AGREEMENT DATED
7/2/98
AMENDED EFFECTIVE
5/1/00
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
A I M DISTRIBUTORS, INC.
HARTFORD LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
HARTFORD SECURITIES DISTRIBUTION COMPANY, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
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Section 1. Available Funds 2
1.1 Availability 2
1.2 Addition, Deletion or Modification of Funds 2
1.3 No Sales to the General Public 2
Section 2. Processing Transactions 3
2.1 Timely Pricing and Orders 3
2.2 Timely Payments 3
2.3 Applicable Price 3
2.4 Dividends and Distributions 4
2.5 Book Entry 4
Section 3. Costs and Expenses 4
3.1 General 4
3.2 Parties To Cooperate 4
Section 4. Legal Compliance 5
4.1 Tax Laws 5
4.2 Insurance and Certain Other Laws 7
4.3 Securities Laws 8
4.4 Notice of Certain Proceedings and Other Circumstances 9
4.5 LIFE COMPANY To Provide Documents; Information About AVIF 9
4.6 AVIF or AIM To Provide Documents; Information About LIFE COMPANY 10
Section 5. Mixed and Shared Funding 12
5.1 General 12
5.2 Disinterested Directors 12
5.3 Monitoring for Material Irreconcilable Conflicts 12
5.4 Conflict Remedies 13
5.5 Notice to LIFE COMPANY 14
5.6 Information Requested by Board of Directors 14
5.7 Compliance with SEC Rules 15
5.8 Other Requirements 15
Section 6. Termination 15
6.1 Events of Termination 15
6.2 Notice Requirement for Termination 16
6.3 Funds To Remain Available 17
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DESCRIPTION PAGE
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6.4 Survival of Warranties and Indemnifications 17
6.5 Continuance of Agreement for Certain Purposes 17
Section 7. Parties To Cooperate Respecting Termination 17
Section 8. Assignment 17
Section 9. Notices 18
Section 10. Voting Procedures 18
Section 11. Foreign Tax Credits 19
Section 12. Indemnification 19
12.1 Of AVIF and AIM by LIFE COMPANY and UNDERWRITER 19
12.2 Of LIFE COMPANY and UNDERWRITER by AVIF and AIM 21
12.3 Effect of Notice 23
12.4 Successors 24
Section 13. Applicable Law 24
Section 14. Execution in Counterparts 24
Section 15. Severability 24
Section 16. Rights Cumulative 24
Section 17. Headings 24
Section 18. Confidentiality 25
Section 19. Trademarks and Fund Names 25
Section 20. Parties to Cooperate 26
II
PARTICIPATION
AGREEMENT
THIS
AGREEMENT, made and entered into as of the 2nd day of July, 1998
("
Agreement"), by and among AIM Variable Insurance Funds, Inc., a
Maryland
corporation ("AVIF"); A I M Distributors, Inc., a Delaware Corporation ("AIM");
Hartford Life Insurance Company, a Connecticut life insurance company ("LIFE
COMPANY"), on behalf of itself and each of its segregated asset accounts listed
in Schedule A hereto, as the parties hereto may amend from time to time (each,
an "Account," and collectively, the "Accounts"); and Hartford Securities
Distribution Company, Inc., an affiliate of LIFE COMPANY and the principal
underwriter of the Contracts ("UNDERWRITER") (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission ("SEC")
as an open-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of thirteen separate series ("Series"), shares
("Shares") of each of which are registered under the Securities Act of 1933, as
amended (the "1933 Act") and are currently sold to one or more separate accounts
of life insurance companies to fund benefits under variable annuity contracts
and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto as the
Parties hereto may amend from time to time (each a "Fund"; reference herein to
"AVIF" includes reference to each Fund, to the extent the context requires)
available for purchase by the Accounts; and
WHEREAS, AIM is a broker-dealer registered with the SEC under the Securities
Exchange Act of 1934 (the "1934 Act") and a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, AIM currently serves as the distributor for the Shares; and
WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity contracts
and variable life insurance contracts ("Contracts") as set forth on Schedule A
hereto, as the Parties hereto may amend from time to time, which Contracts
(hereinafter collectively, the "Contracts"), if required by applicable law, will
be registered under the 1933 Act; and
WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts, each of
which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
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WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each of which
is registered as a unit investment trust investment company under the 1940 Act
(or exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Contracts will be registered as securities under the 1933 Act
(or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of
the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises contained
herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
AVIF will make Shares of each Fund available to LIFE COMPANY for purchase and
redemption at net asset value and with no sales charges, subject to the terms
and conditions of this
Agreement. The Board of Directors of AVIF may refuse to
sell Shares of any Fund to any person, or suspend or terminate the offering of
Shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction or if, in the sole discretion of the Directors
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, such action is deemed in the best interests of the
shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to provide
additional funding media for the Contracts, or to delete, combine, or modify
existing Funds, by amending Schedule A hereto. Upon such amendment to Schedule
A, any applicable reference to a Fund, AVIF, or its Shares herein shall include
a reference to any such additional Fund. Schedule A, as amended from time to
time, is incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
AVIF represents and warrants that no Shares of any Fund have been or will be
sold to the general public.
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SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its designated agent will use its best efforts to provide
LIFE COMPANY with the net asset value per Share for each Fund by
6:00 p.m. Central Time on each Business Day. As used herein,
"Business Day" shall mean any day on which (i) the New York Stock
Exchange is open for regular trading, (ii) AVIF calculates the
Fund's net asset value, and (iii) LIFE COMPANY is open for business.
(b) LIFE COMPANY will use the data provided by AVIF each Business Day
pursuant to paragraph (a) immediately above to calculate Account unit
values and to process transactions that receive that same Business
Day's Account unit values. LIFE COMPANY will perform such Account
processing the same Business Day, and will place corresponding orders
to purchase or redeem Shares with AVIF by 9:00 a.m. Central Time the
following Business Day; PROVIDED, however, that AVIF shall provide
additional time to LIFE COMPANY in the event that AVIF is unable to
meet the 6:00 p.m. time stated in paragraph (a) immediately above.
Such additional time shall be equal to the additional time that AVIF
takes to make the net asset values available to LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of
redemption proceeds by AVIF, LIFE COMPANY and AVIF shall net
purchase and redemption orders with respect to each Fund and shall
transmit one net payment per Fund in accordance with Section 2.2,
below.
(d) If AVIF provides materially incorrect Share net asset value
information (as determined under SEC guidelines), LIFE COMPANY shall
be entitled to an adjustment to the number of Shares purchased or
redeemed to reflect the correct net asset value per Share. Any
material error in the calculation or reporting of net asset value per
Share, dividend or capital gain information shall be reported
promptly upon discovery to LIFE COMPANY.
2.2 TIMELY PAYMENTS.
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY to pay redemption proceeds within the time specified in
Section 22(e) of the 1940 Act or such shorter period of time as may be required
by law.
