<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
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(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 5, 1999
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 Friday, April 30, 1999 at 9:00 a.m. for the following purposes:
1. 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.
2. To ratify the selection of KPMG LLP as independent accountants of
Account GIS for the year ending December 31, 1999.
3. To approve the revised Rules and Regulations for Account GIS.
4. To act on any and all other business as may properly come before
the meeting.
The close of business on February 19, 1999 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.
/s/ 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 FRIDAY, APRIL 30, 1999
THE BOARD OF MANAGERS OF THE TRAVELERS GROWTH AND INCOME STOCK
ACCOUNT FOR VARIABLE ANNUITIES (ACCOUNT GIS) SOLICITS YOUR PROXY FOR USE AT THE
ANNUAL MEETING OF CONTRACT OWNERS AND AT ANY ADJOURNMENT OF IT. The annual
meeting will be held at 9:00 a.m. on Friday, April 30, 1999, at the offices of
Account GIS, One Tower Square, Hartford, Connecticut. This proxy material is
expected to be mailed to Contract Owners on or about March 5, 1999.
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 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 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
KPMG LLP as independent accountants for the fiscal year ending December 31, 1999
and for approval of the revised Rules and Regulations.
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 19,
1999 (the record date) will be entitled to notice of and to vote at the annual
meeting. On the record date, there were 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, 1999, 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 the holders
of a majority of the voting securities present at the Meeting in person or by
proxy. For Proposals 1 and 2, 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. Approval of Proposal 3 requires the affirmative
"vote
<PAGE> 4
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.
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, 1998, was mailed to Contract Owners of record as of
December 31, 1998. Copies of the Annual Report and the most recent semi-annual
report succeeding Account GIS's Annual Report may be obtained without charge, by
writing to The Travelers Insurance Company, Annuity Services, One Tower Square,
Hartford, Connecticut 06183-5030 or by calling 1-800-842-9368.
1. 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 29, 1999.
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<TABLE>
<CAPTION>
CONTRACTS
NOMINEE FOR OWNED
MEMBER PRINCIPAL OCCUPATION 12/31/98
- ------------------------ ---------------------------------------------------- ---------
<S> <C> <C>
Heath B. McLendon* Managing Director (1993-present), Smith Barney Inc. None
Age 65 ("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 75 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++.
Robert E. McGill, III Retired manufacturing executive. Director None
Age 67 (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, Chemfab Corporation (specialty
materials manufacturer); Director (1999-present)
Ravenwoods Winery, 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>
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<TABLE>
<CAPTION>
CONTRACTS
NOMINEE FOR OWNED
MEMBER PRINCIPAL OCCUPATION 12/31/98
- ------------------------ ---------------------------------------------------- ---------
<S> <C> <C>
Lewis Mandell Dean, School of Management (1998-present), None
Age 56 University at Buffalo; Dean, College of Business
Member Since 1990 Administration (1995-1998), Marquette University;
Professor of Finance (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 51 (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 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; Money Market
Portfolio; 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 sub-adviser to Account GIS.
TIMCO is a wholly owned subsidiary of Smith Barney Holdings Inc., a wholly owned
subsidiary of Citigroup Inc. Mr. McLendon also owns shares and options to
purchase shares of Citigroup 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
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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, 1998, 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,
1999.
MEETINGS
There were four regular meetings and two special meetings of the Board of
Managers of Account GIS during 1998. 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 Citigroup Inc.
or its subsidiaries are not entitled to any fee. Members of the Board of
Managers who are not affiliated as employees of Citigroup 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, Account GIS has adopted an Emeritus Program for non-interested
Board members pursuant to which Account GIS('s) Board and the management of
Account GIS 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 Account GIS, must
retire from the Board at age 80. Service as an emeritus director is limited to
10 years. Each emeritus director agrees to be 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, 1998 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>
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<PAGE> 8
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.
2. RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
It is proposed that Contract Owners ratify the action of the Board of
Managers, taken on January 29, 1999 by a unanimous vote, cast in person,
including those members of the Board of Managers who are not interested persons
of Account GIS, to select the firm of KPMG LLP as the independent accountants of
Account GIS for the fiscal year ending December 31, 1999. A representative from
KPMG LLP 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.
Account GIS did not renew its audit relationship with its former principal
accountant, PricewaterhouseCoopers LLP (formerly known as Coopers & Lybrand
L.L.P.) on January 29, 1999. On that same day, KPMG LLP was engaged as principal
accountant for Account GIS. KPMG LLP serves as the principal accountant for
other affiliated separate accounts and mutual funds.
The report by PricewaterhouseCoopers LLP on the financial statements for
fiscal years ended December 31, 1998 and 1997, did not contain an adverse
opinion or disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope, or accounting principles.
The decision to change principal accountants was approved by the Board of
Managers at a meeting held on January 29, 1999, where it decided to engage KPMG
LLP as the principal accountant to audit the Fund's financial statements since
it would promote consistency and possible economies of scale among affiliated
separate accounts and mutual funds.
During the past two years and subsequent interim period preceding such
termination there were no disagreements with PricewaterhouseCoopers LLP on any
matters of accounting principles or practices, financial statement disclosure,
or auditing scope or procedures, which disagreements if not resolved to the
satisfaction of the former accountant, would have caused it to make reference to
the subject matter of disagreement in connection with its report.
Attached as Exhibit A is a letter addressed to the Securities and Exchange
Commission from PricewaterhouseCoopers LLP stating that PricewaterhouseCoopers
LLP agrees with the statements set forth above with respect to the change of
principal accountants.
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 Account GIS's annual audits with Account GIS'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, 1998, the
Audit Committee held one meeting.
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<PAGE> 9
RECOMMENDATION OF THE BOARD OF MANAGERS
The Board of Managers of Account GIS recommends approval of the Proposal to
ratify the selection of KPMG LLP as independent accountants.
3. TO APPROVE THE REVISED RULES AND REGULATIONS
The Board of Managers approved the Revised Rules and Regulations of Account
GIS at the January 29, 1999 Board of Managers meeting. The Rules and Regulations
govern how Account GIS operates. The purpose for adopting new Revised Rules and
Regulations is to standardize the Rules and Regulations for all managed separate
accounts affiliated with Travelers Insurance and to simplify and modernize the
rules and regulations. The Revised Rules and Regulations will minimize costs and
delays associated with frequent Contract Owner meetings. The original Rules and
Regulation were written on December 18, 1967 as set forth in Exhibit B. The
revised Rules and Regulations are set forth in Exhibit C.
The revisions to the Rules and Regulations generally fall into three
categories -- those that directly affect Contract Owners, those that directly
affect Managers, and those provisions that relate to indemnification.
REVISIONS THAT DIRECTLY AFFECT CONTRACT OWNERS. The revisions to the Rules
and Regulations that directly affect Contract Owners are the revisions that: (1)
no longer require annual meetings of the Contract Owners; (2) set forth the
matters on which Contract Owners may vote; (3) reduce the quorum to 20%; (4)
provide for Contract Owner action by written consent; and (5) revise the notice
of meeting date.
Contract Owner meetings entail substantial costs, which could diminish the
benefits of certain cost savings programs implemented or to be implemented by
Account GIS through the Administrative Services Agreement and the Agreement to
Provide Guarantees. In part because of the costs involved, most mutual funds and
separate accounts registered under the federal securities laws no longer hold
annual shareholders meetings unless there are material changes in the operation
of the mutual fund or separate account.
Travelers Insurance estimates the savings from no longer holding annual
Contract Owner meetings to be approximately . These costs should be weighed
against the benefits of Contract Owner scrutiny. However, even without such
Contract Owner scrutiny, the Board will carefully consider the matters that were
formerly brought before Contract Owners at the annual meeting.
The remaining revisions that affect Contract Owners generally clarify the
items that require Contract Owner vote, and make it easier to obtain that vote
in an efficient and cost effective manner. For instance, permitting Contract
Owners' to approve matters by consent, will enable the Board to more quickly
resolve various issues, including the ability to respond to a change in the laws
affecting Account GIS. These governance provisions are important in today's
rapidly changing business environment.
CHANGES THAT DIRECTLY AFFECT MANAGERS. The revisions to the Rules and
Regulations that directly affect Managers are those revisions that: (1) provide
for an indefinite term of Managers;
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<PAGE> 10
(2) provide for telephonic meeting of Managers; (3) permit consent actions of
Managers, where permitted by law; and (4) provide that Managers may elect an
executive or other committee.
As with the revisions that affect Contract Owners, the purpose of these
changes is to operate Account GIS on a more cost-effective basis, as well as to
provide greater governance flexibility. For instance, by no longer requiring
annual election of the Managers, Account GIS will eliminate the expenses
associated with having an annual Contract Owner meeting. Similarly, by
permitting Board of Managers meetings to be conducted by telephone, Account GIS
will save many of transportation and lodging costs associated with conducting a
Board meeting, and will enable the Board to conduct meetings on a more timely
basis.
CHANGES THAT AFFECT INDEMNIFICATION PROVISIONS. The Revised Rules and
Regulations generally clarify and tighten the limitations of liabilities and
indemnification provisions. These revisions are consistent with industry
practice.
