EXHIBIT 1. (8) (I)
Form of Participation Agreement in the
Salomon Brothers Variable Series Funds Inc.
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of __________, 1998
("Agreement"), by and among Salomon Brothers Variable Series Funds Inc, a
Maryland corporation (the "Fund"), Salomon Brothers Asset Management Inc, a
Delaware Corporation (the "Adviser") and ____________________________________,a
[STATE) 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").
WITNESSETH THAT:
WHEREAS, the Fund 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");
WHEREAS, the Fund is available to the extent set forth herein
to act as the investment vehicle for separate accounts established for variable
life insurance policies and variable annuity contracts to be offered by
insurance companies which have entered into participation agreements with the
Fund and ("Participating Insurance Companies");
WHEREAS, the Fund currently consists of seven separate
investment portfolios, shares ("Shares") of each of which are registered under
the Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Fund will make Shares of each investment
portfolio of the Fund listed on Schedule A hereto (each, a "Portfolio" and
collectively, the "Portfolios") as the Parties hereto may amend from time to
time available for purchase by the Accounts;
WHEREAS, the Fund has recieved an order (the "Order") from the
SEC to permit Participating Insurance Companies and variable annuity and
variable life insurance separate accounts exemptions from the provisions of
sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies;
WHEREAS, LIFE COMPANY will be the issuer of certain variable
annuity contracts and variable life insurance policies (collectively, the
"Contracts") as set forth on Schedule A hereto, as the Parties hereto may amend
from time to time, which Contracts, if required by applicable law, will be
registered under the 1933 Act;
WHEREAS, LIFE COMPANY will, to the extent set forth herein,
fund the variable life insurance policies and variable annuity 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);
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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 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);
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, LIFE COMPANY intends to purchase Shares in one or more of the
Portfolios on behalf of the Accounts to fund the Contracts; and
NOW, THEREFORE, in consideration of the mutual benefits and
promises contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE PORTFOLIOS
1.1 AVAILABLE PORTFOLIOS
The Fund will make Shares of each Portfolio listed on Schedule
A available to LIFE COMPANY for purchase and redemption at net asset value next
computed after the Fund's receipt of a purchase or redemption order and with no
sales charges, in accordance with the Fund's then current prospectus and subject
to the terms and conditions of this Agreement. The Board of Directors of the
Fund may refuse to sell Shares of any Portfolio to any person, or suspend or
terminate the offering of Shares of any Portfolio if such action is required by
law or by regulatory authorities having jurisdiction or 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 Portfolio.
1.2 ADDITION, DELETION OR MODIFICATION OF PORTFOLIOS.
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The Parties hereto may agree, from time to time, to add other
Portfolios to provide additional funding alternatives for the Contracts, or to
delete or modify existing Portfolios, by amending Schedule A hereto. Upon such
amendment to Schedule A, any applicable reference to a Portfolio, the Fund, or
its Shares herein shall include a reference to all Portfolios set forth on
Schedule A as then amended. 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.
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The Fund represents that shares of the Portfolios will be sold
only to Participating Insurance Companies, their separate accounts and qualified
pension and retirement plans ("Plans") and that no Shares of any Portfolio have
been or will be sold to the general public.
SECTION 2. PROCESSING TRANSACTIONS
2.1 PLACING ORDERS.
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(a) The Fund or its designated agent will use its best effort
to provide LIFE COMPANY with the net asset value per Share for each Portfolio by
6:30 p.m. Eastern Time on each Business Day. As used herein, "Business Day"
shall mean any day on which (i) the New York Stock Exchange is open for regular
trading, and (ii) the Fund calculates the Portfolios' net asset value.
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(b) LIFE COMPANY will use the data provided by the Fund 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 the Fund by 9:00 a.m. Eastern Time the following Business Day.
(c) With respect to payment of the purchase price by LIFE
COMPANY and of redemption proceeds by the Fund, LIFE COMPANY and the Fund shall
net purchase and redemption orders with respect to each Portfolio and shall
transmit one net payment per Portfolio in accordance with Section 2.2, below.
(d) If the Fund 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 PAYMENTS
(a) LIFE COMPANY shall pay for Shares of each Portfolio on the
same day that it notifies the Fund of a purchase request for such Shares.
Payment for Shares shall be made in federal funds transmitted to the Fund by
wire to be received by the Fund by 1:00 P.M. Eastern Time on the day the Fund is
notified of the purchase request for Shares. If payment in federal funds for any
purchase is not received, or is received by the Fund after 1:00 p.m. Eastern
Time on such Business Day, LIFE COMPANY shall promptly, upon the Fund's request
in writing, reimburse the Fund for any charges, costs, fees, interest or other
expenses incurred by the Fund in connection with any advances to, or borrowings
or overdrafts by, the Fund, or any similar expenses incurred by the Fund, as a
result of non-payment or late payment.