2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other
transactions under Contracts (collectively, "Contract transactions")
and that LIFE COMPANY receives prior to the close of regular trading
on the New
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York Stock Exchange on a Business Day will be executed at the net
asset values of the appropriate Funds next computed after receipt by
AVIF or its designated agent of the orders. For purposes of this
Section 2.3(a), LIFE COMPANY shall be the designated agent of AVIF for
receipt of orders relating to Contract transactions on each Business
Day and receipt by such designated agent shall constitute receipt by
AVIF; PROVIDED that AVIF receives notice of such orders by 9:00 a.m.
Central Time on the next following Business Day or such later time as
computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by LIFE COMPANY will be
effected at the net asset values of the appropriate Funds next
computed after receipt by AVIF or its designated agent of the order
therefor, and such orders will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
AVIF will furnish notice by wire or telephone (followed by written confirmation)
on or prior to the payment date to LIFE COMPANY of any income dividends or
capital gain distributions payable on the Shares of any Fund. LIFE COMPANY
hereby elects to reinvest all dividends and capital gains distributions in
additional Shares of the corresponding Fund at the ex-dividend date net asset
values until LIFE COMPANY otherwise notifies AVIF in writing, it being agreed by
the Parties that the ex-dividend date and the payment date with respect to any
dividend or distribution will be the same Business Day. LIFE COMPANY reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to LIFE COMPANY. Shares ordered from AVIF will
be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached hereto and
made a part hereof, each Party will bear, or arrange for others to bear, all
expenses incident to its performance under this
Agreement.
3.2 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable, in arranging to
print, mail and/or deliver, in a timely manner, combined or coordinated
prospectuses or other materials of AVIF and the Accounts.
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SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF and AIM represent and warrant that each Fund is currently
qualified as a regulated investment company ("RIC") under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), and
represents and warrants that it will maintain qualification of each
Fund as a RIC. AVIF will notify LIFE COMPANY immediately upon having
a reasonable basis for believing that a Fund has ceased to so
qualify or that it might not so qualify in the future.
(b) AVIF and AIM represent and warrant that they will comply and maintain
each Fund's compliance with the diversification requirements set
forth in Section 817(h) of the Code and Section 1.817-5(b) of the
regulations under the Code. AVIF will notify LIFE COMPANY immediately
upon having a reasonable basis for believing that a Fund has ceased
to so comply or that a Fund might not so comply in the future. In the
event of a breach of this Section 4.1(b) by AVIF, it will take all
reasonable steps to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Section 1.817-5 of the
regulations under the Code.
(c) LIFE COMPANY agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or
review of LIFE COMPANY or, to LIFE COMPANY's knowledge, of any
Participant, that any Fund has failed to comply with the
diversification requirements of Section 817(h) of the Code or LIFE
COMPANY otherwise becomes aware of any facts that could give rise to
any claim against AVIF or its affiliates as a result of such a
failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or
potential claim (subject to the Confidentiality provisions of
Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize
any liability that may arise as a result of such failure or
alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize any
liability of AVIF or its affiliates resulting from such
failure, including, without limitation, demonstrating,
pursuant to Treasury Regulations Section 1.817-5(a)(2), to
the Commissioner of the IRS that such failure was
inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their
legal and accounting advisors to participate in any
conferences, settlement discussions or other administrative
or judicial proceeding or contests (including judicial
appeals thereof) with the IRS, any Participant or any other
claimant regarding any claims that could give rise to
liability to AVIF or its affiliates as a result of such a
failure or alleged failure; PROVIDED, however, that LIFE
COMPANY will retain control of the conduct of such
conferences discussions, proceedings, contests or appeals;
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(v) any written materials to be submitted by LIFE COMPANY to the
IRS, any Participant or any other claimant in connection with
any of the foregoing proceedings or contests (including,
without limitation, any such materials to be submitted to the
IRS pursuant to Treasury Regulations Section 1.8I7-5(a)(2)),
(a) shall be provided by LIFE COMPANY to AVIF (together with
any supporting information or analysis); subject to the
confidentiality provisions of Section 18, at least ten (10)
business days or such shorter period to which the Parties
hereto agree prior to the day on which such proposed
materials are to be submitted, and (b) shall not be submitted
by LIFE COMPANY to any such person without the express
written consent of AVIF which shall not be unreasonably
withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their
accounting and legal advisors with such cooperation as AVIF
shall reasonably request (including, without limitation, by
permitting AVIF and its accounting and legal advisors to
review the relevant books and records of LIFE COMPANY) in
order to facilitate review by AVIF or its advisors of any
written submissions provided to it pursuant to the preceding
clause or its assessment of the validity or amount of any
claim against its arising from such a failure or alleged
failure;
(vii) LIFE COMPANY shall not with respect to any claim of the IRS
or any Participant that would give rise to a claim against
AVIF or its affiliates (a) compromise or settle any claim,
(b) accept any adjustment on audit, or (c) forego any
allowable administrative or judicial appeals, without the
express written consent of AVIF or its affiliates, which
shall not be unreasonably withheld, PROVIDED that LIFE
COMPANY shall not be required, after exhausting all
administrative penalties, to appeal any adverse judicial
decision unless AVIF or its affiliates shall have provided
an opinion of independent counsel to the effect that a
reasonable basis exists for taking such appeal; and PROVIDED
FURTHER that the costs of any such appeal shall be borne
equally by the Parties hereto; and
(viii) AVIF and its affiliates shall have no liability as a result
of such failure or alleged failure if LIFE COMPANY fails to
comply with any of the foregoing clauses (i) through (vii),
and such failure could be shown to have materially
contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to any
compromise or settlement of any claim or liability hereunder, LIFE COMPANY may,
in its discretion, authorize AVIF or its affiliates to act in the name of LIFE
COMPANY in, and to control the conduct of, such conferences, discussions,
proceedings, contests or appeals and all administrative or judicial appeals
thereof, and in that event AVIF or its affiliates shall bear the fees and
expenses associated with the conduct of the proceedings that it is so authorized
to control; PROVIDED, that in no event shall LIFE COMPANY have any liability
resulting from AVIF's refusal to accept the proposed settlement or
6
compromise with respect to any failure caused by AVIF. As used in this
Agreement, the term "affiliates" shall have the same meaning as "affiliated
person" as defined in Section 2(a)(3) of the 1940 Act.
(d) LIFE COMPANY represents and warrants that the Contracts currently are
and will be treated as annuity contracts or life insurance contracts
under applicable provisions of the Code and that it will maintain
such treatment; LIFE COMPANY will notify AVIF immediately upon having
a reasonable basis for believing that any of the Contracts have
ceased to be so treated or that they might not be so treated in the
future.
