Ex-8 (k)
PARTICIPATION AGREEMENT
Among
TRAVELERS SERIES FUND INC.,
SSBC FUND MANAGEMENT INC.,
CITICORP LIFE INSURANCE COMPANY, and
FIRST CITICORP LIFE INSURANCE COMPANY
THIS AGREEMENT, made as of the 1st day of April, 1999 by and among the
CITICORP LIFE INSURANCE COMPANY AND FIRST CITICORP LIFE INSURANCE COMPANY
(hereinafter together the "Company"), on their own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), the TRAVELERS SERIES FUND INC., a Maryland corporation (hereinafter
the "Fund"), and SSBC FUND MANAGEMENT INC. (hereinafter the "Adviser"), a
Delaware corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable annuity contracts and, subject to an order obtained
from the Securities and Exchange Commission (the "SEC"), and is available to act
as the investment vehicle for certain qualified pension and retirement plans
("Qualified Plans") and for separate accounts
-1-
established for variable life insurance policies (such variable life insurance
policies and variable annuity contracts are herein, collectively, the "Variable
Insurance Products") to be offered by insurance companies which have entered
into participation agreements with the Fund and the Adviser (hereinafter
"Participating Insurance Companies"); and
WHEREAS, the beneficial interests in the Fund are divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets; and
WHEREAS, the Fund desires to make shares of such managed portfolios as are
listed on Schedule B attached hereto, as such Schedule B may be amended from
time to time hereafter by mutual written agreement of all the parties hereto,
available to the Company for purchase (each such listed portfolio, a
"Portfolio"); and
WHEREAS, the Fund is has obtained an order from the SEC, granting
Participating Insurance Companies and variable annuity and variable insurance
separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a),
and 15(b) of the Investment Company Act of 1940, as amended, (hereinafter the
"1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Fund to be sold to and
-2-
held by variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies (hereinafter the "Mixed and
Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an Investment Adviser under the
Federal Investment Advisers Act of 1940 and any applicable state securities law;
and
WHEREAS, the Company has registered or will register certain variable life
and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to one or more variable life and annuity
contracts; and
-3-
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 Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts,
NOW, THEREFORE, in consideration of their mutual promises the Company, the
Fund and the Adviser agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of the Fund 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, the Company shall be
the designee of the Fund for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Fund; provided that the
Fund receives notice of such order by 10:00 a.m. Eastern time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open
-4-
for trading and on which the Fund calculates its net asset value pursuant to the
rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for purchase
at the applicable net asset value per share by the Company and its Accounts on
those days on which the Fund calculates its net asset value pursuant to rules of
the SEC and the Fund shall use reasonable efforts to calculate such net asset
value on each day which the New York Stock Exchange is open for trading.
Notwithstanding the foregoing, the Board of Directors of the Fund (hereinafter
the "Board") may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interest of the shareholders of such Portfolio.
1.3. The Fund and the Adviser agree that shares of the Fund will be sold
only to Participating Insurance Companies and their separate accounts and, in
accordance with the terms of the Mixed and Shared Funding Exemptive Order,
certain Qualified Plans. No shares of any Portfolio will be sold to the general
public.
-5-
1.4. The Fund will not sell Fund shares to any insurance company or
separate account unless an agreement containing provisions substantially the
same as Articles I and VII, Section 2.5 of Article II and Sections 3.4 and 3.5
of Article III of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any full
or fractional shares of the Fund held by the Company, executing such requests on
a daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of Sections 2.10 and
2.11, upon the payment by the Fund to the Company of the proceeds of such
redemptions, such proceeds shall cease to be the responsibility of the Fund and
shall become the responsibility of the Company. For purposes of this Section
1.5, the Company shall be the designee of the Fund for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such request for
redemption by 10:00 a.m. Eastern time on the next following Business Day.
1.6. The Company agrees to purchase and redeem the shares of each Portfolio
offered by the then current prospectus of the Fund
-6-
in accordance with the provisions of such prospectus. The Company agrees that
all net amounts available under the variable life and variable annuity contracts
with the form number(s) which are listed on Schedule C attached hereto and
incorporated herein by this reference, as such Schedule C may be amended from
time to time hereafter by mutual written agreement of all the parties hereto
shall be invested in the Portfolios, in such other funds selected by the Company
or in the Company's general account.
1.7. The Company 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 hereof. Payment shall be in federal funds transmitted by wire. For
purpose of Section 2.9 and 2.10, upon receipt by the Fund of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
-7-
1.9. The Fund shall furnish notice (by wire or telephone, followed by
written confirmation) as soon as is reasonably practicable to the Company of any
income, dividends or capital gain distributions payable on the Fund's shares.
