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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
(Exact name of Registrant)
THE TRAVELERS INSURANCE COMPANY
(Name of Depositor)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including area code: (860) 277-0111
ERNEST J. WRIGHT
Assistant Secretary
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after
effectiveness of Registration
Statement.
It is proposed that this filing will become effective (check appropriate box):
N/A immediately upon filing pursuant to paragraph (b) of Rule 485
N/A on ___________ pursuant to paragraph (b) of Rule 485
N/A 60 days after filing pursuant to paragraph (a)(1) of Rule 485
N/A on ___________ pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
______ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Rule 24f-2 of the Investment Company Act of 1940, the Registrant
hereby declares that an indefinite amount of Variable Annuity Contracts is
being registered under the Securities Act of 1933. Amount of registration fee:
$500.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
Cross-Reference Sheet
Form N-4
<TABLE>
<CAPTION>
ITEM
NO. CAPTION IN PROSPECTUS
- --- ---------------------
<S> <C>
1. Cover Page Prospectus
2. Definitions Glossary of Special Terms
3. Synopsis Summary
4. Condensed Financial Information Not Applicable
5. General Description of Registrant, The Company, The Separate
Depositor, and Portfolio Companies Account and the Funding Options
6. Deductions Fee Table; Charges Under the Contracts;
Distribution of the Contracts
7. General Description of Variable The Contracts
Annuity Contracts
8. Annuity Period Payment of Benefits
9. Death Benefit Payment of Benefits
10. Purchases and Contract Value Operation of the Contract
11. Redemptions Sales Loads
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Proceedings
14. Table of Contents of Statement Appendix B
CAPTION IN STATEMENT OF ADDITIONAL
INFORMATION
----------------------------------
15. Cover Page Statement of Additional Information
16. Table of Contents Table of Contents
17. General Information and History The Insurance Company
18. Services Principal Underwriter; Distribution and
Management Agreement
19. Purchase of Securities Being Offered Valuation of Assets
20. Underwriters Principal Underwriter
21. Calculation of Performance Data Performance Information
22. Annuity Payments Not Applicable
23. Financial Statements Financial Statements
</TABLE>
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
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THE TRAVELERS INSURANCE COMPANY
PROSPECTUS:
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
The group variable annuity contracts (the "Contracts") described in this
prospectus are designed to fund plans ("Plans") established under certain
sections of the Internal Revenue Code of 1986 (the "Code").
The Contracts are designed for use in conjunction with qualified pension
and profit-sharing plans, tax deferred annuity plans (for public school teachers
and employees of certain other tax exempt and qualifying employers), and
deferred compensation plans for state and local governments. These Plans also
allow for Third Party Administrator involvement. Amounts held under the Plans
may be entitled to tax-deferred treatment under certain sections of the Code.
The Funding Options available under the Contracts are listed below. They may not
all be available under an employer's plan or in all states. This prospectus is
not valid without the current prospectuses for these Funding Options. A Fixed
Account Option is also available and is described in Appendix A. Unless
specified otherwise, this prospectus refers to the Funding Options.
Managed Assets Trust
High Yield Bond Trust
Capital Appreciation Fund
Dreyfus Stock Index Fund, Inc.
Travelers Series Trust
U.S. Government Securities Portfolio
Utilities Portfolio
Social Awareness Stock Portfolio
Templeton Variable Products Series Fund
Templeton Bond Fund
Templeton Stock Fund
Templeton Asset Allocation Fund
Variable Insurance Products Fund
Fidelity's High Income Portfolio
Fidelity's Growth Portfolio
Fidelity's Equity Income Portfolio
Variable Insurance Products Fund II
Fidelity's Asset Manager Portfolio
American Odyssey Funds, Inc.
American Odyssey Core Equity Fund
American Odyssey Emerging Opportunities Fund
American Odyssey International Equity Fund
American Odyssey Long-Term Bond Fund
American Odyssey Intermediate-Term Bond Fund
American Odyssey Short-Term Bond Fund
Smith Barney/Travelers Series Fund, Inc.
Smith Barney Income and Growth Portfolio
Alliance Growth Portfolio
Smith Barney International Equity Portfolio
Putnam Diversified Income Portfolio
Smith Barney High Income Portfolio
MFS Total Return Portfolio
Smith Barney Money Market Portfolio
This prospectus sets forth the information concerning the Separate Account
that investors ought to know before investing. Additional information about the
Separate Account has been filed with the Securities and Exchange Commission and
is available without charge upon request. To obtain the Statement of Additional
Information ("SAI") send a written request to The Travelers Insurance Company,
Attn: Annuity Services, One Tower Square, Hartford, CT 06183-5030. The Table of
Contents for the SAI dated _______ may be found on page __ of this prospectus.
The SAI is incorporated by reference to this prospectus. For more information
about the Contract, contact your registered representative, or write to us at
the above address.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
AN INVESTMENT IN THE SMITH BARNEY MONEY MARKET PORTFOLIO IS NEITHER INSURED
NOR GUARANTEED BY THE U.S. GOVERNMENT.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR
THE FUNDING OPTIONS. THE PROSPECTUSES FOR THE SEPARATE ACCOUNT AND THE FUNDING
OPTIONS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY
THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTMENT.
Prospectus Dated: ____________
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TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS ......................................................
SUMMARY ........................................................................
FEE TABLE ......................................................................
INTRODUCTION....................................................................
THE CONTRACTS...................................................................
General......................................................................
Allocated Contracts..........................................................
Unallocated Contracts........................................................
Right to Return..............................................................
OPERATION OF THE CONTRACT ......................................................
Crediting Purchase Payments..................................................
Transfers of Cash Value Between Funding Options..............................
Dollar Cost Averaging.......................................................
Asset Allocation Advice......................................................
Transfers from Funding Options to Contracts Not Issued by Us.................
Transfers to or from Other Contracts Issued by Us............................
Transfers from Contracts Not Issued by Us....................................
Contract and Participant's Individual Account Termination....................
Account Value................................................................
Accumulation Unit Value .....................................................
PAYMENT OF BENEFITS.............................................................
Death Benefits under an Allocated Contract ..................................
Election of Settlement Options...............................................
Minimum Amounts..............................................................
Misstatement ................................................................
Retired Life Certificate.....................................................
Allocation of Cash Value During the Annuity Period...........................
Annuity Options..............................................................
Variable Annuity.............................................................
Amount of First Payment .................................................
Annuity Unit Value ......................................................
Initial Payment and Number of Annuity Units..............................
Amount of Subsequent Payments............................................
Fixed Annuity................................................................
CHARGES UNDER THE CONTRACT......................................................
Sales Loads..................................................................
Free Withdrawal Allowance ...............................................
Mortality and Expense Risk Charge............................................
Funding Option Charges.......................................................
Administrative Charges ......................................................
Semiannual Policy Fee....................................................
Administrative Expense...................................................
Premium Tax Deductions.......................................................
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TPA Administrative Charges...................................................
THE COMPANY, THE SEPARATE ACCOUNT AND THE FUNDING OPTIONS.......................
The Company..................................................................
The Separate Account.........................................................
The Funding Options..........................................................
Investment Advisers.......................................................
FEDERAL TAX CONSIDERATIONS......................................................
General......................................................................
Ownership of the Investments.................................................
Section 403(b) Plans and Arrangements........................................
Qualified Pension and Profit-Sharing Plans...................................
Section 457 Plans............................................................
The Employee Retirement Income Security Act of 1974..........................
Federal Income Tax Withholding...............................................
Tax Advice...................................................................
MISCELLANEOUS ..................................................................
Voting Rights ...............................................................
Distribution of the Contracts................................................
Postponement of Payment (Emergency Procedure)................................
Contract Modification........................................................
Legal Proceedings............................................................
APPENDIX A: THE FIXED ACCOUNT...................................................
APPENDIX B: TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION ...........
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION PERIOD: The period before the commencement of Annuity payments.
ACCUMULATION UNIT: An accounting unit of measure used to calculate values before
Annuity payments begin.
ANNUITANT: A Person on whose life the Annuity payments are to be made under a
Contract.
ANNUITY: Payment of income for a stated period or amount.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to begin.
ANNUITY PERIOD: The period following the commencement of Annuity payments.
BENEFICIARY(IES): The person(s) or trustee designated to receive contract values
in the event of the Participant's or Annuitant's death.
CASH SURRENDER VALUE: The Cash Value less any amounts deducted upon surrender
and any applicable premium tax.
CASH VALUE: The value of the Accumulation Units in Your Account or a
Participant's Individual Account less any reductions for administrative charges.
Sometimes referred to as "Account Value."
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
COMPANY (WE, US, OUR): The Travelers Insurance Company.
COMPETING FUND: Any investment option under the Plan, which in our opinion,
consists primarily of fixed income securities and/or money market instruments.
CONTRACT DATE: The date on which the Contract becomes effective, as shown on the
Contract.
CONTRACT OWNER (YOU, YOUR): The employer or entity owning the Contract.
CONTRACT YEAR: The twelve month period commencing with the Contract Date or with
any anniversary thereof.
DUE PROOF OF DEATH: (i) a copy of a certified death certificate; (ii) a copy of
a certified decree of a court of competent jurisdiction as to the finding of
death; (iii) a written statement by a medical doctor who attended the deceased;
or (iv) any other proof satisfactory to us.
EXCESS PLAN CONTRIBUTIONS: Plan contributions including excess deferrals, excess
contributions, excess aggregate contributions, excess annual additions, and
excess nondeductible contributions that require correction by the plan
administrator.
FIXED ANNUITY: An Annuity with payments which remain fixed as to dollar amount
throughout the payment period and which do not vary with the investment
experience of a Separate Account.
FUNDING OPTIONS: The variable investment options to which Purchase Payments
under the Contract may be allocated.
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GENERAL ACCOUNT: The Company's General Account in which amounts are held if
directed to the Fixed Account during the Accumulation Period and in which
reserves are maintained for Fixed Annuities during the Annuity Period.
HOME OFFICE: The Travelers Insurance Company, One Tower Square, Hartford, CT
06183
PARTICIPANT: An eligible person who is a member in the Qualified Plan.
PARTICIPANT'S INDIVIDUAL ACCOUNT: An account to which Accumulation Units are
credited to a Participant or Beneficiary under the Contract.
PURCHASE PAYMENTS: Payments made to the Contract.
QUALIFIED PLAN: An employer's voluntary retirement plan which qualifies for
special tax treatment under a particular section of the Internal Revenue Code.
SEPARATE ACCOUNT: The Travelers Separate Account QP for Variable Annuities.
THIRD PARTY ADMINISTRATOR ("TPA"): An entity which has contracted with the
Contract Owner to provide administrative and/or distribution services for the
Plan.
VALUATION DATE: A day on which the New York Stock Exchange is open for business.
The value of the Separate Account is determined at the close of the New York
Stock Exchange on such days.
VALUATION PERIOD: The period between the end of one Valuation Date and the end
of the next Valuation Date.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets held in the underlying
securities of the Separate Account.
WRITTEN REQUEST: A written form satisfactory to us and received at the Home
Office.
YOUR ACCOUNT: Accumulation Units credited to you under this Contract.
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SUMMARY
CONTRACTS OFFERED: The Contracts are designed for use in conjunction with
qualified pension or profit-sharing plans, tax deferred annuity plans (for
public school teachers and employees and employees of certain other tax exempt
and qualifying employers) and deferred compensation plans for state and local
governments. The minimum Purchase Payment allowed is an average of $1,000
annually, per Participant's Individual Account or $10,000 annually per Contract.
Because of the size of these Contracts, the possible involvement of TPAs,
the allocated or unallocated nature of the Contract and a competitive bidding
process which may include negotiation, many of the charges imposed in the
Contract are likely to vary from one Contract to the next. The Contract design
allows the Company maximum flexibility, within the limitations imposed by law,
to "custom design" a charge structure which is likely to be acceptable to a
particular prospective Contract Owner.
RIGHT TO RETURN: For Contracts in used with deferred compensation plans,
tax-deferred annuity plans, and combined qualified plan/deferred annuity plans,
you may return the Contract and receive a full refund of the Cash Value
(including charges) within ten days after the Contract is delivered to you,
unless state law requires a longer period. (See "Right to Return," page ___.)
ASSET ALLOCATION: Some Contract Owners and/or Participants may elect to enter
into an asset allocation investment advisory agreement which is fully described,
including associated fees, in a separate disclosure statement. (See "Asset
Allocation Advice" on page __.)
DEATH BENEFITS: A death benefit is provided in the event of death of the
Participant under a Participant's Individual Account prior to the earlier of the
Participant's 75th birthday or the Annuity Commencement Date. (See "Death
Benefits under an Allocated Contract" on page ___.)
ANNUITY OPTIONS: The Contract Owner selects an Annuity Commencement Date and an
Annuity Option for a Participant as provided by the Plan. The Contract contains
six optional annuity forms, which may be selected on either a fixed or variable
annuity basis, or a combination thereof. (See "Payment of Benefits" on
page _____.)
CHARGES AND FEES: Maximum levels for sales-related expenses, mortality and
expense risk charges and administrative expense charges are set forth in this
prospectus. These charges, as well as allocation and transfer fees are subject
to negotiation or a competitive bidding process, or both, with the prospective
Contract Owner prior to the issuance of a Contract.
The Company will charge a surrender charge or a contingent deferred sales
charge, as negotiated. The maximum contingent deferred sales charge is 5.0% of
each Purchase Payment for a period of five years from the date the Purchase
Payment was made. The maximum surrender charge is 5% of the amount surrendered
in the first two Contract Years, up to 4% in years three and four; up to 3% in
years five and six; up to 2% in years seven and eight and 0% beginning in the
ninth year. Any applicable sales charge will not exceed the aggregate amount of
the Purchase Payments made.
The Company will make a daily charge against the value of the Contract
held in the Separate Account for the Mortality and Expense Risk Charge. The
maximum rate is 1.20% annually. (See "Mortality and Expense Risk Charge" on page
__.)
The Company may also charge a fee of .10% for administrative expenses
under the Contract as well as a Semiannual Policy Fee (for allocated Contracts)
of $15. Deductions for the payment
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of any premium taxes that may be levied against the Contract will be made as
appropriate. (See "Charges Under the Contract" on page __.)
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FEE TABLE
The purpose of this Fee Table is to assist Contract Owners in
understanding the various maximum costs and expenses that Contract Owners or
Participants will bear, directly or indirectly, under the Contract. The
information listed reflects expenses of the Separate Account as well as of the
Funding Options. For additional information regarding the charges and deductions
assessed under the Contract, including possible waivers or reductions of these
expenses, see "Charges Under the Contract," page ___. Expenses shown do not
include premium taxes, which may be applicable.
MAXIMUM CONTRACT OWNER TRANSACTION CHARGES
CONTINGENT DEFERRED SALES CHARGE
(as a percentage of purchase payments): 5% for five years from date purchase
payment made; 0% thereafter (OR)
<TABLE>
<CAPTION>
SURRENDER CHARGE CONTRACT YEAR PERCENTAGE
<S> <C> <C>
(as a percentage of amount surrendered) 1-2 5%
3-4 4%
5-6 3%
7-8 2%
9+ 0%
</TABLE>
MAXIMUM CONTRACT ADMINISTRATIVE CHARGE
SEMIANNUAL CONTRACT ADMINISTRATIVE CHARGE $15
(OR)
FUNDING OPTION ADMINISTRATIVE CHARGE .10% (of amounts allocated to the variable
funding options under allocated contracts)
MAXIMUM SEPARATE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Fees (as a percentage of average net assets of the
Separate Account) 1.20%
FUNDING OPTION EXPENSES
(as a percentage of average net assets of the Funding Option)
<TABLE>
<CAPTION>
Other Total
Management Expenses Funding Option
Fee (After Reimbursement) Expenses
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Fund 0.75% 0.14%(1) 0.89%
High Yield Bond Trust 0.50% 0.75%(1) 1.25%
Managed Assets Trust 0.50% 0.11%(1) 0.61%
U.S. Government Securities Portfolio 0.32% 0.39%(1) 0.71%
Social Awareness Stock Portfolio 0.65% 0.60%(1) 1.25%
Utilities Portfolio 0.65% 0.60%(1) 1.25%
Templeton Bond Fund 0.50% 0.40%(2) 0.90%
Templeton Stock Fund 0.48% 0.25%(2) 0.73%
Templeton Asset Allocation Fund 0.49% 0.26%(2) 0.75%
Fidelity's High Income Portfolio 0.61% 0.10%(3) 0.71%
Fidelity's Equity-Income Portfolio 0.52% 0.06%(3) 0.58%
Fidelity's Growth Portfolio 0.62% 0.07%(3) 0.69%
Fidelity's Asset Manager Portfolio 0.72% 0.08%(3) 0.80%
Dreyfus Stock Index Fund 0.07% 0.33%(4) 0.40%
American Odyssey International Equity Fund 0.70% 0.55%(5) 1.25%
American Odyssey Emerging Opportunities Fund 0.65% 0.18%(5) 0.83%
American Odyssey Core Equity Fund 0.60% 0.18%(5) 0.78%
American Odyssey Long-Term Bond Fund 0.50% 0.25%(5) 0.75%
American Odyssey Intermediate-Term Bond Fund 0.50% 0.25%(5) 0.75%
American Odyssey Short-Term Bond Fund 0.50% 0.25%(5) 0.75%
Smith Barney Income and Growth Portfolio 0.65% 0.10%(6) 0.75%
Alliance Growth Portfolio 0.80% 0.10%(6) 0.90%
Smith Barney International Equity Portfolio 0.90% 0.35%(6) 1.25%
Putnam Diversified Income Portfolio 0.75% 0.20%(6) 0.95%
Smith Barney Money Market Portfolio 0.60% 0.10% 0.70%
Smith Barney High Income Portfolio 0.60% 0.10%(6) 0.70%
MFS Total Return Portfolio 0.80% 0.15%(6) 0.95%
</TABLE>
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(1) Other Expenses are as of the fiscal year ended December 31, 1994,
taking into account the current expense reimbursement arrangement with
the Company. The Company has agreed to reimburse each Fund for the
amount by which its aggregate expenses (including the management fee,
but excluding brokerage commissions, interest charges and taxes)
exceeds 1.25%. Without such arrangement, Other Expenses would have been
0.83%, 2.61% and 2.84% for HYBT, Social Awareness Stock Portfolio, and
Utilities Portfolio, respectively.
(2) Other Expenses are based on the actual operating expenses incurred by
the Fund during the year ended December 31, 1994.
(3) Management Fees and Other Expenses are as of the fiscal year ended
December 31, 1994. No reimbursement arrangement affected the High
Income Portfolio. A portion of the brokerage commissions the Fund paid
was used to reduce its expenses. Without this reduction, total Other
Expenses would have been: Equity-Income Portfolio, 0.60%; Growth
Portfolio, 0.70%; and Asset Manager Portfolio, 0.81%.
(4) The administrator and investment adviser have agreed to reimburse the
Fund for expenses in excess of 0.40%. For the fiscal year ended
December 31, 1994, the Investment Management Fee and Other Expenses
before reimbursement were 0.15% and 0.42%, respectively.
(5) Other Expenses are as of the fiscal year ended December 31, 1994 taking
into account the current expense limitations agreed to by the Manager.
The Manager has agreed to continue, at least until May 1, 1996, to
waive fees or reimburse expenses to the extent a Fund's total expense
ratio exceeds the following expense limitation: International Equity
Fund, 1.25%; Emerging Opportunities Fund and Core Equity Fund, 1.00%;
and Long-Term Bond Fund, Intermediate-Term Bond Fund, Short-Term Bond
Fund, 0.75%. Thereafter, each fund is required to reimburse the Manager
for any fees waived or expenses it reimbursed provided that this
reimbursement by the Fund does not cause the total expense ratio to
exceed the expense limitations above. The Long-Term Bond Fund and the
Intermediate-Bond Fund are currently reimbursing the Manager while the
Short-Term Bond Fund and the International Equity Fund are still
receiving reimbursements from the Manager. Without these expense
limitations and/or Manager reimbursements, Other Expenses of the Funds
would have been as follows: International Equity Fund, 0.66%; Emerging
Opportunities Fund, 0.27%; Core Equity Fund, 0.25%; Long-Term Bond
Fund, 0.23%; Intermediate-Bond Fund, 0.25%; and Short-Term Bond, 0.52%.
(6) Other Expenses are as of October 31, 1994, taking into account the
current expense limitations agreed to by the Manager. The Manager
waived all of its fees for the period and reimbursed the Funds for
their expenses. If such fees were not waived and expenses were not
reimbursed, Total Underlying Expenses would have been as follows: Smith
Barney Income and Growth, 2.08%; Alliance Growth Portfolio, 1.76%;
Smith Barney International Equity Portfolio, 2.00%; Putnam Diversified
Income Portfolio, 2.92%; Smith Barney High Income Portfolio, 2.60%; and
MFS Return Portfolio, 2.51%.