(b) The Fund will wire payment in federal funds for net
redemptions to an account designated by LIFE COMPANY by 1:00 p.m. Eastern Time
on the business day succeeding the day 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 0000 Xxx. The Fund shall not
bear any responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by LIFE COMPANY.
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 York Stock Exchange on
a Business Day will be executed at the net asset values of the appropriate
Portfolios next computed after receipt by the Fund or its designated agent of
the orders. For purposes of this Section 2.3(a), LIFE COMPANY shall be the
designated agent of the Fund for receipt of orders relating to Contract
transactions on each Business Day and receipt by such designated agent shall
constitute receipt by the Fund; PROVIDED that the Fund receives notice of such
orders by 9:00 a.m. Eastern Time on the following Business Day.
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(b) All other Share purchases and redemptions by LIFE COMPANY
will be effected at the net asset values of the appropriate Portfolios next
computed after receipt by the Fund or its designated agent of the order
therefor, and such orders will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS
The Fund 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
Portfolio. LIFE COMPANY hereby elects to reinvest all dividends and capital
gains distributions in additional Shares of the corresponding Portfolio at the
ex-dividend date net asset values until LIFE COMPANY otherwise notifies the Fund
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. Any
such revocation will take effect with respect to the next income dividend or
capital gain distribution following receipt by the Fund of such notification
from LIFE COMPANY.
2.5 BOOK ENTRY
Issuance and transfer of Portfolio Shares will be by book
entry only. Stock certificates will not be issued to LIFE COMPANY. Shares
ordered from the Fund will be recorded in an appropriate title for LIFE COMPANY,
on behalf of its Accounts.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL
(a) Except as otherwise specifically provided herein, each
party will bear all expenses incident to its performance under this Agreement.
(b) The Fund shall pay no fee or other compensation to the
LIFE COMPANY under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Fund may make payments to the LIFE COMPANY or to the
underwriter for the Contracts if and in amounts agreed to by the Fund in
writing. Presently, no such payments are contemplated.
3.2 REGISTRATION
(a) The Fund will bear the cost of its registering as a
management investment company under the 1940 Act and registering its Shares
under the 1933 Act, and keeping such registrations current and effective;
including, without limitation, the preparation of and filing with the SEC of
Forms N-SAR and Rule 24f-2 Notices with respect to the Fund and its Shares and
payment of all applicable registration or filing fees with respect to any of the
foregoing.
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(b) LIFE COMPANY will bear the cost of registering, to the
extent required, each Account as a unit investment trust under the 1940 Act and
registering units of interest under the Contracts under the 1933 Act and keeping
such registrations current and effective; including, without limitation, the
preparation and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with
respect to each Account and its units of interest and payment of all applicable
registration or filing fees with respect to any of the foregoing.
3.3 DISTRIBUTION EXPENSES
LIFE COMPANY will bear the expenses of distribution. These
expenses would include by way of illustration, but are not limited to, the costs
of distributing to Contract owners, annuitants, insureds or participants (as
appropriate) under the Contracts (collectively, "Participants") the following
documents, whether they relate to the Account or the Fund: prospectuses,
statements of additional information, proxy materials and periodic reports.
These costs would also include the costs of preparing, printing, and
distributing sales literature and advertising relating to the Portfolios (all of
which require the prior written consent of the Fund) to the extent such
materials are distributed in connection with the Contracts, as well as filing
such materials with, and obtaining approval from, the SEC, NASD, any state
insurance regulatory authority, and any other appropriate regulatory authority,
to the extent required by law.
3.4 OTHER EXPENSES
(a) The Fund will bear, or arrange for others to bear, the
costs of preparing, filing with the SEC and setting for printing the Fund's
prospectus, statement of additional information and any amendments or
supplements thereto (collectively, the "Fund Prospectus"), periodic reports to
shareholders, the Fund proxy material and other shareholder communications to
the extent required by law or as deemed appropriate by the Fund.
(b) LIFE COMPANY will bear the costs of preparing, filing with
the SEC and printing each Account's prospectus, statement of additional
information and any amendments or supplements thereto (collectively, the
"Account Prospectus"), any periodic reports to Participants, voting instruction
solicitation material and the Fund prospectus, and other Participant
communications to the extent required by law or as deemed appropriate by LIFE
COMPANY.