The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally 6:30 p.m. Eastern time)
and shall use its best efforts to make such net asset value per share available
by 7:00 p.m. Eastern time. If the Fund provides the Company with the incorrect
share net asset value information, the Company on behalf of the Account shall be
entitled to a prompt adjustment to the number of shares purchased or redeemed to
reflect the correct share net asset value. Upon a final determination that there
has been an error in the calculation of net asset value, dividend or capital
gain, the Fund shall report such error to the Company.
-8-
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. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under their domiciliary state insurance laws and has registered or, prior to any
issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, shall be duly authorized
for issuance and sold in compliance with the laws of the State of Maryland and
all applicable federal and state securities laws and that the Fund is and shall
remain registered under the 0000 Xxx. The Fund shall amend the
-9-
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 where necessary
as determined by the Fund or the Adviser in accordance with the laws of the
various states.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company 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. The Company represents that the Contacts are currently treated as
endowment, annuity or life insurance 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 Adviser 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.
-10-
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1040 Act or otherwise,
although it may make such payments in the future. To the extent that it decides
to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to
have a board of directors, a majority of whom are not interested persons of the
Fund, formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
polices) complies with the insurance laws or regulations of the various states
except that the Fund and the Adviser represent that their respective operations
are and shall at all times remain in material compliance with the laws of the
State of Maryland to the extent required to perform this Agreement.
2.7. The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will comply in all
material respects with the 1940 Act.
-11-
2.8. The Adviser represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the State of
Maryland and any applicable state and federal securities laws.
2.9. The Fund and Adviser represent and warrant that all of their
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 Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.10. The Company represents and warrants that if any of its directors,
officers, employees, investment advisers, and other individuals/entities deal
with the money and/or securities of the Fund they will at all such times be
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund, in an amount not less than the minimal coverage as required by Rule 17g-1
of
-12-
the 1940 Act or related provisions as may be promulgated from time to time. The
aforesaid Bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Adviser and the Fund shall provide to the Company such
documentation (including a final copy of the Fund's most current prospectus as
set in type at the Fund's expense) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if the
prospectus for the Fund is amended) to have the prospectus for the Contracts and
the Portfolios' prospectus printed (such printing to be at the Company's expense
except as provided in Section 5.3 hereof).
3.2. The Fund's prospectus shall state that the Statement of Additional
Information ("SAI") for the Fund is available from the Adviser (or in the Fund's
discretion, the Prospectus shall state that such SAI is available from the
Fund), and the Adviser (or the Fund), at its expense, shall print and provide
one copy of such SAI free of charge to the Company and to any owner of a
Contract or prospective owner who requests such Statement. The Company may make
additional copies of the SAI at its expense.
-13-
3.3. The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners; provided, however, that the Company shall bear
the expenses for the costs of printing and distributing any proxy material,
reports to shareholders and other communications to shareholders that are
prepared at the request of the Company.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii) vote Fund shares for which no instructions have been received in
the same proportion as Fund shares of such Portfolio for which
instructions have been received;
so long as and to the extent that the SEC continues to interpret the 1940 Act
to require pass-through voting privileges for owners of Variable Insurance
Products. The Company reserves the right to
-14-
vote Fund shares held in any segregated asset account in its own right, to the
extent permitted by law. Participating Insurance Companies shall be responsible
for assuring that each of their separate accounts participating in the Fund
calculates voting privileges in a manner consistent with this Section.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material in
which the Fund, the Adviser, or the Fund's underwriter is named, at least ten
Business Days prior to its use. No such material shall be used if the Fund or
its designee object to such use within ten Business Days after receipt of such
material.
4.2. The Company 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
-15-
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 Adviser,
except with the permission of the Fund or the Adviser or the designee of either.
4.3. The Fund, and the Adviser, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least ten Business Days prior to its use. No
such material shall be used if the Company or its designee object to such use
within ten Business Days after receipt of such material.
4.4. The Fund and the Adviser shall not give any information or make any
representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus 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 the Company for distribution to Contract owners, or in sales
literature or other promotional
-16-
material approved by the Company or its designee, except with the permission of
the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, as soon as is
reasonably practicable after the filing of such document with the SEC or
other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, Statements of Additional Information,
annual and semi-annual reports, solicitations for voting instructions,
applications for exemptions, requests for no action letters, and all amendments
to any of the above, that relate to the Contracts or each Account, as soon as is
reasonably practicable after the filing of such document with the SEC or other
regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
materials published, or
-17-
designed for use in, in a newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display, signs or billboards,
motion pictures, or other public media), sales literature (i.e., any written
communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters, form
letters, seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees, and registration statements, prospectuses, Statements of Additional
Information, shareholder reports, and proxy materials.