EXAMPLE*
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
A $1,000 investment would be subject to If the Contract is NOT surrendered
the following expenses, assuming a 5% at the end of the period shown, a
annual return on assets, if the Contract $1,000 investment would be subject
is surrendered at the end of the period to the following expenses, assuming
shown**: a 5% annual return:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
One Three Five Ten One Three Five Ten
Year Years Years Years Year Years Years Years
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation Fund $ $ $ $ $ $ $ $
High Yield Bond Trust
Managed Assets Trust
Travelers Series Trust
U.S. Government Securities Portfolio
Social Awareness Stock Portfolio
Utilities Portfolio
Templeton Variable Products Series
Templeton Bond Fund
Templeton Stock Fund
Templeton Asset Allocation Fund
</TABLE>
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
One Three Five Ten One Three Five Ten
Year Years Years Years Year Years Years Years
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity VIP
Fidelity's High Income Portfolio
Fidelity's Equity-Income Portfolio
Fidelity's Growth Portfolio
Fidelity VIP II
Fidelity's Asset Manager Portfolio
Dreyfus Stock Index Fund
American Odyssey Funds(1):
International Equity Fund
Emerging Opportunities Fund
Core Equity Fund
Long-Term Bond Fund
Intermediate-Term Bond Fund
Short-Term Bond Fund
CHART Funds
Smith Barney/Travelers Series Fund, Inc.
Smith Barney Income and Growth Portfolio
Alliance Growth Portfolio
Smith Barney International Equity Portfolio
Putnam Diversified Income Portfolio
Smith Barney Money Market Portfolio
Smith Barney High Income Portfolio
MFS Total Return Portfolio
</TABLE>
- ---------------
* The Example reflects the $15 Semiannual Contract Fee as an annual
charge of 0.XXX% of assets.
** The applicable sales charge may be waived upon annuitization. (See
"Charges Under the Contract," page __.)
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INTRODUCTION
This prospectus has been designed to provide all the necessary information
to make a decision on purchasing Contracts issued in conjunction with qualified
pension and profit-sharing plans, tax deferred annuity plans (for public school
teachers and employees and employees of certain other tax exempt and qualifying
employers) and deferred compensation plans for state and local governments. This
prospectus describes only the elements of the variable Contracts. The Contracts
may contain a Fixed Account Option which is described in Appendix A to this
prospectus. Please read the Glossary of Special Terms prior to reading this
prospectus to become familiar with the terms being used.
THE CONTRACTS
GENERAL
The Contracts, issued on a group basis, are designed for use only with
plans which qualify for special tax treatment under the Internal Revenue Code,
such as tax deferred annuity plans for public school teachers and employees and
employees of certain other tax-exempt organizations; pension and profit-sharing
plans; and deferred compensation plans for state and local governments.
Purchase Payments may be allocated to your choice of one or more Funding
Options. Net Purchase Payments are applied to purchase Separate Account
Accumulation Units of the appropriate Funding Option. The Accumulation Unit
value will be determined as of the end of the Valuation Period during which the
payments were received. The value of your investment during the Accumulation
Period will vary in accordance with the net income and performance of each
Funding Option's individual investments. While you will not receive any
distributions from the Funding Options, any such distributions would be
reflected in the value of that Funding Option's corresponding Accumulation Unit.
During the Variable Annuity payout period, both your Annuity payments and
reserve values will vary in accordance with these factors.
The Contracts may be issued on either an allocated or an unallocated
basis. Both the allocated and unallocated contracts provide for fixed (General
Account) and variable (Separate Account) accumulations and annuity payouts.
ALLOCATED CONTRACTS
A group allocated Contract will cover all present and future Participants
under the Contract. A Participant under an allocated Contract may receive a
certificate which evidences participation in the Contract.
UNALLOCATED CONTRACTS
We offer an unallocated annuity Contract, designed for use with certain
qualified pension and profit-sharing plans where the employer has secured the
services of a TPA.
The Contracts will be issued to an employer or the trustee(s) or custodian
of an employer's pension or profit sharing plan. All Purchase Payments are held
under the Contract, as directed by the Contract Owner. There are no individual
allocations under the unallocated Contracts for individual participants in an
employer's plan.
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RIGHT TO RETURN
For Contracts in use with deferred compensation plans, tax-deferred annuity
plans, and combined qualified plans/tax deferred annuity plans, you may return
the Contract for a full refund of the Cash Value (including charges) within ten
days after you receive it (the "free-look period"). Where state law requires a
longer free look period, or the return of Purchase Payments, the Company will
comply. The Contract Owner bears the investment risk during the free-look
period; therefore, the Cash Value returned may be greater or less than your
Purchase Payment. All Cash Values will be determined as of the next valuation
following the Company's receipt of your written request for refund.
OPERATION OF THE CONTRACT
CREDITING PURCHASE PAYMENTS
The Purchase Payments to Your Account or to a Participant's Individual
Account under a Contract are applied to purchase Accumulation Units of the
selected Funding Options. With respect to an initial Purchase Payment, the
Purchase Payment is credited to the applicable account within two business days
of our receipt of a properly completed application or purchase order form and
the initial Purchase Payment. If an application or any other information
provided is incomplete when received, the Purchase Payment will be credited to
the applicable account within five business days. If an initial Purchase Payment
is not credited within five business days, it will be immediately returned
unless you have been informed of the delay and request that the Purchase Payment
not be returned.
Any subsequent payment is credited as of the Valuation Period in which it
is received. For subsequent Purchase Payments, the number of Accumulation Units
credited is determined by dividing the Purchase Payment by the appropriate
Accumulation Unit value next computed following receipt of the payment at our
Home Office.
TRANSFERS OF CASH VALUE BETWEEN FUNDING OPTIONS
You may transfer Cash Values from one or more Funding Options to other
Funding Options, subject to the terms and conditions of the Contract (and your
Plan). If authorized by the Contract Owner, Participants under allocated
Contracts may transfer all or any of their Cash Value from one Funding Option to
another up to 30 days before the due date of the first Annuity Payment.
Cash Values may generally be transferred from the Funding Option(s) to the
Fixed Account at any time. Cash Values previously transferred from the Fixed
Account to the Funding Options may not be transferred back to the Fixed Account
or any Competing Fund for a period of at least three months from the date of
transfer. We reserve the right to limit the number of transfers and percentage
of Cash Value to be transferred from the Fixed Account to the Funding Options
and to Contracts not issued by us. The minimum limitation on the number of
transfers would be one in any six-month period. Refer to Appendix A for more
information regarding transfers to and from the Fixed Account.
DOLLAR COST AVERAGING (AUTOMATED TRANSFERS)
Dollar cost averaging permits the Contract Owner or Participant to transfer a
fixed dollar amount to other Funding Options on a monthly or quarterly basis so
that more Accumulation Units are purchased if the value per unit is low and less
Accumulation Units are purchased if the
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value per unit is high. Therefore, a lower-than-average value per unit may be
achieved over the long run.
You may elect automated transfers through written request or other method
acceptable to the Company. Certain minimums apply to amounts transferred and/or
to enroll in the program.
Certain restrictions apply for automated transfers from the Fixed Account
that do not apply to automated transfers from any of the other Funding Options.
You may establish automated transfers of Cash Values from the Fixed Account.
(See Appendix A.)
You may start or stop participation in the Dollar Cost Averaging program at
any time, but you must give the Company at least 30 days' notice to change any
automated transfer instructions that are currently in place. Automated transfers
are subject to all of the other provisions and terms of the Contract, including
provisions relating to the transfer of money between funding options. The
Company reserves the right to suspend or modify transfer privileges at any time
and to assess a processing fee for this service.
Before transferring any part of the Cash Value, Contract Owners should
consider the risks involved in switching between investments available under
this Contract. Dollar cost averaging requires regular investments regardless of
fluctuating price levels, and does not guarantee profits or prevent losses in a
declining market. Potential investors should consider their financial ability to
continue purchases through periods of low price levels.
ASSET ALLOCATION ADVICE
Contract Owners may elect to enter into a separate advisory agreement with
Copeland Financial Services, Inc. ("Copeland"), an affiliate of the Company.
Copeland provides asset allocation advice under its CHART program, which is
fully described in a separate disclosure statement. Under the CHART Program,
Purchase Payments and Cash Values are allocated among the specified asset
allocation funds. Copeland's charge for this advisory service is equal to a
maximum of 1.50% of the assets subject to the CHART Program. The CHART Program
fee will be paid by quarterly withdrawals from the Cash Values allocated to the
asset allocation funds. The fee is in addition to the Contract charges described
in "Charges Under the Contract." The Company will not treat these withdrawals as
taxable distributions. The CHART Program may not be available in all marketing
programs through which this Contract is sold.
TRANSFERS FROM FUNDING OPTIONS TO CONTRACTS NOT ISSUED BY US
You may transfer all or any part of Your Account's Cash Surrender Value, subject
to the restrictions of the Fixed Account, if applicable, from any Funding Option
to any contract not issued by us. Such transfers may be subject to a sales
charge, as described in the Contract. If authorized by the Contract Owner, a
Participant may transfer all or any part of the Individual Account's Cash
Surrender Value from one Funding Option to any contract not issued by us,
subject to the restrictions of the Fixed Account, if applicable.
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TRANSFERS TO OR FROM OTHER CONTRACTS ISSUED BY US
Under specific conditions, we may allow you to transfer to this Contract funds
held by you in another group annuity contract issued by us or to transfer
amounts from this Contract to another Contract issued by us without applying a
sales charge to the funds being transferred. Once the transfer is complete and
we have established an account for you at your direction, a new sales charge may
apply, as described in the new Contract.
TRANSFERS FROM CONTRACTS NOT ISSUED BY US
Under specific conditions, when authorized by state insurance law, we may credit
a Plan up to 4% of the amount transferred to us from another investment vehicle
as reimbursement to the Plan for any exit penalty assessed by the other
investment vehicle provider. We will recover this credit through reduced
compensation paid to the servicing agent or broker.
CONTRACT AND PARTICIPANT'S INDIVIDUAL ACCOUNT TERMINATION
Under the allocated Contracts, if the Cash Value in a Participant's
Individual Account is less than the termination amount as stated in your
Contract, we reserve the right to terminate that Account and move the Cash Value
of that Participant's Individual Account to Your Account.
Any Cash Value to which a terminating Participant is not entitled under
the Plan will be moved to Your Account at your direction.
You may discontinue this Contract by Written Request at any time for any
reason. We reserve the right to discontinue this Contract if:
a) the Cash Value of the Contract is less than the termination amount; or
b) We determine within our sole discretion and judgment that the Plan or
administration of the Plan is not in conformity with applicable law;
or
c) We receive notice that is satisfactory to us of plan termination.
If we discontinue this Contract or we receive your Written Request to
discontinue the Contract, we will, in our sole discretion and judgment:
a) accept no further payments for this Contract; and
b) pay you the Cash Surrender Value of the Funding Options within 7 days
of the date of our written notice to you, or distribute the Cash
Surrender Value of each Participant's Individual Account as described
in the Settlement Provisions section at your direction; and
c) pay you the Cash Surrender Value of the Fixed Account, if applicable,
as described in the Fixed Account Appendix.
If the Contract is discontinued, we will distribute the Cash Surrender Value to
you no later than 7 days following our mailing the written notice of
discontinuance to you at the most current address available on our records.
Discontinuance of the Contract will not affect payments we are making under
Annuity options which began before the date of discontinuance.
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ACCOUNT VALUE
During the Accumulation Period, the Account Value can be determined by
multiplying the total number of Funding Option Accumulation Units credited to
that account by the current Accumulation Unit value for the appropriate Funding
Option and adding the sums for each Funding Option. There is no assurance that
the value in any of the Funding Options will equal or exceed the Purchase
Payments made to such Funding Options.
ACCUMULATION UNIT VALUE
The Accumulation Unit value for each Funding Option will vary to reflect
the investment experience of the applicable Funding Option and will be
determined on each by multiplying the Accumulation Unit value of the particular
Funding Option on the preceding Valuation Date by a net investment factor for
that Funding Option for the Valuation Period then ended. The value of the
Accumulation Unit for each Funding Option was initially established at $1.00 on
the date that Purchase Payments were first allocated to that Funding Option. The
net investment factor is described in the Statement of Additional Information.
You should refer to the Funding Option prospectuses which accompany this
prospectus for a description of how the net assets of each Funding Option are
valued since this valuation has a direct bearing on the Accumulation Unit value
of the Funding Option and therefore the Contract and Account values.
PAYMENT OF BENEFITS
DEATH BENEFITS UNDER AN ALLOCATED CONTRACT
The allocated Contract provides that, in the event the Participant dies
before the selected Annuity Commencement Date or the Participant's age 75
(whichever occurs first), the death benefit payable will be the greater of (a)
the Cash Value of the Participant's Individual Account or (b) the total Purchase
Payments under that Participant's Individual Account, less any applicable
premium tax and prior surrenders not previously deducted as of the date we
receive Due Proof of Death.
If the Participant dies on or after age 75 and before the Annuity
Commencement Date, we will pay the Beneficiary the Cash Value of the
Participant's Individual Account, less any applicable Premium Tax as of the date
we receive Due Proof of Death.
We must be notified of a Participant's death no later than six months
after the Participant's date of death in order for the Beneficiary to receive
the death proceeds as described. If notification is received more than six
months after the Participant's death, the Beneficiary shall receive the Cash
Value of the Participant's Individual Account as of the date we receive Due
Proof of Death.
The death benefit may be taken by the beneficiary in one of three ways: 1)
in a single sum, in which case payment will be made within seven days of our
receipt of Due Proof of Death, unless subject to postponement as explained
below; 2) applied to a nonlifetime Annuity option, in which case the proceeds
must be distributed within 5 years of the Participant's date of death, or 3)
applied to a lifetime Annuity.
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An election to receive death benefits under a form of Annuity must be made
within one year after the death. The election must be made by written notice to
us at our Home Office. The beneficiary may choose to have Annuity payments made
on a variable basis, fixed basis, or a combination of the two.
No election to provide Annuity payments will become operative unless the
amount placed under the Annuity Option is at least $2,000. The manner in which
the Annuity payments are determined and in which they may vary from month to
month are the same as applicable to a Participant's Individual Account after
retirement.
There is no Death Benefit under unallocated Contracts.
ELECTION OF SETTLEMENT OPTIONS
Any amount distributed from the Contract may be applied to any one of the
Annuity options described below.
Election of any of these options must be made by Written Request to our
Home Office at least 30 days prior to the date such election is to become
effective. The form of such Annuity option shall be determined by the Contract
Owner. The following information must be provided with any such request:
a) the Participant's name, address, date of birth, social security
number;
b) the amount to be distributed
c) the Annuity option which is to be purchased;
d) the date the Annuity option payments are to begin;
e) if the form of the Annuity provides a death benefit in the event of
the Participant's death, the name, relationship and address of the
beneficiary as designated by you; and
f) any other data that we may require.
The beneficiary, as specified in item (e) above, may be changed by you
or the Annuitant as long as we are notified by Written Request while the
Annuitant is alive and before payments have begun. If the beneficiary
designation is irrevocable, such designation cannot be changed or revoked
without the consent of the beneficiary. After we receive the Written Request and
the written consent of the beneficiary (if required), the new beneficiary
designation will take effect as of the date the notice is signed. We have no
further responsibility for any payment we made before the Written Request.
MINIMUM AMOUNTS
The minimum amount that can be placed under an Annuity option is $2,000
unless we consent to a lesser amount. If any periodic payments due are less than
$100, we reserve the right to make payments at less frequent intervals.
MISSTATEMENT
If an Annuitant's sex or age was misstated, all benefits of this
Contract are what the Cash Values would have purchased on the date of issue at
the correct sex and age.
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RETIRED LIFE CERTIFICATE
We will issue to each person to whom annuity benefits are being paid
under this Contract a certificate setting forth a statement in substance of the
benefits to which such person is entitled under this Contract.
ALLOCATION OF CASH SURRENDER VALUE DURING THE ANNUITY PERIOD
At the time an Annuity Option is elected, you also may elect to have the
Participant's Cash Surrender Value applied to provide a Variable Annuity, a
Fixed Annuity, or a combination of both.
If no election is made to the contrary, the Cash Surrender Value will
provide an Annuity which varies with the investment experience of the
corresponding Funding Option(s) at the time of election. You or the Participant,
if you so authorize, may elect to transfer Cash Value from one Funding Option to
another, as described in the provision "Transfers of Cash Value Between Funding
Options," in order to reallocate the basis on which Annuity payments will be
determined. Once Annuity payments have begun, no further transfers are allowed.
ANNUITY OPTIONS
Option 1: Life Annuity/No Refund
A Life Annuity is an Annuity payable during the lifetime of the Annuitant
and terminating with the last monthly payment preceding the death of the
Annuitant.
Option 2: Life Annuity with 120, 180 or 240 Monthly Payments Assured
An Annuity payable monthly during the lifetime of an Annuitant with the
provision that if, at the death of the Annuitant, payments have been made for
less than 120,180 or 240 months, as elected, then we will continue to make
payments to the designated beneficiary during the remainder of the period.
Option 3: Joint and Last Survivor Life Annuity
Monthly Annuity payments based upon the joint lifetime of two persons
selected: payments made first to the Annuitant, and upon his/her death, paid to
the survivor. No more payments will be made after the death of the survivor.
Option 4: Joint and Last Survivor Annuity - Annuity Reduced on Death of Primary
Payee
Monthly Annuity payments to the Annuitant during the joint lifetime of the
two persons selected. One of the two persons will be designated as the primary
payee. The other will be designated as the secondary payee. On the death of the
secondary payee, if survived by the primary payee, we will continue to make
monthly Annuity payments to the primary payee in the same amount that would have
been payable during the joint lifetime of the two persons.
On the death of the primary payee, if survived by the secondary payee, we
will continue to make monthly Annuity payments to the secondary payee in an
amount equal to 50% of the payments which would have been made during the
lifetime of the primary payee. No further payments will be made following the
death of the survivor.
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Option 5: Fixed Payments for a Fixed Period of 120, 180, or 240 Months
We will make monthly payments for the period selected. If at the death of
the Annuitant, payments have been made for less than 120, 180, or 240 months, as
elected, we will continue to make payments to the designated beneficiary during
the remainder of the period.
Option 6: Other Annuity Options
We will make other arrangements for Annuity payments as may be mutually
agreed upon by you and us.
VARIABLE ANNUITY
AMOUNT OF FIRST PAYMENT
The LIFE ANNUITY TABLES are used to determine the first monthly Annuity
payment. They show the dollar amount of the basic first monthly Annuity payment
which can be purchased with each $1,000 applied. The amount applied to an
Annuity will be the Cash Surrender Value of a Participant's Individual Account
as of 14 days before the date Annuity payments start. We reserve the right to
require satisfactory proof of the age of any persons on whose life Annuity
payments are based before making the first payment under any of these options.
ANNUITY UNIT VALUE
The initial value of an Annuity Unit of each Funding Option was set at
$1.00. On any Valuation Date, the Annuity Unit Value for a Funding Option equals
the Annuity Unit Value on the immediately preceding Valuation Date, multiplied
by the net investment factor for that Funding Option for the Valuation Period
just ended, divided by the Assumed Daily Net Investment Factor. The Assumed
Daily Net Investment Factor is given in the Contract.
The value of an Annuity Unit as of any date other than a Valuation Date
will be equal to its value as of the succeeding Valuation Date.
INITIAL PAYMENT AND NUMBER OF ANNUITY UNITS
We determine the number of Annuity Units credited to the Annuitant's
Individual Account in each Funding Option by dividing the basic first monthly
Annuity payment attributable to that Funding Option by the Funding Option's
Annuity Unit Value as of 14 days before the due date of the first Annuity
payment.
AMOUNT OF SUBSEQUENT PAYMENTS
The dollar amount of any subsequent payments made to an Annuitant after
the first payment date may change from month to month based on the net
investment results of the Funding Option(s). The total amount of each Annuity
payment will be equal to the sum of the payments in each Funding Option
allocated to that Annuitant's Individual Account.
The amount of the payments made to an Annuitant is determined by
multiplying, for each Funding Option, the number of Annuity Units credited to
that Annuitant by the Annuity Unit Value of the Funding Option as of the date 14
days prior to the date on which payment is due and by adding the sums.
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FIXED ANNUITY
A Fixed Annuity provides for payments which do not vary during the Annuity
Period. The dollar amount remains constant throughout the payment period. The
dollar amount of the first Fixed Annuity payment will be calculated as described
under "Amount of First Payment." All subsequent payments will be in the same
amount. If it would provide a larger payment, the first Fixed Annuity Payment
will be determined using the Life Annuity Tables in effect on the Maturity Date.
CHARGES UNDER THE CONTRACT
SALES LOADS
Purchase Payments made under the Contract pursuant to the terms of the
contracts are not subject to a front-end sales load. However, upon redemption,
the Company will charge a surrender charge or a contingent deferred sales
charge, as negotiated. The maximum contingent deferred sales charge is 5% of
each Purchase Payment for a period of five years from the date the Purchase
Payment was made. The maximum surrender charge is 5% of the amount surrendered
in the first two Contract Years, up to 4% in years three and four; up to 3% in
years five and six, up to 2% in years seven and eight and 0% beginning in the
ninth year. Any applicable sales charge will not exceed the aggregate amount of
the Purchase Payments made.
For deferred sales charge options, surrenders will be taken from Purchase
Payments in the order they were received by us and then on any earnings.
The sales charges can be changed if the Company anticipates it will incur
decreased sales-related expenses due to the nature of the Plan to which the
Contract is issued or the involvement of TPAs. When considering a change in the
sales charges, the Company will take into account:
(a) The expected level of initial agent or the Company involvement during
the establishment and maintenance of the Contract including the
amount of enrollment activity required, and the amount of service
required by the Contract Owner in support of the Plan, and
(b) Contract Owner, agent or TPA involvement in conducting ongoing
enrollment of subsequently eligible Participants, and
(c) The expected level of commission the Company may pay to the agent or
TPA for distribution expenses, and
(d) Any other factors which the Company anticipates will increase or
decrease the sales- related expenses associated with the sale of the
Contract in connection with the Plan.
