PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 5th day of December, 2003 by and
among XXXXXXX XXXXX VARIABLE INSURANCE TRUST, an unincorporated business trust
formed under the laws of Delaware (the "Trust"), XXXXXXX, SACHS & CO., a New
York limited partnership (the "Distributor"), THE TRAVELERS INSURANCE COMPANY
AND THE TRAVELERS LIFE AND ANNUITY COMPANY Connecticut Corporations
(collectively the "Company"), on their own behalf and on behalf of each separate
account of the Company as set forth on Schedule 1, as may be amended from time
to time.
WHEREAS, the Trust is a series-type mutual fund offering shares of
beneficial interest (the "Trust shares") consisting of one or more separate
series ("Series") of shares, each such Series representing an interest in a
particular investment portfolio of securities and other assets (a "Fund"), and
which Series may be subdivided into various classes ("Classes") with each such
Class supporting a distinct charge and expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies to be offered by
insurance companies and may also be utilized by qualified retirement plans; and
WHEREAS, the Distributor has the exclusive right to distribute Trust shares
to qualifying investors; and
WHEREAS, the Company desires that the Trust serve as an investment vehicle
for a certain separate account(s) of the Company and the Distributor desires to
sell shares of certain Series and/or Class(es) to such separate account(s);
NOW, THEREFORE, in consideration of their mutual promises, the Trust, the
Distributor and the Company agree as follows:
ARTICLE I
ADDITIONAL DEFINITIONS
1.1. "Account" -- the separate account of the Company described more
specifically in Schedule 1 to this Agreement. If more than one separate account
is described on Schedule 1, the term shall refer to each separate account so
described.
1.2. "Business Day" -- each day that the Trust is open for business as
provided in the Trust's Prospectus.
1.3. "Code" -- the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.4. "Contracts" -- the class or classes of variable annuity contracts
and/or variable life insurance policies issued by the Company and described more
specifically on Schedule 2 to this Agreement.
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1.5. "Contract Owners" -- the owners of the Contracts, as distinguished
from all Product Owners.
1.6. "Participating Account" -- a separate account investing all or a
portion of its assets in the Trust, including the Account.
1.7. "Participating Insurance Company" -- any insurance company investing
in the Trust on its behalf or on behalf of a Participating Account, including
the Company.
1.8. "Participating Plan" -- any qualified retirement plan investing in the
Trust.
1.9. "Participating Investor" -- any Participating Account, Participating
Insurance Company or Participating Plan, including the Account and the Company.
1.10. "Products" -- variable annuity contracts and variable life insurance
policies supported by Participating Accounts, including the Contracts.
1.11. "Product Owners" -- owners of Products, including Contract Owners.
1.12. "Trust Board" -- the board of trustees of the Trust.
1.13. "Registration Statement" -- with respect to the Trust shares or a
class of Contracts, the registration statement filed with the SEC to register
such securities under the 1933 Act, or the most recently filed amendment
thereto, in either case in the form in which it was declared or became
effective. The Contracts' Registration Statement for each class of Contracts is
described more specifically on Schedule 2 to this Agreement. The Trust's
Registration Statement is filed on Form N-1A (File No. 333-35883).
1.14. "1940 Act Registration Statement" -- with respect to the Trust or the
Account, the registration statement filed with the SEC to register such person
as an investment company under the 1940 Act, or the most recently filed
amendment thereto. The Account's 1940 Act Registration Statement is described
more specifically on Schedule 2 to this Agreement. The Trust's 1940 Act
Registration Statement is filed on Form N-1A (File No. 811-08361).
1.15. "Prospectus" -- with respect to shares of a Series (or Class) of the
Trust or a class of Contracts, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933 Act.
With respect to any provision of this Agreement requiring a party to take action
in accordance with a Prospectus, such reference thereto shall be deemed to be to
the version for the applicable Series, Class or Contracts last so filed prior to
the taking of such action. For purposes of Article IX, the term "Prospectus"
shall include any statement of additional information incorporated therein.
1.16. "Statement of Additional Information" -- with respect to the shares
of the Trust or a class of Contracts, each version of the definitive statement
of additional information or supplement thereto filed with the SEC pursuant to
Rule 497 under the 1933 Act. With respect to any provision of this Agreement
requiring a party to take action in accordance with a Statement of Additional
Information, such reference thereto shall be deemed to be the last version so
filed prior to the taking of such action.
1.17. "SEC" -- the Securities and Exchange Commission.
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1.18. "NASD" -- The National Association of Securities Dealers, Inc.
1.19. "1933 Act" -- the Securities Act of 1933, as amended.
1.20. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
SALE OF TRUST SHARES
2.1. AVAILABILITY OF SHARES
(a) The Trust has granted to the Distributor exclusive authority to
distribute the Trust shares and to select which Series or Classes of Trust
shares shall be made available to Participating Investors. The Trust and
the Distributor agree to make the Trust's shares available consistent with
the terms and provisions of the Agreement 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 the rules of the
SEC. Notwithstanding the foregoing, the Board of Directors of the Trust
(hereinafter the "Board") and/or the Distributor may refuse to sell shares
of the Trust to any person, or suspend or terminate the offering of its
shares if such action is required by law or regulatory authorities having
jurisdiction. Notice of election to suspend or terminate shall be furnished
in writing, by the Fund said termination to be effective 10 Business Days
after receipt of such notice by the Company in order to give the Company
sufficient time to take appropriate steps in response to such suspension or
termination.
2.2. REDEMPTIONS.
(a) The Trust shall redeem, at the Company's request, any full or
fractional Trust shares held by the Company on behalf of the Account, such
redemptions to be effected at net asset value in accordance with Section
2.3 of this Agreement. Notwithstanding the foregoing, (i) the Company shall
not redeem Trust shares attributable to Contract Owners except in the
circumstances permitted in Article X of this Agreement, and (ii) the Trust
may delay redemption of Trust shares of any Series or Class to the extent
permitted by the 1940 Act, any rules, regulations or orders thereunder, or
the Prospectus for such Series or Class.
2.3. PURCHASE AND REDEMPTION PROCEDURES
(a) The Trust hereby appoints the Company as an agent of the Trust for
the limited purpose of receiving purchase and redemption requests on behalf
of the Account (but not with respect to any Trust shares that may be held
in the general account of the Company) for shares of those Series or
Classes made available hereunder, based on allocations of amounts to the
Account or subaccounts thereof under the Contracts, other transactions
relating to the Contracts or the Account and customary processing of the
Contracts. Receipt of any such requests (or effectuation of such
transaction or processing) on any Business Day by the Company as such
limited agent of the Trust prior to the
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Trust's close of business as defined from time to time in the applicable
Prospectus for such Series or Class (which as of the date of execution of
this Agreement is defined as the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m. New York Time) shall constitute receipt
by the Trust on that same Business Day, provided that the Trust receives
actual and sufficient notice of such request by 9:30 a.m. New York Time on
the next following Business Day. Such notice must be communicated by
facsimile to the office or person designated for such notice by the Trust,
and receipt of such notice may be confirmed by the Company using DSTVISION
to access this information or by facsimile or email in the event that
access to DSTVISION is unavailable.
(b) The Company shall pay for shares of each Series or Class on the
same day that it provides actual notice to the Trust of a purchase request
for such shares. Payment for Series or Class shares shall be made in
Federal funds transmitted to the Trust by wire to be received by the Trust
no later than 6:00 p.m. New York Time on the day the Trust receives actual
notice of the purchase request for Series or Class shares (unless the Trust
determines and so advises the Company that sufficient proceeds are
available from redemption of shares of other Series or Classes effected
pursuant to redemption requests tendered by the Company on behalf of the
Account). In no event may proceeds from the redemption of shares requested
pursuant to an order received by the Company after the Trust's close of
business on any Business Day be applied to the payment for shares for which
a purchase order was received prior to the Trust's close of business on
such day. If the issuance of shares is canceled because Federal funds are
not timely received, the Company shall indemnify the respective Fund and
Distributor with respect to all costs, expenses and losses relating
thereto. Upon the Trust's receipt of Federal funds so wired, such funds
shall cease to be the responsibility of the Company and shall become the
responsibility of the Trust. If Federal funds are not received on time,
such funds will be invested, and Series or Class shares purchased thereby
will be issued, as soon as practicable after actual receipt of such funds
but in any event not on the same day that the purchase order was received.
