<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 27, 1995
COMMISSION FILE NOS.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. / /
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. / /
ZURICH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
(EXACT NAME OF REGISTRANT)
ZURICH LIFE INSURANCE
COMPANY OF AMERICA
(NAME OF INSURANCE COMPANY)
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1400 American Way, Schaumburg, Illinois 60173
(Address of Insurance Company's Principal Executive Offices) (Zip Code)
Insurance Company's Telephone Number, including Area Code: (708) 517-7900
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Debra P. Rezabek, Esq.
1 Kemper Drive
Long Grove, Illinois 60049
(Name and Address of Agent for Service)
COPIES TO:
FRANK JULIAN, ESQ.
KEMPER LIFE INSURANCE COMPANIES
KLIC LEGAL T-1
1 KEMPER DRIVE
LONG GROVE, ILLINOIS 60049
JOAN E. BOROS, ESQ.
KATTEN MUCHIN & ZAVIS
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this filing.
Calculation of Registration Fee under the Securities Act of 1933:
$500 -- Registrant is registering an indefinite number of securities under the
Securities Act of 1933 pursuant to Investment Company Act Rule 24f-2.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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CROSS-REFERENCE SHEET
ZURICH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
REGISTRATION STATEMENT ON FORM N-4
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N-4 ITEM NO. LOCATION IN PROSPECTUS
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PART A
Item 1. Cover Page........................... Cover Page
Item 2. Definitions.......................... Definitions
Item 3. Synopsis............................. Summary; Summary of Expenses;
Example
Item 4. Condensed Financial Information...... Condensed Financial Information
Item 5. General Description of Registrant,
Depositor and Portfolio
Companies.......................... Zurich Life and the Separate Account;
Fixed Accumulation Options; Voting Rights
Item 6. Deductions and Expenses.............. Contract Charges and Expenses
Item 7. General Description of Variable
Annuity Contracts.................. The Contracts
Item 8. Annuity Period....................... The Annuity Period
Item 9. Death Benefit........................ The Annuity Period; The Accumulation
Period
Item 10. Purchases and Contract Value......... Zurich Life and the Separate Account; The
Contracts
Item 11. Redemptions.......................... The Contracts
Item 12. Taxes................................ Federal Income Taxes
Item 13. Legal Proceedings.................... Legal Proceedings
Item 14. Table of Contents of the Statement of
Additional Information............. Table of Contents
PART B
Item 15. Cover Page........................... Cover Page
Item 16. Table of Contents.................... Table of Contents
Item 17. General Information and History...... Not Applicable
Item 18. Services............................. Services to the Separate Account
Item 19. Purchase of Securities Being
Offered............................ Not Applicable
Item 20. Underwriters......................... Services to the Separate Account
Item 21. Calculation of Performance Data...... Performance Information of
Subaccounts
Item 22. Annuity Payments..................... Not Applicable
Item 23. Financial Statements................. Financial Statements
PART C
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Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
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PROSPECTUS-- , 1996
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PERIODIC PAYMENT
VARIABLE ANNUITY CONTRACTS
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ISSUED BY
ZURICH LIFE INSURANCE COMPANY OF AMERICA
IN CONNECTION WITH
ZURICH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
HOME OFFICE: 1400 AMERICAN WAY, SCHAUMBURG, ILLINOIS 60173 (708) 517-7900
The types of Periodic Payment Deferred Variable Annuity Contracts ("Periodic
Payment Contract" or "Contracts") offered by this Prospectus are issued by
Zurich Life Insurance Company of America ("Zurich Life") and are designed to
provide annuity benefits under retirement plans which may or may not qualify for
the Federal tax advantages available under Section 401, 403, 408 or 457 of the
Internal Revenue Code of 1986, as amended.
Purchase payments for the Contracts may be allocated to one or more of the
options under which Contract values accumulate on either a variable or fixed
basis. These options consist of the fourteen Subaccounts of the Separate Account
and the Fixed Accumulation Option of the General Account. Each Subaccount
invests in one of the Portfolios of the following management investment
companies; the Kemper Investors Fund which is managed by Kemper Financial
Services, Inc., the Janus Aspen Series which is managed by Janus Capital
Corporation and the Lexington Natural Resources Trust and Lexington Emerging
Markets Fund which are managed by Lexington Management Corporation.
The Kemper Investors Fund currently consists of the following Portfolios: Money
Market, Total Return, High Yield, Equity, Government Securities, International
and Small Capitalization Equity ("Small Cap"). The following Portfolios of the
Janus Aspen Series are available under the Contracts: Growth, Aggressive Growth,
Worldwide Growth, Balanced and Short-Term Bond. Lexington Natural Resources
Trust and Lexington Emerging Markets Fund each currently consist of only one
Portfolio.
Subaccounts and Portfolios may be added in the future. Contract values allocated
to any of the Subaccounts will vary to reflect the investment performance of the
corresponding Portfolio. The accompanying Prospectuses for the Funds describe
the investment objectives and the attendant risks of the Funds. Contract values
allocated to the Fixed Accumulation Option will accumulate on a fixed basis.
This Prospectus is designed to provide you with certain essential information
that you should know before investing. A Statement of Additional Information
dated , 1995 has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. A Statement of Additional
Information is available upon request from Zurich Life by writing or calling the
address or telephone number listed above. A table of contents for the Statement
of Additional Information is on page 23 of this Prospectus.
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS
FOR THE KEMPER INVESTORS FUND, JANUS ASPEN SERIES, LEXINGTON NATURAL RESOURCES
TRUST AND LEXINGTON EMERGING MARKETS FUND. ALL PROSPECTUSES SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 4
TABLE OF CONTENTS
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Page
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DEFINITIONS................................................................................. 1
SUMMARY..................................................................................... 2
SUMMARY OF EXPENSES......................................................................... 4
ZURICH LIFE, THE SEPARATE ACCOUNT AND THE FUNDS............................................. 5
FIXED ACCUMULATION OPTION................................................................... 9
THE CONTRACTS............................................................................... 9
CONTRACT CHARGES AND EXPENSES............................................................... 13
THE ANNUITY PERIOD.......................................................................... 16
FEDERAL INCOME TAXES........................................................................ 18
DISTRIBUTION OF CONTRACTS................................................................... 22
VOTING PRIVILEGES........................................................................... 22
REPORTS TO CONTRACT OWNERS AND INQUIRIES.................................................... 22
DOLLAR COST AVERAGING....................................................................... 22
SYSTEMATIC WITHDRAWAL PLAN.................................................................. 23
LEGAL PROCEEDINGS........................................................................... 23
TABLE OF CONTENTS--STATEMENT OF ADDITIONAL INFORMATION...................................... 23
</TABLE>
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DEFINITIONS
The following terms as used in this Prospectus have the indicated meanings:
Accumulation Period--The period between the Date of Issue of a Contract and
the Annuity Date.
Accumulation Unit--A unit of measurement used to determine the value of
each Subaccount during the Accumulation Period.
Annuitant--The person designated to receive or who is actually receiving
annuity payments and upon the continuation of whose life annuity payments
involving life contingencies depend.
Annuity Date--The date on which annuity payments are to commence.
Annuity Option--One of several forms in which annuity payments can be made.
Annuity Period--The period starting on the Annuity Date.
Annuity Unit--A unit of measurement used to determine the amount of
Variable Annuity payments.
Beneficiary--The person designated to receive any benefits under a Contract
upon the death of the Annuitant or the Owner prior to the Annuity Period.
Contract--A Variable Annuity Contract offered by this Prospectus. With
respect to a Contract issued on a group basis, the certificate issued to an
individual shall be deemed for the purposes of this Prospectus to be a
Contract.
Contract Owner or Owner--The person designated in the Contract as having
the privileges of ownership defined in the Contract.
Contract Value--The sum of the values of the Owner's Contract interest in
the Subaccount(s) of the Separate Account and the General Account.
Contract Year--Period between anniversaries of the Date of Issue of a
Contract, or with respect to a Contract issued on a group basis, the period
between anniversaries of the date of issue of a certificate.
Contract Quarter--Periods between quarterly anniversaries of the Date of
Issue of the Contract, or with respect to a Contract issued on a group
basis, the period between quarterly anniversaries of the date of issue of a
certificate.
Contribution Year--Each Contract Year in which a Purchase Payment is made
and each succeeding year measured from the end of the Contract Year during
which such Purchase Payment was made. For example, if a Contract Owner
makes an initial payment of $15,000 and then makes a subsequent payment of
$10,000 during the fourth Contract Year, the fifth Contract Year will be
the fifth Contribution Year for the purpose of Accumulation Units
attributable to the initial payment and the second Contribution Year with
respect to Accumulation Units attributable to the subsequent $10,000
payment.
Date of Issue--The date on which the first Contract Year commences.
Debt--The principal of any outstanding loan from the General Account
Contract Value, plus any accrued interest. Requests for loans must be made
in writing to Zurich Life.
Fixed Annuity--An annuity under which the amount of each annuity payment
does not vary with the investment experience of a Subaccount and is
guaranteed by Zurich Life.
Fund or Funds--The Kemper Investors Fund, the Janus Aspen Series, the
Lexington Natural Resources Trust and the Lexington Emerging Markets Fund,
including any Portfolio thereunder.
General Account--All the assets of Zurich Life other than those allocated
to any Separate Account. Zurich Life guarantees a minimum rate of interest
on Purchase Payments allocated to the General Account.
General Account Contract Value--The value of the Owner's Contract interest
in the General Account.
Non-Qualified Plan Contract--A Contract issued in connection with a
retirement plan which does not receive favorable tax treatment under
Section 401, 403, 408 or 457 of the Internal Revenue Code.
Portfolio--A series of a Fund with its own objective and policies, which
represents shares of beneficial interest in a separate portfolio of
securities and other assets. Portfolio is sometimes referred to herein as a
Fund.
Purchase Payments--Amounts paid to Zurich Life by or on behalf of a
Contract Owner.
Qualified Plan Contract--A Contract issued in connection with a retirement
plan which receives favorable tax treatment under Section 401, 403, 408 or
457 of the Internal Revenue Code.
1
<PAGE> 6
Separate Account--A unit investment trust registered with the Securities
and Exchange Commission under the Investment Company Act of 1940 known as
the Zurich Life Variable Annuity Separate Account.
Separate Account Contract Value--The sum of the Owner's Contract interest
in the Subaccount(s).
Subaccounts--The fourteen subdivisions of the Separate Account, the assets
of which consist solely of shares of the corresponding Portfolios.
Subaccount Value--The value of the Owner's Contract interest in each
Subaccount.
Unitholder--The person holding the voting rights with respect to an
Accumulation or Annuity Unit.
Valuation Date--Each day when the New York Stock Exchange is open for
trading, as well as each day otherwise required. (See "Accumulation Unit
Value.")
Valuation Period--The interval of time between two consecutive Valuation
Dates.
Variable Annuity--An annuity with payments varying in amount in accordance
with the investment experience of the Subaccount(s) in which the Owner's
Contract has an interest.
Withdrawal Charge--The "contingent deferred sales charge" assessed against
certain withdrawals of Accumulation Units in their first six Contribution
Years or against certain annuitization of Accumulation Units in their first
six Contribution Years.
Withdrawal Value--Contract Value less Debt, and any premium tax payable if
the Contract is being annuitized, minus any Withdrawal Charge applicable to
that Contract.
SUMMARY
The Contracts described in the Prospectus provide a way to invest on a
tax-deferred basis and to receive annuity benefits in accordance with the
annuity option selected and the retirement plan under which the Contract has
been purchased. The Prospectus offers both Non-Qualified Plan and Qualified Plan
Contracts. Zurich Life makes several underlying investment options, including
fourteen variable Subaccounts and a Fixed Accumulation Option, available for the
Contract Owner to pursue his or her investment objectives.
The minimum Purchase Payment for a Qualified Plan Contract is $50. However, so
long as annualized contribution amounts from a payroll or salary deduction plan
are equal to or greater than $600, a periodic payment for a Qualified Plan
Contract under $50 will be accepted. The minimum initial Purchase Payment for a
Non-Qualified Plan Contract is $2,500 and the minimum subsequent payment is
$500. For a Non-Qualified Plan Contract a minimum of $500 in Contract Value must
be allocated to an investment option before another investment option can be
selected. For a Qualified Plan Contract, as long as contribution amounts to a
new investment option from a payroll or salary reduction plan are equal to or
greater than $50 per month, another such investment option may be selected. The
maximum Purchase Payment for a Qualified Plan Contract is the maximum permitted
under the plan pursuant to which the Contract is issued. (See "The Contracts,"
page 9.)
Zurich Life provides for variable accumulations and benefits under the Contracts
by crediting purchase payments to one or more Subaccounts of the Separate
Account as selected by the Contract Owner. Each Subaccount invests in one of the
following corresponding Funds: the Kemper Investors Fund's Money Market, Total
Return High Yield, Equity, Government Securities, International and Small Cap
Portfolios; the Janus Aspen Series' Growth, Aggressive Growth, Worldwide Growth,
Balanced and Short-Term Bond Portfolios; the Lexington Natural Resources Trust;
and the Lexington Emerging Markets Fund. (See "The Funds" page 5.) The Contract
Values allocated to the Separate Account will vary with the investment
performance of the Portfolios and Funds selected by the Contract Owner.
Zurich Life also provides for fixed accumulations and benefits under the
Contracts in the Fixed Accumulation Option of the General Account. Any portion
of the purchase payment allocated to the Fixed Accumulation Option is credited
with interest daily at a rate periodically declared by Zurich Life in its sole
discretion, but not less than 3%. (See "Fixed Accumulation Option," page 9.)
The investment risk under the Contracts is borne by the Contract Owner, except
to the extent that Contract Values are allocated to the Fixed Accumulation
Option and are guaranteed to earn at least 3% interest.
Transfers between Subaccounts are permitted before and after annuitization, if
allowed by the applicable retirement plan and subject to certain limitations.
Restrictions apply to transfers out of the Fixed Accumulation Option. (See
"Transfer During Accumulation Period" and "Transfer During Annuity Period,"
pages 11 and 16, respectively.)
No sales charge is deducted from any Purchase Payment. A Contract Owner may
withdraw up to 10% of the Contract Value less Debt in any Contract Year without
assessment of any charge. If the Contract Owner withdraws an amount in excess of
10% of the Contract Value less Debt in any Contract Year, the amount withdrawn
in excess
2
<PAGE> 7
of 10% is subject to a contingent deferred sales charge ("Withdrawal Charge").
The Withdrawal Charge starts at 6% in the first Contribution Year and reduces by
1% each Contribution Year so that there is no charge in the seventh and later
Contribution Years. (See "Withdrawal Charge," page 14.) The Withdrawal Charge
also applies at the annuitization of Accumulation Units in their sixth
Contribution Year or earlier, except as set forth under "Withdrawal Charge."
However, in no event shall the aggregate Withdrawal Charges assessed against a
Contract exceed 7.25% of the aggregate Purchase Payments made under the
Contract. Please note that adverse tax consequences may occur with respect to
certain withdrawals. (See "Tax Treatment of Withdrawals, Loans and Assignments,"
page 19.)
Zurich Life makes charges under the Contract for assuming the mortality and
expense risk and administrative expenses under the Contract, for records
maintenance, and for any applicable premium taxes. (See "Charges Against the
Separate Account," page 13.) In addition, the advisers of the Funds deduct
varying charges against the assets of the Funds for providing investment
advisory services. (See the Funds' Prospectuses for such information.)
The Contracts may be purchased in connection with retirement plans which qualify
either under Section 401 or 403(b) of the Internal Revenue Code of 1986, as
amended (the "Code") or as individual retirement account plans established under
Section 408 of the Code. The Contracts are also available in connection with
state and municipal deferred compensation plans and other entities qualified
under Section 457 of the Code and under other deferred compensation
arrangements, and are also offered under other retirement plans which may not
qualify for similar tax advantages. (See "Non-Qualified Plan Contracts," page 18
and "Qualified Plans," page 19.)
A Contract Owner has the right within the "free look" period (generally ten
days, subject to state variation) after receiving the Contract to cancel the
Contract by delivering or mailing it to Zurich Life. Upon receipt by Zurich
Life, the Contract will be cancelled and a refund will be made. The amount of
the refund will depend on the state in which the Contract is issued; however, it
generally will be an amount at least equal to the Contract Value. (See "The
Contracts," page 9.)
3
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SUMMARY OF EXPENSES
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CONTRACT OWNER TRANSACTION EXPENSES
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Sales Load Imposed on Purchases (as a percentage of Purchase Payments)............................................... None
Contingent Deferred Sales Load (as a percentage of amount surrendered)*
Year of Withdrawal After Purchase Payment
-------------------------------------
First year............................................ 6%
Second year........................................... 5%
Third year............................................ 4%
Fourth year........................................... 3%
Fifth year............................................ 2%
Sixth year............................................ 1%
Seventh year and following............................ 0%
Surrender Fees....................................................................................................... None
Exchange Fee......................................................................................................... None
ANNUAL CONTRACT FEE (Records Maintenance Charge)**................................................................... $36
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<TABLE>
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FUND ANNUAL EXPENSES
(as percentage of each Portfolio's average net assets for the period ended December 31, 1994)
SEPARATE ACCOUNT ANNUAL KINF KINF KINF KINF
EXPENSES MONEY TOTAL HIGH KINF GOVERNMENT
(as a percentage of average daily MARKET RETURN YIELD EQUITY SECURITIES
account value) ------- ------- ----- ------- -----------
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Mortality and Expense Management Fees.... .50% .55% .60% .60% .55%
Risk.................. 1.20%
Administration.......... .10% Other Expenses..... .03 .06 .05 .06 .09
Account Fees and --- --- --- --- ---
Expenses.............. 0% Total Portfolio
Total Separate Account Annual Expenses... .53% .61% .65% .66% .64%
Annual Expenses....... 1.30% === === === === ===
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KINF JANUS JANUS
KINF SMALL JANUS AGGRESSIVE WORLDWIDE
INTERNATIONAL CAP GROWTH*** GROWTH*** GROWTH***
------------- ----- --------- --------- ---------
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Management Fees.... .75% .65 % .66% .77% .69%
Other Expenses..... .18 .60 .22 .28 .49
--- ---- --- ---- ----
Total Portfolio
Annual Expenses... .93% 1.25% .88% 1.05% 1.18%
=== ==== === ==== ====
<CAPTION>
JANUS LEXINGTON LEXINGTON
JANUS SHORT TERM NATURAL EMERGING
BALANCED*** BOND*** RESOURCES MARKETS
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Management Fees.... .83% 0% 1.00% .85%
Other Expenses..... .74 .65 .55 .45
---- --- ---- ----
Total Portfolio
Annual Expenses... 1.57% .65% 1.55% 1.30%****
==== === ==== ====
</TABLE>
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EXAMPLE
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SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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If you surrender your contract at the end of the applicable Kemper Money Market $83 $108 $134 $239
time period: Kemper Total Return 84 111 138 248
You would pay the following expenses on a $1,000 investment, Kemper High Yield 84 112 140 252
assuming 5% annual return on assets: Kemper Equity 84 112 141 253
Kemper Government Securities 84 111 139 250
Kemper International 87 120 154 281
Kemper Small Cap 90 130 -- --
Janus Growth 86 119 -- --
Janus Aggressive Growth 88 124 -- --
Janus Worldwide Growth 89 128 -- --
Janus Balanced 93 139 -- --
Janus Short-Term Bond 84 112 -- --
Lexington Natural Resources 93 138 -- --
Lexington Emerging Markets 90 131 --
If you do not surrender your contract: Kemper Money Market 21 65 111 239
You would pay the following expenses Kemper Total Return 22 67 115 248
on a $1,000 investment, assuming Kemper High Yield 22 69 117 252
5% annual return on assets: Kemper Equity 22 69 118 253
Kemper Government Securities 22 68 116 250
Kemper International 25 77 132 281
Kemper Small Cap 28 87 -- --
Janus Growth 25 76 -- --
Janus Aggressive Growth 26 81 -- --
Janus Worldwide Growth 28 85 -- --
Janus Balanced 32 97 -- --
Janus Short-Term Bond 22 69 -- --
Lexington Natural Resources 31 96 -- --
Lexington Emerging Markets 29 88 --
</TABLE>
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The purpose of the preceding table is to assist Contract Owners in understanding
the various costs and expenses that a Contract Owner in a Subaccount will bear
directly or indirectly. The table reflects expenses of both the Separate Account
and the Fund. The example should not be considered to be a representation of
past or future expenses and does not include the deduction of state premium
taxes, which may be assessed before or upon annuitization. Actual expenses may
be greater or less than those shown. The example assumes a 5% annual rate of
return pursuant to requirements of the Securities and Exchange Commission. This
hypothetical rate of return is not intended to be representative of past or
future performance of any Subaccount. The Records Maintenance Charge is a single
charge, it is not a separate charge for each Subaccount. In addition, the effect
of the Records Maintenance Charge has been reflected by applying the percentage
derived by dividing the total amounts of annual Records Maintenance Charge
collected by the total net assets of all the Subaccounts in the Separate
Account. See "Contract Charges and Expenses" for more information regarding the
various costs and expenses.
* A Contract Owner may withdraw up to 10% of the Contract Value less Debt in
any Contract Year without assessment of any charge. Under certain
circumstances the contingent deferred sales load may be reduced or waived,
including when certain annuity options are selected.
** Under certain circumstances the annual Records Maintenance Charge may be
reduced or waived by Zurich Life.
*** The expenses figures shown are net of certain expense waivers from Janus
Capital Corporation. Without such waivers, Management Fees, Other Expenses
and Total Portfolio Operating Expenses for the Portfolios for the fiscal
year ended December 31, 1994 were: 1.00%, .22% and 1.22%, respectively, for
the Growth Portfolio; 1.00%, .28% and 1.28%, respectively, for the
Aggressive Growth Portfolio; 1.00%, .49% and 1.49%, respectively, for the
Worldwide Growth Portfolio; 1.00%, .74% and 1.74%, respectively, for the
Balanced Portfolio and 0.65%, 0.75% and 1.40%, respectively, for the
Short-Term Bond Portfolio. See the prospectus and Statement of Additional
Information of Janus Aspen Series for a description of these waivers.
**** Annualized based on Fund inception of March 30, 1994.
4
<PAGE> 9
ZURICH LIFE, THE SEPARATE ACCOUNT AND THE FUND
ZURICH LIFE INSURANCE COMPANY OF AMERICA
Zurich Life Insurance Company of America ("Zurich Life"), 1400 American Way,
Schaumburg, Illinois 60173, was organized in 1960 and is a stock life insurance
company organized under the laws of the State of Illinois. Zurich Life is a
subsidiary of Zurich Insurance Company, a multinational insurance and financial
services company headquartered in Zurich, Switzerland. Zurich Life offers life
insurance and annuity products and is admitted to do business in the District of
Columbia and all states except New York. Zurich Life's financial statements
appear in the Statement of Additional Information.
THE SEPARATE ACCOUNT
Zurich Life established the Zurich Life Variable Annuity Separate Account (the
"Separate Account") on December 13, 1995, as a separate investment account
pursuant to Illinois law. The Separate Account is administered and accounted for
as part of the general business of Zurich Life, but the income and capital gains
or capital losses, whether or not realized, for assets allocated to the Separate
Account are credited to or charged against the assets held in the Separate
Account, without regard to any other income, capital gains or capital losses of
any other separate account or arising out of any other business which Zurich
Life may conduct. The benefits provided under the Contracts are obligations of
Zurich Life. The assets of the Separate Account are not chargeable with
liabilities arising out of the business conducted by any other separate account
or out of any other business Zurich Life may conduct.
The Separate Account holds assets that are segregated from all of Zurich Life's
other assets. The Separate Account is used to support the variable annuity
contracts described herein. In addition, the Separate Account may support other
variable annuity contracts offered by Zurich Life. The obligations to Contract
Owners and beneficiaries arising under the Contracts are general corporate
obligations of Zurich Life.
The Separate Account is currently divided into fourteen Subaccounts. Each
Subaccount invests exclusively in shares of one of the corresponding Portfolios
of the Funds. Additional Subaccounts may be added in the future.
The Separate Account will purchase and redeem shares from the Funds at net asset
value. Zurich Life will redeem Fund shares as necessary to provide benefits, to
deduct charges under the Contracts and to transfer assets from one Subaccount to
another as requested by Contract Owners. All dividends and capital gains
distributions received by the Separate Account from a Portfolio of the Funds
will be reinvested in such Portfolio at net asset value and retained as assets
of the corresponding Subaccount.
The Separate Account's financial statements appear in the Statement of
Additional Information.