(e) LIFE COMPANY represents and warrants that each Account is a
"segregated asset account" and that interests in each Account are
offered exclusively through the purchase of or transfer into a
"variable contract," within the meaning of such terms under Section
817 of the Code and the regulations thereunder. LIFE COMPANY will
continue to meet such definitional requirements, and it will notify
AVIF immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be
met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) AVIF will use its best efforts to comply with any applicable state
insurance laws or regulations, to the extent specifically requested
in writing by LIFE COMPANY, including, the furnishing of information
not otherwise available to LIFE COMPANY which is required by state
insurance law to enable LIFE COMPANY to obtain the authority needed
to issue the Contracts in any applicable state.
(b) LIFE COMPANY represents and warrants that (i) it is an insurance
company duly organized, validly existing and in good standing under
the laws of the State of Connecticut and has full corporate power,
authority and legal right to execute, deliver and perform its duties
and comply with its obligations under this
Agreement, (ii) it has
legally and validly established and maintains each Account as a
segregated asset account under Section 38(a)-433 of the Connecticut
General Statutes and the regulations thereunder, and (iii) the
Contracts comply in all material respects with all other applicable
federal and state laws and regulations.
(c) AVIF represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of
the State of
Maryland and has full power, authority, and legal right
to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.
(d) AIM represents and warrants that it is a Delaware Corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware and has full power, authority and right to
execute, deliver and perform its duties and comply with its
obligations under this Agreement.
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4.3 SECURITIES LAWS.
(a) LIFE COMPANY and UNDERWRITER represent and warrant that (i)
interests in each Account pursuant to the Contracts will be
registered under the 1933 Act to the extent required by the 1933
Act, (ii) the Contracts will be duly authorized for issuance and
sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940
Act and Connecticut law, (iii) each Account is and will remain
registered under the 1940 Act, to the extent required by the 1940
Act, (iv) each Account does and will comply in all material respects
with the requirements of the 1940 Act and the rules thereunder, to
the extent required, (v) each Account's 1933 Act registration
statement relating to the Contracts, together with any amendments
thereto, will at all times comply in all material respects with the
requirements of the 1933 Act and the rules thereunder, (vi) LIFE
COMPANY will amend the registration statement for its Contracts
under the 1933 Act and for its Accounts under the 1940 Act from time
to time as required in order to effect the continuous offering of
its Contracts or as may otherwise be required by applicable law, and
(vii) each Account Prospectus will at all times comply in all
material respects with the requirements of the 1933 Act and the
rules thereunder.
(b) AVIF and AIM represent and warrant that (i) Shares sold pursuant to
this Agreement will be registered under the 1933 Act to the extent
required by the 1933 Act and duly authorized for issuance and sold in
compliance with
Maryland law, (ii) AVIF is and will remain registered
under the 1940 Act to the extent required by the 1940 Act, (iii) AVIF
will amend the registration statement for its Shares under the 1933
Act and itself under the 1940 Act from time to time as required in
order to effect the continuous offering of its Shares, (iv) AVIF does
and will comply in all material respects with the requirements of the
1940 Act and the rules thereunder, (v) AVIF's 1933 Act registration
statement, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933 Act
and rules thereunder, and (vi) AVIF's Prospectus will at all times
comply in all material respects with the requirements of the 1933 Act
and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and
to the extent reasonably deemed advisable by AVIF.
(d) AVIF currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it reserves the right to make such payments in
the future. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1, AVIF undertakes to have its Board of
Directors, a majority of whom are not "interested" persons of the
Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
(e) AVIF represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities
having access to the funds and/or securities of the Fund are and
continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not less
than the minimal coverage as required currently by Rule 17g-(1) of
the 1940 Act or related provisions as may be promulgated from time
to time. The aforesaid bond includes coverage for larceny and
embezzlement and is issued by a reputable bonding company.
8
4.4 NOTICE OF CERTAIN PROCEEDING, AND OTHER CIRCUMSTANCES.
(a) AVIF will immediately notify LIFE COMPANY of (i) the issuance by any
court or regulatory body of any stop order, cease and desist order,
or other similar order with respect to AVIF's registration statement
under the 1933 Act or AVIF Prospectus, (ii) any request by the SEC
for any amendment to such registration statement or AVIF Prospectus
that may affect the offering of Shares of AVIF, (iii) the initiation
of any proceedings for that purpose or for any other purpose
relating to the registration or offering of AVIF's Shares, or (iv)
any other action or circumstances that may prevent the lawful offer
or sale of Shares of any Fund in any state or jurisdiction,
including, without limitation, any circumstances in which (a) such
Shares are not registered and, in all material respects, issued and
sold in accordance with applicable state and federal law, or (b)
such law precludes the use of such Shares as an underlying
investment medium of the Contracts issued or to be issued by LIFE
COMPANY. AVIF will make every reasonable effort to prevent the
issuance, with respect to any Fund, of any such stop order, cease
and desist order or similar order and, if any such order is issued,
to obtain the lifting thereof at the earliest possible time.
(b) LIFE COMPANY will immediately notify AVIF of (i) the issuance by any
court or regulatory body of any stop order, cease and desist order,
or other similar order with respect to each Account's registration
statement under the 1933 Act relating to the Contracts or each
Account Prospectus, (ii) any request by the SEC for any amendment to
such registration statement or Account Prospectus that may affect the
offering of Shares of AVIF, (iii) the initiation of any proceedings
for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the
Contracts, or (iv) any other action or circumstances that may prevent
the lawful offer or sale of said interests in any state or
jurisdiction, including, without limitation, any circumstances in
which said interests are not registered and, in all material
respects, issued and sold in accordance with applicable state and
federal law. LIFE COMPANY will make every reasonable effort to
prevent the issuance of any such stop order, cease and desist order
or similar order and, if any such order is issued, to obtain the
lifting thereof at the earliest possible time.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LIFE COMPANY will provide to AVIF or its designated agent at least
one (1) complete copy of all SEC registration statements, Account
Prospectuses, reports, any preliminary and final voting instruction
solicitation material, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that
relate to each Account or the Contracts, contemporaneously with the
filing of such document with the SEC or other regulatory
authorities.
(b) LIFE COMPANY will provide to AVIF or its designated agent at least
one (1) complete copy of each piece of sales literature or other
promotional material in which AVIF or any of its affiliates is named,
at least five (5) Business Days prior to its use (first use for
"standardized material" as defined hereafter, unless more frequent
review is specifically requested by AVIF or its designated agent or
unless such material is amended in any respect other than to provide
updated performance figures or dates) or such shorter period as the
Parties hereto may, from time to time, agree upon. For purposes of
this paragraph, "standardized material" shall include material that
is identical in format and content to material that. AVIF or its
designated agent has reviewed and approved pursuant to this paragraph
with the exception of updated dates and performance figures. LIFE
COMPANY agrees to bear all responsibility and liability for any error
in any standardized material (e.g., transposition of numbers) to the
extent any information contained therein does not
9
conform to the information provided to LIFE COMPANY by AIM or the
Fund. No such material (including the initial approval of
standardized material) shall be used if AVIF or its designated agent
reasonably objects to such use within five (5) Business Days after
receipt of such material or such shorter period as the Parties
hereto may, from time to time, agree upon. AVIF hereby designates
AIM as the entity to receive such sales literature, until such time
as AVIF appoints another designated agent by giving notice to LIFE
COMPANY in the manner required by Section 9 hereof.