(c) LIFE COMPANY will, to the extent required by law, print in
quantity and deliver to existing Participants the documents described in Section
3.4(b) above and will deliver to such Participants the prospectuses as provided
by the Fund. LIFE COMPANY may elect to receive such prospectuses in camera ready
or computer diskette format. The Fund will print the Fund statement of
additional information, proxy materials relating to the Fund and periodic
reports of the Fund.
3.5 PARTIES TO COOPERATE
Each party agrees to cooperate with the other, in arranging to
print, mail and/or deliver, in a timely manner, combined or coordinated
prospectuses or other materials of the Fund and the Accounts.
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SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS
(a) The Fund represents and warrants that it will elect to be
qualified as a regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and represents that it
will qualify and maintain its qualification as a RIC and to comply with the
diversification requirements set forth in Section 817(h) of the Code and the
regulations thereunder. The Fund will notify LIFE COMPANY immediately upon
having a reasonable basis for believing that it has ceased to so qualify or so
comply, or that it might not so qualify or so comply in the future.
(b) 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 the Fund 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.
(c) 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 the Fund 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) LIFE COMPANY represents and warrants that (i) it is an
insurance company duly organized, validly existing and in good standing under
all applicable laws 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 all applicable laws and regulations,
and (iii) the Contracts comply in all material respects with all applicable
federal and state laws and regulations.
(b) The Fund 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 corporate power, authority, and legal right to
execute, deliver, and perform its duties and comply with its obligations under
this Agreement. Notwithstanding the foregoing, the Fund, makes no
representations as to whether any aspect of its operations (including, but not
limited to, fees and expenses and investment policies) otherwise complies with
the insurance laws or regulations of any state.
(c) The Adviser represents that it is and warrants that it
shall remain duly registered as an investment adviser under all applicable
federal and state securities laws and agrees that it shall perform its
obligations to the Fund in accordance in all material respects with such laws.
(d) LIFE COMPANY acknowledges and agrees that it is the
responsibility of LIFE COMPANY and other Participating Insurance Companies to
determine investment restrictions under state insurance law applicable to any
Portfolio, and that the Fund shall bear no responsibility to LIFE COMPANY, for
any such determination or the correctness of such determination. LIFE COMPANY
has determined that the investment restrictions set forth in the current Fund
Prospectus are sufficient to comply with all investment restrictions under state
insurance laws that are currently applicable to the Portfolios as a result of
the Accounts' investment therein. LIFE COMPANY shall inform the Fund of any
additional investment restrictions imposed by state insurance law after the date
of this agreement that may become applicable to the Fund or any Portfolio from
time to time as a result of the Accounts' investment therein. Upon receipt of
any such information from LIFE COMPANY or any other Participating Insurance
Company, the Fund shall determine whether it is in the best interests of
shareholders to comply with any such restrictions. If the Fund determines that
it is not in the best interests of shareholders to comply with a restriction
determined to be applicable by the LIFE COMPANY, the Fund shall so inform LIFE
COMPANY, and the Fund and LIFE COMPANY shall discuss alternative accommodations
in the circumstances.
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4.3 SECURITIES LAWS
(a) LIFE COMPANY represents and warrants that (i) interests in
each Account pursuant to the Contracts will be registered under the 1933 Act to
the extent required by the 1933 Act, (ii) the Contracts will be duly authorized
for issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and
applicable state 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, (vii) each Account Prospectus will at all times comply in all
material respects with the requirements of the 1933 Act and the rules
thereunder, (viii) all of its directors, officers, employees, investment
advisers, and other individuals/entities having access to the funds and/or
securities of any Portfolio are and continue to be at all times covered by a
blanket fidelity bond or similar coverage covering such risks and in such amount
as is customary for companies engaged in similar businesses in similar
industries. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
(b) The Fund represents and warrants that (i) Shares sold
pursuant to this Agreement will be registered under the 1933 Act to the extent
required by the 1933 Act and will be duly authorized for issuance and sold in
compliance with Maryland law, (ii) the Fund is and will remain registered under
the 1940 Act to the extent required by the 1940 Act, (iii) the Fund will amend
the registration statement under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its Shares, (iv) the
Fund does and will comply in all material respects with the requirements of the
1940 Act and the rules thereunder, (v) the Fund'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,
(vi) the Fund's Prospectus will at all times comply in all material respects
with the requirements of the 1933 Act and the rules thereunder and (vii) all of
its directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of any
Portfolio 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.
(c) The Fund 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 the Fund.
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4.4 ANTI-MONEY LAUNDERING PROCEDURES.