(c) Payment for Series or Class shares redeemed by the Account or the
Company shall be made in Federal funds transmitted by wire to the Company
or any other person properly designated in writing by the Company, such
funds normally to be received by the Company no later than 6:00 p.m. New
York Time on the day the Trust receives actual notice of the redemption
order for Series or Class shares (unless redemption proceeds are to be
applied to the purchase of Trust shares of other Series or Classes in
accordance with Section 2.3(b) of this Agreement), except that the Trust
reserves the right to redeem Series or Class shares in assets other than
cash and to delay payment of redemption proceeds to the extent permitted by
the 1940 Act, any rules or regulations or orders thereunder, or the
applicable Prospectus. The Trust shall not bear any responsibility
whatsoever for the proper disbursement or crediting of redemption proceeds
by the Company; the Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Series or Class shares held
or to be held in the Company's general account shall be effected at the net
asset value per share next determined after the Trust's actual receipt of
such request, provided that, in the case of a purchase request, payment for
Trust
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shares so requested is received by the Trust in Federal funds prior to
close of business for determination of such value, as defined from time to
time in the Prospectus for such Series or Class.
(e) Prior to the first purchase of any Trust shares hereunder, the
Company and the Trust shall provide each other with all information
necessary to effect wire transmissions of Federal funds to the other party
and all other designated persons pursuant to such protocols and security
procedures as the parties may agree upon. Should such information change
thereafter, the Trust and the Company, as applicable, shall notify the
other in writing of such changes, observing the same protocols and security
procedures, at least three Business Days in advance of when such change is
to take effect. The Company and the Trust shall observe customary
procedures to protect the confidentiality and security of such information,
but the Trust shall not be liable to the Company for any breach of
security.
(f) The procedures set forth herein are subject to any additional
terms set forth in the applicable Prospectus for the Series or Class or by
the requirements of any applicable law.
(g) The Trust shall provide confirmation to the Company of the amount
of shares traded and the associated net asset value total trade amount and
the outstanding share balances held in the Account as of the end of each
Business Day via access to DSTVISION, or by facsimile or email in the event
that access to DSTVISION is unavailable. Such information will be available
by 1:00 p.m. on the next Business Day.
2.4. NET ASSET VALUE. The Trust shall use its best efforts to inform the
Company of the net asset value per share for each Series or Class available to
the Company as soon as reasonably practicable after the net asset value per
share for such Series or Class is calculated (normally by 7:00 p.m. New York
time) via facsimile or email. The Trust shall calculate such net asset value in
accordance with the Prospectus for such Series or Class.
2.5. DIVIDENDS AND DISTRIBUTIONS. The Trust shall furnish same day notice
(by facsimile or telephone, followed by written confirmation) to the Company of
any income dividends or capital gain distributions payable on any Series or
Class shares. The Company, on its behalf and on behalf of the Account, hereby
elects to receive all such dividends and distributions as are payable on any
Series or Class shares in the form of additional shares of that Series or Class.
The Company reserves the right, on its behalf and on behalf of the Account, to
revoke this election and to receive all such dividends and capital gain
distributions in cash; to be effective, such revocation must be made in writing
and received by the Trust at least ten Business Days prior to a dividend or
distribution date. The Trust shall notify the Company promptly of the number of
Series or Class shares so issued as payment of such dividends and distributions.
2.6. BOOK ENTRY. Issuance and transfer of Trust shares shall be by book
entry only. Stock certificates will not be issued to the Company or the Account.
Purchase and redemption orders for Trust shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
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2.7. PRICING ERRORS. If the Trust provides the Company with materially (as
defined below) incorrect net asset value information through no fault of the
Company, the Company shall be entitled to an adjustment with respect to Trust
shares purchased or redeemed to reflect the correct net asset value per share.
Any material errors in the calculation of net asset value, dividends or capital
gain information shall be reported immediately upon discovery to the Company. An
error shall be deemed "material" based on the SEC's position and policy with
regard to materiality, as it may be modified from time to time.
2.8. LIMITS ON PURCHASERS. The Distributor and the Trust shall sell Trust
shares only to insurance companies and their separate accounts and to persons or
plans ("Qualified Persons") that qualify to purchase shares of the Trust under
Section 817(h) of the Code and the regulations thereunder without impairing the
ability of the Account to consider the portfolio investments of the Trust as
constituting investments of the Account for the purpose of satisfying the
diversification requirements of Section 817(h). The Distributor and the Trust
shall not sell Trust shares to any insurance company or separate account unless
an agreement complying with Article VIII of this Agreement is in effect to
govern such sales. The Company hereby represents and warrants that it and the
Account are Qualified Persons.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. COMPANY. The Company represents and warrants that: (i) the Company is
an insurance company duly organized and in good standing under the Insurance
Code of Connecticut insurance law; (ii) the Account is a validly existing
separate account, duly established and maintained in accordance with applicable
law; (iii) the Account's 1940 Act Registration Statement has been filed with the
SEC in accordance with the provisions of the 1940 Act and the Account is duly
registered as a unit investment trust thereunder, unless such Account is exempt
from registration thereunder; (iv) the Contracts' Registration Statement has
been declared effective by the SEC, unless such Contract is exempt from
registration; (v) the Contracts will be issued in compliance in all material
respects with all applicable Federal and state laws; (vi) the Contracts have
been filed, qualified and/or approved for sale, as applicable, under the
insurance laws and regulations of the states in which the Contracts will be
offered; (vii) the Account will maintain its registration under the 1940 Act,
unless such Account is exempt from registration and will comply in all material
respects with the 1940 Act; (viii) the Contracts currently are, and at the time
of issuance and for so long as they are outstanding will be, treated as annuity
contracts or life insurance policies, whichever is appropriate, under applicable
provisions of the Code; and (ix) the Company's entering into and performing its
obligations under this Agreement does not and will not violate its charter
documents or by-laws, rules or regulations, or any agreement to which it is a
party. The Company will notify the Trust promptly if for any reason it is unable
to perform its obligations under this Agreement.
3.1A MONEY LAUNDERING. The Company represents and warrants that it has
implemented policies and procedures reasonably designed to guard against money
laundering activities, to detect and report suspicious activities and to comply
with the applicable provisions of the Bank Secrecy Act, as amended by the USA
Patriot Act, and any and all related regulations. In this regard, (a) to the
extent required by law, the Company, has obtained and will obtain in the future,
evidence that satisfactorily establishes the identity of each of its customers;
(b) such information will be made available to GSVIT and GS&Co. or to their
agents upon their request or for regulatory
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purposes; and (c) the Company will identify any suspicious transactions to GSVIT
and GS&Co.
3.1B MARKET TIMING AND LATE TRADING. The Company represents and warrants
that it has implemented policies and procedures reasonably designed (a) to guard
against market timing of the Funds by its customers and (b) to ensure that
purchase and redemption transactions are processed in compliance with all
applicable rules and regulations, including but not limited to Rule 22c-1 of the
1940 Act. The Company further represents and warrants that it has been following
and will continue to follow all applicable rules and regulations, including but
not limited to Rule 22c-1 of the 1940 Act; and its own internal policies and
procedures regarding the processing of purchase and redemption transactions in a
timely fashion and regarding anti-market timing policies.
