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EXHIBIT 5(a)
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT
THIS AGREEMENT is made this 8th day of October, 1998, by and among The
Travelers Insurance Company ("The Travelers"), a Connecticut stock insurance
company, with its principal offices in Hartford, Connecticut and the Managed
Separate Accounts as set forth in Schedule A attached hereto, each acting on
its own behalf and not on behalf of any other Managed Separate Account and each
being solely responsible for its obligations, (each a "Separate Account" and
collectively, the "Separate Accounts"), each of which is a registered, open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act") of The Travelers established pursuant to Connecticut
State Insurance Law with its principal offices in Hartford, Connecticut and
CFBDS, Inc. (the "Distributor") a Massachusetts general business corporation.
WHEREAS, the Distributor is engaged principally in the business of
distributing variable insurance products and investment company shares, is
registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and is a member of the National Association of
Securities Dealers, Inc. ("NASD");
WHEREAS, The Travelers and each Separate Account have registered
variable annuity contracts (the "Contracts") under the Securities Act of 1933,
as amended (the "1933 Act"), and desire to retain the Distributor to distribute
the Contracts and the Distributor is willing to distribute the Contracts in the
manner and on the terms set forth herein;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, The Travelers, each Separate Account, and the
Distributor hereby agree as follows:
1. Definitions. The terms "affiliated person," "assignment,"
"interested person," and "majority of the outstanding voting securities," when
used in this Agreement, shall have the respective meanings specified under the
1940 Act and rules thereunder. In addition, the term "representative," when
used in this Agreement shall have the meaning specified under the 1934 Act and
rules thereunder.
2. Distribution and Principal Underwriting of the Contracts.
(a) Right to Distribute Contracts. The Travelers and
each Separate Account hereby grant to the Distributor the exclusive right,
subject to the requirements of the 1933 Act, the 1934 Act, and the 1940 Act,
and the terms set forth herein, to act as agent for distribution of the
Contracts and as principal underwriter during the term of this Agreement. The
Distributor shall at all times function as and be deemed to be an independent
contractor and nothing herein contained shall constitute the Distributor or its
agents, officers, or employees as agents, officers, or employees of The
Travelers solely by virtue of their activities in connection with the sale of
the Contracts hereunder. The Distributor will use its best efforts to
distribute the Contracts in accordance with applicable laws, including the
rules of the NASD.
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The Travelers and each Separate Account hereby authorize the
Distributor to enter into written sales or service agreements, on such terms
and conditions as the Distributor may determine are consistent with this
Agreement, with broker-dealers that are registered under the 1934 Act and are
members of the NASD and who agree to distribute the Contracts. Distributor
shall not be obligated or authorized to make retail sales to the public.
(b) Limits on Authority. This Agreement notwithstanding,
The Travelers retains the ultimate right to control the sale of the Contracts,
including the right to suspend sales in any jurisdiction or jurisdictions, to
appoint and discharge agents of The Travelers, or to refuse to sell a Contract
to any applicant for any reason whatsoever. Furthermore, the Distributor and
its representatives shall not have authority, on behalf of The Travelers: to
make, alter, or discharge any Contract or other variable contract entered into
pursuant to a Contract; to waive any Contract forfeiture provision; to extend
the time of paying any premium, or to receive any monies or premiums. The
Distributor shall not expend, nor contract for the expenditure of, the funds of
The Travelers. The Distributor shall not possess or exercise any authority on
behalf of The Travelers other than that expressly conferred on the Distributor
by this Agreement.
(c) Registration; Compliance with NASD Conduct Rules. To
the extent necessary to distribute the Contracts, the Distributor shall be duly
registered or otherwise qualified under all applicable securities laws of any
state or other jurisdiction in which the Distributor is licensed or otherwise
authorized to distribute the Contracts, if required. The Distributor shall be
responsible for the training, supervision, and control of its representatives
for the purpose of the NASD Conduct Rules and all applicable federal and state
securities law requirements.
(d) Representations and Warranties of the Distributor.
The Distributor represents and warrants to The Travelers that the Distributor
is, and during the term of this Agreement shall remain, registered as a
broker-dealer under the 1934 Act, admitted as a member with the NASD, and duly
registered under applicable state securities laws, and that the Distributor is
and shall remain during the term of this Agreement in compliance with Section
9(a) of the 1940 Act.