LIFE COMPANY agrees that: (a) it is its responsibility to have
in place anti-money laundering procedures which comply with all local
laws in jurisdictions in which Shares or Contracts are distributed, (b)
it is its sole responsibility to take all reasonable steps to determine
1) the true identity of any purchaser of a Contract ("client"), 2) the
source of the client's funds and 3) that the client is not involved in
money laundering activities, and (c) it is its sole responsibility to
comply with any other "know your customer" requirements. Unless
otherwise agreed, LIFE COMPANY agrees that it is its responsibility to
monitor client transactions in order to detect attempted or actual
money laundering. LIFE COMPANY further agrees to promptly provide Fund,
upon Fund's reasonable request, with documentation relating to LIFE
COMPANY's anti-money laundering policies and analysis.
4.5 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) The Fund 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 the Fund's registration statement
under the 1933 Act or the Fund Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or the Fund Prospectus that may affect
the offering of Shares of any Portfolio, (iii) the initiation of any proceedings
for that purpose or for any other purpose relating to the registration or
offering of Shares of any Portfolio, or (iv) any other action or circumstances
that may prevent the lawful offer or sale of Shares of any Portfolio in any
state or jurisdiction, including, without limitation, any circumstances in which
such Shares are not registered and are not, in all material respects, issued and
sold in accordance with applicable state and federal law. The Fund 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.
(b) LIFE COMPANY will immediately notify the Fund 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 any
Portfolio, (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 are not, 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.
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4.6 DOCUMENTS PROVIDED BY LIFE COMPANY; INFORMATION ABOUT
THE FUND.
(a) LIFE COMPANY will provide to the Fund 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 the Fund or its designated
agent at least one (1) complete copy of each piece of sales literature or other
promotional material in which any Portfolio, the Fund or any of its affiliates
is named, at least ten (10) Business Days prior to its use or such shorter
period as the Parties hereto may, from time to time, agree upon. No such
material shall be used if the Fund or its designated agent objects to such use
within ten (10) Business Days after receipt of such material or such shorter
period as the Parties hereto may, from time to time, agree upon.
(c) Neither LIFE COMPANY nor any of its affiliates, will give
any information or make any representations or statements on behalf of or
concerning any Portfolio, the Fund or its affiliates in connection with the sale
of the Contracts other than (i) the information or representations contained in
the then current registration statement, including the Fund Prospectus contained
therein, relating to Shares, as such registration statement and the Fund
Prospectus may be amended from time to time; (ii) in reports or proxy materials
for the Fund; (iii) in published reports for the Fund that are in the public
domain and approved by the Fund for distribution by LIFE COMPANY; or (iv) in
sales literature or other promotional material approved by the Fund for use by
LIFE COMPANY, except with the express written permission of the Fund.
(d) LIFE COMPANY shall adopt and implement procedures
reasonably designed to ensure that information concerning the Fund 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 the Fund 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 0000 Xxx.
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4.7 DOCUMENTS PROVIDED BY FUND; INFORMATION ABOUT LIFE
COMPANY.
(a) The Fund will provide to LIFE COMPANY at least one (1)
complete copy of all SEC registration statements, Fund 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
the Fund or the Shares of a Portfolio, contemporaneously with the filing of such
document with the SEC or other regulatory authorities.
(b) The Fund will provide to LIFE COMPANY copies of all Fund
prospectuses, and printed copies of all 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
Portfolio. The Fund will provide such copies to LIFE COMPANY in a timely manner
so as to enable LIFE COMPANY to print and distribute such materials within the
time required by law to be furnished to Participants.
(c) The Fund 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 ten (10) Business Days prior
to its use or such shorter period as the Parties hereto may, from time to time,
agree upon. No such material shall be used if LIFE COMPANY or its designated
agent reasonably objects to such use within ten (10) Business Days after receipt
of such material or such shorter period as the Parties hereto may, from time to
time, agree upon.
(d) Neither the Fund nor any of its 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; (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) The Fund shall cause its principal underwriter to 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
(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.