We will monitor the deductions applicable to each account for the total
sales charges to ensure they will never exceed 8.5% of the total Purchase
Payments actually made to that account.
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The surrender charge will not be assessed for withdrawals made under the
following circumstances: retirement, separation from service, loans (if
available in your Plan), hardship (as defined by the Code), death, disability as
defined in Code section 72(m)(7), return of Excess Plan Contributions, minimum
required distributions at age 70 1/2, transfers to an Employer Stock Fund,
certain Plan expenses as mutually agreed upon and annuitization under this
Contract or another contract issued by us.
For unallocated Contracts, we make the deductions described above pursuant
to the terms of the various agreements among the custodian, the principal
underwriter, and us. Contract distribution expenses may exceed the deduction for
sales expenses described above. To the extent that they do, they will be borne
by the Company.
FREE WITHDRAWAL ALLOWANCE. For Contracts in use with deferred compensation
plans, the tax deferred annuity plans and combined qualified plans/tax-deferred
annuity plans, there is a 10% free withdrawal allowance available each year
after the first Contract Year. The available withdrawal amount will be
calculated as of the first Valuation Date of any given Contract Year. The free
withdrawal allowance applies to partial surrenders of any amount and to full
surrenders, except those full surrenders transferred directly to annuity
contracts issued by other financial institutions.
MORTALITY AND EXPENSE RISK CHARGE
A mortality and expense risk charge is deducted on each Valuation Date from
amounts held in the Separate Account. This charge is equivalent, on an annual
basis, to a maximum of 1.20% of the amounts allocated to each Funding Option.
The mortality risk portion compensates the Company for guaranteeing to provide
Annuity Payments according to the terms of the Contract regardless of how long
the Annuitant lives and for guaranteeing to provide the death benefit if a
Participant dies prior to the Annuity Commencement Date. The expense risk charge
compensates the Company for the risk that the charges under the Contract, which
cannot be increased during the duration of the Contract, will be insufficient to
cover actual costs.
If the amount deducted for mortality and expense risks is not sufficient to
cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess will be a profit
to the Company. The Company expects to make a profit from the mortality and
expense risk charge.
The mortality and expense risk charge is subject to negotiation. In
determining the level of the mortality and expense risk charge, the Company will
consider the size of the Plan, the number of employees, Plan Participants, the
demographics of the Participants, which may reduce mortality and expenses of the
Plan, and any other factors which the Company considers relevant.
Although variable Annuity payments made under the Contracts will vary in
accordance with the investment performance of each Funding Option's investment
portfolio, payments will not be affected by (a) the Company's actual mortality
experience among Annuitants after retirement or (b) the Company's actual
expenses, if greater than the deductions provided for in the Contracts because
of the expense and mortality undertakings by the Company.
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FUNDING OPTION CHARGES
There are certain deductions from and expenses paid out of the assets of each
Funding Option. These are described in the applicable prospectus for each
Funding Option.
ADMINISTRATIVE CHARGES
The following administrative charges apply only to allocated Contracts. One
charge or the other will apply (not both) as described in your Contract.
SEMIANNUAL POLICY FEE. A semiannual policy fee of up to $15 may be deducted from
the value of each Participant's Individual Account. This fee is assessed only
during the Accumulation Period.
ADMINISTRATIVE EXPENSE. This charge is deducted on each Valuation Date from the
variable Funding Options in order to compensate the Company for certain
administrative and operating expenses of the Funding Options. The charge is
equivalent, on an annual basis, to a maximum of 0.10% of the daily net asset
value of each Funding Options. This charge is assessed during the Accumulation
and Annuity Periods from each Participant's Individual Account.
Neither the semiannual policy fee nor the administrative expense charge
can be increased. The charges are set at a level which does not exceed the
average expected cost of the administrative services to be provided while the
Contract is in force, and the Company does not expect to profit from these
charges.
As discussed below, the level of the semiannual policy fee and of the
administrative expense charge is subject to negotiation. In determining the
level of the semiannual fee and the administrative expense charge, we consider
certain factors including, but not limited to, the following:
(a) The size and characteristics of the Contract and the group to which it
is issued including: the annual amount of Purchase Payments per
Participant, the expected turnover of employees, whether the Contract
Owner will remit Purchase Payment allocations electronically, and any
other factors pertaining to the characteristics of the group or the Plan
which may enable the Company to reduce the expense of administration.
(b) Determination of the Company's anticipated expenses in administering the
Contract, such as: billing for Purchase Payments, producing periodic
reports, providing for the direct payment of Contract charges rather
than having them deducted from Contract values, and any other factors
pertaining to the level and expense of administrative services which
will be provided under the Contract.
(c) TPA and/or agent involvement.
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PREMIUM TAX DEDUCTIONS
Certain states or municipalities impose a premium tax, ranging up to 5.0%.
A premium tax is made, if applicable, on purchase payments or contract values.
On any Contract subject to a premium tax, the tax will be deducted, as provided
under applicable law, either from Purchase Payments when received or from the
amount applied to effect an Annuity at the time Annuity payments commence.
However, we reserve the right to deduct from the Contract the state or
municipality premium tax upon our determination of when such tax is due.
TPA ADMINISTRATIVE CHARGES
The Company may be directed by the Contract Owner to deduct charges from
Purchase Payments or account values for payment to the Contract Owner and/or the
TPA. These charges are not levied by the Contract. Such charges may include
maintenance fees and transaction fees.
THE COMPANY, THE SEPARATE ACCOUNT AND THE FUNDING OPTIONS
THE COMPANY
The Travelers Insurance Company is a stock insurance company chartered
in 1864 in Connecticut and continuously engaged in the insurance business since
that time. It is licensed to conduct life insurance business in all states of
the United States, the District of Columbia, Puerto Rico, Guam, the U.S. and
British Virgin Islands and the Bahamas. The Company is an indirect wholly owned
subsidiary of Travelers Group Inc., a financial services holding company. The
Company's Home Office is located at One Tower Square, Hartford, Connecticut
06183.
THE SEPARATE ACCOUNT
The Separate Account was established on December 26, 1995, in accordance
with authorization by the Board of Directors of the Company. It is the Separate
Account in which the Company sets aside and invests the assets attributable to
the Contracts sold under this prospectus. The Separate Account is registered as
a unit investment trust under the Investment Company Act of 1940. This
registration does not, however, involve Securities and Exchange Commission
supervision of the management or the investment practices or policies of the
Separate Account or the Company.
Under Connecticut law, the assets of the Separate Account attributable to
the Contracts offered under this prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those Contracts. The
assets in the Separate Account are not chargeable with liabilities arising out
of any other business the Company may conduct. Therefore, you will not be
affected by the rate of return of the Company's General Account, nor by the
investment performance of any of the Company's other separate accounts.
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The Company does not guarantee the investment results of the Separate
Account or the Funding Options. There is no assurance that the Account Value on
the Annuity Commencement Date or the aggregate amount of the Variable Annuity
payments will equal the sum of Purchase Payments made under the Contract. Since
each Funding Option has different investment objectives, each is subject to
different risks. These risks are more fully described in the prospectuses for
the Funding Options which must accompany this prospectus. Additional copies of
the prospectuses may be requested from your sales representative or from the
Home Office.
The Company reserves the right, subject to compliance with the law, to
substitute the shares of any other registered investment company for the shares
of any Funding Option held by the Separate Account. Substitution may occur if
shares of the Funding Option(s) become unavailable or due to changes in
applicable law or interpretations of law. Current law requires approval of the
Securities and Exchange Commission and notification to you of any such
substitution. The Company also reserves the right, subject to compliance with
the law to offer additional Funding Options.
THE FUNDING OPTIONS:
MANAGED ASSETS TRUST. The objective of the Managed Assets Trust is high
total investment return through a fully managed investment policy.
Assets of the Managed Assets Trust will be invested in a portfolio of
equity, debt and convertible securities.
HIGH YIELD BOND TRUST.* The objective of the High Yield Bond Trust is
generous income. The assets of the High Yield Bond Trust will be
invested in bonds which, as a class, sell at discounts from par value
and are typically high risk securities. Please read carefully the
complete risk disclosure in the Trust's prospectus before investing.
CAPITAL APPRECIATION FUND. The objective of the Capital Appreciation
Fund is growth of capital through the use of common stocks. Income is
not an objective. The Fund invests principally in common stocks of small
to large companies which are expected to experience wide fluctuations in
price in both rising and declining markets.
DREYFUS STOCK INDEX FUND. The objective of the Dreyfus Stock Index Fund
is to provide investment results that correspond to the price and yield
performance of publicly traded common stocks in the aggregate, as
represented by the Standard & Poor's 500 Composite Stock Price Index.
AMERICAN ODYSSEY FUNDS, INC.
AMERICAN ODYSSEY CORE EQUITY FUND. The objective of the Core Equity Fund
is to seek maximum long-term total return by investing primarily in
common stocks of well-established companies.
AMERICAN ODYSSEY EMERGING OPPORTUNITIES FUND. The objective of the
Emerging Opportunities Fund is to seek maximum long-term total return by
investing primarily in common stocks of small, rapidly growing
companies.
AMERICAN ODYSSEY INTERNATIONAL EQUITY FUND. The objective of the
International Equity Fund is to seek maximum long-term total return by
investing primarily in common stocks of established non-U.S. companies.
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AMERICAN ODYSSEY LONG-TERM BOND FUND.* The objective of the Long-Term
Bond Fund is to seek maximum long-term total return by investing
primarily in long-term corporate debt securities, U.S. government
securities, mortgage-related securities, and asset-backed securities, as
well as money market instruments.
AMERICAN ODYSSEY INTERMEDIATE-TERM BOND FUND.* The objective of the
Intermediate-Term Bond Fund is to seek maximum long-term total return by
investing primarily in intermediate-term corporate debt securities, U.S.
government securities, mortgage-related securities and asset-backed
securities, as well as money market instruments.
AMERICAN ODYSSEY SHORT-TERM BOND FUND.* The objective of the Short-Term
Bond Fund is to seek maximum long-term total return by investing
primarily in investment- grade, short-term debt securities.
TRAVELERS SERIES TRUST
U.S. GOVERNMENT SECURITIES PORTFOLIO.* The objective of the U.S.
Government Securities Portfolio is the selection of investments from the
point of view of an investor concerned primarily with highest credit
quality, current income and total return. The assets of the U.S.
Government Securities Portfolio will be invested in direct obligations
of the United States, its agencies and instrumentalities.
SOCIAL AWARENESS STOCK PORTFOLIO. The investment objective of the Social
Awareness Stock Portfolio is long-term capital appreciation and
retention of net investment income. The Portfolio seeks to fulfill this
objective by selecting investments, primarily common stocks, which meet
the social criteria established for the Portfolio. Social criteria
currently excludes companies that derive a significant portion of their
revenues from the production of tobacco, tobacco products, alcohol, or
military defense systems, or in the provision of military defense
related services or gambling services.
UTILITIES PORTFOLIO. The objective of the Utilities Portfolio is to
provide current income by investing in equity and debt securities of
companies in the utility industries.
TEMPLETON VARIABLE PRODUCTS SERIES
TEMPLETON BOND FUND.* The objective of the Templeton Bond Fund is high
current income through a flexible policy of investing primarily in debt
securities of companies, governments and government agencies of various
nations throughout the world.
TEMPLETON STOCK FUND. The objective of the Templeton Stock Fund is
capital growth through a policy of investing primarily in common stocks
issued by companies, large and small, in various nations throughout the
world.
TEMPLETON ASSET ALLOCATION FUND.** The objective of the Templeton Asset
Allocation Fund is a high level of total return with reduced risk over
the long term through a flexible policy of investing in stocks of
companies in any nation and debt obligations of companies and
governments of any nation. Changes in the asset mix will be adjusted in
an attempt to capitalize on total return potential produced by changing
economic conditions throughout the world.
25
<PAGE> 29
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND
FIDELITY'S HIGH INCOME PORTFOLIO*. The objective of the High Income
Portfolio is to seek to obtain a high level of current income by
investing primarily in high yielding, lower-rated, fixed-income
securities, while also considering growth of capital. Please read
carefully the complete risk disclosure in the Portfolio's prospectus
before investing.
FIDELITY'S GROWTH PORTFOLIO. The objective of the Growth Portfolio is to
seek capital appreciation. The Portfolio normally purchases common
stocks of well-known, established companies, and small emerging growth
companies, although its investments are not restricted to any one type
of security. Capital appreciation may also be found in other types of
securities, including bonds and preferred stocks.
FIDELITY'S EQUITY-INCOME PORTFOLIO. The objective of the Equity-Income
Portfolio is to seek reasonable income by investing primarily in
income-producing equity securities; in choosing these securities, the
portfolio manager will also consider the potential for capital
appreciation.
FIDELITY'S VARIABLE INSURANCE PRODUCTS FUND II
FIDELITY'S ASSET MANAGER PORTFOLIO.** The objective of the Asset Manager
Portfolio is to seek high total return with reduced risk over the
long-term by allocating its assets among stocks, bonds and short-term
fixed-income instruments.
SMITH BARNEY/TRAVELERS SERIES FUND, INC.
SMITH BARNEY INCOME AND GROWTH PORTFOLIO. The objective of the Income
and Growth Portfolio is current income and long-term growth of income
and capital by investing primarily, but not exclusively, in common
stocks.
ALLIANCE GROWTH PORTFOLIO. The objective of the Growth Portfolio is
long-term growth of capital by investing predominantly in equity
securities of companies with a favorable outlook for earnings and whose
rate of growth is expected to exceed that of the U.S. economy over time.
Current income is only an incidental consideration.
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO. The objective of the
International Equity Portfolio is total return on assets from growth of
capital and income by investing at least 65% of its assets in a
diversified portfolio of equity securities of established non-U.S.
issuers.
PUTNAM DIVERSIFIED INCOME PORTFOLIO.** The objective of the Diversified
Income Portfolio is to seek high current income consistent with
preservation of capital. The Portfolio will allocate its investments
among the U.S. Government Sector, the High Yield Sector, and the
International Sector of the fixed income securities markets. Please read
carefully the complete risk disclosure in the Portfolio's prospectus
before investing.
SMITH BARNEY HIGH INCOME PORTFOLIO.* The investment objective of the
High Income Portfolio is high current income. Capital appreciation is a
secondary objective. The Portfolio will invest at least 65% of its
assets in high-yielding corporate debt obligations and preferred stock.
Please read carefully the complete risk disclosure in the Portfolio's
prospectus before investing.
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<PAGE> 30
MFS TOTAL RETURN PORTFOLIO.** The Total Return Portfolio's objective is
to obtain above-average income (compared to a portfolio entirely
invested in equity securities) consistent with the prudent employment of
capital. Generally, at least 40% of the Portfolio's assets will be
invested in equity securities. Please read carefully the complete risk
disclosure in the Portfolio's prospectus before investing.
SMITH BARNEY MONEY MARKET PORTFOLIO.* The Money Market Portfolio's
objective is maximum current income and preservation of capital by
investing in high quality, short-term money market instruments. An
investment in this fund is neither insured nor guaranteed by the U.S.
Government.
* The Funding Options marked with an asterisk (*) are considered Competing
Funds, and are subject to transfer restrictions as described in the Fixed
Account Appendix on page___. Those marked with two asterisks (**) are not
currently considered Competing Funds, but may be so in the future because of an
allowable change in the Funding Option's investment strategy.
An asset allocation program is available for certain Funding Options under the
Contract. See "Asset Allocation Advice" on page ____.
Certain variable annuity separate accounts and variable life insurance
separate accounts may invest in the Funding Options simultaneously (called
"mixed" and "shared" funding). It is conceivable that in the future it may be
disadvantageous to do so. Although the Company and the Funding Options do not
currently foresee any such disadvantages either to variable annuity Contract
Owners or variable life insurance policyowners, each Funding Option's Board of
Directors intends to monitor events in order to identify any material conflicts
between such Contract Owners and policyowners and to determine what action, if
any, should be taken in response thereto. If a Board of Directors was to
conclude that separate funds should be established for variable life and
variable annuity separate accounts, the variable annuity Contract Owners would
not bear any expenses attendant to the establishment of such separate funds, but
variable annuity Contract Owners and variable life insurance policyowners would
no longer have the economies of scale resulting from a larger combined fund.
The Company reserves the right, subject to compliance with the law, to
substitute the shares of any other registered investment company for the shares
of any Funding Option held by the Separate Account. Substitution may occur if
shares of the Funding Option(s) become unavailable or due to changes in
applicable law or interpretations of law. Current law requires notification to
you of any such substitution and approval of the Securities and Exchange
Commission. The Company also reserves the right, subject to compliance with the
law to offer additional Funding Options.
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<PAGE> 31
INVESTMENT ADVISERS
The Funding Options receive investment management and advisory services
from the following investment professionals:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ALTERNATIVE INVESTMENT ADVISER SUB-ADVISER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund The Travelers Investment Management Janus Capital Corporation
Company (TIMCO)
- ------------------------------------------------------------------------------------------------------------------------------------
High Yield Bond Trust Travelers Asset Management International
- ------------------------------------------------------------------------------------------------------------------------------------
Managed Assets Trust TAMIC TIMCO
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Portfolio TAMIC
- ------------------------------------------------------------------------------------------------------------------------------------
Social Awareness Stock Portfolio Smith Barney Mutual Funds Management Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities Portfolio Smith Barney Mutual Funds Management Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Stock Fund Templeton Investment Counsel, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund Templeton Investment Counsel, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Templeton Bond Fund Templeton Global Bond Managers
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity's High Income Portfolio Fidelity Management & Research Company
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity's Equity-Income Portfolio Fidelity Management & Research Company
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity's Growth Portfolio Fidelity Management & Research Company
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity's Asset Manager Portfolio Fidelity Management & Research Company
- ------------------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund Wells Fargo Nikko Investment Advisors
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey International American Odyssey Funds Management, Inc. Bank of Ireland Asset
Equity Fund Management (U.S.) Limited
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Emerging American Odyssey Funds Management, Inc. Wilke/Thompson Capital
- ------------------------------------------------------------------------------------------------------------------------------------
Opportunities Fund Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Core Equity Fund American Odyssey Funds Management, Inc. Equinox Capital Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Long-Term American Odyssey Funds Management, Inc. Western Asset Management
Bond Fund Company and WLO
Global Management
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Intermediate- American Odyssey Funds Management, Inc. TAMIC
Term Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
American Odyssey Short-Term American Odyssey Funds Management, Inc. Smith Graham & Co. Asset
Bond Fund Managers,L.P.
- ------------------------------------------------------------------------------------------------------------------------------------
Smith Barney Income and Growth Smith Barney Mutual Funds Management Inc.
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Growth Portfolio Smith Barney Mutual Funds Management Inc. Alliance Capital Management L.P
- ------------------------------------------------------------------------------------------------------------------------------------
Smith Barney International Smith Barney Mutual Funds Management Inc.
Equity Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income Portfolio Smith Barney Mutual Funds Management Inc. Putnam Investment Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Smith Barney High Income Portfolio Smith Barney Mutual Funds Management Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Portfolio Smith Barney Mutual Funds Management Inc. Massachusetts Financial Services
Company
- ------------------------------------------------------------------------------------------------------------------------------------
Smith Barney Money Market Portfolio Smith Barney Mutual Funds Management Inc
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERAL TAX CONSIDERATIONS
GENERAL
The Company is taxed as a life insurance company under Subchapter L of
the Internal Revenue Code (the "Code"). The Separate Accounts that form the
investment alternatives described herein are treated as part of the total
operations of the Company and are not taxed separately. Investment income and
gains of a Separate Account that are credited to a variable annuity contract
incur no current federal income tax. Generally, amounts credited to a contract
are not taxable until received by the Contract Owner, participant or
beneficiary, either in the form
28
<PAGE> 32
of Annuity Payments or other distributions. Tax consequences and limits are
described further below for each annuity program.
OWNERSHIP OF THE INVESTMENTS
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contract. In those circumstances, income
and gains from the separate account assets would be includable in the variable
contract owner's gross income. The IRS has stated in published rulings that a
variable contract owner will be considered the owner of separate account assets
if the contract owner possesses incidents of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury has
also announced, in connection with the issuance of regulations concerning
diversification, that those regulations "do not provide guidance concerning the
circumstances in which investor control of the investments of a segregated asset
account may cause the investor (i.e., the Contract Owner), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular Sub-Accounts without being treated as owners of the
underlying assets." As of the date of this prospectus, no such guidance has been
issued.
The ownership rights under the Contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it
determined that the owners were not owners of separate account assets. For
example, a Contract Owner or Participant of this Contract has additional
flexibility in allocating payments and cash values. These differences could
result in the Contract Owner being treated as the owner of the assets of Fund
QP. In addition, the Company does not know what standard will be set forth in
the regulations or rulings which the Treasury is expected to issue, nor does the
Company know if such guidance will be issued. The Company therefore reserves the
right to modify the Contract as necessary to attempt to prevent the Contract
Owner from being considered the owner of a pro rata share of the assets of Fund
QP.
The remaining tax discussion assumes that the Contract qualifies as an
annuity contract for federal income tax purposes.
SECTION 403(b) PLANS AND ARRANGEMENTS
Purchase Payments for tax-deferred annuity contracts may be made by an
employer for employees under annuity plans adopted by public educational
organizations and certain organizations which are tax exempt under Section
501(c)(3) of the Code. Within statutory limits, these payments are not currently
includable in the gross income of the participants. Increases in the value of
the Contract attributable to these Purchase Payments are similarly not subject
to current taxation. The income in the Contract is taxable as ordinary income
whenever distributed.
