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FUND PARTICIPATION AGREEMENT
AGREEMENT, made and entered into this _____ day of _____________ 1993 by
and among THE TRAVELERS INSURANCE COMPANY (the "Company"), a Connecticut
corporation, on its own behalf and on behalf of each segregated asset account
set forth on Schedule A hereto as amended from time to time (each such account
hereinafter referred to as the "Account"), ODYSSEY FUNDS, INC. (the "Series
Fund"), a Maryland corporation, and XXXXXXXX EQUITIES, INC. (the "Underwriter"),
a New Jersey corporation.
WHEREAS, the Series Fund is a diversified, open-end management investment
company registered with the Securities and Exchange Commission (the "SEC") under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has or will
register its shares under the Securities Act of 1933, as amended (the 111933
Act"); and
WHEREAS, the Series Fund is currently divided into six separate series
(each a "Fund"), each of which is established pursuant to a resolution of the
Board of Directors of the Series Fund (the "Board"), and. the Series Fund may in
the future add additional Funds; and
WHEREAS, the Underwriter is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the 111934 Act"), and is a member
in good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Series Fund is available to act as the investment vehicle
for separate accounts established for variable life insurance policies and
variable annuity contracts (collectively, the "Variable Insurance Products") to
be offered by insurance companies which have entered into participation
agreements with the Series Fund and the Underwriter (the "Participating
Insurance Companies"); and
WHEREAS, the Account is a unit investment trust registered under the 1940
Act and invests in investment company shares as an investment option under
certain variable annuity or variable life insurance contracts issued by the
Company and registered under the 1933 Act (the "Contracts"); and
WHEREAS, the parties desire to provide Series Fund shares as an
investment option under the Contracts.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I. SALE OF SERIES FUND SHARES
1.1. The Underwriter agrees to sell to the Company those shares of the
Series Fund which the Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Series Fund or its
designee of the order. For purposes of this Section 1.1, the Company shall be
the designee of the Series Fund for receipt of such orders from the Account and
receipt by such designee shall constitute receipt by the Series Fund; provided
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that the Series Fund receives notice of such order by 9:30 a.m. Eastern time on
the next following Business Day. "Business Day" shall mean any day on which the
New York Stock Exchange is open for trading and on which the Series Fund
calculates its net asset value pursuant to SEC rules.
1.2. The Series Fund agrees to make its shares available indefinitely
for purchase by the Company and the Account at the applicable net asset value
per share on those days on which the Series Fund calculates its net asset value
pursuant to SEC rules. The Series Fund shall use reasonable efforts to calculate
such net asset value on each day which the New York Stock Exchange is open for
trading. Notwithstanding the foregoing, the Board may refuse to sell shares of
any Fund to any person, or suspend or terminate the offering of shares of any
Fund if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting in good faith and
in light of their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Fund.
1.3. The Series Fund and the Underwriter agree that shares of the
Series Fund will be sold only to Participating Insurance Companies, their
affiliates, and their separate accounts. No shares of any Fund will be sold to
the general public.
1.4. The Company and the Account shall pay for Series Fund shares on
the next Business Day after an order to purchase Series Fund shares is made.
Payment shall be in federal funds transmitted by wire.
1.5. The Series Fund agrees to redeem for cash, on the Company's
request, any full or fractional shares of the Series Fund held by the Company or
the Account, executing such requests on a daily basis at the net asset value
next computed after receipt by the Series Fund or its designee of the request
for redemption. For purposes of this Section 1.4, the Company shall be the
designee of the Series Fund for receipt of requests for redemption from the
Account and receipt by such designee shall constitute receipt by the Series
Fund; provided that the Series Fund receives notice of such request for
redemption by 9:30 a.m. Eastern time on the next following Business Day.
1.6. Issuance and transfer of the Series Fund's shares will be by book
entry only. Stock certificates will not be issued to the Company or the Account.
Shares ordered from the Series Fund will be recorded in an appropriate title for
the Account or the appropriate subaccount of the Account.
1.7. The Series Fund shall furnish same day notice (by wire or
telephone, followed by written confirmation) to the Company of any income,
dividends or capital gain distributions payable on the Series Fund's shares. The
Company hereby elects to receive all such income, dividends and capital gain
distributions of a Fund in the form of additional shares of that Fund. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Series Fund shall
notify the Company of the number of shares so issued as payment of such
dividends and distributions.
