<PAGE> 1
FILE NOS: 2-27330
811-1539
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
NOT APPLICABLE
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(4) Date filed:
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<PAGE> 2
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
NOTICE OF ANNUAL MEETING
March 12, 1998
To Variable Annuity Contract Owners:
Notice is hereby given that the Annual Meeting of Variable Annuity Contract
Owners of The Travelers Growth and Income Stock Account for Variable Annuities
("Account GIS") will be held at its offices at One Tower Square, Hartford,
Connecticut, on Monday, April 27, 1998 at 9:00 a.m. for the following purposes:
1. To approve an Investment Advisory Agreement between Account GIS and
Travelers Asset Management International Corporation.
2. To approve an Investment Sub-Advisory Agreement between Travelers
Asset Management International Corporation and The Travelers Investment
Management Company.
3. To elect five (5) members of the Board of Managers to serve until
the next annual meeting and until their successors are elected and
qualified.
4. To ratify the selection of Coopers & Lybrand L.L.P. as independent
accountants of Account GIS for the year ending December 31, 1998.
5. To act on any and all other business as may properly come before
the meeting.
The close of business on February 20, 1998 has been fixed as the record
date for the determination of Variable Annuity Contract Owners entitled to
notice of and to vote at said meeting.
By order of the Board of Managers.
LOGO
ERNEST J. WRIGHT, SECRETARY
Please complete and return the enclosed proxy card as soon as possible in
the post-paid envelope provided. Your prompt response is appreciated.
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT
YOU OWN.
<PAGE> 3
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
ANNUAL MEETING OF VARIABLE ANNUITY CONTRACT OWNERS
TO BE HELD ON APRIL 27, 1998
INTRODUCTION
This is a proxy statement relating to The Travelers Growth and Income Stock
Account for Variable Annuities ("Account GIS"). Account GIS is a managed
separate account into which variable annuity contract owners ("Contract Owners")
may allocate their purchase payments. This proxy statement is furnished in
connection with the solicitation of proxies by the Board of Managers of Account
GIS, on behalf of Account GIS, to be used at Account GIS's annual meeting of
Contract Owners (the "Meeting"). The Meeting will be held on Monday, April 27,
1998 at 9:00 a.m. Eastern Time, at One Tower Square, Hartford, Connecticut
06183, for the purposes set forth in the Notice of Meeting. This proxy material
is expected to be mailed to Contract Owners on or about March 12, 1998.
The primary purposes of the Meeting are: (1) to permit the Contract Owners
to consider a new Investment Advisory Agreement (described below) between
Account GIS and Travelers Asset Management International Corporation ("TAMIC"),
to take effect on May 1, 1998; and (2) to permit the Contract Owners to consider
a new Investment Sub-Advisory Agreement (described below) between Account GIS
and The Travelers Investment Management Company ("TIMCO"), to take effect on May
1, 1998. Contract Owners also will be asked to re-elect Account GIS's Managers
and to ratify the selection of Coopers & Lybrand L.L.P. as independent auditors
for Account GIS's current fiscal year.
The Board of Managers recommends that you cast your vote:
- FOR approval of the new Investment Advisory Agreement.
- FOR approval of the new Investment Sub-Advisory Agreement.
- FOR the re-election of the Managers of Account GIS.
- FOR the ratification of the Cooper & Lybrand L.L.P. as independent
auditors of Account GIS for the current fiscal year.
Each of these proposals is described in more detail below, and in the
attached Exhibits.
The Exhibits are important parts of this Proxy Statement; please consult them
carefully as you review this Proxy Statement and evaluate the proposals.
VOTE BY PROXY
A proxy card is enclosed for use in voting. The proxy card may be revoked
at any time before it is voted by sending a written notice of revocation to
Account GIS's Secretary or by appearing in
<PAGE> 4
person to vote at the meeting. All proxy cards which are properly executed and
received prior to the meeting and not so revoked will be voted at the meeting in
accordance with the instructions on them, if any. If no specification is made,
the proxy card will be voted for the Investment Advisory Agreement, for the
Investment Sub-Advisory Agreement, for the election of the five (5) nominees for
members of the Board of Managers listed in this proxy statement, and for the
ratification of the selection of Coopers & Lybrand L.L.P. as independent
accountants for the fiscal year ending December 31, 1998.
COST OF SOLICITATION
The cost of soliciting these proxies will be borne by The Travelers
Insurance Company ("Travelers Insurance"), the issuer of the variable annuity
contracts that use Account GIS as an investment alternative. Proxies may be
solicited by directors, officers or employees of Travelers Insurance on behalf
of the Board of Managers of Account GIS, either in person, by telephone or by
telegram.
CONTRACT OWNERS AND THE VOTE
Only Contract Owners of record at the close of business on February 20,
1998 (the record date) will be entitled to notice of and to vote at the annual
meeting. On the record date, there were 45,310,340.673 units of Account GIS
outstanding and entitled to be voted at the meeting. The number of full and
fractional votes which you as a Contract Owner are entitled to cast is set forth
on the enclosed proxy card. As of January 31, 1998, no single person or entity
owned beneficially a contract or contracts entitling it to cast more than 5% of
the total outstanding votes.
Approval of Proposals 1 and 2 requires the affirmative "vote of a majority
of the outstanding voting securities" of Account GIS. Under the Investment
Company Act of 1940, as amended ("1940 Act"), a "vote of a majority of the
outstanding voting securities" means the affirmative vote of (a) 67% of the
outstanding voting securities represented at the meeting, if more than 50% of
the outstanding voting securities are represented, or (b) more than 50% of the
outstanding voting securities, whichever is less.
Approval of Proposals 3 and 4 requires the affirmative vote of the holders
of a majority of the voting securities present at the Meeting in person or by
proxy. For Proposals 3 and 4, a quorum is present to conduct business at the
meeting if 20% of the voting securities of Account GIS are present at the
meeting in person or by proxy.
For all proposals, abstentions will be counted as present for purposes of
determining a quorum, but will not be counted as voting with respect to those
proposals from which Contract Owners abstain.
ANNUAL REPORT
Account GIS's Annual Report containing financial statements for the fiscal
year ended December 31, 1997, was mailed to Contract Owners of record as of
December 31, 1997. Copies of the Annual Report and the most recent semi-annual
report succeeding Account GIS's Annual Report may be obtained by writing to The
Travelers Insurance Company, Annuity Services, One Tower Square, Hartford,
Connecticut 06183-5030 without charge, or by calling 1-800-842-9368.
2
<PAGE> 5
1. APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT BETWEEN ACCOUNT GIS AND TAMIC
INTRODUCTION
Currently, TIMCO acts as investment adviser to Account GIS pursuant to an
investment advisory agreement dated December 30, 1992 and amended May 1, 1994
(the "Existing Advisory Agreement"). Under the Existing Advisory Agreement,
TIMCO is responsible for providing investment management services to Account
GIS.
Pursuant to an internal restructuring plan (the "Restructuring"), Travelers
Insurance is reorganizing how investment advisory and management services are
provided to portfolios for Travelers Insurance-sponsored variable annuity and
variable life insurance contracts. Under the Restructuring, TAMIC will become
the investment adviser to Account GIS, and TIMCO will become the Account's
sub-adviser. Travelers Insurance believes that the Restructuring should over
time permit the continued high quality investment management and provide for an
overall higher quality of service for Account GIS. Based on information provided
by management of TIMCO and TAMIC, Account GIS's performance has ranked above the
median of actively managed growth and income mutual funds that are used to fund
variable insurance products, regardless of asset size, for eight of the past ten
years.
It is anticipated that a new investment advisory agreement ("Proposed
Advisory Agreement") between Account GIS and TAMIC will be effective upon the
consummation of the Restructuring. The terms of the Proposed Advisory Agreement
that govern investment management services are substantially the same as the
terms that govern investment management services in the Existing Advisory
Agreement, except for the dates of execution and termination of the agreements,
the identity of the investment adviser (currently, TIMCO; in the Proposed
Advisory Agreement, TAMIC), the fee, and the contemplation of subadvisory
services. Further, it is anticipated that TAMIC will enter into an investment
sub-advisory agreement ("Proposed Sub-Advisory Agreement") with TIMCO for the
provision of investment sub-advisory services.
PROPOSALS 1 AND 2, WHICH EACH RELATE TO THE RESTRUCTURING, MUST BOTH BE
APPROVED BY CONTRACT OWNERS IN ORDER FOR EITHER OF THESE PROPOSALS TO BE
IMPLEMENTED. IN OTHER WORDS, CONTRACT OWNERS MUST APPROVE (I) THE PROPOSED
ADVISORY AGREEMENT, AND (II) THE PROPOSED SUB-ADVISORY AGREEMENT, IN ORDER FOR
THE RESTRUCTURING TO BE CONSUMMATED AND EACH OF THESE PROPOSALS TO BE
IMPLEMENTED.
THE PROPOSAL
At a special meeting of the Board of Managers held on February 27, 1998
("February Meeting"), the Managers, including all Managers who are not
"interested persons" of Account GIS (the "Disinterested Managers"), concluded
that the Restructuring and the execution of the Proposed Advisory Agreement
between Account GIS and TAMIC would be in the best interests of Account GIS and
Contract Owners. The Board unanimously approved the Proposed Advisory Agreement,
and recommended that it be submitted for approval of Contract Owners at the
Meeting. A copy of the Proposed Advisory Agreement between Account GIS and TAMIC
is attached as Exhibit A.
3
<PAGE> 6
THE CURRENT INVESTMENT ADVISER AND CURRENT ADVISORY AGREEMENT
TIMCO, a registered investment adviser located at One Tower Square,
Hartford Connecticut, currently serves as investment adviser to Account GIS.
TIMCO is a wholly owned subsidiary of Salomon Smith Barney Holdings Inc., which
is a wholly owned subsidiary of Travelers Group Inc., a financial services
holding company. TIMCO also acts as investment adviser or sub-adviser for other
investment companies used to fund variable products, as well as for individual
and pooled pension and profit-sharing accounts, and for affiliated companies of
Travelers Insurance.
