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EXHIBIT 8
PARTICIPATION AGREEMENT FOR INSURANCE MUTUAL FUNDS
Among
[Name of Fund]
and
THE TRAVELERS INSURANCE COMPANY AND
THE TRAVELERS LIFE AND ANNUITY COMPANY
THIS AGREEMENT effective May 1, 1998, made and entered into by and among
THE TRAVELERS INSURANCE COMPANY and THE TRAVELERS LIFE AND ANNUITY COMPANY
("Travelers" or "Company"), Connecticut corporations, on their own behalf and on
behalf of each segregated asset account of Travelers set forth on Schedule A as
may be amended from time to time (each such account hereinafter referred to as
the "Account"), and those series (the "Series"), set forth on Schedule B as may
be amended from time to time, of the (the "Fund"), a
Maryland Corporation, and L.P.(the "Underwriter").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act") and its shares
are registered under the Securities Act of 1933, as amended (the "1933 Act");
and
WHEREAS, the Fund was established for the purpose of serving as the
investment vehicle for separate accounts established for variable life contracts
and variable annuity contracts to be offered by insurance companies which have
entered into participation agreements with the Fund ("Participating Insurance
Companies"); and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by appropriate corporate resolution of the Travelers'
Board of Directors to set aside and invest assets attributable to one or more
annuity contracts; and
WHEREAS, (the "Adviser") is registered as an
investment adviser with the Securities and Exchange Commission ("SEC") under the
Investment Advisers Act of 1940.
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WHEREAS, the Underwriter is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended, (the "1934 Act"), and is
a member in good standing of the National Association of Securities Dealers,
Inc. ("NASD"); and
WHEREAS, the Company has registered or will register certain variable
life insurance and variable annuity contracts under the 1933 Act (the
"Contracts"); and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
each Account to fund certain of the aforesaid variable life and variable annuity
contracts and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter on behalf of the Fund agrees to sell to Travelers
those Fund shares which each Account orders, executing such orders on a daily
basis at the net asset value next computed after receipt by the Fund or its
designee of the order for the shares of the Fund. For purposes of this Section
1.1, Travelers shall be the designee of the Fund for receipt of such orders from
each Account and receipt by such designee shall constitute receipt by the Fund;
provided that (i) Travelers has received such orders prior to the close of
regular trading on the New York Stock Exchange, Inc. (the "NYSE") (currently
4:00 p.m., Eastern time) on that Business Day, and (ii) the Fund receives notice
of such order by 11:00 a.m. Eastern Standard Time on the next Business Day.
Business Day shall have the meaning as defined in the Fund prospectus. Orders
that Travelers has received after the close of regular trading on the NYSE will
be treated as though received on the next Business Day. Each communication of
orders by Travelers will constitute a representation that such orders were
received by it prior to the close of regular trading on the NYSE on the Business
Day on which the purchase or redemption order is priced in accordance with Rule
22c-1 under the 1940 Act. Other procedures relating to the handling of orders
will be in accordance with the prospectus and statement of additional
information of the relevant series of shares of the Fund or with oral or written
instructions that the Underwriter or the Fund will forward to Travelers from
time to time.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by Travelers and its
Accounts on each Business Day and the Fund shall use reasonable efforts to
calculate such net asset value on each Business Day. However, the Board of
Directors of the Fund (the "Board") may refuse to sell Fund shares to any
person, or suspend or terminate the offering of Fund shares if such action is
required by law or by
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regulatory authorities having jurisdiction or is, in the sole discretion of the
Board acting in good faith and in light of their fiduciary duties under federal
and any applicable state laws, necessary in the best interests of the
shareholders of such Fund.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts, and
other eligible accounts. No shares of any Fund will be sold to the general
public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing provisions
substantially the same as Article XI of this Agreement is in effect to govern
such sales.
1.5. The Fund agrees to redeem for cash, on Travelers' request, any full
or fractional shares of the Fund held by Travelers or the Accounts, executing
such requests on a daily basis at the net asset value next computed after the
Fund or its designee receives the redemption request. For purposes of this
Section 1.5, Travelers shall be the designee of the Fund for receipt of
redemption requests from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
redemption request by 11:00 a.m. on the next Business Day.
1.6. Travelers shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions of
Section 1.1. Payment shall be in federal funds transmitted by wire. For purpose
of Section 2.9, upon receipt by the Fund of the federal funds so wired, such
funds shall cease to be the responsibility of Travelers and shall become the
responsibility of the Fund.