(c) Neither LIFE COMPANY nor any of its affiliates, will give any
information or make any representations or statements on behalf of
or concerning AVIF or its affiliates in connection with the sale of
the Contracts other than (i) the information or representations
contained in the registration statement, including the AVIF
Prospectus contained therein, relating to Shares, as such
registration statement and AVIF Prospectus may be amended from time
to time; or (ii) in reports or proxy materials for AVIF; or (iii) in
published reports for AVIF that are in the public domain and
approved by AVIF for distribution; or (iv) in sales literature or
other promotional material approved by AVIF, except with the express
written permission of AVIF.
(d) LIFE COMPANY shall adopt and implement procedures reasonably designed
to ensure that information concerning AVIF and its affiliates that is
intended for use only by brokers or agents selling the Contracts
(I.E., information that is not intended for distribution to
Participants) ("broker only materials") is so used, and neither AVIF
nor any of its affiliates shall be liable for any losses, damages or
expenses relating to the improper use of such broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales literature
or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in,
a newspaper, magazine, or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures, or other public media, (E.G., on-line networks such
as the Internet or other electronic messages), sales literature
(I.E., any written communication distributed or made generally
available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar
texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials
or other communications distributed or made generally available to
some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder
reports, and proxy materials and any other material constituting
sales literature or advertising under the NASD rules, the 1933 Act
or the 1940 Act.
4.6 AVIF OR AIM TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY at least one (1) complete copy or
all SEC registration statements, AVIF Prospectuses, reports, any
preliminary and final proxy material, applications for exemptions,
requests for no-action letters, and all amendments to any of the
above, that relate to AVIF or the Shares of a Fund,
contemporaneously with the filing of such document with the SEC or
other regulatory authorities.
(b) AVIF will provide to LIFE COMPANY camera ready copy of all AVIF
Prospectuses and printed copies, in an amount specified by LIFE
COMPANY, of AVIF Prospectuses (to the extent that AIM is responsible
for printing and LIFE COMPANY has not requested camera ready copy),
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statements of additional information, proxy materials, periodic
reports to shareholders and other materials required by law to be
sent to Participants who have allocated any Contract value to a Fund.
AVIF will provide such copies to LIFE COMPANY in a timely manner so
as to enable LIFE COMPANY, as the case may be, to print and
distribute such materials within the time required by law to be
furnished to Participants.
(c) AVIF will provide to LIFE COMPANY or its designated agent at least
one (1) complete copy of each piece of sales literature or other
promotional material in which LIFE COMPANY, or any of its respective
affiliates is named, or that refers to the Contracts, at least five
(5) Business Days prior to its use or such shorter period as the
Parties hereto may, from time to time, agree upon. No such material
shall be used if LIFE COMPANY or its designated agent objects to
such use within five (5) Business Days after receipt of such
material or such shorter period as the Parties hereto may, from time
to time, agree upon. LIFE COMPANY shall receive all such sales
literature until such time as it appoints a designated agent by
giving notice to AVIF in the manner required by Section 9 hereof.
(d) None of AVIF, AIM, or any of their affiliates will give any
information or make any representations or statements on behalf of or
concerning LIFE COMPANY, each Account, or the Contracts other than
(i) the information or representations contained in the registration
statement, including each Account Prospectus contained therein,
relating to the Contracts, as such registration statement and Account
Prospectus may be amended from time to time; or (ii) in published
reports for the Account or the Contracts that are in the public
domain and approved by LIFE COMPANY for distribution; or (iii) in
sales literature or other promotional material approved by LIFE
COMPANY or its affiliates, except with the express written permission
of LIFE COMPANY.
(e) AIM shall adopt and implement procedures reasonably designed to
ensure that information concerning LIFE COMPANY, and its respective
affiliates that is intended for use only by brokers or agents
selling the Contracts (I.E., information that is not intended for
distribution to Participants) ("broker only materials") is so used,
and neither LIFE COMPANY, nor any of its respective affiliates shall
be liable for any losses, damages or expenses relating to the
improper use of such broker only materials.
(f) For purposes of this Section 4.6, the phrase "sales literature or
other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in,
a newspaper, magazine, or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures, or other public media, (E.G., on-line networks such
as the Internet or other electronic messages), sales literature
(I.E., any written communication distributed or made generally
available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar
texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials
or other communications distributed or made generally available to
some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder
reports, and proxy materials and any other material constituting
sales literature or advertising under the NASD rules, the 1933 Act
or the 1940 Act.
11
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
The SEC has granted an order to AVIF exempting it from certain provisions of the
1940 Act and rules thereunder so that AVIF may be available for investment by
certain other entities, including, without limitation, separate accounts funding
variable annuity contracts or variable life insurance contracts, separate
accounts of insurance companies unaffiliated with LIFE COMPANY, and trustees of
qualified pension and retirement plans (collectively, "Mixed and Shared
Funding"). The Parties recognize that the SEC has imposed terms and conditions
for such orders that are substantially identical to many of the provisions of
this Section 5. Sections 5.2 through 5.8 below shall apply pursuant to such an
exemptive order granted to AVIF. AVIF hereby notifies LIFE COMPANY that, in the
event that AVIF implements Mixed and Shared Funding, it may be appropriate to
include in the prospectus pursuant to which a Contract is offered disclosure
regarding the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED DIRECTORS.