3.2. TRUST. The Trust represents and warrants that: (i) the Trust is an
unincorporated business trust duly formed and validly existing under the
Delaware law; (ii) the Trust's 1940 Act Registration Statement has been filed
with the SEC in accordance with the provisions of the 1940 Act and the Trust is
duly registered as an open-end management investment company thereunder; (iii)
the Trust's Registration Statement has been declared effective by the SEC; (iv)
the Trust shares will be issued in compliance in all material respects with all
applicable federal laws; (v) the Trust will remain registered under and will
comply in all material respects with the 1940 Act during the term of this
Agreement; (vi) each Fund of the Trust intends to qualify as a "regulated
investment company" under Subchapter M of the Code and to comply with the
diversification standards prescribed in Section 817(h) of the Code and the
regulations thereunder; and (vii) the investment policies of each Fund are in
material compliance with any investment restrictions set forth on Schedule 4 to
this Agreement. The Trust, however, makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) otherwise complies with the insurance laws or regulations
of any state.
3.3. DISTRIBUTOR. The Distributor represents and warrants that: (i) the
Distributor is a limited partnership duly organized and in good standing under
New York law; (ii) the Distributor is registered as a broker-dealer under
federal and applicable state securities laws and is a member of the NASD; and
(iii) the Distributor is registered as an investment adviser under federal
securities laws.
3.4. LEGAL AUTHORITY. Each party represents and warrants that the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary corporate,
partnership or trust action, as applicable, by such party, and, when so executed
and delivered, this Agreement will be the valid and binding obligation of such
party enforceable in accordance with its terms.
3.5. BONDING REQUIREMENT. Each party represents and warrants that all of
its directors, officers, partners and employees dealing with the money and/or
securities of the Trust are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Trust in an
amount not less than the amount required by the applicable rules of the NASD and
the federal securities laws. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company. All
parties shall make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, shall
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provide evidence thereof promptly to any other party upon written request
therefore, and shall notify the other parties promptly in the event that such
coverage no longer applies.
ARTICLE IV
REGULATORY REQUIREMENTS
4.1. TRUST FILINGS. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. CONTRACTS FILINGS. The Company shall amend the Contracts' Registration
Statement and the Account's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of the Contracts in
compliance with applicable law or as may otherwise be required by applicable
law, but in any event shall maintain a current effective Contracts' Registration
Statement and the Account's registration under the 1940 Act for so long as the
Contracts are outstanding unless the Company has supplied the Trust with an SEC
no-action letter or opinion of counsel satisfactory to the Trust's counsel to
the effect that maintaining such Registration Statement on a current basis is no
longer required. The Company shall be responsible for filing all such Contract
forms, applications, marketing materials and other documents relating to the
Contracts and/or the Account with state insurance commissions, as required or
customary, and shall use its best efforts: (i) to obtain any and all approvals
thereof, under applicable state insurance law, of each state or other
jurisdiction in which Contracts are or may be offered for safe; and (ii) to keep
such approvals in effect for so long as the Contracts are outstanding.
4.3. VOTING OF TRUST SHARES. With respect to any matter put to vote by the
holders of Trust shares ("Voting Shares"), the Company will provide
"pass-through" voting privileges to owners of Contracts registered with the SEC
as long as the 1940 Act requires such privileges in such cases. In cases in
which "pass-through" privileges apply, the Company will (i) solicit voting
instructions from Contract Owners of SEC-registered Contracts; (ii) vote Voting
Shares attributable to Contract Owners in accordance with instructions or
proxies timely received from such Contract Owners; and (iii) vote Voting Shares
held by it that are not attributable to reserves for SEC-registered Contracts or
for which it has not received timely voting instructions in the same proportion
as instructions received in a timely fashion from Owners of SEC-registered
Contracts. The Company shall be responsible for ensuring that it calculates
"pass-through" votes for the Account in a manner consistent with the provisions
set forth above and with other Participating Insurance Companies. Neither the
Company nor any of its affiliates will in any way recommend action in connection
with, or oppose or interfere with, the solicitation of proxies for the Trust
shares held for such Contract Owners, except with respect to matters as to which
the Company has the right under Rule 6e-2 or 6e-3(T) under the 1940 Act, to vote
Voting Shares without regard to voting instructions from Contract Owners.
4.4. STATE INSURANCE RESTRICTIONS. The Company acknowledges and agrees that
it is the responsibility of the Company and other Participating Insurance
Companies to determine investment restrictions and any other restrictions,
limitations or requirements under state insurance law applicable to any Fund or
the Trust or the Distributor, and that neither the Trust nor the Distributor
shall bear any responsibility to
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the Company, other Participating Insurance Companies or any Product Owners for
any such determination or the correctness of such determination. Schedule 4 sets
forth the investment restrictions that the Company and/or other Participating
Insurance Companies have determined are applicable to any Fund and with which
the Trust has agreed to comply as of the date of this Agreement. The Company
shall inform the Trust of any investment restrictions imposed by state insurance
law that the Company determines may become applicable to the Trust or a Fund
from time to time as a result of the Account's investment therein, other than
those set forth on Schedule 4 to this Agreement. Upon receipt of any such
information from the Company or any other Participating Insurance Company, the
Trust shall determine whether it is in the best interests of shareholders to
comply with any such restrictions. If the Trust determines that it is not in the
best interests of shareholders (it being understood that "shareholders" for this
purpose shall mean Product Owners) to comply with a restriction determined to be
applicable by the Company, the Trust shall so inform the Company, and the Trust
and the Company shall discuss alternative accommodations in the circumstances.
If the Trust determines that it is in the best interests of shareholders to
comply with such restrictions, the Trust and the Company shall amend Schedule 4
to this Agreement to reflect such restrictions, subject to obtaining any
required shareholder approval thereof.
4.5. COMPLIANCE. Under no circumstances will the Trust, the Distributor or
any of their affiliates (excluding Participating Investors) be held responsible
or liable in any respect for any statements or representations made by them or
their legal advisers to the Company or any Contract Owner concerning the
applicability of any federal or state laws, regulations or other authorities to
the activities contemplated by this Agreement.
4.6. DRAFTS OF FILINGS. The Trust and the Company shall provide to each
other copies of draft versions of any Registration Statements, Prospectuses,
Statements of Additional Information, offering memorandums, periodic and other
shareholder or Contract Owner reports, proxy statements, solicitations for
voting instructions, applications for exemptions, requests for no-action
letters, and all amendments or supplements to any of the above, prepared by or
on behalf of either of them and that mentions the other party by name. Each
party shall use their best effort to provide such drafts shall be provided to
the other party sufficiently in advance of filing such materials with regulatory
authorities in order to allow such other party a reasonable opportunity to
review the materials.
4.7. COPIES OF FILINGS. The Trust and the Company shall provide to each
other at least one complete copy of all Registration Statements, Prospectuses,
Statements of Additional Information, periodic and other shareholder or
Contract Owner reports, proxy statements, solicitations of voting instructions,
applications for exemptions, requests for no-action letters, and all amendments
or supplements to any of the above, that relate to the Trust, the Contracts or
the Account, as the case may be, promptly after the filing by or on behalf of
each such party of such document with the SEC or other regulatory authorities
(it being understood that this provision is not intended to require the Trust to
provide to the Company copies of any such documents prepared, filed or used by
Participating Investors other than the Company and the Account).
4.8. REGULATORY RESPONSES. Each party shall promptly provide to all other
parties copies of responses to no-action requests, notices, orders and other
rulings
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received by such party with respect to any filing covered by Section 4.7 of this
Agreement.