1.7. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to Travelers or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.8. The Fund shall furnish same-day notice by facsimile or telephone,
(if by telephone, it must be followed by written confirmation) to Travelers of
any income, dividends or capital gain distributions payable on the Fund's
shares. Travelers hereby elects to receive all such income dividends and capital
gain distributions in additional shares of that Fund. Travelers reserves the
right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify Travelers of the
number of shares so issued as payment of such dividends and distributions.
1.9. The Fund shall use its best efforts to make the net asset value per
share for each Fund available to Travelers on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and shall
use its best efforts to make such net asset value per share available by 6:00
p.m. Eastern Standard Time. Neither the Fund, any Series, the Distributor, the
Adviser nor any of their affiliates shall be liable for any information provided
to
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the Company pursuant to this Agreement which information is based on incorrect
information supplied by the Company to the Fund, the Distributor or the Adviser.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable Federal and State laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. Travelers further represents and
warrants that it is an insurance company duly organized and in good standing
under the laws of the state of Connecticut and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 38a-433 of the Connecticut General Statutes.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with applicable law and that the Fund is and
shall remain registered under the 1940 Act. The Fund shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund, Adviser or Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code and that it
will make every effort to maintain such qualification (under Subchapter M or any
successor or similar provision) and that it will notify Travelers immediately
upon having a reasonable basis for believing that it has ceased to so qualify or
that it might not so qualify in the future.
2.4. Travelers represents and warrants that the Contracts are currently
and at the time of issuance will be treated as life insurance, endowment or
annuity contracts, under applicable provisions of the Code and that it will make
every effort to maintain such treatment and that it will notify the Fund and the
Underwriter immediately upon having a reasonable basis for believing that the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
2.5. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses, and the Fund and the Underwriter represent that their respective
operations are, and shall at all times remain, in material compliance with the
laws of the states of Maryland and Delaware, respectively, to the extent
required to perform this Agreement.
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2.6. The Underwriter represents and warrants that it is a NASD member in
good standing and is registered as a broker-dealer with the SEC. The Underwriter
further represents that it will sell and distribute the Fund shares in
accordance with all applicable state and federal securities laws and
regulations, including the 1933 Act, the 1934 Act, and the 1940 Act and the
Rules promulgated thereunder.
2.7. The Fund represents that it is lawfully organized and validly
existing under the laws of the state of Maryland and that it does and will
comply with the 1940 Act and the Rules promulgated thereunder.
2.8. The Adviser represents and warrants that it is and shall remain
duly registered under all applicable federal and state securities laws and that
it shall perform its obligations for the Fund in compliance with any applicable
state and federal securities laws.
2.9. The Fund, Adviser and Underwriter each represent and warrant that
all of their respective directors, officers, employees, and other
individuals/entities dealing with the money and/or securities of the Fund are
and shall 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 under the 1940 Act or
related provisions as may be promulgated from time to time. Such bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company, as determined solely in the discretion of the Fund, Adviser or
Underwriter, respectively.
2.10. Travelers represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are and shall 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 entities subject to the requirements of Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. Such bond shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company.
2.11. Travelers represents and warrants that (i) neither it nor any of
its "affiliates" (as such term is defined in 29C.F.R. 2510.3-21(e)) is a
"fiduciary" of any employee benefit plan as such term is defined in section
3(21) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), and (ii) the receipt of fees hereunder will not constitute a
non-exempt "prohibited transaction" as such term is defined in section 406 of
ERISA and section 4975 of the Code.
2.12. Each party to this Agreement will maintain all records required by
law, including records detailing the services it provides. Such records will be
preserved, maintained and made available to the extent required by law and in
accordance with the 1940 Act and the rules thereunder. Upon request by the Fund
or the Underwriter, Travelers agrees promptly to make copies or, if required,
originals of all records pertaining to the performance of services under this
Agreement available to the Fund, the Adviser or the Underwriter, as the case may
be. The Fund
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agrees that Travelers will have the right to inspect, audit and copy all records
pertaining to the performance of services under this Agreement pursuant to the
requirements of any state insurance department. Each party also agrees promptly
to notify the other parties if it experiences any difficulty in maintaining the
records in an accurate and complete manner. This provision shall survive
termination of the Agreement.