RECOMMENDATION OF THE BOARD OF MANAGERS
The Board of Managers of Account GIS recommends approval of the Revised
Rules and Regulations.
4. 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 5, 1999.
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.
THE INVESTMENT ADVISER
Travelers Asset Management International Corporation (TAMIC), One Tower
Square, Hartford Connecticut, serves as investment adviser to Account GIS and
The Travelers Investment Management Company (TIMCO) serves as the Subadviser to
Account GIS.
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<PAGE> 11
MANAGEMENT AGREEMENT
Travelers Insurance, One Tower Square, Hartford, Connecticut serves as the
administrator of Account GIS.
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT
CFBDS Inc., 21 Milk Street, Boston, Massachusetts, is the distributor and
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.
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<PAGE> 12
EXHIBIT A
PRICEWATERHOUSECOOPERS LOGO
February 15,1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Gentlemen:
We were informed on February 10, 1999, that the Board of Managers of The
Travelers Growth and Income Stock Account for Variable Annuities (Commission
File Number 2-27330) (the "Fund") voted to replace PricewaterhouseCoopers LLP as
auditors of the Fund effective January 29, 1999. We have read the Statements
made by the Board of Managers of the Fund as part of the definitive Proxy
Statement dated March 5, 1999, which we understand will be filed with the
Commission, pursuant to Regulation 229, Item 304, as part of the Fund's Proxy
Book dated March 5, 1999. We agree with the statements concerning our Firm in
such Proxy.
Very truly yours,
PRICEWATERHOUSECOOPERS LOGO
PricewaterhouseCoopers LLP
<PAGE> 13
EXHIBIT B
THE TRAVELERS INSURANCE COMPANY
HARTFORD, CONNECTICUT
THE TRAVELERS FUND FOR VARIABLE ANNUITIES
RULES AND REGULATIONS
ARTICLE I
GENERAL
Section 1. Name. The name* of this separate account shall be The Travelers
Fund for Variable Annuities (hereafter "the Fund"). The name of the Fund has
been selected by and belongs to The Travelers Insurance Company (hereafter the
"Company"). It may be used only with the consent of the Company, which reserves
the right to withdraw such consent and to adopt some other name, which may or
may not include the term "Travelers" as a part thereof. The use of its name by
the Fund shall in no way prevent the Company or any company affiliated with the
Company from using the name "Travelers" with any other word or words in
connection with any other entity or business, whether competitive with the Fund
or not.
Section 2. Office. The office of the Fund shall be in the City of
Hartford, Connecticut.
Section 3. Purposes. The purposes of the Fund are to provide a separate
account for assets to be set aside, separate and apart from the other assets of
the Company, for the credit and sole benefit of variable annuity contracts
issued by the Company and entitled to participate in the Fund. The assets of the
Fund shall be held and applied exclusively to meet obligations (including
expenses) to provide variable benefits under variable annuity contracts
participating in the Fund, as provided in such contracts, all in accordance with
applicable state law and as may be required to comply with the requirements of
the Investment Company Act of 1940, as amended, and the rules and regulations of
the Securities and Exchange Commission thereunder.
ARTICLE II
BOARD OF MANGERS
Section 1. Election. A Board of Managers shall be elected annually by the
owners of the variable contracts (referred to as "Contract Owners"). There shall
be a minimum of five and a maximum of ten members, and the number of members at
any time within such minimum and maximum shall be the number fixed by resolution
of the Contract Owners or Board of Managers, or in the absence thereof, shall be
the number of members elected at the preceding annual meeting of the Contract
Owners. Each member shall serve, subject to applicable law, until the next
annual meeting of the Variable Annuity Contract Owners and until his successor
is duly elected and qualified. Members of the Board of Managers need not be
variable Annuity Contract Owners.
Section 2. Meetings. Regular meetings of the Board of Managers shall be
held at such places and at such times as the Board of Managers by vote may
determine from time to time, and if so determined no call or notice thereof need
be given. Special meetings of the Board of Managers may
<PAGE> 14
be held at such place at any time whenever called by the Chairman of the Board
of Managers, or any two or more members of the Board of Managers, notice thereof
being given to each member by the Secretary or Assistant Secretary or the person
or persons calling the meeting, or at any time without formal notice provided
all the members are present or those not present waive notice thereof in writing
which is filed with the records of the meeting. Notice of special meetings,
stating the time and place thereof, shall be given by mailing the same to each
member at his residence or business address at least two days before the meeting
or by delivering the same to him personally or telephoning or telegraphing the
same to him at his residence or business address at least one day before the
meeting unless, in case of urgency, the Chairman of the Board of Managers shall
prescribe a shorter notice to be given personally or by telephoning or
telegraphing each member at his residence or business address. The Chairman of
the Board of Managers shall preside at all meetings of the Board at which he is
present. Whenever any notice is required to be given to any member of the Board
of Managers under this Section, a waiver in writing signed by the member
entitled to such notice, whether before or after the time stated in the notice,
will be deemed equivalent to giving notice. Any waiver will be filed with the
records of the meeting.
Section 3. Quorum. A majority of the members of the Board of Managers in
office shall constitute a quorum for the transaction of business at any meeting
of the Board, and at every meeting the presiding officer for the time being
shall have the right to vote. When a quorum is present at any meeting, a
majority of the members present shall decide any question brought before such
meeting except as otherwise provided by applicable law, or by these Rules and
Regulations.
Section 4. Officers. At the first meeting of the Board of Managers and at
the first such meeting following each annual meeting of the Variable Annuity
Contract Owners, the Board of Managers shall elect one of its members to act as
Chairman of the Board of Managers to hold office until his successor is elected
and qualified.
The Board of Managers may also elect a Secretary of the Board of Managers
who may or may not be a member of the Board of Managers. The Secretary shall
have the power to certify the minutes of the proceedings of the Variable Annuity
Contract Owners and Board of Managers and portions thereof and shall perform
such other duties and have such other powers as the Board of Managers shall
designate from time to time. In the absence of the Secretary, a temporary
Secretary shall perform such duties and have such powers.
Section 5. Resignations and Removal. Any member of the Board of Managers
or the Secretary may resign at any time by mailing or delivering his resignation
in writing to the Chairman of the Board of Managers or to a meeting of the Board
of Managers. Variable Annuity Contract Owners may, at any meeting called for the
purpose by vote of a majority of all votes entitled to be cast, remove any
member of the Board of Managers or the Secretary.
Section 6. Vacancies. No person shall serve as a member of the Board of
Managers after the first annual meeting unless duly elected to that office by
ballot of the Variable Annuity Contract Owners called for that purpose; except
that whenever any vacancy shall occur in the Board of Managers by death,
resignation or otherwise, such vacancy may be filled by the Board for the
remainder of the term for which said member was elected if, immediately after
filling such vacancy, at least two-thirds of the members then holding office
shall have been elected by the Variable
2
<PAGE> 15
Annuity Contract Owners. In the event that at any time after the first annual
meeting of Variable Annuity Contract Owners less than two-thirds of the Board
have been so elected, the Board of Managers shall forthwith cause to be held as
promptly as possible, and in any event within sixty days, a meeting of the
Variable Annuity Contract Owners for the purpose of electing a member or members
to fill the existing vacancy or vacancies in the Board of Managers.
ARTICLE III
VARIABLE ANNUITY CONTRACT OWNERS
Section 1. Annual Meeting. The first annual meeting of the Variable
Annuity Contract Owners shall be called as soon as there are outstanding
contracts entitled to a total of 250,000 votes, but in no event later than nine
months and two weeks from the first effective date of a Registration Statement
for group variable annuity contracts sold by the Company and entitled to
participate in the Fund. Thereafter annual meetings of the Variable Annuity
Contract Owners shall be held at such hour and place as the Board of Managers
may appoint, on the first Monday of March of each year or on some other day
within two months thereafter as fixed by the Board of Managers.
Section 2. Special Meetings. Special meetings of the Variable Annuity
Contract Owners may be called by a majority of the Board of Managers at such
times and places as they may determine. The notice of a special meeting shall
state the purpose of the meeting and no business shall be transacted at the
meeting except matters coming within such purpose.
Section 3. Notice of Meeting. A notice stating the place, day and hour of
the meeting, and, in case of a special meetings, the purpose or purposes for
which the meeting is called, shall be given to each Variable Annuity Contract
Owner as of a record date within seventy-five days prior to the date of the
meeting selected by the Board of Managers, by mailing to his address as it
appears upon the records of the Company not less than twenty days prior to the
day of such meeting. Only persons owning a contract on both the date used to
determine the Variable Annuity Contract Owners entitled to notice and the date
of the meeting will be entitled to vote at such meeting. Notice of any adjourned
meeting shall not be required.
Section 4. Quorum. Contract Owners entitled to vote, represented either in
person or by proxy, shall constitute a quorum at any annual or special meeting
of the Contract Owners, provided that there shall be represented, either in
person or by proxy, at such meeting, twenty percent (20%) of the votes entitled
to be cast. If a quorum shall not Present, a majority of votes represented may
adjourn the meeting to some later time. When a quorum is present, a majority of
the votes represented in person or by proxy shall determine any question, except
as may be otherwise provided by these Rules and Regulations or by applicable
law.