(e) Marketing Materials; Preparation and Filing. The
Travelers shall design and develop all promotional, sales, and advertising
material relating to the Contracts and any other marketing-related documents
for use in the sale of the Contracts, subject to review and approval by
Distributor of such material and documents in accordance with Section 2210 of
the NASD Conduct Rules. The Distributor shall be responsible for filing such
material with the NASD and any state securities regulatory authorities
requiring such filings. The Travelers shall be responsible for filing all
promotional, sales, or advertising material, as required, with any state
insurance regulatory authorities. The Travelers shall be responsible for
preparing the Contract forms and filing them with applicable state insurance
regulatory authorities, and for preparing the prospectuses and registration
statements for the Contracts and filing them with the Securities and Exchange
Commission (the "SEC") and state regulatory authorities, to the extent
required. The parties shall notify each other expeditiously of any comments
provided by the SEC, NASD, or any securities or insurance regulatory authority
on such material, and will cooperate expeditiously in resolving and
implementing any comments, as applicable.
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3. Books and Records.
(a) The Travelers, each Separate Account, and the
Distributor shall cause to be maintained and preserved all books of account and
related financial records as are required by the 1934 Act, the NASD, and any
other applicable laws and regulations. These books and records as to all
transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. All the books and
records maintained by The Travelers on behalf of the Distributor, or by any
person on behalf of The Travelers, or by the Distributor directly, in
connection with the offer and sale of the Contracts, shall be maintained and
preserved in conformity with the requirements of Rules 17a-3 and 17a-4 under
the 1934 Act or the corresponding provisions of any future federal securities
laws or regulations. All such books and records shall be maintained and held
by The Travelers or by any person on behalf of The Travelers on behalf of and
as agent for the Distributor, whose property they are and shall remain. Such
books and records shall be at all times subject to inspection by the SEC in
accordance with Section 17(a) of the 1934 Act. The Travelers shall have access
to all records maintained in connection with the Contracts.
(b) The Travelers, as agent for the Distributor, shall
confirm to each purchaser of a Contract, in accordance with Rule 10b-10 under
the 1934 Act, acceptance of premiums and such other transactions as are
required by and in accordance with Rule 10b-10 and administrative
interpretations thereunder.
4. Reports.
(a) The Distributor shall cause The Travelers and each
Separate Account to be furnished with such reports as either or both may
reasonably request for the purpose of meeting reporting and record keeping
requirements under the 1933 Act, the 1934 Act, and the 1940 Act and rules
thereunder, as well as the insurance laws of the State of Connecticut and any
other applicable states or jurisdictions.
(b) The Distributor and The Travelers shall submit to all
regulatory and administrative bodies having jurisdiction over the present and
future operations of each Separate Account, any information, reports, or other
material which any such body by reason of this Agreement may request or require
pursuant to applicable laws or regulations.
5. Maintaining Registration and Approvals. The Travelers shall
be responsible for maintaining the registration of the Contracts with the SEC
and any state securities regulatory authority with which such registration is
required, and for gaining and maintaining approval of the Contract forms where
required under the insurance laws and regulations of each state or other
jurisdiction in which the Contracts are to be offered.
6. Issuance and Administration of Contracts. The Travelers shall
be responsible for issuing the Contracts and administering the Contracts and
each Separate Account and a Travelers affiliated broker-dealer shall have full
responsibility for the securities activities of all persons employed by The
Travelers, engaged directly or indirectly in the Contract operations, and for
the training, supervision, and control of such persons to the extent of such
activities.
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7. Non-Exclusivity. The Travelers and each Separate Account
agree that the services to be provided by the Distributor hereunder are not to
be deemed exclusive and the Distributor is free to act as distributor of other
variable insurance products or investment company shares.
8. Affiliated Persons. It is understood that any Contract owner
or agent of each Separate Account may be a Contract owner, shareholder,
director, officer, employee, or agent of, or be otherwise interested in, the
Distributor, any affiliated person of the Distributor, any organization in
which the Distributor may have an interest or any organization which may have
an interest in the Distributor; that the Distributor, any such affiliated
person, or any such organization may have an interest in each Separate Account
and that the existence of any such dual interest shall not affect the validity
hereof or any transaction thereunder except as may otherwise be provided in the
articles of organization or by-laws of the Distributor or by specific
provisions of applicable law.