ARTICLE III. Prospectuses and Proxy Solicitations
3.1. The Underwriter shall provide Travelers, at Travelers' expense,
with as many copies of the Fund's current prospectus (and any supplements
thereto) as Travelers may reasonably request. If requested by Travelers in lieu
thereof, the Fund shall provide camera-ready film or computer diskettes
containing the Fund's prospectus and Statement of Additional Information and
other assistance as is reasonably necessary in order for Travelers once each
year (or more frequently if the prospectus for the Fund is amended) to have the
Prospectuses for the Contracts and the Fund printed simultaneously. For
prospectuses and Statements of Additional Information provided by the Company to
its existing owners of Contracts which are invested in the Fund, in order to
update disclosure as required by the 1933 Act and/or the 1940 Act, the cost of
printing shall be borne by the Fund. If Travelers chooses to receive
camera-ready film or computer diskettes in lieu of receiving printed copies of
the Fund's prospectus, the Fund will reimburse Travelers in an amount equal to
the product of A and B, where A is the number of such prospectuses distributed
to owners of the Contracts which are invested in the Fund, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information ("SAI") for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such SAI is available from
the Fund), and the Underwriter (or the Fund), at its expense, shall print and
provide such SAI to Travelers and to any owner/participant of a Contract or
prospective owner/participant who requests such SAI.
3.3. The Fund, at its expense, shall provide Travelers with copies of
its proxy material, reports to stockholders and other communications to
stockholders in such quantity as Travelers shall reasonably require for
distributing to Contract owners/participants.
3.4. If and to the extent required by law Travelers shall:
(i) solicit voting instructions from owners of or participants in
the Contract;
(ii) vote the Fund shares in accordance with instructions received
from owners of or participants in the Contract; and
(iii) vote Fund shares for which no instructions have been received
in the same proportion as Fund shares of such Fund for which
instructions have been received (so long as and to the extent that
the SEC continues to interpret the 1940 Act to require pass-through
voting privileges for variable contract owners). Travelers reserves
the right to vote Fund shares held in any segregated asset account
in its own right, to the extent permitted by law; provided,
however, that if Travelers votes
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Fund shares in any segregated asset account in its own right, it
shall not vote against management of the Fund unless it is required
to do so to fulfill its fiduciary duty to owners of Contracts.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(a) of the 1940 Act and, if and when
applicable, 16(b). Further, the Fund 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.
ARTICLE IV. Sales Material and Information
4.1. Travelers will provide to the Fund at least one complete copy of
all registration statements, prospectuses, SAI's, reports, proxies, sales
literature and other promotional materials, applications for exemptive relief,
requests for no action letters, and all amendments, if any, on an annual basis.
4.2. Travelers shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
4.3. The Fund, Underwriter, or their respective designee(s) shall
furnish, or shall cause to be furnished, to Travelers or its designee, each
piece of sales literature or other promotional material in which Travelers
and/or its separate account(s), is named. No such material will be used until
any required governmental or self-regulatory authority (i.e., NASD) has approved
the material, if necessary.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of Travelers or concerning Travelers, the
Accounts, or the Contracts other than the information or representations
contained in the disclosure memoranda for the Contracts, as such document may be
amended or supplemented from time to time, or in published reports for each
Account which are in the public domain or approved by Travelers for distribution
to Contract owners, or in sales literature or other promotional material
approved by Travelers or its designee, except with the permission of Travelers.
4.5. The Fund will provide to Travelers at least one complete copy of
all registration statements, prospectuses, SAI, reports, proxy statements, sales
literature and other promotional
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materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares, on an
annual basis.
4.6. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published or designed for use in a newspaper, magazine or
other periodical, radio, television, Internet, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e. any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, 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.
ARTICLE V. Fees and Expenses
5.1. The Fund and/or Adviser shall pay to Travelers certain
administrative fees for administrative expenses and costs with respect to the
Contracts. Travelers will provide certain administrative services to owners of
the Contracts, as set forth on Schedule C. The administrative fees are set forth
on Schedule D.
5.2. To the extent permitted under applicable law, all expenses incident
to performance by the Fund under this Agreement shall be paid by the Fund. The
Fund shall see to it that all of its shares are registered and authorized for
issuance in accordance with applicable federal law and, if and to the extent
deemed advisable by the Fund, in accordance with applicable state laws prior to
their sale. The Fund shall bear the expenses for the cost of registration and
qualification of the Fund's shares, preparation and filing of the Fund's
prospectus, registration statements and amendments thereto, proxy materials and
reports, setting the prospectus in type, setting in type and printing the proxy
materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of the Fund's shares. At its own expense, Travelers will distribute
such materials to the owners of the Contracts to the extent required by
applicable law, rules or regulations.
