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EXHIBIT 9
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (the "Agreement") is hereby made
as of November 4, 1996, by and between The Travelers Insurance Company,
("Travelers") a Connecticut corporation with its principal offices in Hartford,
Connecticut, and Capital Appreciation Fund (the "Trust") which is a registered
open end management investment company with its principal office in Hartford,
Connecticut.
In consideration of the premises and the mutual promises hereinafter
set forth, Travelers and the Trust hereby agree as follows:
1. Appointments. Trust hereby appoints and employs Travelers as agent to
provide the services described in this Agreement for the Trust. Travelers shall
perform the obligations and the services set forth herein in accordance with the
terms and conditions hereto.
2. Services to be Performed
A. Travelers shall be responsible for performing as agent, as of
the date of this Agreement, the pricing and bookkeeping services
commonly referred to as "back office" services described as
follows:
(1) Accounting relating to portfolio transactions of the
Trust.
(2) The determination of net asset value per share of the
outstanding shares of the Trust and the offering price, if
any, at which shares are to be sold, at the times and in
the manner described in the declaration of trust or other
organizational document, as amended, and the Prospectus of
the Trust.
(3) The determination of distributions, if any.
(4) Maintaining the books of account of the Trust.
(5) In conjunction with the Trust's custodian ("Custodian"),
receiving information and keeping records about all
corporate actions, including, but not limited to, cash and
stock distributions or dividends, stock splits and reverse
stock splits, taken by companies whose securities are held
by the Trust.
(6) Monitoring foreign corporate actions and foreign trades
and entering orders to convert foreign currency or
establish contracts for future settlement of foreign
currency.
(7) Processing and monitoring of settlement of Variable Rate
Demand Notes, GNMA's and similar instruments.
(8) Monitoring and accounting for futures and options.
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B. Travelers shall be responsible for administering a program of
securities lending for the Trust by:
(1) Carrying out security loan transactions between approved
borrowers and the Trust, including assisting the Custodian
in receiving and returning collateral for loans;
(2) Marking to market loans outstanding each day; and
(3) Ensuring that the value of collateral for loans is 100%
or more of loaned securities at market price and issuing
demands for additional collateral should the percentage
fall below 100%.
C. Travelers shall not be responsible for any other services
provided to the Trust, including, but not limited to, investment
advisory, legal, auditing and clerical services.
The Trust will be responsible for the following expenses,
including, but not limited to, (i) interest and taxes; (ii)
brokerage commissions and other costs in connection with the
purchase or sale of securities and other investment instruments;
(iii) fees and expenses of the Trust's trustees other than those
who are "interested persons" of the Trust, the Manager, the
Subadviser; (iv) legal and audit expenses; (v) custodian and
registrar fees and expenses; (vi) fees and expenses related to
the registration and qualification of the Trust's shares for
distribution under state and federal securities laws; (vii)
expenses of printing and mailing reports and notices and proxy
material to shareholders of the Trust; (viii) all other expenses
incidental to holding meetings of the Trust's shareholders,
including proxy solicitations therefor; (ix) insurance premiums
for fidelity bond and other coverage; (x) investment management
fees; (xi) expenses of typesetting for printing prospectuses and
statements of additional information and supplements thereto;
(xii) expenses of printing and mailing prospectuses and
statements of additional information and supplements thereto;
and (xiii) such non-recurring or extraordinary expenses as may
arise, including those relating to actions, suits or proceedings
to which the Trust is a party and any legal obligation that the
Trust may have to indemnify the Trust's trustees, officers
and/or employees or agents with respect thereto.
Operating procedures and standards to be followed for each function may
be established from time to time by agreement between the Trust and Travelers.
3. Record Keeping and Other Information. Travelers shall create and
maintain all records required by all applicable laws, rules and regulations
relating to the services to be performed herein, including but not limited to,
all applicable records required by Section 31(a) of the Investment Company Act
of 1940 ("1940 Act") and the rules thereunder, as the same be amended from time
to time. All records shall be the property of the Trust and shall be available
for inspection and use by the Trust at all times. Where applicable, such
records shall be maintained by Travelers for the periods and in the places
required by Rule 31a-2 under the 1940 Act.
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4. Audits, Inspections and Visits. Travelers shall make available during
regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by each Trust,
any agent or person designated by the Trust, or any regulatory agency having
authority over the Trust. Upon reasonable notice by the Trust, Travelers shall
make available during regular business hours its facilities and premises
employed in connection with its performance of this Agreement for reasonable
visits by the Trust, any agent or person designated by the Trust, or any
regulatory agency having authority over the Trust.