THE FUNDS
The Separate Account invests in shares of the Kemper Investors Fund, the Janus
Aspen Series, the Lexington Natural Resources Trust and the Lexington Emerging
Markets Fund, open-end management investment companies. Registration of the
Funds with the Securities and Exchange Commission does not involve supervision
of their management, investment practices or policies by the Commission. The
Funds are designed to provide investment vehicles for variable life insurance
and variable annuity contracts and, in the case of the Janus Aspen Series,
certain qualified retirement plans. Shares of the Funds are sold only to
insurance company separate accounts and qualified retirement plans. In addition
to selling shares to separate accounts of Zurich Life and its affiliates, shares
of the Funds may be sold to separate accounts of insurance companies not
affiliated with Zurich Life. It is conceivable that in the future it may be
disadvantageous for variable life insurance separate accounts and variable
annuity separate accounts of companies unaffiliated with Zurich Life, or for
variable life insurance separate accounts, variable annuity separate accounts
and qualified retirement plans to invest simultaneously in the Funds. Currently,
neither Zurich Life nor the Funds foresee any such disadvantages to variable
life insurance owners, variable annuity owners or qualified retirement plans.
Management of the Funds has an obligation to monitor events to identify material
conflicts between such owners and determine what action, if any, should be
taken. In addition, if Zurich Life believes that a Fund's response to any of
those events or conflicts insufficiently protects the owners, it will take
appropriate action on its own.
A Fund may consist of separate Portfolios. The assets of each Portfolio are held
separate from the assets of the other Portfolios, and each Portfolio has its own
distinct investment objective and policies. Each Portfolio operates as a
5
<PAGE> 10
separate investment fund, and the investment performance of one Portfolio has no
effect on the investment performance of any other Portfolio.
The investment objectives and policies of the Kemper Investors Fund Portfolios
are summarized below:
KEMPER INVESTORS FUND
Money Market Portfolio: This Portfolio seeks to provide maximum current income
to the extent consistent with stability of principal. It will maintain a dollar
weighted average portfolio maturity of 90 days or less. This Portfolio pursues
its objective of maximum income and stability of principal by investing in money
market securities such as U.S. Treasury obligations, commercial paper, and
certificates of deposit and bankers' acceptances of domestic and foreign banks,
including foreign branches of domestic banks, and will enter into repurchase
agreements.
Total Return Portfolio: This Portfolio seeks a high total return, a combination
of income and capital appreciation, by investing in a combination of debt
securities and common stocks. The Portfolio's investments will normally consist
of fixed-income and equity securities. Fixed-income securities will include
bonds and other debt securities and preferred stocks, some of which may have a
call on common stocks through attached warrants or a conversion privilege.
Equity investments normally will consist of common stocks and securities
convertible into or exchangeable for common stocks; however the Portfolio may
also make private placement investments (which are normally restricted
securities).
High Yield Portfolio: This Portfolio seeks to provide a high level of current
income by investing in fixed-income securities, including lower rated and
unrated securities which may entail relatively greater risk of loss of income or
principal but may offer a current yield or yield to maturity which is higher.
Lower and unrated securities, (sometimes called "junk bonds") have widely
varying characteristics and quality. The Portfolio invests in U.S. Government,
corporate, and other notes and bonds paying high current income.
Equity Portfolio: This Portfolio seeks maximum appreciation of capital through
diversification of investment securities having potential for capital
appreciation. Current income will not be a significant factor. This Portfolio's
investments normally will consist of common stocks and securities convertible
into or exchangeable for common stocks; however, it may also make private
placement investments (which are normally restricted securities).
Government Securities Portfolio: This Portfolio seeks high current return
consistent with preservation of capital from a portfolio composed primarily of
U.S. Government securities. The Portfolio will also invest in fixed-income
securities other than U.S. Government securities, and will engage in options and
financial futures transactions. The Portfolio may purchase or sell portfolio
securities on a when-issued or delayed delivery basis. The Portfolio's current
return is sought from interest income and net short-term gains on securities and
options and futures transactions.
International Portfolio: This Portfolio seeks a total return, a combination of
capital growth and income, principally through an internationally diversified
portfolio of equity securities. While this Portfolio invests principally in
equity securities of non-United States issuers, this Portfolio may also invest
in convertible and debt securities of non-United States issuers and foreign
currencies.
Small Cap Portfolio: This Portfolio seeks maximum appreciation of capital. At
least 65% of its total assets normally will be invested in the equity securities
of smaller companies, i.e., those having a market capitalization of $1 billion
or less at the time of investment. Current income will not be a significant
factor. This Portfolio's investments normally will consist primarily of common
stocks and securities convertible into or exchangeable for common stocks and to
a limited degree in preferred stock and debt securities.
The investment objectives of the Janus Aspen Series Portfolios, the Lexington
National Resources Trust and the Lexington Emerging Markets Fund are summarized
below:
JANUS ASPEN SERIES
Growth Portfolio: This Portfolio seeks long-term growth of capital by investing
primarily in common stocks with an emphasis on companies with larger market
capitalizations.
Aggressive Growth Portfolio: This Portfolio is a nondiversified portfolio that
seeks long-term growth of capital by investing primarily in common stocks. The
common stocks held by the Portfolio will normally have an average market
capitalization between $1 billion and $5 billion.
Worldwide Growth Portfolio: This Portfolio seeks long-term growth of capital by
investing primarily in common stocks of foreign and domestic companies.
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<PAGE> 11
Balanced Portfolio: This Portfolio seeks long-term growth of capital balanced by
current income. The Portfolio normally invests 40-60% of its assets in equity
securities selected for their growth potential and 40-60% in fixed-income
securities.
Short-Term Bond Portfolio: This Portfolio seeks a high level of current income
while minimizing interest rate risk by investing in shorter term fixed-income
securities. Its average-weighted maturity is normally less than three years.
LEXINGTON NATURAL RESOURCES TRUST
This Fund seeks long-term growth of capital through investment primarily in
common stocks of companies that own or develop natural resources and other basic
commodities, or supply goods and services to such companies. Current income will
not be a factor. Total return will consist of capital appreciation.
LEXINGTON EMERGING MARKETS FUND
This Fund seeks long-term growth of capital primarily through investment in
equity securities of companies domiciled in, or doing business in emerging
countries and emerging markets.
------------------
There is no assurance that any of the Funds or Portfolios will achieve its
stated objective. More detailed information, including a description of risks
involved in investing in each of the Subaccounts that invest in the Funds, may
be found in the corresponding prospectus for the Fund, which must accompany or
precede this Prospectus, and the Fund's Statement of Additional Information
available upon request. Read the prospectus carefully before investing.
Kemper Financial Services, Inc. is the investment adviser for the seven
Portfolios of the Kemper Investors Fund. Janus Capital Corporation is the
investment adviser for the five available Portfolios of the Janus Aspen Series.
Lexington Management Corporation is the investment adviser for the Lexington
Natural Resources Trust and the Lexington Emerging Markets Fund. The investment
advisers are paid fees for their services by the Funds they manage. Zurich Life
may receive compensation from the investment advisers of the Funds for services
related to the Funds. Such compensation will be consistent with the services
rendered or the cost savings resulting from the arrangement.
For their advisory services to the Portfolios, the advisers receive compensation
at the following rates:
KEMPER INVESTORS FUND
Kemper Financial Services, Inc. receives compensation monthly at annual rates
equal to .50 of 1%, .55 of 1%, .60 of 1%, .60 of 1%, .55 of 1%, .75 of 1% and
.65 of 1% of the average daily net asset values of the Money Market Portfolio,
the Total Return Portfolio, the High Yield Portfolio, the Equity Portfolio, the
Government Securities Portfolio, the International Portfolio, and the Small Cap
Portfolio, respectively.
JANUS ASPEN SERIES
Janus Capital Corporation receives a monthly advisory fee for the Growth
Portfolio, the Aggressive Growth Portfolio, the Worldwide Growth Portfolio and
the Balanced Portfolio based on the following schedule (expressed as an annual
rate):
<TABLE>
<CAPTION>
AVERAGE DAILY NET
ASSETS OF PORTFOLIO ANNUAL RATE
--------------------- -----------
<S> <C>
First $30,000,000.............................. 1.00%
Next $270,000,000.............................. .75%
Next $200,000,000.............................. .70%
Over $500,000,000.............................. .65%
</TABLE>
However, Janus Capital Corporation has agreed to reduce each of the above
Portfolios' advisory fees to the extent that such fee exceeds the effective rate
of a fund managed by Janus Capital Corporation with similar investment objective
and policies.
Janus Capital Corporation receives a monthly advisory fee for the Short-Term
Bond Portfolio based on the following advisory fee schedule (expressed as an
annual rate): .65% of the first $300,000,000 of the average daily net assets
plus .55% of the average daily net assets in excess of $300,000,000.
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<PAGE> 12
LEXINGTON NATURAL RESOURCES TRUST
Lexington Management Corporation receives a monthly investment advisory fee at
the annual rate of 1.00% of the Fund's average net assets.
LEXINGTON EMERGING MARKETS FUND
Lexington Management Corporation receives a monthly investment advisory fee at
the annual rate of 0.85% of the Fund's average net assets.
CHANGE OF INVESTMENTS
Zurich Life reserves the right, subject to applicable law, to make additions to,
deletions from, or substitutions for the shares held by the Separate Account or
that the Separate Account may purchase. Zurich Life reserves the right to
eliminate the shares of any of the Portfolios and to substitute shares of
another Portfolio or of another investment company, if the shares of a Portfolio
are no longer available for investment, or if in its judgment further investment
in any Portfolio becomes inappropriate in view of the purposes of the Separate
Account. Zurich Life will not substitute any shares attributable to a Contract
Owner's interest in a Subaccount of the Separate Account without notice to the
Contract Owner and prior approval of the Commission, to the extent required by
the 1940 Act or other applicable law. Nothing contained in this Prospectus shall
prevent the Separate Account from purchasing other securities for other series
or classes of policies, or from permitting a conversion between series or
classes of policies on the basis of requests made by Contract Owners.
Zurich Life also reserves the right to establish additional subaccounts of the
Separate Account, each of which would invest in a new portfolio of the Funds, or
in shares of another investment company, with a specified investment objective.
New subaccounts may be established when, in the sole discretion of Zurich Life,
marketing needs or investment conditions warrant, and any new subaccounts may be
made available to existing Contract Owners as determined by Zurich Life. Zurich
Life may also eliminate or combine one or more subaccounts, transfer assets, or
it may substitute one subaccount for another subaccount, if, in its sole
discretion, marketing, tax, or investment conditions warrant. Zurich Life will
notify all Contract Owners of any such changes.
If deemed by Zurich Life to be in the best interests of persons having voting
privileges under the Policy, the Separate Account may be: (a) operated as a
management company under the 1940 Act; (b) deregistered under that Act in the
event such registration is no longer required; or (c) combined with other Zurich
Life separate accounts. To the extent permitted by law, Zurich Life may also
transfer the assets of the Separate Account associated with the Contract to
another separate account, or to the General Account.
PERFORMANCE INFORMATION
From time to time, the Separate Account may advertise several types of
performance information for the Subaccounts. All Subaccounts may advertise
"average annual total return" and "total return," except "average annual total
return" is not shown for the Kemper Money Market Subaccount. The Kemper High
Yield Subaccount, the Kemper Government Securities Subaccount and the Janus
Short-Term Bond Subaccount may also advertise "yield." The Money Market
Subaccount may advertise "yield" and "effective yield." Each of these figures is
based upon historical earnings and is not necessarily representative of the
future performance of a Subaccount. Average annual total return and total return
calculations measure the net income of a Subaccount plus the effect of any
realized or unrealized appreciation or depreciation of the underlying
investments in the Subaccount for the period in question. Average annual total
return will be quoted for periods of at least one year, five years if
applicable, and the life of Subaccount, ending with the most recent calendar
quarter. Average annual total return figures are annualized and, therefore,
represent the average annual percentage change in the value of an investment in
a Subaccount over the applicable period. Total return figures are not annualized
and represent the actual percentage change over the applicable period. Yield is
a measure of the net dividend and interest income earned over a specific one
month or 30-day period (seven-day period for the Kemper Money Market Subaccount)
expressed as a percentage of the value of the Subaccount's Accumulation Units.
Yield is an annualized figure, which means that it is assumed that the
Subaccount generates the same level of net income over a one year period which
is compounded on a semi-annual basis. The effective yield for the Kemper Money
Market Subaccount is calculated similarly but includes the effect of assumed
compounding calculated under rules prescribed by the Securities and Exchange
Commission. The Kemper Money Market Subaccount's effective yield will be
slightly higher than its yield due to this compounding effect. The Subaccounts'
units are sold at Accumulation Unit value. The Subaccounts' performance figures
and Accumulation Unit values will fluctuate. Units of the Subaccounts are
redeemable by an investor at
8
<PAGE> 13
Accumulation Unit value, which may be more or less than original cost. The
performance figures include the deduction of all expenses and fees, including a
prorated portion of the Records Maintenance Charge. Redemptions within the first
six years after purchase may be subject to a Withdrawal Charge that ranges from
6% the first year to 0% after six years; however, the aggregate Withdrawal
Charge will not exceed 7.25% of aggregate Purchase Payments under the Contract.
Yield, effective yield and total return figures do not include the effect of any
Withdrawal Charge that may be imposed upon the redemption of units, and thus may
be higher than if such charges were deducted. Average annual total return
figures include the effect of the applicable Withdrawal Charge that may be
imposed at the end of the period in question. Additional information concerning
a Subaccount's performance appears in the Statement of Additional Information.
The Subaccounts may provide comparative information with regard to the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index, the Standard and
Poor's Midcap Index, the Consumer Price Index, the CDA Certificate of Deposit
Index, the NASDAQ Composite, U.S. Treasury Obligations, Russell 2000 Index, the
Lehman Brothers Government and Corporate Bond Index, the Lehman Brothers
Government/Corporate 1-3 Year Bond Index, the Lehman Brothers Long
Government/Corporate Bond Index, the Salomon Brothers High Grade Corporate Bond
Index and the Merrill Lynch Government/Corporate Master Index, the CDA Mutual
Fund--International Index, the Morgan Stanley Capital International Europe,
Australia, Far East Index and the Morgan Stanley International World Index and
may provide Lipper Analytical Services, Inc., the VARDS Report, Morningstar,
Inc., Ibbotson Associates and Micropad performance analysis rankings. From time
to time, the Separate Account may quote information from publications such as
Morningstar, Inc., The Wall Street Journal, Money Magazine, Forbes, Barron's,
Fortune, The Chicago Tribune, USA Today, Institutional Investor, Registered
Representative, Investment Advisor and VARDS.
FIXED ACCUMULATION OPTION
Contributions under the fixed portion of the Contract and transfers to the fixed
portion become part of the General Account of the insurance company, which
supports insurance and annuity obligations. Because of exemptive and
exclusionary provisions, interests in the General Account have not been
registered under the Securities Act of 1933 ("1933 Act") nor is the General
Account registered as an investment company under the Investment Company Act of
1940 ("1940 Act"). Accordingly, neither the General Account nor any interests
therein generally are subject to the provisions of the 1933 or 1940 Acts and
Zurich Life has been advised that the staff of the Securities and Exchange
Commission has not reviewed the disclosures in this prospectus which relate to
the fixed portion. Disclosures regarding the fixed portion of the Contract and
the General Account, however, may be subject to certain generally applicable
provisions of the Federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
The Contracts offer a Fixed Accumulation Option (the General Account) under
which Zurich Life allocates payments to its General Account and pays a fixed
interest rate for stated periods. This Prospectus describes only the element of
the Contract pertaining to the Separate Account except where it makes specific
reference to fixed accumulation and annuity elements.
The Contracts guarantee that payments allocated to the General Account will earn
a minimum fixed interest rate of 3%. Zurich Life, at its discretion, may credit
interest in excess of 3%. Zurich Life reserves the right to change the rate of
excess interest credited as provided under the terms of the Contract. Zurich
Life also reserves the right to declare separate rates of excess interest for
Purchase Payments or amounts transferred at designated times, with the result
that amounts at any given designated time may be credited with a higher or lower
rate of excess interest than the rate or rates of excess interest previously
credited to such amounts and Purchase Payments paid or amounts transferred at
any other designated time.
THE CONTRACTS
A. GENERAL INFORMATION.
This Prospectus offers interests in both Qualified Plan Contracts and
Non-Qualified Plan Contracts. The minimum Purchase Payment for a Qualified Plan
is $50. However, so long as annualized contribution amounts from a payroll or
salary deduction plan are equal to or greater than $600, a periodic payment
under $50 will be accepted. The maximum annual amount of Purchase Payments may
be limited by the provisions of the retirement plan pursuant to which the
Contract has been purchased. For a Non-Qualified Plan Contract the minimum
initial Purchase Payment is $2,500 and the minimum subsequent payment is $500.
An initial allocation of less than $500 may be made to the General Account or to
a Subaccount, or to the General Account and one Subaccount. For a Non-Qualified
Plan, no subsequent allocations of Purchase Payments may be made to any
additional Subaccount until allocations total at least $500 to each Subaccount
in which the Contract has an interest. For a Qualified Plan Contract, as long as
9
<PAGE> 14
annualized contribution amounts to a new Subaccount from a payroll or salary
reduction plan are equal to or greater than $25 per month, allocations to
another such Subaccount may be made.
Zurich Life may at any time amend the Contract in accordance with changes in the
law, including applicable tax laws, regulations or rulings, and for other
purposes.
A Contract Owner is allowed a "free look" period (generally 10 days, subject to
state variation) after receiving the Contract, to review it and decide whether
or not to keep it. If the Contract Owner decides to return the Contract, it may
be cancelled by delivering or mailing it to Zurich Life. Upon receipt by Zurich
Life, the Contract will be cancelled and a refund will be made. The amount of
the refund will depend on the state in which the Contract is issued; however, it
generally will be an amount at least equal to the Contract Value on the date of
receipt by Zurich Life, without any deduction for withdrawal charges or Records
Maintenance charges. However, in some states applicable law requires that the
amount of the Purchase Payment be returned.
During the Accumulation Period, the Contract Owner may assign the Contract or
change a Beneficiary at any time by filing such assignment or change with Zurich
Life's home office at 1400 American Way, Schaumburg, Illinois 60173. No
assignment or Beneficiary change shall be binding on Zurich Life until received
by Zurich Life. Zurich Life assumes no responsibility for the validity of such
assignment or Beneficiary change. An assignment may subject the Owner to
immediate tax liability. (See "Tax Treatment of Withdrawals, Loans and
Assignments.")
Amounts payable during the Annuity Period may not be assigned or encumbered and,
to the extent permitted by law, are not subject to levy, attachment or other
judicial process for the payment of the payee's debts or obligations.
The original Beneficiary may be named in the application for the Contract. If a
Beneficiary is not named, or if no named Beneficiary survives the Annuitant, the
Beneficiary shall be the Annuitant's or Owner's estate.
Assignment of interest in the Contract or change of Beneficiary designation
under a Qualified Plan Contract may be prohibited by the provisions of the
applicable plan.
B. THE ACCUMULATION PERIOD.
1. APPLICATION OF PURCHASE PAYMENTS.
Purchase Payments are allocated to the Subaccount(s) or General Account as
selected by the Contract Owner. The amount of each Purchase Payment credited to
a Subaccount will be based on the next computed value of an Accumulation Unit
following receipt of payment in proper form by Zurich Life. The value of an
Accumulation Unit is determined when the net asset values of the Portfolios of
the Funds are calculated, which is generally at 3:00 p.m. Chicago time (11:00
a.m. and 3:00 p.m. Chicago time for the Kemper Money Market Portfolio) on each
day that the New York Stock Exchange is open for trading. Purchase Payments
allocated to the General Account will begin earning interest one day after
receipt in proper form. However, with respect to initial Purchase Payments, the
amount will be credited only after an affirmative determination by Zurich Life
to issue the Contract, but no later than the second day following receipt of the
Purchase Payment. After the initial purchase, the number of Accumulation Units
credited is determined by dividing the Purchase Payment amount allocated to a
Subaccount by the Accumulation Unit value which is next computed following
receipt by Zurich Life of any Purchase Payment in good funds. Purchase Payments
will not be received except on those days when the New York Stock Exchange is
open for trading.
The number of Accumulation Units will not change because of a subsequent change
in value. The dollar value of an Accumulation Unit will vary to reflect the
investment experience of the Subaccount and the assessment of charges against
the Subaccount other than the Records Maintenance Charge. The number of
Accumulation Units will be reduced upon assessment of the Records Maintenance
Charge.
If Zurich Life has not been provided with information sufficient to establish a
Contract or to properly credit such Purchase Payment, it will promptly request
that the necessary information be furnished. If the requested information is not
furnished within five (5) business days of initial receipt of the Purchase
Payment, or if Zurich Life determines that it cannot otherwise issue the
Contract within the five (5) day period, the Purchase Payment will be returned
to the Owner.
2. ACCUMULATION UNIT VALUE.
Each Subaccount has an Accumulation Unit value under the Contracts. When
Purchase Payments or other amounts are allocated to a Subaccount, a number of
units are purchased based on the Subaccount's Accumulation Unit value
10
<PAGE> 15
at the end of the Valuation Period during which the allocation is made. When
amounts are transferred out of or deducted from a Subaccount, units are redeemed
in a similar manner.
The Accumulation Unit value for each subsequent Valuation Period is the
investment experience factor for that period multiplied by the Accumulation Unit
value for the immediately preceding period. Each Valuation Period has a single
Accumulation Unit value which is applied to each day in the period.
Each Subaccount has its own investment experience factor. The investment
experience of the Separate Account is calculated by applying the investment
experience factor to the Accumulation Unit value in each Subaccount during a
Valuation Period.
The investment experience factor of a Subaccount for a Valuation Period is
determined by dividing (1) by (2) and subtracting (3) from the result, where:
(1) is the net result of:
a. the net asset value per share of the investment held in the
Subaccount determined at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain distributions
made by the investments held in the Subaccount, if the "ex-dividend"
date occurs during the current Valuation Period; plus or minus
c. a charge or credit for any taxes reserved for the current Valuation
Period which Zurich Life determines to have resulted from the
investment operations of the Subaccount;
(2) is the net asset value per share of the investment held in the
Subaccount, determined at the end of the last prior Valuation Period;
(3) is the factor representing the mortality and expense risk and
administrative cost charge stated in the Contract for the number of days in
the Valuation Period.
3. CONTRACT VALUE.
Separate Account Contract Value on any Valuation Date can be determined by
multiplying the total number of Accumulation Units credited to the Contract for
a Subaccount by the value of an Accumulation Unit for that Subaccount on that
Valuation Date, then adding the values of the Owner's Contract interest in each
Subaccount in which the Contract is participating. That amount, when added to
the Owner's Contract interest in the General Account, equals the Contract Value.
4. TRANSFER DURING ACCUMULATION PERIOD.
During the Accumulation Period, a Contract Owner may transfer the Contract Value
among the Subaccounts and the Fixed Accumulation Option subject to the following
provisions: (i) No transfer can be made until the initial Purchase Payment has
been in a Subaccount or the General Account for fifteen days; (ii) Once all or
part of the Owner's Separate Account Contract Value has been transferred to the
General Account or from one Subaccount to another Subaccount another transfer
may not be made within the next fifteen day period; (iii) Once all or part of
the Owner's General Account Contract Value has been transferred to a Subaccount
another transfer may not be made within the next fifteen day period; and (iv)
The General Account Contract Value, less Debt, may be transferred one time
during the Contract Year to one or more Subaccounts in the thirty day period
following an anniversary of a Contract Year or the thirty day period following
the date of the confirmation statement provided for the period through the
anniversary date, if later.
Zurich Life will make transfers pursuant to proper written or telephone
instructions which specify in detail the requested changes. Before telephone
transfer instructions will be honored by Zurich Life, a telephone transfer
authorization must be completed by the Contract Owner. The minimum partial
transfer amount is $500. No partial transfer may be made if the value of the
Contract Owner's remaining Contract interest in a Subaccount or the General
Account, from which amounts are to be transferred, would be less than $500 after
such transfer. Transfers involving a Subaccount will be based upon the
Accumulation Unit values next determined following receipt of valid, complete
transfer instructions by Zurich Life. The transfer privilege may be suspended,
modified or terminated at any time (subject to state requirements). Zurich Life
disclaims all liability for acting in good faith in following instructions which
are given in accordance with procedures established by Zurich Life, including
requests for personal identifying information, that are designed to limit
unauthorized use of the privilege. Therefore, a Contract Owner would bear the
risk of loss in the event of a fraudulent telephone transfer.
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<PAGE> 16
5. WITHDRAWAL DURING ACCUMULATION PERIOD.
The Contract Owner may redeem all or a portion of the Contract Value less Debt
and previous withdrawals. Contract Owners should be aware that such withdrawals
may, under certain circumstances, be subject to adverse tax consequences under
the Internal Revenue Code. (See "Tax Treatment of Withdrawals, Loans and
Assignments.") A withdrawal of the entire Contract Value is called a surrender.
A Contract Owner may withdraw up to 10% of the Contract Value less Debt in any
Contract Year without assessment of any charge. If the Contract Owner withdraws
an amount in excess of 10% of the Contract Value in any Contract Year, the
amount withdrawn in excess of 10% is subject to a Withdrawal Charge. The
Withdrawal Charge starts at 6% in the first Contribution Year and reduces by 1%
each Contribution Year, so that there is no charge against Accumulation Units
withdrawn in their seventh and later Contribution Years. However, in no event
shall the aggregate Withdrawal Charges assessed against a Contract exceed 7.25%
of the aggregate Purchase Payments made under the Contract.