TIMCO has acted as investment adviser to Account GIS since 1967. The
Existing Advisory Agreement and amendment thereto were last approved by a vote
of Contract Owners at their annual meetings held on April 23, 1993 and April 22,
1994, respectively. The Board last approved the continuance of the Advisory
Agreement at the January 28, 1997 Board of Managers meeting.
The Existing Advisory Agreement provides that TIMCO, subject to the
supervision of the Board of Managers, shall:
a. obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of Account
GIS, affecting the economy generally and individual companies or
industries, the securities of which are included in Account GIS's portfolio
or are under consideration for inclusion therein;
b. be authorized to purchase supplemental research and other services
from brokers at additional cost to Account GIS;
c. regularly furnish to the Board recommendations with respect to any
investment program for approval, modification or rejection by the Board;
d. take such steps as are necessary to implement the investment
program approved by the Board; and
e. regularly report to the Board with respect to implementation of the
approved investment program and any other activities in connection with the
administration of the assets of Account GIS.
As compensation for its services to Account GIS under the Existing Advisory
Agreement, TIMCO receives an amount equivalent on an annual basis to .45% of the
average daily assets of the Account. For the fiscal year ended December 31,
1997, the total advisory fees paid to TIMCO by Account GIS were $2,724,000.
4
<PAGE> 7
During Account GIS's last fiscal year, the Account paid brokerage
commissions to affiliated broker-dealers in the amounts shown, which constituted
the percentage of the Account's total brokerage commissions for the fiscal year
shown:
<TABLE>
<CAPTION>
AGGREGATE AMOUNT % OF AGGREGATE
TOTAL OF COMMISSIONS PAID TO COMMISSIONS PAID TO
FUND NAME COMMISSION AFFILIATED BROKERS(1)(2) AFFILIATED BROKERS
--------- ---------- ------------------------ -------------------
<S> <C> <C> <C>
The Travelers Growth $818,411 $22,730(1) 2.8%(1)
and Income Stock Account $71,521(2) 8.7%(2)
</TABLE>
- ---------------
(1) Robinson Humphrey Company Inc.
(2) Smith Barney Inc.
THE RESTRUCTURING
In an effort to ensure that investment advisory operations sponsored by
Travelers Insurance are managed in a consistent fashion and with adequate
resources, Travelers Insurance has determined to reorganize the provision of
investment management services for portfolios offered in its variable annuity
and variable life insurance products. Since 1996, new portfolios for Travelers
Insurance-sponsored variable annuities and life insurance have been established
with TAMIC serving as the adviser and certain other affiliated and
non-affiliated advisers serving as the sub-adviser. Travelers Insurance proposed
to the Managers of Account GIS that the Account adopt this structure.
The adviser/sub-adviser structure permits TAMIC to supervise and evaluate
investment sub-advisers with the objective of selecting sub-advisers with more
depth of personnel and different styles of management. This type of business
structure is used by a number of investment providers in today's marketplace and
is consistent with maintaining a focused, well-qualified investment capability.
In this framework, TAMIC has more flexibility and potentially more control over
management, supervision, and administration of the sub-advisers to the account.
Under the Restructuring, TAMIC will be obligated to perform the same
investment management services to Account GIS that TIMCO currently performs,
plus TAMIC will be obligated to supervise any sub-adviser to the Account. TAMIC
will contract with TIMCO, as sub-adviser, to perform investment management
services for Account GIS subject to the supervision of TAMIC and the Board of
Managers.
Consummation of the Restructuring would result in an "assignment" (as
defined in the 1940 Act) of the Existing Advisory Agreement between Account GIS
and TIMCO. As required by the 1940 Act, the Existing Advisory Agreement provides
for its automatic termination in the event of an assignment.
In anticipation of the Restructuring, and in order for TAMIC to serve as
investment adviser to Account GIS after consummation of the Restructuring
without interruption of advisory services, the Proposed Advisory Agreement
between Account GIS and TAMIC must be approved (i) by a majority of
Disinterested Managers and (ii) by the holders of a majority of the outstanding
voting securities of Account GIS.
5
<PAGE> 8
THE PROPOSED ADVISORY AGREEMENT
The Board of Managers approved the Proposed Advisory Agreement between
Account GIS and TAMIC at the February Meeting. Subject to Contract Owner
approval, the Proposed Advisory Agreement will take effect on May 1, 1998.
The form of the Proposed Advisory Agreement is the same in all material
respects as the Existing Advisory Agreement except for (i) the dates of
execution and termination, (ii) the identity of the investment adviser, (iii)
the fees, and (iv) the contemplation of sub-advisory services. TAMIC will be
responsible for its own costs and expenses in providing advisory services to
Account GIS under the Proposed Advisory Agreement, and also will be responsible
for paying any fees for sub-advisory services.
TAMIC is a registered investment adviser that has provided investment
advisory services since its incorporation in 1978. TAMIC currently manages
assets over $4.9 billion. Its principal offices are located at One Tower Square,
Hartford, Connecticut, and it is a direct wholly-owned subsidiary of Travelers
Insurance, and an indirect wholly-owned subsidiary of Travelers Group Inc. TAMIC
acts as investment adviser or sub-adviser for other investment companies used to
fund variable products, as well as for individual and pooled pension and
profit-sharing accounts, and for domestic insurance companies affiliated with
The Travelers Insurance Company and nonaffiliated insurance companies. Attached
Exhibit B lists the other investment companies with similar investment
objectives to those of Account GIS for which TAMIC provides advisory services,
the size of the investment company, and the fee TAMIC receives for its services.
The principal executive officers and directors of TAMIC are set forth in
the following table along with their addresses and principal occupations, as
well as their respective positions with registered investment companies for
which TAMIC currently acts as investment adviser.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH TRAVELERS POSITION WITH
OF PRINCIPAL EXECUTIVE ASSET MANAGEMENT OTHER INVESTMENT
OFFICERS AND DIRECTORS INTERNATIONAL CORPORATION COMPANIES(2) PRINCIPAL OCCUPATION
- ---------------------- ------------------------- ---------------- --------------------
<S> <C> <C> <C>
Marc P. Weill Director and Chairman Senior Vice President,
Chief Investment Officer
Travelers Insurance
David A. Tyson Director, President and Senior Vice President
Chief Investment Officer Travelers Insurance
F. Denney Voss Director and Senior Vice Senior Vice President
President Travelers Insurance
Joseph P. Rueli Director, SVP, and Chief Vice President
Financial Officer Travelers Insurance
John R. Britt Director and Corporate Assistant Secretary
Secretary Travelers Insurance
</TABLE>
- ---------------
(1) The address for all of the named persons is The Travelers Insurance Company,
One Tower Square, Hartford, Connecticut.
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<PAGE> 9
(2) Investment companies currently managed by TAMIC: The Travelers Quality Bond
Account for Variable Annuities; The Travelers Money Market Account for
Variable Annuities; The Travelers Timed Bond Account for Variable Annuities;
Cash Income Trust; High Yield Bond Trust; Managed Assets Trust, the U.S.
Government Securities portfolio and three separate series of the Zero Coupon
Bond Fund Portfolio (Series 1998, 2000 and 2005), MFS Emerging Growth
Portfolio, MFS Research Portfolio, MFS Mid Cap Growth Portfolio, Lazard
International Stock Portfolio, Federated High Yield Portfolio, Federated
Stock Portfolio, Large Cap Portfolio, Equity Income Portfolio and the
Travelers Quality Bond Portfolio of The Travelers Series Trust.
It is anticipated that TAMIC's becoming the investment adviser should not
effect the quality of management services provided to Account GIS and Contract
Owners, and that TAMIC will exercise effective supervision and evaluation of
contemplated services (see below). Personnel of TIMCO who perform investment
management services for Account GIS pursuant to the Existing Advisory Agreement
will continue to do so under the Proposed Sub-Advisory Agreement. No change in
the level, quality, or quantity of such services to be performed by TIMCO is
contemplated. As discussed below, however, the investment advisory fees paid to
the adviser will increase.
Under the current investment advisory agreement, TIMCO receives an amount
equivalent on annual basis to .45% of the average daily net assets of Account
GIS. The Proposed Advisory Agreement would change the advisory fee as follows:
<TABLE>
<CAPTION>
ANNUAL AGGREGATE
MANAGEMENT NET ASSET VALUE
FEE OF THE ACCOUNT
---------- ---------------
<C> <S> <C>
0.65% of the first $ 500,000,000, plus
0.55% of the next $ 500,000,000, plus
0.50% of the next $ 500,000,000, plus
0.45% of the next $ 500,000,000, plus
0.40% of amounts over $2,000,000,000
</TABLE>
The advisory fees would be deducted on each valuation date. The net assets under
management for Account GIS as of December 31, 1997 were $670.9 million.
Pro forma expense information for Account GIS (post-Restructuring) is as
follows.
THE INFORMATION IN THE TABLES BELOW IS ESTIMATED BASED ON ACTUAL EXPENSES
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 FOR THE UNIVERSAL ANNUITY.
DOLLAR AMOUNT OF ADVISORY FEES PAID
(FISCAL YEAR ENDED DECEMBER 31, 1997)
<TABLE>
<CAPTION>
EXISTING AMENDED
ADVISORY ADVISORY
AGREEMENT AGREEMENT
--------- ---------
<S> <C> <C>
Amount of Fees Paid (Existing) or
that Would Have Been Paid
(Proposed) $2,724,400 $3,807,000
Percentage Difference from Amount
Paid Under Existing Agreement N/A 39.8% increase
</TABLE>
7
<PAGE> 10
COMPARATIVE FEE TABLE
<TABLE>
<CAPTION>
EXISTING FEE NEW FEES
------------ --------
<S> <C> <C>
Contract Owner Expenses
Deferred Sales Load
(as a percentage of
purchase payments) 5.00% 5.00%
Semi-Annual Contract Fee $15.00 $15.00
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
EXISTING FEE NEW FEE
------------ -------
<S> <C> <C>
Management Fee 0.45% 0.62%
Mortality and Expense Risk 1.25% 1.25%
---- ----
Total Expenses 1.70% 1.87%
</TABLE>
EXAMPLE
The following illustrates the expenses on a $1,000 investment under the
existing and proposed fees and the expenses stated above, assuming (1) a 5%
annual return, and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Existing Fee $69 $109 $151 $219
Proposed Fee $70 $113 $159 $234
</TABLE>
The purpose of this example and the table to assist investors in
understanding the various costs and expenses of investing in shares of Account
GIS. The example above should not be considered a representation of past or
future expenses of Account GIS. Actual expenses may be higher or lower than
those shown above.