Section 5. Proxies. A Variable Annuity Contract Owner may vote either in
person or by proxy duly executed in writing by the Variable Annuity Contract
Owner. A proxy for any meeting shall be valid for any adjournment of such
meeting.
Section 6. Voting. For purposes of this Article II only, the term
"Variable Annuity Contract Owner" (hereafter the "Owner") shall mean the person,
corporation, trustee or other entity shown by the records of the Company to be
the owner. The number of votes which the Owner
3
<PAGE> 16
may cast will be determined as of the record date chosen by the Board of
Managers not more than seventy-five nor less than twenty days prior to the date
of the annual or any special meeting of the Owners. Prior to the commencement of
payments under a variable annuity contract, the number of votes will equal the
number of Accumulation Units credited to the contract. After variable annuity
payments have commenced, the number of votes will equal the amount of the assets
in the Fund to meet variable annuity obligations related to the variable annuity
contract, divided by the value of an. Accumulation Unit. In the case of a group
contract under which annuity payments have commenced for some participants and
not for others, the number of votes shall be computed on the applicable basis
and totalled.
During the accumulation period the Owners of contracts issued in connection
with plans qualified under Section 401(a) of the Internal Revenue Code (other
than H.R. 10 plans) will have the sole right to cast all votes attributable to
the Owners' contributions under such contracts; during such period an individual
covered by or participating under variable annuity contracts (a) adopted by the
public school systems and certain tax-exempt organizations pursuant to Section
403(b) of the Internal Revenue Code, (b) in connection with plans established by
persons entitled to the benefits of the Self-employed Individual's Tax
Retirement Act of 1962, as amended, "H.R. 10," and (c) in connection with plans
qualified under Section 401(a) of the Internal Revenue Code (other than H.R. 10
plans) to the extent of the individual's contributions thereunder, will have the
right to instruct the Owner with respect to the votes attributable to that
individual's account.
During the annuity period an individual will have the right to instruct the
Owner with respect to all votes attributable to the amount of assets established
in the Fund to meet the annuity obligations relating to such individual.
Votes for which instructions have not been received where such individual
was entitled to instruct the Owner shall be cast by the Owner for or against
each proposal to be voted upon only in the same proportion as votes for which
instructions have been received.
The Company will furnish to the Owner (or mail in accordance with his
instructions) proxy materials necessary for distribution to individuals in order
to permit the Owner to obtain instructions as to casting the votes, when such
individuals are entitled to instruct the Owner and each individual so entitled
shall receive a statement of the number of votes, including fractional shares,
attributable to his participation under the contract or contracts and stating
his right to instruct the Owner how such votes shall be cast. In no case shall
the Company be under any duty to inquire as to the instructions received by, or
the authority of, the Owner, with respect to votes cast by such Owner in person
or by proxy, which shall be valid and effective insofar as the Company, the Fund
and other Owners are concerned.
Section 7. Tellers. Every meeting Or the Variable Annuity Contract Owners
shall be organized by the election viva voce of a chairman and clerk. The
chairman shall appoint two tellers to receive, count and report all ballots cast
at such meeting and he may also appoint a committee on qualifications and
proxies to inquire and report to the meeting what Variable Annuity Contract
Owners are present, duly qualified or properly represented. If the right of any
person to vote be questioned, the chairman of the meeting shall upon receiving
the report of the committee on qualifications and proxies determine as to his
said right, subject to an appeal from such decision to the meeting.
4
<PAGE> 17
ARTICLE IV
POWERS AND DUTIES OF BOARD OF MANAGERS
The Board of Managers shall have the following powers, responsibilities and
duties:
1. To select and approve annually an independent public accountant,
whose employment shall be approved by the Variable Annuity Contract Owners;
2. To execute a management agreement or agreements and an investment
advisory agreement or agreements providing for sales and administrative
services, mortality guarantees, expense guarantees, investment advisory
services and other related matters, which agreements shall be submitted for
approval or rejection by Variable Annuity Contract Owners not later than
their first annual meeting;
3. To consider annually the terms of any management and investment
advisory agreements approved by Variable Annuity Contract Owners and
approve their continuance or submit for action by Variable Annuity Contract
Owners recommendations for amendment or termination;
4. To recommend any changes in the fundamental investment policies of
the Fund and to submit the same to the Variable Annuity Contract Owners at
any annual or special meeting;
5. To supervise the investment of the assets of the Fund in
accordance with the fundamental investment policies of the Fund;
6. To enter into agreements and to take any and all actions necessary
or proper in connection with the operation and management of the Fund and
the assets thereof.
ARTICLE V
FEES OF MEMBERS OF BOARD AND OTHERS
The Board of Managers shall have power to fix and determine the fee or fees
to be paid members of the Board of Managers or any person elected by the Board
of Managers or by the Variable Annuity Contract Owners on account of services to
the Fund, except that members of the Board of Managers who are also officers,
directors or employees of the Company or The Travelers Corporation or any
company affiliated with The Travelers Corporation shall not be entitled to any
fee. Any fees so fixed and determined by the Board of Managers shall be subject
to revision or amendment by the Variable Annuity Contract Owners and may be paid
by the Company in accordance with the terms of any management agreement entered
into with the Fund.
ARTICLE VI
INDEMNIFICATION
Each member of the Board of Managers and each officer and agent of the Fund
(and his heirs, executors and administrators) shall be indemnified and
reimbursed by the Fund for expenses, including attorneys' fees, and for such
amount of any judgment, money decree, fine, penalty or
5
<PAGE> 18
settlement for which he may become liable as the Board of Managers deems
reasonable, actually incurred by him in connection with the defense or
reasonable settlement of any action, suit or proceeding, or any appeal therein,
in which he is made a party by reason of the fact that he, or the person whose
legal representative he is, is or was such a member, officer or agent, except in
relation to matters as to which he shall be finally adjudged in such action,
suit or proceeding to be liable for negligence or misconduct in the performance
of his duties. No such payment shall be made to any person in respect of any
action, suit or proceeding seeking to establish his liability to the Fund
arising out of alleged negligence or misconduct by him, or the person whose
legal representative or successor he is, in the performance of his duties unless
either (a) he is successful in his defense on the merits or (b) the court in
which such action, suit or proceeding was instituted, on motion for such
indemnification and reimbursement, finds such payment not unreasonable or
inequitable after such hearing and notice thereof as it deems proper. The
foregoing right of indemnification and reimbursement shall not be exclusive of
any other rights to which any person may be entitled as a matter of law. Nothing
contained herein shall be construed to protect any person against any liability
to the Fund or to Variable Annuity Contract Owners of the Company to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
ARTICLE VII
VALUATION OF THE FUND
Section 1. Valuation of Assets. In determining the total value of the
assets of the Fund on any valuation date, securities shall be taken at their
market value and all other assets at fair value, determined as follows:
(1) The market value of each security that is listed or traded on the
New York Stock Exchange or the American Stock Exchange shall be determined
by the price of the last reported sale of such security, ascertained by any
method which may be selected by or under the direction of the Board of
Managers, on either of said exchanges on the business day next preceding
the valuation date. In case there has been no such sale of such security on
such day, then market value shall be ascertained by any method which may be
selected by or under the direction of the Board of Managers, but shall be
not less than the last bid price nor more than the last asked price, if
any, on either of such exchanges for such security on such day.
(2) The market value of each security that shall not be listed or
traded on the New York Stock Exchange or the American Stock Exchange shall
be determined by any method which may be selected by or under the direction
of the Board of Managers.
(3) Dividends declared but not yet received and rights in respect of
securities quoted ex-dividends or ex-rights shall be included at the fair
value thereof as determined by any method which may be selected by or under
the direction of the Board of Managers, which may, but need not be, the
fair value so determined on the day the particular securities are first
quoted ex-dividends or ex-rights.
6
<PAGE> 19
(4) The fair value of any other assets of the Fund (or the value of
any of the assets mentioned in paragraphs (1), (2) or (3) in situations not
covered thereby or in the event of the closing of the New York Stock
Exchange or any other circumstance determined by authority of the Board of
Managers to make other methods of valuation advisable) shall be determined
by any method which may be selected by or under the direction of the Board
of Managers.
(5) Whenever value or market prices or any other matter are to be
determined hereunder by any method which may be selected by or under the
direction of the Board of Managers, the method selected shall be in
accordance with generally accepted accounting principles and as may be
approved from time to time by or pursuant to the authority of the Board of
Managers.