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1.8. The Series Fund shall make the net asset value per share for each
Fund available to the Company on a daily basis as soon as reasonably practical
after those figures are calculated. The Series Fund shall use its best efforts
to make such net asset value per share information available by 7 p.m. Eastern
time.
1.9. The Company agrees to purchase and redeem the shares of each Fund
offered by the then current prospectus of the Series Fund and in accordance with
the provisions of such prospectus. The Company agrees that all net amounts
available under the Contracts shall be invested in the Series Fund, or in the
Company's general account; provided, however, that such amounts may also be
invested in an investment company other than the Series Fund if (a) such other
investment company, or series thereof, has investment objectives or policies
that are substantially different from the investment objectives and policies of
all the Funds; or (b) the Company gives the Series Fund and the Underwriter 45
days written notice of its intention to make such other investment company
available as a funding vehicle for the Contracts; or (c) such other investment
company was available as a funding vehicle for the Contracts prior to the date
of this Agreement; or (d) the Series Fund or the Underwriter consents to the use
of such other investment company.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that it is an insurance
company duly organized and in good standing under applicable law and that it has
legally and validly established the Account as a segregated asset account under
Section 38a-433 of the Connecticut Insurance Code and has registered the Account
as a unit investment trust under the 0000 Xxx.
2.2. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act, that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws,
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements.
2.3. The Series Fund represents and warrants that it is lawfully
organized and validly existing Maryland Corporation, that it is registered as a
diversified, open-end management investment company under the 1940 Act, and that
it does and will comply in all materials respects with the 1940 Act.
2.4. The Series Fund represents and warrants that Series Fund shares
sold pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of
Maryland and all applicable federal and state securities laws. The Series Fund
shall amend the Registration Statement for its shares under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous
offering of its shares.
2.5. The Series Fund represents and warrants that it is currently
qualified as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") and that it will make every effort
to maintain such qualification (under
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Subchapter M or any successor or similar provision) and that it will notify the
Company immediately upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future.
2.6. The Series Fund represents and warrants that each Fund will comply
with Section 817(h) of the Code, all regulations issued thereunder and all
amendments or modifications to such Section or regulations, and that it will
notify the Company immediately upon having a reasonable basis for believing that
it has ceased to comply or that it might not comply in the future.
2.7. The Company represents and warrants that the contracts are
currently treated as endowment, annuity or life insurance contracts, under
applicable provisions of the Code and that it will make every effort to maintain
such treatment and that it will notify the Series Fund and the Underwriter
immediately upon having a reasonable basis for believing that the Contracts have
ceased to be so treated or that they might not be so treated in the future.
2.8. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered with the SEC as a broker-dealer. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with the laws of the State of New Jersey and all applicable state
and federal securities laws.
2.9. The Series Fund and the Underwriter represent and warrant that all
of their directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Series Fund
are and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Series Fund (the "Bond") in an amount
not less than the minimal coverage as required currently by Rule 17g-1 of the
1940 Act or related provisions as may be promulgated from time to time. The Bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.10. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Series Fund are and shall continue to be
at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Series Fund (the "Bond") in an amount not less than the minimal
coverage as required currently by entities subject to the requirements of Rule
17g-1 of the 1940 Act or related provisions as may be promulgated from time to
time. The Bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Underwriter shall provide the Company (at the Company's
expense) with as many copies of the Series Fund's current prospectus as the
Company may reasonably request. If requested by the Company in lieu thereof, the
Series Fund shall provide such documentation (including a final copy of the new
prospectus as set in type at the Series Fund's expense) and other assistance as
is reasonably necessary in order for the Company once each year (or more
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frequently if the prospectus for the Series Fund is amended) to have the
prospectus for the Contracts and the Series Fund's prospectus printed together
in one document (such printing to be at the Company's expense).
3.2. The Underwriter or the Series Fund (at their expense) shall print
and provide a copy of the Series Fund current Statement of Additional
Information ("SAI") to the Company and to any owner of a Contract or prospective
owner who requests it. The Company may order additional copies of the SAI at its
expense.
3.3. The Series Fund, at its expense, shall provide the Company with
copies of its proxy materials, reports to stockholders, and other communications
to stockholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4. If and to the extent required by law, the Company shall: (i)
solicit voting instructions from Contract owners; (ii) vote the Series Fund
shares in accordance with instructions received from Contract owners; and (iii)
vote Series Fund shares for which no instructions have been received in the same
proportion as Series Fund shares of such Fund for which instructions have been
received; all so long as and to the extent that the SEC continues to interpret
the 1940 Act to require passthrough voting privileges for variable contract
owners. The Company reserves the right to vote Series Fund shares held in any
segregated asset account in its own right, to the extent permitted by law.