* * *
The Proposed Advisory Agreement also includes a provision contemplating
that TAMIC will engage a sub-adviser. Specifically, paragraph 3 of the Proposed
Advisory Agreement provides "TAMIC may engage a sub-adviser to furnish
investment management information and advice to assist TAMIC in carrying out its
responsibilities under this Agreement."
In evaluating the Proposed Advisory Agreement, the Board of Managers
considered the skills and capabilities of TAMIC to provide investment management
and supervision services to the Account. The Board reviewed written materials
relating to the Proposed Advisory Agreement in advance of the February Meeting.
These materials described, among other things, TAMIC senior personnel, portfolio
managers, analysts, its method of operation, investment philosophy, performance
record, compliance history, and financial condition. Further, representatives
from TAMIC met
8
<PAGE> 11
with the Board at the February Meeting, at which time such representatives
described the resources available to TAMIC to secure quality investment
research, investment advice, and sub-adviser supervisory services, and answered
questions asked of them by the Board.
The Board of Managers also took into account that the Proposed Advisory
Agreement is substantially the same as the Existing Advisory Agreement except
for (i) the dates of execution and termination (ii) the identity of the
investment adviser, (iii) the fees, and (iv) the contemplation of sub-advisory
services.
The Board of Managers also analyzed a number of factors in examining the
basis for the proposed increase in the advisory fees charged by TAMIC to Account
GIS. First, the Board noted that based on comparative information furnished by
TAMIC management, the current advisory fee is significantly below the median of
advisory fees charged to actively managed variable growth and income mutual
funds used to fund variable insurance products ("underlying funds") that are
comparable in net asset size to Account GIS. The Board also noted that the
Company would continue to pay the Account's other expenses, and that even with
the increase in advisory fees charged to Account GIS, Account GIS's actual total
expenses would approximate the median actual total expenses of such similar
variable growth and income underlying funds.
Second, the Board of Managers analyzed the structure of the fees under the
Proposed Advisory Agreement. Unlike the fees under the Existing Advisory
Agreement, the proposed advisory fee will have breakpoints. This means that as
the average net assets of Account GIS increase, the fee rates charged by TAMIC
will decrease. Thus, TAMIC will pass along the economies of scale it recognizes
from handling a greater pool of assets. Because of such fee breakpoints, the
Board noted that if the average net assets of Account GIS were sufficiently
large (i.e., over $2 billion), the advisory fees charged to the Account on
assets over $2 billion would be lower under the Proposed Advisory Agreement than
under the Existing Advisory Agreement.
Third, the Board of Managers considered the expected profitability to TAMIC
of providing investment management and supervision services to Account GIS. The
Board noted that based on comparative information furnished by TAMIC management,
the level of profitability for TAMIC under the Existing Advisory Agreement was
significantly below the expected profitability for TIMCO and TAMIC for new
mutual fund portfolios recently offered in its variable annuity products by
Travelers Insurance. TAMIC represented to the Board that the expected level of
profit under the Proposed Advisory Agreement would be consistent with the
profits TAMIC and TIMCO are expected to receive from other funds sponsored by
the Company.
Finally, the Board considered the financial resources of TAMIC and the
personnel who would be providing services to Account GIS. The Board reviewed
TAMIC's financial statements, and also noted that TAMIC, with over $4.9 billion
of assets under management, has more assets under management than TIMCO, which
has approximately $2.0 billion of assets under management. The Board of Managers
also considered the fee in light of the fact that senior management of TAMIC
would perform services for Account GIS. The Board viewed certain incentives
provided to such members of senior management, and the anticipated retention of
such members and of other key employees of TAMIC as important in providing
Account GIS with high level investment management and supervision services.
9
<PAGE> 12
After consideration of the above factors, and such other factors and
information that the Managers deemed relevant, the Managers, including the
Disinterested Managers, unanimously approved the Proposed Advisory Agreement and
voted to recommend its approval to the Contract Owners.
In the event that Contract Owners do not approve the Proposed Advisory
Agreement, the Restructuring would not be consummated, and TIMCO would continue
to serve as investment adviser for Account GIS under the terms of the Existing
Advisory Agreement.
RECOMMENDATION OF THE BOARD OF MANAGERS
The Board of Managers of Account GIS recommends approval of the Proposed
Advisory Agreement between Account GIS and TAMIC.
2. APPROVAL OF INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN TAMIC AND TIMCO
THE PROPOSAL
In anticipation of the Restructuring, the Proposed Sub-Advisory Agreement
between TAMIC and TIMCO must be approved (i) by the Managers of Account GIS,
including the Disinterested Managers, and (ii) the holders of a majority of the
outstanding voting securities of the Account GIS. The Board of Managers approved
the Proposed Sub-Advisory Agreement between TAMIC and TIMCO at its February
Meeting. The Proposed Sub-Advisory Agreement will take effect on May 1, 1998, if
approved by a majority of Contract Owners.
THE PROPOSED SUB-ADVISER AND THE PROPOSED SUB-ADVISORY AGREEMENT
TIMCO is a registered investment adviser which has provided investment
advisory services since its incorporation in 1967. TIMCO currently manages
assets of over $2 billion, and is the current investment adviser to Account GIS.
Its principal offices are located at One Tower Square Hartford, Connecticut and
it is a wholly owned subsidiary of Salomon Smith Barney Holdings, Inc., which is
a wholly owned subsidiary of Travelers Group Inc.
10
<PAGE> 13
The principal executive officers and directors of TIMCO are set forth in
the following table along with their addresses and principal occupations, as
well as their respective positions with registered investment companies for
which TIMCO currently acts as investment adviser.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH POSITION WITH
OF PRINCIPAL EXECUTIVE THE TRAVELER INVESTMENT OTHER INVESTMENT
OFFICER AND DIRECTORS(1) MANAGEMENT COMPANY COMPANIES(2) PRINCIPAL OCCUPATION
- ------------------------ ----------------------- ---------------- --------------------
<S> <C> <C> <C>
Thomas W. Jones(2) Director and Chairman Vice Chairman
Travelers Group Inc.
Heath B. McLendon(2) Director Chairman, Board of Managing Director
Managers/Trustees Smith Barney Inc.
Virgil H. Cumming(2) Director Managing Director
Smith Barney Inc.
Sandip A. Bhagat(3) Director, President and President and Chief
Chief Executive Officer Executive Officer
TIMCO
Michael F. Rosenbaum(2) Corporate Secretary General Counsel to
Asset Management
Smith Barney Inc.
</TABLE>
- ---------------
(1) Investment companies currently managed by TIMCO: The Travelers Growth and
Income Stock 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; Managed Assets Trust; Travelers Series
Trust -- Disciplined Mid Cap Stock Portfolio. TIMCO also manages other
investment companies for Salomon Smith Barney.
(2) The address for the above-named persons is 388 Greenwich Street, New York,
New York.
(3) The address for the above-named person is The Travelers Investment
Management Company, One Tower Square, Hartford, Connecticut.
Attached Exhibit C contains information regarding the size of each investment
company (or series thereof) that is advised or sub-advised by TIMCO and which
has an investment objective similar to that of Account GIS, and the advisory fee
rate paid by such investment company.
Pursuant to the Proposed Sub-Advisory Agreement, which is attached as
Exhibit D, Account GIS's proposed investment adviser, TAMIC, will contract with
TIMCO for sub-advisory services. Under the Proposed Sub-Advisory Agreement,
TIMCO is authorized to: (a) obtain and evaluate pertinent economic, financial,
and other information affecting the economy generally and certain companies as
such information relates to securities which are purchased for or considered for
purchase in Account GIS; (b) manage Account GIS's assets in accordance with
Account GIS's investment objective(s) and policies as stated in the Account's
prospectus and statement of additional information; (c) make investment
decisions for Account GIS; (d) place purchase and sale orders for portfolio
transactions on behalf of Account GIS and manage otherwise uninvested cash
assets of Account GIS; (e) price such portfolio securities as TAMIC and TIMCO
shall mutually agree upon from time to time; (f) execute account documentation,
agreements, contracts and
11
<PAGE> 14
other documents as TIMCO shall be requested by brokers, dealers, counterparties
and other persons in connection with its management of the assets of Account GIS
(in such respect, and only for this limited purpose, TIMCO shall act as TAMIC's
and Account GIS's agent and attorney-in-fact); (g) employ professional portfolio
managers and securities analysts who provide research services to Account GIS;
and (h) regularly report to TAMIC and to the Board of Managers with respect to
its sub-advisory activities. In addition, TIMCO will execute trades, and in
general take such action as is appropriate to effectively manage Account GIS's
investment practices and provide investment advisory assistance and portfolio
management advice to TAMIC for Account GIS.