ARTICLE V. Expenses
5.1. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. Except as provided in sections 3.1, 3.2 and 3.3
hereof, 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 and registration statement, proxy materials and reports, setting the
prospectus in type, setting in type and printing the proxy materials and reports
to shareholders (including, if so elected,
-18-
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,
all taxes on the issuance or transfer of the Fund's shares.
5.2. The printing and distributing of the prospectus for the Portfolios (or
that portion of a prospectus relating to the Portfolios should the Company
determine to print a combined prospectus) to existing owners of Contracts shall
be at the expense of the Fund.
ARTICLE VI. Diversification
6.1. Subject to the following sentence, the Fund will at all times comply
with Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event of any changes to such Section or Regulations relating
to the treatment of variable contracts, the Company will advise the Fund of such
changes.
-19-
ARTICLE VII. Potential Conflicts
7.1 The parties to this Agreement acknowledge that the Fund has been
granted 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 and Qualified Plans. The
Exemptive Order requires the Fund and each Participating Insurance Company
comply with conditions and undertakings substantially as provided in this
Article VII. The Fund will not enter into a participation agreement with any
other Participating Insurance Company unless it imposes the same conditions
and undertakings as are imposed on the Company hereby.
7.2 The Company will report any potential or existing conflicts promptly to
the Board, and in particular whenever contract owner voting instructions are
disregarded, and recognizes that it shall be responsible for assisting the Board
in carrying out its responsibilities in connection with the Exemptive Order. The
Company agrees to carry out such responsibilities with a view to the interests
of contract owners.
-20-
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested directors that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, including but not limited to:
(1) withdrawing the assets allocable to some or all of the separate accounts
from the Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the Fund,
or submitting the question whether such segregation should be implemented, to a
vote of all affected Contract owners and, as appropriate, segregating the assets
of any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises as a result of a decision
by the Company to disregard contract owner voting instructions and said decision
represents a minority position or
-21-
would preclude a majority vote by all contract owners having an interest in the
Fund, the Company may be required, at the Board's election, to withdraw the
Account's investment in the Fund.
7.5 For purposes of this Article VII, a majority of the disinterested
directors shall determine whether or not any proposed action adequately remedies
any irreconcilable material conflict, but in no event shall the Fund be required
to bear the expense of establishing a new funding medium for any Contract. The
Company shall not be required by this Article VII to establish a new funding
medium for any Contract if an offer to do so has been declined by vote of a
majority of the contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines that
any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
-22-
7.6. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3 (T)
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall
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.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each of its directors 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 8.1) against any and
all losses, claims, damages, liabilities (including amounts
-23-
paid in settlement with the written consent of the Company) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contract 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 the Company by or
on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts
-24-
or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the Fund not
supplied by the Company, or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or distribution of the Contracts or Fund Shares; or
(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 the Company; or
-25-
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or
by reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party
-26-
shall have notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the Company of any such claim
shall not relieve the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The Company
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the
Company to such party of the Company's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company 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.
-27-
8.1(d). The indemnification provided by this Section 8.1 shall survive
the termination of this Agreement and shall be in addition to any other
liability the Company may have.
8.2. Indemnification by the Adviser
8.2(a). The Adviser agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Adviser) or litigation
(including legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(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
-28-
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Adviser or Fund by or on
behalf of the Company for use in the Registration Statement or
prospectus for the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or 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 or persons under its control) or
wrongful conduct of the Fund or Adviser or persons under their
control; 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
-29-
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 the
Company by or on behalf of the Fund; or
(iv) arise as a result of (a) any failure by the Fund to provide the
services and furnish the material under the terms of this Agreement;
or (b) a failure to comply with Article VI of this Agreement with
respect to diversification requirements; or (c) failure to qualify as
a registered investment company under Subchapter M of the Code; or
(v) arise out of or result from 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 or the Fund.
-30-
8.2(b). The Adviser 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 or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company or Account, whichever, is
applicable.
8.2(c). The Adviser shall not be able under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Adviser in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Adviser of any such claim shall not relieve the Adviser from 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
Adviser will be
-31-
entitled to participate, at its own expense, in the defense thereof. The
Adviser also shall be entitled to assume the defense thereof with counsel
satisfactory to the party named in the action. After notice from the
Adviser to such party of the Adviser's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Adviser will not be liable to
such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense thereof other than reasonable costs of investigation.