An additional tax of 10% will apply to any taxable distribution received
by the participant before the age of 59 1/2, except when due to death,
disability, or as part of a series of payments for life or life expectancy, or
made after the age of 55 with separation from service. There are other statutory
exceptions.
29
<PAGE> 33
Amounts attributable to salary reductions and income thereon may not be
withdrawn prior to attaining the age of 59 1/2, separation from service, death,
total and permanent disability, or in the case of hardship as defined by federal
tax law and regulations. Hardship withdrawals are available only to the extent
of the salary reduction contributions and not from the income attributable to
such contributions. These restrictions do not apply to assets held generally as
of December 31, 1988.
Distribution must begin by April 1st of the calendar year following the
calendar year in which the participant attains the age of 70 1/2. Certain other
mandatory distribution rules apply at the death of the participant.
Eligible rollover distributions, including most partial or full
redemptions or "term-for-years" distributions of less than 10 years, are
eligible for direct rollover to another 403(b) contract or to an Individual
Retirement Arrangement (IRA) without federal income tax withholding.
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing trust described in Section
401(a) of the Code and exempt from tax under Section 501(a) of the Code,
Purchase Payments made by an employer are not currently taxable to the
participant and increases in the value of a contract are not subject to taxation
until received by a Participant or beneficiary.
Distributions in the form of Annuity or Income Payments are taxable to
the Participant or beneficiary as ordinary income in the year of receipt. Any
distribution that is considered the participant's "investment in the contract"
is treated as a return of capital and is not taxable. Payments under Income
Option 3 are taxable in full. Certain lump-sum distributions described in
Section 402 of the Code may be eligible for special ten-year forward averaging
treatment for individuals born before January 1, 1936. All individuals may be
eligible for favorable five-year forward averaging of lump-sum distributions.
Certain eligible rollover distributions including most partial and full
surrenders or term-for-years distributions of less than 10 years are eligible
for direct rollover to an eligible retirement plan or to an IRA without federal
income tax withholding.
An additional tax of 10% will apply to any taxable distribution received
by the Participant before the age of 59 1/2, except by reason of death,
disability or as part of a series of payments for life or life expectancy, or at
early retirement at or after the age of 55. There are other statutory
exceptions.
Amounts attributable to salary reductions and income thereon may not be
withdrawn prior to attaining the age of 59 1/2, separation from service, death,
total and permanent disability, or in the case of hardship as defined by federal
tax law and regulations. Hardship withdrawals are available only to the extent
of the salary reduction contributions and not from the income attributable to
such contributions. These restrictions do not apply to assets held generally as
of December 31, 1988.
Distribution must begin by April 1st of the calendar year following the
calendar year in which the participant attains the age of 70 1/2. Certain other
mandatory distribution rules apply at the death of the Participant.
30
<PAGE> 34
SECTION 457 PLANS
Section 457 of the Code allows employees and independent contractors of
state and local governments and tax-exempt organizations to defer a portion of
their salaries or compensation to retirement years without paying current income
tax on either the deferrals or the earnings on the deferrals.
The Owner of contracts issued under Section 457 plans is the employer or
a contractor of the Participant and amounts may not be made available to
Participants (or beneficiaries) until separation from service, retirement or
death or an unforeseeable emergency as determined by Treasury Regulations. The
proceeds of Annuity contracts purchased by Section 457 plans are subject to the
claims of general creditors of the employer or contractor.
Distributions must begin generally by April 1st of the calendar year
following the calendar year in which the Participant attains the age of 70 1/2.
Certain other mandatory distribution rules apply upon the death of the
Participant.
All distributions from plans that meet the requirements of Section 457
of the Code are taxable as ordinary income in the year paid or made available to
the Participant or beneficiary.
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
Under the Employee Retirement Income Security Act of 1974 ("ERISA"), as
amended, certain special provisions may apply to the contract if the Owner of a
Section 403(b) plan contract or certain other tax-benefited contracts requests
that the contract be issued to conform to ERISA or if the Company has notice
that the contract was issued pursuant to a plan that is subject to ERISA.
ERISA requires that certain Annuity Options, withdrawals or other
payments and any application for a loan secured by the contract may not be made
until the Participant has filed a Qualified Election with the plan
administrator. Under certain plans, ERISA also requires that a designation of a
beneficiary other than the Participant's spouse be invalid unless the
Participant has filed a Qualified Election.
A Qualified Election must include either the written consent of the
Participant's spouse, notarized or witnessed by an authorized plan
representative, or the Participant's certification that there is no spouse or
that the spouse cannot be located.
The Company intends to administer all contracts to which ERISA applies
in a manner consistent with the direction of the plan administrator regarding
the provisions of the plan, in accordance with applicable law. Because these
requirements differ according to the plan, a person contemplating the purchase
of an annuity contract should consider the provisions of the plan.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient
will be subject to federal income tax withholding, generally pursuant to Section
3405 of the Code. The application of this provision is summarized below.
31
<PAGE> 35
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(b) PLANS OR
ARRANGEMENTS OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
Plan distributions that are eligible for rollover to an IRA or to
another retirement plan but are not directly rolled over are subject
to a mandatory 20% federal tax withholding. A distribution made
directly to a participant or beneficiary may avoid this result if:
(a) a periodic settlement distribution is elected based upon a life
or life expectancy calculation, or
(b) a complete term-for-years settlement distribution is elected for
a period of ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law is
taken upon the attainment of the age of 70 1/2 or as otherwise
required by law.
A distribution including a rollover that is not a direct rollover
will require the 20% withholding, and a 10% additional tax penalty
(for premature withdrawal) may apply to any amount not actually
rolled over due to 20% withholding. The 20% withholding may be
recovered when the Participant or beneficiary files a personal income
tax return for the year if a rollover was completed within 60 days of
receipt of the funds, except to the extent that the Participant or
spousal beneficiary is otherwise underwithheld or short on estimated
taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
For any payment not subject to mandatory 20% withholding as described
in 1 above, the portion of a non-periodic distribution which
constitutes taxable income will be subject to federal income tax
withholding, to the extent such aggregate distributions exceed $200
for the year, unless the recipient elects not to have taxes withheld.
If an election out is not provided, 10% of the taxable distribution
will automatically be withheld as federal income tax. Election forms
will be provided at the time distributions are requested. This form
of withholding applies to all annuity programs.
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER
THAN ONE YEAR)
The portion of a periodic distribution which constitutes taxable
income will be subject to federal income tax withholding under the
wage withholding tables as if the recipient were married claiming
three exemptions. A recipient may elect not to have income taxes
withheld or have income taxes withheld at a different rate by
providing a completed election form. Election forms will be provided
at the time distributions are requested. This form of withholding
applies to all annuity programs. As of January 1, 1994, a recipient
receiving periodic payments (e.g., monthly or annual payments under
an Annuity Option) which total $13,700 or less per year, will
generally be exempt from the withholding requirements.
Recipients who elect not to have withholding made are liable for payment
of federal income tax on the taxable portion of the distribution. All recipients
may also be subject to penalties under the estimated tax payment rules if
withholding and estimated tax payments are insufficient.
32
<PAGE> 36
Recipients who do not provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
Additionally, United States citizens residing outside of the country, or U.S.
legal residents temporarily residing outside the country, are not permitted to
elect out of withholding.
TAX ADVICE
Because of the complexity of the law and the fact that the tax results
will vary according to the factual status of the individual involved, tax advice
may be needed by a person contemplating purchase of an annuity contract and by
an Owner, participant or beneficiary who may make elections under a contract.
The foregoing description of the federal income tax consequences under these
contracts is not exhaustive and that special rules are provided with respect to
situations not discussed here. It should be understood that if a tax-benefited
plan loses its exempt status, employees could lose some of the tax benefits
described. For further information, a qualified tax adviser should be consulted.
MISCELLANEOUS
VOTING RIGHTS
The Company shall notify the Contract Owner of any Funding Option
shareholders' meeting if the shares held for the Contract Owner's accounts may
be voted at such meetings. The Company shall also send proxy materials and a
form of instruction by means of which the Contract Owner can instruct the
Company with respect to the voting of the Funding Option shares held for the
Contract Owner's account. In connection with the voting of Funding Option shares
held by it, the Company shall arrange for the handling and tallying of proxies
received from Contract Owners. The Company as such, shall have no right, except
as hereinafter provided, to vote any Fund Option shares held by it thereunder
which may be registered in its name or the names of its nominees. The Company
will, however, vote the Funding Option shares held by it in accordance with the
instructions received from the Contract Owners for whose accounts the Funding
Option shares are held. If a Contract Owner desires to attend any meeting at
which shares held for the Contract Owner's benefit may be voted, the Contract
Owner may request the Company to furnish a proxy or otherwise arrange for the
exercise of voting rights with respect to the Funding Option shares held for
such Contract Owner's account. In the event that the Contract Owner gives no
instructions or leaves the manner of voting discretionary, the Company will vote
such shares of the appropriate Funding Option, including any of its own shares,
in the same proportion as shares of that Fund Option for which instructions have
been received.
A Contract Owner or Participant, as appropriate, is entitled to one full
or fractional vote for each full or fractional Accumulation or Annuity Unit
owned. The Contract Owner has voting rights throughout the life of the Contract.
Vested Participants have voting rights for as long as participation in the
Contract continues. Voting rights attach only to Separate Account interests.
During the Annuity period under a Contract the number of votes will
decrease as the assets held to fund Annuity benefits decrease.
33
<PAGE> 37
DISTRIBUTION OF THE CONTRACTS
Tower Square Securities, Inc. ("TSSI") serves as Principal Underwriter for
the securities issued with respect to the Separate Account. The Company is the
custodian of the Separate Account's assets. It is currently anticipated that an
affiliated broker-dealer may become the principal underwriter for the Contracts
during 1996.
The Contracts will be sold by salespersons of TSSI who represent the
Company as insurance and variable annuity agents and who are registered
representatives or Broker-Dealers who have entered into distribution agreements
with TSSI. The compensation paid to sales representatives will not exceed 5%
of payments made under the Contracts. TSSI is registered with the Commission
under the Securities Exchange Act of 1934 as a Broker-Dealer and is a member of
the National Association of Securities Dealers, Inc. TSSI is an indirect wholly
owned subsidiary of Travelers Group Inc.
POSTPONEMENT OF PAYMENT (EMERGENCY PROCEDURE)
Payment of any benefit or values may be postponed whenever (1) the New
York Stock Exchange is closed; (2) when trading on the New York Stock Exchange
is restricted; (3) when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the securities held in the Funding
Options is not reasonably practicable or it is not reasonably practicable to
determine the value of the Funding Option's net assets; or (4) during any other
period when the Securities and Exchange Commission, by order, so permits for the
protection of security holders. Any provision of the Contract which specifies a
Valuation Date will be superseded by this Emergency Procedure.
CONTRACT MODIFICATION
The Company reserves the right to modify the Contract to keep it qualified
under all related law and regulations which are in effect during the term of
this Contract. We will obtain the approval of any regulatory authority needed
for the modifications.
LEGAL PROCEEDINGS
The Company's Counsel with respect to federal laws and regulations
applicable to the issue and sale of the Contracts and with respect to
Connecticut law is Kathleen A. McGah, Esquire, Counsel and Assistant Secretary
of The Travelers Insurance Company. She has passed on all legal matters
affecting the Separate Account. Currently, there are no material legal
proceedings affecting the Separate Account.
34
<PAGE> 38
APPENDIX A: THE FIXED ACCOUNT
Under the Fixed Account, the Company assumes the risk of investment gain or
loss, guarantees a specified interest rate, and, if a Fixed Annuity option is
elected, guarantees a specified periodic payment. The investment gain or loss of
any of the Funding Options does not affect the Fixed Account portion of the
Contract Owner's Cash Value, or the dollar amount of fixed annuity payments made
under any payout option.
Interest will be compounded and credited to the Fixed Account at a daily rate
equivalent to the effective annual interest rate as determined by the Company.
The net interest rate will never be less than 3%. Any interest credited to
amounts allocated to the Fixed Account in excess of 3% per year will be
determined at our sole discretion.
The Company guarantees that, at any time, the Fixed Account Cash Value will
not be less than the amount of the Purchase Payments allocated to the Fixed
Account, plus interest credited as described above, less any applicable premium
taxes or prior surrenders. If the Contract Owner takes a surrender, the amount
available from the Fixed Account will be reduced by any applicable surrender
charge as described under "Charges under the Contract" in this prospectus.
Purchase Payments allocated to the Fixed Account and any transfers made to
the Fixed Account become part of the Company's General Account which supports
insurance and Annuity obligations. Neither the General Account nor any interest
therein is registered under, nor subject to the provisions of the Securities Act
of 1933 or 1940 Act. The Company will invest the assets of the Fixed Account at
its discretion. Investment income from such Fixed Account assets will be
allocated to the Company and to the Contracts participating in the Fixed
Account.
Investment income from the Fixed Account allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The amount of such investment income allocated to
the Contracts will vary from year to year in the sole discretion of the Company
at such rate or rates as the Company prospectively declares from time to time.
TRANSFERS
After the first Contract Year, transfers from the Fixed Account are
permitted, either to the Funding Options or to Contracts not issued by us, but
not exceed 20% per Contract Year, as applicable of the Cash Value in the Fixed
Account valued on each such anniversary. No transfers will be allowed between
the Fixed Account and any Competing Fund in the Plan. Amounts previously
transferred from the Fixed Account to the Funding Options may not be transferred
back to the Fixed Account or to any Competing Fund for a period of at least 3
months from the date of transfer. The Company reserves the right to waive either
of these restrictions in its discretion and/or to limit the number of transfers
to be transferred from the Fixed Account to the Funding Options to not more than
one in any six month period.
Automated transfers from the Fixed Account to any of the Funding Options may
begin at any time. Automated transfers from the Fixed Account may not deplete
your Fixed Account Value in a period of less than twelve months from your
enrollment in the Dollar Cost Averaging Program.
35
<PAGE> 39
DISTRIBUTIONS
As allowed under the Contract and the Plan, you may request
distributions from the Fixed Account at any time. Upon receipt of your Written
Request, we will pay you the applicable Fixed Account Cash Surrender Value.
Distributions from the Fixed Account are processed on a last-in,
first-out basis (LIFO) for interest-crediting purposes. The Cash Surrender Value
will be determined as of the next valuation date following receipt of your
Written Request. We reserve the right to defer payment of Fixed Account values
for up to six months from the date of the Written Request. If a payment is
deferred for more than 30 days from the date the request is received, we will
pay a minimum interest rate of 3% on the amount deferred.
CONTRACT DISCONTINUANCE PROVISION
If the Contract is discontinued, no further Purchase Payments or
transfers or benefit payments will be allowed. On the date we receive your
Written Request to discontinue the Contract or within 31 days after we notify
you in writing of our intent to discontinue the Contract, all Cash Values in the
Individual Accounts will be transferred to Your Account. Any amounts transferred
from the Fixed Account to the Funding Options during the previous 30 days from
the date of discontinuance will be transferred back to the Fixed Account. If
these amounts are not available in the Individual Accounts, the equivalent Cash
Values will be transferred from Your Account.
The Fixed Account value payable upon Contract discontinuance, and the
method of payment are described in you Contract.
36
<PAGE> 40
Appendix B
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific
information and financial statements relating to the Separate Account and the
Company. A list of the contents of the Statement of Additional Information is
set forth below:
The Insurance Company
Principal Underwriter
Distribution and Management Agreement
Valuation of Assets
Performance Information
Independent Accountants
Financial Statements
Copies of the Statement of Additional Information dated __________, 1996 (Form
No. L 12549S) are available without charge. To request a copy, please complete
the coupon found below and mail it to: The Travelers Insurance Company, Annuity
Investor Services -- 5SHS, One Tower Square, Hartford, Connecticut, 06183-9061.
Name: __________________________________________________
Address:________________________________________________
________________________________________________________
37
<PAGE> 41
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 42
STATEMENT OF ADDITIONAL INFORMATION
dated
_______________, 1996
for
THE TRAVELERS FUND QP FOR VARIABLE ANNUITIES
ISSUED BY
THE TRAVELERS INSURANCE COMPANY
This Statement of Additional Information ("SAI") is not a prospectus but relates
to, and should be read in conjunction with, the Group Variable Annuity Contract
Prospectus dated __________, 1996. A copy of the Prospectus may be obtained by
writing to The Travelers Insurance Company, Annuity Services, One Tower Square,
Hartford, Connecticut 06183-9061, or by calling 1-800-842-8573.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 1
PRINCIPAL UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . . 2
DISTRIBUTION AND MANAGEMENT AGREEMENT . . . . . . . . . . . . . . . . . 2
VALUATION OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 3
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . 5
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
<PAGE> 43
THE INSURANCE COMPANY
The Travelers Insurance Company (the "Company"), is a stock insurance
company chartered in 1864 in Connecticut and continuously engaged in the
insurance business since that time. It is licensed to conduct life insurance
business in all states of the United States, the District of Columbia, Puerto
Rico, Guam, the U.S. and British Virgin Islands and the Bahamas. The Company is
an indirect wholly owned subsidiary of Travelers Group Inc. The Company's Home
Office is located at One Tower Square, Hartford, Connecticut 06183.
STATE REGULATION. The Company is subject to the laws of the state of Connecticut
governing insurance companies and to regulation by the Insurance Commissioner of
the state of Connecticut (the "Commissioner"). An annual statement covering the
operations of the Company for the preceding year, as well as its financial
conditions as of December 31 of such year, must be filed with the Commissioner
in a prescribed format on or before March 1 of each year. The Company's books
and assets are subject to review or examination by the Commissioner or his
agents at all times, and a full examination of its operations is conducted at
least once every four years.
The Company is also subject to the insurance laws and regulations of all
other states in which it is licensed to operate. However, the insurance
departments of each of these states generally apply the laws of the jurisdiction
of domicile in determining the field of permissible investments.
THE SEPARATE ACCOUNT. Fund QP meets the definition of a separate account under
the federal securities laws, and will comply with the provisions of the 1940
Act. Additionally, the operations of Fund QP are subject to the provisions of
Section 38a-433 of the Connecticut General Statutes which authorizes the
Commissioner to adopt regulations under it. Section 38a-433 contains no
restrictions on the investments of the Separate Account, and the Commissioner
has adopted no regulations under the Section that affect the Separate Account.
THE FIXED ACCOUNT. The Fixed Account is secured by part of the general assets of
the Company. The general assets of the Company include all assets of the Company
other than those held in Fund QP or any other separate account sponsored by the
Company or its affiliates.
The staff of the Securities and Exchange Commission does not generally review
the disclosure in the prospectus relating to the Fixed Account. Disclosure
regarding the Fixed Account and the general account may, however, be subject to
certain provisions of the federal securities laws relating to the accuracy and
completeness of statements made in the prospectus.
1
<PAGE> 44
PRINCIPAL UNDERWRITER
Tower Square Securities, Inc. ("TSSI"), an affiliate of the Company,
serves as principal underwriter for Fund QP and the Contracts. The offering is
continuous. TSSI is an indirect wholly owned subsidiary of Travelers Group Inc.
and its principal executive offices are located at One Tower Square, Hartford,
Connecticut. It is anticipated that an affiliated broker-dealer may become the
principal underwriter for the Contracts in 1996.
DISTRIBUTION AND MANAGEMENT AGREEMENT
Under the terms of the Distribution and Management Agreement among Fund
QP, the Company and TSSI, the Company provides all administrative services and
mortality and expense risk guarantees related to variable annuity contracts sold
by the Company in connection with the Fund QP. TSSI performs the sales functions
related to the Contracts. The Company reimburses TSSI for commissions paid,
other sales expenses and certain overhead expenses connected with sales
functions. The Company also pays all costs (including costs associated with the
preparation of sales literature); all costs of qualifying the Fund QP and the
variable annuity contract with regulatory authorities; the costs of proxy
solicitation; and all custodian, accountant's and legal fees. The Company also
provides without cost to the Fund QP all necessary office space, facilities, and
personnel to manage its affairs.
VALUATION OF ASSETS
FUNDING OPTIONS: The value of the assets of each Underlying Fund is determined
on each Valuation Date as of the close of the New York Stock Exchange. Each
security traded on a national securities exchange is valued at the last reported
sale price on the Valuation Date. If there has been no sale on that day, then
the value of the security is taken to be the mean between the reported bid and
asked prices on the Valuation Date or on the basis of quotations received from a
reputable broker or any other recognized source.
Any security not traded on a securities exchange but traded in the
over-the-counter-market and for which market quotations are readily available is
valued at the mean between the quoted bid and asked prices on the Valuation Date
or on the basis of quotations received from a reputable broker or any other
recognized source.
Securities traded on the over-the-counter-market and listed securities
with no reported sales are valued at the mean between the last reported bid and
asked prices or on the basis of quotations received from a reputable broker or
other recognized source.
2
<PAGE> 45
Short-term investments for which a quoted market price is available are
valued at market. Short-term investments maturing in more than sixty days for
which there is no reliable quoted market price are valued by "marking to market"
(computing a market value based upon quotations from dealers or issuers for
securities of a similar type, quality and maturity.) "Marking to market" takes
in account unrealized appreciation or depreciation due to changes in interest
rates or other factors which would influence the current fair values of such
securities. Short-term investments maturing in sixty days or less for which
there is no reliable quoted market price are valued at amortized cost which
approximates market.
