of
Contract owners.
7.5 For purposes of Sections 7.3 through 7.4 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 through 7.4 to
establish a new funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners materially adversely affected
by the irreconcilable material conflict.
7.6 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision
of the 1940 Act or the rules promulgated thereunder with respect to mixed or
shared funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then the Fund and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable.
7.7 Each of the Company and the Adviser shall at least annually
submit to the Board such reports, materials or data as the Board may reasonably
request so that the Board may fully carry out the obligations imposed upon them
13
by the provisions hereof and in the Shared Funding Exemptive Order, and said
reports, materials and data shall be submitted more frequently if deemed
appropriate by the Board. All reports received by the Board of potential or
existing conflicts, and all Board action with regard to determining the
existence of a conflict, notifying Participating Insurance Companies of a
conflict, and determining whether any proposed action adequately remedies a
conflict, shall be properly recorded in the minutes of the Board or other
appropriate records, and such minutes or other records shall be made available
to the Securities and Exchange Commission upon request.
ARTICLE VIII INDEMNIFICATION
---------------
8.1 INDEMNIFICATION BY THE COMPANY
------------------------------
8.1(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser, and each member of its Board and its officers, employees and agents and
each person, if any, who controls the Fund within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8. 1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or litigation (including 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 statements
or alleged untrue statements of any material fact
contained in the registration statement or prospectus
for the Contracts or contained in the Contracts or
sales literature 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 the Company by or on behalf
of the Fund for use in the registration statement or
prospectus for the Contracts or in the Contracts or
sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration
statement, prospectus or sales literature of the Fund
not supplied by the Company, or persons under its
control and other than statements or representations
authorized by the Fund or
the Adviser or wrongful conduct -of the Company or
persons under its control, with respect to the sale
or distribution of the Contracts or Fund shares; or
14
(iii) arise out of or as a result of any untrue statement
or alleged untrue statement of a material fact
contained in a registration statement, prospectus, or
sales literature of the Fund or any amendment thereof
or supplement thereto or the omission or alleged
omission to state therein a material fact required to
be stated therein or necessary to make the statements
therein not misleading if such a statement or
omission was made in reliance upon and in conformity
with information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any 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 of this Agreement by
the Company.
8.1(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
8.1(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company 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 Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses under this Agreement for any legal or other expenses
of any additional counsel retained by the Indemnified Party other than
reasonable costs of investigation.
8.1(d) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
8.2 [RESERVED]
15
8.3 INDEMNIFICATION BY THE ADVISER
------------------------------
8.3(a) The Adviser agrees to indemnify and hold harmless the Company
and its directors, employees, agents and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(hereinafter collectively, the "Indemnified Parties" and individually,
"Indemnified Party," for purposes of this Section 8.3) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of tile Adviser) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
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 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 the registration statement or prospectus
or sales literature 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 or such alleged
statement or omission was made in. reliance upon and
in conformity with information furnished to the
Adviser, the Fund by or on behalf of the Company for
use in the registration statement or prospectus for
the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with
the sale of the Contracts or Portfolio shares; or
(ii) arise out of or as a result of 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, the Adviser or
persons under its control and other than statements
or representations authorized by the Company) or
unlawful conduct of the Fund, the Adviser or persons
under their control, with respect to the sale or
distribution of the Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement
or alleged untrue statement of a material fact
contained in a registration statement, prospectus, or
sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statement or statements therein
not misleading, if such statement or omission was
made in reliance upon and in conformity with
information furnished to the Company by or on behalf
of the Fund or the Adviser; or
(iv) arise as a result of any failure by the Adviser to
provide the services and furnish the materials under
the terms of this Agreement; or
16
(v) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
or the Adviser in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Fund or the Adviser, including
without limitation any failure by the Fund to comply
with the conditions of Article VI hereof.
8.3(b) The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an indemnified Party as may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
8.3(c) The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser 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 Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from an) liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Adviser 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 then reasonable costs of investigation.