Section 2. Determinations Binding. Any determination made in good faith
and, so far as accounting matters are involved, in accordance with generally
accepted accounting principles by or pursuant to the direction of the Board of
Managers, as to the amount of the assets, debts, obligations, or liabilities of
the Fund, as to the amount of any reserves or charges set up and the propriety
thereof, as to the time of or purpose for creating such reserves or charges, as
to the use, alteration or cancellation of any reserves or charges (whether or
not any debt, obligation or liability for which such reserves or charges shall
have been created shall have been paid or discharged or shall be then or
thereafter required to be paid or discharged), as to the price or closing bid or
asked price of any security owned or held by the Fund, as to the market value of
any security or fair value of any other asset of the Fund, as to the number of
units of the Fund outstanding, as to the estimated expense to the Fund in
connection with purchases of assets or units, as to the ability to liquidate
securities in orderly fashion, or as to any other matters relating to the issue,
sale, purchase and/or other acquisition or disposition of securities or units of
the Fund, shall be final, conclusive and binding.
ARTICLE VIII
AMENDMENTS
These Rules and Regulations, subject to applicable law, may be altered,
amended or repealed by vote of a majority of the Board of Managers as is
necessary and appropriate to carry out the purposes of the Fund
***
As adopted on December 18, 1967, pursuant to authorization by a vote of the
Board of Directors of The Travelers Insurance Company on August 4, 1967.
- ---------------
* Effective October 1, 1985, the name changed to The Traveler Growth Stock
Account for Variable Annuities effective
Effective May 1, 1992, the name changed to The Travelers Growth and Income
Stock Account for Variable Annuities.
Article II amended by vote of Board of Managers at July 25, 1996 meeting.
7
<PAGE> 20
EXHIBIT C
THE TRAVELERS INSURANCE COMPANY
HARTFORD, CONNECTICUT
------------------------
RULES AND REGULATIONS
OF
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
------------------------
DATED AS OF MAY 1, 1999
<PAGE> 21
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
RULES AND REGULATIONS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I GENERAL........................................... 1
Section 1.1. Name......................................... 1
Section 1.2. Office....................................... 1
Section 1.3. Purposes..................................... 1
Section 1.4. Status Under the 1940 Act.................... 1
ARTICLE II BOARD OF MANAGERS................................ 2
Section 2.1. Management of the Separate Account........... 2
Section 2.2. Qualification................................ 2
Section 2.3. Number....................................... 2
Section 2.4. Term and Election............................ 2
Section 2.5. Composition of the Board of Managers......... 2
Section 2.6. Resignation and Retirement................... 2
Section 2.7. Removal...................................... 2
Section 2.8. Vacancies.................................... 3
Section 2.9. Meetings and Vote of Managers................ 3
Section 2.9.1. Regular Meetings........................ 3
Section 2.9.2. Special Meetings........................ 3
Section 2.9.3. Telephonic Meetings..................... 3
Section 2.9.4. Quorum.................................. 3
Section 2.9.5. Required Vote........................... 3
Section 2.9.6. Consent in Lieu of a Meeting............ 3
Section 2.10 Officers and Agents.......................... 3
Section 2.10.1. Enumeration............................ 3
Section 2.10.2. Qualification.......................... 4
Section 2.10.3. Election............................... 4
Section 2.10.4. Term of Office......................... 4
Section 2.10.5. Titles and Duties...................... 4
(a) Chairman......................................... 4
(b) Secretary........................................ 4
(c) Assistant Secretary.............................. 4
(d) Temporary Secretary.............................. 4
Section 2.10.6. Powers................................. 4
Section 2.10.7. Resignation, Retirement, and Removal... 5
Section 2.10.8. Vacancies.............................. 5
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 2.11. Powers and Duties of the Board of
Managers............................................... 5
Section 2.11.1. Powers and Duties -- Generally......... 5
Section 2.11.2. Powers and Duties Regarding Fees and
Benefits.............................................. 6
Section 2.12. Committees.................................. 7
Section 2.12.1. Generally.............................. 7
Section 2.12.2. Executive Committee.................... 7
ARTICLE III CONTRACT OWNERS................................. 7
Section 3.1. Annual or Regular Meetings................... 7
Section 3.2. Special Meetings............................. 7
Section 3.3. Notice of Meetings........................... 8
Section 3.4. Call of Meetings............................. 8
Section 3.5. Record Date.................................. 8
Section 3.6. Actions by Written Consent................... 8
Section 3.7. Required Vote................................ 8
Section 3.8. Proxies...................................... 9
Section 3.9. Quorum....................................... 9
Section 3.10. Adjournments................................ 9
Section 3.11. Procedure at Meetings....................... 9
Section 3.12. Voting Powers............................... 9
Section 3.13. Matters Requiring Contract Owner Action..... 9
ARTICLE IV LIMITATION OF LIABILITY AND INDEMNIFICATION...... 10
Section 4.1. General Provisions........................... 10
Section 4.1.1. General Limitation of Liability......... 10
Section 4.1.2. Notice of Limited Liability............. 10
Section 4.1.3. Liability Limited to Assets of the
Separate Account...................................... 10
Section 4.2. Liability of Managers........................ 10
Section 4.2.1. Liability for Own Actions............... 10
Section 4.2.2. Liability for Actions of Others......... 11
Section 4.2.3. Advice of Experts and Reports of
Others................................................ 11
Section 4.2.4. Bond.................................... 11
Section 4.2.5. Rules and Regulations Governs Issues of
Liability............................................. 11
Section 4.3. Liability of Third Persons Dealing with
Managers............................................... 11
Section 4.4. Indemnification.............................. 11
Section 4.4.1. Indemnification of Covered Persons...... 11
Section 4.4.2. Exceptions.............................. 12
Section 4.4.3. Rights of Indemnification............... 12
Section 4.4.4. Expenses of Indemnification............. 12
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 4.4.5. Certain Defined Terms Relating to
Indemnification....................................... 13
Section 4.5. Consistent with Applicable Law............... 13
ARTICLE V VALUATION OF ASSETS............................... 13
Section 5.1. General...................................... 13
Section 5.2. Suspension of Determination of Value......... 13
Section 5.3. Computation of Net Assets.................... 13
Section 5.4. Separate Account's Assets.................... 13
Section 5.5. Valuation of Assets.......................... 14
Section 5.6. The Separate Account's Liabilities........... 14
Section 5.7. Determination Binding........................ 14
ARTICLE VI AMENDMENTS....................................... 15
Section 6.1. General...................................... 15
Section 6.2. Prohibited Retrospective Amendments.......... 15
ARTICLE VII MISCELLANEOUS PROVISIONS........................ 15
Section 7.1. Certain Internal References.................. 15
Section 7.2. Certified Copies............................. 15
Section 7.3. Fiscal Year.................................. 15
Section 7.4. Governing Law................................ 15
Section 7.5. Headings..................................... 15
Section 7.6. Resolution of Ambiguities.................... 16
Section 7.7. Seal......................................... 16
Section 7.8. Severability................................. 16
Section 7.9. Signatures................................... 16
</TABLE>
<PAGE> 24
THE TRAVELERS INSURANCE COMPANY
HARTFORD, CONNECTICUT
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
------------------------
RULES AND REGULATIONS
------------------------
ARTICLE I
GENERAL
Section 1.1. Name. The name of this separate account will be The Travelers
Growth and Income Stock Account for Variable Annuities (the "Separate Account").
The name of the Separate Account has been selected by and belongs to The
Travelers Insurance Company (the "Company"). The use of its name by the Separate
Account will in no way prevent the Company or any company affiliated with the
Company from using the name "Travelers" with any other word or words in
connection with any other entity or business, whether competitive with the
Separate Account or not. The Company's red umbrella service mark may be used by
the Separate Account only with the consent of the Company, which reserves the
right to withdraw such consent.
Section 1.2. Office. The office of the Separate Account will be in the
City of Hartford, Connecticut.
Section 1.3. Purposes. The purpose of the Separate Account is to provide
an account pursuant to Section 38a-433 of the Connecticut General Statutes (the
"CGS"), for assets to be set aside, separate and apart from the other assets of
the Company, for the credit and sole benefit of variable insurance contracts
issued by the Company and entitled to participate in the Separate Account. The
assets of the Separate Account will be held and applied exclusively to meet
obligations (including expenses) to provide variable benefits under variable
insurance contracts participating in the Separate Account, as provided in such
contracts, all in accordance with applicable state law and as may be required to
comply with the requirements of the Investment Company Act of 1940, as amended
(the "1940 Act"), and the rules and regulations of the Securities and Exchange
Commission (the "SEC") under the 1940 Act.
Section 1.4. Status Under the 1940 Act. The Separate Account may be
registered as an open-end management investment company under the 1940 Act. Such
registration may be terminated, however, if and to the extent permitted by law;
or the Separate Account may be reorganized and registered as a unit investment
trust under the 1940 Act; in each case with the approval (if required by the
1940 Act) of the owners of the outstanding variable insurance contracts issued
with respect to the Separate Account (the "Contract Owners"), voted as provided
in Article III of these Rules and Regulations. The Separate Account also may be
a series company, with separate investment portfolios or funds.
Any question of interpretation of any term or provisions of these Rules and
Regulations having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to the corresponding
term or provision of the 1940 Act and to any definition thereof in
<PAGE> 25
the 1940 Act or to judicial interpretations thereof, if any, or, in the absence
of any controlling judicial decisions, to rules, regulations, or orders of the
SEC validly issued pursuant to the 1940 Act.