THE CONTRACT VALUE: The value of an Accumulation Unit on any Valuation Date is
determined by multiplying the value on the immediately preceding Valuation Date
by the net investment factor for the Valuation Period just ended. The net
investment factor is used to measure the investment performance of a Funding
Option from one Valuation Period to the next. The net investment factor for a
Funding Option for any Valuation Period is equal to the sum of 1.000000 plus the
net investment rate (the gross investment rate less any applicable Funding
Option deductions during the Valuation Period relating to the Insurance Charge
and the Funding Option Administrative Charge). The gross investment rate of a
Funding Option is equal to (a - b)/c where:
(a) = investment income plus capital gains and losses (whether realized or
unrealized);
(b) = any deduction for applicable taxes (presently zero); and
(c) = the value of the assets of the Funding Option at the beginning of the
Valuation Period.
The gross investment rate may be either positive or negative. A Funding
Option's investment income includes any distribution whose ex-dividend date
occurs during the Valuation Period.
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of
historical performance for the Funding Options of Fund QP. The Company may
advertise the "standardized average annual total returns" of the Funding Option,
calculated in a manner prescribed by the Securities and Exchange Commission, as
well as the "non-standardized total return," as described below:
STANDARDIZED METHOD. Quotations of average annual total return are
computed according to a formula in which a hypothetical initial investment of
$1,000 is applied to the Funding Option, and then related to ending redeemable
values over one-, five-, and ten-year periods, or for a period covering the time
during which the Funding Option has been in existence if less. These quotations
reflect the deduction of all recurring charges during each period (on a pro rata
basis in the case of fractional periods). The deduction for the semiannual
administrative charge is converted to a percentage of assets based on the actual
fee collected, divided by the average net assets per contract sold under the
Prospectus to which this Statement of Additional Information relates. Each
quotation assumes a total redemption at the end of each period with the
assessment of any applicable sales charge at that time.
NON-STANDARDIZED METHOD. Non-standardized "total return" will be
calculated in a similar manner based on the performance of the Funding Options
over a period of time, usually for the calendar year-to-date, and for the past
one-, three-, five- and seven-year periods. Nonstandardized total return will
not reflect the deduction of any applicable sales charge or the $15 semiannual
contract administrative charge, which, if reflected, would decrease the level of
performance shown. The sales charge is not reflected because the Contract is
designed for long-term investment.
3
<PAGE> 46
GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
Advertisements may include data comparing performance to well-known indices of
market performance (including, but not limited to, the Dow Jones Industrial
Average, the Standard & Poor's (S&P) 500 Index and the S&P 400 Index, the Lehman
Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000 Indices, the Value
Line Index, and the Morgan Stanley Capital International's EAFE Index).
Advertisements may also include published editorial comments and performance
rankings compiled by independent organizations (including, but not limited to,
Lipper Analytical Services, Inc. and Morningstar, Inc.) and publications that
monitor the performance of Fund QP and the Underlying Funds.
For Funding Options that were in existence prior to the date they
became available under Fund QP, the standardized average total return and
non-standardized total return quotations will show the investment performance
that such Funding Options would have achieved (reduced by the applicable
charges) had they been held under the Contract for the period quoted. The total
return quotations are based upon historical earnings and are not necessarily
representative of future performance. An Owner's Contract Value at redemption
may be more or less than original cost.
Average annual total returns for each of the Funding Options computed
according to the standardized and non-standardized methods for the period ending
December 31, 1995 (beginning at inception date) are set forth in the following
table.
TOTAL RETURN CALCULATIONS
FUNDING OPTIONS OF FUND QP
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
STANDARDIZED NON-STANDARDIZED
Inception
1-yr 5-yr 10-yr 1-yr 3-yr 5-yr 7-yr Date
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation Fund
High Yield Bond Trust
Managed Assets Trust
Dreyfus Stock Index Fund
Travelers Series Trust:
U.S. Government Securities Portfolio
Social Awareness Stock Portfolio
Utilities Portfolio
Templeton Variable Products Series Fund
Templeton Bond Fund
Templeton Stock Fund
Templeton Asset Allocation Fund
Variable Insurance Products Fund
Fidelity's High Income Portfolio
Fidelity's Equity-Income Portfolio
Fidelity's Growth Portfolio
Variable Insurance Products Fund II
Fidelity's Asset Manager Portfolio
</TABLE>
4
<PAGE> 47
TOTAL RETURN CALCULATIONS
FUNDING OPTIONS OF FUND QP (Continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
STANDARDIZED NON-STANDARDIZED
Inception
1-yr 5-yr 10-yr 1-yr 3-yr 5-yr 7-yr Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
American Odyssey Funds:
International Equity Fund
Emerging Opportunities Fund
Core Equity Fund
Long-Term Bond Fund
Intermediate-Term Bond Fund
Short-Term Bond Fund
CHART Funds:
Smith Barney/Travelers Series Fund, Inc:
Smith Barney Income and Growth Portfolio
Alliance Growth Portfolio
Smith Barney International Equity Portfolio
Putnam Diversified Income Portfolio
Smith Barney High Income Portfolio
MFS Total Return Portfolio
Smith Barney Money Market Portfolio
</TABLE>
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., certified public independent accountants, 100
Pearl Street, Hartford, Connecticut, are the independent auditors for Fund QP.
The services to be provided to Fund QP include primarily the examination of the
Fund's financial statements.
FINANCIAL STATEMENTS
Financial Statements for Fund QP are not available since the Fund had
no assets as of the effective date of this SAI. Financial statements for The
Travelers Insurance Company are included in this SAI.
5
<PAGE> 48
STATEMENT OF ADDITIONAL INFORMATION
FUND QP
Group Variable Annuity Contract
issued by
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
L-XXXXXS (_______, 1996)
6
<PAGE> 49
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The financial statements of the Registrant are not provided since the
Registrant will have no assets prior to the effective date of the
Registration Statement.
The consolidated financial statements of The Travelers Insurance Company
and Subsidiaries and the Reports of Independent Accountants, will be
provided in a subsequent pre-effective amendment.
(b) Exhibits
1. Resolution of The Travelers Insurance Company Board of Directors
authorizing the establishment of the Registrant.
2. Exempt.
3(a). Form of Distribution and Management Agreement among the
Registrant, The Travelers Insurance Company and Tower Square
Securities, Inc.
3(b). Form of Selling Agreement.
4. Form of Variable Annuity Contract(s).
5. None.
6(a). Charter of The Travelers Insurance Company, as amended on October
19, 1994. (Incorporated herein by reference to Exhibit 3(a)(i) to
Registration Statement on Form S-2, File No. 33-58677, filed via
Edgar on April 18, 1995.)
6(b). By-Laws of The Travelers Insurance Company, as amended on October
20, 1994. (Incorporated herein by reference to Exhibit 3(b)(i) to
the Registration Statement on Form S-2, File No. 33-58677, filed
via Edgar on April 18, 1995.)
7. None.
8. None.
9. Opinion of Counsel as to the legality of securities being
registered.
10. Not Applicable.
11. Not Applicable.
12. None
<PAGE> 50
13. Schedule for computation of each performance quotation. To be
filed by amendment.
14. Representation concerning reliance upon No-Action Letter IP-6-88.
15. Powers of Attorney authorizing Jay S. Fishman or Ernest J. Wright
as signatory for Robert I. Lipp, Michael A. Carpenter, Charles O.
Prince III, Marc P. Weill, Irwin R. Ettinger, Donald T. DeCarlo
and Christine B. Mead.
27. Financial Data Schedule. (To be filed by amendment.)
<PAGE> 51
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- --------------
<S> <C>
Robert I. Lipp* Director and Chairman
Michael A. Carpenter* Director, President and Chief Executive Officer
Jay S. Fishman* Director, Vice Chairman and Chief Financial Officer
Charles O. Prince III** Director
Marc P. Weill** Director, Senior Vice President and Chief Investment Officer
Irwin R. Ettinger** Director
Donald T. DeCarlo* Director, Senior Vice President, General Counsel
and Secretary
Stuart Baritz** Senior Vice President
Jay S. Benet* Senior Vice President
George C. Kokulis* Senior Vice President
Warren H. May* Senior Vice President
Christine B. Mead* Vice President and Controller
William H. White* Vice President and Treasurer
Ian R. Stuart* Vice President and Financial Officer
Kathleen A. D'Auria* Vice President
Charles N. Vest* Vice President and Actuary
Robert Hamilton* Second Vice President
Bethann C. Maas* Second Vice President
Elizabeth Charron* Second Vice President
Ernest J. Wright* Counsel and Assistant Secretary
Kathleen A. McGah* Counsel and Assistant Secretary
Principal Business Address:
* The Travelers Insurance Company **Travelers Group Inc.
One Tower Square 388 Greenwich Street
Hartford, CT 06183 New York, N.Y. 10013
</TABLE>
<PAGE> 52
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
To be filed by Amendment
<PAGE> 53
Item 27. Number of Contract Owners
Not Applicable.
Item 28. Indemnification
Section 33-320a of the Connecticut General Statutes ("C.G.S.") regarding
indemnification of directors and officers of Connecticut corporations provides
in general that Connecticut corporations shall indemnify their officers,
directors and certain other defined individuals against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses actually incurred
in connection with proceedings against the corporation. The corporation's
obligation to provide such indemnification generally does not apply unless (1)
the individual is successful on the merits in the defense of any such
proceeding; or (2) a determination is made (by persons specified in the
statute) that the individual acted in good faith and in the best interests of
the corporation; or (3) the court, upon application by the individual,
determines in view of all of the circumstances that such person is fairly and
reasonably entitled to be indemnified, and then for such amount as the court
shall determine. With respect to proceedings brought by or in the right of the
corporation, the statute provides that the corporation shall indemnify its
officers, directors and certain other defined individuals, against reasonable
expenses actually incurred by them in connection with such proceedings, subject
to certain limitations.
C.G.S. Section 33-320a provides an exclusive remedy; a Connecticut corporation
cannot indemnify a director or officer to an extent either greater or less than
that authorized by the statute, e.g., pursuant to its certificate of
incorporation, by-laws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Travelers Group Inc. also provides liability insurance for its directors and
officers and the directors and officers of its subsidiaries, including the
Depositor. This insurance provides for coverage against loss from claims made
against directors and officers in their capacity as such, including, subject to
certain exceptions, liabilities under the Federal securities laws.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liability (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE> 54
Item 29. Principal Underwriter
(a) In addition to The Travelers Separate Account QP for Variable Annuities,
Tower Square Securities, Inc. also serves as the principal underwriter
for:
The Travelers Growth and Income Stock Account for Variable Annuities
The Travelers Quality Bond Account for Variable Annuities
The Travelers Money Market Account for Variable Annuities
The Travelers Timed Growth and Income Stock Account for Variable Annuities
The Travelers Timed Short-Term Bond Account for Variable Annuities
The Travelers Timed Aggressive Stock Account for Variable Annuities
The Travelers Timed Bond Account for Variable Annuities
The Travelers Fund U for Variable Annuities
The Travelers Fund VA for Variable Annuities
The Travelers Fund UL for Variable Life Insurance
The Travelers Fund UL II for Variable Life Insurance
The Travelers Fund BD for Variable Annuities
The Travelers Fund BD II for Variable Annuities
The Travelers Variable Life Insurance Separate Account One
The Travelers Variable Life Insurance Separate Account Three
The Travelers Fund ABD for Variable Annuities
The Travelers Fund ABD II for Variable Annuities
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ --------------------- ---------------------
<S> <C>
Russell H. Johnson Chairman of the Board -----
and Chief Executive Officer
Donald R. Munson, Jr. Director, President and
Chief Operating Officer -----
George C. Kokulis Director -----
Gregory C. Macdonald Director -----
Robert C. Hamilton Director and Senior Vice President -----
Thomas P. Tooley Vice President, Life Marketing -----
George A. Ryan Vice President -----
Jeffrey A. Barker Regional Vice President -----
Walter Melnik, Jr. Regional Vice President -----
Raymond W. Sheridan Regional Vice President -----
William F. Scully, III Treasurer -----
William H. White Assistant Treasurer -----
Charles B. Chamberlain Assistant Treasurer -----
George M. Quaggin Assistant Treasurer -----
Kathleen A. McGah General Counsel and Secretary -----
Cynthia P. Macdonald Chief Compliance Officer -----
John J. Williams, Jr. Assistant Compliance Officer -----
Susan M. Curcio Operations Manager -----
</TABLE>
* Principal business address: One Tower Square, Hartford, Connecticut
06183
<PAGE> 55
(c) Not Applicable.
Item 30. Location of Accounts and Records
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The undersigned Registrant hereby undertakes:
(a) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial statements
in the registration statement are never more than sixteen months old for
so long as payments under the variable annuity contracts may be accepted;
(b) To include either (1) as part of any application to purchase a contract
offered by the prospectus, a space that an applicant can check to request
a Statement of Additional Information, or (2) a post card or similar
written communication affixed to or included in the prospectus that the
applicant can remove to send for a Statement of Additional Information;
(c) To deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly upon
written or oral request; and
(d) To include in any registration statement filed in connection with a
contract used as a funding vehicle for retirement plans meeting the
requirements of Section 403(b) of the Internal Revenue Code, a
representation that the Registrant is relying upon No-Action Letter
IP-6-88 issued to the American Council of Life Insurance.
<PAGE> 56
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on its
behalf, in the City of Hartford, and State of Connecticut, on this 11th day of
January, 1996.
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
(Registrant)
THE TRAVELERS INSURANCE COMPANY
(Depositor)
By: /s/Jay S. Fishman
-----------------------
Jay S. Fishman
Vice Chairman and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated on January 11, 1996.
*ROBERT I. LIPP Director, Chairman of the Board
- ---------------
(Robert I. Lipp)
*MICHAEL A. CARPENTER Director, President and Chief Executive Officer
- ---------------------
(Michael A. Carpenter)
/s/JAY S. FISHMAN Director, Vice Chairman and
- ----------------- Chief Financial Officer
(Jay S. Fishman)
*CHARLES O. PRINCE III Director
- -----------------------
(Charles O. Prince III)
*MARC P. WEILL Director
- --------------
(Marc P. Weill)
*IRWIN R. ETTINGER Director
- ------------------
(Irwin R. Ettinger)
*DONALD T. DeCARLO Director
- ------------------
(Donald T. DeCarlo)
/s/CHRISTINE B. MEAD Vice President and Controller
- --------------------
(Christine B. Mead)
*By: /s/Jay S. Fishman
--------------------------------
Jay S. Fishman, Attorney-in-Fact
<PAGE> 57
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- --- ----------- ----------------
<S> <C> <C>
1. Resolution of The Travelers Insurance Company Electronically
Board of Directors authorizing the establishment
of the Registrant.
3(a). Form of Distribution and Management Agreement Electronically
among the Registrant, The Travelers Insurance
Company and Tower Square Securities, Inc.
3(b). Form of Selling Agreement. Electronically
4. Form of Variable Annuity Contract(s). Electronically
6(a). Charter of The Travelers Insurance Company, as
amended on October 19, 1994. (Incorporated herein
by reference to Exhibit 3(a)(i) to the Registration
Statement on Form S-2, File No. 33-58677, filed via
Edgar on April 18, 1995.)
6(b). By-laws of The Travelers Insurance Company, as
amended on October 20, 1994. (Incorporated herein
by reference to Exhibit 3(b)(i) to the Registration
Statement on Form S-2, File No. 33-58677, filed via
Edgar on April 18, 1995.)
9. Opinion of Counsel as to the legality of securities being Electronically
registered by Registrant.
13. Schedule of Computation of Total Return Calculations. To be filed by
amendment
14. Representation concerning reliance upon No-Action Electronically
Letter IP-6-88.
15. Powers of Attorney authorizing Jay S. Fishman or Electronically
Ernest J. Wright as signatory for Robert I. Lipp,
Michael A Carpenter, Charles O. Prince III,
Marc P. Weill, Irwin R. Ettinger, Donald T. DeCarlo
and Christine B. Mead.
27 Financial Data Schedule. To be filed by
amendment
</TABLE>
<PAGE> 1
EXHIBIT 1
CERTIFICATE
I, ERNEST J. WRIGHT, Assistant Secretary of THE TRAVELERS INSURANCE
COMPANY, DO HEREBY CERTIFY that by unanimous consent action of the Board of
Directors of The Travelers Insurance Company effective the 22nd day of October,
1993, the following resolution was adopted:
VOTED: That pursuant to authority granted by Section 38a-433 of the
Connecticut General Statutes, the Chairman of the Board, the President
or Chief Investment Officer, or any one of them acting alone, for the
purpose of doing variable life insurance or variable annuity business,
is authorized to establish a separate account or accounts to invest in
shares of investment companies pursuant to plans and contracts issued
and sold by the Company in connection therewith.
VOTED: That the proper officers are authorized to take such action as may be
necessary to register as unit investment trust investment companies
under the Investment Company Act of 1940 the separate account or
accounts to be established to hold shares of investment companies; to
file any necessary or appropriate exemptive requests, and any
amendments thereto, for such separate account or accounts under the
Investment Company Act of 1940; to file one or more registration
statements, and any amendments, exhibits and other documents thereto,
in order to register plans and contracts of the Company and interests
in such separate account or accounts in connection therewith under the
Securities Act of 1933; and to take any and all action as may in
their judgment be necessary or appropriate in connection therewith.
I FURTHER CERTIFY that by unanimous consent action of the Board of
Directors of The Travelers Insurance Company effective the 21st day of
September, 1994, the following resolution was adopted:
VOTED: That each officer and director who may be required, on their own
behalf and in the name and on behalf of the Company, to execute one or
more registration statements, and any amendments thereto, under the
Securities Act of 1933 and the Investment Company Act of 1940 relating
to the separate account or accounts to be established to invest in
shares of investment companies is authorized to execute a power of
attorney appointing representatives to act as their attorney and agent
to execute said registration statement, and any amendments thereto, in
their name, place and stead; and that the Secretary, or any Assistant
Secretary designated by the Secretary, is designated and appointed the
agent for service of process of the Company under the Securities Act
of 1933 and the Investment Company Act of 1940 in connection with such
registration statement, and any amendments thereto, with all the
powers incident to such appointment.
AND I DO FURTHER CERTIFY that the foregoing action of the said Board
of Directors is still in full force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of THE
TRAVELERS INSURANCE COMPANY at Hartford, Connecticut, this 11th day of January,
1996.
/s/ ERNEST J. WRIGHT
---------------------
SEAL Ernest J. Wright
Assistant Secretary
<PAGE> 1
EXHIBIT 3(a)
FORM OF
DISTRIBUTION AND MANAGEMENT AGREEMENT
DISTRIBUTION AND MANAGEMENT AGREEMENT made this __th day of January,
1996, by and among The Travelers Insurance Company, a Connecticut stock
insurance company (hereinafter the "Company"), Tower Square Securities, Inc., a
Connecticut general business corporation (hereinafter "TSSI"), and The
Travelers Separate Account QP for Variable Annuities (hereinafter "Separate
Account QP"), a separate account of the Company established on December 26,
1995 by its President and Chief Executive Officer pursuant to a resolution of
the Company's Board of Directors, pursuant to Section 38a-433 of the
Connecticut General Statutes.
1. The Company hereby agrees to provide all administrative services
relative to variable annuity contracts and revisions thereof (hereinafter
"Contracts") sold by the Company, the net proceeds of which or reserves for
which are maintained in Separate Account QP.
2. TSSI hereby agrees to perform all sales functions relative to the
Contracts. The Company agrees to reimburse TSSI for commissions paid, other
sales expenses and properly allocable overhead expenses incurred in
performance thereof.
3. For providing the administrative services referred to in paragraph
1 above and reimbursing TSSI for the sales functions referred to in paragraph 2
above, the Company will receive the deductions for sales and administrative
expenses which are stated in the Contracts.
4. The Company will furnish at its own expense and without cost to
Separate Account QP the administrative expenses of Separate Account QP,
including but not limited to:
(a) office space in the offices of the Company or in such other place
as may be agreed upon from time to time, and all necessary office
facilities and equipment;
(b) necessary personnel for managing the affairs of Separate Account
QP, including clerical, bookkeeping, accounting and other office
personnel;
(c) all information and services, including legal services, required in
connection with registering and qualifying Separate Account QP or
the Contracts with federal and state regulatory authorities,
preparation of registration statements and prospectuses, including
amendments and revisions thereto, and annual, semi-
<PAGE> 2
annual and periodic reports, notices and proxy solicitation
materials furnished to variable annuity Contract Owners or
regulatory authorities, including the costs of printing and mailing
such items;
(d) the costs of preparing, printing, and mailing all sales literature;
(e) all registration, filing and other fees in connection with
compliance requirements of federal and state regulatory authorities;
(f) the charges and expenses of any custodian or depository appointed by
Separate Account QP for the safekeeping of its cash, securities and
other property; and
(g) the charges and expenses of independent accountants retained by
Separate Account QP.
5. The services of the Company and TSSI to Separate Account QP
hereunder are not to be deemed exclusive and the Company and TSSI shall be free
to render similar services to others so long as its services hereunder are not
impaired or interfered with thereby.
6. The Company agrees to guarantee that the annuity payments will not
be affected by mortality experience (under Contracts the reserves for which are
invested in Separate Account QP) and as such assumes the risks (a) that the
actuarial estimate of mortality rates among annuitants may prove erroneous and
that reserves set up on the basis of such estimates will not be sufficient to
meet the Company's variable annuity payment obligations, and (b) that the
charges for services and expenses of the Company set forth in the Contracts may
not prove sufficient to cover its actual expenses. For providing these
mortality and expense risk guarantees, the Company will receive from Separate
Account QP an amount per valuation period of Separate Account QP, as provided
from time to time.