9. Indemnification.
(a) By The Travelers. The Travelers on its behalf and on
behalf of each Separate Account shall indemnify and hold harmless the
Distributor and any officer, director, or employee of the Distributor 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 Distributor and/or any such
person may become subject, under any statute or regulation, any NASD rule or
interpretation, at common law or otherwise, insofar as such losses, claims,
damages, or liabilities:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state 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, contained in any registration statement or in any
prospectus for the Contracts; provided that The Travelers shall not be liable
in any such case to the extent that such loss, claim, damage, or liability
arises out of, or is based upon, an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon information
furnished in writing to The Travelers by the Distributor specifically for use
in the preparation of any such registration statement or any amendment thereof
or supplement thereto;
(ii) or result from any breach by The Travelers of
any provision of this Agreement.
This indemnification agreement shall be in addition to any liability that The
Travelers may otherwise have; provided, however, that no person shall be
entitled to indemnification pursuant to this provision if such loss, claim,
damage, or liability is due to the willful misfeasance, bad faith, gross
negligence, or reckless disregard of duty by the person seeking
indemnification.
(b) By The Distributor. The Distributor shall indemnify
and hold harmless The Travelers on its behalf and on behalf of each Separate
Account and any officer, director, or employee of The Travelers or each
Separate Account against any and all losses, claims, damages, or liabilities,
joint or several (including any investigative, legal, and other expenses
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reasonably incurred in connection with, and any amounts paid in settlement of,
any action, suit, or proceeding or any claim asserted), to which The Travelers
and/or any such person may become subject under any statute or regulation, any
NASD rule or interpretation, at common law or otherwise, insofar as such
losses, claims, damages, or liabilities:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, in light of the
circumstances in which they were made, contained in any registration statement
or in any prospectus for the Contracts; in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon information furnished in writing
by the Distributor to The Travelers specifically for use in the preparation of
any such registration statement or any amendment thereof or supplement thereto;
or
(ii) result from any breach by the Distributor of
any provision of this Agreement; or
(iii) result from the Distributor's own misconduct
or negligence.
This indemnification agreement shall be in addition to any liability that the
Distributor may otherwise have; provided, however, that no person shall be
entitled to indemnification pursuant to this provision if such loss, claim,
damage, or liability is due to the willful misfeasance, bad faith, gross
negligence, or reckless disregard of duty by the person seeking
indemnification.
(c) General. Promptly after receipt by a party entitled
to indemnification ("indemnified person") under this Paragraph 9 of notice of
the commencement of any action as to which a claim will be made against any
person obligated to provide indemnification under this Paragraph 9
("indemnifying party"), such indemnified person shall notify the indemnifying
party in writing of the commencement thereof as soon as practicable thereafter,
but failure to so notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to the indemnified
person otherwise than on account of this Paragraph 9. The indemnifying party
will be entitled to participate in the defense of the indemnified person but
such participation will not relieve such indemnifying party of the obligation
to reimburse the indemnified person for reasonable legal and other expenses
incurred by such indemnified person in defending himself or itself.
The indemnification provisions contained in this Paragraph 9 shall
remain operative in full force and effect, regardless of any termination of
this Agreement. A successor by law of the Distributor or The Travelers, as the
case may be, shall be entitled to the benefits of the indemnification
provisions contained in this Paragraph 9.
10. Regulation. This Agreement shall be subject to the provisions
of the 1933 Act, the 1934 Act, and the 1940 Act and the rules, regulation, and
rulings thereunder, and of the NASD, as in effect from time to time, including
such exemptions and other relief as the SEC, its staff, or the NASD may grant,
and the terms hereof shall be interpreted and construed in accordance
therewith.
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11. Investigation and Proceedings.
(a) Each party hereto shall advise the other promptly of
(i) any action of the SEC or any authorities of any state or territory, of
which it has knowledge, affecting registration or qualification of each
Separate Account and the Contracts, or the right to offer the Contracts for
sale, and (ii) the happenings of any event that makes untrue any statement or
which requires the making of any change, in the registration statement or
prospectus for the Contracts in order to make the statements therein not
misleading.
(b) The Travelers, each Separate Account, and the
Distributor agree to cooperate fully in any regulatory inspection, inquiry,
investigation, or proceeding or any judicial proceeding with respect to The
Travelers, each Separate Account, or the Distributor, their affiliates and
their representatives to the extent that such inspection, inquiry,
investigation, or proceeding is in connection with the Contracts distributed
under this Agreement.
12. Duration and Termination of the Agreement.
(a) This Agreement shall become effective with respect to
the Contracts as of the date first written above, and shall continue in full
force and effect until termination or expiration. This Agreement may be
amended at any time by mutual agreement of the parties hereto.