ARTICLE VI. Indemnification
6.1 Indemnification By Travelers
6.1(a). Travelers agrees to indemnify and hold harmless the Underwriter,
the Adviser, the Fund and each director of the Board and officers and each
person, if any, who controls the Fund within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this Section
6.1) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of Travelers) or litigation
(including legal
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and other expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained
in the Contracts or sales literature for the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading; PROVIDED that this
agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to Travelers by or on behalf of the Fund, the Underwriter
or the Adviser for use in the Registration Statement or prospectus
for the Contracts or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the Fund
not supplied by Travelers or persons under its control) or wrongful
conduct of Travelers or persons under its control, with respect to
the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement,
prospectus, or sales literature of the Fund or any amendment
thereof or supplement thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such a
statement or omission was made in reliance upon information
furnished to the Fund by or on behalf of Travelers or persons under
its control; or
(iv) arise as a result of any failure by Travelers to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by Travelers in this Agreement
or arise out of or result from any other material breach of this
Agreement by Travelers, as limited by and in accordance with the
provisions of Sections 6.1(b) and 6.1(c) hereof.
6.1(b). Travelers shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or
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gross negligence in the performance of such Indemnified Party's duties under
this Agreement or to the Fund, whichever is applicable, or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Fund, whichever is applicable.
6.1(c). Travelers shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified Travelers in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify Travelers of any
such claim shall not relieve Travelers from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, Travelers shall be entitled to participate, at
its own expense, in the defense of such action. Travelers also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from Travelers to such party of Travelers' election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and Travelers will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
6.1(d). The Indemnified Parties will promptly notify Travelers of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
6.2. Indemnification by the Underwriter
6.2(a). The Underwriter agrees to indemnify and hold harmless Travelers
and each of its directors and officers and each person, if any, who controls
Travelers within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 6.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any statute
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement or prospectus or sales literature of the Fund (or any
amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading; PROVIDED that this
agreement to indemnify shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished
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to the Adviser, the Underwriter or Fund by or on behalf of
Travelers for use in the Registration Statement or prospectus for
the Fund or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Adviser, the Underwriter, the Fund or
persons under their control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their control, with respect
to the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in the disclosure memoranda, or sales
literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to Travelers by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Adviser, Underwriter
or the Fund to provide the services and furnish the materials under
the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser or Underwriter
in this Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser or Underwriter; as limited
by and in accordance with the provisions of Sections 6.2(b) and
6.2(c) hereof; or
(vi) arise as a result of the Company's providing the Fund
inaccurate information, which causes the Fund to calculate its NAV
incorrectly.
6.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties under this Agreement, or to
Travelers or the Account, as applicable, or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
Travelers or the Account, whichever is applicable.
6.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
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Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and the Underwriter will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
6.2(d). Travelers agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
6.3 Exclusion of Consequential Damages. Notwithstanding anything in this
Agreement to the contrary, in no event shall any party to this Agreement, its
affiliates or any of its or their respective directors, officers, employees,
agents or subcontractors be liable under any theory of tort, contract, strict
liability or other legal equitable theory for lost profits, exemplary, punitive,
special, indirect or consequential damages, each of which is hereby excluded by
Agreement of the parties regardless of whether such damages were foreseeable or
whether any party or any entity has been advised of the possibility of such
damages.
ARTICLE VII. Applicable Law
7.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the state of New York.