In the case of a Contract invested other than solely in one Subaccount, a
Contract Owner requesting a partial withdrawal must specify what portion of the
Owner's Contract interest is to be redeemed. If a Contract Owner does not
specify what portion of the Owner's Contract interest is to be redeemed, Zurich
Life will redeem Accumulation Units from all Subaccounts in which the Contract
Owner has an interest and the General Account. The number of Accumulation Units
redeemed from each Subaccount and the amount redeemed from the General Account
will be in approximately the proportion which the Owner's Contract interest in
each Subaccount and in the General Account bears to the Contract Value. In all
cases, the Accumulation Units attributable to the earliest Contribution Years
will be redeemed first.
The Contract Owner may request a partial withdrawal subject to the following
conditions:
(1) The amount requested must be at least $500, or the Owner's entire
interest in the Subaccount or the General Account from which withdrawal is
requested.
(2) The Owner's Contract interest in the Subaccount, or the General Account
from which the withdrawal is requested must be at least $500 after the
withdrawal is completed.
Election to withdraw shall be made in writing to Zurich Life at its home office
at 1400 American Way, Schaumburg, Illinois 60173 and should be accompanied by
the Contract if the request is for a surrender. Withdrawal requests will not be
received except on Zurich Life business days which are those days when the New
York Stock Exchange is open for trading. The Withdrawal Value attributable to
the Subaccounts is determined on the basis of the Accumulation Unit values next
computed following receipt of the request in proper order. The Withdrawal Value
attributable to the Subaccounts will be paid within seven (7) days after the
date a proper written request is received by Zurich Life at its home office
provided, however, that Zurich Life may suspend the right of withdrawal or delay
payment more than seven (7) days (a) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings), (b) when
trading in the markets a Portfolio of the Funds normally utilizes is restricted
or an emergency exists as determined by the Securities and Exchange Commission,
so that disposal of the Subaccount's investments or determination of its
Accumulation Unit value is not reasonably practicable, or (c) for such other
periods as the Securities and Exchange Commission by order may permit for the
protection of Contract Owners or Unitholders.
6. DEATH BENEFIT.
If the Annuitant dies during the Accumulation Period, prior to attaining age 75,
the Contract Value less Debt as computed at the end of the Valuation Period next
following receipt by Zurich Life of due proof of death and the return of the
Contract, or the total amount of Purchase Payments less Debt, whichever is
greater, will be paid to the designated Beneficiary. If a Contract has been
subject to any partial withdrawal, the death benefit will be the greater of (a)
the Contract Value less Debt or (b) the total amount of Purchase Payments, less
both Debt and the aggregate dollar amount of all previous partial withdrawals.
If death occurs at age 75 or later, the death benefit will be the Contract Value
less Debt. The Owner or Beneficiary, as appropriate, may elect to have all or a
part of the death proceeds paid to the Beneficiary under one of the Annuity
Options described under "Annuity Options" below.
For Non-Qualified Plan Contracts, if the Owner is not the Annuitant and the
Owner dies before the Annuitant, the death benefit will be paid to the
designated Beneficiary. The death benefit is determined as stated above, except
that the age of the Owner at death is used in determining the amount payable. If
the Beneficiary is the surviving spouse of the Owner, the surviving spouse may
elect to be treated as the successor Owner of the Contract with no
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<PAGE> 17
requirement to begin Death Benefit distribution. The issue age of the deceased
Owner applies in computing the Death Benefit, payable at the death of a spouse
who has elected to be treated as the successor Owner.
7. LOANS.
The Owner of a Contract issued as a tax sheltered annuity under Section 403(b)
of the Code or as a qualified plan under Section 401 of the Code may request a
loan any time during the accumulation period. Loans are made from the General
Account and are limited to the General Account Contract Value minus any
withdrawal charge that would apply to the Contract Value and minus interest on
the loan for the remainder of the Contract Year. In addition, loans may not
exceed 50% of the Contract Value, or, if less, $50,000. The minimum loan is
$1,000.
For non-ERISA loans, the loan interest rate is 5.5% per year. For loans issued
under ERISA plans, the loan interest rate will vary based on current rates.
Interest that is not paid when due is added to the loan and will bear interest
at the same rate as the loan. While the loan is outstanding, the portion of the
General Account Contract Value that equals the debt will earn interest at a rate
2.5% less than the loan rate.
Loans must be repaid in substantially equal quarterly payments within 5 years.
Loans used to purchase the principal residence of the Owner must be repaid
within 30 years.
If a loan payment is not made when due, interest will continue to accrue. On
403(b) Contracts, to the extent permitted by law, the amount of the defaulted
payment plus accrued interest will be deducted from the Contract and paid to
Zurich Life. Any loan payment which is not made when due, plus interest, will be
treated as a distribution as permitted by law, may be taxable to the borrower,
and may be subject to early withdrawal tax penalty.
If there is an outstanding loan balance when the Contract is surrendered or
annuitized, or when a death benefit is paid, the amount payable will be reduced
by the amount of the loan outstanding plus accrued interest. Any loans made
under a Contract will be subject to administrative procedures then in effect as
reflected under the loan agreement used by Zurich Life.
CONTRACT CHARGES AND EXPENSES
Charges and deductions under the Contracts are made for Zurich Life's assumption
of mortality and expense risk and administrative expenses, and for an annual
Records Maintenance Charge. Subject to certain expense limitations, investment
management fees and other expenses of the Funds are indirectly borne by the
Contract Owner. Zurich Life will deduct state premium taxes from Contract Value
when paid by Zurich Life. Where applicable, the dollar amount of state premium
taxes previously paid or paid upon annuitization by Zurich Life will be charged
back against the Contract Value when and if the Contract is annuitized.
Additionally, where applicable, a Withdrawal Charge may be assessed by Zurich
Life in the event of early withdrawal or early annuitization.
A. CHARGES AGAINST THE SEPARATE ACCOUNT.
During the Accumulation Period and the Annuity Period, Zurich Life assesses that
portion of each Subaccount representing assets under Periodic Payment Contracts
with a daily asset charge for mortality and expense risks and administrative
costs, which amounts to an aggregate of one and three-tenths percent (1.30%) per
annum (consisting of approximately .85% for mortality risks, approximately .35%
for expense risks and approximately .10% for administrative costs). The
administrative charge is intended to cover the average anticipated
administrative expenses to be incurred over the period the Contracts are in
force. With an administrative charge based on a percentage of assets, however,
there is not necessarily a direct relationship between the amount of the charge
and the administrative costs of a particular account. Additionally, Zurich Life
deducts an annual Records Maintenance Charge of $36 (assessed ratably each
quarter) for each Contract as described below. The Records Maintenance Charge is
not assessed during the Annuity Period.
These charges may be decreased by Zurich Life without notice but may not exceed
the rate or amount shown above. If the daily asset charge for mortality and
expense risks is insufficient to cover the risks and costs, any loss or
deficiency will fall on Zurich Life. Conversely, if the charges prove more than
sufficient, the gain will accrue to Zurich Life, creating a profit which would
be available for any proper corporate purpose including, among other things,
payment of distribution expenses.
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<PAGE> 18
1. RECORDS MAINTENANCE CHARGE.
Zurich Life will assess an annual Records Maintenance Charge of $36 (assessed
ratably each quarter) during the Accumulation Period against each Contract which
has participated in one or more of the Subaccounts during the calendar year
whether or not any Purchase Payments have been made during the year. This charge
is to reimburse Zurich Life for expenses incurred in establishing and
maintaining the records relating to a Contract. This charge has been set at a
level not greater than its costs. A portion of the Records Maintenance Charge
will be deducted at the end of each calendar quarter and will constitute a
reduction in the net assets of each Subaccount.
At any time the Records Maintenance Charge is assessed, an equal portion of the
applicable charge will be assessed against each Subaccount in which the Contract
is participating and a number of Accumulation Units sufficient to equal the
proper portion of the charge will be redeemed from each Subaccount, or from the
General Account Contract Value only if necessary to meet the assessment.
2. MORTALITY RISK.
Variable Annuity payments reflect the investment experience of each Subaccount
but are not affected by changes in actual mortality experience or by actual
expenses incurred by Zurich Life.
The mortality risk assumed by Zurich Life arises from two contractual
obligations. First, in case of the death of the Contract Owner or of the
Annuitant prior to the Annuitant's 75th birthday, and prior to the Annuity Date,
Zurich Life will return to the Beneficiary the Contract Value minus Debt, or the
total amount of Purchase Payments minus Debt, whichever is greater. If a
Contract has been subject to a partial withdrawal, the death benefit shall be
the greater of (a) Contract Value minus Debt, or (b) the total amount of
Purchase Payments, minus both Debt and the aggregate dollar amount of all
previous partial withdrawals. The second contractual obligation assumed by
Zurich Life is to continue to make annuity payments to each Annuitant for the
entire life of the Annuitant under Annuity Options involving life contingencies.
The latter assures each Annuitant that neither the Annuitant's own longevity nor
an improvement in life expectancy generally will have an adverse effect on the
annuity payments received under a Contract.
3. EXPENSE RISK.
Zurich Life also assumes the risk that all actual expenses involved in
administering the Contracts including Contract maintenance costs, administrative
costs, data processing costs and costs of other services may exceed the amount
recovered from the Records Maintenance Charge or the amount recovered from the
administrative cost portion of the daily asset charge.
4. ADMINISTRATIVE COSTS.
The daily asset charge for administrative costs is imposed to reimburse Zurich
Life for the expenses it incurs for administering the Contracts, which include,
among other things, responding to Contract Owner inquiries, processing changes
in Purchase Payment allocations and providing reports to Contract Owners.
B. WITHDRAWAL CHARGE.
No sales charge is deducted from any Purchase Payment. However, a contingent
deferred sales charge ("Withdrawal Charge") will be used to cover expenses
relating to the sale of the Contracts, including commissions paid to sales
personnel, and other promotion and acquisition expenses. Also, withdrawals
(which may include certain loans) may be subject to certain adverse tax
consequences. (See "Tax Treatment of Withdrawals, Loans and Assignments.")
A Contract Owner may withdraw up to 10% of the Contract Value less Debt
determined at the time the withdrawal is requested in any Contract Year without
assessment of any charge. If the Contract Owner withdraws an amount in excess of
10% of the Contract Value in any Contract Year, the amount withdrawn in excess
of 10% subjects the Contract to a Withdrawal Charge. The Withdrawal Charge
starts at 6% in the first Contribution Year and reduces by
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<PAGE> 19
1% each Contribution Year, so that there is no charge against Accumulation Units
withdrawn or annuitized in their seventh and later Contribution Years as shown
below:
<TABLE>
<CAPTION>
YEAR OF
WITHDRAWAL
AFTER
PURCHASE WITHDRAWAL
PAYMENT CHARGE
- --------- ----------
<S> <C>
First......................................... 6%
Second........................................ 5%
Third......................................... 4%
Fourth........................................ 3%
Fifth......................................... 2%
Sixth......................................... 1%
Seventh and following......................... 0%
</TABLE>
When a withdrawal is requested, the recipient will receive a check in the amount
requested. To the extent that any Withdrawal Charge is applicable, the Contract
Value will be reduced by the amount of the Withdrawal Charge in addition to the
actual dollar amount sent to the Owner.
Because the Contribution Years are Contract Years in which a Purchase Payment is
made, Contract Owners may be subject to a Withdrawal Charge as indicated above,
even though the Contract may have been issued many years earlier. However, in no
event shall the aggregate Withdrawal Charges assessed against a Contract exceed
7.25% of the aggregate Purchase Payments made under the Contract. (For
additional details, see "Withdrawal During Accumulation Period.")
The Withdrawal Charges are intended to compensate Zurich Life for expenses in
connection with distribution of the Contracts. Under current assumptions, Zurich
Life anticipates Withdrawal Charges will not fully cover distribution expenses.
To the extent that distribution expenses are not recovered from Withdrawal
Charges, those expenses may be recovered from Zurich Life's general assets.
Those assets may include proceeds from the mortality and expense charge
described above.
The Withdrawal Charge also applies at the time of annuitization to amounts
attributable to Accumulation Units in their sixth Contribution Year or earlier.
The amount annuitized is subject to the Withdrawal Charge, as applicable. There
shall be no Withdrawal Charge assessed upon annuitization so long as annuity
payments provide for payment under Annuity Options 2, 3 or 4, or payments under
Annuity Option 1 are scheduled to continue for at least five years. For
Qualified Plan Contracts, Withdrawal Charges will be waived if a Contract is
surrendered in the sixth Contract Year or later when the Annuitant is at least
59 1/2 years old at the time of such surrender.
The Withdrawal Charge may be reduced or eliminated, but only to the extent
KILICO anticipates that it will incur lower sales expenses or perform fewer
services because of economies arising from the size of the particular group, the
average contribution per participant, or the use of mass enrollment procedures.
Units of a Subaccount sold to officers, directors and employees of Zurich Life
or certain affiliated companies, or to any trust, pension, profit-sharing or
other benefit plan for such persons may be withdrawn without any Withdrawal
Charge.
C. FUND INVESTMENT MANAGEMENT FEE AND OTHER EXPENSES.
The net asset value of each of the Portfolios of the Funds reflects investment
management fees and certain general operating expenses already deducted from the
assets of the Portfolios. Subject to certain limitations, these fees and
expenses are indirectly borne by the Contract Owners. Investment management fees
are described beginning on page 9. Further detail about fees and expenses of the
Portfolios is provided in the attached Prospectuses for the Funds and in the
Funds' Statements of Additional Information.
D. STATE PREMIUM TAXES.
Certain state and local governments impose a premium tax ranging from 0% to 3.5%
on the amount of Purchase Payments. Where applicable, the dollar amount of state
premium taxes previously paid or payable upon annuitization by Zurich Life may
be charged against the Contract Value if not previously assessed, when and if
the Contract is annuitized. See "Appendix--State Premium Tax Chart" in the
Statement of Additional Information.
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<PAGE> 20
THE ANNUITY PERIOD
Contracts may be annuitized under one of several Annuity Options. Annuity
payments will begin on the Annuity Date under the Annuity Option selected by the
Owner.
1. ANNUITY PAYMENTS.
Annuity payments will be determined on the basis of (i) the annuity table
specified in the Contract, (ii) the Annuity Option selected, and (iii) the
investment performance of the Subaccount selected. The Annuitant receives the
value of a fixed number of Annuity Units each month. The value of an Annuity
Unit will reflect the investment performance of the Subaccounts selected, and
the amount of each annuity payment will vary accordingly. Annuity payments may
be subject to a Withdrawal Charge if made within the sixth Contribution Year or
earlier. If the Owner elects an annuity which provides either an income benefit
period of five years or more, or a benefit under which payment is contingent
upon the life of the payee(s), any applicable Withdrawal Charges will be waived.
2. ANNUITY OPTIONS.
The Contract Owner may elect to have annuity payments made under any one of the
Annuity Options specified in the Contract and described below. The Contract
Owner may decide at any time (subject to the provisions of any applicable
retirement plan) to commence annuity payments. A change of Annuity Option is
permitted if made before the date annuity payments are to commence. For a
Non-Qualified Plan Contract, if no other Annuity Option is elected, monthly
annuity payments will be made in accordance with Option 3 below with a ten (10)
year period certain. For a Qualified Plan Contract, if no other Annuity Option
is elected, monthly annuity payments will be made in the form of a qualified
joint and survivor annuity with a monthly income at two-thirds of the full
amount payable during the lifetime of the surviving payee. Generally, annuity
payments will be made in monthly installments. However, if the net proceeds
available to apply under an Annuity Option are less than $2,000, Zurich Life
shall have the right to pay the annuity in one lump sum. In addition, if the
first payment provided would be less than $25, Zurich Life shall have the right
to change the frequency of payments to quarterly, semiannual or annual intervals
resulting in an initial payment of at least $25.
The amount of periodic annuity payments will depend upon (a) the type of annuity
option selected; (b) the age of the payee; and (c) the investment experience of
the Subaccounts selected. For example, if the annuity option selected is income
for a specified period, the shorter the period selected the fewer payments will
be made and those payments will have a higher value. If the annuity option
selected is life income, it is likely the payments will be in a smaller amount
than income for a short specified period. If an individual selects the life
income with installments guaranteed option, the payments will probably be in a
smaller amount than for the life income option. If an individual selects the
joint and survivor annuity option, the payments will be smaller than those
measured by an individual life income option. The age of the payee will also
influence the amount of periodic annuity payments because presumably the older
the payee, the shorter the life expectancy and the larger the payments. Finally,
if the Contract Owner participates in a Subaccount with higher investment
performance, it is likely the Contract Owner will receive a higher periodic
payment.
For Non-Qualified Plan Contracts, if the Owner dies before the Annuity Date,
Annuity Options which may be elected are limited. The Annuity Options available
are (a) Option 2 or (b) Option 1 or 3 for a period no longer than the life
expectancy of the Beneficiary. If the Beneficiary is not an individual, the
entire interest must be distributed within 5 years of the Owner's death. The
Death Benefit distribution must begin no later than one year from the Owner's
death or such later date as prescribed by federal regulation.
Option 1--Income for Specified Period.
An annuity payable monthly for a selected number of years ranging from five to
thirty. Upon the payee's death, if the Beneficiary is a natural person, Zurich
Life will automatically continue payments for the remainder of the certain
period to the Beneficiary. If the Beneficiary is either an estate or trust,
Zurich Life will pay a commuted value of the remaining payments. Variable
Annuity payments under Option 1 reflect the payment of the mortality and expense
risk charge, even though there is no life contingency risk associated with
Option 1.
Option 2--Life Income.
An annuity payable monthly during the lifetime of the payee, terminating with
the last monthly payment due prior to the death of the payee. If this Option is
elected, annuity payments terminate automatically and immediately on
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<PAGE> 21
the death of the payee without regard to the number or total amount of payments
made. Thus, it is possible for an individual to receive only one payment if
death occurred prior to the date the second payment was due.
Option 3--Life Income with Installments Guaranteed.
An annuity payable monthly during the lifetime of the payee with the provision
that if, at the death of the payee, payments have been made for less than five,
ten, fifteen or twenty years as elected, and the Beneficiary is a natural
person, Zurich Life will automatically continue payments for the remainder of
the elected period to the Beneficiary. If the Beneficiary is either an estate or
trust, Zurich Life will pay a commuted value of the remaining payments.
Option 4--Joint and Survivor Annuity.
An annuity payable monthly while both payees are living. Upon the death of
either payee, the monthly income payable will continue during the lifetime of
the surviving payee at the percentage of such full amount chosen at the time of
election of this Option. Annuity payments terminate automatically and
immediately upon the death of the surviving payee without regard to the number
or total amount of payments received.
Payees under Option 1 by written notice to Zurich Life may cancel all or part of
the remaining payments due and receive that part of the remaining value of the
Contract.
3. ALLOCATION OF ANNUITY.
The Contract Owner may elect to have payments made on a fixed or variable basis,
or a combination of both. An Owner may exercise the transfer privilege during
the Accumulation Period for the purposes of such allocation. Any General Account
Contract Value will be annuitized on a fixed basis. Any Separate Account
Contract Value will be annuitized on a variable basis. Transfers during the
Annuity Period are permitted subject to stated limitations.
4. TRANSFER DURING ANNUITY PERIOD.
During the Annuity Period, the payee may transfer the value of the payee's
Contract interest in a Subaccount(s) to another Subaccount or to the General
Account by written request to Zurich Life subject to the following limitations:
a. No transfer to a Subaccount may be made during the first year of the
Annuity Period; subsequent transfers are limited to one per year during the
Annuity Period.
b. A Contract's entire interest in a Subaccount must be transferred.
c. A transfer to a Subaccount, if notice to Zurich Life is received more
than seven (7) days prior to any annuity payment date, shall be effective
during the Valuation Period next succeeding the date such notice is
received. If received fewer than seven (7) days before any annuity payment
date, the transfer shall be effective during the Valuation Period next
succeeding that annuity payment date.
d. A transfer to the General Account may be made effective only on an
anniversary of the first Annuity Date and upon not less than thirty (30)
days prior written notice to Zurich Life.
The Annuity Unit value of a Subaccount shall be determined as of the end of the
Valuation Period next preceding the effective date of the transfer. The transfer
privilege may be suspended, modified or terminated at any time (subject to state
requirements). Payees should consider the appropriateness of each Subaccount's
investment objectives and risks as an investment during the Annuity Period.
5. ANNUITY UNIT VALUE.
The value of an Annuity Unit is determined independently for each of the
Subaccounts.
For each Subaccount, the Annuity Unit value for any Valuation Period is
determined by multiplying the Annuity Unit value for the immediately preceding
Valuation Period by the net investment factor for the Valuation Period for which
the Annuity Unit value is being calculated, and multiplying the result by an
interest factor which offsets the effect of the assumed investment earnings rate
of 2.5% per annum which is assumed in the annuity tables contained in the
Contract.
The net investment factor for each Subaccount for any Valuation Period is
determined by dividing (a) by (b) where:
(a) Is the value of an Accumulation Unit for the applicable Subaccount as
of the end of the current Valuation Period, plus or minus the per share
charge or credit for taxes reserved.
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<PAGE> 22
(b) Is the value of an Accumulation Unit for the applicable Subaccount as
of the end of the immediately preceding Valuation Period, plus or minus the
per share charge or credit for taxes reserved.
6. FIRST PERIODIC PAYMENT.
At the time annuity payments begin, the value of the Owner's Contract interest
is determined by multiplying the applicable Accumulation Unit values at the end
of the Valuation Period immediately preceding the date the first annuity payment
is due by the respective number of Accumulation Units credited to the Owner's
Contract interest as of the end of such Valuation Period, less the dollar amount
of premium taxes not previously deducted, if applicable, and less the amount of
the Withdrawal Charge, if applicable.
There is no withdrawal charge assessed so long as annuity payments provide for
payments under Annuity Options 2, 3 or 4 or payments under Annuity Option 1 are
scheduled to continue for at least five years.
The first annuity payment is determined by multiplying the benefit per $1,000 of
value shown in the applicable annuity table by the number of thousands of
dollars of Contract Value less deduction for Debt and premium taxes, if
applicable.
A 2.5% per annum assumed investment rate is built into the annuity tables
contained in the Contracts. If the actual net investment rate exceeds 2.5% per
annum, payments will increase at a rate equal to the amount of such excess.
Conversely, if the actual rate is less than 2.5% per annum, annuity payments
will decrease.
7. SUBSEQUENT PERIODIC PAYMENTS.
The amount of the second and subsequent annuity payments is determined by
multiplying the number of Annuity Units by the Annuity Unit value as of the
Valuation Period next preceding the date on which each annuity payment is due.
The dollar amount of the first annuity payment as determined above is divided by
the Annuity Unit value as of the Annuity Date to establish the number of Annuity
Units representing each annuity payment. The number of Annuity Units determined
for the first annuity payment remains constant for the second and subsequent
monthly payments.
8. FIXED ANNUITY PAYMENTS.
The amount of each payment under a Fixed Annuity will be determined from tables
prepared by Zurich Life. Such tables show the monthly payment for each $1,000 of
Contract Value allocated to provide a Fixed Annuity. Fixed Annuity payments will
not change regardless of investment, mortality or expense experience.
9. DEATH BENEFIT.
If the payee dies after the Annuity Date while the Contract is in force, the
death proceeds, if any, will depend upon the form of annuity payment in effect
at the time of death. (See "Annuity Options.")
FEDERAL INCOME TAXES
The ultimate effect of Federal income taxes on Contract Value, on annuity
payments and on the economic benefit to the Contract Owner, Annuitant or
Beneficiary depends on Zurich Life's tax status, the type of retirement plan for
which the Contract is purchased and upon the tax status of the individual
concerned. Each individual Contract Owner should consult a competent tax
advisor.
A. ZURICH LIFE'S TAX STATUS.
Zurich Life is taxed as a life insurance company under the current Internal
Revenue Code. The operations of the Separate Account are taxed as part of the
total operations of Zurich Life. However, the determination of tax charges and
credits to the Separate Account will be independent of the tax actually paid by
Zurich Life.
Under current interpretations of existing Federal income tax law, investment
income of the Separate Account, to the extent that it is applied to increase an
individual Contract Owner's equity, is not taxed. Thus, a Subaccount may realize
net investment income and dividends, and the Subaccount may receive and reinvest
them, all without Federal income tax consequences for the Separate Account.
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<PAGE> 23
B. AMOUNTS RECEIVED AS AN ANNUITY.
A fixed portion of each annuity payment is excludable from gross income as a
return of investment in the Contract and the balance is taxed as ordinary
income. For payments made on a fixed basis, the excludable amount is generally
the same for each payment. For payments made on a variable basis, the excludable
amount may be recalculated if any payment is less than the excludable amount.
The excludable amount of each Annuity Unit is determined by dividing the
investment in the Contract as of the Annuity Date by the number of Annuity Units
to be received under the payment option chosen.