3.5. The Series Fund shall comply with 1940 Act's requirements
concerning shareholder meetings.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Series Fund or its designee, each piece of sales literature or other promotional
material in which the Series Fund or its investment adviser or the Underwriter
is named, at least fifteen Business Days prior to its use. No such material
shall be used if the Series Fund or its designee object to such use within
fifteen Business Days after receipt of such material.
4.2. The company shall not give any information or make any
representations or statements on behalf of the Series Fund or concerning the
Series Fund in connection with the sale of the Contracts other than the
information or representations contained in the registration statement,
prospectus, or SAI for the Series Fund shares, as such registration statement,
prospectus, and SAI may be amended or supplemented from time to time, or in
reports or proxy statements for the Series Fund, or in sales literature or other
promotional material approved by the Series Fund or its designee or by the
Underwriter, except with the permission of the Series Fund or the Underwriter or
the designee of either.
4.3. The Series Fund, the Underwriter, or their designee shall furnish,
or shall cause to be furnished, to the Company or its designee, each piece of
sales literature or other promotional material in which the Company and/or its
separate account(s), is named, at least fifteen Business
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Days prior to its use. No such material shall be used if the Company or its
designee object to such use within fifteen Business Days after receipt of such
material.
4.4. The Series Fund and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the Company,
the Account, or the Contracts other than the information or representations
contained in the registration statement, prospectus, and SAI for the Contracts,
as such registration statement, prospectus, or SAI may be amended or
supplemented from time to time, or in published reports for the Account which
are in the public domain or approved by the Company for distribution to Contract
owners, or in sales literature or other promotional material approved by the
Company or its designee, except with the permission of the Company.
4.5. The Series Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, SAIs, reports, proxy
statements, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Series Fund or its shares, as soon as reasonably
practicable after the filing of such document with the SEC or other regulatory
authorities.
4.6. The Company will provide to the Series Fund at least one complete
copy of all registration statements, prospectuses, SAIs, reports, solicitations
for voting instructions, sales literature and other promotional materials,
applications for exemptions, requests for no action letters, and all amendments
to any of the above, that relate to the contracts or the Account, as soon as
reasonably practicable after the filing of such document with the SEC.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund and the Underwriter shall pay no fee or other
compensation to the Company under this Agreement.
5.2. All expenses incident to performance by the Series Fund under this
Agreement shall be paid by the Series Fund. The Series Fund shall bear the
expenses for the cost of registration and qualification of the Series Fund's
shares, preparation and filing of the Series Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type, printing
and providing the Company with a sufficient quantity of the Series Fund's
prospectus for the Company to distribute to all existing owners of Contracts,
setting in type and printing the proxy materials and reports to shareholders
(including the costs of printing a prospectus that constitutes an annual
report), the preparation of all statements and notices required by any federal
or state law, all taxes on the issuance or transfer of the Series Fund's shares.
5.3. The Company shall bear the expenses of printing and distributing
the Series Fund's prospectus to prospective owners of Contracts and of
distributing the Series Fund's proxy materials and reports to existing Contract
owners.
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ARTICLE VI. POTENTIAL CONFLICTS
6.1. The Board will monitor the Series Fund for the existence of any
material irreconcilable conflict between the interests of the contract owners of
all separate accounts investing in the Series Fund. A material irreconcilable
conflict may arise for a variety of reasons, including: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar action
by insurance, tax, or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Fund are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that a material irreconcilable conflict exists and the
implications thereof.
6.2. The Company will report to the Board any potential or existing
conflicts of which it is aware. The Company will assist the Board in carrying
out its responsibilities under any exemptive order issued by the SEC permitting
shared funding by providing the Board with all information reasonably necessary
for the Board to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded.
6.3. If it is determined by a majority of the Board, or a majority of
its disinterested directors, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested directors), take whatever steps are necessary to remedy or
eliminate the material irreconcilable conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Series Fund or any Fund thereof and reinvesting such assets in a different
investment medium, including (but not limited to) another Fund of the Series
Fund, or submitting the question whether such segregation should be implemented
to a vote of all affected contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., annuity contract owners, life insurance
contract owners, or variable contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to the
affected contract owners the option of making such a change; and (2)
establishing a new registered management investment company or managed separate
account.