7.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE VIII. Termination
8.1. This Agreement shall terminate:
(a) at the option of any party upon 180 days' advance written
notice to the other parties; or
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(b) at the option of Travelers to the extent that shares of Funds
are not reasonably available to meet the requirements of the
Contracts as determined by Travelers in its sole reasonable
discretion; or
(c) at the option of the Fund in the event that formal
administrative proceedings are instituted against Travelers by the
NASD, the SEC, an Insurance Commissioner or any other regulatory
body regarding Travelers duties under this Agreement or related to
the sale of the Contracts, with respect to the operation of any
Account, or the purchase of the Fund shares, provided, however,
that the Fund or the Adviser determines in its sole judgment
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of Travelers
to perform its obligations under this Agreement; or
(d) at the option of Travelers in the event that formal
administrative proceedings are instituted against the Fund, the
Underwriter or the Adviser by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body,
provided, however, that Travelers determines in its sole judgment
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Fund,
the Underwriter or the Adviser to perform its obligations under
this Agreement; or
(e) with respect to any Account, upon requisite approval of the
State Insurance Department and Contract owners, if necessary; or
(f) at the option of Travelers, in the event any of the Fund's
shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use
of such shares as the underlying investment media of the Contracts
issued or to be issued by Travelers; or
(g) at the option of Travelers, if the Fund ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code or
under any successor or similar provision, or if Travelers
reasonably believes that the Fund may fail to so qualify; or
(h) at the option of the Fund, the Adviser or the Underwriter, if
(1) the Fund, the Adviser or the Underwriter, respectively, shall
determine in good faith that Travelers has suffered a material
adverse change in its business or financial condition or is the
subject of material adverse publicity and such material adverse
change or material adverse publicity will have a material adverse
impact upon the business and operations of the Fund, the Adviser or
the Underwriter, (2) the Fund, the Adviser or the Underwriter shall
notify Travelers in writing of such determination and its intent to
terminate this Agreement, and (3) after considering the actions
taken by Travelers and any other changes in
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circumstances since the giving of such notice, such determination
of the Fund, the Adviser or the Underwriter shall continue to apply
on the sixtieth (60th) day following the giving of such notice,
which sixtieth day shall be the effective date of termination; or
(i) at the option of Travelers, if (1) Travelers shall determine in
good faith that either the Fund, the Adviser or the Underwriter has
suffered a material adverse change in its business or financial
condition or is the subject of material adverse publicity and such
material adverse change or material adverse publicity will have a
material adverse impact upon the business and operations of
Travelers, (2) Travelers shall notify the Fund , the Adviser and
the Underwriter in writing of such determination and its intent to
terminate the Agreement, and (3) after considering the actions
taken by the Fund, the Adviser and/or the Underwriter and any other
changes in circumstances since the giving of such notice, such
determination shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be
the effective date of termination; or
(j) at the option of the Fund, the Adviser or the Underwriter, if
Travelers gives the Fund, the Adviser and the Underwriter the
written notice specified in Section 8.1(a) hereof and at the time
such notice was given there was no notice of termination
outstanding under any other provision of this Agreement; PROVIDED,
however any termination under this Section 8.1(j) shall be
effective forty five (45) days after the notice specified in
Section 8.1(a) was given; or
(k) at the option of Travelers or the Fund upon the determination
by a majority of the Board, or a majority of the disinterested
directors of the Board, that an irreconcilable material conflict
exists among the interests of: (1) the contract owners of variable
insurance products of all some or all of the relevant separate
accounts; or (2) the interests of the insurance companies or other
eligible accounts investing in the Fund as set forth in Article XI
of this Agreement; or
(l) at the option of the Fund in the event that any of the
Contracts are not issued or sold in accordance with applicable
federal and/or state law. Such termination will be effective
immediately upon notice by the Fund.
8.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 8.1(a) may be exercised for any
reason or for no reason.
8.3. Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to terminate
which notice shall set forth the basis for such termination. Furthermore,
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(a) In the event that any termination is based upon the provisions
of Section 8.1(a), 8.1(h), 8.1(i) or 8.1(j) of this Agreement, such
prior written notice shall be given in advance of the effective
date of termination as required by such provisions; and
(b) in the event that any termination is based upon the provisions
of Section 8.1(c) or 8.1(d) of this Agreement, such prior written
notice shall be given at least ninety (90) days before the
effective date of termination.
8.4. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at Travelers' option, continue to
make available additional Fund shares pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of termination
of this Agreement (the "Existing Contracts"). Specifically, without limitation,
the owners of the Existing Contracts shall be permitted to reallocate
investments in the Fund, redeem investments in the Fund and/or invest in the
Fund upon the making of additional purchase payments under the Existing
Contracts. However, the availability of additional shares hereunder will be
subject to the restrictions and limitations set forth in Article XI, as
applicable.
Travelers agrees (i) to terminate the availability of shares of the Fund
to Contracts other than Existing Contracts and (ii) to request approval from the
SEC to replace shares of the Fund with other investments for existing Contracts
and, if and when granted such approval, thereafter to so replace the shares of
the Fund, in each case as soon as reasonable practicable.