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SECTION 5. MIXED AND SHARED FUNDING
LIFE COMPANY acknowledges that the Fund has the Order granting
relief from various provisions of the 1940 Act and the rules thereunder to the
extent necessary to permit Fund shares to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies, as well as by Plans. Any
conditions or undertakings that are imposed on LIFE COMPANY and the Fund by
virtue of such order are be incorporated herein by reference, as of the date
such order is granted, as though set forth herein in full, and the parties to
this Agreement shall comply with such conditions and undertakings to the extent
applicable to each such party.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION
Subject to Section 6.4 below, this Agreement will terminate as
to a Portfolio:
(a) at the option of any party, with or without cause, upon
one (1) year advance written notice to the other parties; or
(b) at the option of LIFE Company if shares of a Portfolio are
not reasonably available to meet the requirements of the Contracts as determined
by LIFE COMPANY PROVIDED, however, that such a termination shall apply only to
the Portfolio(s) not available. Prompt written notice of the election to
terminate for such cause shall be furnished by LIFE COMPANY to the Fund;
(c) at the option of the Fund upon institution of formal
processing 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, the Fund
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 Portfolio with respect to which the Agreement is to
be terminated; or
(d) at the option of LIFE COMPANY upon institution of formal
proceedings against the Fund, its principal underwriter, or its investment
adviser by the NASD, the SEC, or any state insurance regulator or any other
regulatory body regarding the Fund's obligations under this Agreement or related
to the operation or management of the applicable Portfolio or the purchase of
the applicable Portfolios, 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 Portfolio with respect to which
the Agreement is to be terminated; or
(e) at the option of any party in the event that (i) a
Portfolio's Shares are not registered and, in all material respects, issued and
sold in accordance with any applicable federal or state law, or (ii) such law
precludes the use of such Shares as an underlying investment medium of the
Contracts issued or to be issued by LIFE COMPANY; or
(f) at the option of LIFE COMPANY if the applicable Portfolio
ceases to qualify as a RIC under Subchapter M of the Code or under successor or
similar provisions or fails to comply with the diversification requirements of
Section 817(h) of the Code or such requirements under successor or similar
provisions or if Life Company reasonably believes the applicable Portfolio may
so cease to qualify or comply and, in each case, the Fund upon written request
fails to provide reasonable assurance that it will take action to cure or
correct such failure; or
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(g) at the option of the Fund if the Contracts issued by LIFE
COMPANY cease to qualify as annuity contracts or life insurance contracts under
the Code or if Fund reasonably believes the applicable Contracts may so cease to
qualify, 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 and, in each case, LIFE
COMPANY upon written request fails to provide reasonable assurance that it will
take action to cure or correct such failure; or
(h) at the option of the Fund by written notice to LIFE
COMPANY, if the Fund shall determine in its sole judgment exercised in good
faith, that LIFE COMPANY and/or its 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; or
(i) at the option of LIFE COMPANY by written notice to the
Fund, if LIFE COMPANY shall determine in its sole judgment exercised in good
faith, that the Fund and/or its 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; or
(j) at the option of LIFE COMPANY by written notice to the
Fund, if LIFE COMPANY shall determine in its sole judgment exercised in good
faith, that the Adviser and/or its 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; or
(k) at the option of either party upon a determination by a
majority of the Fund's Board of Directors, or a majority of the Fund's
disinterested directors, that an irreconcilable material conflict exists among
the interests of: (1) all contract owners of variable insurance products of all
separate accounts; or (2) the interests of the Participating Insurance Companies
investing in the Fund; or
(l) at the option of any party upon another party's
material breach of any provision of this Agreement; or
(m) with respect to any Account, upon requisite vote of the
Contract owners having an interest in that Account (or any subaccount) or upon
the receipt of a substitution order by the SEC to substitute the shares of
another investment company for the corresponding Fund shares in accordance with
the terms of the Contracts for which those Fund shares had been selected to
serve as the underlying investment media. LIFE COMPANY will give at least 30
days' prior written notice to the Fund of the date of any proposed vote to
replace the Fund's shares; or
(n) at the option of the Fund if it suspends or terminates the
offering of Shares of the applicable Portfolio to all Participating Insurance
Companies or only designated Participating Insurance Companies, if such action
is required by law or by regulatory authorities having jurisdiction or if, in
the sole discretion of the Fund acting in good faith, suspension or termination
is necessary in the best interests of the shareholders of the applicable
Portfolio (it being understood that "shareholders" for this purpose shall mean
Participants), such notice effective immediately upon receipt of written notice,
it being understood that a lack Participating Insurance Companies interest in
the applicable Portfolio may be grounds for a suspension or termination as to
such Portfolio.
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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 Section 6.1(a) hereof, such prior written notice shall be given at
least one (1) year 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 Section 6.1(b), 6.1(c), 6.1(d), 6.1(e), 6.1(f), 6.1(g), 6.1(h),
6.1(i), 6.1(j), 6.1(k), 6.1(l), 6.1(m), or 6.1(n) hereof, such prior written
notice shall be given at least 30 days in advance of the effective date of
termination unless a shorter time is agreed to by the Parties hereto; and
6.3 FUND TO REMAIN AVAILABLE
Notwithstanding any termination of this Agreement, the Fund
will, at the option of LIFE COMPANY, continue to make available additional
shares of a Portfolio 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 Portfolios of the Fund (as in effect on such date),
redeem investments in Portfolios of the Fund and/or invest in Portfolios of the
Fund upon the making of additional purchase payments under the Existing
Contracts. Notwithstanding any termination of this Agreement, LIFE COMPANY
agrees to distribute to holders of Existing Contracts all materials required by
law to be distributed to such holders (including, without limitation,
prospectuses, statements of additional information, proxy materials and periodic
reports). The parties agree that this Section 6.3 will not apply to any
terminations under the conditions of the Order and the effect of such
terminations will be governed by the Order.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS
All warranties and indemnifications will survive the
termination of this Agreement.