6.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Series Fund's election, to withdraw the affected
account's investment in the Series Fund and terminate this Agreement with
respect to such account; provided, however that such withdrawal and termination
shall be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Any such withdrawal and termination must take place within six months after the
Series Fund gives written notice that this provision is being implemented, and
until the end of that six-month period the Underwriter and the Series Fund
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shall continue to accept and implement orders by the Company for the purchase
(and redemption) of shares of the Series Fund.
6.5. If a material irreconcilable conflict arises because a decision of
a particular state insurance regulator applicable to the Company conflicts with
the position of the majority of other state regulators, then the Company will
withdraw the affected account's investment in the Series Fund and terminate this
Agreement with respect to such account within six months after the Board informs
the Company in writing that it has determined that such decision has created a
material irreconcilable conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six-month period, the Underwriter
and the Series Fund shall continue to accept and implement orders by the Company
for the purchase (and redemption) of shares of the Series Fund.
6.6. For purposes of Sections 6.3 through 6.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any material irreconcilable conflict, but in
no event will the Series Fund be required to establish a new funding medium for
the Contracts. The Company shall not be required by Section 6.3 to establish a
new funding medium for the Contracts if an offer to do so has been declined by
vote of a majority of Contract owners materially adversely affected by the
material irreconcilable conflict. In the event that the Board determines that
any proposed action does not adequately remedy any material irreconcilable
conflict, then the Company will withdraw the account's investment in the Series
Fund and terminate this Agreement within six months after the Board informs the
Company in writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
6.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding on terms and conditions materially different from those contained in any
exemptive order issued by the SEC permitting mixed or shared funding, then (a)
the Series Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 6.1, 6.2, 6.3, 6.4, and 6.5 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 VII. INDEMNIFICATION
7.1. Indemnification By The Company
7.1.(a) The Company agrees to indemnify and hold harmless the
Series Fund and each director of the Board and officers and each person, if any,
who controls the Series Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for
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purposes of this Section 7.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Series Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or
contained in the Contracts or sales literature for the Contracts
(or any amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided
that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished to the Company by or on behalf of the
Series Fund for use in the Registration Statement or prospectus
for the Contracts or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Series Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or sales
literature of the Series Fund not supplied by the Company or
persons under its control) or wrongful conduct of the Company or
persons under its control, with respect to the sale or
distribution of the Contracts or Series Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of the Series Fund or
any amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Series Fund by or on behalf of
the Company; or
(iv) arise as a result of any failure by the Company to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Company, as limited by and in accordance
with the provisions of Sections 7.1(b) and 7.1(c) hereof.
7.1.(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities, or
litigation incurred or assessed against an
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Indemnified Party as such may arise from such Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations or duties under this Agreement or to the Series Fund,
whichever is applicable.
7.1.(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.1.(d) The Indemnified Parties will promptly notify the Company
of the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Series Fund shares or the Contracts or the
operation of the Series Fund.
7.2. Indemnification by the Underwriter
7.2.(a) The Underwriter agrees to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Underwriter) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities, or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Series Fund's shares
or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus or sales literature of the
Series Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance
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upon and in conformity with information furnished to the
Underwriter or the Series Fund by or on behalf of the Company for
use in the Registration Statement or prospectus for the Series
Fund or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or
Series Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus, or sales
literature for the Contracts not supplied by the Underwriter or
persons under its control) or wrongful conduct of the Series Fund
or Underwriter or persons under their control, with respect to the
sale or distribution of the Contracts or Series Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature covering the Contracts,
or any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, if such a statement or omission was made in reliance
upon information furnished to the Company by or on behalf of the
Series Fund; or
(iv) arise as a result of any failure by the Series Fund to
provide the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the diversification
requirements specified in Section 2.6 of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Underwriter, as limited by and in
accordance with the provisions of Sections 7.2(b) and 7.2(c)
hereof.