(b) This Agreement shall continue in effect for two years
from the date of its execution, and thereafter from year to year, but only so
long as such continuance is specifically approved at least annually by (i) each
Separate Account's Board of Managers (the "Board"), or by a vote of the
majority of the outstanding voting securities of each Separate Account, and
(ii) a vote of a majority of those members of the Board who are not parties to
this Agreement nor interested persons of such parties, cast in person at a
meeting called for the purpose of voting on such approval.
(c) This Agreement may be terminated at any time for any
reason by either party upon 60 days' written notice to the other party, without
payment of any penalty. This Agreement may be terminated immediately at the
option of either party to this Agreement upon the other party's material breach
of any provision of this Agreement, unless such breach has been cured within 10
days after receipt of notice from the non-breaching party of such breach.
(d) This Agreement shall automatically terminate in the
event of its assignment. (The term "assigned" shall not include any
transaction exempted from Section 15(b)(2) of the 1940 Act).
(e) Upon termination of this Agreement, all
authorizations, rights and obligations shall cease except the obligation to
settle accounts, and the provisions contained in Paragraph 9 regarding
indemnification agreements.
13. Rights, Remedies, etc. are Cumulative. The rights, remedies,
and obligations contained in this Agreement are cumulative and are in addition
to any and all rights, remedies, and obligations, at law or in equity, which
the parties hereto are entitled to under state and federal laws. Failure of
either party to insist upon strict compliance with any of the conditions of
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this Agreement shall not be construed as a waiver of any of the conditions, but
the same shall remain in full force and effect. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver.
14. Interpretation. This Agreement constitutes the whole
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior oral or written understandings, agreements, or
negotiations between the parties with respect to such matter. No prior writing
by or between the parties with respect to the subject matter hereof shall be
used by either party in connection with the interpretation of any provisions of
this Agreement.
15. Severability. This is a severable Agreement. In the event
that any provision of this Agreement would require a party to take action
prohibited by applicable federal or state law or prohibit a party from taking
action required by applicable federal or state law, then it is the intention of
the parties hereto that such provision shall be enforced to the extent
permitted under the law, and, in any event, that all other provisions of this
Agreement shall remain valid and duly enforceable as if the provision at issue
had never been a part hereof.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
be deemed one instrument.
17. Notices. All notices and other communications provided for
hereunder shall be in writing and shall be either hand-delivered, transmitted
by registered or certified United States mail with return receipt requested, or
by overnight mail by a nationally recognized courier. All notices shall be
effective upon delivery and shall be addressed as follows:
(a) If to The Travelers -
The Travelers Insurance Company
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
(b) If to the Separate Accounts
The Travelers Insurance Company, Separate Accounts
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
(c) If to the Distributor -
CFBDS, Inc.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
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or to such other address as The Travelers, each Separate Account, or the
Distributor shall designate by written notice to the other parties.
18. Miscellaneous. Captions in this Agreement are included for
convenience or reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, The Travelers, each Separate Account, and the
Distributor have caused this Agreement to be executed in their names and on
their behalf by and through their duly authorized officer on the day and year
first above written.
THE TRAVELERS INSURANCE COMPANY
Attest: /s/Xxxxxxxx X. XxXxx By: /s/Xxxxxx X. Xxxxxx
------------------------ ------------------------------------
Name: Xxxxxx X. Xxxxxx
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Title: Vice President
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EACH OF THE MANAGED SEPARATE
ACCOUNTS LISTED ON SCHEDULE A,
ATTACHED HERETO.
Attest: /s/Xxxxxxxx X. XxXxx By: /s/Xxxxxx X. Xxxxxx
------------------------ ------------------------------------
Name: Xxxxxx X. Xxxxxx
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Title: Vice President
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CFBDS, INC.
Attest: /s/Xxxxxxxxx X. Xxxxxxx By: /s/Xxxxx Xxxxxx
------------------------ ------------------------------------
Name: Xxxxx Xxxxxx
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Title: Secretary
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SCHEDULE A
TO THE
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT
LIST OF MANAGED SEPARATE ACCOUNTS
1. The Travelers Growth and Income Stock Account for Variable Annuities
2. The Travelers Quality Bond Account for Variable Annuities
3. The Travelers Money Market Account for Variable Annuities
4. The Travelers Timed Growth and Income Stock Account for Variable
Annuities
5. The Travelers Timed Short-Term Bond Account for Variable Annuities
6. The Travelers Timed Aggressive Stock Account for Variable Annuities
7. The Travelers Timed Bond Account for Variable Annuities
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