5. Compensation. For the performance of its obligations hereunder, the
Trust agrees to pay fees to Travelers at the annualized rate of .06% of the
daily net assets. Fees will be accrued daily and quarterly within ten days of
the end of each calendar quarter.
6. Appointment of Agents. Travelers, at its expense, may at any time or
times in its discretion appoint (and may at any time remove) one or more other
parties as agent to perform any or all of the services specified hereunder and
carry out such provisions of this Agreement as Travelers may from time to time
direct; provided, however, that the appointment of any such agent shall not
relieve Travelers of any of its responsibilities or liabilities hereunder.
7. Security. Travelers represents and warrants that, to the best of its
knowledge, the various procedures and systems which Travelers has implemented
with regard to the safeguarding from loss or damage attributable to fire, theft
or any other cause (including provision for twenty-four hours a day restricted
access) of the Trust's blank checks, certificates, records and other data and
Travelers records, data, equipment, facilities and other property used in the
performance of its obligations hereunder are adequate, and that it will make
such changes therein from time to time as in its judgment are required for the
secure performance of its obligations hereunder. Travelers shall review such
systems and procedures on a periodic basis and the Trust shall have access to
review these systems and procedures.
8. Insurance. Travelers shall maintain insurance of the types and in the
amounts deemed by it to be appropriate and shall notify the Trust should any of
its insurance coverage be changed for any reason. Such notification shall
include the date of change and the reason or reasons therefor. Travelers shall
notify the Trust of any material claims against Travelers whether or not they
may be covered by insurance, and shall notify the Trust from time to time as may
be appropriate of the total outstanding claims made by Travelers under its
insurance coverage. To the extent that policies of insurance may provide for
coverage of claims for liability or indemnity by the parties set forth in this
Agreement, the contracts of insurance shall take precedence, and no provision of
this Agreement shall be construed to relieve any insurer of any obligation to
pay claims to the Trust, Travelers or other insured party which would otherwise
be a covered claim in the absence of any provision of this Agreement.
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9. Indemnification.
A. The Trust shall indemnify and hold Travelers harmless against
any losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person
other than the Trust, including by a shareholder, which
names Travelers and/or the Trust as a party and is not
based on and does not result from Travelers willful
misfeasance, bad faith or reckless disregard of its
duties, and arises but of or in connection with Travelers
performance hereunder, or
(2) any claim, demand, action or suit (except to the extent
contributed to by Travelers willful misfeasance, bad faith
or reckless disregard of its duties) which results from
the negligence of the Trust, or from Travelers acting upon
any instruction(s) reasonably believed by it to have been
executed or communicated by any person duly authorized by
the Trust, or as a result of Travelers acting in reliance
with advice reasonably believed by Travelers to have been
given by counsel for the Trust, or as a result of
Travelers acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine
and signed, countersigned or executed by the proper
person.
B. Travelers shall indemnify and hold the Trust harmless against
any losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim,
demand, action or suit brought by any person other than
Travelers, which names the Trust and/or Travelers as a party and
is based upon and arises out of Travelers willful misfeasance,
bad faith or reckless disregard of its duties in connection with
its performances hereunder.
In the event that either party requests the other to indemnify or hold
it harmless hereunder, the party requesting indemnification (the "Indemnified
Party") shall inform the other party (the "Indemnifying Party") of the relevant
facts known to the Indemnified Party concerning the matter in question. The
Indemnified Party shall use reasonable care to identify and promptly to notify
the Indemnifying Party concerning any matter which presents, or appears likely
to present, a claim for indemnification. The Indemnifying Party shall have the
election of defending the Indemnified Party against any claim which may be the
subject of indemnification or of holding the Indemnified Party harmless
hereunder. In the event the Indemnifying Party so elects, it will so notify the
Indemnified Party and thereupon the Indemnifying Party shall take over defense
of the claim and, if so requested by the Indemnifying Party, the Indemnified
Party shall incur no further legal or other expenses related thereto for which
it shall be entitled to indemnify or to being held harmless hereunder; provided,
however, that nothing herein shall prevent the Indemnified Party from retaining
counsel at its own expense to defend any claim. Except with the Indemnifying
Party's prior written consent, the Indemnified Party shall in no event confess
any claim or make any compromise in any matter in which the Indemnifying Party
will be asked to indemnify or hold the Indemnified Party harmless hereunder.