4.9. COMPLAINTS AND PROCEEDINGS
(a) The Trust and/or the Distributor shall immediately notify the Company
of: (i) the issuance by any court or regulatory body of any stop order, cease
and desist order, or other similar order (but not including an order of a
regulatory body exempting or approving a proposed transaction or arrangement)
with respect to the Trust's Registration Statement or the Prospectus of any
Series or Class; (ii) any request by the SEC for any amendment to the Trust's
Registration Statement or the Prospectus of any Series or Class; (iii) the
initiation of any proceedings for that purpose or for any other purposes
relating to the registration or offering of the Trust shares; or (iv) any other
action or circumstances that may prevent the lawful offer or sale of Trust
shares or any Class or Series in any state or jurisdiction, including, without
limitation, any circumstance in which (A) such shares are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law or (B) such law precludes the use of such shares as an underlying
investment medium for the Contracts. The Trust will make every reasonable effort
to prevent the issuance of any such stop order, cease and desist order or
similar order and, if any such order is issued, to obtain the lifting thereof at
the earliest possible time.
(b) The Company shall immediately notify the Trust and the Distributor of:
(i) the issuance by any court or regulatory body of any stop order, cease and
desist order, or other similar order (but not including an order of a regulatory
body exempting or approving a proposed transaction or arrangement) with respect
to the Contracts' Registration Statement or the Contracts' Prospectus; (ii) any
request by the SEC for any amendment to the Contracts' Registration Statement or
Prospectus; (iii) the initiation of any proceedings for that purpose or for any
other purposes relating to the registration or offering of the Contracts; or
(iv) any other action or circumstances that may prevent the lawful offer or sale
of the Contracts or any class of Contracts in any state or jurisdiction,
including, without limitation, any circumstance in which such Contracts are not
registered, qualified and approved, and, in all material respects, issued and
sold in accordance with applicable state and federal laws. The Company will make
every reasonable effort to prevent the issuance of any such stop order, cease
and desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(c) Each party shall immediately notify the other parties when it receives
notice, or otherwise becomes aware of, the commencement of any litigation or
proceeding against such party or a person affiliated therewith in connection
with the issuance or sale of Trust shares or the Contracts.
(d) The Company shall provide to the Trust and the Distributor any
complaints it has received from Contract Owners pertaining to the Trust or a
Fund, and the Trust and Distributor shall each provide to the Company any
complaints it has received from Contract Owners relating to the Contracts.
4.10. COOPERATION. Each party hereto shall cooperate with the other parties
and all appropriate government authorities (including without limitation the
SEC, the NASD and state securities and insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry by any such authority relating to this Agreement or
the transactions
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contemplated hereby. However, such access shall not extend to attorney-client
privileged information.
ARTICLE V
SALE, ADMINISTRATION AND SERVICING OF THE CONTRACTS
5.1. SALE OF THE CONTRACTS. The Company shall be fully responsible as to
the Trust and the Distributor for the sale and marketing of the Contracts. The
Company shall provide Contracts, the Contracts' and Trust's Prospectuses,
Contracts' and Trust's Statements of Additional Information, and all amendments
or supplements to any of the foregoing to Contract Owners and prospective
Contract Owners, all in accordance with federal and state laws. The Company
shall ensure that all persons offering the Contracts are duly licensed and
registered under applicable insurance and securities laws. Through its selling
agreements with broker-dealers, the Company obligates, broker-dealers to I
review all contract and policy applications for suitability, completeness and
correctness as to form and to be responsible for ensuring compliance with state
insurance laws and regulations and NASD suitability rules and standards
applicable to sales of variable insurance contracts. The Company shall adopt and
implement procedures reasonably designed to ensure that information concerning
the Trust and the Distributor that is intended for use only by brokers or agents
selling the Contracts (i.e., information that is not intended for distribution
to Contract Owners or offerees) is so used.
5.2. ADMINISTRATION AND SERVICING OF THE CONTRACTS. The Company shall be
fully responsible as to the Trust and the Distributor for the underwriting,
issuance, service and administration of the Contracts and for the administration
of the Account, including, without limitation, the calculation of performance
information for the Contracts, the timely payment of Contract Owner redemption
requests and processing of Contract transactions, and the maintenance of a
service center, such functions to be performed in all respects at a level
commensurate with those standards prevailing in the variable insurance industry.
The Company shall provide to Contract Owners all Trust reports, solicitations
for voting instructions including any related Trust proxy solicitation
materials, and updated Trust Prospectuses as required under the federal
securities laws.
5.3. CUSTOMER COMPLAINTS. The Company shall promptly address all customer
complaints and resolve such complaints consistent with high ethical standards
and principles of ethical conduct.
5.4. TRUST DOCUMENTS AND REPORTS. In order to enable the Company to fulfill
its obligations under this Agreement and the federal securities laws, the Trust
shall provide the Company with a copy, in camera-ready form or form otherwise
suitable for printing or duplication of: (i) the Trust's Prospectus for the
Series and Classes listed on Schedule 3 and any supplement thereto; (ii) each
Statement of Additional Information and any supplement thereto; (iii) any Trust
proxy soliciting material for such Series or Classes, and (iv) any Trust
periodic shareholder reports. The Trust and the Company may agree upon alternate
arrangements, but in all cases, the Trust reserves the right to approve the
printing of any such material. The Trust shall provide the Company at least 10
Business Days advance written notice when any such material shall become
11
available, provided, however, that in the case of a supplement, the Trust shall
provide the Company notice reasonable in the circumstances, it being understood
that circumstances surrounding such supplement may not allow for advance notice.
The Company may not alter any material so provided by the Trust or the
Distributor (including without limitation presenting or delivering such material
in a different medium, e.g., electronic or Internet) without the prior written
consent of the Distributor.
In addition to providing the Company with the Trust Prospectuses, as described
above, the Trust will provide the Company with Trust Prospectuses in PDF format
no later than 10 Business Days before the effective date of the Trust
Prospectuses. The Company may post the PDF version of the Trust Prospectuses on
the Company's intranet and internet sites; provided, however, that the Company
agrees (a) not to alter or modify in any way such prospectus or supplement
supplied by the Trust, (b) to post any updated prospectus or supplement supplied
by the Trust within two Business Days after receipt, and (c) to comply with any
request by the Trust to remove any then-posted prospectus within one Business
Day after such request.
5.5. TRUST ADVERTISING MATERIAL. No piece of marketing, advertising or
sales literature or other promotional material in which the Trust or the
Distributor or the trade name and trademark Xxxxxxx Xxxxx (the "Xxxx") is named
(including, without limitation, material for prospects, existing Contract
Owners, brokers, rating or ranking agencies, or the press, whether in print,
radio, television, video, Internet, or other electronic medium) shall be used by
the Company or any person directly or indirectly authorized by the Company,
including without limitation, underwriters, distributors, and sellers of the
Contracts, except with the prior written consent of the Trust or the
Distributor, as applicable, as to the form, content and medium of such material.
Any such piece shall be furnished to the Trust for such consent prior to its
use. The Trust shall respond to any request for written consent on a prompt and
timely basis, and failure to respond to the Company within ten business days
shall be deemed as the Trust's consent to the use of such sales or marketing
literature. The Trust or Distributor may at any time in its sole discretion
revoke such written consent, and upon notification of such revocation, the
Company shall no longer use the material subject to such revocation. Until
further notice to the Company, the Trust has delegated its rights and
responsibilities under this provision to the Distributor.
5.6. CONTRACTS ADVERTISING MATERIAL. No piece of marketing, advertising or
sales literature or other promotional material in which the Company is named
shall be used by the Trust or the Distributor, except with the prior written
consent of the Company. Any such piece shall be furnished to the Company for
such consent prior to its use. The Company shall respond to any request for
written consent on a prompt and timely basis, and failure to respond to the
Trust or the Distributor within three business days shall be deemed as the
Company's consent to the use of such sales or marketing literature. The Company
may at any time in its sole discretion revoke any written consent, and upon
notification of such revocation, neither the Trust nor the Distributor shall use
the material subject to such revocation. The Company, upon prior written notice
to the Trust, may delegate its rights and responsibilities under this provision
to the principal underwriter for the Contracts.