ARTICLE II
BOARD OF MANAGERS
Section 2.1. Management of the Separate Account. The business and affairs
of the Separate Account shall be managed by the Managers, and they shall have
all powers necessary and desirable to carry out that responsibility, including
those specifically set forth in Sections 2.11.1 and 2.11.2 herein.
Section 2.2. Qualification. Each Manager shall be a natural person. A
Manager need not be Contract Owner, a citizen of the United States, or a
resident of the State of Connecticut.
Section 2.3. Number. The number of Managers which shall constitute the
entire Board of Managers shall not be less than five (5) nor more than ten (10),
which number may be increased or decreased by the Managers, but shall never be
less than the minimum number required by the CGS. The number of Managers may be
decreased in conjunction with a removal of a Manager pursuant to Section 2.7.
Notwithstanding the foregoing, the entire Board of Managers may be comprised of
only the initial Manager prior to the effective date of the registration
statement registering the Separate Account and the variable insurance contracts
under the federal securities laws.
Section 2.4. Term and Election. Each Manager shall hold office
indefinitely. If and to the extent required by the 1940 Act, one or more
Managers shall be elected by Contract Owners at a meeting called for that
purpose. Any Manager who is appointed by the Managers to fill a vacancy as
provided hereunder shall hold his position until the next Contract Owners'
meeting, subject to the requirements of the 1940 Act.
Section 2.5. Composition of the Board of Managers. No election or
appointment of a Manager shall take effect if such election or appointment would
cause the number of Managers who are interested persons, as defined in Section
2(a)(19) of the 1940 Act ("Interested Persons"), to exceed the number permitted
by Section 10 of that Act.
Section 2.6. Resignation and Retirement. Any Manager may resign or retire
as a Manager (without need for prior or subsequent accounting) by an instrument
in writing signed by such Manager and delivered or mailed to the Chairman of the
Board of Managers. Such resignation or retirement shall be effective upon such
delivery, or at a later date according to the terms of the instrument.
Section 2.7. Removal. Any Manager may be removed with or without cause at
any time: (1) by written instrument signed by two-thirds (2/3) of the number of
Managers in office prior to such removal, specifying the date upon which such
removal shall become effective, or (2) by the affirmative vote of a majority of
all votes entitled to be cast of Contract Owners in person or by proxy at any
meeting called for that purpose.
2
<PAGE> 26
Section 2.8. Vacancies. Any vacancy or anticipated vacancy resulting for
any reason, including without limitation the death, resignation, retirement,
removal, or incapacity of any of the Managers, or resulting from an increase in
the number of Managers may (but need not unless required by the 1940 Act) be
filled by a majority of the Managers then in office, subject to the provisions
of Section 16 of the 1940 Act, through the appointment in writing of such other
person as such remaining Managers in their discretion shall determine. The
appointment shall be effective upon the written acceptance of the person named
therein to serve as a Manager and agreement by such person to be bound by the
provisions of these Rules and Regulations, except that any such appointment in
anticipation of a vacancy occurring by reason of the resignation, retirement, or
increase in number of Managers to be effective at a later date shall become
effective only at or after the effective date of such resignation, retirement,
or increase in number of Managers.
Section 2.9. Meetings and Vote of Managers.
Section 2.9.1. Regular Meetings. The Managers, from time to time, may
provide for the holding of regular meetings of the Managers, and fix their
time and place.
Section 2.9.2. Special Meetings. Special meetings of the Managers may
be called by the Chairman of the Board of Managers on twenty-four (24)
hours notice to each Manager, either personally, by mail, by telegram, or
by facsimile transmission. Special meetings shall be called by the
Secretary or Assistant Secretary in like manner and on like notice on the
written request of a majority of the Managers then in office.
Section 2.9.3. Telephonic Meetings. Managers may participate in a
meeting of the Managers by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time. Except to the extent that the
1940 Act has been interpreted otherwise, participation by such means shall
constitute presence in person at the meeting.
Section 2.9.4. Quorum. A majority of the Managers then in office
being present in person or by proxy shall constitute a quorum.
Section 2.9.5. Required Vote. Except as otherwise provided by the
1940 Act, other applicable law, or these Rules and Regulations, any action
to be taken by the Managers on behalf of the Separate Account may be taken
by a majority of the Managers present at a meeting of Managers at which a
quorum is present.
Section 2.9.6. Consent in Lieu of a Meeting. Except as otherwise
provided by the 1940 Act or other applicable law, the Managers may, by
unanimous written consent of the Managers then in office, take any action
which may have been taken at a meeting of the Managers.
Section 2.10 Officers and Agents.
Section 2.10.1. Enumeration. The officers of the Board of Managers
shall be a Chairman, a Secretary, and an Assistant Secretary. The Managers
may also appoint such other officers as they deem desirable. The Separate
Account may also have such agents as the Managers from time to time may in
their discretion appoint. Any two or more offices may be held by the same
person except that a person who holds more than one office may not act in
more than one
3
<PAGE> 27
capacity to execute, acknowledge, or verify an instrument required by law
to be executed, acknowledged, or verified by more than one officer.
Section 2.10.2. Qualification. The Chairman shall be a Manager, and
may, but need not be, a Contract Owner. Any other officer may, but need not
be, a Manager or Contract Owner.
Section 2.10.3. Election. The Chairman shall be elected by the
Managers at the first meeting of the Managers. Other officers may be
elected or appointed by the Managers at any meeting of the Managers or at
any other time.
Section 2.10.4. Term of Office. The Chairman shall hold office until
his respective successor is chosen and qualified, or in each case until he
or she sooner dies, resigns, is removed, or becomes disqualified. Each
other officer shall hold office and each agent shall retain authority at
the pleasure of the Managers.
Section 2.10.5 Titles and Duties.
(a) Chairman. Unless the Managers otherwise provide, the Chairman
of the Board shall preside at all meetings of the Contract Owners and of
the Managers. The Chairman of the Board shall also perform such other
duties and have such other powers as the Board of Managers may from time
to time prescribe.
(b) Secretary. The Secretary shall record all proceedings of the
Contract Owners and the Managers in books to be kept for such purposes,
which books or a copy thereof shall be kept at the principal office of
the Separate Account or at such other place as designated by the
Managers, in accordance with the requirements of the 1940 Act and rules
thereunder. The Secretary shall also perform such other duties and have
such other powers as the Board of Managers may from time to time
prescribe.
(c) Assistant Secretary. In the absence of the Secretary or in the
event of his or her inability or refusal to act, the Assistant
Secretary, or if there is more than one, the Assistant Secretaries in
their order of election or in such other order as determined by the
Managers, shall perform the duties of the Secretary, and when so acting
shall have all the powers of and be subject to all the restrictions upon
the Secretary. The Assistant Secretary shall also perform such other
duties and have such other powers as the Board of Managers may from time
to time prescribe.
(d) Temporary Secretary. In the absence of the Secretary and
Assistant Secretary from any meeting of the Contract Owners or Managers,
the Managers may appoint a temporary secretary at such meeting, who
shall perform the duties of the Secretary for the purposes of such
meeting.
Section 2.10.6. Powers. Subject to the other provisions of these
Rules and Regulations, each officer shall have, in addition to the duties
and powers set forth herein, such duties and powers as are commonly
incident to the office occupied by such officer as if the Separate Account
were organized as a Connecticut business corporation and such other duties
and powers as the Managers may from time to time designate.
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Section 2.10.7. Resignation, Retirement, and Removal. Any officer may
resign at any time by written instrument signed by him or her delivered to
the Chairman or Secretary or delivered to a meeting of the Managers. Such
resignation shall be effective upon receipt unless specified to be
effective at some other time. The Managers may remove any officer elected
by them with or without cause by the vote or written consent of a majority
of the Managers then in office. To the extent that any officer or Manager
of the Separate Account receives compensation from the Separate Account
(and except as may otherwise be expressly provided in a written agreement
with the Separate Account that is not inconsistent with applicable law), no
Manager or officer resigning and no officer removed shall have any right to
any compensation for any period following his or her resignation or
removal, or any right to damages on account of such removal.
Section 2.10.8. Vacancies. Any vacancy or anticipated vacancy
resulting for any reason, including without limitation the death,
resignation, retirement, removal, or incapacity of the Chairman or the
Secretary may be filled by a majority of the Managers then in office
through the appointment in writing of such other person as such remaining
Managers in their discretion shall determine. The appointment shall be
effective upon the written acceptance of the person named therein to serve
as in the capacity named therein. Other vacancies may be filled, if at all,
by the Managers at a meeting of the Managers or at any other time.
Section 2.11. Powers and Duties of the Board of Managers.