7.2.(b) The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities, or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
7.2.(c) The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any
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such action is brought against the Indemnified Parties, the Underwriter will be
entitled to participate, at its own expense, in the defense of such action. The
Underwriter also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Underwriter
to such party of the Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
7.2.(d) The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
7.3. Indemnification By the Series Fund
7.3.(a) The Series Fund agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Series Fund) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities, or expenses (or actions in respect thereof) or
settlements result from the gross negligence, bad faith, or willful misconduct
of the Board or any member thereof, are related to the operations of the Series
Fund and:
(i) arise as a result of any failure by the Series Fund to
provide the services and furnish the materials under the terms of
this Agreement (including a failure to comply with the
diversification requirements specified in Section 2.6 of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Series Fund in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Series Fund;
as limited by and in accordance with the provisions of Sections 7.3(b) and
7.3(c) hereof.
7.3.(b) The Series Fund shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities, or litigation incurred or assessed against an Indemnified Party as
such may arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company, the Series Fund, the Underwriter, or the
Account, whichever is applicable.
7.3.(c) The Series Fund shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Series Fund in
writing within a reasonable time after the summons or other first
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legal process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure to notify
the Series Fund of any such claim shall not relieve the Series Fund from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Series Fund will be
entitled to participate, at its own expense, in the defense of such action. The
Series Fund also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Series Fund
to such party of the Series Fund's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Series Fund will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
7.3.(d) The Company agrees promptly to notify the Series Fund of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with this Agreement, the issuance or sale of
the Contracts, with respect to the operation of the Account, or the sale or
acquisition of shares of the Series Fund.
ARTICLE VIII. APPLICABLE LAW
8.1. This Agreement shall be governed and construed in accordance with
the laws of the State of New Jersey.
8.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules, and regulations as the SEC
may grant, and the terms of this Agreement shall be interpreted and construed in
accordance therewith.
ARTICLE IX. TERMINATION
9.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance written
notice to the other parties; or
(b) at the option of the Company to the extent that shares of
the Funds are not reasonably available to meet the requirements of
the Contracts as determined by the Company; provided, however,
that such termination shall apply only to the Fund(s) not
reasonably available. Prompt notice of the election to terminate
for such cause shall be furnished by the Company; or
(c) at the option of the Series Fund in the event that formal
administrative proceedings are instituted against the Company by
the NASD, the SEC, the
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Insurance Commissioner, or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of
the Contracts, with respect to the operation of the Account, or
the purchase of the Series Fund shares; provided, however, that
the Series Fund determines in its sole judgment exercised in good
faith that any such administrative proceedings will have a
material adverse effect upon the ability of the Company to perform
its obligations under this Agreement; or
(d) at the option of the Company in the event that formal
administrative proceedings are instituted against the Series Fund
or the Underwriter by the NASD, the SEC, or any state securities
or insurance department, or any other regulatory body; provided,
however, that the Company determines in its sole judgment
exercised in good faith that any such administrative proceedings
will have a material adverse effect upon the ability of the Series
Fund or the Underwriter to perform their obligations under this
Agreement; or
(e) with respect to the Account, upon requisite vote of the
Contract owners having an interest in such Account (or any
subaccount) to substitute the shares of another investment company
for Series Fund shares. The Company will give 30 days' prior
written notice to the Series Fund of the date of any proposed vote
to replace the Series Fund's shares; or
(f) at the option of the Company, in the event any of the
Series Fund's shares are not registered, issued, or sold in
accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investment
media of the Contracts; or
(g) at the option of the Company, if the Series Fund ceases to
qualify as a Regulated Investment Company under Subchapter M of
the Code or under any successor or similar provision, or if the
Company reasonably believes that the Series Fund may fail to so
qualify; or
(h) at the option of the Company, if the Series Fund fails to
meet the diversification requirements of the Code; or
(i) at the option of either the Series Fund or the Underwriter,
if (1) the Series Fund or the Underwriter, respectively, shall
determine, in their sole judgment reasonably exercised in good
faith, that the Company has suffered a material adverse change in
its business or financial condition or is the subject of material
adverse publicity and such material adverse change or material
adverse publicity will have a material adverse impact upon the
business and operations of either the Series Fund or the
Underwriter, (2) the Series Fund or the Underwriter shall notify
the Company in writing of such determination and its intent to
terminate this Agreement, and (3) after considering the actions
taken by the Company and any other changes in circumstances since
the giving of such notice, such determination of the Series Fund
or the Underwriter shall continue to apply on the sixtieth (60th)
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day following the giving of such notice, which sixtieth day shall
be the effective date of termination; or
(j) at the option of the Company, if (1) the Company shall
determine, in its sole judgment reasonably exercised in good
faith, that either the Series Fund or the Underwriter has suffered
a material adverse change in its business or financial condition
or is the subject of material adverse publicity and such material
adverse change or material adverse publicity will have a material
adverse impact upon the business and operations of the Company,
(2) the Company shall notify the Series Fund and the Underwriter
in writing of such determination and its intent to terminate the
Agreement, and (3) after considering the actions taken by the
Series Fund and/or the Underwriter and any other changes in
circumstances since the giving of such notice, such determination
shall continue to apply on the sixtieth (60th) day following the
giving of such notice, which sixtieth day shall be the effective
date of termination; or
(k) at the option of either the Series Fund or the Underwriter,
if the Company gives the Series Fund and the Underwriter the
written notice specified in Section 1.9(b) hereof and at the time
such notice was given there was no notice of termination
outstanding under any other provision of this Agreement; provided,
however, any termination under this Section 10.1(k) shall be
effective forty-five (45) days after the notice specified in
Section 1.9(b) was given.