For a Non-Qualified Plan Contract, the investment in the Contract is equal to
the Purchase Payments minus any withdrawals thereof. For a Qualified Plan
Contract, the investment in the Contract is equal to the employee's non-
deductible contributions, minus any prior distributions thereof.
The excludable amount of any payment may not exceed the unrecovered investment
in the Contract immediately before such payment. The amount of the unrecovered
investment is allowed as a deduction on the final return of a deceased Annuitant
where annuity payments cease before the investment in the Contract has been
fully recovered.
C. NON-QUALIFIED PLAN CONTRACTS.
1. DIVERSIFICATION REQUIREMENTS.
While Section 72 of the Code governs the taxation of annuities in general,
Section 817(h) of the Code provides that nonqualified annuity contracts will not
be treated as annuities unless the underlying investments are "adequately
diversified" in accordance with regulations prescribed by the Secretary of the
Treasury. Such regulations require, among other things, that a mutual fund
underlying an annuity contract, such as those underlying the Contracts, may
invest no more than 55% of the value of its assets in one investment; 70% in two
investments; 80% in three investments; and 90% in four investments. If the above
diversification requirements are not met, the annuity contract could lose its
overall tax status as an annuity, resulting in current taxation of the excess of
cash value over the "investment in the contract" (as defined above) to the
Contract Owner. Zurich Life has reviewed the diversification regulations and
believes that the Contracts are in compliance with these regulations and that
there is no threat to their current favorable tax status as annuities.
Furthermore, Zurich Life intends to make whatever changes may be necessary and
appropriate to these Contracts in the future in order to maintain their
continued favorable tax treatment.
In connection with the earlier issuance of temporary regulations relating to
diversification requirements, the Treasury Department announced that such
regulations do not provide guidance concerning the extent to which owners may
direct their investments to particular Subaccounts. Moreover any additional rule
may apply to pension plan contracts. It is possible that when such guidance is
available, the Contract may need to be modified to comply with such guidance.
Accordingly, Zurich Life reserves the right to modify the Contract as necessary
to prevent the Contract Owner from being considered the owner of the assets of
the Subaccount. Because the guidance has not been published, there can be no
assurance as to content or even whether application will be prospective only.
2. TAX TREATMENT OF WITHDRAWALS, LOANS AND ASSIGNMENTS.
Withdrawals from Non-Qualified Plan Contracts will be allocable first to any
investment in the Contract made prior to August 14, 1982 (if any), then to
ordinary income attributable to such investment, then to ordinary income
attributable to investment in the Contract made after August 13, 1982, and
finally to investment in the Contract made after August 13, 1982. Loans under a
Contract or collateral assignments or pledges of any portion of the value of
such Contract attributable to investment in the Contract after August 13, 1982
or income attributable to such investment are treated as withdrawals.
If the Owner transfers a Non-Qualified Plan Contract by gift, the Owner must
include in gross income the excess of the Contract Value over the investment in
the Contract as of the date of transfer.
Non-Qualified Plan Contracts which were issued by Zurich Life (or an affiliate)
during a calendar year are to be aggregated and considered a single contract for
purposes of determining the amount of any withdrawal, loan, or assigned or
pledged cash value includible in the Owner's gross income.
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<PAGE> 24
3. 10-PERCENT PENALTY TAX ON PREMATURE DISTRIBUTIONS.
A 10% penalty is imposed on the taxable portion of any distribution to a
participant in a qualified pension or profit sharing plan, tax sheltered annuity
or individual retirement annuity ("IRA"), or under a Non-Qualified Plan
Contract, prior to age 59 1/2, death or disability of the participant or
Non-Qualified Plan Contract Owner.
The 10% penalty does not apply to any distribution which is part of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life or life expectancy of the qualified plan participant or Non-
Qualified Plan Contract Owner, provided that there is no change in such payments
before the later of (i) the close of the 5-year period beginning on the date of
the first payment, or (ii) age 59 1/2, death or disability of such participant
or Owner. Further, the 10% penalty does not apply to any distribution from a
qualified pension or profit sharing plan or tax sheltered annuity on account of
retirement after age 55, or to any distribution from a Non-Qualified Plan
Contract: (i) attributable to investment in the Contract before August 14, 1982,
or (ii) where the Contract is an "immediate annuity" under the Internal Revenue
Code ("Code").
D. QUALIFIED PLANS.
The Contracts offered by this Prospectus are designed to be suitable for use
under Qualified Plans. Such contracts are commonly referred to as "Qualified
Plan Contracts." Zurich Life, in its sole discretion, reserves the right to
waive certain minimums with respect to large group contracts. Taxation of
participants in such Qualified Plans varies with the type of plan and the terms
and conditions of the specific plan. Qualified Plan Contract Owners, Annuitants
and Beneficiaries are cautioned that benefits under a Qualified Plan may be
subject to the terms and conditions of the plan regardless of the terms and
conditions of the Contracts issued pursuant to the plan. Following are general
descriptions of the types of Qualified Plans and of the use of the Contracts in
connection therewith. Purchasers intending to use the Contracts in connection
with Qualified Plans should seek competent tax advice.
(a) Pension and Profit-Sharing Plans.
Sections 401(a) of the Code permits employers to establish qualified
retirement plans for employees. Taxation of plan participants depends on
the specific plan. Such plans are limited by law as to maximum permissible
contributions, distribution dates, non-forfeitability of interests and tax
rates applicable to distributions. In order to establish such a plan, a
plan document is adopted and implemented by the employer. Such retirement
plans may permit the purchase of the Contracts in order to provide benefits
under the plans.
(b) Tax-Sheltered Annuities.
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code to purchase annuity contracts
and, subject to certain limitations, exclude the amount of purchase
payments from gross income for tax purposes. Generally, the annual
contribution limit is 20% of an employee's includible compensation times
the number of years of service, less previously excluded contributions. For
salary reduction plans the maximum contribution is $9,500. These annuity
contracts are commonly referred to as "tax-sheltered annuities."
To the extent attributable to contributions to your tax-sheltered annuity
contract under a salary reduction agreement (or to transfers of such
amounts from other contracts), contributions made or earnings credited
after December 31, 1988 may not be withdrawn until separation from service,
attainment of age 59 1/2, death or disability. Salary reduction
contributions after December 31, 1988 may also be withdrawn in the case of
hardship within the meaning of section 403(b)(11) of the Internal Revenue
Code. Further, all amounts transferred to your contract from a Section
403(b)(7) custodial account are subject to such restrictions on withdrawal.
Under your employer's tax-sheltered annuity plan, you may be allowed to
transfer your contract value to other types of options, such as other fixed
or variable annuity contracts or Section 403(b)(7) custodial accounts.
(c) Treatment of Certain Distributions from Pension and Profit Sharing
Plans and Tax-Sheltered Annuities.
Distributions from Pension and Profit Sharing Plans and Tax-Sheltered
Annuities which are eligible to be rolled over to an IRA or another
employer's retirement plan are generally subject to 20% withholding, unless
the participant exercises the right to a "direct rollover." A "direct
rollover" may be accomplished when the sponsor of a participant's existing
pension or profit sharing plan or tax-sheltered annuity makes a
distribution payable to the sponsor of the new IRA or new employer plan for
the participant's benefit.
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<PAGE> 25
If the participant does not exercise the right to a "direct rollover," in
general, 20% will be withheld from the distribution and credited against
the participant's income taxes incurred in the taxable year of the
distribution. Other rules may apply, therefore, Zurich Life suggests that
participants consult their tax advisors before making a decision.
(d) Individual Retirement Annuities.
Section 408(b) of the Code permits eligible individuals to make deductible
contributions to an individual retirement program known as an "Individual
Retirement Annuity" ("IRA"). Generally, the maximum contribution is $2,000
for an individual and $2,250 for an individual and spouse eligible for a
spousal IRA. In addition, certain distributions from qualified pension and
profit sharing plans, tax-sheltered annuities and other IRA's may be placed
on a tax-deferred basis into an IRA. When issued in connection with an IRA,
the Contract will be amended to conform to the requirements under such
plans. Purchasers have the right to revoke an IRA Contract within seven (7)
days of the receipt of the IRA disclosure statement which is attached to
the application used for IRA Contracts. The IRA disclosure statement also
provides more information on contribution limits. A purchaser can revoke
the IRA Contract within seven (7) days of the date the application was
signed by notifying Zurich Life.
PLEASE NOTE THAT AN IRA DISCLOSURE STATEMENT IS INCLUDED IN THIS PROSPECTUS
AS AN APPENDIX.
(e) Deferred Compensation Plans.
Section 457 of the Code allows a State defined to also include a political
subdivision of a State, and an agency or instrumentality of a State or a
political subdivision of a State, and any other tax exempt organization to
establish a deferred compensation plan ("Section 457 Plan") for the benefit
of its employees. Contracts issued under such a plan are owned by the
employer.
An employee electing to participate in a Section 457 Plan should understand
that all rights and benefits are governed strictly by the terms of the
plan. The employer is legal owner of any Contracts issued under the plan.
The employee is, in fact, a general creditor of the employer under the
terms of the plan. The employer, as owner of the Contracts, also retains
all voting and redemption rights which may accrue through the Contracts
issued under the plan.
The participating employee should look to the terms of the plan for any
charges in regard to participating in such plan other than those disclosed
in this Prospectus. Section 457 of the Code places limitations on
contributions to such plans. A participant must look to the terms of the
plan for an explanation of this limitation.
E. TAX WITHHOLDING.
Zurich Life is required to withhold federal income tax on the taxable portion of
all distributions under the Contracts unless the individual elects under a
nonqualified plan not to be subject to withholding. The rate of withholding will
depend on the type of distribution.
F. OTHER CONSIDERATIONS.
Because of the complexity of the law and its application to a specific
individual, tax advice may be needed by a person contemplating purchase of a
Contract or the exercise of elections under a Contract. The above comments
concerning the Federal income tax consequences are not exhaustive, and special
rules are provided with respect to situations not discussed in this Prospectus.
The preceding description is based upon Zurich Life's understanding of current
Federal income tax law. Zurich Life cannot assess the probability that changes
in tax laws, particularly affecting annuities, will be made.
The preceding comments do not take into account state income or other tax
considerations which may be involved in the purchase of a Contract or the
exercise of elections under the Contract. For complete information on such
Federal and state tax considerations, a qualified tax adviser should be
consulted.
Legislation has been considered which would prohibit insurers from using
sex-distinct factors in determining annuity benefit payments. If "unisex"
requirements are adopted, Zurich Life may be required to utilize annuity tables
which do not differentiate the amount of annuity benefits on the basis of sex.
This might result in a change
21
<PAGE> 26
providing for either an increase in the initial amount of monthly benefits
applied for females or a decrease in such amount for males or a combination of
both. Zurich Life is using "unisex" annuity tables on Qualified Plan Contracts.
DISTRIBUTION OF CONTRACTS
The Contracts are sold by licensed insurance agents, where the Contracts may be
lawfully sold, who are registered representatives of broker-dealers which are
registered under the Securities Exchange Act of 1934 and are members of the
National Association of Securities Dealers, Inc. In addition to commissions,
Zurich Life may, from time to time, pay or allow additional promotional
incentives, in the form of cash or other compensation, to broker-dealers that
sell the Contracts. In some instances, such other incentives may be offered only
to certain licensed broker-dealers that sell or are expected to sell during
specified time periods certain minimum amounts of the Contracts or other
contracts issued by Zurich Life. The Contracts are distributed through the
principal underwriter for the Separate Account, which is Investors Brokerage
Services, Inc. ("IBS"), which enters into selling group agreements with
affiliated and unaffiliated broker-dealers.
VOTING PRIVILEGES
Proxy materials in connection with any shareholder meeting of the Funds will be
delivered to each Contract Owner with Subaccount interests invested in the Funds
as of the record date for voting at such meeting. Such proxy materials will
include an appropriate form which may be used to give voting instructions. So
long as the Commission so requires, Zurich Life will vote Fund shares held in
each Subaccount in accordance with instructions received from persons having a
Subaccount interest in such Fund shares. Fund shares as to which no timely
voting instructions are received will be voted by Zurich Life in proportion to
the voting instructions received from all persons in a timely manner. Zurich
Life will also vote any Fund shares attributed to amounts it has accumulated in
the Subaccounts in the same proportion that Contract Owners vote. The Funds are
not required to hold annual shareholders' meetings. They will, however, hold
special meetings as required or deemed desirable for such purposes as electing
trustees, changing fundamental policies or approving an investment advisory
agreement.
Contract Owners of all Contracts participating in each Subaccount shall have
voting privileges with respect to the Portfolio invested in by that Subaccount,
based upon each Contract Owner's proportionate interest in that Subaccount as
measured by units. The person having such voting privileges will be the Contract
Owner before surrender, the Annuity Date or the death of the Annuitant, and
thereafter, the payee entitled to receive Variable Annuity payments under the
Contract. During the Annuity Period, voting privileges attributable to a
Contract will generally decrease as Annuity Units attributable to an Annuitant
decrease.
REPORTS TO CONTRACT OWNERS AND INQUIRIES
Immediately after each Contract anniversary, Contract Owners will be sent
statements for their own Contract showing the amount credited to each Subaccount
and to the Fixed Accumulation Option. It will also show the interest rate(s)
that Zurich Life is crediting upon amounts then held under the Fixed
Accumulation Option. In addition, Contract Owners transferring amounts among the
investment options or making additional payments will receive written
confirmation of such transactions. Upon request, any Contract Owner will be sent
a current statement in a form similar to that of the annual statement described
above. Each Contract Owner will also be sent an annual and a semi-annual report
for the Funds and a list of the securities held in each Portfolio of the Funds,
as required by the 1940 Act.
A Contract Owner may direct inquiries to the individual who sold him or her the
Contract or may call (708) 517-7900 or write to Zurich Life Insurance Company of
America, 1400 American Way, Schaumburg, Illinois 60173.
DOLLAR COST AVERAGING
A Contract Owner may predesignate a portion of the Contract Value under a
Contract attributable to the Kemper Money Market or Kemper Government Securities
Subaccount to be automatically transferred on a monthly basis to one or more of
the other Subaccounts and the General Account during the Accumulation Period. A
Contract Owner may enroll in this program at the time the Contract is issued or
anytime thereafter by properly completing the Dollar Cost Averaging enrollment
form and returning it to Zurich Life at its home office at least five (5)
business days prior to
22
<PAGE> 27
the second Tuesday of a month which is the date that all dollar cost averaging
transfers will be made ("Transfer Date").
Transfers will be made in the amounts designated by the Contract Owner and must
be at least $500 per Subaccount or General Account. The total Contract Value in
the Kemper Money Market or Kemper Government Securities Subaccount at the time
Dollar Cost Averaging is elected must be at least equal to the amount designated
to be transferred on each Transfer Date multiplied by the duration selected.
Dollar Cost Averaging will cease automatically if the Contract Value does not
equal or exceed the amount designated to be transferred on each Transfer Date
and the remaining amount will be transferred.
Dollar Cost Averaging will terminate when (i) the number of designated monthly
transfers has been completed, (ii) the Contract Value attributable to the Kemper
Money Market or Kemper Government Securities Subaccount is insufficient to
complete the next transfer, (iii) the Contract Owner requests termination in
writing and such writing is received by Zurich Life at its home office at least
five (5) business days prior to the next Transfer Date in order to cancel the
transfer scheduled to take effect on such date, or (iv) the Contract is
surrendered or annuitized.
If the General Account has a balance of at least $10,000, a Contract Owner may
elect automatic calendar quarter transfers of interest accrued in the General
Account to one or more of the Subaccounts. A Contract Owner may enroll in this
program at any time by completing the proper Dollar Cost Averaging enrollment
form and returning it to Zurich Life at its home office at least ten (10) days
prior to the end of the calendar quarter. The Transfer Date will be within five
business days of the end of the calendar quarter.
Following the Issue Date, a Contract Owner may initiate, reinstate or change
Dollar Cost Averaging or change existing Dollar Cost Averaging terms by properly
completing the new enrollment form and returning it to Zurich Life at its home
office at least five (5) business days, ten (10) business days for General
Account transfers, prior to the next Transfer Date such transfer is to be made.
When utilizing Dollar Cost Averaging, a Contract Owner must be invested in the
Kemper Money Market or Kemper Government Securities Subaccount or the General
Account and may be invested in the General Account and a maximum of five other
Subaccounts at any given time. Election of Dollar Cost Averaging is not
available during the Annuity Period.
SYSTEMATIC WITHDRAWAL PLAN
Zurich Life administers a Systematic Withdrawal Plan ("SWP") which allows
certain Contract Owners to pre-authorize periodic withdrawals during the
Accumulation Period. Contract Owners entering into a SWP agreement instruct
Zurich Life to withdraw selected amounts from the General Account, or from any
of the Subaccounts on a monthly, quarterly, semi-annual or annual basis.
Currently the SWP is available to Contract Owners who request a minimum $100.00
periodic payment. If the amounts distributed under the SWP exceed the amount
free of surrender charge (currently 10% of Contract Value) then the surrender
charge will be applied on any amounts exceeding the 10% free withdrawal.
WITHDRAWALS TAKEN UNDER THE SWP MAY BE SUBJECT TO THE 10% FEDERAL TAX PENALTY ON
EARLY WITHDRAWALS AND TO INCOME TAXES AND WITHHOLDING. SEE "FEDERAL INCOME
TAXES." Contract owners interested in SWP may obtain an application and full
information concerning this program and its restrictions from their
representative or Zurich Life's home office. The right is reserved to amend the
SWP on thirty days' notice. The SWP may be terminated at any time by the
Contract Owner or Zurich Life.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate Account,
Zurich Life or Investors Brokerage Services, Inc. is a party.
TABLE OF CONTENTS--STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information, Table of Contents is: Services to the
Separate Account; Performance Information of Subaccounts; State Regulation;
Experts; Report of Independent Auditors, Financial Statements of the Separate
Account, Report of Independent Auditors and Financial Statements of Zurich Life.
The Statement of Additional Information should be read in conjunction with this
Prospectus.
23
<PAGE> 28
APPENDIX
ZURICH LIFE INSURANCE COMPANY OF AMERICA DEFERRED FIXED AND
VARIABLE ANNUITY IRA DISCLOSURE STATEMENT
This Disclosure Statement describes the statutory and regulatory provisions
applicable to the operation of Individual Retirement Annuities. Internal Revenue
Service regulations require that this be given to each person desiring to
establish an IRA.
A. REVOCATION
Within 7 days of the date you signed your enrollment application, you may revoke
it and receive back 100% of your money. To do so, write Zurich Life Insurance
Company of America, 1400 American Way, Schaumburg, Illinois 60173, or call
1-800-621-5001.
B. STATUTORY REQUIREMENTS
The provisions of this contract meet the requirements of Section 408(b) of the
Internal Revenue Code as to form for use as an IRA annuity contract described in
Items 1 through 5 below. The contract has not been approved as to form by the
IRS. If you set up an IRA using an annuity contract it must meet the following
requirements:
1. The amount in your IRA must be fully vested at all times.
2. The contract must provide that you cannot transfer it to someone else.
3. The contract must have flexible premiums.
4. You must start receiving distributions by April 1 of the year following the
year in which you reach age 70 1/2 (see "Required Distributions").
5. The contract must provide that you cannot contribute more than $2,000 for any
year. (This requirement does not apply to rollovers. See "Rollovers and Direct
Transfers").
C. ROLLOVERS AND DIRECT TRANSFERS
1. A rollover is a tax-free transfer of cash or other assets from one retirement
program to another. There are two kinds of rollover payments. In one, you
transfer amounts from one IRA to another. With the other, you transfer amounts
from a qualified employee benefit plan or tax-sheltered annuity to an IRA. A
rollover is an allowable payment that you cannot deduct on your tax return.
2. You must complete the transfer by the 60th day after the day you receive the
distribution from your IRA or other qualified employee benefit plan.
3. A rollover distribution from an IRA may be made to you only once a year. The
one-year period begins on the date you receive the IRA distribution, not on the
date you roll it over (reinvest it) into another IRA.
4. A direct transfer of funds in an IRA from one trustee or insurance company to
another is not a rollover. It is a transfer that is not affected by the one-year
waiting period.
5. All or a part of the premium for this contract may be paid from a rollover
from an IRA, qualified pension or profit-sharing plan or tax-sheltered annuity,
or from a direct transfer from another IRA. The proceeds from this contract may
be used as a rollover contribution to another IRA.
6. A distribution that is eligible for rollover treatment from a qualified
employee benefit plan or tax-sheltered annuity will be subject to 20%
withholding by the Internal Revenue Service even if you roll the distribution
over to an IRA within the 60-day rollover period. To avoid withholding, the
distribution should be made as a direct transfer to the IRA trustee or insurance
company.
24
<PAGE> 29
D. ALLOWANCE OF DEDUCTION
1. In general, the amount you can contribute each year is the lesser of $2,000
or your taxable compensation for the year. If you have more than one IRA, the
limit applies to the total contributions made to your own IRAs for the year.
Generally, if you work the amount that you earn is compensation. Wages,
salaries, tips, professional fees, bonuses and other amounts you receive for
providing personal services are compensation. If you own and operate your own
business as a sole proprietor, your net earnings reduced by your deductible
contributions on your behalf to self-employed retirement plans is compensation.
If you are an active partner in a partnership and provide services to the
partnership, your share of partnership income reduced by deductible
contributions made on your behalf to self-employed retirement plans is
compensation. All taxable alimony and separate maintenance payments received
under a decree of divorce or separate maintenance is compensation.
2. If neither you nor your spouse are covered for any part of the year by an
employer retirement plan, you can deduct the lesser of $2,000 or your taxable
compensation. If either you or your spouse are covered by a retirement plan at
work, the $2,000 limit is reduced $10 for each $50 that your adjusted gross
income exceeds $40,000 (married filing jointly), $25,000 (single) or zero
(married filing separately).
3. Contributions to your IRA can be made at any time. If you make the
contribution between January 1 and April 15, however, you may elect to treat the
contribution as made either in that year or in the preceding year. You may file
a tax return claiming deduction for your IRA contribution before the
contribution is actually made. You must, however, make the contribution by the
due date of your return not including extensions.
4. You cannot make a contribution other than a rollover contribution to your IRA
for the year in which you reach age 70 1/2 or thereafter.
5. If both you and your spouse have compensation, you can each set up your own
IRA. The contribution for each of you is figured separately and depends on how
much each earns. Both of you cannot participate in the same IRA account or
contract.
6. If you file a joint return, you can contribute up to the lesser of $2,000 or
your taxable compensation to an IRA for a spouse who has not reached age 70 1/2
(even if you have reached age 70 1/2) and who has no compensation or elects to
be treated as having no compensation for the year. The total combined amount you
can contribute each year to your own IRA and the spousal IRA is the lesser of
$2,250 or your taxable compensation for the year.
7. If neither you nor your spouse are covered for any part of the year by an
employer retirement plan, you can deduct the lesser of $2,250 or your taxable
compensation. If you or your spouse is covered by a retirement plan, the $2,250
limit is reduced $10 for each $44.44 that your adjusted gross income exceeds
$40,000.
E. SEP-IRA'S
1. The maximum deductible contribution for a Simplified Employee Pension (SEP)
IRA is the lesser of $30,000 or 15% of compensation.
2. A SEP must be established and maintained by an employer (corporation,
partnership, sole proprietor).
F. TAX STATUS OF THE CONTRACT AND DISTRIBUTIONS
1. Earnings of your IRA annuity contract are not taxed until they are
distributed to you.
2. In general, taxable distributions are included in your gross income in the
year you receive them.
3. Distributions are non-taxable to the extent they represent a return of
non-deductible contributions. The non-taxable percentage of a distribution is
determined by dividing your total undistributed, non-deductible IRA
contributions by the value of all your IRAs (including SEPs and rollovers).
4. You cannot choose the special five-year or ten-year averaging that may apply
to lump sum distributions from qualified employer plans.
G. REQUIRED DISTRIBUTIONS
You must start receiving minimum distributions from your IRA starting with the
year you reach age 70 1/2 (your 70 1/2 year). Ordinarily, you must receive the
minimum distribution for any year by December 31. However, you may delay the
minimum distribution for your 70 1/2 year until April 1 of the following year.
25
<PAGE> 30
Figure your required minimum distribution for each year by dividing the value of
your IRA as of the close of business on December 31 of the preceding year by the
applicable life expectancy. The applicable life expectancy is your remaining
life expectancy or the remaining joint life and last survivor expectancy of you
and your designated beneficiary. Life expectancies are determined using the
expected return multiple tables shown in IRS Publication 590 "Individual
Retirement Arrangements." If a designated beneficiary is more than 10 years
younger than you, that beneficiary is assumed to be exactly 10 years younger. To
obtain a free copy of IRS Publication 590 and other IRS forms, phone the IRS
toll free at 1-800-829-3676 or write the IRS Forms Distribution Center for your
area as shown in your income tax return instructions.