Section 2.11.1. Powers and Duties -- Generally. Subject to applicable
law, the Board of Managers shall have the following powers,
responsibilities, and duties:
(a) to select and approve annually an independent public accountant
for the Separate Account, whose initial selection shall be submitted to
the Contract Owners for ratification or rejection if and to the extent
required by applicable law;
(b) to approve an agreement for investment advisory (and any
agreement for sub-advisory) services, which agreement shall be submitted
to the Contract Owners for approval or rejection if and to the extent
required by applicable law;
(c) to approve an underwriting agreement(s) with a principal
underwriter(s) for the Separate Account;
(d) to consider annually the terms of any agreement or agreements
of the nature contemplated by paragraphs (b) or (c) of this Section
2.11.1 and approve amendments thereto or continuance or termination
thereof, subject to any action by the Contract Owners required by
applicable law;
(e) to approve an agreement or agreements for administrative
services and/or custody of the assets of the Separate Account, if deemed
appropriate;
(f) to take such action as may be necessary or appropriate with
respect to the registration and qualification of the Separate Account
and of the variable insurance contracts under the 1940 Act, the
Securities Act of 1933 (the 1933 Act), and any applicable state
securities and insurance laws;
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(g) to adopt and amend the investment policies and restrictions of
the Separate Account, or in the status or classification of the Separate
Account under the 1940 Act as contemplated by Section 1.4 of these Rules
and Regulations, and, to the extent required by applicable law, to
submit the same to the Contract Owners at a meeting of the Contract
Owners;
(h) to add new funds to the Separate Account or eliminate existing
funds as they deem appropriate;
(i) to supervise the investment of the assets of the Separate
Account in accordance with the investment policies and restrictions of
the Separate Account;
(j) to determine the value of the net assets of the Separate
Account in accordance with Article V hereof, and in particular to
determine, in good faith, the fair value of all assets of the Separate
Account for which market quotations are not readily available;
(k) to elect and remove officers and appoint and terminate agents
and consultants, any one or more of the foregoing of whom may be a
Manager, and provide compensation for the foregoing in the Managers sole
discretion;
(l) to elect, by vote of a majority of the Managers then in office,
an Executive Committee and any other committee, and, in the Managers
sole discretion, to delegate thereto certain of their powers that may be
delegated, subject to Section 2.12 hereof; and
(m) to enter into any other agreements, or authorize the entrance
into the same, on behalf of the Separate Account, and to take any and
all actions necessary or proper in connection with the operation and
management of the Separate Account and the assets thereof.
If any insurance regulatory authority should require that the Separate
Account make or refrain from making certain investments or disapprove any
agreement of the nature referred to in this Section, or if the Company
should disapprove any change in the Separate Account's investment policy,
investment manager, or principal underwriter initiated by the Contract
Owners or the Board of Managers, the Company shall immediately notify the
Board of such action in order that a special meeting of the Board of
Managers may be called, if desired.
Section 2.11.2. Powers and Duties Regarding Fees and Benefits. The
Board of Managers shall have the power to fix and determine the fee or fees
and the reimbursement for expenses, to be paid to Managers or any officer
elected or appointed by the Board of Managers, on account of services to
the Separate Account or expenses incurred in connection with the Separate
Account; and no fees or expenses shall be paid to any such member or
officer on such account which is not so fixed and determined by the Board
of Managers. Managers and officers who are also officers, directors, or
employees of the Company or any company affiliated with the Company shall
not be entitled to any fee from the Separate Account. Any fees or expenses
so fixed and determined by the Board of Managers may be paid by the Company
in accordance with the terms of any expense agreement entered into with the
Separate Account.
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In addition, the Managers shall have the power to pay pensions for faithful
service, as deemed appropriate by the Managers, and to adopt, establish and
carry out pension, profit-sharing, savings, thrift, and other retirement,
incentive and benefit plans, including the purchasing of life insurance and
annuity contracts as a means of providing retirement and other benefits, for any
or all Managers, officers, employees, and agents of the Separate Account, each
in accordance with and subject to the requirements of applicable law.
Section 2.12. Committees.
Section 2.12.1. Generally. The Managers, by vote of the Managers then
in office, may elect from their number an Executive Committee or any other
committee, and may delegate thereto some or all of their powers except
those which by law or by these Rules or Regulations may not be delegated.
Except as the Managers may otherwise determine, any committee established
by a majority of the Managers then in office may make rules for the conduct
of its business, but unless otherwise provided by the Managers or in such
rules, its business shall be conducted so far as possible in the same
manner as is provided by the Rules and Regulations of the Separate Account
for the Managers themselves. All members of such committees shall hold such
offices at the pleasure of the Managers. The Managers may abolish any
committee at any time. Any committee to which the Managers delegate any of
their powers or duties shall keep records of its meetings and shall report
its actions to the Managers. The Managers shall have power to rescind any
action of any committee, but no such rescission shall have retroactive
effect.
Section 2.12.2. Executive Committee. The Executive Committee, if
there shall be one, shall have all of the powers and authority of the
Managers that may lawfully be exercised by an Executive Committee, except
the power to recommend to the Contract Owners any action which requires the
Contract Owners approval; or approve any merger, reorganization, or
exchange which does not require Contract Owners approval. Notwithstanding
the foregoing, the Managers may limit the powers and authority of the
Executive Committee at any time.
ARTICLE III
CONTRACT OWNERS
Section 3.1. Annual or Regular Meetings. No annual or regular meetings of
Contract Owners are required.
Section 3.2. Special Meetings. Special meetings of Contract Owners may be
called by the Chairman of the Board of Managers or the Managers from time to
time for the purpose of taking action upon any matter requiring the vote or
authority of the Contract Owners as herein provided or upon any other matter
upon which Contract Owner approval is deemed by the Managers to be necessary or
desirable. A special meeting shall be called by the Secretary of the Separate
Account upon (i) the request of a majority of the Managers then in office, or
(ii) the written request of Contract Owners entitled to cast at least ten
percent (10%) of all the votes entitled to be cast at such meeting subject to
the requirements of Section 16(c) of the 1940 Act.
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Section 3.3. Notice of Meetings. Written notice of any meeting of Contract
Owners shall be given or caused to be given by the Managers by mailing or
transmitting such notice not less than ten (10) nor more than sixty (60) days
before such meeting, postage prepaid, stating the time, place, and purpose of
the meeting, to each Contract Owner entitled to vote at such meeting as of the
Record Date, at the Contract Owner's address as it appears on the records of the
Separate Account. Notice of any adjourned meeting will not be required. Whenever
any notice of time, place, or any other matter is required to be given to
Contract Owners, a waiver thereof in writing signed by the Contract Owner
entitled to the notice, whether before or after the time stated in the notice,
will be deemed equivalent to the giving of notice. Any waivers will be filed
with the records of the meeting.
Section 3.4. Call of Meetings. The Managers shall promptly call and give
notice of a meeting of Contract Owners for the purpose of voting upon removal of
any Manager of the Separate Account when requested to do so in accordance with
Section 3.2. For all other matters, the Managers shall call or give notice of a
meeting within thirty (30) days after written application by Contract Owners
entitled to cast at least ten percent (10%) of all the votes entitled to be cast
on the matter request a meeting be called.
Section 3.5. Record Date. The records of the Company will be conclusive in
determining Contract Owners entitled to vote. The number of votes which the
Contract Owner may cast will be determined as of the record date chosen by the
Board of Managers not more than seventy-five (75) nor less than twenty (20) days
prior to the date of any meeting of the Contract Owners, provided that the
record date may be less than twenty days prior to the initial meeting of
Contract Owners. Prior to the commencement of payments under a variable
insurance contract, the number of votes will equal the number of Accumulation
Units credited to the contract. After variable payments have commenced, the
number of votes will equal the amount of the assets in the Separate Account
established to meet variable obligations related to the contract, divided by the
value of an Accumulation Unit.
The Company will furnish to the Contract Owner (or mail in accordance with
his instructions) proxy materials. In no case will the Company be under any duty
to inquire as to the instructions received by, or the authority of, the Contract
Owner, with respect to votes cast by an Contract Owner in person or by proxy,
which will be valid and effective insofar as the Company, the Separate Account,
and other Contract Owners are concerned.
Section 3.6. Actions by Written Consent. Except as otherwise required by
the 1940 Act, other applicable law, or these Rules and Regulations, any action
taken by Contract Owners may be taken without a meeting if Contract Owners
entitled to cast at least a majority of all the votes entitled to be cast on the
matter (or such larger proportion thereof as shall be required by the 1940 Act
or by any express provision of these Rules and Regulations) consent to the
action in writing and such written consents are filed with the records of the
meetings of Contract Owners. Such consent shall be treated for all purposes as a
vote taken at a meeting of Contract Owners.
Section 3.7. Required Vote. Subject to any provision of law requiring the
authorization of any matter by a greater proportion, any matter on which the
Contract Owners vote shall be approved by the affirmative vote of the votes
entitled to be cast on such matter at a meeting of the Contract
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Owners at which a quorum is present, except that Managers shall be elected by a
plurality of the votes cast at such meeting.
Section 3.8. Proxies. A Contract Owner may vote either in person or by
proxy duly executed by the Contract Owner and transmitted to the Separate
Account by mail, facsimile, or any other form of transmission permitted by
applicable law. A proxy for any meeting will be valid for any adjournment of
such meeting.