5.7. TRADE NAMES. No party shall use any other party's trade names, logos,
trademarks or service marks, whether registered or unregistered, without the
prior written consent of such other party, or after written consent therefore
has been revoked. The Company shall not use in advertising, publicity or
otherwise the name of the Trust,
12
Distributor, or any of their affiliates nor any trade name, trademark, trade
device, service xxxx, symbol or any abbreviation, contraction or simulation
thereof of the Trust, Distributor, or their affiliates without the prior written
consent of the Trust or the Distributor in each instance. The Company
acknowledges that the Distributor owns all right, title and interest in and to
the Xxxx and the registrations thereof. The Company shall use the Xxxx intact
and shall not modify or alter the Xxxx. Upon termination of this Agreement, the
Company or its successor (to the extent and as soon as it lawfully can) will
cease the use of the Xxxx.
5.8. REPRESENTATIONS BY COMPANY. Except with the prior written consent of
the Trust, the Company shall not give any information or make any
representations or statements about the Trust or the Funds nor shall it
authorize or allow any other person to do so except information or
representations contained in the Trust's Registration Statement or the Trust's
Prospectuses or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in writing by the Trust or its
designee in accordance with this Article V, or in published reports or
statements of the Trust in the public domain.
5.9. REPRESENTATIONS BY TRUST. Except with the prior written consent of the
Company, the Trust shall not give any information or make any representations or
statements about the Company, the Account or the Contracts nor shall it
authorize or allow any other person to do so except information or
representations contained in the Contracts' Registration Statement or Contracts'
Prospectus or in published reports of the Account which are in the public domain
or in sales literature or other promotional material approved in writing by the
Company in accordance with this Article V.
5.10. ADVERTISING. For purposes of this Article V, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
material constituting sales literature or advertising under the NASD rules, the
1940 Act or the 1933 Act.
ARTICLE VI
COMPLIANCE WITH CODE
6.1. SECTION 817(H). Each Fund of the Trust shall comply with Section
817(h) of the Code and the regulations issued thereunder to the extent
applicable to the Fund as an investment company underlying the Account, and the
Trust shall notify the Company immediately upon having a reasonable basis for
believing that a Fund has ceased to so qualify or that it might not so qualify
in the future.
6.2. SUBCHAPTER M. Each Fund of the Trust shall maintain the qualification
of the Fund as a regulated investment company (under Subchapter M or any
successor or similar provision), and the Trust shall notify the Company
immediately upon having a reasonable basis for believing that a Fund has ceased
to so qualify or that it might not so qualify in the future.
6.3. CONTRACTS. The Company shall use their best efforts to maintain the
continued treatment of the Contracts as annuity contracts or life insurance
policies, whichever is appropriate, under applicable provisions of the Code and
shall notify the Trust and the Distributor 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.
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ARTICLE VII
EXPENSES
7.1. EXPENSES. All expenses incident to each party's performance under this
Agreement (including expenses expressly assumed by such party pursuant to this
Agreement) shall be paid by such party to the extent permitted by law.
7.2. TRUST EXPENSES. Expenses incident to the Trust's performance of its
duties and obligations under this Agreement include, but are not limited to, the
costs of:
(a) registration and qualification of the Trust shares under the federal
securities laws;
(b) preparation and filing with the SEC of the Trust's Prospectuses,
Trust's Statement of Additional Information, Trust's Registration
Statement, Trust proxy materials and shareholder reports, and
preparation of a camera-ready copy of the foregoing;
(c) preparation of all statements and notices required by any Federal or
state securities law;
(d) all taxes on the issuance or transfer of Trust shares;
(e) payment of all applicable fees relating to the Trust, including,
without limitation, all fees due under Rule 24f-2 in connection with
sales of Trust shares to qualified retirement plans, custodial,
auditing, transfer agent and advisory fees, fees for insurance
coverage and Trustees' fees;
(f) any expenses permitted to be paid or assumed by the Trust pursuant to
a plan, if any, under Rule 12b-1 under the 1940 Act; and
(g) printing of the Trust's Prospectuses, Statement of Additional
Information and reports for distribution by the Company to existing
Contract Owners. If the Trust's Prospectuses are printed by the
Company in one document with the prospectus for the Contracts and the
prospectuses for other funds, then the expenses of such printing will
be apportioned between the Company and the Trust in proportion to the
number of pages of the Contract's prospectus, other fund prospectuses
and the Trust's Prospectuses, taking account of other relevant factors
affecting the expense of printing, such as covers, columns, graphs and
charts; the Trust to bear the cost of printing the Trust's portion of
such document (relating to the Trust's Prospectuses) for distribution
only to owners of existing Contracts funded by the Trust and the
Company to bear the expense of printing the portion of such documents
relating to the Account; provided, however, the Company shall bear all
printing expenses of such combined documents where used for
distribution to prospective purchasers or to owners of existing
Variable Contracts not funded by the Trust.
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7.3. COMPANY EXPENSES. Expenses incident to the Company's performance of
its duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Contracts under the federal
securities laws;
(b) preparation and filing with the SEC of the Contracts' Prospectus and
Contracts' Registration Statement;
(c) the sale, marketing and distribution of the Contracts, including
printing and dissemination of Contracts' Prospectuses and compensation
for Contract sales;
(d) administration of the Contracts;
(e) payment of all applicable fees relating to the Contracts, including,
without limitation, all fees due under Rule 24f-2;
(f) preparation, printing and dissemination of all statements and notices
to Contract Owners required by any Federal or state insurance law
other than those paid for by the Trust;
(g) preparation, printing and dissemination of all marketing materials for
the Contracts and Trust except where other arrangements are made in
advance;
(h) distribution of the Trust Prospectuses and Statements of Additional
Information, as required by law, to prospective and existing Contract
Owners; and
(i) distribution of the Trust's proxy material, reports to shareholders,
and other Trust communications, as required by law, to Contract
Owners.
7.4. 12B-1 PAYMENTS. The Trust shall pay no fee or other compensation to
the Company under this Agreement, except that if the Trust or any Series or
Class adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to
finance distribution expenses, then payments may be made to the Company in
accordance with such plan. The Trust currently does not intend to make any
payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940
Act or in contravention of such rule, although it may make payments pursuant to
Rule 12b-1 in the future. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1 and such formulation is required by the 1940 Act
or any rules or order thereunder, the Trust undertakes to have a Board of
Trustees, a majority of whom are not interested persons of the Trust, formulate
and approve any plan under Rule 12b-1 to finance distribution expenses.
15
ARTICLE VIII
POTENTIAL CONFLICTS
8.1. EXEMPTIVE ORDER. The parties to this Agreement acknowledge that the
Trust has received an exemptive order from the SEC (the "Exemptive Order")
granting relief from various provisions of the 1940 Act and the rules thereunder
to the extent necessary to permit Trust 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 other
Qualified Persons (as defined in Section 2.8 hereof). The Exemptive Order
requires the Trust and each Participating Insurance Company to comply with
conditions and undertakings substantially as provided in this Article VIII. The
Trust will not enter into a participation agreement with any other Participating
Insurance Company unless it imposes the same conditions and undertakings on that
company as are imposed on the Company pursuant to this Article VIII.
8.2. COMPANY MONITORING REQUIREMENTS. The Company will monitor its
operations and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts between
or among the interests of Participating Plans, Product Owners of variable life
insurance policies and Product Owners of variable annuity contracts.
8.3. COMPANY REPORTING REQUIREMENTS. The Company shall report any conflicts
or potential conflicts to the Trust Board and will provide the Trust Board, at
least annually, with all information reasonably necessary for the Trust Board to
consider any issues raised by such existing or potential conflicts or by the
conditions and undertakings required by the Exemptive Order. The Company also
shall assist the Trust Board in carrying out its obligations including, but not
limited to: (a) informing the Trust Board whenever it disregards Contract Owner
voting instructions with respect to variable life insurance policies, and (b)
providing such other information and reports as the Trust Board may reasonably
request. The Company will carry out these obligations with a view only to the
interests of Contract Owners.