TIMCO will be paid by TAMIC for its investment sub-advisory services to
Account GIS. For its services, TAMIC will pay TIMCO a fee equivalent on an
annual basis the following:
<TABLE>
<CAPTION>
ANNUAL AGGREGATE
SUB-ADVISORY NET ASSET VALUE
FEE OF THE ACCOUNT
- -------------- --------------------
<C> <S> <C>
0.45% of the first $ 700,000,000, plus
0.275% of the next $ 300,000,000, plus
0.25% of the next $ 500,000,000 plus
0.225% of the next $ 500,000,000 plus
0.20% of amounts over $2,000,000,000
</TABLE>
Under its terms, the Proposed Sub-Advisory Agreement will continue in
effect until May 1, 2000, and from year to year thereafter so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Disinterested Managers of the Account GIS, cast in person at a meeting
called for the purpose of voting on the approval of the terms of such renewal,
and by either the Managers of the Account GIS or the affirmative vote of a
majority of the outstanding voting securities of Account GIS. The Proposed
Sub-Advisory Agreement may be terminated at any time, without penalty, by the
Managers of the Account GIS or by vote of at least a majority of the outstanding
voting securities of Account GIS on 60 days' written notice to TIMCO, or by
TIMCO if it gives 60 days' written notice to TAMIC. In addition, the Proposed
Sub-Advisory Agreement terminates automatically upon its assignment.
In evaluating the Proposed Sub-Advisory Agreement, the Board of Managers
considered the terms of the Restructuring and the ability of TIMCO to provide
sub-advisory services. The Board of Managers received written materials relating
to the Proposed Sub-Advisory Agreement in advance of the February Meeting, and
had the opportunity to ask questions and request further information in
connection with such consideration. The materials described among other things
TIMCO senior personnel, portfolio managers, analysts, its method of operation,
investment philosophy, performance record, compliance history and financial
condition. Representatives of TIMCO met with the Board of Managers at the
February Meeting, discussed the materials, and responded to questions.
Further, noting their favorable experience in overseeing, on an ongoing
basis, the nature and quality and extent of TIMCO's services to Account GIS, the
Board considered, among other factors: (1) the representations by TIMCO that no
material change in the current management or facilities available to the Account
will occur; (2) the necessity of maintaining and enhancing TIMCO's ability to
retain and attract capable personnel to serve Account GIS; (3) TIMCO's
expenditures in
12
<PAGE> 15
enhancing its research and trading capabilities for Account GIS; (4) the
investment record of TIMCO in managing Account GIS and other investment
companies for which it acts as investment adviser or sub-adviser; (5) TIMCO's
and its affiliates overall profitability; (6) data such as investment
performance, advisory fees, and expense ratios of other investment companies not
advised by TIMCO but believed to be generally comparable to Account GIS; (7)
current and developing conditions in the financial services industry, including
the entry into the industry of large and highly capitalized companies which are
spending and appear to be prepared to continue to spend substantial sums of
engage personnel and to provide services to competing investment companies; and
(8) the financial resources of TIMCO. In particular, the Board considered that,
based on comparative information furnished by management of TIMCO, Account GIS's
performance has ranked above the median of actively managed growth and income
mutual funds that are used to fund variable insurance products, regardless of
asset size, for eight of the past ten years.
Based on its review, the Board concluded that the Proposed Sub Advisory
Agreement is in the best interests of Account GIS and Contract Owners.
Accordingly, after consideration of the above factors, and such other factors
and information that the Managers deemed relevant, the Mangers, including the
Disinterested Managers, unanimously approved the Proposed Sub-Advisory Agreement
and voted to recommend its approval to the Contract Owners.
In the event that Contract Owners do not approve the Proposed Sub Advisory
Agreement, the Restructuring would not be consummated, and TIMCO would continue
to serve as investment adviser pursuant to the terms of the Existing Advisory
Agreement.
RECOMMENDATION OF THE BOARD OF MANAGERS
The Board of Managers for Account GIS recommends approval of the Proposed
Sub-Advisory Agreement between TAMIC and TIMCO.
3. ELECTION OF THE BOARD OF MANAGERS
At the meeting, five (5) members of the Board of Managers are to be elected
to hold office until the next annual meeting and until their successors shall
have been elected and qualify. Unless this authority has been withheld on the
proxy card, it is intended that the proxy card will be voted for the election of
the five (5) nominees named below. If any of the nominees are unable to serve at
the time of the meeting, and there is no reason to believe they will not serve,
the persons named as proxies may vote for any other person or persons as they
may determine at their discretion. The following nominees are recommended by the
Nominating Committee pursuant to their meeting held on January 30, 1998.
13
<PAGE> 16
<TABLE>
<CAPTION>
NOMINEE FOR OWNED
MEMBER PRINCIPAL OCCUPATION 12/31/97
- ------------------------ ---------------------------------------------------- ---------
<S> <C> <C>
Heath B. McLendon* Managing Director (1993-present), Smith Barney Inc. None
Age 64 ("Smith Barney"); Chairman (1993-present), Smith
Member Since 1995 Barney Strategy Advisors, Inc.; President and
Director (1994-present), Mutual Management Corp.;
Director and President (1996-present) of Travelers
Investment Advisers; Chairman and Director of
forty-two investment companies associated with Smith
Barney; Chairman, Board of Trustees, Drew
University; Advisory Director, First Empire State
Corporation; Chairman, Board of Managers, seven
Variable Annuity Separate Accounts of The Travelers
Insurance Company+; chairman, Board of Trustees,
five Mutual Funds sponsored by The Travelers
insurance Company++; prior to July 1993, Senior
Executive Vice President of Shearson Lehman Brothers
Inc.; Vice Chairman of Shearson Asset Management;
Director PanAgora Asset Management, Inc. and
PanAgora Asset Management Limited.
Knight Edwards Of Counsel (1998-present), Partner (1956-1988), None
Age 74 Edwards & Angell, Attorneys; Member, Advisory Board
Member Since 1969 (1973-1994), thirty-one mutual funds sponsored by
Keystone Group, Inc.; Member, Board of Managers,
seven Variable Annuity Separate Accounts of The
Travelers Insurance Company+; Trustee, five Mutual
Funds sponsored by The Travelers Insurance
Company++.
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
NOMINEE FOR OWNED
MEMBER PRINCIPAL OCCUPATION 12/31/97
- ------------------------ ---------------------------------------------------- ---------
<S> <C> <C>
Robert E. McGill, III Retired manufacturing executive. Director None
Age 66 (1983-1995), Executive Vice president (1989-1994)
Member Since 1974 and Senior Vice President, Finance and
Administration (1983-1989), The Dexter Corporation
(manufacturer of specialty chemicals and materials);
Vice Chairman (1990-1992), Director (1983-1995),
Life Technologies, Inc. (life science/biotechnology
products); Director (1994-present), The Connecticut
Surety Corporation (insurance); Director
(1995-present) CN Bioscience, Inc. (life
science/biotechnology products); Director
1995-present, Chemfab Corporation (specialty
materials manufacturer); Member, Board of Managers,
seven Variable Annuity Separate Accounts of The
Travelers Insurance Company+; Trustee, five mutual
Funds sponsored by The Travelers Insurance
Company++.
Lewis Mandell Dean, College of Business Administration (1995- None
Age 55 present), Marquette University; Professor of Finance
Member Since 1990 (1980-1995) and Associate Dean (1993-1995), School
of Business Administration, and Director, Center for
Research and Development in Financial Services
(1980-1995), University of Connecticut;
Director(1992-present), GZA Geoenvironmental Tech,
Inc. (engineering services); Member, Board of
Managers, seven Variable Annuity Separate Accounts
of The Travelers Insurance Company+; (Trustee, five
Mutual Funds sponsored by The Travelers Insurance
Company++.)
Frances M. Hawk, CFA,CFP Private Investor (1997-present); Portfolio Manager None
Age 50 (1992-1997), HLM Management Company, Inc.
Member Since 1991 (investment management); Assistant Treasurer,
Pensions and Benefits Management (1989-1992), United
Technologies Corporation (broad-based designer and
manufacturer of high technology products); Member,
Board of Managers, seven Variable Annuity Separate
Accounts of The Travelers Insurance Company+;
Trustee, five Mutual Funds sponsored by The
Travelers Insurance Company++.
</TABLE>
+These seven Variable Annuity Separate Accounts are; 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
15
<PAGE> 18
Stock Account for Variable Annuities; The Travelers Timed Short-Term Bond
Account for Variable Annuities; The Travelers Timed Aggressive Stock Account for
Variable Annuities and The Travelers Timed Bond Account for Variable Annuities.
++These five Mutual Funds are: Capital Appreciation Fund; Cash Income Trust;
High Yield Bond Trust; Managed Assets Trust and The Travelers Series Trust.
* Mr. McLendon is an "interested person" within the meaning of the 1940 Act by
virtue of his position as Director of TIMCO, the proposed sub-adviser to Account
GIS. Mr. McLendon also owns shares and options to purchase shares of Travelers
Group Inc., the indirect parent of The Travelers Insurance Company.
Prior to each annual meeting of Contract Owners at which members of the
Board of Managers are to be elected or if a vacancy in the Board of Managers
occurs between such meetings, the Nominating Committee of the Board of Managers
recommends candidates for nomination as members of the Board of Managers.
Account GIS's Nominating Committee consists of those members of the Board of
Managers who are not "interested persons' as defined in the 1940 Act. Currently,
these are Knight Edwards, Robert E. McGill, III, Lewis Mandell and Frances M.
Hawk. During the fiscal year ended December 31, 1997, the Nominating Committee
held one meeting. The Committee will consider potential nominees recommended by
Contract Owners. Any Contract Owner desiring to present a candidate to the
Committee for consideration should submit the name of the candidate, in writing,
to Account GIS's Secretary prior to December 31, 1998.
MEETINGS
There were four regular meetings and one special meeting of the Board of
Managers of Account GIS during 1997. All members of the Board of Managers
attended at least 75% of the aggregate of its meetings and the meetings of the
committees of which they were members.
REMUNERATION OF THE BOARD OF MANAGERS
Members of the Board of Managers who are also employees of Travelers Group,
Inc. or its subsidiaries are not entitled to any fee. Members of the Board of
Managers who are not affiliated as employees of Travelers Group Inc. or its
subsidiaries receive an aggregate annual retainer of $19,000 for service on the
Boards of the seven Variable Annuity Separate Accounts established by Travelers
Insurance and the five Mutual Funds sponsored by Travelers Insurance. They also
receive an aggregate fee of $2,500 for each meeting of such Boards attended.