Section 3.9. Quorum. Subject to applicable law, Contract Owners entitled
to vote, represented in person or by proxy, will constitute a quorum for the
transaction of business at any annual or special meeting of the Contract Owners,
provided that there is represented, either in person or by proxy, at any
meeting, twenty percent (20%) of the votes entitled to be cast. If a quorum is
not present, a majority of votes represented may adjourn the meeting to some
later time. When a quorum is present, a majority of the votes represented in
person or by proxy will determine any questions, except as may be otherwise
provided by these Rules and Regulations or by applicable law.
Section 3.10. Adjournments. Adjourned meetings may be held within a
reasonable time after the date set for the original meeting without the
necessity of further notice.
Section 3.11. Procedure at Meetings. The Chairman and Secretary of the
Board of Managers shall act as Chairman and Secretary, respectively, of every
meeting of the Contract Owners, or in the absence of both, such other person or
persons as the meeting shall select by voice vote. The chairman of the meeting
shall appoint such inspectors of election, tellers, or other officers or
committees of the meeting as may be necessary to determine the vote on any
question or the right of any person or proxy to vote at the meeting.
Section 3.12. Voting Powers. The Contract Owners shall have power to vote
only with respect to matters expressly enumerated in Section 3.13 or with
respect to such additional matters relating to the Separate Account as may be
required by the 1940 Act, this Separate Account, any registration of the
Separate Account with the SEC or any state, or as the Managers may otherwise
deem necessary or desirable.
Section 3.13. Matters Requiring Contract Owner Action. Action by the
Contract Owners shall be required as to the following matters:
(a) to elect or remove Managers as provided in Sections 2.4 and 2.7
hereof;
(b) to approve any agreement or arrangement with a third party
provider of services as to which Contract Owner approval is required by the
1940 Act;
(c) to ratify the selection of an initial independent public
accountant and any independent public accountant other than the current
accountant, and terminate the employment of such accountant, if and to the
extent required by applicable law ;
(d) to authorize changes in the fundamental investment restrictions
and/or policies of the Separate Account, if and to the extent required by
applicable law; and
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(e) to approve any acts, transactions, or other agreements that may be
submitted to a vote of the Contract Owners by the Board of Managers.
ARTICLE IV
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 4.1. General Provisions.
Section 4.1.1. General Limitation of Liability. No personal liability
for any debt or obligation of the Separate Account shall attach to any
Manager, officer, or employee of the Separate Account or Contract Owner.
Without limiting the foregoing, a Manager shall not be responsible for or
liable in any event for any neglect or wrongdoing of any officer, agent, or
employee, of the Separate Account, nor shall any Manager be responsible or
liable for the act or omission of any other Manager of the Separate
Account. Similarly, an officer or employee of the Separate Account or
Contract Owner shall not be responsible for or liable in any event for any
neglect or wrongdoing of any Manager or agent of the Separate Account, or
any other officer or employee of the Separate Account or Contract Owner.
Every note, bond, contract, instrument, certificate, or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Separate Account or the Managers or any Manager in connection with the
Separate Account shall be conclusively deemed to have been executed or done
only in or with respect to their or his or her capacity as Managers or
Manager and neither such Managers or Manager shall be personally liable
thereon.
Section 4.1.2. Notice of Limited Liability. Every note, bond,
contract, instrument, certificate or undertaking made or issued by the
Managers or by any officers or officer shall recite that the same was
executed or made by or on behalf of the Separate Account by them as
Managers or Manager or as officers or officer and not individually and that
the obligations of such instrument are not binding upon any of them but are
binding only upon the assets and property of the Separate Account, and may
contain such further recitals as they or he may deem appropriate, but the
omission thereof shall not operate to bind any Managers or Manager or
officers or officer individually.
Section 4.1.3. Liability Limited to Assets of the Separate
Account. All persons extending credit to, contracting with, or having any
claim against the Separate Account shall look only to the assets of the
Separate Account, as appropriate, for payment under such credit, contract
or claim, and neither the Managers nor any of the Separate Account s
officers, employees, or agents, whether past, present, or future, shall be
personally liable therefor.
Section 4.2. Liability of Managers. The exercise by the Managers of their
powers and discretion hereunder shall be binding upon the Separate Account, and
any other person dealing with the Separate Account. The liability of the
Managers, however, shall be limited by this Article IV.
Section 4.2.1. Liability for Own Actions. A Manager shall be liable
to the Separate Account only for his or her own willful misfeasance, bad
faith, gross negligence, or reckless
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disregard of the duties involved in the conduct of the office of Manager,
and for nothing else, and shall not be liable for errors of judgment or
mistakes of fact or law.
Section 4.2.2. Liability for Actions of Others. The Managers shall
not be responsible or liable in any event for any neglect or wrongdoing of
any officer, agent, employee, consultant, adviser, administrative
distributor, principal underwriter, custodian, transfer agent, dividend
disbursing agent, Contract Owner, servicing agent, or accounting agent of
the Separate Account, nor shall any Manager be responsible for any act or
omission of any other Manager.
Section 4.2.3. Advice of Experts and Reports of Others. The Managers
may take advice of counsel or other experts with respect to the meaning and
operation of these Rules and Regulations and their duties as Managers
hereunder, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. In
discharging their duties, the Managers, when acting in good faith, shall be
entitled to rely upon the books of account of the Separate Account and upon
written reports made to the Managers by any officer appointed by them, any
independent public accountant, and (with respect to the subject matter of
the contract involved) any officer, partner, or responsible employee of any
other party to any contract entered into hereunder.
Section 4.2.4. Bond. The Managers shall not be required to give any
bond as such, nor any surety if a bond is required.
Section 4.2.5. Rules and Regulations Governs Issues of Liability. The
provisions of these Rules and Regulations, to the extent that they restrict
the duties and liabilities of the Managers otherwise existing at law or in
equity, are agreed by the Contract Owners and all other Persons bound by
these Rules and Regulations to replace such other duties and liabilities of
the Managers.
Section 4.3. Liability of Third Persons Dealing with Managers. No person
dealing with the Managers shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Managers or to see to the
application of any payments made or property transferred to the Separate Account
or upon its order.
Section 4.4. Indemnification.
Section 4.4.1. Indemnification of Covered Persons. Subject to the
exceptions and limitations contained in Article IV, every person who is, or
has been, a Manager, officer, employee, or agent of the Separate Account,
including persons who serve at the request of the Separate Account as
Managers, officers, employees, or agents of another organization in which
the Separate Account has an interest as a shareholder, creditor or
otherwise (hereinafter referred to as Covered Person ), shall be
indemnified by the Separate Account to the fullest extent permitted by law
against liability and against all expenses reasonably incurred or paid by
him or her in connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by virtue of his being or
having been such a Manager, officer, employee, or agent and against amounts
paid or incurred by him in settlement thereof.
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Section 4.4.2. Exceptions. No indemnification shall be provided hereunder
to a Covered Person:
(a) For any liability to the Separate Account arising out of a
final adjudication by the court or other body before which the
proceeding was brought that the Covered Person engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;
(b) With respect to any matter as to which the Covered Person shall
have been finally adjudicated not to have acted in good faith in the
reasonable belief that his or her action was in the best interests of
the Separate Account; or
(c) In the event of a settlement or other disposition not involving
a final adjudication (as provided in paragraph (a) or (b) of this
Section 4.4.2) and resulting in a payment by a Covered Person, unless
there has been either a determination that such Covered Person did not
engage in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office by
the court or other body approving the settlement or other disposition,
or a reasonable determination, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that he or she did not
engage in such conduct, such determination being made by: (i) a vote of
a majority of the Disinterested Managers (as such term is defined in
Section 4.4.5) acting on the matter (provided that a majority of
Disinterested Managers then in office act on the matter); or (ii) a
written opinion of independent legal counsel.
Section 4.4.3. Rights of Indemnification. The rights of
indemnification herein provided may be insured against by policies
maintained by the Separate Account, and shall be severable, shall not
affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be a Covered
Person, and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Separate Account personnel other than
Covered Persons may be entitled by contract or otherwise under law.
Section 4.4.4. Expenses of Indemnification. Expenses of preparation
and indemnification under this Section 4.4.4 shall be advanced by the
Separate Account prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient to repay such amount if it is
ultimately determined that he or she is not entitled to indemnification
under this Section 4.4.4, provided that either:
(a) Such undertaking is secured by a surety bond or some other
appropriate security or the Separate Account shall be insured against
losses arising out of any such advances; or
(b) A majority of the Disinterested Managers acting on the matter
(provided that a majority of the Disinterested Managers then in office
act on the matter) or independent legal counsel in a written opinion
shall determine, based upon a review of the readily available facts (as
opposed to the facts available upon a full trial), that there reason to
believe that the recipient ultimately will be found entitled to
indemnification.