8.4. TRUST BOARD MONITORING AND DETERMINATION. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans, Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts and determine what action, if any, should be taken in response to
those conflicts. A majority vote of Trustees who are not interested persons of
the Trust as defined in the 1940 Act (the "disinterested trustees") shall
represent a conclusive determination as to the existence of a material
irreconcilable conflict between or among the interests of Product Owners and
Participating Plans and as to whether any proposed action adequately remedies
any material irreconcilable conflict. The Trust Board shall give prompt written
notice to the Company and Participating Plan of any such determination.
8.5. UNDERTAKING TO RESOLVE CONFLICT. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans, the Company will, at its own expense, take whatever action
is necessary to remedy such conflict as it adversely affects Contract Owners up
to and including (1) establishing a new registered management investment
company, and (2) withdrawing assets from the Trust attributable to reserves for
the Contracts subject to the conflict and reinvesting such assets in a different
investment medium (including another Fund of the Trust) or submitting the
question of whether such withdrawal should be
16
implemented to a vote of all affected Contract Owners, and, as appropriate,
segregating the assets supporting the Contracts of any group of such owners that
votes in favor of such withdrawal, or offering to such owners the option of
making such a change. The Company will carry out the responsibility to take the
foregoing action with a view only to the interests of Contract Owners.
8.6. WITHDRAWAL. If a material irreconcilable conflict arises because of
the Company's decision to disregard the voting instructions of Contract Owners
of variable life insurance policies and that decision represents a minority
position or would preclude a majority vote at any Fund shareholder meeting,
then, at the request of the Trust Board, the Company will redeem the shares of
the Trust to which the disregarded voting instructions relate. No charge or
penalty, however, will be imposed in connection with such a redemption.
8.7. EXPENSES ASSOCIATED WITH REMEDIAL ACTION. In no event shall the Trust
be required to bear the expense of establishing a new funding medium for any
Contract. The Company shall not be required by this Article 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.
8.8. SUCCESSOR RULES. 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
provisions of the 1940 Act or the rules promulgated thereunder with respect to
mixed and shared funding on terms and conditions materially different from those
contained in the Exemptive Order, then (i) the Trust and/or the Company, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the extent
such rules are applicable, and (ii) Sections 8.2 through 8.5 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 IX
INDEMNIFICATION
9.1. INDEMNIFICATION BY THE COMPANY. The Company hereby agrees to, and
shall, indemnify and hold harmless the Trust and each trustee of the Board and
officers and each person, if any, who controls the Trust within the meaning of
Section 15 of the 1933 Act (collectively the "Indemnified Parties"), the
Distributor and each person who controls or is affiliated with the Trust or the
Distributor within the meaning of such terms under the 1933 Act or I940 Act (but
not any Participating Insurance Companies or Qualified Persons) and any officer,
trustee, partner, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid in settlement of, any action, suit or proceeding or any
claim asserted), to which the Indemnified Parties they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities are related to the sale or
acquisition of, or investment in, the Trust's shares or the Contracts and:
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Contracts Registration Statement, Contracts
Prospectus, sales literature or other promotional material for the
Contracts or the Contracts themselves (or any amendment or supplement
to any of the
17
foregoing), or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances in which they were made; provided that this obligation
to indemnify shall not apply if such statement or omission was made in
reliance upon and in conformity with information furnished in writing
to the Company by the Trust or the Distributor for use in the
Contracts Registration Statement, Contracts Prospectus or in the
Contracts or sales literature or promotional material for the
Contracts (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the
Trust Registration Statement, any Prospectus for Series or Classes or
sales literature or other promotional material of the Trust (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with information
furnished to the Trust or Distributor in writing by or on behalf of
the Company; or
(c) arise out of or are based upon any wrongful conduct of, or violation
of federal or state law by, the Company or persons under its control
or subject to its authorization, including without limitation, any
broker-dealers or agents authorized to sell the Contracts, with
respect to the sale, marketing or distribution of the Contracts or
Trust shares, including, without limitation, any impermissible use of
broker-only material, unsuitable or improper sales of the Contracts or
unauthorized representations about the Contracts or the Trust; or [
(d) arise as a result of any failure by the Company or persons under its
control (or subject to its authorization) to provide services, furnish
materials or make payments as required under this Agreement; or
(e) arise out of any material breach by the Company or persons under its
control (or subject to its authorization) of this Agreement; or
(f) arise out of any breach of any warranties contained in Article III
hereof, or any unauthorized use of the names, trade names or trademark
of the Trust or the Distributor.
This indemnification is in addition to any liability that the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or r reckless disregard of duty
by the party seeking indemnification.
9.2. INDEMNIFICATION BY THE TRUST. The Trust hereby agrees to, and shall,
indemnify and hold harmless the Company and each person who controls or is
affiliated with the Company within the meaning of such terms under the 1933 Act
or 1940 Act and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in
18
settlement of, any action, suit or proceeding or any claim asserted), to which
they or any of them may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Trust Registration Statement, any Prospectus for
Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in
which they were made; provided that this obligation to indemnify shall
not apply if such statement or omission was made in reliance upon and
in conformity with information furnished in writing by the Company to
the Trust or the Distributor for use in the Trust Registration
Statement, Trust Prospectus or sales literature or promotional
material for the Trust (or any amendment or supplement to any of the
foregoing) or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the
Contracts Registration Statement, Contracts Prospectus or sales
literature or other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing by
the Trust to the Company; or
(c) arise out of or are based upon wrongful conduct of the Trust or its
Trustees or officers with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Trust to provide services,
furnish materials or make payments as required under the terms of this
Agreement; or
(e) arise out of any material breach by the Trust of this Agreement
(including any breach of Section 6.1 of this Agreement and any
warranties contained in Article III hereof);
it being understood this indemnification is in addition to any liability that
the Trust may otherwise have; provided, however, that no party shall be entitled
to indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification.
9.3. INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor hereby agrees to,
and shall, indemnify and hold harmless the Company and each person who controls
or is affiliated with the Company within the meaning of such terms under the
1933 Act or 1940 Act and any officer, director, employee or agent of the
foregoing, against any and all losses, claims, damages or liabilities, joint or
several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they or
19
any of them may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities;
(a) arise out of or are based upon any untrue statement of any material
fact contained in the Trust Registration Statement, any Prospectus for
Series or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in
which they were made; provided that this obligation to indemnify shall
not apply if such statement or omission was made in reliance upon and
in conformity with information furnished in writing by the Company to
the Trust or Distributor for use in the Trust Registration Statement,
Trust Prospectus or sales literature or promotional material for the
Trust (or any amendment or supplement to any of the foregoing) or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(b) arise out of any untrue statement of a material fact contained in the
Contracts Registration Statement, Contracts Prospectus or sales
literature or other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or the omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances in which they were made, if such statement or
omission was made in reliance upon information furnished in writing by
the Distributor to the Company; or
(c) arise out of or are based upon wrongful conduct of the Distributor or
persons under its control with respect to the sale of Trust shares; or
(d) arise as a result of any failure by the Distributor or persons under
its control to provide services, furnish materials or make payments as
required under the terms of this Agreement; or
(e) arise out of any material breach by the Distributor or persons under
its control of this Agreement (including any breach of Section 6.1 of
this Agreement and any warranties contained in Article III hereof);
it being understood that in no way shall the Distributor be liable to the
Company with respect to any violation of insurance law, compliance with which is
a responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Distributor in accordance with Section 4.4
hereof; provided however that the Distributor agrees that either of its
affiliates shall perform diversification tests required under Subchapters L and
M of the Internal Revenue Code on behalf of the Trust. This indemnification is
in addition to any liability that the Distributor may otherwise have; provided,
however, that no party shall be entitled to indemnification if such loss, claim,
damage or liability is caused by the willful misfeasance, bad faith, gross
negligence or reckless disregard of duty by the party seeking indemnification.