8.5. Surviving Provisions. Notwithstanding any termination of this
Agreement, each party's obligations under Article VI to indemnify other parties
will survive and not be affected by any termination of this Agreement. In
addition, each party's obligations under Section 2.12 will survive and not be
affected by any termination of this Agreement. Finally, with respect to Existing
Contracts, all provisions of this Agreement also will survive and not be
affected by any termination of this Agreement.
ARTICLE IX. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the applicable party at the address set forth below or at such
other address as may be specified in writing to the other parties.
If to the Fund:
If to Travelers: Travelers Insurance Company
One Tower Square
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Hartford, Connecticut 06183
Attention: General Counsel
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If to the Underwriter:
ARTICLE X. Miscellaneous
10.1 All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders of the Fund assume any personal
liability for obligations entered into on behalf of the Fund. To the extent such
claims relate to a specific Series of the Fund, such persons must look solely to
the property attributable to that Series.
10.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, without the express written consent of the affected party, shall
not disclose, disseminate or utilize such names and addresses and other
confidential information until such time as it may come into the public domain.
10.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
10.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.5 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
10.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including the SEC, the NASD and state
insurance regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby. Each party hereto
further agrees to furnish any state insurance department with any information or
reports in connection with services provided under this Agreement if such state
so requests.
10.7. 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, which the parties hereto are entitled to under
state and federal laws.
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10.8. No part of this Agreement may be assigned without the prior
written consent of the other parties. Such consent will not be unreasonably
withheld.
ARTICLE XI. Potential Conflicts
11.1. The Board will monitor the Fund for the existence of any
irreconcilable material conflict among the interests of the contract owners of
all separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax or securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar action by
insurance, tax or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by insurance companies participating in the Fund
("Participating Insurance Companies") or by variable annuity and variable life
insurance contract owners; or (f) a decision by an insurer to disregard the
voting instructions of contract owners. The Board will promptly inform Travelers
if it determines that an irreconcilable material conflict exists and the
implications thereof.
11.2. Travelers will report any potential or existing conflicts of which
it is aware to the Fund Board. Travelers agrees to assist the Board in carrying
out its responsibilities, as delineated in the mixed and shared funding
exemptive order received by the Fund (the "Exemptive Order") by providing the
Board with all information necessary for the Board to consider any issues
raised. This includes, but is not limited to, an obligation by Travelers to
inform the Board whenever contract owner voting instructions are to be
disregarded. Traveler's responsibilities hereunder will be carried out with a
view only to the interest of contract owners.
11.3. If it is determined by a majority of the Board, or a majority of
its disinterested directors, that an irreconcilable material conflict exists,
Travelers will, at its 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 irreconcilable material conflict, up to
and including: (a) withdrawing the assets allocable to some or all of the
Accounts from the Fund or any designated portfolio and reinvesting such assets
in a different investment medium, including (but not limited to) another
portfolio of the Fund, or submitting the question whether such segregation
should be implemented to a vote of all affected contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e., variable
annuity contract owners or variable life insurance contract owners of one or
more Participating Insurance Companies) that votes in favor of such segregation,
or offering to the affected contract owners the option of making such a change;
and (b) establishing a new registered management investment company or managed
separate account.
11.4. If a material irreconcilable conflict arises because of a decision
by Travelers to disregard contract owner voting instructions, and Traveler's
judgment represents a minority position or would preclude a majority vote,
Travelers may be required, at the Fund's election, to withdraw the affected
subaccount of the Account's investment in the Fund and terminate this
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Agreement with respect to such subaccount; provided, however, that such
withdrawal and termination will be limited to the extent required by the
foregoing irreconcilable material conflict as determined a majority of the
disinterested trustees of the Board. No charge or penalty will be imposed as a
result to such withdrawal.
11.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to Travelers conflicts with the
majority of other state insurance regulators, then Travelers will withdraw the
affected subaccount of the Account's investment in the Fund and terminate this
Agreement with respect to such subaccount, provided, however, that such
withdrawal and termination will be limited to the extent required by the
foregoing irreconcilable material conflict as determined by a majority of the
disinterested directors of the Board. No charge or penalty will be imposed as a
result of such withdrawal.
11.6. For purposes of Sections 11.3 through 11.6 of this Agreement, a
majority of the disinterested members of the Board will determine whether any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the Fund or the Adviser (or any other investment adviser to the
Fund) be required to establish a new funding medium for the Contracts. Travelers
will not be required by Section 11.3 to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority of
contract owners materially affected by the irreconcilable material conflict.