Currently, Travelers Insurance pays such compensation under an Agreement with
Account GIS.
In addition, the Fund has adopted an Emeritus Program for non-interested
Board members pursuant to which the Fund's Board and the management of the Fund
can continue to benefit from the experience of long-time Board members who have
resigned from the Board. Pursuant to this Program, Board members with 10 years
of service may agree to provide services as an emeritus director at age 72 and,
pursuant to resolutions adopted by the Fund, must retire from the Board at age
80. Service as an emeritus director is limited to 10 years. Each emeritus
director agrees to be
16
<PAGE> 19
available for consultation with the Board and management of the Fund and may
attend Board meetings.
BOARD MEMBER COMPENSATION, BOARD AND COMMITTEE MEETINGS
<TABLE>
<CAPTION>
AMOUNTS PAID DURING CALENDAR YEAR
ENDED DECEMBER 31, 1997 FOR FIVE MUTUAL
FUNDS AND SEVEN VARIABLE SEPARATE
BOARD MEMBER ACCOUNTS (AGGREGATE FEE)
- ----------------- ---------------------------------------
<S> <C>
Heath B. McLendon N/A
Knight Edwards $31,500.00
Robert E. McGill
III $34,000.00
Lewis Mandell $34,000.00
Frances M. Hawk $34,000.00
</TABLE>
RECOMMENDATION OF THE BOARD OF MANAGERS
The Board of Managers of Account GIS recommends approval of the Proposal to
elect the five (5) members of the Board.
4. RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
It is proposed that Contract Owners ratify the action of the Board of
Managers, including the Disinterested Managers, taken on January 30, 1998 by a
unanimous vote, cast in person, to select the firm of Coopers & Lybrand L.L.P.
as the independent accountants of Account GIS for the fiscal year ending
December 31, 1998. A representative from Coopers & Lybrand L.L.P. is expected to
be present at the meeting with the opportunity to make a statement if desired,
and is expected to be available to respond to appropriate questions.
The services provided to Account GIS by Coopers & Lybrand L.L.P. were in
connection with the audit function for the year 1997 and included primarily the
examination of Account GIS's financial statements and the review of filings made
with the Securities and Exchange Commission.
The Board also has an Audit Committee consisting of those members who are
not "interested persons" as defined in the 1940 Act. The Audit Committee reviews
the scope and results of the Fund's annual audits with the Fund's independent
accountant and recommends the engagement of the accountants. Currently, the
members of the Audit Committee are Knight Edwards, Robert E. McGill III, Lewis
Mandell and Frances M. Hawk and are not "interested persons" as defined in the
1940 Act. During the fiscal year ended December 31, 1997, the Audit Committee
held one meeting.
RECOMMENDATION OF THE BOARD OF MANAGERS
The Board of Managers of Account GIS recommends approval of the Proposal to
ratify the selection of Coopers & Lybrand L.L.P. as independent accountants.
17
<PAGE> 20
5. OTHER BUSINESS
The Board of Managers knows of no other business to be presented at the
meeting. The proxy card gives the persons named in the proxy discretion to vote
according to their best judgment if any other business properly comes before the
meeting.
ADDITIONAL INFORMATION
CONTRACT OWNER PROPOSALS
All Contract Owner proposals to be included in the Proxy Statement for the
next annual meeting must be received by Account GIS's Secretary at One Tower
Square, Hartford, Connecticut 06183 by November 1, 1998.
It is suggested that Contract Owners submit their proposals by Certified
Mail -- Return Receipt Requested. The Securities and Exchange Commission has
adopted certain requirements which apply to any proposals of Contract Owners.
DISTRIBUTION AND MANAGEMENT AGREEMENT
Travelers Insurance, One Tower Square, Hartford, Connecticut serves as the
administrator of Account GIS. Tower Square Securities, Inc. ('Tower Square'),
One Tower Square, Hartford, Connecticut, is the principal underwriter for
Account GIS.
OFFICERS OF ACCOUNT GIS
<TABLE>
<CAPTION>
NAME TITLE POSITION HELD SINCE
---- ----- -------------------
<S> <C> <C>
Ernest J. Wright Secretary October 21, 1994
Kathleen A. McGah Assistant Secretary January 27, 1995
David A. Golino Principal Accounting Officer January 30, 1998
</TABLE>
The officers of Account GIS serve for one year or until their respective
successors are chosen and qualified. Account GIS pays no salaries or
compensation to any of its officers, all of whom are employees of The Travelers
Insurance Company or its affiliates.
18
<PAGE> 21
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made as of this 1st day of May, 1998, between
Travelers Asset Management International Corporation, a New York general
business corporation (hereinafter "TAMIC") and The Travelers Growth and Income
Stock Account for Variable Annuities (hereinafter "Account GIS"), a separate
account of The Travelers Insurance Company established by authority of a
resolution of The Travelers Insurance Company's Board of Directors on September
22, 1967, pursuant to Public Act 529 of the 1967 Connecticut General Assembly.
WITNESSETH:
WHEREAS, Account GIS and TAMIC wish to enter into an agreement setting
forth the terms upon which TAMIC will perform certain services for Account GIS.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. Account GIS hereby employs TAMIC to manage the investment and
reinvestment of the assets of Account GIS and to perform the other
services herein set forth, subject to the supervision of the Board of
Managers of Account GIS (hereinafter the "Board") for the period and on
the terms herein set forth. TAMIC hereby accepts such employment and
agrees during such period, at its own expense, to render the services
and to assume the obligations herein set forth for the compensation
herein provided.
2. In carrying out these obligations to manage the investment and
reinvestment of the assets of Account GIS, TAMIC shall:
a. obtain and evaluate pertinent economic, statistical and financial
data and other information relevant to the investment policy of
Account GIS, affecting the economy generally and individual companies
or industries, the securities of which are included in Account GIS's
portfolio or are under consideration for inclusion therein;
b. be authorized to purchase supplemental research and other services
from brokers at additional cost to Account GIS;
c. regularly furnish to the Board recommendations with respect to any
investment program for approval, modification or rejection by the
Board;
d. take such steps as are necessary to implement the investment program
approved by the Board; and
e. regularly report to the Board with respect to implementation of the
approved investment program and any other activities in connection
with the administration of the assets of Account GIS.
3. TAMIC may engage a sub-adviser to furnish investment management
information and advice to assist TAMIC in carrying out its
responsibilities under this Agreement.
A-1
<PAGE> 22
4. Any investment program undertaken by TAMIC pursuant to this Agreement
and any other activities undertaken by TAMIC on behalf of Account GIS
shall at all times be subject to any directives of the Board or any duly
constituted committee thereof acting pursuant to like authority.
5. For the services rendered hereunder, TAMIC will receive an amount
equivalent on an annual basis to the following:
<TABLE>
<CAPTION>
AGGREGATE
ANNUAL NET ASSET VALUE
MANAGEMENT FEE OF THE ACCOUNT
- -------------- --------------------
<C> <S> <C>
0.65% of the first $ 500,000,000, plus
0.55% of the next $ 500,000,000, plus
0.50% of the next $ 500,000,000, plus
0.45% of the next $ 500,000,000, plus
0.40% of amounts over $ 2,000,000,000
</TABLE>
The advisory fees will be deducted on each valuation date.
6. The services of TAMIC to Account GIS hereunder are not to be deemed
exclusive and TAMIC shall be free to render similar services to others
so long as its services hereunder are not impaired or interfered with
thereby.
7. If approved by a vote of a majority of the outstanding voting securities
of Account GIS (as defined in the Investment Company Act of 1940), this
Investment Advisory Agreement:
a. may not be terminated by TAMIC, without the prior approval of a new
Investment Advisory Agreement by a vote of a majority of the
outstanding voting securities of Account GIS, and shall be subject to
termination, without the payment of any penalty, upon sixty days'
written notice to the investment adviser, by the Board of Managers or
by a vote of a majority of the outstanding voting securities of
Account GIS;
b. shall not be amended without prior approval of a majority of the
outstanding voting securities of Account GIS;
c. shall automatically terminate upon assignment by either party; and
d. shall continue in effect for a period of more than two years from the
date of its execution, only so long as such continuance is
specifically approved (i) at least annually by a vote of a majority
of the Board of Managers who are not parties to, or interested
persons of any party to, such agreement, cast in person at a meeting
called for the purpose of voting on such approval and at which the
Board has been furnished such information as may be reasonably
necessary to evaluate the terms of said agreement, or (ii) by a vote
of a majority of the outstanding voting securities of Account GIS.
8. This Investment Advisory Agreement is subject to the provisions of the
Investment Company Act of 1940, as amended, and the rules and
regulations of the Securities and Exchange Commission.
A-2
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this Investment Advisory
Agreement to be signed by their respective officials thereunto duly authorized
and seals to be affixed, in the case of TAMIC, as of the day and year first
above written.
THE TRAVELERS GROWTH AND INCOME STOCK
ACCOUNT FOR VARIABLE ANNUITIES
By:
--------------------------------------
Chairman, Board of Managers
WITNESS:
- --------------------------------------
Secretary, Board of Managers
TRAVELERS ASSET MANAGEMENT
INTERNATIONAL CORPORATION
By:
--------------------------------------
President
ATTEST: (Seal)
- --------------------------------------
Corporate Secretary
A-3
<PAGE> 24
EXHIBIT B
The following table provides information on investment companies advised or
sub-advised by TAMIC with an investment objective similar to Account GIS.