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
Subject to the provisions of Section 6.3 hereof, 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 the applicable Portfolio 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 Portfolio, or otherwise
terminating participation by the Contracts in such Portfolio.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any party, except
with the prior written consent of all the Parties.
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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:
[Name of LIFE COMPANY]
Street Address
City, State Zip Code
Facsimile:
Attn.:
SALOMON BROTHERS VARIABLE SERIES FUNDS INC.
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn.: Secretary
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 the Fund
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 for such 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 the manner required
by the Order obtained by the Fund. The Fund will notify LIFE COMPANY of any
amendments to the Order it has obtained.
SECTION 11. INDEMNIFICATION
11.1 OF THE FUND BY LIFE COMPANY
(a) Except to the extent provided in Sections 11.1(b) and
11.1(c), below, LIFE COMPANY agrees to indemnify and hold harmless the Fund, its
affiliates, and each person, if any, who controls the Fund or its affiliates
within the meaning of Section 15 of the 1933 Act and each of their respective
directors and officers (collectively, the "Indemnified Parties" for purposes of
this Section 11.1) against any and all losses, claims, damages, costs, expenses,
liabilities (including amounts paid in settlement with the written consent of
LIFE COMPANY)or actions in respect thereof (including, to the extent reasonable,
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise insofar as such
losses, claims, damages, costs, expenses, liabilities or actions:
14
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(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 written
information furnished to LIFE COMPANY by or on
behalf of the Fund for use in any Account's 1933
Act registration statement, any Account
Prospectus, the Contracts, or sales literature or
advertising (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 the
Fund's 1933 Act registration statement, the Fund
Prospectus, sales literature or advertising of the
Fund, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on
behalf of LIFE COMPANY, or its affiliates and on
which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of LIFE
COMPANY, or its 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) or subject to
its authorization, including without limitation,
broker-dealers or agents authorized to sell the
Contracts, in connection with the sale, marketing
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 the Fund's 1933 Act
registration statement, the Fund Prospectus, sales
literature or advertising of the Fund, 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 the Fund
or its affiliates by or on behalf of LIFE COMPANY
or its affiliates for use in the Fund's 1933 Act
registration statement, the Fund Prospectus, sales
literature or advertising of the Fund, or any
amendment or supplement to any of the foregoing;
or
15
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(iv) arise as a result of any failure by LIFE COMPANY
or persons under its control (or subject to its
authorization) to perform the obligations, provide
the services and furnish the materials required
under the terms of this Agreement, or any material
breach of any representation and/or warranty made
by LIFE COMPANY in this Agreement or arise out of
or result from any other material breach of this
Agreement by LIFE COMPANY or persons under its
control (or subject to its authorization); or
(v) arise as a result of failure to transmit a request
for purchase or redemption of Shares or payment
therefor within the time period specified herein
and otherwise in accordance with the procedures
set forth in this Agreement; or
(vi) arise as a result of any unauthorized use of the
trade names of the Fund to the extent such use is
not required by applicable law or regulation.
(b) This indemnification is in addition to any liability that
LIFE COMPANY may otherwise have. LIFE COMPANY shall not be liable under this
Section 11.1 with respect to any losses, claims, damages, costs, expenses,
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 the Fund.
(c) LIFE COMPANY shall not be liable under this Section 11.1
with respect to any action against an Indemnified Party unless the Fund shall
have notified LIFE COMPANY in writing promptly 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 LIFE COMPANY shall
be relieved of liability under this Section 11.1 only to the extent the
indemnifying party is damaged solely by reason of such party's failure to so
notify and failure to notify LIFE COMPANY of any such action shall not relieve
LIFE COMPANY from any liability which they may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
11.1. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to participate, at
its 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 to such Indemnified Party of LIFE COMPANY's election to assume
the defense thereof, the Indemnified Party will cooperate fully with LIFE
COMPANY and shall bear the fees and expenses of any additional counsel retained
by it, and LIFE COMPANY will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof, other
than reasonable costs of investigation.