AVIF agrees that its Board of Directors shall at all times consist of directors
a majority of whom (the "Disinterested Directors") are not interested persons of
AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the rules
thereunder and as modified by any applicable orders of the SEC, except that if
this condition is not met by reason of the death, disqualification, or bona fide
resignation of any director, then the operation of this condition shall be
suspended (a) for a period of forty-five (45) days if the vacancy or vacancies
may be filled by the Board;(b) for a period of sixty (60) days if a vote of
shareholders is required to fill the vacancy or vacancies; or (c) for such
longer period as the SEC may prescribe by order upon application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Directors will monitor for the existence of any
material irreconcilable conflict between the interests of the Participants in
all separate accounts of life insurance companies utilizing AVIF ("Participating
Insurance Companies"), including each Account, and participants in all qualified
retirement and pension plans investing in AVIF ("Participating Plans"). LIFE
COMPANY agrees to inform the Board of Directors of AVIF of the existence of or
any potential for any such material irreconcilable conflict of which it is
aware. The concept of a "material irreconcilable conflict" is not defined by the
1940 Act or the rules thereunder, but the Parties recognize that such a conflict
may arise for a variety of reasons, including, without limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities
laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by
insurance, tax or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
12
(d) the manner in which the investments of any Fund are being managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or by
Participants of different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the
voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive orders of
the type referred to in Section 5.1 hereof, LIFE COMPANY will assist the Board
of Directors in carrying out its responsibilities by providing the Board of
Directors with all information reasonably necessary for the Board of Directors
to consider any issue raised, including information as to a decision by LIFE
COMPANY to disregard voting instructions of Participants. LIFE COMPANY's
responsibilities in connection with the foregoing shall be carried out with a
view only to the interests of Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the members
of the Board of Directors or a majority of the Disinterested
Directors that a material irreconcilable conflict exists, LIFE
COMPANY will, if it is a Participating Insurance Company for which a
material irreconcilable conflict is relevant, at its own expense and
to the extent reasonably practicable (as determined by a majority of
the Disinterested Directors), take whatever steps are necessary to
remedy or eliminate the material irreconcilable conflict, which
steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the
Accounts from AVIF or any Fund and reinvesting such assets in
a different investment medium, including another Fund of
AVIF, or submitting the question whether such segregation
should be implemented to a vote of all affected Participants
and, as appropriate, segregating the assets of any particular
group (E.G., annuity Participants, life insurance
Participants or all Participants) that votes in favor of such
segregation, or offering to the affected Participants the
option of making such a change; and
(ii) establishing a new registered investment company of the type
defined as a "management company" in Section 4(3) of the 1940
Act or a new separate account that is operated as a
management company.
(b) If the material irreconcilable conflict arises because of LIFE
COMPANY's decision to disregard Participant voting instructions and
that decision represents a minority position or would preclude a
majority vote, LIFE COMPANY may be required, at AVIF's election, to
withdraw each Account's investment in AVIF or any Fund. No charge or
penalty will be imposed as a result of such withdrawal. Any such
withdrawal must take place within six (6) months after AVIF gives
notice to
13
LIFE COMPANY that this provision is being implemented, and until
such withdrawal AVIF shall continue to accept and implement orders
by LIFE COMPANY for the purchase and redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to LIFE COMPANY
conflicts with the majority of other state regulators, then LIFE
COMPANY will withdraw each Account's investment in AVIF within six
(6) months after AVIF's Board of Directors informs LIFE COMPANY that
it has determined that such decision has created a material
irreconcilable conflict, and until such withdrawal AVIF shall
continue to accept and implement orders by LIFE COMPANY for the
purchase and redemption of Shares of AVIF. No charge or penalty will
be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving
any material irreconcilable conflict will be carried out at its
expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors will
determine whether or not any proposed action adequately remedies any
material irreconcilable conflict. In no event, however, will AVIF or
any of its affiliates be required to establish a new funding medium
for any Contracts. LIFE COMPANY will not be required by the terms
hereof to establish a new funding medium for any Contracts if an
offer to do so has been declined by vote of a majority of
Participants materially adversely affected by the material
irreconcilable conflict.
5.5 NOTICE TO LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY the Board of Directors'
determination of the existence of a material irreconcilable conflict, a
description of the facts that give rise to such conflict and the implications of
such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
LIFE COMPANY and AVIF (or its investment adviser) will at least annually submit
to the Board of Directors of AVIF such reports, materials or data as the Board
of Directors may reasonably request so that the Board of Directors may fully
carry out the obligations imposed upon it by the provisions hereof or any
exemptive order granted by the SEC to permit Mixed and Shared Funding, and said
reports, materials and data will be submitted at any reasonable time deemed
appropriate by the Board of Directors. All reports received by the Board of
Directors of potential or existing conflicts, and all Board of Directors actions
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies and Participating Plans of a conflict, and determining
whether any proposed action adequately remedies a conflict, will be properly
recorded in the minutes of the Board of Directors or other appropriate records,
and such minutes or other records will be made available to the SEC upon
request.
14
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.
5.8 OTHER REQUIREMENTS.
AVIF will require that each Participating Insurance Company and Participating
Plan enter into an agreement with AVIF that contains in substance the same
provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b), 4.5(a),
5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to
the Fund, upon six (6) months advance written notice to the other
parties, or, if later, upon receipt of any required exemptive relief
from the SEC, unless otherwise agreed to in writing by the parties;
or
(b) at the option of AVIF upon institution of formal proceedings against
LIFE COMPANY or its affiliates by the NASD, the SEC, any state
insurance regulator or any other regulatory body regarding LIFE
COMPANY's obligations under this Agreement or related to the sale of
the Contracts, the operation of each Account, or the purchase of
Shares, if, in each case, AVIF reasonably determines that such
proceedings, or the facts on which such proceedings would be based,
have a material likelihood of imposing material adverse consequences
on the Fund with respect to which the Agreement is to be terminated;
or
(c) at the option of LIFE COMPANY upon institution of formal proceedings
against AVIF, its principal underwriter, or its investment adviser
by the NASD, the SEC, or any state insurance regulator or any other
regulatory body regarding AVIF's obligations under this Agreement or
related to the operation or management of AVIF or the purchase of
AVIF Shares, if, in each case, LIFE COMPANY reasonably determines
that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse
consequences on LIFE COMPANY, or the Subaccount corresponding to the
Fund with respect to which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares
are not registered and, in all material respects, issued and sold in
accordance with any applicable federal or state law, or
15
(ii) such law precludes the use of such Shares as an underlying
investment medium of the Contracts issued or to be issued by LIFE
COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the
Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC
under Subchapter M of the Code or under successor or Similar
provisions, or if LIFE COMPANY reasonably believes that the Fund may
fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions,
or if LIFE COMPANY reasonably believes that the Fund may fail to so
comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANY cease
to qualify as annuity contracts or life insurance contracts under the
Code (other than by reason of the Fund's noncompliance with Section
817(h) or Subchapter M of the Code) or if interests in an Account
under the Contracts are not registered, where required, and, in all
material respects, are not issued or sold in accordance with any
applicable federal or state law; or
(i) upon another Party's material breach of any provision of this
Agreement; or
(k) at the option of the LIFE COMPANY in the event A I M Advisors, Inc.
terminates the Administrative Services Agreement between A I M
Advisors, Inc. and the LIFE COMPANY, for any reason.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until the Party
terminating this Agreement gives prior written notice to the other Party to this
Agreement of its intent to terminate, and such notice shall set forth the basis
for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of
Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be
given at least six (6) months in advance of the effective date of
termination unless a shorter time is agreed to by the Parties
hereto;
(b) in the event that any termination is based upon the provisions of
Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be
given at least ninety (90) days in advance of the effective date of
termination unless a shorter time is agreed to by the Parties hereto;
and
(c) in the event that any termination is based upon the provisions of
Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior
written notice shall be given as soon as possible within twenty-four
(24) hours after the terminating Party learns of the event causing
termination to be required.