8.2(d). The indemnification provided by this Section 8.2 shall survive
the termination of this Agreement and shall be in addition to any other
liability the Fund or Adviser may have.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
-32-
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Term and Termination
10.1. The Agreement is effective as of the date hereof and will remain in
effect until terminated in accordance with the provisions herein.
10.2. This Agreement shall terminate:
(a) at the option of any party upon 180 days advance written notice to
the other parties unless otherwise agreed in a separate written agreement among
the parties; or
(b) at the option of the Company if shares of the Portfolios
delineated in Schedule 2 are not reasonably available to meet the requirements
of the Contracts as determined by the Company; provided, however, that such
termination shall only apply to the Portfolio(s) not reasonably available.
Prompt notice of the election to terminate for such cause shall be furnished by
the Company; or
-33-
(c) at the option of the Fund upon institution of formal proceedings
against the Company by the NASD, the SEC, the insurance commission of any state
or any other regulatory body regarding the Company's duties under this Agreement
or related to the sale of the Contracts, the administration of the Contracts,
the operation of the Account, or the purchase of the Fund shares, the expected
or anticipated ruling, judgment or outcome of which would, in the Fund's
reasonable judgment, materially impair the Company's ability to perform its
obligation and duties hereunder; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in the Company's reasonable
judgment, materially impair the Fund's ability to perform its obligation and
duties hereunder; or
(e) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the contract owners having an
interest in the Account (or any subaccount) to substitute the shares of another
investment company for the corresponding Portfolio shares of the Fund in
accordance with the terms of the Contracts for which those Portfolio shares had
been selected to serve as the underlying investment media.
-34-
The Company will give 30 days' prior written notice to the Fund of the date of
any proposed vote or other action taken to replace the Fund's shares; or
(f) at the option of the Company or the Fund upon a determination by a
majority of the Fund Board, or a majority of the disinterested Fund Board
members, that an irreconcilable material conflict exists among the interests of
(i) all contractowners of variable insurance products of all separate accounts
or (ii) the interests of the Participating Insurance Companies investing in the
Fund as delineated in Article VII of this Agreement; or
(g) at the option of the Company 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 the Company reasonably believes that the
Fund may fail to so qualify; or
(h) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(j) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith, that
-35-
either the Fund or the Adviser has suffered a material adverse change in its
business, operations or financial condition since the date of this Agreement or
is the subject of material adverse publicity and such material adverse change or
material adverse publicity is likely to have a material adverse impact upon the
business and operations of the Company; or
(k) at the option of the Fund or Adviser, if the Fund or Adviser
respectively, shall determine in its sole judgment exercised in good faith, that
the Company has suffered a material adverse change in its business, operations
or financial condition since the date of this Agreement or is the subject of
material adverse publicity and such material adverse change or material adverse
publicity is likely to have a material adverse impact upon the business and
operations of the Fund or Adviser; or
(l) at the option of the Fund in the event any of the Contracts are
not issued or sold in accordance with applicable federal and/or state law.
Termination shall be effective immediately upon such occurrence without notice,
or
(m) automatically upon its assignment by any party without the other
parties' prior written consent; or
(n) in the event the Fund's shares are not registered, issued or sold
in accordance with applicable state or federal law, or such law precludes the
use of such shares for the underlying investment medium of variable contracts
issued or to be issued by
-36-
the Company. Termination shall be effective immediately upon such occurrence
without notice.
10.3. Notice Requirement
(a) In the event that any termination of this Agreement is based upon
the provisions of Article VII such prior written notice shall be given in
advance of the effective date of termination as required by such provisions.
(b) In the event that any termination of this Agreement is based upon
the provisions of Sections 10.2(b)- (d) or 10.2(g) - (i), prior written notice
of the election to terminate this Agreement for cause shall be furnished by the
party terminating the Agreement to the non-terminating parties, with said
termination to be effective upon receipt of such notice by the non-terminating
parties.
(c) In the event that any termination of this Agreement is based upon
the provisions of Sections 10.2(j) or 10.2(k), prior written notice of the
election to terminate this Agreement for cause shall be furnished by the party
terminating this Agreement to the non-terminating parties. Such prior written
notice shall be given by the party terminating this Agreement to the
non-terminating parties at least 30 days before the effective date of
termination.
-37-
10.4. It is understood and agreed that the right to terminate this
Agreement pursuant to Section 10.2(a) may be exercised for any reason or for no
reason.