11.2 OF LIFE COMPANY BY THE FUND
(a) Except to the extent provided in Sections 11.2(b), 11.2(c)
and 11.2(d), below, the Fund agrees to indemnify and hold harmless LIFE COMPANY,
its affiliates, and each person, if any, who controls LIFE COMPANY or its
affiliates within the meaning of Section 15 of the 1933 Act and each of their
respective directors and officers (collectively, the "Indemnified Parties" for
purposes of this Section 11.2) against any and all losses, claims, damages,
costs, expenses, liabilities (including amounts paid in settlement with the
written consent of the Fund) 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;
insofar as such losses, claims, damages, costs, expenses, liabilities or
actions:
16
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(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the Fund's 1933 Act
registration statement, Prospectus or sales
literature or advertising 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 to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in
conformity with written information furnished to
the Fund or its affiliates by or on behalf of LIFE
COMPANY or its affiliates for use in the Fund's
1933 Act registration statement, the Fund
Prospectus, or in sales literature or advertising
or otherwise for use in connection with the sale
of Contracts or Shares (or any amendment or
supplement to any of the foregoing); or
(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 the Fund or its
affiliates and on which such persons have
reasonably relied) or the negligent, illegal or
fraudulent conduct of the Fund or its affiliates
or persons under its control (including, without
limitation, their employees and "Associated
Persons" as that Term is defined in Section (n) of
Article 1 of the NASD By-Laws), in connection with
the sale, marketing or distribution of Fund
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 written information
furnished to LIFE COMPANY, or its affiliates by or
on behalf of the Fund 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
17
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(iv) arise as a result of any failure by the Fund to
perform the obligations, provide the services and
furnish the materials required of it under the
terms of this Agreement, including, without
limitation, any failure of the Fund or its
designated agent to inform LIFE COMPANY of the
correct net asset values per share for each
Portfolio on a timely basis sufficient to ensure
the timely execution of all purchase and
redemption orders at the correct net asset value
per share, or any material breach of any
representation and/or warranty made by the Fund in
this Agreement or arise out of or result from any
other material breach of this Agreement by the
Fund.
(b) This indemnification is in addition to any liability that
the Fund may otherwise have. The Fund shall not be liable under this Section
11.2 with respect to any losses, claims, damages, costs, expenses, 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, each Account or Participants.
(c) The Fund shall not be liable under this Section 11.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified the Fund in writing promptly 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 the Fund
shall be relieved of liability under this Section 11.2 only to the extent the
indemnifying party is damaged solely by reason of such party's failure to so
notify and failure to notify the Fund of any such action shall not relieve the
Fund from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this Section 11.2. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, the Fund 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 the Fund to such
Indemnified Party of the Fund's election to assume the defense thereof, the
Indemnified Party will cooperate fully with the Fund and shall bear the fees and
expenses of any additional counsel retained by it, and the Fund 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.
11.3 OF LIFE COMPANY BY THE ADVISER
(a) Except to the extent provided in Sections 11.3(b), 11.3(c)
and 1.3(d), below, the Adviser agrees to indemnify and hold harmless LIFE
COMPANY, its affiliates, and each person, if any, who controls LIFE COMPANY or
its affiliates within the meaning of Section 15 of the 1933 Act and each of
their respective directors and officers (collectively, the "Indemnified Parties"
for purposes of this Section 11.2) against any and all losses, claims, damages,
costs, expenses, liabilities (including amounts paid in settlement with the
written consent of the Fund) 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;
insofar as such losses, claims, damages, costs, expenses, liabilities or
actions:
18
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(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the Fund's 1933 Act
registration statement, Prospectus or sales
literature or advertising 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 to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in
conformity with written information furnished to
the Adviser, the Fund or their affiliates by or on
behalf of LIFE COMPANY or its affiliates for use
in the Fund's 1933 Act registration statement, the
Fund Prospectus, or in sales literature or
advertising or otherwise for use in connection
with the sale of Contracts or Shares (or any
amendment or supplement to any of the foregoing);
or
(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 the Adviser,
the Fund or their affiliates and on which such
persons have reasonably relied) or the negligent,
illegal or fraudulent conduct of the Adviser, the
Fund or their affiliates or persons under their
control (including, without limitation, their
employees and "Associated Persons" as that Term is
defined in Section (n) of Article 1 of the NASD
By-Laws), in connection with the sale, marketing
or distribution of Fund 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 written information
furnished to LIFE COMPANY, or its affiliates by or
on behalf of the Adviser or the Fund 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
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(iv) arise as a result of any failure by the Adviser or
the Fund to perform the obligations, provide the
services and furnish the materials required of it
under the terms of this Agreement, including,
without limitation, any failure of the Fund or its
designated agent to inform LIFE COMPANY of the
correct net asset values per share for each
Portfolio on a timely basis sufficient to ensure
the timely execution of all purchase and
redemption orders at the correct net asset value
per share, or any material breach of any
representation and/or warranty made by the Adviser
or the Fund in this Agreement or arise out of or
result from any other material breach of this
Agreement by the Adviser.