7. This Agreement will be effective on the date executed, and will
remain effective until terminated by any party upon sixty (60) days notice;
provided, however, that this agreement will terminate automatically in the
event of its assignment by any of the parties hereto.
8. Notwithstanding termination of this Agreement, the Company shall
continue to provide administrative services and mortality and expense risk
guarantees provided for herein with respect to Contracts in effect on the date
of termination, and
-2-
<PAGE> 3
the Company shall continue to receive the compensation provided under this
Agreement.
9. This Agreement is subject to the provisions of the Investment
Company Act of 1940, as amended, and the rules of the Securities and Exchange
Commission.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunto duly authorized and, in the case
of the Company and TSSI, seals to be affixed as of the day and year first above
written.
THE TRAVELERS INSURANCE COMPANY
(Seal)
By:____________________________________
Title:_________________________________
ATTEST:
_____________________________________
Assistant Secretary
THE TRAVELERS SEPARATE ACCOUNT QP
FOR VARIABLE ANNUITIES
By:____________________________________
Title:_________________________________
WITNESS:
______________________________________
TOWER SQUARE SECURITIES, INC.
By:____________________________________
Title:_________________________________
ATTEST: (SEAL)
______________________________________
Corporate Secretary
-3-
<PAGE> 1
EXH-3(b)
SELLING AGREEMENT
FOR VARIABLE CONTRACTS
THIS AGREEMENT, effective ____________________, is made by TOWER SQUARE
SECURITIES, INC., (hereafter referred to as TSSI) as the Distributor, and
______________________________________________________________________________
__________________________________________________, (hereafter referred to as
Broker/Dealer).
TSSI and the Broker/Dealer enter into this agreement for the purpose of
authorizing the Broker/Dealer, through its licensed individual agents as
described in paragraph 3, to solicit applications for such variable life
insurance, variable annuity and modified guaranteed annuity contracts (the
"Contract(s)") as may be issued by The Travelers Insurance Company, the
Travelers Life and Annuity Company and any affiliated companies (hereafter
referred to as the Insurance Companies), and identified by policy form in the
Compensation Schedules relating to this agreement as such schedules may be
amended from time to time. The parties represent and agree as follows:
1. The Insurance Companies are engaged in the issuance of the Contracts in
accordance with federal securities laws and the applicable insurance laws
of those states in which the Contracts have been qualified for sale. The
Contracts may be considered securities under the Securities Act of 1933;
therefore, distribution of the Contracts is made through TSSI as a
registered Broker/Dealer under the Securities Exchange Act of 1934 and as a
member of the National Association of Securities Dealers, Inc. ("NASD").
The terms of the offering of the Contracts are more particularly described
in the Prospectus(es) for the Contracts.
2. The Broker/Dealer certifies that it is a registered Broker/Dealer under the
Securities Exchange Act of 1934 and a member of the NASD. The Broker/Dealer
agrees to abide by all rules and regulations of the NASD and to comply with
all applicable state and federal laws and the rules and regulations of the
authorized regulatory agencies affecting the sale of the Contracts.
3. The Broker/Dealer will select persons whom it will employ and supervise and
who will be trained and qualified to solicit applications for the Contracts
in conformance with applicable state and federal laws and regulations.
Persons so trained and qualified will be registered representatives of the
Broker/Dealer in accordance with the rules of the NASD and they will be
properly licensed in accordance with the state insurance laws of those
jurisdictions in which the Contracts may lawfully be distributed and in
which they solicit applications for such Contracts. The Insurance Companies
shall have ultimate authority to determine whether they shall appoint or
terminate a particular registered representative as an agent of the
Insurance Companies with the various state insurance departments.
4. The Broker/Dealer will review all contract proposals and applications for
suitability and for completeness and correctness as to form. The
Broker/Dealer will promptly, but in no case later than the end of the next
business day following receipt by the Broker/Dealer, forward to the
applicable Insurance Company, at addresses provided, all applications found
suitable and in good form, together with any payments received with such
applications without deduction or reduction. The Broker/Dealer will
immediately return to the applicant all applications together with any
payments received therewith deemed by the Broker/Dealer to be unsuitable or
not complete and correct as to form. The Insurance Companies reserve the
right to reject any Contract application and return any payment made in
connection with an application which is rejected. Contracts issued on
applications accepted by the Insurance Companies will be forwarded to the
Broker/Dealer or at the direction of the Broker/Dealer to the registered
representative for delivery to the Contract Owner. The Broker/Dealer shall
obtain and retain a receipt for each Contract which the Broker/Dealer
delivers.
<PAGE> 2
2
5. The Broker/Dealer will perform the selling functions required by this
Agreement only in accordance with the terms and conditions of the then
current prospectus(es) applicable to the Contract and will make no
representations not included in the prospectus or in any authorized
supplemental material. No sales solicitation, including the delivery of
supplemental sales literature or other such materials, shall occur, be
delivered to, or used with a prospective purchaser unless accompanied or
preceded by appropriate and then-current prospectus(es). Any material
prepared or used by the Broker/Dealer or its registered representative,
which describes in whole or in part or refers by name or form to any of the
Insurance Companies' Contracts or underlying funds or uses the name of the
Insurance Companies, TSSI, or The Travelers Group, Inc., or the logos or
service marks of any of them, or the name, logos or service marks of any
"Affiliated Company" of any of them, as that term is defined in Section
2(a)(2) of the Investment Company Act of 1940, must be approved by TSSI in
writing prior to any such use.
6. Compensation payable to the Broker/Dealer on sales of the Contracts
solicited by the Broker/Dealer will be paid to the Broker/Dealer, or as
necessary to meet any and all legal requirements, to a licensed insurance
affiliate, in accordance with the Compensation Schedule(s) relating to this
agreement as they may be amended from time to time and are in effect at the
time the Contract payments are received by the applicable Insurance Company
(in the case of annuities) or at the time the applications are received (in
the case of life insurance). In the event compensation is paid to the
licensed insurance agency affiliate as described in the preceding sentence,
such payment will be reflected in the Broker/Dealer's "Focus" reports, and
in its fee assessment reports filed with the NASD. The Insurance Companies
and TSSI reserve the privilege of revising the Compensation Schedules at
any time.
7. If the Insurance Companies return all or a portion of a premium paid with
respect to a Contract, Broker/Dealer shall be obligated to refund to TSSI
applicable commissions on the amount of such premium only where:
(a) the Contract solicited is returned not taken under the policy "free
look" provisions;
(b) premiums are refunded due to overpayments, errors in billing or in the
timing of automatic premium collection deductions, or errors resulting
in policy reissue;
(c) the check delivered in payment of any contract premium does not clear
and the premium collection deductions, or errors resulting in policy
reissue;
(d) the Contract is terminated or there is a refund of premium and an act,
error or omission of the Broker/Dealer or its registered
representative materially contributed to the termination of the
Contract or the need to return premium;
(e) the application is rejected by the Insurance Company;
(f) the Insurance Company is directed by a judicial or regulatory
authority to return premium without assessment of a surrender charge;
(g) the applicant's initial premium on a 1035 exchange is returned because
the expected rollover amount from another Contract is not transferred
due to the exchange not meeting the legal requirements to qualify for
a tax-free exchange;
(h) the Insurance Company returns unearned premium on a life insurance
contract as required by the provisions of the contract;
<PAGE> 3
3
(i) the Insurance Company determines that it has a legal liability to
return premiums on a life insurance contract within the first year
after the Contract is issued; or
(j) the Insurance Company and Broker/Dealer mutually agree to return all
or a portion of a premium paid with respect to a Contract.
8. If any Contract is repurchased at any time or if within forty-five (45)
days after confirmation by the Insurance Companies of any premium payments
credited to a Contract, that Contract is tendered for full or partial
surrender, or the life at risk thereunder dies, then, at the option of the
Insurance Companies or TSSI no commission will be payable with respect to
said premium payments and any commission previously paid for said premium
payments must be refunded to the applicable Insurance Company or TSSI as
directed by TSSI. TSSI agrees to notify the Broker/Dealer within ten (10)
business days after the request for repurchase or redemption, or
notification or death of the life at risk is received by the applicable
Insurance Company.
9. This Agreement may not be assigned except by mutual consent and will
continue, subject to the termination by any party on written notice to the
other party, except that in the event the Broker/Dealer ceases to be a
registered Broker/Dealer or a member of the NASD, this Agreement will
immediately terminate. TSSI reserves the right to designate, at its sole
discretion, an alternative Principal Underwriter for the distribution of
the Contracts covered by this Agreement. The designation will constitute
substitution of parties to this Agreement with assumption of the rights and
obligations created by this Agreement as applicable.
10. Failure of any party to terminate this Agreement for any of the causes set
forth in this agreement will not constitute a waiver of the right to
terminate this Agreement at a later time for any of these causes.
11. For the purpose of compliance with any applicable federal or state
securities laws or regulations promulgated under them, the Broker/Dealer
acknowledges and agrees that in performing the Broker/Dealer services
covered by this Agreement, it is acting in the capacity of an independent
broker and dealer as defined by the By-Laws of the NASD and not as an agent
or employee of either TSSI or any registered investment company.
The Broker/Dealer represents and warrants that it is authorized and
licensed as an agent under applicable state insurance laws to solicit,
negotiate and effect the contracts of insurance contemplated hereunder. In
the event the Broker/Dealer is not licensed as such, an insurance agency
affiliated with the Broker/Dealer shall be licensed as an agent under
applicable state insurance laws to solicit, negotiate and effect the
contracts of insurance contemplated hereunder.
For the purpose of compliance with any applicable state insurance laws or
regulations promulgated under them, the Broker/Dealer acknowledges and
agrees that solely in performing the insurance-selling functions reflected
by this agreement, it or its registered representative is acting as the
agent of the Insurance Companies, and in that capacity is authorized only
to solicit applications from the public for the Contracts. Such Contracts
will not become effective until such applications are accepted after
underwriting review by the Insurance Companies at their Home Office.
In furtherance of its responsibilities as a Broker/Dealer, the
Broker/Dealer acknowledges that it is responsible for compliance on any
business it produces concerning the Contracts. No Broker/Dealer will be
entitled to compensation with respect to any application for or payment
credited to, any Contract(s) that is rejected by the Insurance Companies in
the event the Insurance Companies or TSSI determine the solicitation or
obtaining of purchasers, applications or payments by the Broker/Dealer or
any of its Associated persons was done in
<PAGE> 4
4
violation of the securities or insurance laws of the United States or any
state or other jurisdiction.
No party to this Agreement will be liable for any obligation, act or
omission of the other. Each party to this Agreement will hold harmless and
indemnify the (1) Registered Investment Companies which are used to fund
the Contracts, (2) Insurance Companies, (3) TSSI, and (4) the
Broker/Dealer, as appropriate, for any loss or expense suffered as a result
of the violation or noncompliance by that party or the Associated persons
of that party of any applicable law or regulation or any provision of the
Agreement; provided, however, that no party or any of its employees or
agents will be liable to the other party for any direct, special or
consequential damages arising out of or in connection with the performance
of any services pursuant to the Agreement.
12. All notices to the Insurance Companies or TSSI relating to this Agreement
should be sent to the attention of The Travelers Insurance Companies, FS
Law Department, One Tower Square, Hartford, CT 06183. All notices to the
Broker/Dealer will be duly given if mailed or faxed to the address shown
below.
13. The terms "Associated Person", "member" and "rules of the Corporation" as
used herein shall be defined consistently with the definition of similar
terms as contained in Article I of the NASD By-Laws. This Agreement will be
construed in accordance with the laws of the State of Connecticut.
In reliance on the representations set forth and in consideration of the
undertakings described herein, the parties represented below do hereby contract
and agree.
TOWER SQUARE SECURITIES, INC. The Broker/Dealer
By: ___________________________ __________________________________
Title: ___________________________ __________________________________
Street Address
Date: ___________________________ __________________________________
By: __________________________________
Title: __________________________________
Taxpayer I.D.: __________________________________
Date: __________________________________
Fax: __________________________________
<PAGE> 1
EXHIBIT 4
--FORM OF VARIABLE ANNUITY CONTRACT--
THE TRAVELERS INSURANCE COMPANY - ONE TOWER SQUARE - HARTFORD CT - 06183
A STOCK COMPANY
We are pleased to provide You the benefits of this annuity contract. Please read
all attached forms carefully.
The contract is subject to the terms and conditions stated on the attached
pages, all of which are a part of it. The contract is issued in consideration of
the Purchase Payments.
RIGHT TO EXAMINE THIS CONTRACT
If this contract is returned to Us at Our Office or to Our Agent to be
canceled within ten days after its delivery to You, We will pay You the
Cash Value determined as of the next Valuation Date after We receive
the Written Request at Our Office, plus any Premium Tax charges or
contract charges paid. After the contract is returned, it will be
considered as never in effect.
Executed at Hartford, Connecticut
[Sig]
Chairman
This is a legal contract between You and Us. PLEASE READ YOUR CONTRACT
CAREFULLY.
FLEXIBLE PREMIUM GROUP VARIABLE ANNUITY CONTRACT
TAX QUALIFIED
Elective Options Non-Participating
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF THE UNDERLYING FUNDS, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNT.
Specimen Registered Allocated Contract
<PAGE> 2
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<S> <C>
Contract Specifications Page 2
Definitions Page 6
Purchase Payments Page 8
General Contract Provisions Page 8
Valuation Information Page 9
Transfers Between Underlying Funds Page 10
Transfers from Underlying Funds to Contracts not Issued by Us Page 10
Transfers from Other Contracts Issued by Us Page 11
Transfers to Other Contracts Issued by Us Page 11
Transfers from Contracts not Issued by Us Page 11
Distributions from the Contract Page 11
Contract Charges Page 11
Death Benefit Provisions Page 12
Account Termination Provisions Page 12
Contract Discontinuance Provisions Page 12
Settlement Provisions Page 13
</TABLE>
Any Riders or Endorsements follow the Life Annuity Tables.
Page 1
<PAGE> 3
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CONTRACT SPECIFICATIONS
- --------------------------------------------------------------------------------
<S> <C>
CONTRACT OWNER TRUSTEE OF THE X RETIREMENT PLAN
PLAN NAME THE X RETIREMENT PLAN
CONTRACT NUMBER SPECIMEN
CONTRACT DATE 12/01/95
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PURCHASE PAYMENT/TERMINATION AMOUNTS
- ------------------------------------
<S> <C>
Minimum Average Purchase Payment Amount: $1,000 per Individual Account per Contract Year
Maximum Purchase Payment Amount: $3,000,000 per contract without prior approval by Our Office
Termination Amount: $2,000 per Individual Account, $20,000 per contract
</TABLE>
AMOUNTS DEDUCTED ON SURRENDER:
<TABLE>
<CAPTION>
[Years since Purchase Payment Percent of Purchase Payments
was made (not previously surrendered)
- ----------------------------- ----------------------------
<S> <C>
1 - 5 [5%]
6 and thereafter 0%
</TABLE>
For the purpose of determining the amounts deducted on Surrender, distributions
are processed against the Purchase Payments in the order in which they came into
the contract on a First-In, First-Out (FIFO) basis, and then against earnings on
those payments.]
<TABLE>
<CAPTION>
[Contract Year Surrender Charge
- -------------- ----------------
<S> <C>
1 5%
2 5%
3 4%
4 4%
5 3%
6 3%
7 2%
8 2%
9 and thereafter 0%
</TABLE>
For the purpose of determining the amounts deducted on Surrender, the surrender
charge is calculated as a percentage of the Cash Value being surrendered.]
Page 2
<PAGE> 4
- --------------------------------------------------------------------------------
CONTRACT SPECIFICATIONS
- --------------------------------------------------------------------------------
Allowable distributions prior to Contract Discontinuance not subject to amounts
deducted on Surrender: retirement, Separation from Service, loans, hardship
withdrawals (as defined by the Internal Revenue Code), death, disability (as
defined by the Internal Revenue Code section 72 [m] [7]), minimum required
distributions at age 70 1/2, return of Excess Plan Contributions, certain Plan
expenses as mutually agreed upon, transfers to an employer stock fund, and
annuitization under this contract to another contract issued by Us.
For distributions subject to amounts deducted on Surrender, the Cash Surrender
Value of Your Account or an Individual Account will be paid to satisfy the
requested distribution. For allowable distributions not subject to amounts
deducted on Surrender, the Cash Value of Your Account or the Individual Account
will be paid to satisfy the requested distribution.
[Amounts deducted on Surrender will apply to allowable distributions made to
highly compensated employees until after the fifth Contract Year.]
For contracts issued to tax deferred annuity plans, deferred compensation plans,
or combined qualified plans/tax deferred annuity plans, after the first Contract
Year and to the extent permitted under current law, You may take partial
surrenders annually of up to 10% of the Cash Value in Your Account as of the
first Valuation Date of any given Contract Year without imposition of amounts
deducted on Surrender. Similarly, after the first Contract Year, Participants in
such plans may take partial surrenders annually of up to 10% of the Cash Value
in their Individual Accounts as of the first Valuation Date of any given
Contract Year with out imposition of amounts deducted on Surrender.
SEMIANNUAL ACCOUNT CHARGE: [$15.00]
This charge is assessed in June and December of each year.
UNDERLYING FUND TRANSFER CHARGE: $0.00
Page 3
<PAGE> 5
- --------------------------------------------------------------------------------
CONTRACT SPECIFICATIONS
- --------------------------------------------------------------------------------
The Travelers Fund QP for Variable Annuities
UNDERLYING FUNDS
Managed Assets Trust
High Yield Bond Trust*
Capital Appreciation Fund
American Odyssey Funds, Inc.
American Odyssey Core Equity Fund
American Odyssey Emerging Opportunities Fund
American Odyssey International Equity Fund
American Odyssey Long-Term Bond Fund*
American Odyssey Intermediate-Term Bond Fund*
American Odyssey Short-Term Bond Fund*
The Travelers Series Trust
U.S. Government Securities Portfolio*
Utilities Portfolio
Social Awareness Stock Portfolio
Templeton Variable Products Series Fund
Templeton Bond Fund*
Templeton Stock Fund
Templeton Asset Allocation Fund**
Variable Insurance Products Fund
Fidelity's High Income Portfolio*
Fidelity's Growth Portfolio
Fidelity's Equity Income Portfolio
Variable Insurance Products Fund II
Fidelity's Asset Manager Portfolio**
Dreyfus Stock Index Fund, Inc.
Smith Barney/Travelers Series Fund, Inc.
Smith Barney Income & Growth Portfolio
Alliance Growth Portfolio
Smith Barney International Equity Portfolio
Putnam Diversified Income Portfolio**
Smith Barney High Income Portfolio*
MFS Total Return Portfolio**
Smith Barney Money Market Portfolio*
The annual Underlying Fund deduction is [1.30%] for all funds listed above. This
equals a daily deduction of [.00003562] per fund.
The Assumed Daily Net Investment Factor is 1.000081 for all Underlying Funds.
The Underlying Funds marked with an asterisk (*) are considered Competing Funds,
and are subject to transfer restrictions as described in the Fixed Account
rider. Those marked with two asterisks (**) are not currently considered
competing, but may be so in the future based on allowable changes in the fund's
investment strategy. After the first Contract Year, transfers from the Fixed
Account, either to the Underlying Funds or to contracts not issued by Us, as
described in the Fixed Account rider, may not exceed 20% per Contract Year of
the Cash Value in the Fixed Account valued on each Contract Year anniversary.
Page 4
<PAGE> 6
- --------------------------------------------------------------------------------
CONTRACT SPECIFICATIONS
- --------------------------------------------------------------------------------
GUARANTEED INTEREST PERIODS FOR THE FIXED ACCOUNT:
The initial interest rate for any Purchase Payment is declared each calendar
[month] and is guaranteed for one year. Each Purchase Payment is placed in a
"cell" for accounting purposes. At the end of the twelve month guarantee period,
a renewal interest rate will be determined that will not be lower than the
minimum interest rate guarantee of 3%. At the end of the initial guarantee
period, the first renewal rate will be guaranteed to the end of that calendar
year. The second and all future renewal rates will be declared each subsequent
January 1 and guaranteed through December 31 of each year.
[INTEREST RATE BONUS AMOUNT: 0.00%]
Page 5
<PAGE> 7
- --------------------------------------------------------------------------------
DEFINITIONS
- --------------------------------------------------------------------------------
ACCUMULATION UNIT - An accounting unit of measure used to calculate the value of
this contract. An Accumulation Unit exists for each Underlying Fund. The value
of this measure is called the Accumulation Unit Value.
ANNUITANT - The person on whose life the annuity payments are made.
ANNUITY - Payment of income for a stated period or amount.
ANNUITY COMMENCEMENT DATE - The date on which annuity payments commence.
BENEFICIARY(IES) - The Beneficiary of this contract is the Plan trustee. Any
Beneficiary designated by the Participant(s) or Annuitant(s) shall be maintained
by You under the provisions of the Plan.
CASH SURRENDER VALUE - The Cash Value less any amounts deducted on Surrender
shown on the Contract Specifications page and any applicable Premium Tax.
CASH VALUE - The value of the accumulation units in Your Account or an
Individual Account less any reductions for administrative charges. Sometimes
referred to as "Account Value."
COMPETING FUND - Any investment option under the Plan which, in Our opinion,
consists primarily of fixed income securities and/or money market instruments.
Competing Funds included in this contract are indicated on the Contract
Specifications page.
CONTRACT DATE - The date shown on the Contract Specifications page on which the
contract is issued.
CONTRACT DISCONTINUANCE - Termination of this contract by Us or by Your Written
Request.
CONTRACT YEAR - The twelve month period beginning with the Contract Date or any
anniversaries thereof. This may or may not coincide with the Plan year.