8.3(d) The Company agrees to promptly notify the Adviser of the
commencement of any litigation or proceedings against it or any of as respective
officers or directors in connection with this Agreement, the issuance or sale of
the Contracts, with respect to the operation of each Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX APPLICABLE LAW
--------------
9.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
9.2 This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
17
ARTICLE X TERMINATION
-----------
10.1 This Agreement shall continue in full force and effect until
the first to occur of:
(a) termination by any party for any reason upon six months
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund
or Adviser with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are
not reasonably available to meet the requirements of the
Contracts. Reasonable advance notice of election to
terminate shall be furnished by the Company, said
termination to be effective ten (10) days after receipt
of notice unless the Fund makes available a sufficient
number of shares to reasonably meet the requirements of
the Account within said ten (10) day period; or
(c) termination by the Company upon written notice to the
Fund or Adviser with respect to any Portfolio in the
event any of the Portfolio's shares are not registered,
issued or sold inaccordance with applicable state and/or
federal law or such law precludes the use of such shares
as the underlying, investment medium of the Contracts
issued or to be issued by the Company. The terminating
party shall give prompt notice to the other parties of
its decision to terminate; or
(d) termination by the Company upon written notice to the
Fund or Adviser with respect to any Portfolio in the
event that such portfolio ceases to qualify as a
Regulated Investment Company under Subchapter M of the
Code or under any successor or similar provision; or
(e) termination by the Company upon written notice to the
Fund or Advisor with respect to any Portfolio in the
event that such Portfolio fails to meet the
diversification requirements specified in Article VI
hereof, or
(f) termination by either the Fund or Adviser by written
notice to the Company, if either one or more of the
Fund or Adviser, shall determine, in its or their sole
judgment exercised in good faith, that the Company and/or
their affiliated companies has suffered a material
adverse change in its business, operations, financial
condition or prospects since the date of this Agreement
or is the subject of material adverse publicity, provided
that the Fund or Adviser will give the Company sixty (60)
days' advance written notice of such determination of its
intent to terminate this Agreement, and provide further
that after consideration of the actions taken by the
Company and any other changes in circumstances since the
giving of such notice, the determination of the Fund or
Adviser shall continue to apply on the 60th day since
giving of such notice, then such 60th day shall be the
effective date of termination; or
18
(g) termination by the Company by written notice to the Fund
or Adviser, if the Company shall determine, in
its sole judgment exercised in good faith, that either
the Fund or Adviser has suffered a material adverse
change in its business,operations, financial condition or
prospects since the date of this Agreement or is the
subject of material adverse publicity, provided that the
Company will give the Fund or Adviser sixty (60) days'
advance written notice of such determination of its
intent to terminate this Agreement, and provided further
that after consideration of the actions taken by the Fund
or Adviser and any other changes in circumstances since
the giving of such notice, the determination of the
Company shall continue to apply on the 60th day since
giving of such notice, then such 60th day shall be the
effective date of termination; or
(h) termination by the Fund or Adviser by written notice
to the Company, if the Company gives the Fund or
Adviser the written notice specified in Section 1.5
hereof and at the time such notice was given there
was no notice of termination outstanding under any
other provision of this Agreement; provided, however
any termination under this Section 10. 1(h) shall be
effective sixty (60) days after the notice specified
in Section 1.5 was given; or
(i) termination by any party upon the other party's
breach of any representation in Section 2 or any
material provision of this Agreement, which breach
has not been cured to the satisfaction of the
terminating party within ten (10) days after written
notice of such breach is delivered to the Fund or the
Company, as the case may be; or
(j) termination by the Fund or Adviser in the event an
Account or Contract is not registered (unless exempt
from registration) or sold in accordance with
applicable federal or state law or regulation, or the
Company fails to provide pass-through voting
privileges as specified in Section 3.4. Termination
shall be effective immediately upon such occurrence
without notice.
(k) At the option of the Fund or the Adviser, upon a
finding against the Company by the Securities and
Exchange Commission, the National Association of
Securities Dealers, Inc. or any other regulatory body
after the completion of formal proceedings, the
ruling, judgment or outcome of which has, in the
Fund's or the Adviser's reasonable judgment,
materially impaired the Company's ability to meet and
perform its obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by
the Fund or Adviser with said termination to be
effective upon receipt of notice.
19
(l) In the event the Contracts cease to qualify as
annuity contracts or life insurance contracts, as
applicable, under the Internal Revenue Code of 1986,
as amended, or if the Fund reasonably believes that
the Contracts may fail to so qualify, the Fund may
terminate this Agreement effective upon giving notice
to the Company.