<TABLE>
<CAPTION>
ADVISORY OR
NAME OF NET ASSETS ON SUBADVISORY
INVESTMENT COMPANY 12/31/97 FEE RATE
- -------------------------- ------------- -----------------------------
<S> <C> <C>
Federated Stock Portfolio $ 13,607,000 .625% (.375% to Sub-adviser)
Large Cap Portfolio $ 14,100,000 .75% (.45% to Sub-adviser)
Equity Income Portfolio $ 26,600,000 .75% (.45% to Sub-adviser)
</TABLE>
B-1
<PAGE> 25
EXHIBIT C
The following table provides information on investment companies advised or
sub-advised by TIMCO with an investment objective similar to Account GIS.
<TABLE>
<CAPTION>
ADVISORY OR
NAME OF NET ASSETS ON SUBADVISORY
INVESTMENT COMPANY 12/31/97 FEE RATE
- --------------------------- ------------- -----------
<S> <C> <C>
The Travelers Timed Growth
and Income Stock Account $ 212,664,000 0.32%
Managed Assets Trust
(Stock only) $ 142,209,000 0.50%
</TABLE>
C-1
<PAGE> 26
EXHIBIT D
INVESTMENT SUB-ADVISORY AGREEMENT
ENTERED INTO BETWEEN
TRAVELERS ASSET MANAGEMENT INTERNATIONAL COMPANY, INC.
AND
THE TRAVELERS INVESTMENT MANAGEMENT COMPANY
This Investment Sub-Advisory Agreement (the "Agreement") is entered into as
of May 1, 1998, by and between Travelers Asset Management International
Corporation, a corporation duly organized and existing under the laws of the
state of New York ("TAMIC"), and The Travelers Investment Management Company, a
corporation duly organized and existing under the laws of the state of
Connecticut (the "Sub-Adviser").
WHEREAS, TAMIC has entered into an Investment Advisory Agreement dated May
1, 1998, (the "Investment Advisory Agreement") with The Travelers Growth and
Income Stock Account for Variable Annuities (hereinafter referred to as "Account
GIS"). A copy of such agreement is attached as Exhibit A hereto, pursuant to
which TAMIC provides investment management and advisory services to Account GIS;
and
WHEREAS, the Investment Advisory Agreement provides that TAMIC may engage a
duly organized sub-adviser, to furnish investment information, services and
advice to assist TAMIC in carrying out its responsibilities under the Investment
Advisory Agreement; and
WHEREAS, TAMIC desires to retain Sub-Adviser to render investment advisory
services to TAMIC in the manner and on the terms set forth in this Agreement,
and the Sub-Adviser desires to provide such investment advisory services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, TAMIC and Sub-Adviser agree as follows.
1. REPRESENTATIONS AND WARRANTIES OF TAMIC
TAMIC represents and warrants to the Sub-Adviser as follows:
a. TAMIC is registered with the SEC as an investment adviser under the
Advisers Act;
b. TAMIC is registered and licensed as an investment adviser under the
laws of all jurisdictions in which its activities require it to be so
licensed, except in such jurisdictions where the failure to be so
licensed would not have a material effect on its business;
c. TAMIC is a corporation duly organized and validly existing under the
laws of the State of New York with the power to own and possess its
assets and carry on its business as it is now being conducted;
d. The execution, delivery and performance by TAMIC of this Agreement
are within TAMIC's powers and have been duly authorized by all
necessary action on the part of its directors, and no action by or in
respect of, or filing with, any governmental body, agency or official
is required on the part of TAMIC for the execution, delivery and
D-1
<PAGE> 27
performance of this Agreement by the parties hereto, and the
execution, delivery and performance of this Agreement by the parties
hereto does not contravene or constitute a default under (i) any
provision of applicable law, rule or regulation, (ii) TAMIC's
Articles of Incorporation or By-Laws, or (iii) any agreement,
judgment, injunction, order, decree or other instruments binding upon
TAMIC;
e. This Agreement is a valid and binding Agreement of TAMIC;
f. TAMIC has provided the Sub-Adviser with a copy of its Form ADV as
most recently filed with the SEC and will, within a reasonable time
after filing any amendment to its Form ADV with the SEC, furnish a
copy of such amendments to the Sub-Adviser. The information contained
in TAMIC's Form ADV is accurate and complete in all material respects
and does not omit to state any material fact necessary in order to
make the statements made, in light of the circumstances under this
they were made, not misleading;
g. TAMIC acknowledges that it received a copy of the Sub-Adviser's Form
ADV at least 48 hours prior to the execution of this Agreement and
has delivered a copy of the same to Account GIS.
2. REPRESENTATIONS AND WARRANTIES OF SUB-ADVISER
The Sub-Adviser hereby represents and warrants to TAMIC that:
a. The Sub-Adviser is registered with the SEC as an investment adviser
under the Advisers Act;
b. The Sub-Adviser is registered or licensed as an investment adviser
under the laws of jurisdictions in which its activities require it to
be so registered or licensed, except where the failure to be so
licensed would not have a material adverse effect on its business;
c. The Sub-Adviser is a corporation duly organized and validly existing
under the laws of the Connecticut with the power to own and possess
its assets and carry on its business as it is now being conducted;
d. The execution, delivery and performance by the Sub-Adviser of this
Agreement are within the Sub-Adviser's powers and have been duly
authorized by all necessary action on the part of its directors, and
no action by or in respect of, or filing with, any governmental body,
agency or official is required on the part of the Sub-Adviser for the
execution, delivery and performance of this Agreement by the parties
hereto, and the execution, delivery and performance of this Agreement
by the parties hereto does not contravene or constitute a default
under (i) any provision of applicable law, rule or regulation, (ii)
the Sub-Adviser's Articles of Incorporation or By-Laws, or (iii) any
agreement, judgment, injunction, order, decree or other instruments
binding upon the Sub-Adviser;
e. This Agreement is a valid and binding Agreement of the Sub-Adviser;
D-2
<PAGE> 28
f. The Sub-Adviser has provided TAMIC with a copy of its Form ADV as
most recently filed with the SEC and will, promptly after filing any
amendment to its Form ADV with the SEC, furnish a copy of such
amendments to the Sub-Adviser. The information contained in the
Sub-Adviser's form ADV is accurate and complete in all material
respects and does not omit to state any material fact necessary in
order to make the statements made, in light of the circumstances
under which they were made, not misleading;
g. The Sub-Adviser acknowledges that it received a copy of TAMIC's Form
ADV at least 48 hours prior to the execution of this Agreement.
3. INVESTMENT DESCRIPTION APPOINTMENT
Account GIS desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the investment(s), policies and
limitations specified in the prospectus (the "Prospectus") and the statement of
additional information (the "SAI") filed with the Securities and Exchange
Commission (the "SEC") as part of Account GIS's Registration Statement on Form
N-3, as amended or supplemented from time to time, and in the manner and to the
extent as may from time to time be approved by the Board of Managers of Account
GIS (the "Board"). TAMIC will supply copies of the Prospectus and the SAI to the
Sub-Adviser promptly after Account GIS's Registration Statement is declared
effective. TAMIC agrees promptly to provide copies of all amendments and
supplements to the current Prospectus and the SAI, and copies of any procedures
adopted by the Board applicable to the Sub-Adviser and any amendments thereto
(the "Board Procedures"), to the Sub-Adviser on an on-going basis. Until TAMIC
delivers any such amendment or supplement or Board Procedures, the Sub-Adviser
shall be fully protected in relying on the Prospectus and SAI and any Board
Procedures, if any, as previously furnished to the Sub-Adviser. In addition,
TAMIC shall furnish the Sub-Adviser with a certified copy of any financial
statement or report prepared for Account GIS by certified or independent public
accountants, and with copies of any financial statements or reports made by
Account GIS to contract owners or to any state or federal regulatory agency.
TAMIC shall also inform the Sub-Adviser of the results of any audits or
examinations by regulatory authorities pertaining to Account GIS. TAMIC further
agrees to furnish the Sub-Adviser with any materials or information that the
Sub-Adviser may reasonably request to enable it to perform its functions under
this Agreement.
TAMIC and Account GIS desire to employ and hereby appoint the Sub-Adviser
to act as the sub-investment adviser to Account GIS. Subject to the terms and
conditions of this Agreement, Sub-Adviser accepts the appointment and agrees to
furnish the services for the compensation and for the term set forth below.
Except as specified herein, the Sub-Adviser agrees that it shall not delegate
any material obligation assumed pursuant to this Agreement to any third party
without first obtaining the written consent of both Account GIS and TAMIC.
4. SERVICES AS SUB-ADVISER
Subject to the supervision, direction and approval of the Board and TAMIC,
the Sub-Adviser shall conduct a continual program of investment, evaluation and,
if appropriate in its view, the sale and reinvestment of Account GIS's assets.
The Sub-Adviser is authorized, in its sole discretion and without prior
consultation with TAMIC, to: (a) obtain and evaluate pertinent economic,
financial,
D-3
<PAGE> 29
and other information affecting the economy generally and certain companies as
such information relates to securities which are purchased for or considered for
purchase in Account GIS; (b) manage Account GIS's assets in accordance with
Account GIS's investment objective(s) and policies as stated in the Prospectus
and the SAI; (c) make investment decisions for Account GIS; (d) place purchase
and sale orders for portfolio transactions on behalf of Account GIS and manage
otherwise uninvested cash assets of Account GIS; (e) price such Portfolio
securities as TAMIC and Sub-Adviser shall mutually agree upon from time to time;
(f) execute account documentation, agreements, contracts and other documents as
the Sub-Adviser shall be requested by brokers, dealers, counterparties and other
persons in connection with its management of the assets of Account GIS (in such
respect, and only for this limited purpose, the Sub-Adviser shall act as TAMIC's
and Account GIS's agent and attorney-in-fact); (g) employ professional portfolio
managers and securities analysts who provide research services to Account GIS;
and (h) regularly report to TAMIC and to the Board with respect to its
subadvisory activities. The Sub-Adviser shall execute trades, and in general
take such action as is appropriate to effectively manage Account GIS's
investment practices.
In addition, (i) the Sub-Adviser shall furnish TAMIC daily information
concerning portfolio transactions and quarterly and annual reports concerning
transactions and performance of Account GIS in such form as may be mutually
agreed upon, and the Sub-Adviser agrees to review Account GIS and discuss the
management of it with TAMIC and Board as either or both shall from time to time
reasonably request.