DUE PROOF OF DEATH - (i) A copy of a certified death certificate; (ii) a copy of
a certified decree of a court of competent jurisdiction as to the finding of
death; (iii) a written statement by a medical doctor who attended the deceased;
or (iv) any other proof satisfactory to Us.
EXCESS PLAN CONTRIBUTIONS - Plan contributions including excess deferrals,
excess contributions, excess aggregate contributions, excess annual additions,
and excess nondeductible contributions that require correction by the Plan
Administrator.
FIXED ANNUITY - An Annuity with payments which remain fixed as to dollar amount
throughout the payment period.
INDIVIDUAL ACCOUNT - Accumulation Units credited to a Participant or Beneficiary
under this contract.
OUR OFFICE - The home office of the Travelers Insurance Company located at One
Tower Square, Hartford, Connecticut 06183-XXXX. All correspondence concerning
this contract should be sent to the attention of Annuity Services.
PARTICIPANT- An eligible person who is a member in the Plan.
PLAN - The Plan designated on the Contract Specifications page. We are not a
party to the Plan. We do not assume the responsibilities of the Plan
Administrator, nor are We bound by the terms of the Plan. All records pertaining
to the Plan will be open for inspection by Us.
PLAN ADMINISTRATOR - The corporation or other entity so specified on the
application or purchase order. If none is specified, the Plan trustee is the
Plan Administrator.
Page 6
<PAGE> 8
PLAN TERMINATION - Termination of the Plan established by You, including partial
Plan Termination. If the Plan is terminated, this contract will be discontinued.
PREMIUM TAX - The amount of tax, if any, charged by the state or municipality.
We will deduct any applicable Premium Tax from the Cash Value either upon
Surrender, annuitization, death, or at the time Purchase Payments are made, but
no earlier than when We have a tax liability under state law.
PURCHASE PAYMENTS - Payments You and/or the Participants make to this contract.
SEPARATE ACCOUNT - The Separate Account shown on the Contract Specifications
page which We established under Connecticut Insurance Laws and which purchases
shares of the Underlying Funds for this class of contracts and certain other
contracts.
SEPARATION FROM SERVICE - The termination or permanent severance of the
Participant's employment with the employer for any reason that is a Separation
from Service within the meaning of the Plan. However, termination of a
Participant's employment with the employer as a result of the sale of all or
part of the employer's business (including divisions or subsidiaries of the
employer) will not be considered Separation from Service unless the Participant
actually loses his/her job or is not immediately included in a pension or profit
sharing plan of the successor employer.
SURRENDER - Funds distributed from the contract for retirement, Separation from
Service, loans, hardship withdrawals, death, disability, return of Excess Plan
Contributions, payment of certain plan expenses as mutually agreed upon,
Contract Discontinuance, or transfers to other Plan funding vehicles which may
or may not be subject to charges.
SURRENDER DATE - The date We receive Your Written Request for a Surrender.
UNDERLYING FUND - An open-ended diversified investment management company
indicated on the Contract Specifications page which is an underlying investment
for the Separate Account.
VALUATION DATE - The date on which the Separate Account is valued. The Separate
Account is generally valued at the close of business on each day that the New
York Stock Exchange is open for trading.
VALUATION PERIOD - The period between successive valuations.
VARIABLE ANNUITY - An Annuity with payments which vary with the net investment
results of the Separate Account.
WE, OUR, US - The Travelers Insurance Company.
WRITTEN REQUEST - A written form satisfactory to Us and received at Our Office.
YOU, YOUR - The contract owner. The contract owner is the person or entity named
as such on the Contract Specifications page.
YOUR ACCOUNT - Accumulation Units credited to You under this contract.
Page 7
<PAGE> 9
- --------------------------------------------------------------------------------
PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
PURCHASE PAYMENT
The Purchase Payments are the payments You and/or the Participants make to this
contract. An initial lump sum Purchase Payment must be made to the contract and
is due and payable before the contract becomes effective. Each Purchase Payment
is payable to Us at Our Office. The minimum Purchase Payment is shown on the
Contract Specifications page. We reserve the right to limit the amount of the
Purchase Payment which will be accepted.
Net Purchase Payments are that part of Your Purchase Payments applied to the
contract. The net Purchase Payment is equal to the Purchase Payment less any
applicable Premium Tax.
ALLOCATION OF PURCHASE PAYMENTS
The initial net Purchase Payment will be applied within two business days
following its receipt in good order at Our Office. Any subsequent net Purchase
Payments will be credited to Your Account using the Accumulation Unit Value
determined after We receive those payments at Our Office. Each net Purchase
Payment will be allocated to the Underlying Funds in the proportion specified by
You for this contract. By Written Request, You may change Your choice of
Underlying Funds or allocation percentages. The available Underlying Funds to
which assets may be allocated are shown on the Contract Specifications page;
funds may be subsequently added or deleted.
The net Purchase Payments will be allocated to an account established for You by
Us. At Your direction, We will establish Individual Accounts for each
Participant in Your Plan. We will deposit each Purchase Payment to the
appropriate Individual Account as directed by You. At Your direction, We will
satisfy distributions from these Individual Accounts and provide periodic
reports as described in the "Required Reports" provision. If You so authorize by
Written Request, Participants may change their choice of Underlying Funds or
allocation percentages, but only for those Underlying Funds that You select as
part of the Plan.
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GENERAL CONTRACT PROVISIONS
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OWNER
This contract belongs to You. You have sole power while the contract is in force
to exercise any rights given in the contract. In order to maintain tax
qualification, this contract may not be sold, assigned, transferred, discounted
or pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose except as may be required or permitted under
applicable sections of the Internal Revenue Code.
CREDITOR CLAIMS
No right or benefit of You, the Annuitant or Beneficiary under this contract
shall be subject to the claims of creditors or any legal process other than to
the extent permitted by law.
CONTROL OF THE CONTRACT
All rights in the contract rest with You, and You are entitled to all amounts
held under this contract. You may elect to exercise any options allowed by the
contract with respect to Your Account or an Individual Account. Elections made
under the contract must be made by a Written Request, unless another manner is
mutually agreed upon.
THE CONTRACT
The entire contract between You and Us consists of the contract and all attached
pages.
CONTRACT CHANGES
The only way this contract may be changed is by a written endorsement signed by
one of Our officers.
SUBSTITUTION OF UNDERLYING FUNDS
If it is not possible to continue to offer an Underlying Fund, or in Our
judgment becomes inappropriate for the purposes of this contract, We may
substitute another Underlying Fund without Your consent. Substitutions may be
made with respect to both existing investments and investment of future Purchase
Payments. However, no such substitution will be made without notice to You and
without prior approval of the Securities and Exchange Commission, to the extent
required by law.
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INCONTESTABILITY
We will not contest this contract from its Contract Date.
REQUIRED REPORTS
As often as required by law, but at least once in each Contract Year, We will
furnish a report to You which will show the number of Accumulation Units
credited to this contract in each Underlying Fund and the corresponding
Accumulation Unit Values as of the date of the report.
VOTING RIGHTS
If required by federal law, You may have the right to vote at the meetings of
the Shareholders of the Underlying Funds. If You have voting rights, We will
send a notice to You telling You the time and place of a meeting. The notice
will also explain matters to be voted upon and how many votes You may exercise.
MORTALITY AND EXPENSES
Our actual mortality and expense experience will not affect the values or
amounts paid under this contract.
NON-PARTICIPATING
This contract does not share in Our surplus earnings, so You will receive no
dividends under it.
CONTRACT MODIFICATION
We reserve the right to modify this contract to qualify it under all related
laws and regulations which are in effect during the term of this contract. We
will obtain the approval of any regulatory authority needed for the
modifications.
STATE LAWS
This contract is governed by the law of the state in which it is issued for
delivery. We may, at any time, make any changes, including retroactive changes,
in this contract to the extent that the change is required to meet the
requirements of any law or regulation issued by any governmental agency to which
We or You are subject.
EMERGENCY PROCEDURE
We reserve the right to suspend or postpone the date of any payment of any
benefit or values for any Valuation Period (1) when the New York Stock Exchange
is closed; (2) when trading on the Exchange is restricted; (3) when an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the securities held in the Underlying Funds is not reasonably practicable or
it is not reasonably practicable to determine the value of the Underlying Funds'
net assets; or (4) during any other period when the Securities and Exchange
Commission, by order, so permits for the protection of security holders. Any
provision of this contract which specifies a Valuation Date will be superseded
by this Emergency Procedure.
RELATION OF THIS CONTRACT TO THE SEPARATE ACCOUNT
We will have exclusive and absolute ownership and control of the assets of the
Separate Account. That portion of the assets of the Separate Account equal to
the reserves and other contract liabilities with respect to such Separate
Account shall not be chargeable with liabilities arising out of any other
business We conduct. Our determination of the value of an Accumulation Unit and
an Annuity Unit by the method described in this contract will be conclusive.
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VALUATION INFORMATION
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NUMBER OF ACCUMULATION UNITS
The number of Accumulation Units to be credited to each Underlying Fund once a
Purchase Payment has been received by Us will be determined by dividing the net
Purchase Payment allocated to each Underlying Fund by the corresponding
Accumulation Unit Value.
ACCUMULATION UNIT VALUE
The initial value of an Accumulation Unit for each Underlying Fund is set at
$1.000000. We determine the value of an Accumulation Unit on each Valuation Date
by multiplying the value on the immediately preceding Valuation Date by the
net investment factor for that Underlying Fund for the Valuation Period just
ended.
The value of an Accumulation Unit on any date other than a Valuation Date will
be equal to its value as of the previous Valuation Date.
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NET INVESTMENT FACTOR
The net investment factor is a factor applied to measure the investment
performance of an Underlying Fund from one Valuation Period to the next. The net
investment factor for an Underlying Fund for any Valuation Period is equal to
the sum of 1.000000 plus the net investment rate.
Each Underlying Fund's net investment rate for a Valuation Period is equal to
the gross investment rate for that Underlying Fund less the applicable
Underlying Fund deduction for the Valuation Period.
Underlying Fund deductions are shown on the Contract Specifications page.
The gross investment rate of an Underlying Fund for a Valuation Period is equal
to (1) divided by (2) where
(1) is:
(a) investment income; plus
(b) capital gains and losses, whether realized or unrealized; less
(c) a deduction for any expenses levied against the Separate Account and
its Underlying Funds; and
(2) is the amount of the net assets at the beginning of the Valuation Period.
The gross investment rate for an Underlying Fund may be either positive or
negative. Underlying Fund assets are based on the net assets held by the
Underlying Fund. Investment income includes any distribution whose ex-dividend
date occurs during the Valuation Period.
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TRANSFERS BETWEEN UNDERLYING FUNDS
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You may transfer all or any part of Your Account's Cash Value, subject to the
restrictions of the Fixed Account as noted in the Fixed Account rider, if
applicable, from one Underlying Fund to any other Underlying Fund shown on the
Contract Specifications page. If You so authorize, Participants may transfer all
or any part of their Individual Account's Cash Value from one Underlying Fund to
any other Underlying Fund shown on the Contract Specifications page at any time
up to 30 days before the due date of the first Annuity payment, subject to the
restrictions of the Fixed Account as noted in the Fixed Account Rider, if
applicable.
We reserve the right to limit the number of transfers in an account between
Underlying Funds. We will not limit transfers to less than one in any six month
period.
Transfers between Underlying Funds will result in the addition or deletion of
Accumulation Units having a total value equal to the dollar amount being
transferred to or from a particular Underlying Fund. The number of Accumulation
Units will be determined by using the Accumulation Unit Value of the Underlying
Funds involved as of the next Valuation Date after We receive notification of
request for transfer. Transfers will be subject to any applicable Underlying
Fund Transfer Charge stated on the Contract Specifications page.
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TRANSFERS FROM UNDERLYING FUNDS TO CONTRACTS NOT ISSUED BY US
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You may transfer all or any part of Your Account's Cash Surrender Value, subject
to the restrictions of the Fixed Account as noted in the Fixed Account rider, if
applicable, from any Underlying Fund to any contract not issued by Us. Such
transfers may be subject to amounts deducted on Surrender as shown on the
Contract Specifications page. If You so authorize, Participants may transfer all
or any part of their Individual Account's Cash Surrender Value from one
Underlying Fund to any contract not issued by Us, subject to the restrictions of
the Fixed Account as noted in the Fixed Account rider, if applicable.
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TRANSFERS FROM OTHER CONTRACTS ISSUED BY US
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Under specific conditions, We may allow You to transfer funds held by You in
another group annuity contract issued by Us to this contract without applying
deferred sales charges or surrender charges to the funds being transferred. Once
the transfer is complete and We have established an account for You at Your
direction, new amounts deducted on Surrender may apply to this contract as shown
on the Contract Specifications page.
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TRANSFERS TO OTHER CONTRACTS ISSUED BY US
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Under specific conditions, We may allow You to transfer funds held by You for a
Participant in this contract to another contract issued by Us without applying
the amounts deducted on Surrender shown on the Contract Specifications page to
the funds being transferred. Once the transfer is complete and We have
established a new account for the Participant at Your direction, new deferred
sales charges or surrender charges may apply to the new contract in accordance
with the provisions of such contract.
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TRANSFERS FROM CONTRACTS NOT ISSUED BY US
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Under specific conditions, when authorized by state insurance law, We may credit
a Plan up to 4% of the amount transferred to Us from another investment vehicle
as reimbursement to the Plan for any exit penalty assessed by the other
investment vehicle provider. We will recover this credit through reduced
compensation paid to the servicing agent or broker.
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DISTRIBUTIONS FROM THE CONTRACT
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DISTRIBUTION FROM ONE ACCOUNT TO ANOTHER ACCOUNT
You may, as provided in the Plan, distribute Cash Value from Your Account to one
or more Individual Accounts. You also may, as required and provided by the Plan,
move Cash Value from any or all Individual Accounts to Your Account.
CASH SURRENDER
The Cash Surrender Value will be determined as of the next Valuation Date
following receipt of Your Written Request. We may delay payment of the Cash
Surrender Value in the Underlying Funds for a period of not more than seven days
after We receive the request. The payment of the Cash Surrender Value of the
Fixed Account, if applicable, may be delayed as described in the Fixed Account
rider.
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CONTRACT CHARGES
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SEMIANNUAL ACCOUNT CHARGE
A fee for administrative expenses relating to the contract known as the
Semiannual Account Charge will be assessed on each Participant's Individual
Account as shown on the Contract Specifications page.
We will apply this Semiannual Account Charge for each Participant's Individual
Account on a pro rata basis based on the Accumulation Units from all Underlying
Funds in which the Individual Account has Cash Value. We will apply the charge
on a pro rata basis if the Individual Account has been in effect for less than a
full period on the date a Semiannual Account Charge is applied. This charge will
also be prorated upon Surrender of the Individual Account.
AMOUNTS DEDUCTED ON SURRENDER
The applicable amounts deducted on Surrender are shown on the Contract
Specifications page. These amounts may be reduced or eliminated to the extent
that We anticipate lower sales expenses or perform fewer sales services due to:
1. the size of the group participating in the contract;
2. an existing relationship to the contract owner;
3. use of mass enrollment procedures, or;
4. performance of sales functions by a third party, which We would
otherwise perform.
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DEATH BENEFIT PROVISIONS
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A death benefit is payable in a single sum to the Beneficiary upon the death of
a Participant before the Annuity Commencement Date. A death benefit is also
payable under those Annuity Options which provide for death benefits. We will
pay the Beneficiary the death benefit as described below upon receiving Due
Proof of Death. We must be notified of a Participant's death no later than six
months from the Participant's date of death in order for the Beneficiary to
receive the death proceeds as described below. If notification is received more
than six months after the Participant's death, the Beneficiary will receive
death proceeds equal to the Cash Value of the Participant's Individual Account
as of the date We receive Due Proof of Death. At Your Written Request, We will
pay the death benefit to the Participant's beneficiary.
DEATH PROCEEDS PRIOR TO THE ANNUITY COMMENCEMENT DATE
If the Participant dies before age 75 and before the Annuity Commencement Date,
We will pay the Beneficiary the greater of a) or b) below, less any applicable
Premium Tax and prior surrenders not previously deducted as of the date We
receive Due Proof of Death:
a) the Cash Value of the Participant's Individual Account; or
b) the total Purchase Payments under that Participant's Individual
Account.
If the Participant dies on or after age 75 and before the Annuity Commencement
Date, We will pay the Beneficiary the Cash Value of the Participant's Individual
Account, less any applicable Premium Tax as of the date We receive Due Proof of
Death.
DEATH PROCEEDS AFTER THE ANNUITY COMMENCEMENT DATE
If the Annuitant dies on or after the Annuity Commencement Date, We will pay the
Beneficiary a death benefit consisting of any benefit remaining under the
Annuity option then in effect.
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ACCOUNT TERMINATION PROVISIONS
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TERMINATION AMOUNT
If the Cash Value in a Participant's Individual Account is less than the
Termination Amount stated on the Contract Specifications page, We reserve the
right to terminate that Account and move the Cash Value of that Participant's
Individual Account to Your Account.
Any Cash Value to which a terminating Participant is not entitled under the Plan
will be moved to Your Account at Your direction.
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CONTRACT DISCONTINUANCE PROVISIONS
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You may discontinue this contract by Written Request at any time for any reason.
We reserve the right to discontinue this contract if:
a) the Cash Value of the contract is less than the Termination
Amount shown on the Contract Specifications page; or
b) We determine within Our sole discretion and judgment that the
Plan or administration of the Plan is not in conformity with
applicable law; or
c) We receive notice that is satisfactory to Us of Plan Termination.
If We discontinue this contract or We receive Your Written Request to
discontinue the contract, We will, in Our sole discretion and judgment:
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a) accept no further payments for this contract; and
b) pay You the Cash Surrender Value of the Underlying Funds within 7
days of the date of Our Written Notice to You, or distribute the
Cash Surrender Value of each Participant's Individual Account as
described in the Settlement Provisions section at Your direction;
and
c) pay You the Cash Surrender Value of the Fixed Account, if
applicable, as described in the Fixed Account rider.
If this contract is discontinued, We will distribute the Cash Surrender Value to
You no later than 7 days following Our mailing the written notice of
discontinuance to You at the most current address available on Our records.
Discontinuance of this contract will not affect payments We are making under any
Annuity options which began before the date of discontinuance.
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SETTLEMENT PROVISIONS
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ANNUITY COMMENCEMENT DATE
The Annuity Commencement Date is the date on which We will begin paying to the
Annuitant the first of a series of Annuity payments in accordance with the
Annuity option elected by You. Annuity payments will begin under this contract
on the Annuity Commencement Date unless the contract has been discontinued or
the proceeds have been paid to the Participant or Beneficiary prior to that
date. We may require proof that the Annuitant is alive before Annuity payments
are made. If no Annuity Commencement Date is specified, the automatic Annuity
Commencement Date will be the date the Participant reaches age 70.
Additionally, at least 30 days before the original Annuity Commencement Date,
You may change the Annuity Commencement Date by Written Request to any time
prior to the Participant's 70th birthday or to a later date with Our consent.
ELECTION OF SETTLEMENT OPTIONS
On the Annuity Commencement Date, or other agreed upon date, any amount
distributed from the contract may be applied to any one of the Annuity option
described below.
Election of any of these options must be made by Written Request to Our Office
at least 30 days prior to the date such election is to become effective. The
form of such Annuity option shall be determined by You. The following
information must be provided with any such request:
a) the Participant's name, address, date of birth, social security
number; and
b) the Annuity option which is to be purchased; and
c) the date the Annuity option payments are to begin; and
d) if the form of the Annuity provides a death benefit in the event
of the Participant's death, the name, relationship and address of
the beneficiary as designated by You; and
e) any other data that We may require.
The beneficiary, as specified in item (d) above, may be changed by You or the
Annuitant as long as We are notified by Written Request while the Annuitant is
alive. If the beneficiary designation is irrevocable, such designation cannot be
changed or revoked without the consent of the beneficiary. After We receive the
Written Request and the written consent of the beneficiary (if required), the
new beneficiary designation will take effect as of the date the notice is
signed. We have no further responsibility for any payment We made before the
Written Request.
MINIMUM AMOUNTS
The minimum amount that can be placed under an Annuity option is $2,000 unless
We consent to a lesser amount. If any periodic payments due are less than $100,
We reserve the right to make payments at less frequent intervals.
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MISSTATEMENT
If an Annuitant's sex or age was misstated, all benefits of this contract are
what the Cash Surrender Value would have purchased on the date of issue at the
correct sex and age.
RETIRED LIFE CERTIFICATE
We will issue to each person to whom Annuity benefits are being paid under this
contract a certificate setting forth a statement in substance of the benefits to
which such person is entitled under this contract.
ALLOCATION OF AN ANNUITY
At the time election of one of the Annuity options is made, You may further
elect to have the Participant's Cash Surrender Value applied to provide a
Variable Annuity, a Fixed Annuity, or a combination of both.
If no election is made to the contrary, the value of an Underlying Fund will
provide an Annuity which varies with the investment experience of that same
Underlying Fund. You or the Participant, if You so authorize, may elect to
transfer Cash Value from one Underlying Fund to another, as described in the
provision "Transfers Between Underlying Funds," in order to reallocate the basis
on which Annuity payments will be determined. Once Annuity payments have begun,
no further transfers are allowed.
VARIABLE ANNUITY
AMOUNT OF FIRST PAYMENT
The LIFE ANNUITY TABLES are used to determine the first monthly Annuity payment.