(b) This indemnification is in addition to any liability that
the Adviser may otherwise have. The Adviser shall not be liable under this
Section 11.3 with respect to any losses, claims, damages, costs, expenses,
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, each Account or Participants.
(c) The Adviser shall not be liable under this Section 11.3
with respect to any action against an Indemnified Party unless the Indemnified
Party shall have notified the Adviser in writing promptly 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 the
Adviser shall be relieved of liability under this Section 11.3 only to the
extent the indemnifying party is damaged solely by reason of such party's
failure to so notify and failure to notify the Adviser of any such action shall
not relieve the Adviser from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
Section 11.3. Except as otherwise provided herein, in case any such action is
brought against an Indemnified Party, the Adviser 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 the Adviser to such Indemnified Party of the Adviser's election to assume
the defense thereof, the Indemnified Party will cooperate fully with the Fund
and shall bear the fees and expenses of any additional counsel retained by it,
and the Adviser 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.
11.4 EFFECT OF NOTICE
Any notice given by the indemnifying party to an Indemnified
Party referred to in Sections 11.1(c), 11.2(c) or 11.3(c) 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.
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11.5 SUCCESSORS
A successor by law of any party shall be entitled to the
benefits of the indemnification contained in this Section 11.
11.6 OBLIGATIONS OF THE FUND.
All persons dealing with the Fund must look solely to the
property of the applicable Portfolio for the enforcement of any claims against
the Fund as neither the Board, Officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of the Fund.
SECTION 12. APPLICABLE LAW
(a) This Agreement will be construed and the provisions hereof
interpreted under and in accordance with New York law, without regard for that
state's principles of conflict of laws.
(b) This Agreement shall be subject to the provisions of the
1933 Act, 1934 and 1940 acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and regulations
as the SEC may grant (including, but not limited to, the Order) and the terms
hereof shall be interpreted and construed in accordance therewith.
SECTION 13. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together with constitute one and the same
instrument.
SECTION 14. 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 15. 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.
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SECTION 16. HEADINGS
The Table of Contents and headings used in this Agreement are
for purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
SECTION 17. CONFIDENTIALITY
Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of customers of the other party and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not, without the express written consent of the affected
party, disclose, disseminate or utilize such names and addresses and other
confidential information until such time as it may come into the public domain.
SECTION 18. TRADEMARKS AND FUND NAMES
(a) Salomon Brothers Asset Management Inc, the adviser to the
Fund and its affiliates, own all right, title and interest in and to the names,
trademarks and service marks "Salomon" and "Salomon Brothers" and such other
tradenames, trademarks and service marks as may be identified to LIFE COMPANY
from time to time (the "Salomon licensed marks"). Upon termination of this
Agreement LIFE COMPANY and its affiliates shall cease to use the Salomon
licensed marks, except to the extent required by law or regulation.
(b) Name of LIFE COMPANY and its affiliates, own all right,
title and interest in and to the names, trademarks and service marks
"__________" and such other tradenames, trademarks and service marks as may be
identified to the Adviser and/or the Fund from time to time (the "__________"
licensed marks). Upon termination of this Agreement the Fund, the Adviser and
their affiliates shall cease to use the __________ licensed marks, except to the
extent required by law or regulation.
SECTION 19. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other
party and all appropriate governmental authorities (including, without
limitation, the SEC, the NASD and state insurance regulators) and will permit
each other and such authorities reasonable access to its books and records
(including copies thereof) in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
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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.
SALOMON BROTHERS VARIABLE SERIES FUNDS INC
Attest: __________________ By: ________________________
Name: __________________ Name: ________________________
Title: __________________ Title:________________________
SALOMON BROTHERS ASSET MANAGEMENT INC
Attest: __________________ By: ________________________
Name: __________________ Name: ________________________
Title: __________________ Title:________________________
[Name OF LIFE COMPANY]
on behalf of itself and its separate accounts
Attest: __________________ By: ________________________
Name: __________________ Name: ________________________
Title: __________________ Title:________________________
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SCHEDULE A
PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
SEPARATE ACCOUNTS UTILIZING THE FUNDS
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
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PARTICIPATION AGREEMENT
BY AND AMONG
[Name of LIFE COMPANY]
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
SALOMON BROTHERS ASSET MANAGEMENT INC
AND
SALOMON BROTHERS VARIABLE SERIES FUNDS INC