Annuity payments which begin by April 1 of the year following your 70 1/2 year
satisfy the minimum distribution requirement if they provide for non-increasing
payments over the life or the lives of you and your spouse, provided that, if
installments are guaranteed, the guaranty period does not exceed the lesser of
20 years or the applicable life expectancy.
If you have more than one IRA, you must determine the required minimum
distribution separately for each IRA; however, you can total up these minimum
amounts and take the total from any one or more of the IRAs.
If the actual distribution from your IRA during a year after you die or reach
age 70 1/2 is less than the minimum amount that should be distributed in
accordance with the rules set forth at Items 5, 6 and 7 above, the difference is
an excess accumulation. There is a 50% excise tax on any excess accumulations.
However, if you have a good reason for having an excess accumulation in your IRA
you may not have to pay the tax. For example, if you have been given wrong
advice or you made a mistake in using or did not understand the excess
accumulation rules, you may request the IRS to excuse the tax.
H. TAX ON EXCESS CONTRIBUTIONS
1. You must pay a 6% excise tax each year on excess contributions that remain in
your IRA. Generally, an excess contribution is the amount contributed to your
IRA that is more than you can contribute or roll over. The excess is taxed for
the year of the excess contribution and for each year after that until you
correct it.
2. You will not have to pay the 6% excise tax if you withdraw the excess amount
by the date your tax return is due including extensions for the year of the
contribution. You do not have to include in your gross income an excess
contribution that you withdraw from your IRA before your tax return is due if
the income earned on the excess was also withdrawn and no deduction was allowed
for the excess contribution.
3. If an excess contribution in your IRA is a result of a rollover and the
excess occurred because information required to be supplied by the payor of the
distribution was incorrect, you may withdraw the excess amount attributable to
the incorrect information after the date your return is due and still not
include the amount withdrawn in your gross income. It is not necessary to
withdraw the income earned on the excess. You will, however, have to pay the 6%
tax on the excess amount for each year the excess contribution was in the IRA at
the end of the year.
I. TAX ON PREMATURE DISTRIBUTIONS
There is an additional tax on premature distributions equal to 10% of the amount
of the premature distribution that you must include in your gross income.
Premature distributions are generally amounts you withdraw from your IRA before
you are age 59 1/2. However, the tax on premature distributions does not apply:
1. To amounts that are rolled over tax free.
2. To a series of substantially equal periodic payments made over your life or
life expectancy, or the joint life or life expectancy of you and your
beneficiary.
3. If you are permanently disabled. You are considered disabled if you cannot do
any substantial gainful activity because of your physical or mental condition. A
physician must determine that the condition has lasted or can be expected to
last continuously for 12 months or more or that the condition can be expected to
lead to death.
J. IRA EXCISE TAX REPORTING
Use Form 5329, Return for Individual Retirement Arrangement Taxes, to report the
excise taxes on excess contributions, premature distributions, and excess
accumulations. If you do not owe any IRA excise taxes, you do not need Form
5329. Further information can be obtained from any district office of the
Internal Revenue Service.
26
<PAGE> 31
K. BORROWING
If you borrow money against your IRA contract or use it as security for a loan,
you must include in gross income the fair market value of the IRA contract as of
the first day of your tax year. (Note: This contract does not allow borrowings
against it, nor may it be assigned or pledged as collateral for a loan.)
L. FINANCIAL DISCLOSURE
1. If this is a regular contribution IRA, the following information, based on
the charts shown at the back of this form, which assumes you were to make a
level contribution to the fixed account at the beginning of each year of $1,000,
must be completed prior to your signing the enrollment application.
<TABLE>
<CAPTION>
END
OF LUMP SUM TERMINATION AT LUMP SUM TERMINATION
YEAR VALUE OF CONTRACT * AGE VALUE OF CONTRACT *
<S> <C>
- ------------------------------------------------------------------------------------------------------
1 60
- ------------------------------------------------------------------------------------------------------
2 65
- ------------------------------------------------------------------------------------------------------
3 70
- ------------------------------------------------------------------------------------------------------
4
- ------------------------------------------------------------------------------------------------------
5
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Includes applicable withdrawal charges as described in Item M below.
2. If this is a rollover IRA, the following information, based on the charts
shown at the back of this form, and all of which assumes you make one
contribution to the fixed account of $1,000 at the beginning of this year, must
be completed prior to your signing the enrollment application.
<TABLE>
<CAPTION>
END
OF LUMP SUM TERMINATION AT LUMP SUM TERMINATION
YEAR VALUE OF CONTRACT * AGE VALUE OF CONTRACT *
<S> <C>
- ------------------------------------------------------------------------------------------------------
1 60
- ------------------------------------------------------------------------------------------------------
2 65
- ------------------------------------------------------------------------------------------------------
3 70
- ------------------------------------------------------------------------------------------------------
4
- ------------------------------------------------------------------------------------------------------
5
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Includes applicable withdrawal charges as described in Item M below.
M. FINANCIAL DISCLOSURE FOR THE SEPARATE ACCOUNT (VARIABLE ACCOUNT)
1. If on the enrollment application you indicated an allocation to a Subaccount,
this contract will be assessed a daily charge of an amount which will equal an
aggregate of 1.30% per annum for Periodic Payment Contracts.
2. An annual records maintenance charge of $36.00 will be assessed ratably each
quarter against the Separate Account value, if you have participated in a
Subaccount during the year. If insufficient values are in the Subaccounts when
the charge is assessed, the charge will be assessed against General Account
value.
3. Withdrawal (early annuitization) charges as follows will be assessed based on
the years elapsed since purchase payments (in a given contract year) were
received by the Company; under 1 year, 6%; over 1 to 2 years, 5%; over 2 to 3
years, 4%; over 3 to 4 years, 3%; over 4 to 5 years, 2%; over 5 to 6 years, 1%;
6th year and thereafter, 0%.
4. The method used to compute and allocate the annual earnings is contained in
the prospectus under the heading "Accumulation Unit Value."
5. The growth in value of your contract is neither guaranteed nor projected but
is based on the investment experience of the Separate Account.
27
<PAGE> 32
GUARANTEED LUMP SUM TERMINATION OF DEFERRED FIXED AND VARIABLE ANNUITY
COMPLETELY ALLOCATED TO THE GENERAL ACCOUNT WITH 3% GUARANTEED EACH YEAR.
(TERMINATION VALUES ARE BASED ON $1,000 ANNUAL CONTRIBUTIONS AT THE BEGINNING OF
EACH YEAR.)
<TABLE>
<CAPTION>
END OF TERMINATION END OF TERMINATION END OF TERMINATION END OF TERMINATION
YEAR VALUES* YEAR VALUES* YEAR VALUES* YEAR VALUES*
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
1 $ 1,000 14 $17,371 27 $41,703 40 $ 77,436
- ---------------------------------------------------------------------------------------------------
2 2,000 15 18,929 28 43,991 41 80,796
- ---------------------------------------------------------------------------------------------------
3 3,038 16 20,534 29 46,348 42 84,256
- ---------------------------------------------------------------------------------------------------
4 4,130 17 22,187 30 48,775 43 87,821
- ---------------------------------------------------------------------------------------------------
5 5,264 18 23,889 31 51,275 44 91,492
- ---------------------------------------------------------------------------------------------------
6 6,442 19 25,643 32 53,850 45 95,274
- ---------------------------------------------------------------------------------------------------
7 7,665 20 27,449 33 56,503 46 99,169
- ---------------------------------------------------------------------------------------------------
8 8,932 21 29,309 34 59,235 47 103,181
- ---------------------------------------------------------------------------------------------------
9 10,236 22 31,225 35 62,048 48 107,313
- ---------------------------------------------------------------------------------------------------
10 11,580 23 33,199 36 64,947 49 111,569
- ---------------------------------------------------------------------------------------------------
11 12,965 24 35,232 37 67,932 50 115,953
- ---------------------------------------------------------------------------------------------------
12 14,390 25 37,326 38 71,007
- ---------------------------------------------------------------------------------------------------
13 15,859 26 39,482 39 74,174
- ---------------------------------------------------------------------------------------------------
</TABLE>
GUARANTEED LUMP SUM TERMINATION OF DEFERRED FIXED AND VARIABLE ANNUITY
COMPLETELY ALLOCATED TO THE GENERAL ACCOUNT WITH 3% GUARANTEED EACH YEAR.
(TERMINATION VALUES ARE BASED ON $1,000 SINGLE PREMIUM.)
<TABLE>
<CAPTION>
END OF TERMINATION END OF TERMINATION END OF TERMINATION END OF TERMINATION
YEAR VALUES* YEAR VALUES* YEAR VALUES* YEAR VALUES*
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
1 $ 1,000 14 $ 1,513 27 $ 2,221 40 $ 3,262
- ---------------------------------------------------------------------------------------------------
2 1,013 15 1,558 28 2,288 41 3,360
- ---------------------------------------------------------------------------------------------------
3 1,053 16 1,605 29 2,357 42 3,461
- ---------------------------------------------------------------------------------------------------
4 1,095 17 1,653 30 2,427 43 3,565
- ---------------------------------------------------------------------------------------------------
5 1,138 18 1,702 31 2,500 44 3,671
- ---------------------------------------------------------------------------------------------------
6 1,183 19 1,754 32 2,575 45 3,782
- ---------------------------------------------------------------------------------------------------
7 1,230 20 1,806 33 2,652 46 3,895
- ---------------------------------------------------------------------------------------------------
8 1,267 21 1,860 34 2,732 47 4,012
- ---------------------------------------------------------------------------------------------------
9 1,305 22 1,916 35 2,814 48 4,132
- ---------------------------------------------------------------------------------------------------
10 1,344 23 1,974 36 2,898 49 4,256
- ---------------------------------------------------------------------------------------------------
11 1,384 24 2,033 37 2,985 50 4,384
- ---------------------------------------------------------------------------------------------------
12 1,426 25 2,094 38 3,075
- ---------------------------------------------------------------------------------------------------
13 1,469 26 2,157 39 3,167
- ---------------------------------------------------------------------------------------------------
</TABLE>
* Includes applicable withdrawal charges.
28
<PAGE> 33
STATEMENT OF ADDITIONAL INFORMATION
, 1996
- --------------------------------------------------------------------------------
PERIODIC PAYMENT
VARIABLE ANNUITY CONTRACTS
- --------------------------------------------------------------------------------
ISSUED BY
ZURICH LIFE INSURANCE COMPANY OF AMERICA
IN CONNECTION WITH
ZURICH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
HOME OFFICE: 1400 AMERICAN WAY, SCHAUMBURG, ILLINOIS 60173 (708) 517-7900
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information should be read in conjunction with the Prospectus of the
Separate Account dated , 1996 and is incorporated therein by reference.
The Prospectus may be obtained from Zurich Life Insurance Company of America by
writing or calling the address or telephone number listed above.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Services to the Separate Account....................................... B-1
Performance Information of Subaccounts................................. B-1
State Regulation....................................................... B-8
Experts................................................................ B-8
Financial Statements................................................... B-8
</TABLE>
<PAGE> 34
SERVICES TO THE SEPARATE ACCOUNT
Zurich Life Insurance Company of America ("Zurich Life") maintains the books and
records of the Zurich Life Variable Annuity Separate Account (the "Separate
Account"). Zurich Life holds the assets of the Separate Account. The assets are
kept segregated and held separate and apart from the general funds of Zurich
Life. Zurich Life maintains records of all purchases and redemptions of shares
of each Fund by each of the Subaccounts. All expenses incurred in the operations
of the Separate Account, except the charge for mortality and expense risk and
administrative expenses, and records maintenance charge (as described in the
Prospectus) are borne by Zurich Life.
The independent auditors for the Separate Account are KPMG Peat Marwick LLP,
Chicago, Illinois. The firm performs an annual audit of the financial statements
of the Separate Account.
The Contracts are sold by licensed insurance agents, where the Contracts may be
lawfully sold, who are registered representatives of broker-dealers which are
registered under the Securities Exchange Act of 1934 and are members of the
National Association of Securities Dealers, Inc. The Contracts are distributed
through the principal underwriter for the Separate Account, Investors Brokerage
Services, Inc. ("IBS"), which enters into selling group agreements with
affiliated and unaffiliated broker-dealers. Subject to the provisions of the
Contracts, units of the Subaccounts under the Contract are offered on a
continuous basis.
KILICO pays commissions to the seller which may vary but are not anticipated to
exceed in the aggregate an amount equal to six percent (6%) of Purchase
Payments.
PERFORMANCE INFORMATION OF SUBACCOUNTS
As described in the prospectus, a Subaccount's historical performance may be
shown in the form of "average annual total return" and "total return"
calculations in the case of all Subaccounts, except "average annual total
return" is not shown for the Kemper Money Market Subaccount; "yield" information
may be provided in the case of the Kemper High Yield Subaccount, the Kemper
Government Securities Subaccount and the Janus Short-Term Bond Subaccount; and
"yield" and "effective yield" information may be provided in the case of the
Money Market Subaccount. These various measures of performance are described
below.
A Subaccount's average annual total return quotation is computed in accordance
with a standard method prescribed by rules of the Securities and Exchange
Commission. The average annual total return for a Subaccount for a specific
period is found by first taking a hypothetical $1,000 investment in each of the
Subaccount's units on the first day of the period at the maximum offering price,
which is the Accumulation Unit value per unit ("initial investment") and
computing the ending redeemable value ("redeemable value") of that investment at
the end of the period. The redeemable value reflects the effect of the
applicable Withdrawal Charge that may be imposed at the end of the period as
well as all other recurring charges and fees applicable under the Contract to
all Contract Owner accounts. Premium taxes are not included in the term charges.
The redeemable value is then divided by the initial investment and this quotient
is taken to the Nth root (N represents the number of years in the period) and 1
is subtracted from the result, which is then expressed as a percentage. Average
annual total return quotations for various periods are set forth in the table
below.
No standard formula has been prescribed for calculating total return
performance. Total return performance for a specific period is calculated by
first taking an investment (assumed to be $10,000 below) in each Subaccount's
units on the first day of the period at the maximum offering price, which is the
Accumulation Unit Value per unit ("initial investment") and computing the ending
value ("ending value") of that investment at the end of the period. The ending
value does not include the effect of the applicable Withdrawal Charge that may
be imposed at the end of the period, and thus may be higher than if such charge
were deducted. The total return percentage is then determined by subtracting the
initial investment from the ending value and dividing the remainder by the
initial investment and expressing the result as a percentage. An assumed
investment of $10,000 was chosen because that approximates the size of a typical
account. The account size used affects the performance figure because the
Records Maintenance Charge is a fixed per account charge.
The yield for the Kemper High Yield Subaccount, the Kemper Government Securities
Subaccount and the Janus Short-Term Bond Subaccount is computed in accordance
with a standard method prescribed by rules of the Securities and Exchange
Commission. The yield quotation is computed by dividing the net investment
income per
B-1
<PAGE> 35
unit earned during the specified one month or 30-day period by the accumulation
unit values on the last day of the period, according to the following formula
that assumes a semi-annual reinvestment of income:
a-b 6
YIELD = 2[( ----- +1) - 1]
cd
a = net dividends and interest earned during the period by the Fund attributable
to the Subaccount
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of Accumulation Units outstanding during the period
d = the Accumulation Unit value per unit on the last day of the period
The yield of each Subaccount reflects the deduction of all recurring fees and
charges applicable to each Subaccount, but does not reflect the deduction of
withdrawal charges or premium taxes.
The Kemper Money Market Subaccount's yield is computed in accordance with a
standard method prescribed by rules of the Securities and Exchange Commission.
Under that method, the current yield quotation is based on a seven-day period
and computed as follows: the net change in the Accumulation Unit Value during
the period is divided by the Accumulation Unit Value at the beginning of the
period ("base period return") and the result is divided by 7 and multiplied by
365 and the current yield figure carried to the nearest one-hundredth of one
percent. Realized capital gains or losses and unrealized appreciation or
depreciation of the Account's portfolio are not included in the calculation.
The Kemper Money Market Subaccount's effective yield is determined by taking the
base period return (computed as described above) and calculating the effect of
assumed compounding. The formula for the effective yield is: (base period return
+1) 365/7 - 1.
In computing yield, the Separate Account follows certain standard accounting
practices specified by Securities and Exchange Commission rules. These practices
are not necessarily consistent with the accounting practices that the Separate
Account uses in the preparation of its annual and semi-annual financial
statements.
A Subaccount's performance quotations are based upon historical earnings and are
not necessarily representative of future performance. The Subaccount's units are
sold at Accumulation Unit value. Performance figures and Accumulation Unit value
will fluctuate. Factors affecting a Subaccount's performance include general
market conditions, operating expenses and investment management. Units of a
Subaccount are redeemable at Accumulation Unit value, which may be more or less
than original cost. The performance figures include the deduction of all
expenses and fees, including a prorated portion of the Records Maintenance
Charge. Redemptions within the first six years after purchase may be subject to
a Withdrawal Charge that ranges from 6% the first year to 0% after six years;
however, the aggregate Withdrawal Charge will not exceed 7.25% of aggregate
Purchase Payments under the Contract. Yield, effective yield and total return do
not reflect the effect of the Withdrawal Charge or premium taxes that may be
imposed upon the redemption of units. Average annual total return reflects the
effect of the applicable Withdrawal Charge (but not premium tax) that may be
imposed at the end of the period in question.
Performance of the Subaccounts will vary from time to time, and these results
are not necessarily representative of future results. The total return
performance of each Subaccount is calculated for a specified period of time by
assuming an initial Purchase Payment of $10,000 fully allocated to each Separate
Account and the deduction of all expenses and fees, including a prorated portion
of the $36 annual Records Maintenance Charge. No withdrawals are assumed. The
percentage increases are determined by subtracting the initial Purchase Payment
from the ending value and dividing the remainder by the beginning value.
Comparative information for certain Subaccounts with respect to the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index, the Consumer Price
Index, the CDA Certificate of Deposit Index, the Lehman Brothers Government and
Corporate Bond Index, the Salomon Brothers High Grade Corporate Bond Index and
the Merrill Lynch Government/Corporate Master Index is also included.
Comparative information may be shown for the Kemper International Subaccount
with respect to the CDA Mutual Fund International Index and the Morgan Stanley
Capital International Europe Australia Far East Index. The Kemper Total Return
and Equity Subaccounts, the Lexington Natural Resources and Emerging Markets
Subaccounts and the Janus Subaccounts are compared to, and the International
Subaccount may be compared to, the Dow Jones Industrial Average and the Standard
& Poor's 500 Stock Index because these indices are generally considered
representative of the U. S. stock market in general. The Consumer Price Index is
generally considered to be a measure of inflation and thus the performance of
the Subaccounts is compared to that index. The Kemper High Yield, Government
Securities Subaccounts and the Janus
B-2
<PAGE> 36
Short-Term Bond Subaccounts are compared to the Lehman Brothers Government and
Corporate Bond Index, the Salomon Brothers High Grade Corporate Bond Index and
the Merrill Lynch Government/Corporate Master Index because such indices are
generally considered to represent the performance of intermediate and long term
bonds during various market cycles. The Kemper Money Market Subaccount is also
compared to the CDA Certificate of Deposit Index because certificates of deposit
represent an alternative current income producing product. The Kemper
International Subaccount may be compared to the CDA Mutual Fund--International
Index because the index is a weighted performance average of other mutual funds
that invest primarily in securities of foreign issuers. The International
Subaccount also may be compared to the Morgan Stanley Capital International
Europe Australia Far East Index because the index is an unmanaged index that is
considered to be generally representative of major non-United States stock
markets. The Janus Growth, Janus Aggressive Growth, Janus Worldwide Growth,
Janus Balanced, Janus Short-Term Bond, Lexington Natural Resources and Lexington
Emerging Markets Subaccounts may also be compared to the Standard & Poor's
Midcap Index, the Lehman Brothers Government/Corporate 1-3 Year Bond Index, the
Lehman Brothers Long Government/Corporate Bond Index, the Russell 2000 Index,
and the NASDAQ composite. In addition, the Janus Worldwide Growth and Lexington
Emerging Markets Subaccounts' performance may also be compared to the Morgan
Stanley International World Index. Please note the differences and similarities
between the investments which a Subaccount may purchase and the investments
measured by the indexes which are described below. In particular, it should be
noted that certificates of deposit may offer fixed or variable yields and
principal is guaranteed and may be insured. The units of the Subaccounts are not
insured. Also, the value of the Subaccounts will fluctuate.
B-3
<PAGE> 37
TABLES OF HISTORICAL HYPOTHETICAL PERFORMANCE INFORMATION
The following tables reflect historical hypothetical performance information
based on the performance of the underlying Funds from the inception date of each
Fund. Neither the Contracts nor the Separate Account existed during these
periods but the performance information reflects the investment performance of
the underlying Funds for the periods shown and the fees and charges under the
Contracts. Actual performance of the underlying Funds might have been altered by
the additional investments under the Contracts. In addition, the past
performance of the Funds is no indication of their future performance.
<TABLE>
<CAPTION>
VALUES OF INITIAL
$10,000 INVESTMENT
--AS OF DECEMBER 31,
COMPARED TO
1995 ---------------------------------------
---------------------- Dow Jones Standard Consumer
Ending Percentage Industrial & Poor's Price EAFE
TOTAL RETURN TABLE Value Increase Average(2) 500(3) Index(4) (12)
- ------------------------------------------------------------- --------- ---------- --------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
KEMPER EQUITY SUBACCOUNT(1)
Life of Fund(5)............................................
Ten years..................................................
Five years.................................................
One year...................................................
KEMPER TOTAL RETURN SUBACCOUNT(1)
Life of Fund(6)............................................
Ten years..................................................
Five years.................................................
One year...................................................
KEMPER INTERNATIONAL SUBACCOUNT
Life of Fund(13)...........................................
One year...................................................
KEMPER SMALL CAP SUBACCOUNT
Life of Fund(14)...........................................
JANUS GROWTH SUBACCOUNT
Life of Fund(15)...........................................
One year...................................................
JANUS AGGRESSIVE GROWTH SUBACCOUNT
Life of Fund(15)...........................................
One year...................................................
JANUS WORLDWIDE GROWTH SUBACCOUNT
Life of Fund(15)...........................................
One year...................................................
JANUS BALANCED SUBACCOUNT
Life of Fund(15)...........................................
One year...................................................
LEXINGTON NATURAL RESOURCES SUBACCOUNT
Life of Fund(16)...........................................
One year...................................................
LEXINGTON EMERGING MARKETS SUBACCOUNT
Life of Fund(17)...........................................
One year...................................................
</TABLE>
B-4
<PAGE> 38
<TABLE>
<CAPTION>
VALUES OF INITIAL COMPARED TO
$10,000 --------------------------------------------------------------
INVESTMENT IN Salomon
SUBACCOUNTS--AS OF Bros. Lehman Merrill
DECEMBER 31, 1994 High Grade Bros. Lynch
----------------------- Consumer CDA Cert. Corp. Govt./Corp. Govt./Corp.
TOTAL RETURN Ending Percentage Price of Deposit Bond Bond Master
TABLE Value Increase Index(4) Index(5) Index(8) Index(9) Index(10)
--------- ---------- -------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
KEMPER MONEY MARKET
SUBACCOUNT(1)
Life of Fund(6).....................
Ten years...........................
Five years..........................
One year............................
KEMPER HIGH YIELD SUBACCOUNT(1)
Life of Fund(6).....................
Ten years...........................
Five years..........................
One year............................
KEMPER GOVERNMENT
SECURITIES
SUBACCOUNT
Life of Fund(11)....................
Five years..........................
One year............................
JANUS SHORT-TERM BOND SUBACCOUNT
Life of Fund(15)....................
One year............................
</TABLE>
<TABLE>
<CAPTION>
COMPARED TO
----------------------------------------
Average Annual Standard
Total Return Dow Jones & Poor's Consumer
AVERAGE ANNUAL TOTAL (based on $1,000 Industrial 500 Stock Price EAFE
RETURN TABLE investment) Average(2) Index(3) Index(4) (12)
- ------------------------------------------------------------- -------------------- ---------- --------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
KEMPER EQUITY SUBACCOUNT(1)
Life of Fund(5)............................................
Ten years..................................................
Five years.................................................
One year...................................................
KEMPER TOTAL RETURN SUBACCOUNT(1)
Life of Fund(6)............................................
Ten years..................................................
Five years.................................................
One year...................................................
KEMPER INTERNATIONAL SUBACCOUNT
Life of Fund(13)...........................................
One year...................................................
</TABLE>
B-5
<PAGE> 39
<TABLE>
<CAPTION>
COMPARED TO
------------------------------------------------------------
LEHMAN
AVERAGE ANNUAL SALOMON BROS. BROS. MERRILL LYNCH
TOTAL RETURN CONSUMER HIGH GRADE GOVT./CORP. GOVT./CORP.
AVERAGE ANNUAL TOTAL (BASED ON $1,000 PRICE CORP. BOND BOND MASTER
RETURN TABLE INVESTMENT) INDEX(4) INDEX(8) INDEX(9) INDEX(10)
- ---------------------------------- ---------------------------- -------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
KEMPER HIGH YIELD SUBACCOUNT(1)
Life of Fund(5).................