9.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 9.1(a) may be exercised for any
reason or for no reason.
9.3. Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to terminate
which notice shall set forth the basis for such termination. Furthermore,
(a) in the event that any termination is based upon the
provisions of Article VI, or the provision of Section 9.1(a),
9.1(i), 9.1(j) or 9.1(k) of this Agreement, such prior written
notice shall be given in advance of the effective date of
termination as required by such provisions; and
(b) in the event that any termination is based upon the
provisions of Section 9.1(c) or 9.1(d) of this Agreement, such
prior written notice shall be given at least ninety (90) days
before the effective date of termination.
9.4. Effect of Termination. Notwithstanding any termination of this
Agreement, the Series Fund and the Underwriter shall, at the option of the
Company, continue to make available additional shares of the Series Fund
pursuant to the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement (the "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Series Fund,
redeem investments in the Series Fund,
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and/or invest in the Series Fund upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 9.4 shall not
apply to any terminations under Article VI and the effect of such Article VI
terminations shall be governed by Article VI of this Agreement.
9.5. The Company shall not redeem Series Fund shares attributable to
the Contracts (as opposed to Series Fund shares purchased directly by the
Company to provide seed money and Series Fund shares attributable to the
Company's assets held in the Account) except (i) as necessary to implement
Contract owner initiated transactions, or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of general
application (a "Legally Required Redemption"). Upon request, the Company will
promptly furnish to the Series Fund and the Underwriter the opinion of counsel
for the Company (which counsel shall be reasonably satisfactory to the Series
Fund and the Underwriter) to the effect that any redemption pursuant to clause
(ii) above is a Legally Required Redemption. Furthermore, except in cases where
permitted under the terms of the Contracts, the Company shall not prevent
Contract owners from allocating payments to a Fund that was otherwise available
under the Contracts without first giving the Series Fund or the Underwriter 90
days notice of its intention to do so.
ARTICLE X. NOTICES
10.1. Any notice shall be sufficiently given when sent by registered or
certified mail (return receipt requested) to the other party at the address of
such party set forth below or at such other address as such party may from time
to time specify in writing to the other party.
If to the Series Fund:
Odyssey Funds, Inc.
Xxx Xxxxx Xxxxxx
Xxxx Xxxxxxxxx, XX 00000
Attention: Secretary
If to the Company:
The Travelers Insurance Company
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Annuity Division
If to the Underwriter:
Xxxxxxxx Equities, Inc.
Xxx Xxxxx Xxxxxx
Xxxx Xxxxxxxxx, XX 00000
Attention: Secretary
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ARTICLE XI. MISCELLANEOUS
11.1. All persons dealing with the Series Fund must look solely to the
property of the Series Fund for the enforcement of any claims against the Series
Fund as neither the Board, officers, agents, or shareholders assume any personal
liability for obligations entered into on behalf of the Series Fund.
11.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate, or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
11.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one instrument.
11.5. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule, or otherwise, the remainder of the Agreement
shall not be affected thereby.
11.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
11.7. The rights, remedies, and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies, and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
ODYSSEY FUNDS, INC.
By:
----------------------------- -------------------------------
Witness
Title:
----------------------------
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THE TRAVELERS INSURANCE COMPANY
By:
----------------------------- -------------------------------
Witness
Title:
----------------------------
XXXXXXXX EQUITIES, INC.
By:
----------------------------- -------------------------------
Witness
Title:
----------------------------
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SCHEDULE A
The Travelers Fund U for Variable Annuities, established May 7, 1982.
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