16
6.3 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, AVIF will, at the option of
LIFE 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"). Specifically, without limitation, the owners of the
Existing Contracts will be permitted to reallocate investments in the Fund (as
in effect on such date), redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase payments under the Existing
Contracts. The parties agree that this Section 6.3 will not apply to any
terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of this
Agreement.
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund pursuant to
Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, this
Agreement shall nevertheless continue in effect as to any Shares of that Fund
that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date as
of which an Account owns no Shares of the affected Fund or a date (the "Final
Termination Date") six (6) months following the Initial Termination Date, except
that LIFE COMPANY may, by written notice shorten said six (6) month period in
the case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or
6.1(i).
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance to one
another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Contracts in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written consent
of each other Party.
17
SECTION 9. NOTICES
Notices and communications required or permitted by Section 9 hereof will be
given by means mutually acceptable to the Parties concerned. Each other notice
or communication required or permitted by this Agreement will be given to the
following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
AIM Variable Insurance Funds, Inc.
A I M Distributors, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
Hartford Life Insurance Company
Hartford Securities Distribution Company, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx Xx. 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx Xxxxx, Executive Vice President
Xxxxx Xxxxxx, General Counsel
Xxxxxx Xxx
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE
COMPANY will distribute all proxy material furnished by AVIF to Participants to
whom pass-through voting privileges are required to be extended and will solicit
voting instructions from Participants. LIFE COMPANY will vote Shares in
accordance with timely instructions received from Participants. LIFE COMPANY
will vote Shares that are (a) not attributable to Participants to whom
pass-through voting privileges are extended, or (b) attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Shares for which said instructions have been received from
Participants, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass through voting privileges for Participants. Neither
LIFE COMPANY nor any of its affiliates will in any way recommend action in
connection with or oppose or interfere with the solicitation of proxies for the
Shares held forsuch Participants. LIFE COMPANY reserves the right to vote shares
held in any Account in its own right, to the extent permitted by law. LIFE
COMPANY shall be responsible for assuring that each of its Accounts holding
Shares calculates voting privileges in a manner consistent with that of other
Participating Insurance Companies or in the manner required by the Mixed and
Shared Funding exemptive order obtained by AVIF. AVIF will notify LIFE COMPANY
of any changes of interpretations or amendments to Mixed and Shared
18
Funding exemptive order it has obtained. AVIF will comply with all provisions of
the 1940 Act requiring voting by shareholders, and in particular, AVIF either
will provide for annual meetings (except insofar as the SEC may interpret
Section 16 of the 1940 Act not to require such meetings) or will comply with
Section 16(c) of the 1940 Act (although AVIF is not one of the trusts described
in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when
applicable, 16(b). Further, AVIF will act in accordance with the SEC's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of directors and with whatever rules the SEC may promulgate with
respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANY concerning any decision to
elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY LIFE COMPANY AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold
harmless AVIF, AIM, their affiliates, and each person, if any, who
controls AVIF, AIM or their affiliates within the meaning of Section
15 of the 1933 Act and each of their respective directors and
officers, (collectively, the "Indemnified Parties" for purposes of
this Section 12.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of LIFE COMPANY and UNDERWRITER) or actions in respect
thereof (including, to the extent reasonable, legal and other
expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise; PROVIDED, the
Account owns shares of the Fund and insofar as such losses, claims,
damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising for the Contracts
(or any amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; PROVIDED,
that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished to LIFE COMPANY or UNDERWRITER by or on
behalf of AVIF for use in any Account's 1933 Act registration
statement, any Account Prospectus, the Contracts, or sales
literature or advertising or otherwise for use in connection
19
with the sale of Contracts or Shares (or any amendment or
supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in AVIF's 1933 Act registration statement, AVIF
Prospectus, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing, not supplied for
use therein by or on behalf of LIFE COMPANY, UNDERWRITER or their
respective affiliates and on which such persons have reasonably
relied) or the negligent, illegal or fraudulent conduct of LIFE
COMPANY, UNDERWRITER or their respective affiliates or persons
under their control (including, without limitation, their
employees and "Associated Persons," as that term is defined in
paragraph (m) of Article I of the NASD's By-Laws), in connection
with the sale or distribution of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933
Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to AVIF, AIM or their affiliates by or on
behalf of LIFE COMPANY, UNDERWRITER or their respective
affiliates for use in AVIF's 1933 Act registration statement,
AVIF Prospectus, sales literature or advertising of AVIF, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY or UNDERWRITER to
perform the obligations, provide the services and furnish the
materials required of them under the terms of this Agreement, or
any material breach of any representation and/or warranty made by
LIFE COMPANY or UNDERWRITER in this Agreement or arise out of or
result from any other material breach of this Agreement by LIFE
COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by LIFE
COMPANY to qualify as annuity contracts or life insurance
contracts under the Code, otherwise than by reason of any Fund's
failure to comply with Subchapter M or Section 817(h) of the Code.
(b) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any losses, claims, damages, liabilities
or actions to which an Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in
the performance by that Indemnified Party of its duties or by reason
of that Indemnified Party's reckless disregard of obligations or
duties (i) under this Agreement, or (ii) to AVIF or AIM.