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10. Acts of God, etc. Travelers shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication equipment of common carriers or power supply. In the
event of equipment breakdowns beyond it control, Travelers shall, at no
additional expense to the Trust, take reasonable steps to minimize service
interruptions and mitigate their effects but shall have no liability with
respect thereto. Travelers shall enter into and shall maintain in effect with
appropriate parties one or more agreements making reasonable provision for
emergency use of electronic data processing equipment.
11. Amendments. Travelers and the Trust shall regularly consult with each
other regarding Travelers performance of its obligations and its compensation
hereunder. In connection therewith, the Trust shall submit to Travelers at a
reasonable time in advance of filing with the Securities and Exchange
Commission copies of any amended or supplemented registration statements
(including exhibits) under the Securities Act of 1933, as amended, and the 1940
Act and, a reasonable time in advance of their proposed use, copies of any
amended or supplemented forms relating to any plan, program or service offered
by the Trust. Any change in such material which would require any change in
Travelers obligations hereunder shall be subject to Travelers approval, which
shall not be unreasonably withheld. In the event that a change in such
documents or in the procedures contained therein materially increases the cost
to Travelers of performing its obligations hereunder, Travelers shall be
entitled to receive reasonable compensation therefor.
12. Duration, Termination, etc. Neither this Agreement nor any provisions
hereof may be changed, waived, discharged or terminated, except by written
instrument which shall make specific reference to this Agreement and which
shall be signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.
This Agreement shall continue in effect with respect to the Trust until
October 31, 1998 and indefinitely thereafter so long as such continuance is
approved at least annually by vote of such Trust's Board of Trustees; provided,
however, that this Agreement may be terminated at any time with respect to such
Trust by sixty (60) days' written notice given by Travelers to the Trust or
sixty (60) days' written notice given by the Trust to Travelers,; and provided
further that this Agreement may be terminated immediately at any time for cause
either by the Trust or by Travelers in the event that such cause remains
unremedied for a reasonable period of time not to exceed ninety (90) days after
receipt of written specification of such cause. Any such termination shall not
affect the rights and obligations of the parties under Paragraph 9 hereof.
Upon the termination hereof, the Trust shall pay to Travelers such
compensation as may be due for the period prior to the date of such termination.
In the event that the Trust designates a successor to any Traveler's obligations
hereunder, Travelers shall, at the expense and direction of the Trust, transfer
to such successor all relevant books, records and other data established or
maintained by Travelers hereunder. To the extent that Travelers incurs expenses
related to a transfer of responsibilities to a successor, Travelers shall be
entitled to be reimbursed for such expenses, including any out-of-pocket
expenses reasonably incurred by Travelers in connection with the transfer.
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13. LIABILITY. NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT IS NOT EXECUTED
ON BEHALF OF THE TRUSTEES OF ANY TRUST AS INDIVIDUALS, AND THE OBLIGATIONS OF
THIS AGREEMENT ARE NOT BINDING UPON ANY OF THE TRUSTEES, OFFICERS OR
SHAREHOLDERS OF A TRUST INDIVIDUALLY, BUT ARE BINDING ONLY UPON THE ASSETS AND
PROPERTY OF THE TRUST. TRAVELERS AGREES THAT NO SHAREHOLDER, TRUSTEE, OR
OFFICER OF THE TRUST MAY BE HELD PERSONALLY LIABLE OR RESPONSIBLE FOR ANY
OBLIGATIONS OF THE TRUST ARISING OUT OF THIS AGREEMENT. WITH RESPECT TO ANY
OBLIGATIONS OF THE TRUST ARISING OUT OF THIS AGREEMENT, TRAVELERS SHALL LOOK
FOR PAYMENT OR SATISFACTION OF ANY OBLIGATION SOLELY TO THE ASSETS AND PROPERTY
OF THE TRUST.
15. Miscellaneous. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Connecticut, without giving effect to the
choice of laws provisions thereof. The captions in this Agreement are intended
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in counterparts, each of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement by
their respective officials thereunto duly authorized and seals to be affixed, in
the case of the Company.
CAPITAL APPRECIATION FUND
By:
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Name:
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Title:
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THE TRAVELERS INSURANCE COMPANY
By:
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Name:
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Title:
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