9.4. INDEMNIFICATION PROCEDURES. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
20
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
RELATIONSHIP OF THE PARTIES; TERMINATION
10.1. RELATIONSHIP OF PARTIES. The Company is to be an independent
contractor vis-a-vis the Trust, the Distributor, or any of their affiliates for
all purposes hereunder and will have no authority to act for or represent any of
them (except to the limited extent the Company acts as agent of the Trust
pursuant to Section 2.3(a) of this Agreement). In addition, no officer or
employee of the Company will be deemed to be an employee or agent of the Trust,
Distributor, or any of their affiliates. The Company will not act as an
"underwriter" or "distributor" of the Trust, as those terms variously are used
in the 1940 Act, the 1933 Act, and rules and regulations promulgated thereunder.
10.2. NON-EXCLUSIVITY AND NON-INTERFERENCE. The parties hereto acknowledge
that the arrangement contemplated by this Agreement is not exclusive; the Trust
shares may be sold to other insurance companies and investors (subject to
Section 2.8 hereof) and the cash value of the Contracts may be invested in other
investment companies, provided, however, that until this Agreement is terminated
pursuant to this Article X:
(a) the Company shall not, without prior notice to the Distributor (unless
otherwise required by applicable law), take any action to operate the
Account as a management investment company under the 1940 Act;
(b) the Company shall not, without the prior written consent of the
Distributor (unless otherwise required by applicable law), solicit,
induce or encourage
21
Contract Owners to change or modify the Trust to change the Trust's
distributor or investment adviser, to transfer or withdraw Contract
Values allocated to a Fund, or to exchange their Contracts for
contracts not allowing for investment in the Trust;
(c) the Company shall not substitute another investment company for one or
more Funds without providing written notice to the Distributor at
least 60 days in advance of effecting any such substitution; and
(d) the Company shall not withdraw the Account's investment in the Trust
or a Fund of the Trust except as necessary to facilitate Contract
Owner requests and routine Contract processing.
10.3. TERMINATION OF AGREEMENT. This Agreement shall not terminate until
(i) the Trust is dissolved, liquidated, or merged into another entity, or (ii)
as to any Fund that has been made available hereunder, the Account no longer
invests in that Fund and the Company has confirmed in writing to the
Distributor, if so requested by the Distributor, that it no longer intends to
invest in such Fund. However, certain obligations of, or restrictions on, the
parties to this Agreement may terminate as provided in Sections 10.4 through
10.6 and the Company may be required to redeem Trust shares pursuant to Section
10.7 or in the circumstances contemplated by Article VIII. Article IX and
Sections 5.7, 10.8 and 10.9 shall survive any termination of this Agreement.
10.4. TERMINATION OF OFFERING OF TRUST SHARES. The obligation of the Trust
and the Distributor to make Trust shares available to the Company for purchase
pursuant to Article II of this Agreement shall terminate at the option of the
Distributor upon written notice to the Company as provided below:
(a) upon institution of formal proceedings against the Company, or the
Distributor's reasonable determination that institution of such
proceedings is being considered 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 operation of the Account, the administration of the
Contracts or the purchase of Trust shares, or an expected or
anticipated ruling, judgment or outcome which would, in the
Distributor's reasonable judgment exercised in good faith, materially
impair the Company's or Trust's ability to meet and perform the
Company's or Trust's obligations and duties hereunder, such
termination effective upon 15 days prior written notice;
(b) in the event any of the Contracts are not registered, issued or sold
in accordance with applicable federal and/or state law, such
termination effective immediately upon receipt of written notice;
(c) if the Distributor shall determine, in its sole judgment exercised in
good faith, that either (1) the Company shall have suffered a material
adverse change in its business or financial condition or (2) the
Company shall have been the subject of material adverse publicity
which is likely to have a material adverse impact upon the business
and operations of either the Trust or the Distributor, such
termination effective upon 30 days prior written notice;
22
(d) if the Distributor suspends or terminates the offering of Trust shares
of any Series or Class to all Participating Investors or only
designated Participating Investors, if such action is required by law
or by regulatory authorities having jurisdiction or if, in the sole
discretion of the Distributor acting in good faith, suspension or
termination is necessary in the best interests of the shareholders of
any Series or Class (it being understood that "shareholders" for this
purpose shall mean Product Owners), such written notice to the extent
reasonably practicable under the circumstances, will become effective
15 Business Days after receipt of such notice by the Company.
(e) upon the Company's assignment of this Agreement (including, without
limitation, any transfer of the Contracts or the Account to another
insurance company pursuant to an assumption reinsurance agreement)
unless the Trust consents thereto, such termination effective upon 30
days prior written notice;
(f) if the Company is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction of the
Trust within 20 days after written notice of such breach has been
delivered to the Company, such termination effective upon expiration
of such 20-day period; or
(g) upon the determination of the Trusts Board to dissolve, liquidate or
merge the Trust as contemplated by Section 10.3(i), upon termination
of the Agreement pursuant to Section 10.3(ii), or upon notice from the
Company pursuant to Section 10.5 or 10.6, such termination pursuant
hereto to be effective upon 15 days prior written notice.
Except in the case of an option exercised under clause (b), (d) or (g), the
obligations shall terminate only as to new Contracts and the Distributor shall
continue to make Trust shares available to the extent necessary to permit owners
of Contracts in effect on the effective date of such termination (hereinafter
referred to as "Existing Contracts") to reallocate investments in the Trust,
redeem investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts.
10.5. TERMINATION OF INVESTMENT IN A FUND. The Company may elect to cease
investing in a Fund, promoting a Fund as an investment option under the
Contracts, or withdraw its investment or the Account's investment in a Fund,
subject to compliance with applicable law, upon written notice to the Trust
within 15 days of the occurrence of any of the following events (unless provided
otherwise below):
(a) if the Trust informs the Company pursuant to Section 4.4 that it will
not cause such Fund to comply with investment restrictions as
requested by the Company and the Trust and the Company are unable to
agree upon any reasonable alternative accommodations;
(b) if shares in such Fund are not reasonably available to meet the
requirements of the Contracts as determined by the Company (including
any non-availability as a result of notice given by the Distributor
pursuant
23
to Section 10.4(d)), and the Distributor, after receiving written
notice from the Company of such non-availability, fails to make
available, within 10 days after receipt of such notice, a sufficient
number of shares in such Fund or an alternate Fund to meet the
requirements of the Contracts;
(c) if such Fund fails to meet the diversification requirements specified
in Section 817(h) of the Code and any regulations thereunder and the
Trust, upon written request, fails to provide reasonable assurance
that it will take action to cure or correct such failure; or
(d) if such Fund ceases to qualify as a regulated investment company under
Subchapter M of the Code, as defined therein, or any successor or
similar provision, or if the Company reasonably believes that the Fund
may fail to so qualify, and the Trust, upon written request, fails to
provide reasonable assurance that it will take action to cure or
correct such failure within 30 days;
(e) if, in the sole discretion of the Company acting in good faith,
suspension or termination is necessary in the best interests of the
shareholders of any Series or Class (it being understood that
"shareholders" for this purpose shall mean Product Owners).
Such termination shall apply only as to the affected Fund and shall not apply to
any other Fund in which the Company or the Account invests.
10.6. TERMINATION OF INVESTMENT BY THE COMPANY. The Company may elect to
cease investing in all Series or Classes of the Trust made available hereunder,
promoting the Trust as an investment option under the Contracts, or withdraw its
investment or the Account's investment in the Trust, subject to compliance with
applicable law, upon written notice to the Trust within 15 days of the
occurrence of any of the following events (unless provided otherwise below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by the NASD, the SEC
or any state securities or insurance commission or any other
regulatory body; or
(b) if the Trust or Distributor is in material breach of a provision of
this Agreement, which breach has not been cured to the satisfaction of
the Company within 10 days after written notice of such breach has
been delivered to the Trust or the Distributor, as the case may be.