20
(c) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this Section
12.1 with respect to any action against an Indemnified Party unless
AVIF or AIM shall have notified LIFE COMPANY and UNDERWRITER in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the action shall have been served
upon such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure
to notify LIFE COMPANY and UNDERWRITER of any such action shall not
relieve LIFE COMPANY and UNDERWRITER from any liability which they may
have to the Indemnified Party against whom such action is brought
otherwise than on account of this Section 12.1. Except as otherwise
provided herein, in case any such action is brought against an
Indemnified Party, LIFE COMPANY and UNDERWRITER shall be entitled to
participate, at their own expense, in the defense of such action and
also shall be entitled to assume the defense thereof, with counsel
approved by the Indemnified Party named in the action, which approval
shall not be unreasonably withheld. After notice from LIFE COMPANY or
UNDERWRITER to such Indemnified Party of LIFE COMPANY's or
UNDERWRITER's election to assume the defense thereof, the Indemnified
Party will cooperate fully with LIFE COMPANY and UNDERWRITER and shall
bear the fees and expenses of any additional counsel retained by it,
and neither LIFE COMPANY nor UNDERWRITER will be liable to such
Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
12.2 OF LIFE COMPANY AND UNDERWRITER BY AVIF AND AIM.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF and AIM agree to indemnify and hold harmless
LIFE COMPANY, UNDERWRITER, their respective affiliates, and each
person, if any, who controls LIFE COMPANY, UNDERWRITER or their
respective affiliates within the meaning of Section 15 of the 1933
Act and each of their respective directors and officers,
(collectively, the "Indemnified Parties" for purposes of this
Section 12.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of AVIF and/or AIM) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses), to
which the Indemnified Parties may become subject under any statute,
regulation, at common law, or otherwise; PROVIDED, the Account owns
shares of the Fund and insofar as such losses, claims, damages,
liabilities or actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
AVIF's 1933 Act registration statement, AVIF Prospectus or
sales literature or advertising of AVIF (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 AVIF or its
affiliates by or on behalf of LIFE COMPANY, UNDERWRITER or
their respective affiliates for use in AVIF's 1933 Act
registration statement, AVIF Prospectus, or in sales
literature or
21
advertising or otherwise for use in connection with the sale
of Contracts or Shares (or any amendment or supplement to
any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statement,
any Account Prospectus, sales literature or advertising for
the Contracts, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of
AVIF, AIM or their affiliates and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent
conduct of AVIF, AIM or their affiliates or persons under its
control (including, without limitation, their employees and
"Associated Persons" as that term is defined in Section (n)
of Article I of the NASD By-Laws), in connection with the
sale or distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
any Account's 1933 Act registration statement, any Account
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon and in
conformity with information furnished to LIFE COMPANY,
UNDERWRITER or their respective affiliates by or on behalf
of AVIF or AIM for use in any Account's 1933 Act
registration statement, any Account Prospectus, sales
literature or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any
material breach of any representation and/or warranty made by
AVIF in this Agreement or arise out of or result from any
other material breach of this Agreement by AVIF.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, AVIF and AIM agree to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims,
damages, liabilities (including amounts paid in settlement thereof
with, the written consent of AVIF and/or AIM) or actions in respect
thereof (including, to the extent reasonable, legal and other
expenses) to which the Indemnified Parties may become subject
directly or indirectly under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or actions
directly or indirectly result from or arise out of the failure of any
Fund to operate as a regulated investment company in compliance with
(i) Subchapter M of the Code and regulations thereunder, or (ii)
Section 817(h) of the Code and regulations thereunder, including,
without limitation, any income taxes and related penalties,
rescission charges, liability under state law to Participants
asserting liability against LIFE COMPANY pursuant to the Contracts,
the costs of any ruling and closing agreement or other settlement
with the IRS, and the cost of any substitution by LIFE COMPANY of
Shares of another investment company or portfolio for those of any
adversely
22
affected Fund as a funding medium for each Account that LIFE COMPANY
reasonably deems necessary or appropriate as a result of the
noncompliance.
(c) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any losses, claims, damages, liabilities or actions to
which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the
performance by that Indemnified Party of its duties or by reason of
such Indemnified Party's reckless disregard of its obligations and
duties (i) under this Agreement, or (ii) to LIFE COMPANY,
UNDERWRITER, each Account or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the
Indemnified Party shall have notified AVIF and/or AIM in writing
within a reasonable time after the summons or other first legal
process giving information of the nature of the action shall have
been served upon such Indemnified Party (or after such Indemnified
Party shall have received notice of such service on any designated
agent), but failure to notify AVIF or AIM of any such action shall
not relieve AVIF or AIM from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than
on account of this Section 12.2. Except as otherwise provided herein,
in case any such action is brought against an Indemnified Party, AVIF
and/or AIM will be entitled to participate, at its own expense, in
the defense of such action and also shall be entitled to assume the
defense thereof (which shall include, without limitation, the conduct
of any ruling request and closing agreement or other settlement
proceeding with the IRS), with counsel approved by the Indemnified
Party named in the action, which approval shall not be unreasonably
withheld. After notice from AVIF and/or AIM to such Indemnified Party
of AVIF's or AIM's election to assume the defense thereof, the
Indemnified Party will cooperate fully with AVIF and AIM and shall
bear the fees and expenses of any additional counsel retained by it,
and AVIF and AIM will not be liable to such Indemnified Party under
this Agreement for any legal or other expenses subsequently incurred
by such Indemnified Party independently in connection with the
defense thereof, other than reasonable costs of investigation.
(e) In no event shall AVIF or AIM be liable under the indemnification
provisions contained in this Agreement to any individual or entity,
including, without limitation, LIFE COMPANY, UNDERWRITER or any
other Participating Insurance Company or any Participant, with
respect to any losses, claims, damages, liabilities or expenses that
arise out of or result from (i) a breach of any representation,
warranty, and/or covenant made by LIFE COMPANY or UNDERWRITER
hereunder or by any Participating Insurance Company under an
agreement containing substantially similar representations,
warranties and covenants; (ii) the failure by LIFE COMPANY or any
Participating Insurance Company to maintain its segregated asset
account (which invests in any Fund) as a legally and validly
established segregated asset account under applicable state law and
as a duly registered unit investment trust under the provisions of
the 1940 Act (unless exempt therefrom); or (iii) the failure by LIFE
COMPANY or any Participating Insurance Company to maintain its
variable annuity or life insurance contracts (with respect to which
any Fund serves as an underlying funding vehicle) as annuity
contracts or life insurance contracts under applicable provisions of
the Code.
23
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party referred to
in Sections 12.1(c) or 12.2(d) above of participation in or control of any
action by the indemnifying Party will in no event be deemed to be an admission
by the indemnifying Party of liability, culpability or responsibility, and the
indemnifying Party will remain free to contest liability with respect to the
claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted under and
in accordance with
Maryland law, without regard for that state's principles of
conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more counterparts, each
of which taken together will constitute one and the same instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby.
SECTION 16. RIGHTS CUMULATIVE
The rights, remedies and obligations contained in this Agreement are cumulative
and are in addition to any and all rights, remedies and obligations, at law or
in equity, that the Parties are entitled to under federal and state laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for purposes of
reference only and shall not limit or define the meaning of the provisions of
this Agreement.
24
SECTION 18. CONFIDENTIALITY
AVIF acknowledges that the identities of the customers of LIFE COMPANY or any of
its affiliates (collectively, the "LIFE COMPANY Protected Parties" for purposes
of this Section 18), information maintained regarding those customers, and all
computer programs and procedures or other information developed by the LIFE
COMPANY Protected Parties or any of their employees or agents in connection with
LIFE COMPANY's performance of its duties under this Agreement are the valuable
property of the LIFE COMPANY Protected Parties. AVIF agrees that if it comes
into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY Protected Parties' customers who
also maintain accounts directly with AVIF, AVIF will hold such information or
property in confidence and refrain from using, disclosing or distributing any of
such information or other property except: (a) with LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
acknowledges that the identities of the customers of AVIF or any of its
affiliates (collectively, the "AVIF Protected Parties" for purposes of this
Section 18), information maintained regarding those customers, and all computer
programs and procedures or other information developed by the AVIF Protected
Parties or any of their employees or agents in connection with AVIF's
performance of its duties under this Agreement are the valuable property of the
AVIF Protected Parties. LIFE COMPANY agrees that if it comes into possession of
any list or compilation of the identities of or other information about the AVIF
Protected Parties' customers or any other information or property of the AVIF
Protected Parties, other than such information as may be independently developed
or compiled by LIFE COMPANY from information supplied to it by the AVIF
Protected Parties' customers who also maintain accounts directly with LIFE
COMPANY, LIFE COMPANY will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or other
property except: (a) with AVIF's prior written consent; or (b) as required by
law or judicial process. Each party acknowledges that any breach of the
agreements in this Section 18 would result in immediate and irreparable harm to
the other parties for which there would be no adequate remedy at law and agree
that in the event of such a breach, the other parties will be entitled to
equitable relief by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems appropriate.