(ii) Unless TAMIC gives the Sub-Adviser written instructions to the
contrary, the Sub-Adviser shall use its good faith judgment in a manner which it
reasonably believes best serves the interests of Account GIS's contract owners
to vote or abstain from voting all proxies solicited by or with respect to the
issuers of securities in which assets of Account GIS may be invested.
(iii) The Sub-Adviser shall maintain and preserve such records related to
Account GIS's transactions as are required under any applicable state or federal
securities law or regulation including: the Investment Company Act of 1940, as
amended (the "1940 Act"), the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and the Investment Advisers Act of 1940, as amended (the "Advisers
Act"). TAMIC shall maintain and preserve all books and other records not related
to Account GIS's transactions as required under such rules. The Sub-Adviser
shall timely furnish to TAMIC all information relating to the Sub-Adviser's
services hereunder reasonably requested by TAMIC to keep and preserve the books
and records of Account GIS. The Sub-Adviser agrees that all records which it
maintains for Account GIS are the property of Account GIS and the Sub-Adviser
will surrender promptly to Account GIS copies of any of such records.
(iv) The Sub-Adviser shall maintain compliance procedures for Account GIS
that it reasonably believes are adequate to ensure Account GIS's compliance
with: (i) the 1940 Act and the rules and regulations promulgated thereunder; and
(ii) Account GIS's investment objective(s) and policies as stated in the
Prospectus and SAI. The Sub-Adviser shall notify TAMIC immediately upon
detection of any material breach of such compliance procedures. The Sub-Adviser
shall maintain compliance procedures that it reasonably believes are adequate to
ensure its compliance with the Investment Advisers Act of 1940.
D-4
<PAGE> 30
(v) The Sub-Adviser shall maintain a written code of ethics (the "Code of
Ethics") that it reasonably believes complies with the requirements of Rule
17j-1 under the 1940 Act, a copy of which it will provide to TAMIC or Trust upon
any reasonable request. The Sub-Adviser shall follow such Code of Ethics in
performing its services under this Agreement. Further, the Sub-Adviser
represents that it has policies and procedures regarding the detection and
prevention of the misuse of material, nonpublic information by the Sub-Adviser
and its employees as required by the Insider Trading and Securities Fraud
Enforcement Act of 1988.
(vi) The Sub-Adviser shall manage the investment and reinvestment of the
assets of Account GIS in a manner consistent with the diversification
requirements of Section 817 and Section 851 of the Internal Revenue Code of
1986, as amended (the "IRC"). The Sub-Adviser will also manage the investments
of Account GIS in a manner consistent with any and all investment restrictions
(including diversification requirements) contained in the 1940 Act, any SEC
No-Action Letter or order applicable to the Company, and any applicable state
securities law or regulation.
(viii) The Sub-Adviser shall submit on a quarterly basis to the Board and
TAMIC a written certification detailing any variation from applicable investment
objectives, practices, policies or procedures, or from its Code of Ethics.
5. BROKERAGE
In selecting brokers or dealers (including, if permitted by applicable law
and appropriate Board Procedures, any broker or dealer affiliated with either
TAMIC or the Sub-Adviser) to execute transactions on behalf of Account GIS, the
Sub-Adviser will seek the best overall terms available. In assessing the best
overall terms available for any transaction, the Sub-Adviser will consider
factors it deems relevant, including, but not limited to, the breadth and nature
of the market in the security, the price of the security, the size of the order,
the timing of the transaction, the difficulty of the transaction, the
reputation, experience, financial condition and execution capability of the
broker or dealer, the quality of the service and the reasonableness of the
commission, if any, for the specific transaction and on a continuing basis. In
selecting brokers or dealers to execute a particular transaction, and in
evaluating the best overall terms available, the Sub-Adviser is authorized to
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the 1934 Act) provided to Account GIS and/or other accounts
over which the Sub-Adviser or its affiliates exercise investment discretion.
Nothing in this paragraph shall be deemed to prohibit the Sub-Adviser from
paying an amount of commission for effecting a securities transaction in excess
of the amount of commission another member of an exchange, broker, or dealer
would have charged for effecting that transaction, if the Sub-Adviser determined
in good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such member, broker, or
dealer, viewed in terms of either that particular transaction or its overall
responsibilities with respect to Account GIS and/or other accounts over which
the Sub-Adviser or its affiliate exercise investment discretion.
To the extent consistent with the applicable law, Sub-Adviser may aggregate
purchase or sell orders for Account GIS with contemporaneous purchase or sell
orders of other clients of Sub-Adviser or its affiliated persons. In such event,
allocation of Securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by Sub-Adviser in the manner Sub-
D-5
<PAGE> 31
Adviser considers to be the most equitable and consistent with its and its
affiliates' fiduciary obligations to Account GIS and to such other clients.
TAMIC hereby acknowledges that such aggregations of orders may not result in a
more favorable price or lower brokerage commissions in all instances.
6. INFORMATION AND REPORTS
(a) TAMIC will provide Sub-Adviser with a list, to the best of TAMIC's
knowledge, of all affiliated persons of TAMIC (and any affiliated
person of such an affiliated person) and will promptly update the list
whenever TAMIC becomes aware of any additional affiliated persons.
(b) The Sub-Adviser will maintain books and records relating to its
management of Account GIS under its customary procedures and in
compliance with applicable regulations under the 1940 Act and the
Advisers Act. Sub-Adviser will permit TAMIC to inspect such books and
records at all reasonable times during normal business hours, upon
reasonable notice. Sub-Adviser agrees that all records which it
maintains for Account GIS are the property of Account GIS and
Sub-Adviser will surrender promptly to Account GIS copies of any such
records upon request by Account GIS or TAMIC.
(c) Prior to each Board meeting, Sub-Adviser will provide TAMIC and the
Board with reports regarding its management of Account GIS during the
interim period, in such form as may be mutually agreed upon by
Sub-Adviser and TAMIC. Sub-Adviser will also provide TAMIC with any
information regarding its management of Account GIS required for any
Board Meeting, any contract owner report, amended registration
statement or prospectus supplement filed by Account GIS with the SEC.
Sub-Adviser will submit on a quarterly basis to the Board and TAMIC a
written certification detailing any variation from applicable
investment policies or procedure, or from its Code of Ethics.
7. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, TAMIC
will pay the Sub-Adviser an annual fee calculated an annual basis to the
following:
<TABLE>
<CAPTION>
AGGREGATE
ANNUAL NET ASSET VALUE
SUB ADVISORY FEE OF THE ACCOUNT
- ---------------- --------------------
<C> <S> <C>
0.45% of the first $ 700,000,000, plus
0.275% of the next $ 300,000,000, plus
0.25% of the next $ 500,000,000, plus
0.225% of the next $ 500,000,000, plus
0.20% of amounts over $ 2,000,000,000
</TABLE>
These fees are calculated daily and paid monthly. The Sub-Adviser shall have no
right to obtain compensation directly from Account GIS for services provided
hereunder and agrees to look solely to TAMIC for payment of fees due. The fee
for the period from the Effective Date (defined below) of the Agreement to the
end of the month during which the Effective Date occurs shall be prorated
according to the proportion that such period bears to the full monthly period.
Upon any
D-6
<PAGE> 32
termination of this Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
the Sub-Adviser, the value of Account GIS's net assets shall be computed at the
times and in the manner specified in the Prospectus and/or the SAI.
8. EXPENSES
The Sub-Adviser shall bear all expenses in connection with the performance
of its services under this Agreement. In no event will the Sub-Adviser bear
brokerage costs, custodian fees, auditors fees or other expenses to be borne by
Account GIS. Account GIS will bear certain other expenses to be incurred in its
operation, including, but not limited to, (i) interest and taxes; (ii) brokerage
commissions and other costs in connection with the purchase or sale of
securities and other investment instruments; (iii) fees and expenses of Account
GIS's trustees other than those who are "interested persons" of Account GIS,
TAMIC, the Sub-Adviser; (iv) legal and audit expenses; (v) custodian, registrar
and transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of Account GIS's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to contract owners of Account GIS; (viii)
all other expenses incidental to holding meetings of Account GIS's contract
owners, including proxy solicitations therefor; (ix) insurance premiums for
fidelity bond and other coverage; (x) investment management fees; (xi) expenses
of typesetting for printing prospectuses and statements of additional
information and supplements thereto; (xii) expense of printing and mailing
prospectuses and statements of additional information and supplements thereto;
and (xiii) such non-recurring or extraordinary expenses as may arise, including
those relating to actions, suits or proceedings to which Account GIS is a party
and legal obligations that Account GIS may have to indemnify Account GIS's
trustees, officers and/or employees or agents with respect thereto. Account GIS
shall assume all other expenses not specifically assumed by the Sub-Adviser or
by TAMIC under the Investment Advisory Agreement entered into between TAMIC and
Account GIS.
9. STANDARD OF CARE
The Sub-Adviser shall exercise reasonable care and in a manner consistent
with applicable federal and state laws and regulations in rendering the services
it agrees to provide under this Agreement. Neither the Sub-Adviser nor its
officers, directors, employees, agents, affiliated person, legal representatives
or persons controlled by it (collectively, the "Related Persons") shall be
liable for or subject to any damages, expenses, or losses in connection with any
error of judgment or mistake of law or for any loss suffered by Account GIS or
TAMIC or any contract owner, director, trustee or officer thereof, in connection
with the matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect the Sub-Adviser
against any liability to TAMIC, Account GIS or to the contract owners of Account
GIS to which the Sub-Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or by reason of the Sub-Adviser's disregard of its obligations and duties
under this Agreement.