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Section 4.4.5. Certain Defined Terms Relating to Indemnification. As
used in this Article IV, the following words shall have the meanings set
forth below:
(a) A Disinterested Manager is one (i) who is not an Interested
Person of the Separate Account (including anyone, as such Disinterested
Manager, who has been exempted from being an interested person by any
rule, regulation or order of the SEC), and (ii) against whom none of
such actions, suits or other proceedings or another action, suit or
other proceeding on the same or similar grounds is then or has been
pending;
(b) Claim, action, suit or proceeding shall apply to all claims,
actions, suits, proceedings (civil, criminal, administrative or other,
including appeals), actual or threatened;
(c) An Independent Legal Counsel is counsel who is not a Manager,
officer, employee, or Interested Person of the Separate Account or the
Company, and who the Covered Person who is submitting the
indemnification claim and the Managers agree will exercise impartial
legal judgment; and
(c) "Liability" and "expenses" shall include without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
Section 4.5. Consistent with Applicable Law. No indemnification provided
by this Section shall be inconsistent with any applicable law, including the
1940 Act and the 1933 Act.
ARTICLE V
VALUATION OF ASSETS
Section 5.1. General. The Board of Managers shall have the power and duty
to determine the value of the net assets of the Separate Account and to adopt
procedures relating thereto. The Board may establish a securities valuation
committee, appoint one or more agents, or enter into other arrangements with
third parties to assist it in the determination of the value of some or all of
the securities in the Separate Account s portfolio and to make the actual
calculations pursuant to directions of the Board of Managers. Any securities
valuation committee, if established, or any agents appointed by the Board of
Manager will have the duty and responsibility to continuously review the
appropriateness of any valuation method established by the Board and to inform
the Board whenever they determine that any method is no longer appropriate. The
data and information considered in implementing the valuation methods adopted by
the Board will be retained for inspection by the Separate Account's independent
auditors.
Section 5.2. Suspension of Determination of Value. The Board of Managers
may declare a suspension of the determination of the value of the net assets of
the Account to the extent permitted by the 1940 Act.
Section 5.3. Computation of Net Assets. The value of the net assets of the
Separate Account as of any particular time shall be the value of the assets of
the Separate Account less its liabilities.
Section 5.4. Separate Account's Assets. The Separate Accounts assets shall
be deemed to include: (a) all cash on hand or on deposit, including any interest
accrued thereon, (b) all bills and
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demand notes and accounts receivable, (c) all securities owned by or on behalf
of the Separate Account, (d) all stock and cash dividends and cash distributions
payable but not yet received on behalf of the Separate Account (when the
valuation of the underlying securities is being determined ex-dividend), (e) all
interest accrued on any interest-bearing securities owed on behalf of the
Separate Account (except accrued interest included in the valuation of the
underlying security) and (f) all other property of every kind and nature,
including prepaid expenses.
Section 5.5. Valuation of Assets. The value of the Separate Account's
assets will be determined in accordance with the 1940 Act, rules and
regulations, releases and orders of the SEC from time to time in effect
thereunder, valuation procedures adopted by the Board of Mangers, and the
Separate Account's then-effective registration statement.
Section 5.6. The Separate Account's Liabilities. The Separate Account's
liabilities will be deemed to include (a) all bills and accounts payable, (b)
all administrative or other expenses accrued which are chargeable to the
Separate Account, (c) all contractual obligations for the payment of money or
property, (d) all reserves authorized or approved by the Board of Managers for
taxes or contingencies, and (e) all other liabilities of whatsoever kind and
nature.
Section 5.7. Determination Binding. Any determination made in good faith
and, so far as accounting matters are involved, in accordance with generally
accepted accounting principles, by or pursuant to the direction of the Board of
Managers, as to the amounts of the assets, debts, obligations or liabilities of
the Separate Account, as to the amount of any reserves, liabilities, or expenses
set up and the propriety thereof, as to the time of or purpose for creating such
reserves, liabilities, or expenses, as to the use, alteration or cancellation of
any reserves, liabilities, or expenses (whether or not any debt, obligation or
liability for which such reserves, liabilities or expenses shall have been
created shall have been paid or discharged or shall be then or thereafter
required to be paid or discharged), as to the price or closing bid or asked
price of any securities owed or held by the Separate Account, as to the market
value of any securities or fair value of any other asset of the Separate
Account, as to the estimated expense of the Separate Account in connection with
purchases of assets, as to the ability of liquidate securities in an orderly
fashion, as to the number of Accumulation or Annuity Units of the Separate
Account outstanding, or as to any other matters relating to the sale, purchase
and/or other acquisition or disposition of securities or units of the Separate
Account, shall be final, conclusive and binding. The foregoing sentence shall
not be construed to protect any Manager, officer, or agent of the Separate
Account against any liability to the Separate Account or Contract Owners to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office or agency; nor shall the foregoing sentence be constructed
as a waiver of compliance with any provision of the 1940 Act or with any rule,
regulation, or order promulgated under said Act.
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ARTICLE VI
AMENDMENTS
Section 6.1. General. Except as otherwise specifically provided herein or
as required by the 1940 Act or other applicable law, these Rules and Regulations
may be amended at any time by an instrument in writing signed by a majority of
the Managers then in office.
Section 6.2. Prohibited Retrospective Amendments. No amendment of these
Rules and Regulations or repeal of any of its provisions shall limit or
eliminate the limitation of liability provided to Managers and officers
hereunder with respect to any act or omission occurring prior to such amendment
or repeal.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. Certain Internal References. In these Rules and Regulations
or in any such amendment, references to these Rules and Regulations, and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to
these Rules and Regulations as a whole and as amended or affected by any such
amendment.
Section 7.2. Certified Copies. The original or a copy of these Rules and
Regulations and of each amendment hereto shall be kept in the office of the
Separate Account. Anyone dealing with the Separate Account may rely on a
certificate by an officer or Manager of the Separate Account as to whether or
not any such amendments have been made and as to any matters in connection with
the Separate Account hereunder, and with the same effect as if it were the
original, may rely on a copy certified by an officer or Manager of the Separate
Account to be a copy of these Rules and Regulations or of any such amendments.
Section 7.3. Fiscal Year. The fiscal year of the Separate Account shall
end on December 31, or such other date as fixed by resolution of the Managers.
Section 7.4. Governing Law. These Rules and Regulations are executed and
delivered with reference to the laws of the State of Connecticut by all of the
Managers whose signatures appear below, and the rights of all parties and the
validity and construction of every provision hereof shall be subject to and
construed according to the applicable laws of the State of Connecticut (unless
and to the extent otherwise provided for and/or preempted by the 1940 Act or
other applicable federal securities laws). All references to sections of the
1940 Act, or any rules or regulations thereunder, refer to such sections, rules,
or regulations in effect as of the date of, or any successor sections, rules, or
regulations thereto.
Section 7.5. Headings. Headings are placed herein for convenience of
reference only, and in case of any conflict, the text of this instrument, rather
than the headings, shall control. This instrument may be executed in any number
of counterparts, each of which shall be deemed an original.
15
<PAGE> 39
Section 7.6. Resolution of Ambiguities. The Managers may construe any of
the provisions of these Rules and Regulations, insofar as the same may appear to
be ambiguous or inconsistent with any other provisions hereof, and any such
construction hereof by the Managers in good faith shall be conclusive as to the
meaning to be given to such provisions. In construing these Rules and
Regulations, the presumption shall be in favor of a grant of power to the
Managers.
Section 7.7. Seal. No official seal of the Separate Account shall be
required to execute any instruments on behalf of the Managers.
Section 7.8. Severability. The provisions of these Rules and Regulations
are severable, and if the Managers shall determine, with the advice of counsel,
that any of such provision is in conflict with the 1940 Act, or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of these Rules and Regulations; provided, however,
that such determination shall not affect any of the remaining provisions of
these Rules and Regulations or render invalid or improper any action taken or
omitted prior to such determination. If any provision of these Rules and
Regulations shall be held invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provision in any other
jurisdiction or any other provision of these Rules and Regulations in any
jurisdiction.
Section 7.9. Signatures. To the extent permitted by applicable law, any
instrument signed pursuant to a validly executed power of attorney shall be
deemed to have been signed by the Manager or officer executing the power of
attorney.
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<PAGE> 40
THE TRAVELERS
GROWTH AND INCOME
STOCK ACCOUNT
FOR VARIABLE ANNUITIES
PROXY STATEMENT
VG-82 1999
001
<PAGE> 41
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
Proxy for the Annual Meeting of Contract Owners to be held on April 30, 1999
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 Friday, April 30, 1999 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(es) below.
FOR WITHHOLD FOR, except
all AUTHORITY vote withheld
nominees for all for nominees
nominees listed at left
1. Election of the Board of Managers - Nominees:
Heath B. McLendon, Knight Edwards, Robert E. McGill, III, Lewis Mandell, [ ] [ ] [ ]
and Frances M. Hawk.
------------------------------------------------------------------------
2. Ratification of the selection of KPMG LLP as independent FOR AGAINST ABSTAIN
accountants for the fiscal year ending December 31, 1999.
[ ] [ ] [ ]
3. To approve the revised Rules and Regulations. [ ] [ ] [ ]
</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> 42
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF MANAGERS. THE BOARD OF
MANAGERS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. 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 AND 3.
---------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
---------------------------------------------
PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.
DATE:_____________________, 1999
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)