10.7. COMPANY REQUIRED TO REDEEM. The parties understand and acknowledge
that it is essential for compliance with Section 817(h) of the Code that the
Contracts qualify as annuity contracts or life insurance policies, as
applicable, under the Code. Accordingly, if any of the Contracts cease to
qualify as annuity contracts or life insurance policies, as applicable, under
the Code, or if the Trust reasonably believes that any such Contracts may fail
to so qualify, the Trust shall have the right to require the Company to redeem
Trust shares attributable to such Contracts upon notice to the Company and the
Company shall so redeem such Trust shares in order to ensure that the Trust
complies with the provisions of Section 817(h) of the Code applicable to
ownership of Trust shares. Notice to the Company shall specify the period of
time the
24
Company has to redeem the Trust shares or to make other arrangements
satisfactory to the Trust and its counsel, such period of time to be determined
with reference to the requirements of Section 817(h) of the Code. In addition,
the Company may be required to redeem Trust shares pursuant to action taken or
request made by the Trust Board in accordance with the Exemptive Order described
in Article VIII or any conditions or undertakings set forth or referenced
therein, or other SEC rule, regulation or order that may be adopted after the
date hereof. The Company agrees to redeem shares in the circumstances described
herein and to comply with applicable terms and provisions. Also, in the event
that the Distributor suspends or terminates the offering of a Series or Class
pursuant to Section 10.4(c) of this Agreement, the Company, upon request by the
Distributor, will cooperate in taking appropriate action to withdraw the
Account's investment in the respective Fund.
10.8. CONFIDENTIALITY. The Company will keep confidential any information
acquired as a result of this Agreement regarding the business and affairs of the
Trust, the Distributor, and their affiliates.
ARTICLE XI
APPLICABILITY TO NEW ACCOUNTS AND NEW CONTRACTS
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts, any Series or Class, additions of new classes of Contracts to be
issued by the Company and separate accounts therefore investing in the Trust.
Such amendments may be made effective by executing the form of amendment
included on each schedule attached hereto. The provisions of this Agreement
shall be equally applicable to each such class of Contracts, Series, Class or
separate account, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all of
the parties.
25
ARTICLE XII
NOTICE, REQUEST OR CONSENT
Any notice, request or consent to be provided pursuant to this Agreement is
to be made in writing and shall be given:
If to the Trust:
Xxxxx XxXxxxxx
President
Xxxxxxx Sachs Variable Insurance Trust
00 Xxx Xxxx
Xxx Xxxx, XX 00000
If to the Distributor:
Xxxxx XxXxxxxx
Managing Director
Xxxxxxx Sachs & Co.
00 Xxx Xxxx
Xxx Xxxx, XX 00000
If to the Company:
Xxxxxxxx XxXxx
Deputy General Counsel
Travelers Life & Annuity
X.X. Xxx 000000
Xxxxxxxx, XX 00000-0000
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized courier, and shall be
effective upon receipt. Notices pursuant to the provisions of Article II may be
sent by facsimile to the person designated in writing for such notices.
ARTICLE XIII
MISCELLANEOUS
13.1. INTERPRETATION. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the state of
Delaware, without giving effect to the principles of conflicts of laws, subject
to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933 Act,
1940 Act and Securities Exchange Act of 1934, as amended, and the
rules, regulations and rulings thereunder, including such exemptions
from those statutes, rules, and regulations as the SEC may grant, and
the terms hereof shall be limited, interpreted and construed in
accordance therewith.
(b) 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.
26
(c) 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.
(d) 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.
13.2. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which together shall constitute one and the same
instrument.
13.3. NO ASSIGNMENT. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Company, the Distributor or the
Trust without the prior written consent of the other parties.
13.4. DECLARATION OF TRUST. A copy of the Declaration of Trust of the Trust
is on file with the Secretary of State of the State of Delaware, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as trustees, and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually, but binding only upon the assets and
property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
27
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
officer on the date specified below.
XXXXXXX XXXXX VARIABLE INSURANCE TRUST
(Trust)
Date: 12/5/03 By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Secretary
XXXXXXX, SACHS & CO.
(Distributor)
Date: 12/5/03 By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
THE TRAVELERS INSURANCE COMPANY, and
(Company)
Date: 12/5/03 By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name:
Title:
THE TRAVELERS LIFE AND ANNUITY COMPANY
Date: 12/5/03 By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name:
Title:
28
SCHEDULE 1
Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
Date Established by
Name of Account and Board of Directors of SEC 1940 Act Type of Product Supported
Subaccounts the Company Registration Number by Account
------------------- --------------------- ------------------- -------------------------
The Travelers Fund UL for November 10, 1983 811-03927 Variable Life Insurance
Variable Life Insurance Products
The Travelers Fund UL II October 17, 1995 811-07411 Variable Life Insurance
for Variable Life Insurance Products
The Travelers Separate November 21, 2002 N/A (unregistered) Private Placement
Account PP for Variable Variable Life Insurance
Life Insurance Product
[Form of Amendment to Schedule 1]
Effective as of _____________, the following separate accounts of the Company
are hereby added to this Schedule 1 and made subject to the Agreement:
Date Established by
Name of Account and Board of Directors of SEC 1940 Act Type of Product
Subaccounts the Company Registration Number Supported by Account
------------------- --------------------- ------------------- --------------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend
this Schedule 1 in accordance with Article XI of the Agreement.
-------------------------------------- ---------------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust The Travelers Insurance Company, and
The Travelers Life and Annuity Company
--------------------------------------
Xxxxxxx, Sachs & Co.
29
SCHEDULE 2
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 1
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
Policy Marketing SEC 1933 Act Contract Form
Name Registration Number Number Annuity or Life
----------------------- ------------------- ------------- ---------------
Travelers Variable 333-96519 (TIC) L-15258 Life
Life 333-96517 (TLAC) TL-15258
Travelers Variable Life 333-96515 (TIC) L-15598 Life
Accumulator 333-96521 (TLAC) TL-15598
Travelers Variable 333-6971 (TIC) L-15258 Life
Survivorship Life 333-69773 (TLAC) TL-15258
Travelers Variable 333-56952 (TIC) L-15847 Life
Survivorship Life II 333-56958 (TLAC) TL-15847
[Form of Amendment to Schedule 2]
Effective as of __________, the following classes of Contracts are hereby added
to this Schedule 2 and made subject to the Agreement:
Policy Marketing SEC 1933 Act Name of Supporting
Name Registration Number Account Annuity or Life
---------------- ------------------- ------------------ ---------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 2 in accordance with Article XI of the Agreement.
-------------------------------------- ---------------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust The Travelers Insurance Company, and
The Travelers Life and Annuity Company
--------------------------------------
Xxxxxxx, Sachs & Co.
30
SCHEDULE 3
Trust Classes and Series
Available Under
Each Class of Contracts
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Contracts:
Contracts Marketing Name Trust Classes and Series
------------------------ ------------------------
[Form of Amendment to Schedule 3]
Effective as of _____________, this Schedule 3 is hereby amended to reflect the
following changes in Trust Classes and Series:
Contracts Marketing Name Trust Classes and Series
------------------------ ------------------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 3 in accordance with Article XI of the Agreement.
-------------------------------------- ---------------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust The Travelers Insurance Company, and
The Travelers Life and Annuity Company
--------------------------------------
Xxxxxxx, Sachs & Co.
31
SCHEDULE 4
Investment Restrictions
Applicable to the Trust
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
[Form of Amendment to Schedule 4]
Effective as of ____________, this Schedule 4 is hereby amended to reflect the
following changes:
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 4 in accordance with Article XI of the Agreement.
-------------------------------------- ---------------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust The Travelers Insurance Company, and
The Travelers Life and Annuity Company
--------------------------------------
Xxxxxxx, Sachs & Co.
32