D-7
<PAGE> 33
10. LIMITATION OF LIABILITY
Except as may otherwise be provided by the 1940 Act or federal securities
laws, neither TAMIC or Sub-Adviser, nor any of their officers, directors,
employees or agent, shall be subject to any liability or subject to any damages,
expenses, or losses in connection with any error of judgment, mistake of law, or
any loss to each other or Account GIS arising out of any investment or other act
or omission in the course of, connected with, or arising out of any services to
be rendered under this Agreement, except by reason of willful misfeasance, bad
faith, or gross negligence in the performance if its duties or by reason of
reckless disregard of its obligations and duties under this Agreement. TAMIC
shall hold harmless and indemnify Sub-Adviser against any loss, liability,
claim, cost, damage or expense (including reasonable investigation and defense
costs and reasonable attorneys fees and costs)arising by reason of any matter to
which this Agreement relates unless the Sub-Adviser is negligent in the
performance of its duties or it has reckless disregard of its obligations and
duties under this Agreement. The Sub-Adviser shall hold harmless Account GIS and
TAMIC for any loss, liability, cost, damage, or expenses arising from any claim
resulting from the Sub-Adviser's negligence in connection with the performance
of its duties or the reckless disregard of its obligations and duties under this
Agreement.
Promptly after receipt by a party seeking to be indemnified under this
Section 10 (the "Indemnified Party") of notice of the commencement of any
action, the Indemnified Party shall, if a claim in respect thereof is to be made
against a party against whom indemnification is sought under this Section 10
(the "Indemnifying Party"), notify the Indemnifying Party in writing of the
commencement thereof; but the omission to notify the Indemnifying Party shall
not relieve the Indemnifying Party from any liability which it may have to any
Indemnified Party otherwise than under the provisions hereof, and shall relieve
it from liability hereunder only to the extent that such omission results in the
forfeiture by the Indemnifying Party of rights or defenses with respect to such
action.
In any action or proceeding, following provision of proper notice by the
Indemnified Party of the existence of such action, the Indemnifying Party shall
be entitled to participate in any such action and, to the extent that it shall
wish, participate jointly with any other Indemnifying Party similarly notified,
to assume the defense thereof, with counsel of its choice (unless any conflict
of interest requires the appointment of separate counsel), and after notice from
the Indemnifying Party to such Indemnified Party of its election to assume the
defense of the action, the Indemnifying Party shall not be liable to such
Indemnified Party hereunder for any legal expense of the other counsel
subsequently incurred without the Indemnifying Party's consent by such
Indemnified Party in connection with the defense thereof. The Indemnified Party
shall cooperate in the defense or settlement of claims so assumed. The
Indemnifying Party shall not be liable hereunder for the settlement by the
Indemnified Party for any claim or demand unless it has previously approved the
settlement or it has been notified of such claim or demand and has failed to
provide a defense in accordance with the provisions hereof. In the event that
any proceeding against the Indemnified Party shall be commenced by the
Indemnified Party in connection with this Agreement, or the transactions
contemplated hereunder, and such proceeding shall be finally determined by a
court of competent jurisdiction in favor of the Indemnifying Party, the
Indemnified Party shall be liable to
D-8
<PAGE> 34
the Indemnifying Party for any reasonable attorney's fees and court costs
relating to such proceedings.
The indemnifications provided in this Section 10 shall survive the
termination of this Agreement.
11. TERM OF AGREEMENT
This Agreement shall become effective May 1, 1998, (the "Effective Date")
and shall continue for an initial two-year term and shall continue thereafter so
long as such continuance is specifically approved at least annually as required
by the 1940 Act. This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board or by vote of holders of a majority (as defined in
the 1940 Act and the rules thereunder) of the outstanding voting securities of
Account GIS, or upon 60 days' written notice, by the Sub-Adviser. This Agreement
will also terminate automatically in the event of its assignment (as defined in
the 1940 Act and the rules thereunder).
If the Board of Managers fails to approve the Agreement or any continuance
of the Agreement, Sub-Adviser will continue to act as investment subadviser with
respect to Account GIS pending the required approval of the Agreement or its
continuance or of any contract with Sub-Adviser or a different adviser or
subadviser or other definitive action, provided that the compensation received
by Sub-Adviser during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
12. SERVICES TO OTHER COMPANIES OR ACCOUNTS
TAMIC understands that the Sub-Adviser and its affiliates act, will
continue to act and may act in the future as investment manager or adviser to
fiduciary and other managed accounts, as an investment manager or adviser to
other investment companies, including any offshore entities, or accounts. TAMIC
has no objection to the Sub-Adviser and its affiliates so acting, provided that
whenever Account GIS and one or more other investment companies or accounts
managed or advised by the Sub-Adviser and its affiliates have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with a formula believed to be equitable to each company and
account. TAMIC recognizes that in some cases this procedure may adversely affect
the size of the position obtainable for Account GIS. In addition, TAMIC
understands that the persons employed by the Sub-Adviser to assist in the
performance of the Sub-Adviser's duties under this Agreement will not devote
their full time to such service and nothing contained in this Agreement shall be
deemed to limit or restrict the right of the Sub-Adviser or any affiliate of the
Sub-Adviser to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature. This Agreement shall not in any way
limit or restrict Sub-Adviser or any of its directors, officers, employees, or
agents from buying, selling or trading any securities or other investment
instruments for its or their own account or for the account of others for whom
it or they may be acting, provided that such activities will not adversely
affect or otherwise impair the performance by Sub-Adviser of its duties and
obligations under this Agreement.
D-9
<PAGE> 35
13. COOPERATION WITH REGULATORY AUTHORITIES OR OTHER ACTIONS
The parties to this Agreement each agree to cooperate in a reasonable
manner with each other in the event that any of them should become involved in a
legal, administrative, judicial or regulatory action, claim, or suit as a result
of performing its obligations under this Agreement.
14. COMPLIANCE WITH APPLICABLE LAW
The Subadviser agrees to conduct itself in a manner consistent with
applicable laws and regulations, including but not limited to Sections 2a-7,
5(b), 12, 17, 18, and 36 of the 1940 Act. The Subadviser shall ensure that its
activities are conducted in a manner consistent with a Code of Ethics maintained
pursuant to Section 17j-1 of the 1940 Act. The Subadviser also agrees that it
shall conduct its activities in a manner consistent with any No-Action Letter,
order or rule promulgated by the SEC applicable to Account GIS.
15. MISCELLANEOUS
This Agreement may be signed in one or more counterpart.
Each party to this Agreement represents and warrants that it is validly
existing and taken all necessary action to obtain the requisite authority to
enter into this Agreement and to perform the duties contemplated herein.
This Agreement shall be governed by the laws of the State of Connecticut.
Each party agrees to comply with all applicable reporting requirements
pursuant to state and federal laws and regulations.
All representations and warranties made by the Sub-Adviser and TAMIC herein
shall survive for the duration of this Agreement and the parties hereto shall
immediately notify, but in no event later than five (5) days, each other in
writing upon becoming aware that any of the foregoing representations and
warranties are no longer true.
IN WITNESS WHEREOF, the parties hereto have caused this Investment
Sub-Advisory Agreement to be signed by their respective officials thereunto duly
authorized as of the day and year first above written.
Travelers Asset Management
International Corporation
By:
-----------------------------------
Its:
-----------------------------------
The Travelers Investment Management
Company
By:
-----------------------------------
Its:
-----------------------------------
D-10
<PAGE> 36
THE TRAVELERS
GROWTH AND INCOME
STOCK ACCOUNT
FOR VARIABLE ANNUITIES
PROXY STATEMENT
VG-82 1998
001
<PAGE> 37
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
Proxy for the Annual Meeting of Contract Owners to be held on April 27, 1998
The undersigned, revoking all proxies heretofore given, hereby appoints Heath B.
McLendon, Robert E. McGill, III, or either one of them, as Proxies, with full
power of substitution, to vote on behalf of the undersigned all units of The
Travelers Growth and Income Stock Account for Variable Annuities which the
undersigned is entitled to vote at the Annual Meeting of Contract Owners to be
held at 9:00 a.m. on Monday, April 27, 1998 at One Tower Square, Hartford,
Connecticut, and at any adjournment thereof, in the manner directed below with
respect to the matters described in the Proxy Statement for the Annual Meeting,
receipt of which is hereby acknowledged, and in their discretion, upon such
other matters as may properly come before the Annual Meeting or any adjournment
thereof.
<TABLE>
<S> <C> <C> <C>
Please vote by filling in the appropriate box below, as shown, using blue or black ink
or dark pencil. Do not use red ink. [X]
FOR AGAINST ABSTAIN
1. To approve an Investment Advisory Agreement between Account GIS and
Travelers Asset Management International Corporation. [ ] [ ] [ ]
2. To approve an Investment Sub-Advisory Agreement between Travelers Asset
Management International Corporation and The Travelers Investment
Management Company. [ ] [ ] [ ]
FOR WITHHOLD FOR, except
all AUTHORITY vote withheld
nominees for all for nominees
nominees listed below
3. Election of the Board of Managers - Nominees:
Heath B. McLendon, Knight Edwards, Robert E. McGill, III, Lewis Mandell, [ ] [ ] [ ]
and Frances M. Hawk.
------------------------------------------------------------------------
4. Ratification of the selection of Coopers & Lybrand L.L.P. as independent FOR AGAINST ABSTAIN
accountants for the fiscal year ending December 31, 1998.
[ ] [ ] [ ]
</TABLE>
In their discretion, the Proxies are authorized to vote on any and all other
business as may properly come before the meeting.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD.
<PAGE> 38
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF MANAGERS. THE BOARD OF
MANAGERS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, and 4. THE UNITS
REPRESENTED HEREBY WILL BE VOTED BY THE PROXIES IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED CONTRACT OWNER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2, 3, AND 4.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW.
DATE:_____________________, 1998
If signing in a representative capacity
(as attorney, executor or administrator,
trustee, guardian or custodian, corporate
officer or general partner), please
indicate such capacity following
signature. Proxies for custodian accounts
must be signed by the named custodian, not
by the minor.
Signature(s) if held jointly (Title(s), if
required)