SECTION 19. TRADEMARKS AND FUNDS NAMES
(a) A I M Management Group Inc. ("AIM" or "licensor"), an affiliate of AVIF,
owns all right, title and interest in and to the name, trademark and service
xxxx "AIM" and such other tradenames, trademarks and service marks as may be set
forth on Schedule B, as amended from time to time by written notice from AIM to
LIFE COMPANY (the "AIM licensed marks" or the licensor's licensed marks") and is
authorized to use and to license other persons to use such marks. LIFE COMPANY
and its affiliates are hereby granted a non-exclusive license to use the AIM
licensed marks in connection with LIFE COMPANY's performance of the services
contemplated under this Agreement, subject to the terms and conditions set forth
in this Section 19.
(b) The grant of license to LIFE COMPANY and its affiliates (the "licensee")
shall terminate automatically upon termination of this Agreement. Upon automatic
termination, the
25
licensee shall cease to use the licensor's licensed marks, except that LIFE
COMPANY shall have the right to continue to service any outstanding Contracts
bearing any of the AIM licensed marks. Upon AIM's elective termination of this
license, LIFE COMPANY and its affiliates shall immediately cease to issue any
new annuity or life insurance contracts bearing any of the AIM licensed marks
and shall likewise cease any activity which suggests that it has any right under
any of the AIM licensed marks or that it has any association with AIM, except
that LIFE COMPANY shall have the right to continue to service outstanding
Contracts bearing any of the AIM licensed marks.
(c) The licensee shall obtain the prior written approval of the licensor for
the public release by such licensee of any materials bearing the licensor's
licensed marks. The licensor's approvals shall not be unreasonably withheld.
(d) During the term of this grant of license, a licensor may request that a
licensee submit samples of any materials bearing any of the licensor's licensed
marks which were previously approved by the licensor but, due to changed
circumstances, the licensor may wish to reconsider. If, on reconsideration, or
on initial review, respectively, any such samples fail to meet with the written
approval of the licensor, then the licensee shall immediately cease distributing
such disapproved materials. The licensor's approval shall not be unreasonably
withheld, and the licensor, when requesting reconsideration of a prior approval,
shall assume the reasonable expenses of withdrawing and replacing such
disapproved materials. The licensee shall obtain the prior written approval of
the licensor for the use of any new materials developed to replace the
disapproved materials, in the manner set forth above.
(e) The licensee hereunder: (i) acknowledges and stipulates that, to the best
of the knowledge of the licensee, the licensor's licensed marks are valid and
enforceable trademarks and/or service marks and that such licensee does not own
the licensor's licensed marks and claims no rights therein other than as a
licensee under this Agreement; (ii) agrees never to contend otherwise in legal
proceedings or in other circumstances; and (iii) acknowledges and agrees that
the use of the licensor's licensed marks pursuant to this grant of license shall
inure to the benefit of the licensor.
SECTION 20. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including, without limitation, the SEC,
the NASD and state insurance regulators) and will permit each other and such
authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
------------
26
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in
their names and on their behalf by and through their duly authorized officers
signing below.
AIM VARIABLE INSURANCE FUNDS,
INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------ ------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxx
------------------------------ ------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxx
Title: Assistant Secretary Title: President
HARTFORD LIFE INSURANCE COMPANY,
on behalf of itself and its
separate accounts
Attest: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------------ ------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
Title: Assistant General Counsel Title: Vice President
HARTFORD SECURITIES DISTRIBUTION
COMPANY, INC.
Attest: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------------ ------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx
Title: Assistant General Counsel Title: Assistant Secretary
27
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
- AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. High Yield Fund
AIM V.I. Value Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Hartford Life Separate Account Two
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Nations Variable Annuity Contract
28
SCHEDULE B
- AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Capital Appreciation Fund
AIM V.I. High Yield Fund
AIM V.I. Value Fund
- AIM and Design
[LOGO]
AIM(R)
29
SCHEDULE C
EXPENSE ALLOCATIONS
LIFE COMPANY AVIF
----------------------------------------------------------------------------------------------------------------
preparing, maintaining and filing the Account's preparing, maintaining and filing the Fund's registration
registration statement with the SEC and State statement with the SEC and State Regulators, as required
Regulators, as required
text composition for Account prospectuses and text composition for Fund prospectuses and supplements
supplements
text alterations of prospectuses (Account) and text alterations of prospectuses (Fund) and supplements
supplements (Account) (Fund)
printing Account and Fund prospectuses and a camera ready Fund prospectus, printing costs of Fund
supplements prospectus to existing policy owners with amounts allocated
to the Fund
text composition and printing Account SAIs text composition and printing Fund SAIs
mailing and distributing Account SAIs to policy mailing and distributing Fund SAIs to policy owners upon
owners upon request by policy owners request by policy owners
mailing and distributing prospectuses (Account) and mailing and distribution of prospectuses and supplements
supplements (Account) to policy owners of record as (Fund) to policy owners of record. Life Company to advise
required by Federal Securities Laws and to if it wants either (1) printed Fund prospectuses or (2)
prospective purchasers (Account and Fund) camera ready copy with reimbursement by Fund of its pro
rata share of printing expense
text composition (Account), printing, mailing, and text composition of annual and semi-annual reports (Fund)
distributing annual and semi-annual reports for and pro rata share of expense of printing, mailing and
Account (Fund and Account, as applicable) distributing reports (Fund) to policy owners of record
participating in the Fund
text composition, printing, mailing, distributing, text composition, printing, mailing, distributing and
and tabulation of proxy statements and voting tabulation of proxy statements and voting instruction
instruction solicitation materials to policy owners solicitation materials to policy owners with respect to
with respect to proxies related to the Account proxies related to the Fund
preparation, printing and distributing sales
material and advertising relating to the Funds,
insofar as such materials relate to the Contracts
and filing such materials with and obtaining
approval from, the SEC, the NASD, any state
insurance regulatory authority, and any other
appropriate regulatory authority, to the extent
required
30