Ten years.......................
Five years......................
One year........................
KEMPER GOVERNMENT SECURITIES
SUBACCOUNT
Life of Fund(11)................
Five years......................
One year........................
KEMPER SMALL CAP SUBACCOUNT
Life of Fund(14)................
JANUS GROWTH SUBACCOUNT
Life of Fund(15)................
One year........................
JANUS AGGRESSIVE GROWTH SUBACCOUNT
Life of Fund(15)................
One year........................
JANUS WORLDWIDE GROWTH SUBACCOUNT
Life of Fund(15)................
One year........................
JANUS BALANCED SUBACCOUNT
Life of Fund(15)................
One year........................
JANUS SHORT-TERM BOND
Life of Fund(15)................
One year........................
LEXINGTON NATURAL RESOURCES
SUBACCOUNT
Life of Fund(16)................
One year........................
LEXINGTON EMERGING MARKETS
SUBACCOUNT
Life of Fund(17)................
One year........................
YIELD INFORMATION
KEMPER HIGH YIELD SUBACCOUNT
30 day period ended .....
KEMPER GOVERNMENT SECURITIES
SUBACCOUNT
30 day period ended .....
KEMPER MONEY MARKET SUBACCOUNT
7 day period ended ......
JANUS SHORT-TERM BOND SUBACCOUNT
30 day period ended .....
</TABLE>
(1) On November 3, 1989, the KILICO Money Market, High Yield, Total Return and
Equity Separate Accounts were restructured into four subaccounts of KILICO
Variable Annuity Separate Account which invests in corresponding portfolios of
the Kemper Investors Fund. The performance reflects the experience of the
predecessor KILICO Separate Accounts where appropriate.
(2) The Dow Jones Industrial Average is an unmanaged unweighted average of
thirty blue chip industrial corporations listed on the New York Stock Exchange.
Assumes reinvestment of dividends.
(3) The Standard & Poor's 500 Stock Index is an unmanaged weighted average of
500 stocks, over 95% of which are listed on the New York Stock Exchange. Assumes
reinvestment of dividends.
B-6
<PAGE> 40
(4) The Consumer Price Index, published by the U.S. Bureau of Labor Statistics,
is a statistical measure of change, over time, in the prices of goods and
services in major expenditure groups.
(5) From December 9, 1983.
(6) From March 5, 1982 to .
(7) The CDA Certificate of Deposit Index is provided by CDA Investment
Technologies, Inc., Silver Spring, Maryland, and is based upon a statistical
sampling of the yield of 30-day certificates of deposit of major commercial
banks. Yield is based upon a monthly compounding of interest.
(8) The Salomon Brothers High Grade Corporate Bond Index is on a total return
basis with all dividends reinvested and is comprised of high grade long-term
industrial and utility bonds rated in the top two rating categories.
(9) The Lehman Brothers Government/Corporate Bond Index is on a total return
basis and is comprised of all publicly issued, non-convertible, domestic debt of
the U.S. Government or any agency thereof, quasi-Federal corporation, or
corporate debt guaranteed by the U.S. Government and all publicly issued,
fixed-rate, non-convertible, domestic debt of the three major corporate
classifications: industrial, utility, and financial. Only notes and bonds with a
minimum outstanding principal amount of $1,000,000 and a minimum of one year are
included. Bonds included must have a rating of at least Baa by Moody's Investors
Service, BBB by Standard & Poor's Corporation or in the case of bank bonds not
rated by either Moody's or Standard & Poor's, BBB by Fitch Investors Service.
(10) The Merrill Lynch Government/Corporate Master Index is based upon the total
return with all dividends reinvested of 4,000 corporate and 300 government bonds
issued with an intermediate average maturity and an average quality rating of Aa
(Moody's Investors Service, Inc.) /AA (Standard & Poor's Corporation).
(11) From September 3, 1987.
(12) EAFE is the Morgan Stanley Capital International Europe, Australia, Far
East index. This index is an unmanaged index that is considered to be generally
representative of major non-United States stock markets.
(13) From January 6, 1992.
(14) From May 2, 1994.
(15) From September 13, 1993.
(16) From August 1, 1989.
(17) From January 3, 1994.
TAX-DEFERRED ACCUMULATION
<TABLE>
<CAPTION>
TAX-DEFERRED NON-QUALIFIED CONVENTIONAL
RETIREMENT ANNUITY ANNUITY SAVINGS PLAN
BEFORE-TAX CONTRIBUTIONS AFTER-TAX CONTRIBUTIONS
AND TAX-DEFERRED EARNINGS. AND TAX-DEFERRED EARNINGS.
-------------------------- --------------------------
TAXABLE TAXABLE AFTER-TAX
LUMP LUMP CONTRIBUTIONS
NO SUM NO SUM AND TAXABLE
WITHDRAWALS WITHDRAWAL WITHDRAWALS WITHDRAWAL EARNINGS
--------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
10 Years................ $ 33,898 $ 22,732 $ 23,283 $ 20,746 $ 22,137
20 Years................ 100,018 66,967 68,698 56,258 60,535
30 Years................ 228,992 151,140 157,284 119,479 127,136
</TABLE>
This chart compares the accumulation of monthly contributions into a
Tax-Deferred Retirement Annuity through a payroll reduction program, a
Non-qualified Annuity and a Conventional Savings Plan. Before-tax contributions
to the Tax-Deferred Retirement Annuity are $200 per month and the entire amount
of a taxable lump sum withdrawal will be subject to income tax. After-tax
contributions to the Non-qualified Annuity and the Conventional Savings Plan are
$138 per month. Only the gain in the Non-qualified Annuity will be subject to
income tax in a taxable lump sum withdrawal. The chart assumes a 31% tax bracket
and an 8% annual return. Tax rates are subject to change as is the tax-deferred
treatment of the Contracts. Tax-deferred retirement accumulations, as well as
the income on non-qualified annuities, are taxed as ordinary income upon
withdrawal. A 10% tax penalty may apply to early withdrawals. See "Federal
Income Taxes" in the prospectus. For the Tax-Deferred Retirement Annuity and the
Non-Qualified Annuity the figures include a deduction for all applicable
Contract charges. No implication is intended by the use of these assumptions
that the return shown is guaranteed in any way or that the return shown
represents an average or expected rate of return over the period of the
Contracts. [IMPORTANT--THIS IS NOT AN ILLUSTRATION OF YIELD OR RETURN]
Unlike savings plans, contributions to tax-deferred retirement annuities and
non-qualified annuities provide tax-deferred treatment on earnings. In addition,
contributions to tax-deferred retirement annuities are not subject to current
tax in the year of contribution. When monies are received from a tax-deferred
retirement annuity or non-qualified annuity (and you have many different options
on how you receive your funds), they are subject to income tax. At the time of
receipt, if the person receiving the monies is retired, not working or has
additional tax exemptions, these monies may be taxed at a lesser rate.
B-7
<PAGE> 41
STATE REGULATION
Zurich Life is subject to the laws of Illinois governing insurance companies and
to regulation by the Illinois Department of Insurance. An annual statement in a
prescribed form is filed with the Illinois Department of Insurance each year.
Zurich Life's books and accounts are subject to review by the Department of
Insurance at all times, and a full examination of its operations is conducted
periodically. Such regulation does not, however, involve any supervision of
management or investment practices or policies. In addition, Zurich Life is
subject to regulation under the insurance laws of other jurisdictions in which
it may operate.
EXPERTS
The financial statements of Zurich Life have been included in the Statement of
Additional Information in reliance upon the reports of Coopers and Lybrand,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
FINANCIAL STATEMENTS
This Statement of Additional Information contains financial statements for
Zurich Life which should be considered only as bearing on the ability of Zurich
Life to meet its obligations under the Contracts. No financial statements for
the Separate Account have been included herein. As of the date of this Statement
of Additional Information the Separate Account has not yet commenced operations,
has no assets or liabilities and received no income nor incurred any expense.
B-8
<PAGE> 42
FINANCIAL STATEMENTS TO BE
FILED BY AMENDMENT
B-9
<PAGE> 43
APPENDIX B
STATE PREMIUM TAX CHART
<TABLE>
<CAPTION>
Rate of Tax
---------------------------
Qualified Non-Qualified
State Plans Plans
----- ------ ------
<S> <C> <C>
California...................................................... .50% 2.35%*
District of Columbia............................................ 2.25% 2.25%*
Kansas.......................................................... -- 2.00%*
Kentucky........................................................ 2.00%* 2.00%*
Maine........................................................... -- 2.00%
Mississippi..................................................... -- 1.00%
Nevada.......................................................... -- 3.50%*
Pennsylvania.................................................... -- 2.00%
South Dakota.................................................... -- 1.25%
West Virginia................................................... 1.00% 1.00%
Wyoming......................................................... -- 1.00%
</TABLE>
* Taxes become due when annuity benefits commence, rather than when the
premiums are collected. At the time of annuitization, the premium tax
payable will be charged against the Contract Value.
B-10
<PAGE> 44
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Financial Statements included in Part B of the Registration Statement:
(To be filed by Amendment)
Zurich Life Insurance Company of America
Independent Auditors' Report
Zurich Life Insurance Company of America and Subsidiaries
Consolidated Balance Sheet as of December 31, 1995 and 1994
Zurich Life Insurance Company of America and Subsidiaries
Consolidated Statement of Operations for the Years Ended December
31, 1995, 1994 and 1993
Zurich Life Insurance Company of America and Subsidiaries
Consolidated Statement of Stockholder's Equity for the Years Ended
December 31, 1995, 1994 and 1993
Zurich Life Insurance Company of America and Subsidiaries
Consolidated Statement of Cash Flows for the Years Ended December
31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
(B) EXHIBITS:
<TABLE>
<C> <S>
1. A copy of resolution of the Board of Directors of Zurich Life Insurance Company of
America.
2. Not Applicable.
3.1 Form of Distribution Agreement between Investors Brokerage Services, Inc. and
Zurich Life Insurance Company of America.
3.2 Form of Selling Group Agreement of Investors Brokerage Services, Inc.
4. Form of Variable Annuity Contract.
5. Form of application.
6. Zurich Life Insurance Company of America articles of incorporation and by-laws.
7. Inapplicable.
8.1 Form of Fund Participation Agreement among Zurich Life Insurance Company of
America, Lexington Natural Resources Trust and Lexington Management Corporation.
8.2 Form of Fund Participation Agreement among Zurich Life Insurance Company of
America, Lexington Emerging Markets Fund and Lexington Management Corporation.
8.3 Form of Fund Participation Agreement among Zurich Life Insurance Company of
America, Janus Aspen Series and Janus Capital Corporation.
*9. Opinion and Consent of Counsel.
11. Inapplicable.
12. Inapplicable.
13. Schedules for Computation of Performance Information.
14. Organizational Chart.
15. Inapplicable.
</TABLE>
- ---------------
* To be filed by amendment.
C-1
<PAGE> 45
ITEM 25. DIRECTORS AND OFFICERS OF ZURICH LIFE INSURANCE COMPANY OF AMERICA
The directors and principal officers of Zurich Life are listed below
together with their current positions. The address of each officer and
director is 1400 American Way, Schaumburg, Illinois 60173.
<TABLE>
<CAPTION>
NAME OFFICE WITH ZURICH LIFE
---- ------------------------------------------------------
<S> <C>
James E. Cassavoy.................... President and Director
Paul E. Black........................ Vice President and Director
Peter P. Rill........................ Vice President, Corporate Secretary, General Counsel
and Director
Loren J. Alter....................... Director
William H. Bolinder.................. Director
David A. Bowers...................... Director
Rolf F. Huppi........................ Director
Stuart L. Olin....................... Director
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE INSURANCE
COMPANY OR REGISTRANT
See Exhibit 14 for organizational charts of persons controlled or
under common control with Zurich Life Insurance Company of America.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not applicable because as of the date of this Initial Registration, no
contracts have been sold.
ITEM 28. INDEMNIFICATION
To the extent permitted by law of the State of Illinois and subject to
all applicable requirements thereof, Sections 9 through 9.9 of the By-Laws
of Zurich Life Insurance Company of America ("Zurich Life") provide for the
indemnification of any person against all expenses (including attorneys
fees), judgments, fines, amounts paid in settlement and other costs
actually and reasonably incurred by him in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative in which he is a party or is threatened to
be made a party by reason of his being or having been a director, officer,
employee or agent of Zurich Life, or serving or having served, at the
request of Zurich Life, as a director, officer, employee, agent, partner,
trustee, underwriter or attorney-in-fact of another corporation,
partnership, joint venture, trust, employee benefit plan, Lloyds',
association or other enterprise, if he acted in good faith and in a manner
he reasonably believed to be in and not opposed to the best interests of
Zurich Life, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
be determinative that he did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of Zurich
Life, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. No
indemnification shall be made in respect of any claim issue or matter by or
in the right of Zurich Life if he shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the company,
unless and only to the extent that the court in which such action or suit
was brought or other court of competent jurisdiction shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, he is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, employees
or agents of Zurich Life pursuant to the foregoing provisions, or
otherwise, Zurich Life has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in that Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by Zurich Life of expenses incurred or paid by a director,
officer, employee of agent of Zurich Life in the successful defense of any
action, suit or proceeding) is asserted by such director, officer, employee
or agent of Zurich Life in connection with variable annuity contracts,
Zurich Life will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by Zurich Life is
against public policy as expressed in that Act and will be governed by the
final adjudication of such issue.
C-2
<PAGE> 46
ITEM 29.(A) PRINCIPAL UNDERWRITER
Investors Brokerage Services, Inc., a wholly owned subsidiary of
Kemper Investors Life Insurance Company, acts as principal underwriter for
Zurich Life Variable Annuity Separate Account, FKLA Variable Separate
Account, KILICO Variable Annuity Separate Account, KILICO Variable Separate
Account and Kemper Investors Life Insurance Company Variable Annuity
Account C.
ITEM 29.(B) INFORMATION REGARDING PRINCIPAL UNDERWRITER, INVESTORS BROKERAGE
SERVICES, INC.
The address of each officer is 1 Kemper Drive, Long Grove, IL 60049.
<TABLE>
<CAPTION>
POSITION AND OFFICES
NAME WITH UNDERWRITER
---------------------------------------------------- ----------------------------------------
<S> <C>
John B. Scott....................................... Chairman and Director
Otis R. Heldman..................................... President and Director
Debra P. Rezabek.................................... Secretary and Director
Jerome J. Cwiok..................................... Director
Eliane L. Frye...................................... Director
Michael A. Kelly.................................... Vice President
Robert A. Daniel.................................... Vice President and Treasurer
David F. Dierenfeldt................................ Assistant Secretary
David R. Kickert.................................... Assistant Secretary
Frank J. Julian..................................... Assistant Secretary
</TABLE>
ITEM 29.(C)
Inapplicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are maintained by Zurich Life Insurance Company of
America at 1400 American Way, Schaumburg, Illinois 60173 and at 1 Kemper
Drive, Long Grove, Illinois 60049.
ITEM 31. MANAGEMENT SERVICES
Inapplicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to ensure that
the audited financial statements in the registration statement are never
more than sixteen (16) months old for so long as payment under the variable
annuity contracts may be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that
an applicant can check to request a Statement of Additional Information,
(2) a postcard or similar written communication affixed to or included in
the Prospectus that the applicant can remove to send for a Statement of
Additional Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under
this Form promptly upon written or oral request.
C-3
<PAGE> 47
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Zurich Life Variable Annuity Separate Account, has caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Village of Schaumburg and State of Illinois on
the 18th day of December, 1995.
ZURICH LIFE VARIABLE ANNUITY
SEPARATE ACCOUNT
(Registrant)
By: Zurich Life Insurance Company of
America
By: /s/ JAMES E. CASSAVOY
--------------------------------------
James E. Cassavoy, President
ZURICH LIFE INSURANCE COMPANY OF
AMERICA
(Depositor)
By: /s/ JAMES E. CASSAVOY
--------------------------------------
James E. Cassavoy, President
As required by the Securities Act of 1933, this Registration Statement has been
signed below by the following directors and principal officers of Zurich Life
Insurance Company of America in the capacities indicated on the 18th day of
December, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ------------------------------------------------
<S> <C>
/s/ JAMES E. CASSAVOY President and Director (Principal Executive
- --------------------------------------------- Officer)
James E. Cassavoy
/s/ PAUL E. BLACK Vice President and Director (Principal Financial
- --------------------------------------------- Officer and Principal Accounting Officer)
Paul E. Black
/s/ PETER P. RILL Vice President, Corporate Secretary, General
- --------------------------------------------- Counsel and Director
Peter P. Rill
/s/ LOREN J. ALTER Director
- ---------------------------------------------
Loren J. Alter
/s/ DAVID A. BOWERS Director
- ---------------------------------------------
David A. Bowers
</TABLE>
C-4
<PAGE> 48
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER TITLE NUMBER*
- ------ ------------------------------------------------------------------------------- ----------
<S> <C> <C>
1. A copy of resolution of the Board of Directors of Zurich Life Insurance Company
of America.....................................................................
3.1 Form of Distribution Agreement between Investors Brokerage Services, Inc. and
Zurich Life Insurance Company of America.......................................
3.2 Form of Selling Group Agreement of Investors Brokerage Services, Inc. .........
4. Form of Variable Annuity Contract..............................................
5. Form of Application............................................................
6. Zurich Life Insurance Company of America Articles of Incorporation and
By-Laws........................................................................
8.1 Form of Fund Participation Agreement among Zurich Life Insurance Company of
America, Lexington Natural Resources Trust and Lexington Management
Corporation....................................................................
8.2 Form of Fund Participation Agreement among Zurich Life Insurance Company of
America, Lexington Emerging Markets Fund and Lexington Management
Corporation....................................................................
8.3 Form of Fund Participation Agreement among Zurich Life Insurance Company of
America, Janus Aspen Series and Janus Capital Corporation......................
13. Schedules for Computation of Performance Information...........................
14. Organizational Chart...........................................................
- ------
</TABLE>
* In manually signed original only.
<PAGE> 1
EXHIBIT 1
CERTIFICATE REGARDING
BOARD OF DIRECTORS RESOLUTIONS
ZURICH LIFE INSURANCE COMPANY OF AMERICA
- ------------------------------------------------------------------------------
The undersigned, Peter P. Rill, Corporate Secretary of Zurich Life Insurance
Company of America, (referred to as the "Company") hereby states:
1. That in accordance with the laws of the state of incorporation of Zurich
Life Insurance Company of America, the Board of Directors may pass
resolutions at regular or special meetings of the Board of Directors.
2. That in accordance with the laws of the state of incorporation of Zurich
Life Insurance Company of America, the Board of Directors may take action
without a meeting if a consent, in writing, setting for the action so taken,
shall be signed by all Directors.
3. That in December, 1995, the Board of Directors, did unanimously in writing,
take, consent, and duly approve and adopt the attached Resolutions as set
out therein.
4. That the attached represents a true and accurate copy of said Resolutions
of the Board of Directors of Zurich Life Insurance Company of America.
/s/ Peter P. Rill
- ----------------------------------------
Signature of Peter P. Rill
Corporate Secretary
Zurich Life Insurance Company of America
Subscribed to and sworn before me this 15th day
of December, 1995.
/s/ Linda V. Woods
- --------------------------------------
Signature of Notary Public
My commission expires on: 7/16/97
[Notary Seal]
<PAGE> 2
THE ZURICH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT
WHEREAS, Illinois Insurance Code, Section 245.21 provides that a
domestic life insurance company may authorize the establishment of one or more
separate accounts; and
WHEREAS, competitive conditions in the marketing of annuities make it
both desirable and in the best interest of the Corporation for the Corporation
to be able to offer separate investment facilities; and
WHEREAS, the Board of Directors of this Corporation desires to
authorize and empower its officers to establish and maintain a separate
account, so that the Corporation may exercise each and every power and right
permitted to it by Section 245.21, and other sections relating thereto, of the
Illinois Insurance Code;
NOW, THEREFORE, BE IT RESOLVED, THAT:
1. A separate account designated the Zurich Life Variable Annuity
Separate Account ("Separate Account") of the Corporation is
established and empowered to:
a. Provide for the sale of variable annuity contracts
issued and administered by the Corporation which
provide for the allocation of amounts paid to or held
by the Corporation under such contracts to the
Separate Account.
b. Register, to the extent required, under the
Investment Company Act of 1940, or file a
notification of claim of exemption from such
registration, and make applications for such
exemptions or orders under the provisions of such Act
as may appear to be necessary or desirable;
c. Register, to the extent required, the contracts or
units of interest thereunder under the Securities
Act of 1933;
d. Provide for custodial or depository arrangements for
assets allocated to the Separate Account including
self custodianship or safekeeping arrangements by the
Corporation;
e. Select an independent public accountant to audit the
books and records of the Separate Account;
f. Select outside legal counsel to provide advice on
legal matters;
<PAGE> 3
g. Invest or reinvest the assets of the Separate Account
in securities issued by one or more investment
companies registered under the Investment Company Act
of 1940 or directly in other appropriate securities;
h. Divide the Separate Account into subaccounts with
each subaccount investing in shares of designated
classes of designated investment companies or other
appropriate securities; and
i. Perform such additional functions and take such
additional action as may be necessary or desirable to
carry out the foregoing and the intent and purposes
thereof;
AND FURTHER RESOLVED, THAT:
2. The income, gains and losses, whether or not realized, from
assets allocated to the Separate Account shall, in accordance
with the variable annuity contracts, be credited to or charged
against the Separate Account without regard to other income,
gains or losses of the Corporation; the Separate Account will
be administered and accounted for as part of the general
business of the Corporation but the assets of the Separate
Account are segregated and not chargeable with liabilities
arising out of any other business which the Corporation may
conduct and are not part of the general assets of the
Corporation for purposes of the bankruptcy laws; and the
Separate Account shall at all times be created, operated and
maintained in compliance with all applicable federal and state
laws governing insurance company separate accounts;
3. The proper officers are authorized, as they deem appropriate
from time to time, to divide, modify, consolidate or eliminate
any subaccounts of the Separate Account, change the
designations of the Separate Account to another designation,
designate further subaccounts, deregister the Separate Account
under the Investment Company Act of 1940 and deregister the
policies or units of interest therein under the Securities Act
of 1933;
4. The proper officers are, and each of them hereby is,
authorized to invest cash from the Corporation's general
account in the Separate Account or in any division thereof as
may be deemed necessary or appropriate to facilitate the
commencement of the Separate Account's operations or to meet
any minimum capital requirements under the Investment Company
Act of 1940 and to transfer cash or securities from time to
time between the Corporation's general account and the
Separate Account as
<PAGE> 4
deemed necessary or appropriate so long as such transfers are
not prohibited by law and are consistent with the terms of the
variable annuity contracts issued by the Corporation providing
for allocations to the Separate Account;
5. The fiscal year of the Separate Account shall end on the 31st
day of December of each year;
6. The investment policies of the Separate Account shall be to
invest or reinvest the assets of the Separate Account in
securities issued by investment companies registered under the
Investment Company Act of 1940 as the proper officers of the
Corporation may designate pursuant to the provisions of the
variable annuity contracts issued by the Corporation providing
for allocations to the Separate Account, and the proper
officers of the Corporation are authorized and directed to
prepare and execute any necessary agreements to enable the
Separate Account to carry out this investment policy;
notwithstanding the above investment policies, the proper
officers are authorized to reorganize the Separate Account to
operate as a management separate account as that term is used
under the Investment Company Act;
7. The proper officers of the Corporation are authorized to
prepare, execute and file all periodic reports required under
the Investment Company Act of 1940 and the Securities Exchange
Act of 1934 in connection with the Separate Account and the
variable annuity contracts;
8. The proper officers of the Corporation are authorized on
behalf of the Separate Account to register variable annuity
contracts, or units of interest thereunder, under the
Securities Act of 1933 and may register the Separate Account
as a unit investment trust under the Investment Company Act of
1940 and, in connection therewith, the proper officers of the
Corporation are, and each of them hereby is, authorized to
prepare, execute and file with the Securities and Exchange
Commission (1) registration statements under the Securities
Act of 1933 and the Investment Company Act of 1940, including
prospectuses, amendments, supplements, exhibits and other
documents relating thereto, (2) applications and amendments
thereto for exemptions from or orders under the Investment
Company Act of 1940 and (3) requests from the Securities and
Exchange Commission for no action and interpretive letters in
such form and at such times as the proper officer executing
the same may deem necessary or appropriate;
<PAGE> 5
9. The proper officers of the Corporation are, and each of them
is, authorized to effect all such registrations, filings and
qualifications under blue sky or other applicable securities
laws and regulations, insurance securities laws and insurance
laws and regulations of such states and other jurisdictions as
they may deem necessary or appropriate, with respect to the
Corporation and any variable annuity contracts; such
authorization to include registration, filing and
qualification of the Corporation and of said contracts, as
well as registration, filing and qualification of officers,
employees and agents of the Corporation as broker, dealers,
agents, salesmen, or otherwise; and such authorization also to
include authorization to prepare, execute, acknowledge and
file all such applications, applications for exemptions,
appointments, certificates, affidavits, covenants, consents to
service of process and other instruments and to take all such
action as the proper officer executing the same or taking such
action may deem necessary or desirable;
10. The Corporation's General Counsel is hereby appointed as agent
for service for, and is duly authorized to exercise all powers
given to such agent in connection with (1) any registration
statement or amendment thereto under the Securities Act of
1933 or the Investment Company Act, (2) any Investment Company
Act exemptive application or order, (3) any no action letter
or interpretive letter request under the Securities Act or
Investment Company Act or (4) any similar matter pertaining to
state blue sky or insurance regulation;
11. The signature of any director or officer required by law to be
affixed to any document referred to in this resolution may be
affixed by said director or officer personally, or by an
attorney-in-fact duly constituted in writing by said director
or officer to sign his name thereto;
12. The proper officers of the Corporation are, and each of them
hereby is, authorized to establish procedures under which the
Corporation will provide for voting rights for owners of the
variable annuity contracts with respect to securities owned by
the Separate Account;
13. The proper officers of the Corporation are, and each of them
hereby is, authorized to execute such agreement or agreements
as deemed necessary and appropriate with (1) Investors
Brokerage Services, Inc., or another qualified entity, under
which Investors Brokerage Services, Inc., or such other
qualified entity, will be appointed principal underwriter and
distributor of the variable annuity contracts and (2) with one
or more qualified banks or other qualified entities to provide
<PAGE> 6
administrative and/or custodial services in connection with
the establishment and maintenance of the Separate Account and
the design, issuance and administration of the policies;
14. The proper officers of the Corporation are, and each of them
hereby is, authorized, in the name and on behalf of the
Corporation, to execute and deliver such corporate documents
and certificates and to take such further action as they deem
necessary or desirable, including, but not limited to, the
payment of applicable fees, in order to effectuate the
purposes of any of the foregoing matters.
