EXHIBIT 10.7


 


March 31, 2004


 


Via Express Mail Delivery and


Facsimile Transmission


 


Citigroup Alternative
Investments Inc.


399 Park Avenue 7th
Floor


New York, New York 10043


 


Attention:              James Zelter, Chief
Investment Officer


 


Re:                               Modification to Investment Management

and Administrative Services Agreement


 


Ladies and Gentlemen:


 


Reference is made to the
Investment Management and Administrative Services Agreement dated as of August
6, 2002 (the “Agreement”) between Citigroup Alternative Investments LLC (“CAI”)
and Travelers Insurance Group Holdings Inc. on behalf of itself and its
subsidiaries (the “Client”).


 


As you know, it is contemplated
that Client and a subsidiary of The St. Paul Companies (together with its
subsidiaries “St. Paul”) will merge in the second quarter of 2004.  It is also contemplated that a portion of
the assets currently managed by CAI under the Agreement will continue to be
managed by CAI following the merger, and that a portion of the assets will be
managed by St. Paul. Assets of Client that will continue to be managed by CAI
following the merger are set forth on Attachment A annexed hereto. All other
assets will be managed by St. Paul.


 


Pursuant to Section 11 of the
Agreement, the parties agreed that the term of the Agreement would be for the
period commencing April 1, 2002 and ending March 31, 2004 (the “Initial Term”).
Client is desirous of, and CAI is willing, upon the terms and conditions
provided below, and in consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, to extend the Initial
Term of the Agreement as provided below.


 


1.                                       Extension
of Initial Term.


 


(a)                                  Notwithstanding
anything to the contrary in the Agreement, the parties agree to extend the
Initial Term of the Agreement to that date which is the earlier of: (1) June
30, 2004, or (2) the date on


 

















 


which Client
and CAI enter into a new agreement which replaces and supersedes the Agreement
in its totality.


 


(b)                                 Client
and CAI agree that effective as of April l, 2004, all provisions of the
Agreement relating to the provision of administrative services will be
superseded by the Administrative Services Agreement, dated as of April 1, 2004,
between Client and Trumbull Street Investments, LLC (the “Administrative
Services Agreement”). Client and CAI further agree that any fees attributable
to administrative services relating to or associated with assets of Client
managed by CAI under the Agreement (“Administrative Fees”), shall be covered
under the Administrative Services Agreement. Therefore, any Administrative Fees
otherwise payable by Client to CAI under the terms of the Agreement shall be
deducted from or backed out of any compensation calculations made under the
terms of such Agreement. Further, to the extent that management fees relating
to the Single Manager Funds (as set forth on Attachment A annexed hereto) are
currently deducted directly by the funds in which Client is invested and not
paid by Client to CAI, such fee payment mechanism shall continue with respect
to assets managed by CAI pursuant to this Agreement and no additional fees
pertaining to such Single Manager Funds shall be charged under the
Administrative Services Agreement. In addition, pending agreement, for those
investment management services that will continue following the Closing, this
modification shall govern the provision of such services.


 


2.             Unmodified Terms.


 


Except as
otherwise provided in this letter agreement to the contrary, all other terms
and conditions contained in the Agreement shall remain in full force and
effect.


 


3.             Successors and
Assigns.


 


This letter
agreement shall inure to the benefit of and be binding upon the successors to
the parties hereto.


 


4.             Representations.


 


The Client and
CAI represent and warrant to each other that:


 


(a)          it
has full power and authority to execute, deliver and perform this letter
agreement; and


 

















 


(b)         this
letter agreement has been duly authorized, executed and delivered and
constitutes its legal, valid and binding obligation enforceable against it in
accordance with its terms except that enforceability may be subject to
bankruptcy, insolvency, reorganization or other similar laws relating to
creditors rights and general principles of equity.


 


5.             Miscellaneous.


 


This letter
agreement may be executed in any number of counterparts, all of which together
shall constitute a single instrument.


 


If the
foregoing reflects your understanding, please execute the enclosed copy of this
letter agreement.


 


Very truly
yours,


 


	
  TRAVELERS INSURANCE
  GROUP

  
	
  HOLDINGS INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Jay S. Benet

  	
   

  
	
  Name: Jay S. Benet

  
	
  Title: Chief Financial Officer

  
	
   

  
	
   

  
	
  Accepted and Agreed to

  
	
  This 31st day of March, 2004.

  
	
   

  
	
   

  
	
  CITIGROUP
  ALTERNATIVE INVESTMENTS LLC

  
	
   

  
	
   

  
	
  By:

  	
  /s/ James Zelter

  	
   

  
	
  Name: James Zelter

  
	
  Title: Chief Investment Officer