They show the dollar amount of the basic first monthly Annuity payment which can
be purchased with each $1,000 applied. The amount applied to an Annuity will be
the Cash Surrender Value of an Individual Account as of 14 days before the date
Annuity payments start. We reserve the right to require satisfactory proof of
the age of any person on whose life Annuity payments are based before making the
first payment under any of these options.
ANNUITY UNIT VALUE
The initial value of an Annuity Unit for each Underlying Fund was set at
$1.000000. On any Valuation Date, the Annuity Unit Value for an Underlying Fund
equals the Underlying Fund Annuity Unit Value on the immediately preceding
Valuation Date, multiplied by the net investment factor for that Underlying Fund
for the Valuation Period just ended, divided by the Assumed Daily Net Investment
Factor. The Assumed Daily Net Investment Factor is shown on the Contract
Specifications page.
The value of an Annuity Unit as of any date other than a Valuation Date will be
equal to its value as of the previous Valuation Date.
NUMBER OF ANNUITY UNITS
We determine the number of Annuity Units credited to the Annuitant's Individual
Account in each Underlying Fund by dividing the basic first monthly Annuity
payment attributable to that Underlying Fund by the Underlying Fund's Annuity
Unit Value as of 14 days before the due date of the first Annuity payment.
AMOUNT OF SECOND AND SUBSEQUENT PAYMENTS
The dollar amount of any or all payments made to an Annuitant after the first
payment may change from month to month based on the net investment results of
the Underlying Fund(s). The total amount of each Annuity payment made to an
Annuitant will be equal to the sum of the payments in each Underlying Fund
allocated to that Annuitant's Individual Account.
The actual amount of the payments made to an Annuitant in each Underlying Fund
is found by multiplying the number of Annuity Units credited to the Annuitant's
Individual Account in that Underlying Fund by the Annuity Unit Value of the
Underlying Fund as of the date 14 days prior to the date on which the payment is
due.
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FIXED ANNUITY
A Fixed Annuity is an Annuity with payments which remain fixed as to dollar
amount throughout the payment period. The dollar amount of the first Fixed
Annuity payment will be calculated as described above the in the "Amount of
First Payment" provision. All subsequent payments will be in the same amount and
that amount will be assured throughout the payment period.
BETTERMENT OF RATES
Any Annuity option purchased with respect to an amount equal to the
Participant's Cash Surrender Value as determined at the time of its commencement
shall not be less than that which would be provided by the application of such
amount to purchase a single premium immediate annuity offered by Us at that time
for the same class of contracts. If it would produce a larger payment, We agree
that the Fixed Annuity payment will be determined using the Life Annuity Tables
in effect on the Annuity Commencement Date.
ANNUITY OPTIONS
Subject to conditions stated in ELECTIONS OF SETTLEMENT OPTIONS and MINIMUM
AMOUNTS, all or any part of the Cash Value of this contract may be paid to the
Annuitant under one or more of the options below.
OPTION 1. LIFE ANNUITY - NO REFUND
We will make monthly Annuity payments during the lifetime of the person on whose
life the payments are based, ending with the last monthly payment preceding
death.
OPTION 2. LIFE ANNUITY WITH 120, 180, OR 240 MONTHLY PAYMENTS ASSURED
We will make monthly Annuity payments during the lifetime of the person on whose
life the payments are based and under the conditions stated below.
If at the death of the Annuitant, payments have been made for less than 120,
180, or 240 months, as elected, We will continue to make payments to the
designated beneficiary during the remainder of the period.
OPTION 3. JOINT AND LAST SURVIVOR LIFE ANNUITY
We will make monthly Annuity payments based upon the joint lifetime of two
persons selected: first to the Annuitant, and upon his/her death, to the
survivor.
No more payments will be made after the death of the survivor.
OPTION 4. JOINT AND LAST SURVIVOR LIFE ANNUITY - ANNUITY REDUCED ON DEATH OF
PRIMARY PAYEE
We will make monthly Annuity payments to the Annuitant during the joint lifetime
of two persons selected. One of the two persons will be designated as the
primary payee. The other will be designated as the secondary payee. On the death
of the secondary payee, if survived by the primary payee, We will continue to
make monthly Annuity payments to the primary payee in the same amount that would
have been payable during the joint lifetime of the two persons.
On the death of the primary payee, if survived by the secondary payee, We will
continue to make monthly Annuity payments to the secondary payee in an amount
equal to 50% of the payments which would have been made during the lifetime of
the primary payee.
No further payments will be made following the death of the survivor.
OPTION 5. FIXED PAYMENTS FOR A FIXED PERIOD OF 120, 180, OR 240 MONTHS
We will make monthly payments for the period selected. If at the death of the
Annuitant, payments have been made for less than 120, 180, or 240 months, as
elected, We will continue to make payments to the designated beneficiary during
the remainder of the period.
OPTION 6. OTHER ANNUITY OPTIONS
We will make other arrangements for Annuity payments as may be mutually agreed
upon by You and Us.
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FIXED ACCOUNT RIDER
This rider is made part of the basic contract to which it is attached. The date
of issue of the rider is the same as that of the basic contract unless a
different date is shown on the Contract Specifications page. Except as provided
in this rider, the Fixed Account is treated the same as an Underlying Fund.
When You, or the Participant if You so authorize, direct Us to do so, We will
apply all or any part of a Participant's Purchase Payments to the Fixed Account.
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PURCHASE PAYMENTS
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The Purchase Payments are the payments You and/or the Participants make for
allocation to this rider. No purchase payment after the first is required to
keep the Fixed Account in effect, as long as the basic contract is in effect.
We will apply the allocation of the first net Purchase Payment paid for the
Fixed Account to provide Accumulation Units to the credit of the Fixed Account
as of the day the Purchase Payment is received in good order at Our Office. We
will apply any allocation of the net Purchase Payments after the first net
Purchase Payment to the Fixed Account as of the day We receive it at Our Office.
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VALUATION INFORMATION
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For the purpose of this rider, for the Fixed Account only, the VALUATION
INFORMATION section of the basic contract is amended by deleting the following
provisions:
1. "Number of Accumulation Units;"
2. "Accumulation Unit Value;" and
3. "Net Investment Factor;"
and the following provisions are added.
NUMBER OF ACCUMULATION UNITS
We will determine the number of Accumulation Units to be credited to the Fixed
Account on payment of Purchase Payments to this rider by dividing the net
Purchase Payment for this rider by the then dollar value of one Accumulation
Unit of the Fixed Account.
ACCUMULATION UNIT VALUE
We will determine the value of an Accumulation Unit for the Fixed Account on any
day by multiplying:
a) the value on the immediately preceding date; by
b) the net interest factor for the day on which the value is being
determined.
NET INTEREST FACTOR
The net interest factor for a day is:
1. the assured Net Interest Rate which is equivalent to an annual interest
rate of 3%, plus
2. any interest in excess of the assured Net Interest Rate (3%) credited
at Our discretion, plus
3. 1.000000.
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INTEREST CREDITED TO THE FIXED ACCOUNT
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Interest will be compounded and credited to the Fixed Account at a daily rate
equivalent to the effective annual interest rate as determined by Us. The rate
will never be less than the Net Interest Rate of 3%. Additional amounts may be
credited by Us for the guaranteed interest periods shown on the Contract
Specifications page.
From time to time, We may offer customers of certain broker dealers special
guaranteed interest rates and negotiated commissions.
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TRANSFERS BETWEEN THE UNDERLYING FUNDS AND THE FIXED ACCOUNT
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Amounts may generally be transferred from the Underlying Funds to the Fixed
Account at any time. Amounts may be transferred from the Fixed Account to the
Underlying Funds as described on the Contract Specifications page. No transfers
will be allowed between the Fixed Account and any Competing Fund in the Plan.
Amounts previously transferred from the Fixed Account to the Underlying Funds
may not be transferred back to the Fixed Account or any Competing Fund for a
period of at least 3 months from the date of transfer. We reserve the right to
limit the number of transfers and percentage of Cash Value, as shown on the
Contract Specifications page, to be transferred from the Fixed Account to the
Underlying Funds and to contracts not issued by Us. We will not limit the number
of these transfers to less that one in any six month period.
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TRANSFERS BETWEEN CONTRACTS NOT ISSUED BY US AND THE FIXED ACCOUNT
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At Your Written Request, We will make available the Cash Surrender Value of the
Fixed Account for transfer to contracts not issued by Us, subject to the
restrictions on the Contract Specifications page.
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TRANSFERS BETWEEN OTHER CONTRACTS ISSUED BY US AND THE FIXED ACCOUNT
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Under specific conditions, We may allow You to transfer funds held by You in
another group annuity contract issued by Us to the Fixed Account without
applying deferred sales charges or surrender charges to the funds being
transferred. Once the transfer is complete and We have established an account
for You at Your direction, new amounts deducted on Surrender may apply to the
Fixed Account as shown on the Contract Specifications page.
We may also allow You, under specific conditions, to transfer funds held by You
for a Participant in the Fixed Account to another contract issued by Us without
applying the amounts deducted on Surrender shown on the Contract Specifications
page to the funds being transferred. Once the transfer is complete and We have
established a new account for the Participant at Your direction, new deferred
sales charges or surrender charges may apply to the new contract in accordance
with the provisions of such contract.
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DISTRIBUTION FROM THE FIXED ACCOUNT
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ALLOWABLE DISTRIBUTIONS
You may request allowable distributions shown on the Contract Specifications
page from the Fixed Account at any time. Upon receipt of Your Written Request,
We will pay You the Cash Value of the Fixed Account as applicable for those
allowable distributions.
SURRENDER FROM FIXED ACCOUNT CELLS
For the purpose of processing distributions from the Fixed Account, withdrawals
are taken from the most recent "cell" first, and each subsequent cell is
accessed for distributions in descending order on a Last-In, First-Out (LIFO)
basis.
The Cash Surrender Value will be determined as of the next valuation following
receipt of Your Written Request. We may defer payment of the Cash Surrender
Value in the Fixed Account for up to six months from the date of the Written
Request. If a payment is deferred more than 30 days from the date the request is
received, We will pay interest of 3% on the amount deferred.
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CONTRACT CHARGES
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No Semiannual Account Charge is applicable to the Fixed Account.
AMOUNTS DEDUCTED ON SURRENDER
The applicable amounts deducted on Surrender are shown on the Contract
Specifications page. These amounts may be reduced or eliminated to the extent
that We anticipate lower sales expenses or perform fewer sales services due to:
1. the size of the group participating in the contract;
2. an existing relationship to the contract owner;
3. use of mass enrollment procedures, or;
4. performance of sales functions by a third party, which We would
otherwise perform.
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CONTRACT DISCONTINUANCE PROVISIONS
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If the contract is discontinued, this rider will also be discontinued, and no
further Purchase Payments or transfers will be allowed.
On the date We receive Your Written Request to discontinue the contract, or
within 31 days after We notify You in writing of Our intent to discontinue the
contract, all Cash Values in the Individual Accounts will be transferred to Your
Account. Any amounts transferred from the Fixed Account to the Underlying Funds
during the previous 30 days from the date of discontinuance will be transferred
back to the Fixed Account. If these amounts are not available in the Individual
Accounts, the equivalent Cash Values will be transferred from Your Account.
If the contract is discontinued because of Plan Termination and the Plan
certifies to Us that the Plan Termination is the result of the dissolution or
liquidation of the employer under US Code Title 11 procedures, the Cash
Surrender Value will be distributed directly to the employees entitled to share
in such distributions in accordance with the Plan relating to Plan Termination.
Distribution may be in the form of cash payments, Annuity options, or deferred
annuities. This provision does not apply to 457 Deferred Compensation plans.
If the Plan is terminated or the contract discontinued for any other reason,
then upon discontinuance of this contract, We will determine the Market Adjusted
Value of the Fixed Account. The Market Adjusted Value is the current value as of
the date of discontinuance and reflects the relationship between the rate of
interest credited to funds on deposit under the Fixed Account at the time of
discontinuance and the rate of interest credited on new deposits for this class
of contracts at the time of discontinuance. The Market Adjusted Value may be
greater than or less than the Cash Value of the Fixed Account.
If the Market Adjusted Value is less than the Cash Value of the Fixed Account as
of the date of discontinuance, We will pay You Your choice of:
a) the Market Adjusted Value, less any amounts deducted on
Surrender, in one lump sum within 60 days of the date of
discontinuance; or
b) the Cash Surrender Value of the Fixed Account in installments
over a 5 year period. The amounts deducted on Surrender, if any,
are determined as of the date of discontinuance and will apply to
all installment payments. Interest will be credited to the
remaining Cash Value of the Fixed Account during this installment
period at a fixed effective annual interest rate not less than
3%. The first payment will be made no later than 60 days
following Our mailing the written notice to You at the most
current address available on Our records. The remaining payments
will be mailed on each anniversary of the discontinuance date for
4 years. Allowable distributions shown on the Contract
Specifications page are not allowed during the 5 year installment
period.
Page 18
<PAGE> 20
If the Market Adjusted Value is greater than the Cash Value of the Fixed Account
as of the date of discontinuance, We will pay You Your choice of:
a) the Cash Surrender Value of the Fixed Account within 60 days of
the date of discontinuance; or
b) the Cash Value of the Fixed Account in installments over a 5 year
period. Interest will be credited to the remaining Cash Value of
the Fixed Account during this installment period at a fixed
effective annual interest rate not less than 3%. The first
payment will be made no later than 60 days following Our mailing
the written notice to You at the most current address available
on Our records. The remaining payments will be mailed on each
anniversary of the discontinuance date for 4 years. Allowable
distributions shown on the Contract Specifications page are not
allowed during the 5 year installment period.
THE TRAVELERS INSURANCE COMPANY
Chairman
Page 19
<PAGE> 1
EXHIBIT 9
January 11, 1996
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
Gentlemen:
With reference to the Registration Statement on Form N-4 filed by The
Travelers Insurance Company and The Travelers Separate Account QP for Variable
Annuities with the Securities and Exchange Commission covering variable annuity
contracts for qualified plans, I have examined such documents and such law as I
have considered necessary and appropriate, and on the basis of such examination,
it is my opinion that:
1. The Travelers Insurance Company is duly organized and existing under
the laws of the State of Connecticut and has been duly authorized to
do business and to issue variable annuity contracts by the Insurance
Commissioner of the State of Connecticut.
2. The Travelers Separate Account QP for Variable Annuities is a duly
authorized and validly existing separate account established
pursuant to Section 38a-433 of the Connecticut General Statutes.
3. The variable annuity contracts covered by the above Registration
Statement, and all pre- and post-effective amendments relating
thereto, will be approved and authorized by the Insurance
Commissioner of the State of Connecticut and when issued will be
valid, legal and binding obligations of The Travelers Insurance
Company and The Travelers Separate Account QP for Variable
Annuities.
I hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement and to the reference to this opinion
under the caption "Legal Proceedings and Opinion" in the Prospectus constituting
a part of the Registration Statement.
/s/ ERNEST J. WRIGHT
----------------------------------------
Ernest J. Wright
General Counsel
Life and Annuities Division
The Travelers Insurance Company
<PAGE> 1
EXHIBIT 14
In connection with the solicitation and sale of variable annuity contracts
to participants of plans qualified under Section 403(b) of the Internal Revenue
Code, the Registrant hereby represents, in reliance upon No-Action Letter
IP-6-88, that it has:
(1) included appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement,
including the prospectus, used in connection with the offer of the
contract;
(2) included appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in
connection with the offer of the contract;
(3) instructed sales representatives who solicit participants to purchase
the contract specifically to bring the redemption restrictions imposed
by Section 403(b)(11) to the attention of the potential participants;
and
(4) obtained from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed
statement acknowledging the participant's understanding of (i) the
restrictions on redemption imposed by Section 403(b)(11), and (ii)
the investment alternatives available under the employer's Section
403(b) arrangement, to which the participant may elect to transfer
his or her contract value.
By: /s/ ROBERT C. HAMILTON
----------------------------
Name: Robert C. Hamilton
Title: Second Vice President
Date: January 11, 1996
<PAGE> 1
EXHIBIT 15
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, ROBERT I. LIPP of Scarsdale, New York, Chairman and Director
of The Travelers Insurance Company (hereafter the "Com-pany"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director, Vice Chairman and Chief
Financial Officer of said Company, and ERNEST J. WRIGHT, Assistant Secretary of
said Company, or either one of them acting alone, my true and lawful attorney-
in-fact, for me, and in my name, place and stead, to sign registration
statements on behalf of said Company on Form N-4 or other appropriate form
under the Securities Act of 1933 for The Travelers Separate Account QP for
Variable Annuities, a separate account of the Company dedicated specifically to
the funding of variable annuity contracts to be offered by the Company, and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of
December, 1995.
/s/Robert I. Lipp
Chairman and Director
The Travelers Insurance Company
<PAGE> 2
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, MICHAEL A. CARPENTER of Greenwich, Connecticut, Director,
President Vice Chairman and Chief Executive Officer of The Travelers Insurance
Company (hereafter the "Company"), do hereby make, constitute and appoint JAY
S. FISHMAN, Director, Vice Chairman and Chief Financial Officer of said
Company, and ERNEST J. WRIGHT, Assistant Secretary of said Company, or either
one of them acting alone, my true and lawful attorney-in-fact, for me, and in
my name, place and stead, to sign registration statements on behalf of said
Company on Form N-4 or other appropriate form under the Securities Act of 1933
for The Travelers Separate Account QP for Variable Annuities, a separate
account of the Company dedicated specifically to the funding of variable
annuity contracts to be offered by the Company, and further, to sign any and
all amendments thereto, including post-effective amendments, that may be filed
by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 8th day of
December, 1995.
/s/Michael A. Carpenter
Director, President and
Chief Executive Officer
The Travelers Insurance Company
<PAGE> 3
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, CHARLES O. PRINCE III of Weston, Connecticut, director of The
Travelers Insurance Company (hereafter the "Company"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director, Vice Chairman and Chief
Financial Officer of said Company, and ERNEST J. WRIGHT, Assistant Secretary of
said Company, or either one of them acting alone, my true and lawful attorney-
in-fact, for me, and in my name, place and stead, to sign registration
statements on behalf of said Company on Form N-4 or other appropriate form
under the Securities Act of 1933 for The Travelers Separate Account QP for
Variable Annuities, a separate account of the Company dedicated specifically to
the funding of variable annuity contracts to be offered by the Company, and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of
December, 1995.
/s/Charles O. Prince, III
Director
The Travelers Insurance Company
<PAGE> 4
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, MARC P. WEILL of New York, New York, director of The Travelers
Insurance Company (hereafter the "Company"), do hereby make, constitute and
appoint JAY S. FISHMAN, Director Vice Chairman, and Chief Financial Officer of
said Company, and ERNEST J. WRIGHT, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements on behalf of
said Company on Form N-4 or other appropriate form under the Securities Act of
1933 for The Travelers Separate Account QP for Variable Annuities, a separate
account of the Company dedicated specifically to the funding of variable
annuity contracts to be offered by the Company, and further, to sign any and
all amendments thereto, including post-effective amendments, that may be filed
by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of
December, 1995.
/s/Marc P. Weill
Director
The Travelers Insurance Company
<PAGE> 5
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, IRWIN R. ETTINGER of Stamford, Connecticut, director of The
Travelers Insurance Company (hereafter the "Company"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director Vice Chairman, and Chief
Financial Officer of said Company, and ERNEST J. WRIGHT, Assistant Secretary of
said Company, or either one of them acting alone, my true and lawful
attorney-in-fact, for me, and in my name, place and stead, to sign registration
statements on behalf of said Company on Form N-4 or other appropriate form
under the Securities Act of 1933 for The Travelers Separate Account QP for
Variable Annuities, a separate account of the Company dedicated specifically to
the funding of variable annuity contracts to be offered by the Company, and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of
December, 1995.
/s/Irwin R. Ettinger
Director
The Travelers Insurance Company
<PAGE> 6
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, DONALD T. DeCARLO of Douglaston, New York, director of The
Travelers Insurance Company (hereafter the "Company"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director Vice Chairman and Chief
Financial Officer of said Company, and ERNEST J. WRIGHT, Assistant Secretary of
said Company, or either one of them acting alone, my true and lawful
attorney-in-fact, for me, and in my name, place and stead, to sign registration
statements on behalf of said Company on Form N-4 or other appropriate form
under the Securities Act of 1933 for The Travelers Separate Account QP for
Variable Annuities, a separate account of the Company dedicated specifically to
the funding of variable annuity contracts to be offered by the Company, and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 9th day of
December, 1995.
/s/Donald T. DeCarlo
Director
The Travelers Insurance Company
<PAGE> 7
THE TRAVELERS SEPARATE ACCOUNT QP FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, CHRISTINE B. MEAD of Avon, Connecticut, Vice President and
Controller of The Travelers Insurance Company (hereafter the "Company"), do
hereby make, constitute and appoint JAY S. FISHMAN, Director, Vice Chairman and
Chief Financial Officer of said Company, and ERNEST J. WRIGHT, Assistant
Secretary of said Company, or either one of them acting alone, my true and
lawful attorney- in-fact, for me, and in my name, place and stead, to sign
registration statements on behalf of said Company on Form N-4 or other
appropriate form under the Securities Act of 1933 for The Travelers Separate
Account QP for Variable Annuities, a separate account of the Company dedicated
specifically to the funding of variable annuity contracts to be offered by the
Company, and further, to sign any and all amendments thereto, including
post-effective amendments, that may be filed by the Company on behalf of said
registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 8th day of
December, 1995.
/s/Christine B. Mead
Vice President and Controller
The Travelers Insurance Company