<PAGE> 1
EXHIBIT 3.1
FORM OF DISTRIBUTION AGREEMENT
BETWEEN
ZURICH LIFE INSURANCE COMPANY OF AMERICA
AND
INVESTORS BROKERAGE SERVICES, INC.
THIS AGREEMENT is made on this _______ day of ___________, 19__ between ZURICH
LIFE INSURANCE COMPANY OF AMERICA ("ZURICH") on its own behalf and on behalf of
the Zurich Life Variable Annuity Separate Account (the "Account") and INVESTORS
BROKERAGE SERVICES, INC. ("IBS"). In consideration of the mutual covenants
contained in this Agreement, the parties agree as follows:
1. ZURICH appoints IBS to promote the sale of variable annuity contracts
("Contracts") issued by ZURICH and the Account. IBS will promote such
Contracts in those states in which ZURICH has variable contract authority and
in which the Contracts are eligible for sale under applicable state law.
ZURICH agrees to inform IBS of the status of such matters in each of these
states from time to time.
2. The solicitation of Contracts shall be made by persons who are registered
representatives of National Association of Securities Dealers, Inc. ("NASD")
member broker-dealers who have a Selling Group Agreement with IBS, which
agreement shall encompass the promotion of the sale of the Contracts; provided
that, no such registered representative shall be allowed to participate in the
solicitation of the Contracts unless such person has been appointed to solicit
variable contracts by ZURICH in any state in which such solicitation may occur.
3. All books and records maintained by ZURICH in connection with the sale of
Contracts will be maintained and preserved by ZURICH in conformity with the
requirements of Rule 17a-3 and 17a-4 under the Securities Exchange Act of 1934,
to the extent that such requirements are applicable to the Contracts.
4. ZURICH assumes full responsibility for the activities of all persons
engaged directly or indirectly in the promotion of the solicitation of the
Contracts, including all sales representatives and associated persons as
defined in the Securities Exchange Act of 1934. IBS shall, in the course of
contracting with NASD member broker-dealers with which it has agreements,
require that such broker-dealers be responsible for the acts of their
registered representatives and associated persons.
5. Compensation to broker-dealers for the sale of Contracts shall be paid by
ZURICH through IBS. Any obligation by IBS to pay such compensation will occur
only following receipt of such amounts by IBS from ZURICH.
-1-
<PAGE> 2
6. IBS, when requested by ZURICH, shall suspend its efforts to effectuate
sales of the Contracts at any time ZURICH shall request.
7. ZURICH shall bear the expenses of printing and distributing registration
statements and prospectuses relating to the public sale of Contracts pursuant
to this Agreement. ZURICH agrees to bear the expenses of qualification of the
Contracts for sale and of continuing the qualification in the various states.
ZURICH shall bear the expenses of any sales literature used by IBS or furnished
by IBS to dealers in connection with offering the Contracts and the expenses of
advertising in connection with such offerings, except for customized pieces the
cost of which shall be mutually agreed to by ZURICH and IBS.
8. IBS agrees that it will not use any sales material as defined under the
rules of the NASD or by the statutes or regulations of any state in which the
Contracts may be solicited, unless such material has received prior written
approval by ZURICH.
9. IBS, ZURICH and the Account shall each comply with all applicable
provisions of the Investment Company Act of 1940, Securities Act of 1933 and of
all Federal and state securities and insurance laws, rules and regulations
governing the issuance and sale of the Contracts.
10. ZURICH agrees to indemnify IBS against any and all claims, liabilities
and expenses including but not limited to reasonable attorneys fees which IBS
may incur under the Investment Company Act of 1940, Securities Act of 1933 and
all Federal and state securities and insurance laws, rules and regulations
governing the issuance and sale of the Contracts, common law or otherwise,
arising out of or based upon any alleged untrue statements of material fact
contained in any registration statement or prospectus of the Account, or any
alleged omission to state a material fact therein, the omission of which makes
any statement contained therein misleading or of any alleged act or omission in
connection with the offering, sale or distribution of the Contracts by any
registered representatives or associated persons of a NASD member broker-dealer
which has an agreement with IBS. IBS agrees to indemnify ZURICH and the
Account against any and all claims, demands, liabilities and expenses,
including but not limited to reasonable attorneys fees, which ZURICH or the
Account may incur, arising out of or based upon any act of IBS or of any
registered representative of an NASD member investment dealer which has an
agreement with IBS and is acting in accordance with ZURICH's instructions.
ZURICH acknowledges that IBS may similarly attempt to hold such an NASD member
broker-dealer responsible for the acts of registered representatives and
associated persons; and to the extent ZURICH is obligated to indemnify IBS
under this Agreement, IBS agrees to assign its rights against such
broker-dealers to ZURICH.
11. ZURICH agrees to supply IBS with such information as may be reasonably
required by IBS including the "net accumulation unit value" computed as of the
time prescribed by and in compliance with all pertinent requirements of the
NASD and the Securities and Exchange Commission.
-2-
<PAGE> 3
12. This Agreement shall be effective _____________, 1995. This Agreement is
subject to termination by either party upon thirty (30) days' prior written
notice to the other party. This Agreement may not be assigned by either party
without the written consent of the other party. This Agreement shall be
interpreted according to the laws of the State of Illinois.
IN WITNESS WHEREOF, this Agreement has been signed by the parties on the date
first above written.
ZURICH LIFE INSURANCE COMPANY OF AMERICA
ATTEST: BY: ___________________________________
TITLE:
________________________________
TITLE:
INVESTORS BROKERAGE SERVICES, INC.
ATTEST: BY: ___________________________________
TITLE: PRESIDENT
________________________________
TITLE:
-3-
<PAGE> 1
EXHIBIT 3.2
INVESTORS BROKERAGE SERVICES, INC.
FORM OF SELLING GROUP AGREEMENT
THIS AGREEMENT ("Agreement") is made by and between Investors Brokerage
Services, Inc. ("IBS") and Broker-Dealer.
RECITALS:
A. IBS, pursuant to the provisions of Distribution Agreements
("Distribution Agreements") between it and Zurich Life Insurance Company of
America ("Zurich"), acts as the principal underwriter of certain variable
annuity contracts and variable life insurance policies (the "variable products"
or "Contracts") issued by Zurich. Such Contracts, and the investment options
available thereunder, are identified in Schedule 1 to this Agreement at the
time that this Agreement is executed, and such other Contracts that may be
added to Schedule 1 from time to time in accordance with Section 1.5 of this
Agreement. IBS desires that Broker-Dealer distribute such variable products in
those states or jurisdictions in which Broker-Dealer, IBS, Zurich and the
Contracts are appropriately licensed, qualified or approved, and Broker-Dealer
desires to sell such Contracts, through its agents in such states or
jurisdictions, on the terms and conditions set forth hereinafter. Zurich has
authorized IBS to enter into separate written agreements with broker-dealers
pursuant to which such broker-dealers would be authorized to participate in the
distribution of the Contracts and would agree to use their best efforts to
solicit applications for the Contracts to the general public.
B. Zurich, pursuant to General Agent Agreements, has authorized
Broker-Dealer or an affiliate to act as a general agent ("General Agent") for
the solicitation of applications for the Contracts and to engage in the
distribution activities contemplated by this Agreement and such General Agent
Agreements.
C. The parties to this Agreement desire that Broker-Dealer be authorized
to solicit applications for the sale of the Contracts to the general public
subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises and covenants hereinafter set forth, the parties agree as follows:
Section 1: Representations and Warranties; Authorizations
1.1 Broker-Dealer agrees to use its best efforts on behalf of IBS while
performing the functions set forth herein. Broker-Dealer shall be free to
exercise its own judgment as to whom to solicit and the time, place, and manner
of solicitation. Broker-Dealer shall pay all expenses incurred by it hereunder
and shall comply with all applicable federal and state laws, ordinances and
regulations relating thereto.
<PAGE> 2
1.2 Broker-Dealer is authorized, except as hereinafter specifically
provided, to cause its representatives ("Registered Representatives") to sell
such Contracts in the states and jurisdictions in which Broker-Dealer and its
Registered Representatives are appropriately licensed, registered or otherwise
qualified and in which the Contracts are duly authorized. Broker-Dealer shall
not have the authority nor shall it grant such authority to any of its
Registered Representatives, on behalf of IBS and Zurich: to make, alter or
discharge any Contract or other contract entered into pursuant to a Contract;
to waive any Contract's forfeiture provisions; to extend the time of paying any
premiums; or to receive any monies or premiums from applicants for or
purchasers of the Contracts (except for the sole purpose of forwarding monies
or premiums to Zurich). IBS, in its sole discretion, may reject any
application for a Contract submitted to it by the Broker-Dealer or any of its
Registered Representatives.
1.3 IBS, subject to the terms and conditions contained herein, hereby
authorizes Broker-Dealer as an independent contractor, on a non- exclusive
basis, to make sales of such Contracts for which IBS acts as distributor.
Broker-Dealer agrees to direct the sales activities of its Registered
Representatives and to enforce written supervisory procedures to assure strict
compliance with applicable rules and regulations under the Securities Exchange
Act of 1934 ("1934 Act"), the National Association of Securities Dealers, Inc.
("NASD") rules, and other applicable federal and state statutes and
regulations.
1.4 Nothing herein contained shall constitute Broker-Dealer or any of its
Registered Representatives as employees of IBS or Zurich in connection with the
solicitation of applications for the Contracts.
1.5 Schedule 1 to this Agreement may be amended by IBS at its sole
discretion from time to time to include other Contracts (or investment options)
distributed by IBS pursuant to the Distribution Agreements or other
distribution agreements with Zurich, or to delete Contracts (or investment
options) from the Schedule. The provisions of this Agreement shall be equally
applicable to each Contract listed on Schedule 1 unless the context otherwise
requires.
Section 2: Representations and Warranties:
Registration, Licensing and Compliance
2.1 Broker-Dealer represents, warrants and covenants that:
a. It is and will remain at all times during the terms of this
Agreement a member in good standing of the NASD and a
broker-dealer duly registered with the Securities and Exchange
Commission ("SEC") under the 1934 Act and licensed as a
broker-dealer in each state or other jurisdiction in which
Broker-Dealer intends to perform its functions and fulfill its
obligations under this Agreement.
2
<PAGE> 3
b. It is in compliance, and during the term of this Agreement, will
remain in compliance, with all applicable federal and state
security laws and regulations and the requirements of the NASD
and any applicable securities exchanges of which it is a member.
c. It is a corporation organized, existing and in good standing
under applicable state law and is qualified to do business as a
corporation in those states or jurisdictions where it is or will
be doing business.
d. Only Registered Representatives of Broker-Dealer who are agents
of Zurich, and who are licensed, registered, or otherwise
qualified to offer and sell the variable products, may do so
under this Agreement and as permitted under the applicable
insurance laws of such state or jurisdiction under which the
Registered Representatives are authorized to perform their
activities.
e. It is in compliance with all applicable insurance laws and
regulations, including without limitation state insurance laws
and regulations imposing insurance licensing requirements.
f. It shall carry out its sales and administrative obligations
under this Agreement in continued compliance with federal and
state laws and regulations, including those governing securities
and/or insurance-related activities or transactions, as
applicable.
g. It has blanket bond insurance coverage. Broker-Dealer has the
affirmative duty to maintain its blanket bond insurance
coverage. Broker-Dealer will notify IBS immediately in the
event a determination is made to cancel, terminate or
substantially modify its blanket bond insurance coverage.
2.2 Broker-Dealer will be responsible for the training, supervision and
control of its Registered Representatives engaged in the offer and sale of the
Contracts and will supervise strict compliance with applicable federal and
state securities laws and NASD rules. IBS shall have no responsibility in
connection with such program of supervision and compliance.
2.3 If General Agent is an Affiliate of the same person as Broker-Dealer
as reflected in
Recital B. to this Agreement, then by engaging in the distribution activities
contemplated by this Agreement, Broker-Dealer represents and warrants that:
a. Broker-Dealer
(i) has obtained a letter from the Staff of the SEC
advising Broker-Dealer that the Staff will not recommend
enforcement action if General Agent is not registered as a
broker-dealer with the SEC; or
3
<PAGE> 4
(ii) It is relying upon a no-action letter issued by the Staff
of the SEC at the request of a broker-dealer that, also,
was a licensed insurance agent engaged in distribution
activities similar to those contemplated by this Agreement,
and where the Staff did not recommend enforcement action if
the insurance agent was not registered as a broker-dealer
with the SEC; and
(iii) It is complying and will continue to comply with the
conditions set forth in such letters at all times while
this Agreement is in effect; or
b. that at the time that this Agreement becomes effective and
during the term of this Agreement:
(i) General Agent is wholly-owned by Broker-Dealer or is
wholly-owned by one or more associated persons of
Broker-Dealer;
(ii) General Agent and its personnel will be "associated
persons" of Broker-Dealer within the meaning of Section
3(a)(18) of the 1934 Act;
(iii) General Agent will engage in the offer or sale of the
Contracts only through persons who are also Registered
Representatives of Broker-Dealer;
(iv) General Agent will not receive or handle customer funds or
securities;
(v) Broker-Dealer will be responsible for the training,
supervision and control of its Registered Representatives
engaged in the offer or sale of the Contracts on behalf of
General Agent, as required under the 1934 Act, the NASD
rules and other applicable federal and state statutes and
regulations, and will also be responsible for the
supervision and control of any of its associated persons
who are owners, directors, or executive officers of General
Agent;
(vi) Broker-Dealer will, in the offer and sale of the Contracts
by it or General Agent, comply with all applicable
requirements of the 1934 Act and the NASD, including the
requirement to maintain and preserve books and records
under Section 17(a) of the 1934 Act and the rules
thereunder; and
(vii) Commissions and fees relating to the Contracts will be
reflected in the quarterly FOCUS reports and the fee
assessment reports filed by Broker-Dealer with the NASD.
4
<PAGE> 5
2.4 Broker-Dealer shall notify IBS and Zurich immediately in writing if
Broker-Dealer fails to comply with any of the applicable provisions set forth
above.
2.5 IBS represents and warrants that all Contracts are legally issued,
registered and filed as required by applicable federal securities and state
insurance laws.
Section 3: Sales Materials
3.1 Broker-Dealer shall submit to IBS, for written approval in advance of
use, all promotional, sales, and advertising material and signs involving the
use of IBS's and Zurich's name and/or pertaining to the sale of any Contract.
3.2 IBS will file such materials or will cause such materials to be filed
with the SEC, the NASD, and with any state securities regulatory authorities,
as appropriate.
Section 4: Compensation
4.1 Except as otherwise stated herein, Broker-Dealer shall be entitled to
commissions with respect to sales of such Contracts it shall make in accordance
with the Schedule of Commissions under the General Agent Agreement with Zurich.
Commissions are payable by Zurich through IBS or as otherwise permitted by law
or regulations. Any obligation of IBS to pay such commissions will occur only
following receipt of such amounts by IBS from Zurich.
Section 5: Term and Exclusivity of Agreement
5.1 No relationship of principal and agent or partnership or joint
venture between the parties hereto is intended to be established and neither
party shall hold itself out as the agent, partner or joint venturer of or with
the other party in any respect whatsoever. Except for this Agreement and the
General Agent Agreement, no other legal relationship is intended between the
parties.
5.2 This Agreement may be terminated at any time by either party upon
thirty (30) days written notice to the other, and may be terminated immediately
by IBS for cause. For purposes of this Section, "cause" shall mean failure to
return money to clients where appropriate, failure to account for any money
received from or on behalf of IBS, any fraud, misrepresentation or dishonesty
in any relationship with IBS, its affiliates, or any past, present or proposed
client, violation of any federal or state law or regulation, or violation of
any of the terms of this Agreement.
5.3 Notice of termination shall be deemed to be given on the day mailed
or delivered by hand to an officer of either party. If mailed to IBS, such
notice shall be addressed to the principal office of IBS, and if mailed to the
Broker-Dealer, shall be addressed to the last known address as shown on the
records of IBS.
5
<PAGE> 6
Section 6: Complaints and Investigations
6.1 Broker-Dealer shall cooperate fully in any securities or insurance
regulatory investigation or proceeding or judicial proceeding with respect to
IBS and Zurich, and/or Broker-Dealer and its Registered Representatives or any
Affiliate, to the extent that such investigation or proceeding is in connection
with the Contracts marketed under this Agreement.
Section 7: Assignment
7.1 Broker-Dealer may not assign this Agreement without the prior written
approval of IBS.
7.2 This Agreement is exclusively for and shall inure to the benefit of
the parties hereto, their respective heirs, legal representatives, successors
and assigns and shall not be deemed to create any rights for the benefit of
third parities.
Section 8: Confidentiality
8.1 Each party will keep confidential information it may acquire as a
result of this Agreement regarding IBS, its affiliates' and subsidiaries'
affairs, including any customer list or other propriety information that it may
acquire in the performance of this Agreement, and shall not use such customer
list or information without the prior written consent of the other party which
requirement shall survive the termination of this Agreement.
Section 9: Modification of Agreement
9.1 This Agreement supersedes all prior agreements, either oral or
written, between the parties relating to the Contracts and, except for any
amendment of Schedule 1 pursuant to the terms of Section 1.5 hereof or of the
Schedule of Commissions pursuant to the terms of Section 4 hereof, may not be
modified in any way unless by written agreement signed by all of the parties.
Section 10: Indemnification
10.1 Broker-Dealer shall be responsible and liable for any damages arising
out of the acts or omissions of Broker-Dealer, its Registered Representatives,
and/or its employees and does hereby agree to indemnify and hold IBS harmless
against any loss or expense arising out of any of its Registered
Representatives, any Affiliate and/or employees failure to carry out fully and
without negligence the duties and responsibilities assigned to it herein.
10.2 If any action or proceeding shall be brought against Broker-Dealer
relating to a Contract sold pursuant to this Agreement, Broker- Dealer shall
give prompt written notice to IBS.
6
<PAGE> 7
10.3 In the event of any dispute with a Contract owner, IBS shall have the
right to take such action as IBS may in its sole discretion deem necessary to
promptly effect a mitigation of damages or limitation of losses without
obtaining the prior consent of Broker-Dealer and without waiving or electing to
relinquish any rights or remedies IBS may have against Broker-Dealer.
10.4 IBS shall have the right to settle with any Contract owner engaged in
a dispute with IBS or Broker-Dealer without the prior consent of Broker-Dealer
and without waiving or electing to relinquish any rights or remedies IBS may
have against Broker-Dealer.
10.5 The indemnification provisions of this Agreement shall remain
operative and in full force and effect, regardless of the termination of this
Agreement and shall survive any such termination.
10.6 Without limiting the foregoing indemnities, IBS and Broker-Dealer
each agree to indemnify and hold harmless the other against any breach of
representation, warranty or covenant herein by the indemnifying party.
Section 11: Right, Remedies, etc. are Cumulative
11.1 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws. Failure of either party to insist upon strict compliance with
any of the conditions of this Agreement shall not be construed as a waiver of
any of the conditions, but the same shall remain in full force and effect. No
waiver of any of the provisions of this Agreement shall be deemed, or shall
constitute a waiver of any other provisions, whether or not similar, nor shall
any waiver constitute a continuing waiver.
Section 12: Notices
12.1 All notices hereunder are to be made in writing and shall be either
hand delivered or transmitted by registered or certified United States mail
with return receipt requested to the principal office of the party and shall be
effective upon delivery, except as otherwise provided in Section 5.2 of this
Agreement.
Section 13: Interpretation, Jurisdiction, etc.
13.1 This Agreement constitutes the whole agreement between the parties
hereto with respect to the subject matter hereof, and supersedes all prior oral
or written understandings, agreements or negotiations between the parties with
respect to the subject matter hereof. No prior writings by or between the
parties hereto with respect to the subject matter hereof shall be used by
either party in connection with the interpretation of any provisions of this
Agreement.
7
<PAGE> 8
13.2 This Agreement is made in the State of Illinois, and all questions
concerning its validity, construction or otherwise shall be determined under
the laws of Illinois without giving effect to principles of conflict of laws.
Section 14: Headings
14.1 The headings in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
Section 15: Counterparts
15.1 This Agreement may be executed in two or more counterparts, each of
which taken together shall constitute one and the same instrument.
Section 16: Severability
16.1 This is a severable Agreement. In the event that any provisions of
this Agreement would require a party to take action prohibited by applicable
federal or state law or prohibit a party from taking action required by
applicable federal or state law, then it is the intention of the parties hereto
that such provisions shall be enforced to the extent permitted under the law,
and, in any event, that all other provisions of this Agreement shall remain
valid and duly enforceable as if the provision at issue had never been a part
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year indicated below.
INVESTORS BROKERAGE __________________________________
SERVICES, INC. ("Broker-Dealer")
BY_______________________________ BY________________________________
Print Name_______________________ Print Name________________________
Title____________________________ Title_____________________________
Date_____________________________ Date______________________________
8
<PAGE> 1
EXHIBIT 4
ZURICH LIFE INSURANCE COMPANY OF AMERICA
An Illinois stock corporation
Home Office: 1400 American Lane, Schaumburg, IL 60173
RIGHT TO CANCEL - FREE LOOK PROVISION - At any time within 10 days of
receiving this contract you may return it to us or to the agent through whom it
was purchased. Immediately upon our receipt, this contract will be voided as if
it had never been in force. All purchase payments allocated to the General
Account plus the Separate Account contract value computed at the end of the
valuation period following our receipt of this contract will then be refunded
within ten days.
We agree to pay an annuity to the annuitant provided the annuitant is living
and this contract is in force on the annuity date.
We further agree to pay the death benefit prior to the annuity date upon the
death of the owner or the annuitant when a death benefit is payable. Payment
will be made upon our receipt of due proof of death and the return of this
contract.
This contract is issued in consideration of the attached application and
payment of the initial purchase payment. The provisions on this cover and the
pages that follow are part of this contract.
Signed for Zurich Life Insurance Company of America at its home office in
Schaumburg, Illinois.
/s/ Christie J. Lickfield /s/ James E. Cassavoy
Secretary President
FIXED AND VARIABLE DEFERRED ANNUITY
NON-PARTICIPATING
ALL BENEFITS, PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED UPON
THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT. REFER TO THE VARIABLE ACCOUNT AND ANNUITY
PERIOD PROVISIONS FOR A DETERMINATION OF ANY VARIABLE BENEFITS.
This is a legal contract between the owner and Zurich Life Insurance Company of
America.