10.5. Effect of Termination
(a) Notwithstanding any termination of this Agreement pursuant to
Section 10.2 of this Agreement, the Fund may, at its option, or in the event of
termination of this Agreement by the Fund or the Adviser pursuant to Section
10.2(a) of this Agreement, the Company may require the Fund and the Adviser to,
continue to make available additional shares of the Fund for so long after the
termination of this Agreement as the Fund or the Company, if the Company is so
requiring, desires pursuant to the terms and conditions of this Agreement as
provided in paragraph (b) below for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, if the Fund so elects to make
available additional shares of the Fund or if the Company is so requiring, 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. The parties
agree that this Section 10.5 shall not apply to any terminations under Article
VII and the
-38-
effect of such Article VII terminations shall be governed by Article VII of this
Agreement.
(b) In the event of a termination of this Agreement pursuant to
Section 10.2 of this Agreement, the Fund shall promptly notify the Company
whether the Fund will continue to make available shares of the Fund, after such
termination, except that, with respect to a termination by the Fund or the
Adviser pursuant to Section 10.2(a) of this Agreement, the Company shall
promptly notify the Fund whether it wishes the Fund to continue to make
available additional shares of the Fund. If shares of the Fund continue to be
made available after such termination, the provisions of this Agreement shall
remain in effect except for Section 10.2(a) and thereafter the Fund or the
Company may terminate the Agreement, as so continued pursuant to this Section
10.5 upon written notice to the other party, such notice to be for a period that
is reasonable under the circumstances.
(c) In determining whether to make available additional Fund shares,
the Fund shall act in good faith, giving due consideration to the interest of
the existing shareholders, including holders of the existing Contracts.
-39-
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
Travelers Series Fund Inc.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxx, Secretary
If to the Company:
Citicorp Life Insurance Company
First Citicorp Life Insurance Company
C/O Travelers Insurance Company
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
If to the Adviser:
SSBC Fund Management Inc.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
-40-
Attn: Xxxxxxxxx X. Xxxxx, General Counsel
ARTICLE XII. Miscellaneous
12.1. 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 assume any personal liability for
obligations entered into on behalf of the Fund.
12.2. Subject to the requirement of legal process and regulatory authority,
each party hereto shall treat as if 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 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 without the express written consent of the affected party.
12.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provision hereof or
otherwise affect their construction or effect.
-41-
12.4. This Agreement maybe executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. 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.
12.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation 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.
12.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights,
-42-
remedies and obligations, at law or in equity, which the parties hereto are
entitled to under state and federal laws.
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.
CITICORP LIFE INSURANCE COMPANY
By its authorized officer
By: /s/ Xxxxxxx X. Xxxxxxx, XX
---------------------------------
Xxxxxxx X. Xxxxxxx, XX
Title: Senior Vice President
Date: 7/2/99
FIRST CITICORP LIFE
INSURANCE COMPANY
By its authorized officer
BY: /s/ Xxxxxxx X. Xxxxxxx, XX
---------------------------------
Xxxxxxx X. Xxxxxxx, XX
Title: Senior Vice President
Date: 7/2/99
-43-
TRAVELERS SERIES FUND
INC.
By its authorized officer
By: /s/ President
---------------------------------
Title: President
Date: April 1, 1999
SSBC FUND MANAGEMENT INC.
By its authorized officer
By: /s/ Senior Vice President
---------------------------------
Title: Senior Vice President
Date: April 1, 1999
-44-
SCHEDULE A
SEPARATE ACCOUNT OF
CITICORP LIFE INSURANCE COMPANY
SEPARATE ACCOUNT DATE ESTABLISHED SEC REGISTRATION NUMBER
---------------- ---------------- -----------------------
Citicorp Life 7/6/94 333-71379
Variable Annuity 811-08628
Separate Account
SEPARATE ACCOUNT OF
FIRST CITICORP LIFE INSURANCE COMPANY
SEPARATE ACCOUNT DATE ESTABLISHED SEC REGISTRATION NUMBER
---------------- ---------------- -----------------------
First Citicorp Life 7/6/94 333-71377
Variable Annuity 811-08732
Separate Account
-45-
EXHIBIT B
Travelers Series Fund, Inc.
AIM Capital Appreciation Portfolio
MFS Total Return Portfolio
Xxxxxx Diversified Income Portfolio
-46-
SCHEDULE C
VARIABLE ANNUITY CONTRACT
ISSUED BY CITICORP LIFE INSURANCE COMPANY
CONTRACT REPRESENTATIVE FORM NUMBER
-------- --------------------------
CitiElite 63-1106 (1-99)
VARIABLE ANNUITY CONTRACT
ISSUED BY FIRST CITICORP LIFE INSURANCE COMPANY
CONTRACT REPRESENTATIVE FORM NUMBER
-------- --------------------------
CitiElite 63-5101C
63-5102C
63-5103C
-47-