11.7. Travelers will at least annually submit to the Board such reports,
materials or data as the Board may reasonably request so that the Board may
fully carry out the duties imposed upon it as delineated in the Exemptive Order,
and said reports, materials and data will be submitted more frequently if deemed
appropriate by the Board.
11.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) as amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Exemptive Order) on terms and conditions materially
different from those contained in the Exemptive Order, then: (a) the Fund and/or
the Participating Insurance Companies, as appropriate, will take such steps as
may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable, and (b) Sections 3.4,
3.5, 11.1, 11.2, 11.3, 11.4, and 11.5 of this Agreement will continue in effect
only to the extent that terms and conditions substantially identical to such
Sections are contained in such Rule(s) as so amended or adopted.
11.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if
any), as soon as practical and in any event within 90 days
after the end of each fiscal year;
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(b) the Company's quarterly statements (statutory) (and GAAP,
if any), as soon as practical and in any event within 45
days after the end of each quarterly period;
(c) any financial statement, proxy statement, notice or report
of the Company sent to stockholders and/or policyholders,
as soon as practical after the delivery thereof to
stockholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the Securities
and Exchange Commission or any state insurance regulator,
as soon as practical after the filing thereof;
(e) any other report submitted to the Company by independent
accountants in connection with any annual, interim or
special audit made by them of the books of the Company, as
soon as practical after the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
Company:
THE TRAVELERS INSURANCE COMPANY
By its authorized officer,
By:
------------------------------------------
Title: Senior Vice President
---------------------------------------
Date:
----------------------------------------
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THE TRAVELERS LIFE AND ANNUITY COMPANY
By its authorized officer,
By:
------------------------------------------
Title: Senior Vice President
---------------------------------------
Date:
----------------------------------------
Fund:
By its authorized officer,
By:
------------------------------------------
Title:
---------------------------------------
Date:
----------------------------------------
Underwriter:
By its authorized officer,
By:
------------------------------------------
Title:
---------------------------------------
Date:
----------------------------------------
Adviser:
---------------------------------------------
By its authorized officer,
By:
------------------------------------------
Title:
---------------------------------------
Date:
----------------------------------------
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Schedule A
Separate Account(s)
Travelers Separate Account QP for Variable Annuities
Travelers Separate Account ABD for Variable Annuities
Travelers Separate Account ABD II for Variable Annuities
Travelers Separate Account TM for Variable Annuities
Travelers Separate Account TM II for Variable Annuities
Travelers Separate Account Five for Variable Annuities
Travelers Separate Account Six for Variable Annuities
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Schedule B
Mutual Funds
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SCHEDULE C
ADMINISTRATIVE SERVICES FOR THE FUND
MAINTENANCE OF BOOKS AND RECORDS
- - Maintaining a record of share purchases to assist transfer agent in
recording issuances of shares.
- - Performing miscellaneous account services to assist transfer agent in
recording transfers of shares (via net purchase orders).
- - Reconciliation and balancing of the separate account at the Fund level in
the general ledger and reconciliation of cash accounts at general
account.
PURCHASE ORDERS
- - Determination of net amount of cash flow into Fund.
- - Reconciliation and deposit of receipts at Fund and confirmation thereof.
REDEMPTION ORDERS
- - Determination of net amount required for redemptions by Fund.
- - Notification to Fund of cash required to meet payments for redemption.
REPORTS
- - Periodic information reporting to the Fund as mutually agreed to in
writing by the Insurer and the Fund.
FUND-RELATED CONTRACT OWNER SERVICES
- - Telephonic support for Contract owners and Policy Holders with respect to
inquiries about the Fund (not including information about performance or
related to sales).
OTHER ADMINISTRATIVE SUPPORT
- - Sub-Accounting services as mutually agreed to in writing by the Insurer
and the Fund.
- - Providing other adminstrative support to the Fund as mutually agreed to
in writing by the Insurer and the Fund.
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- - Relieving the Fund of other usual or incidental administrative services
provided to individual shareholders as mutually agreed to in writing by
the Insurer and the Fund.
- - Preparation of reports to certain third-party reporting services as
mutually agreed to in writing by the Insurer and the Fund.
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Schedule D
Fees
The applicable annual fee shall be forty basis points (.40%) of the aggregate
investments in the portfolios of the Fund by all separate accounts of the
Insurer related to Contracts as a percentage of the average daily net asset
value of such investments.
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