10.2 EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund shall at the option of the 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 Fund shares is proscribed by law, regulation or applicable
regulatory body, or unless the Fund determines that liquidation of the Fund
following termination of this Agreement is in the best interests of the Fund and
its shareholders. Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to direct reallocation of investments in the Fund,
redemption of investments in the Fund and/or investment in the Fund upon the
making of additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.2 shall not apply to any terminations under Article
VII and the effect of such Article VII terminations shall be governed by Article
VII of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund the opinion of counsel
for the Company (which counsel shall be reasonably satisfactory to the Fund) to
the effect that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contracts, the Company shall not prevent Contract Owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Adviser 30 days notice of its
intention to do so.
ARTICLE XI NOTICES
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
c/o Xxxxxxxx Xxxxxxxx Asset Management Inc.
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
If to the Adviser:
c/o Xxxxxxxx Xxxxxxxx Asset Management Inc.
20
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
If to the Company: With a copy to:
Hartford Life Insurance Co. Hartford Life Insurance Co.
000 Xxxxxxxxx Xxxxxx 000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Attn: Xxx Xxxxx, Executive Attn: Xxxxx Xxxxxx, Xx. Vice President,
Vice President General Counsel & Secretary
ARTICLE XII FOREIGN TAX CREDITS
-------------------
12.1 The Fund and Advisor agree to consult in advance with the
Company concerning whether any series of the Fund qualifies to provide a foreign
tax credit pursuant to Section 853 of the Code.
ARTICLE XIII MISCELLANEOUS
-------------
13.1 The Board of Trustees of the fund and the shareholders of its
Portfolios shall not be liable for any obligations of the Fund of any Portfolio
under this Agreement, and the Company agrees that, in asserting any rights or
claims under this Agreement, it shall look only to the assets and property of
the Fund or the particular Portfolio in settlement of such right or claims, and
not to such trustees or shareholders.
13.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts except, with respect to the Fund and the Adviser,
to the extent that a Contract Owner is a client of PaineWebber Incorporated or
its affiliates and all information reasonably identified as confidential in
writing by any other party hereto and, except as permitted by this Agreement,
shall not disclose, disseminate or utilize such names and addresses and other
confidential information until such time as it may come into public domain
without the express written consent of the affected party.
13.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
13.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.5 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
13.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities (and
21
other 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.
13.7 The rights, remedies and obligations in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
13.8 This Agreement or any of the rights and obligations hereunder
may not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Adviser may, with advance written
notice to the other parties hereto, assign this Agreement or any rights or
obligations hereunder to any affiliate of or company under common control with
the Adviser if such assignee is duly licensed and registered to perform the
obligations of the Adviser under this Agreement.
13.9 The Company shall furnish, or shall cause to be furnished, to
the Fund or its designee upon request, copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if
any), as soon as practical and in any event within 90
days after the end of each fiscal year;
(b) the Company's June 30th quarterly statements (statutory),
as soon as practical and in any event within 45 days
following such period;
(c) any financial statement, proxy statement, notice or
report of the Company sent to stockholders and/or
policyholders, as soon as practical after the delivery
thereof to stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the
Securities and Exchange Commission or any state insurance
regulator, as soon as practical after the filing thereof;
(e) any other public report submitted to the Company by
independent accountants in connection with any annual,
interim or special audit made by them of the books of the
Company, as soon as practical after the receipt thereof.
13.10 If this Agreement terminates, the parties agree that Article VM
and Sections 13.6 and 13.7 shall remain in effect after termination.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in as name and on its behalf by its duly authorized
representative as of the date specified above.
22
HARTFORD LIFE INSURANCE COMPANY
on behalf of Itself and each of its Accounts named in
Schedule A hereto, as amended from time to time
By: /s/ Xxxxx Xxxxxxx
-----------------
Xxxxx Xxxxxxx
Its Senior Vice President
23
FUND
By: /s/ Xxxxxx X. X'Xxxxxxx
-----------------------
Xxxxxx X. X'Xxxxxxx
Its Vice President and Secretary
ADVISER
By: /s/ Julian Sluyters
-------------------
Julian Sluyters
Its Chief Administrative Officer
24