READ YOUR CONTRACT CAREFULLY
<PAGE> 2
Z-4700
<TABLE>
<CAPTION>
INDEX PAGE
<S> <C>
ANNUITY OPTION TABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . Follows Page 9
ANNUITY PERIOD PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-9
Election Of Annuity Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Transfers During The Annuity Period . . . . . . . . . . . . . . . . . . . . . . . 8
APPLICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . Follows Contract Schedule
CONTRACT SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Follows Index
DEATH BENEFIT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Amount Payable Upon Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Payment Of Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ENDORSEMENTS, if any . . . . . . . . . . . . . . . . . . . . . . Follow Annuity Option Tables
GENERAL ACCOUNT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
General Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
General Account Contract Value . . . . . . . . . . . . . . . . . . . . . . . . . . 3
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-2
The Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Incontestability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
LOAN PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Loan Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Loan Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
OWNERSHIP PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Owner of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Change of Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PURCHASE PAYMENT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Initial Purchase Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Purchase Payment Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
TRANSFER AND WITHDRAWAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6
Transfers During The Accumulation Period . . . . . . . . . . . . . . . . . . . . . 5
Withdrawals During The Accumulation Period . . . . . . . . . . . . . . . . . . . . 5
Withdrawal Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Transfer And Withdrawal Procedures . . . . . . . . . . . . . . . . . . . . . . . . 5-6
VARIABLE ACCOUNT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4
Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Liabilities Of Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . 3
Subaccounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Rights Reserved By The Company . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Accumulation Unit Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>
<PAGE> 3
CONTRACT SCHEDULE
DESCRIPTION OF PLAN: FIXED AND VARIABLE DEFERRED ANNUITY
THE OWNER(S), BENEFICIARY(IES) AND ANNUITY DATE ARE AS STATED IN THE
APPLICATION FOR THIS CONTRACT UNLESS SUBSEQUENTLY CHANGED IN ACCORDANCE WITH
THE CONTRACT PROVISIONS.
FIXED ACCUMULATION UNDER:
GENERAL ACCOUNT
VARIABLE ACCUMULATION UNDER:
KEMPER MONEY MARKET SUBACCOUNT
KEMPER TOTAL RETURN SUBACCOUNT
KEMPER HIGH YIELD SUBACCOUNT
KEMPER EQUITY SUBACCOUNT
KEMPER GOVERNMENT SECURITIES SUBACCOUNT
KEMPER INTERNATIONAL SUBACCOUNT
KEMPER SMALL CAP SUBACCOUNT
JANUS GROWTH SUBACCOUNT
JANUS AGGRESSIVE GROWTH SUBACCOUNT
JANUS WORLDWIDE GROWTH SUBACCOUNT
JANUS BALANCED SUBACCOUNT
JANUS SHORT-TERM BOND SUBACCOUNT
LEXINGTON NATURAL RESOURCES SUBACCOUNT
LEXINGTON EMERGING MARKETS SUBACCOUNT
CONTRACT NUMBER: KIL00-1000 ISSUE DATE: JUNE 1, 1993
ANNUITANT: JOHN DOE
SEX: MALE
ISSUE AGE: 35
1000a-6/93
<PAGE> 4
CONTRACT SCHEDULE
GENERAL ACCOUNT: INTEREST RATES STATED AS ANNUAL RATES
INITIAL GENERAL ACCOUNT INTEREST RATE 4.75%
THE GENERAL ACCOUNT INTEREST RATE IS GUARANTEED
THROUGH THE CONTRACT YEAR IN WHICH A PURCHASE
PAYMENT IS RECEIVED.
SUBSEQUENT GENERAL ACCOUNT GUARANTEE PERIOD -
ONE CONTRACT YEAR
MINIMUM GUARANTEED INTEREST RATE 3.00%
QUALIFIED OR NONQUALIFIED PLAN: NONQUALIFIED
INITIAL PURCHASE PAYMENT: $5,000.00
INITIAL ALLOCATION OF PURCHASE PAYMENT
FIXED ACCUMULATION UNDER:
GENERAL ACCOUNT 100.00%
1000b-3.0-12.0-6/93
<PAGE> 5
CONTRACT SCHEDULE
RECORDS MAINTENANCE CHARGE: $36.00 ANNUAL - PAYABLE QUARTERLY
WE WILL ASSESS AN ANNUAL RECORDS MAINTENANCE CHARGE OF $36, PAYABLE QUARTERLY,
AT THE END OF EACH CALENDAR QUARTER FOR EACH CALENDAR YEAR IN WHICH YOU
PARTICIPATE IN THE SEPARATE ACCOUNT. AN EQUAL PORTION OF THE CHARGE WILL BE
ASSESSED AGAINST EACH SUBACCOUNT IN WHICH THE CONTRACT IS PARTICIPATING. WE
WILL REDEEM THE NUMBER OF ACCUMULATION UNITS SUFFICIENT TO EQUAL THE PROPER
SHARE OF THE CHARGE FROM EACH SUBACCOUNT. IF THE CONTRACT IS NOT PARTICIPATING
IN THE SEPARATE ACCOUNT AT THE TIME THE CHARGE IS ASSESSED, WE WILL DEDUCT THE
CHARGE FROM THE GENERAL ACCOUNT. THIS CHARGE WILL NOT BE ASSESSED AFTER THE
ANNUITY DATE.
MORTALITY AND EXPENSE RISK AND ADMINISTRATIVE CHARGES: 1.3% ANNUALLY
THE CHARGES WILL BE ASSESSED DAILY ON THE SEPARATE ACCOUNT CONTRACT VALUE
<TABLE>
<CAPTION>
WITHDRAWAL CHARGE TABLE:
CONTRACT YEARS ELAPSED SINCE PURCHASE
PAYMENTS WERE RECEIVED BY THE COMPANY RATE
<S> <C>
FIRST 6.00%
SECOND 5.00%
THIRD 4.00%
FOURTH 3.00%
FIFTH 2.00%
SIXTH 1.00%
SEVENTH & LATER 0.00%
</TABLE>
UP TO 10% OF THE CONTRACT VALUE LESS ANY DEBT MAY BE WITHDRAWN AS A PARTIAL
FREE WITHDRAWAL EACH CONTRACT YEAR. CHARGES ARE APPLIED TO PURCHASE PAYMENTS
AND ALL RELATED ACCUMULATIONS FOR ANY WITHDRAWALS IN EXCESS OF THE 10% PARTIAL
FREE WITHDRAWAL. CHARGES START AT 6% IN THE CONTRACT YEAR IN WHICH THE PURCHASE
PAYMENT WAS RECEIVED AND REDUCE 1% EACH CONTRACT YEAR THEREAFTER.
1000c-6/93
<PAGE> 6
CONTRACT SCHEDULE
MINIMUM GENERAL ACCOUNT VALUES FOR GENERAL ACCOUNT ALLOCATIONS
GENERAL ACCOUNT GENERAL ACCOUNT
END OF CONTRACT VALUES TERMINATION VALUES
CONTRACT PER $1,000 OF PER $1,000 OF
YEAR PURCHASE PAYMENT* PURCHASE PAYMENT*
1 $1,047.50 $1,000.00
2 $1,078.93 $1,030.37
3 $1,111.29 $1,071.29
4 $1,144.63 $1,113.73
5 $1,178.97 $1,157.75
6 $1,214.34 $1,203.41
7 $1,250.77 $1,250.77
8 $1,288.29 $1,288.29
9 $1,326.94 $1,326.94
10 $1,366.75 $1,366.75
11 $1,407.75 $1,407.75
12 $1,449.98 $1,449.98
13 $1,493.48 $1,493.48
14 $1,538.29 $1,538.29
15 $1,584.44 $1,584.44
16 $1,631.97 $1,631.97
17 $1,680.93 $1,680.93
18 $1,731.36 $1,731.36
19 $1,783.30 $1,783.30
20 $1,836.80 $1,836.80
*VALUES ARE BASED ON THE INITIAL GENERAL ACCOUNT INTEREST RATE THROUGH THE END
OF THE INITIAL GUARANTEE PERIOD. THEREAFTER, VALUES ARE BASED ON THE MINIMUM
GUARANTEED INTEREST RATE OF 3.00%. VALUES SHOWN ASSUME ALLOCATION ON THE ISSUE
DATE AND NO SUBSEQUENT WITHDRAWALS, TRANSFERS, OR LOAN.
1000d-6/93
<PAGE> 7
DEFINITIONS
ACCUMULATION PERIOD - The period between the issue date and the annuity date.
ACCUMULATION UNIT - An accounting unit of measure used to calculate the value
of each subaccount.
AGE - The attained age of the annuitant.
ANNUITANT - The person named in the application during whose lifetime the
annuity is to be paid. Under a nonqualified plan when two people are named as
joint annuitants, the term "annuitant" means the joint annuitants or the
survivor. You may not change the person(s) named as the annuitant.
ANNUITY - A series of payments paid in accordance with this contract which
begins on the annuity date.
ANNUITY DATE - The date on which this contract matures and annuity payments
begin. The original annuity date is stated in the application. Unless otherwise
requested, the annuity date is the twentieth contract anniversary date. The
annuity date may be changed by the owner.
ANNUITY PERIOD - This is the period that starts on the annuity date.
ANNUITY UNIT - An accounting unit of measure used to calculate the amount of
variable annuity payments after the first annuity payment.
ANNUITY UNIT VALUE - The value of an annuity unit of a subaccount determined
for a valuation period according to the formula stated in this contract.
CONTRACT VALUE - The sum of the General Account Contract Value plus the
Separate Account Contract Value.
CONTRACT YEAR - A one year period of time starting on successive contract
anniversaries.
DEBT - The principal of any outstanding loan plus any loan interest due or
accrued.
FIXED ANNUITY - An annuity payment plan that does not vary as to dollar amount.
FUND - An investment company or separate series thereof, in which the
subaccounts of the Separate Account invest.
GENERAL ACCOUNT - Our assets other than those allocated to the Separate Account
or any other separate account. We guarantee a minimum rate of interest on
purchase payments allocated to the General Account.
GENERAL ACCOUNT CONTRACT VALUE - The General Account contract value is the
value of the General Account of this contract on any valuation date.
ISSUE DATE - The issue date is stated in the contract schedule. If the normal
issue date is the 29th, 30th or 31st of the month, the issue date will be the
28th day of that month.
MORTALITY AND EXPENSE RISK CHARGE - This is a charge deducted in the
calculation of the accumulation unit value and the annuity unit value. It is
for our assumption of mortality risks and expense guarantees.
NONQUALIFIED - This contract issued other than as a qualified plan.
OWNER - See "You, Your, Yours" below.
PURCHASE PAYMENTS - This is the dollar amount we receive in U.S. currency to
buy the benefits this contract provides.
QUALIFIED PLAN - This contract issued under a retirement plan which qualifies
for favorable income tax treatment under Section 401, 403, 408 or 457 of the
Internal Revenue Code as amended.
RECORDS MAINTENANCE CHARGE - This is a charge assessed against your contract as
specified in the Contract Schedule.
RECEIVED BY THE COMPANY - This means received by Zurich Life Insurance Company
of America at its home office in Schaumburg, Illinois.
SEPARATE ACCOUNT - A segregated asset account registered as a unit investment
trust with the Securities and Exchange Commission under the Investment Company
Act of 1940 known as the Zurich Life Variable Annuity Separate Account.
SEPARATE ACCOUNT CONTRACT VALUE - This is the sum of the subaccount values of
this contract on the valuation date.
SUBACCOUNTS - The Separate Account has several subaccounts. The available
subaccounts are stated in the contract schedule.
SUBACCOUNT VALUE - We will value each subaccount separately according to the
formula stated in this contract.
VALUATION DATE - Each business day that applicable law requires that we value
the assets of the Separate Account. Currently this is each day that the New
York Stock Exchange is open for trading.
VALUATION PERIOD - The period that starts at the close of a valuation date and
ends at the close of the next succeeding valuation date.
VARIABLE ANNUITY - An annuity payment plan which varies as to dollar amount
because of subaccount investment experience.
WE, OUR, US - Zurich Life Insurance Company of America, Schaumburg, Illinois.
YOU, YOUR, YOURS - The party(s) named as owner in the application unless later
changed as provided in this contract. The owner is the annuitant unless a
different owner is named in the application. Under a nonqualified plan when
more than one person is named as owner, the terms "you," "your," "yours," means
joint owners. The owner may be changed during the lifetime of the owner and the
annuitant. The owner, prior to the annuity date or any distribution of any
death benefit, has the exclusive right to exercise every option and right
conferred by this contract.
Z-4700 Page 1
<PAGE> 8
Z-4700 Page 2
GENERAL PROVISIONS
THE CONTRACT - This contract and the attached application constitute the entire
contract between the parties. All statements made in the application are deemed
representations and not warranties. No statement will void this contract or be
used as a defense of a claim unless it is contained in the application.
MODIFICATION OF CONTRACT - Only our president, secretary and assistant
secretaries have the power to approve a change or waive any provisions of this
contract. Any such modifications must be in writing. No agent or person other
than the officers named has the authority to change or waive the provisions of
this contract.
INCONTESTABILITY - We cannot contest this contract after it has been in force
for two years from the issue date.
CHANGE OF ANNUITY DATE - You may write to us prior to distribution of a death
benefit or the first annuity payment date and request a change of the annuity
date.
ASSIGNMENT - No assignment of this contract is binding unless we receive it in
writing. We assume no responsibility for the validity or sufficiency of any
assignment. Once filed, the rights of the owner, annuitant and beneficiary are
subject to the assignment. Any claim is subject to proof of interest of the
assignee.
DUE PROOF OF DEATH - We must receive written proof of death within sixty days
of the death of the owner or the annuitant when a death benefit is payable. The
proof may be a certified death certificate, the written statement of a
physician, or any other proof satisfactory to us.
RESERVES, CONTRACT VALUES AND DEATH BENEFITS - All reserves are equal to or
greater than those required by statute. Any available contract value and death
benefit are not less than the minimum benefits required by the statutes of the
state in which this contract is delivered.
NON-PARTICIPATING - This contract does not pay dividends. It will not share in
our surplus or earnings.
REPORTS - At least once each contract year we will send you a statement showing
purchase payments received, interest credited, investment experience; and
charges made since the last report, as well as any other information required
by statute.
PREMIUM TAXES - We will make a deduction for state premium taxes in certain
situations. On any contract subject to premium tax, as provided under
applicable law, the tax will be deducted from: a. the purchase payments when we
receive them; b. the contract value upon total withdrawal; or c. from the total
contract value applied to an annuity option at the time annuity payments start.
QUALIFIED PLANS - If this contract is issued under a qualified plan additional
provisions may apply. The rider or amendment to this contract used to qualify
it under the applicable section of the Internal Revenue Code will indicate the
extent of change in the provisions.
OWNERSHIP PROVISIONS
OWNER OF CONTRACT - The annuitant is the original owner unless otherwise
provided in the application.
Before the annuity date or any distribution of death benefit, you have the
right to cancel or amend this contract if we agree. You may exercise every
option and right conferred by this contract including the right of assignment.
The joint owners must agree to any change if more than one owner is named.
CHANGE OF OWNERSHIP - You may change the owner by written request at any time
while the annuitant is alive. You must furnish information sufficient to
clearly identify the new owner to us. The change is subject to any existing
assignment of this contract. When we record the effective date of the change,
it will be the date the notice was signed except for action taken by us prior
to receiving the request. Any change is subject to the payment of any proceeds.
We may require you to return this contract to us for endorsement of a change.
BENEFICIARY DESIGNATION AND CHANGE OF BENEFICIARY - The application for this
contract shows the original beneficiary. You may change the beneficiary if you
send us a written change form. Changes are subject to the following:
1. The change must by filed while the annuitant is alive and prior to the
annuity date;
2. This contract must be in force at the time you file a change;
3. Such change must not be prohibited by the terms of an existing assignment,
beneficiary designation or other restriction;
4. Such change will take effect when we receive it;
5. After we receive the change, it will take effect on the date the change form
was signed. However, action taken by us before the change form was received
will remain in effect; and
6. The request for change must provide information sufficient to identify the
new beneficiary.
We may require you to return this contract for endorsement of a change.
DEATH OF BENEFICIARY - The interest of a beneficiary who dies before the
distribution of the death benefit will pass to the other beneficiaries, if
any, share and share alike, unless otherwise provided in the beneficiary
designation. If no beneficiary survives or is named, the distribution will be
made to your estate when you die; or to the estate of the annuitant upon the
death of the annuitant if you are not also the annuitant. If a beneficiary dies
within ten days of the date of your death, the death benefit will be paid as if
you had survived the beneficiary. If a beneficiary dies within ten days of the
death of the annuitant, and you are not the annuitant, we will pay the death
benefit as if the annuitant survived the beneficiary. If you, the annuitant,
and the beneficiary die simultaneously, we will pay the death benefit as if
you had survived the annuitant and the beneficiary.
<PAGE> 9
PURCHASE PAYMENT PROVISIONS
INITIAL PURCHASE PAYMENT - The minimum initial purchase payment is $2,500 for a
nonqualified plan and $50 for a qualified plan.
PURCHASE PAYMENT LIMITATIONS - The minimum subsequent purchase payment is $500
for a nonqualified plan and $50 for a qualified plan. We will accept a
subsequent qualified plan purchase payment of less than $50 when annual
contributions from a payroll deduction or salary reduction plan equal or exceed
$600. The maximum purchase payment that may be made during a contract year
without our approval is $500,000 for a nonqualified plan; or the maximum
permitted by the Internal Revenue Code for a qualified plan. We will not accept
purchase payments more frequently than once every other week.
Initial purchase payments of less than $500 may be allocated to: 1. the General
Account; or 2. a subaccount; or 3. to the General Account and one subaccount.
Subsequent nonqualified purchase payments must first be applied to the General
Account or any subaccount whose value is less than $500. After each initial
account has been allocated at least $500, purchase payments may be allocated to
a new account.
Subsequent qualified plan contributions from a payroll deduction or salary
reduction program of $50 or more may be made to the General Account or to an
additional subaccount.
We will deduct any applicable state premium taxes from the purchase payments we
apply to the contract.
We reserve the right to waive or modify these limits.
PLACE OF PAYMENT - All purchase payments under this contract must be paid to us
at our home office or such other location as we may select. We will notify you
and any other interested parties in writing of such other locations. Purchase
payments received by an agent will begin earning interest after we receive it.
GENERAL ACCOUNT PROVISIONS
GENERAL ACCOUNT - The guaranteed benefits under this contract are provided
through the General Account.
GENERAL ACCOUNT CONTRACT VALUE - The General Account Contract Value includes 1.
your purchase payments allocated to the General Account; 2. amounts transferred
from a subaccount to the General Account at your request; and 3. the interest
credited to amounts so allocated or transferred. Transfers and withdrawals from
the General Account reduce the General Account Contract Value.
The initial General Account interest rate credited to the initial purchase
payment is in effect through the end of the guarantee period and is shown in
the contract schedule. At the beginning of each subsequent guarantee period
shown in the contract schedule, we will declare the General Account interest
rate applicable to the initial purchase payment for each such subsequent
guarantee period. We will declare the General Account interest rate with
respect to each subsequent purchase payment received. Any such purchase payment
we receive will be credited that rate through the end of the guarantee period
shown in the contract schedule. At the beginning of each subsequent guarantee
period, we will declare the General Account interest rate applicable to each
subsequent purchase payment for such guarantee period.
We reserve the right to declare the General Account current interest rate(s)
based upon: the issue date; the date we receive a purchase payment; or the date
of account transfer.
We calculate the interest credited to the General Account by compounding daily,
at daily interest rates, rates which would produce at the end of a contract
year a result identical to the one produced by applying an annual interest
rate.
The minimum guaranteed General Account interest rate is 3.00% per year.
VARIABLE ACCOUNT PROVISIONS
SEPARATE ACCOUNT - The variable benefits under this contract are provided
through the Zurich Life Variable Annuity Separate Account. This is called the
Separate Account. The Separate Account is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940. It is a separate investment account maintained by us into which a
portion of the company's assets have been allocated for this contract and may
be allocated for certain other contracts.
LIABILITIES OF SEPARATE ACCOUNT - The assets equal to the reserves and other
liabilities of the Separate Account will not be charged with liabilities
arising out of any other business we may conduct. We will value the assets of
the Separate Account on each valuation date.
SEPARATE ACCOUNT CONTRACT VALUE - On any valuation date the Separate Account
contract value is the sum of its subaccount values.
SUBACCOUNTS - The Separate Account consists of several subaccounts as shown in
the contract schedule. We may, from time to time, combine or remove subaccounts
in the Separate Account and establish additional subaccounts of the Separate
Account. In such event we may permit you to select other subaccounts under this
contract. However, the right to select any other subaccount is limited by the
terms and conditions we may impose on such transactions.
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FUNDS - Each subaccount of the Separate Account will buy shares of an
investment company or a separate series of an investment company offered
as an investment alternative under the contract. The funds are registered
under the Investment Company Act of 1940 as open-end diversified management
investment companies. Each series of the funds represents a separate
investment portfolio which corresponds to one of the subaccounts of the
Separate Account.
If we establish additional subaccounts each new subaccount will invest in a new
series of the existing funds or in shares of another investment company. We may
also substitute other investment companies.
RIGHTS RESERVED BY THE COMPANY - We reserve the right, subject to compliance
with the current law or as it may be changed in the future:
1. To operate the Separate Account in any form permitted under the Investment
Company Act of 1940 or in any other form permitted by law;
2. To take any action necessary to comply with or obtain and continue any
exemptions from the Investment Company Act of 1940 or to comply with any other
applicable law;
3. To transfer any assets in any subaccount to another subaccount or to one or
more separate accounts, or the General Account, or to add, combine or remove
subaccounts in the Separate Account;
4. To delete the shares of any of the portfolios of the fund or any other
open-end investment company and to substitute, for the fund shares held in any
subaccount, the shares of another portfolio of the fund or the shares of
another investment company or any other investment permitted by law; and
5. To change the way we assess charges, but not to increase the aggregate
amount above that currently charged to the Separate Account and the fund in
connection with the contracts.
When required by law, we will obtain your approval of such changes and the
approval of any regulatory authority.
ACCUMULATION UNIT VALUE - Each subaccount has an accumulation unit value. When
purchase payments or other amounts are allocated to a subaccount, a number of
units are purchased based on the accumulation unit value of the subaccount at
the end of the valuation period during which the allocation is made. When
amounts are transferred out of or deducted from a subaccount, units are
redeemed in a similar manner.
The accumulation unit value for each subsequent valuation period is the
investment experience factor for that period multiplied by the accumulation
unit value for the period immediately preceding. Each valuation period has a
single accumulation unit value that is applied to each day in the period. The
number of accumulation units will not change as a result of investment
experience.
INVESTMENT EXPERIENCE FACTOR - Each subaccount has its own investment
experience factor. The investment experience of the Separate Account is
calculated by applying the investment experience factor to the cash value in
each subaccount during a valuation period.
The investment experience factor of a subaccount for a valuation period is
determined by dividing 1. by 2. and subtracting 3. from the result, where:
1. is the net result of:
a. the net asset value per share of the investment held in the subaccount
determined at the end of the current valuation period; plus
b. the per share amount of any dividend or capital gain distributions made by
the investments held in the subaccount, if the "ex- dividend" date occurs
during the current valuation period; plus or minus
c. a charge or credit for any taxes reserved for the current valuation period
which we determine resulted from the investment operations of the subaccount;
2. is the net asset value per share of the investment held in the subaccount,
determined at the end of the last valuation period;
3. is the factor representing the mortality and expense risk charge stated in
the contract schedule for the number of days in the valuation period.
<PAGE> 11
TRANSFER AND WITHDRAWAL PROVISIONS
TRANSFERS DURING THE ACCUMULATION PERIOD - You may direct the following
transfers:
1. Once each fifteen days all or part of the Separate Account contract value
may be transferred to the General Account or to another subaccount. We will
allow the first transfer fifteen days after the issue date.
2. During the thirty days that follow a contract year anniversary or the thirty
day period that follows the date you receive an annual report, if later, all or
part of the General Account contract value, less debt, may be transferred to
one or more subaccounts.
Transfers will also be subject to the following conditions:
1. The minimum amount which may be transferred is $500 or, if smaller, the
remaining value in the General Account or a subaccount;
2. No partial transfer will be made if the remaining contract value of the
General Account or any subaccount will be less than $500 unless the
transfer will eliminate your interest in such account;
3. No transfer may be made within seven calendar days of the date on which the
first annuity payment is due;
4. You may request an additional transfer from the General Account to one or
more subaccounts during the thirty day period before the date on which the
first annuity payment is due. Such transfer must become effective no later
than the seventh calendar day before such due date;
5. When you request a transfer from the General Account Contract Value to a
subaccount, we will limit the amount that can be transferred to the amount
which exceeds debt and withdrawal charge, if any, applicable to the total
General Account Contract Value for the contract year during which the total
transfer is made.
We will transfer amounts bought by purchase payments and all related
accumulations received in a given contract year, in the chronological order we
received them.
Any transfer request must clearly specify: 1. the amount which is to be
transferred; and 2. the names of the accounts which are affected. We will only
honor a telephone transfer request if a properly executed telephone transfer
authorization is on file with us. Such request for a transfer must comply with
the conditions of the authorization.
We reserve the right at any time and without notice to any party, to terminate,
suspend, or modify these transfer rights.
WITHDRAWALS DURING THE ACCUMULATION PERIOD - During the accumulation period,
you may withdraw all or part of the contract value that remains after we
subtract any withdrawal charge, debt and applicable premium taxes. We must
receive a written request that indicates the amount of the withdrawal from the
General Account and each subaccount. You must return the contract to us if you
elect a total withdrawal.
Withdrawals are subject to the conditions that follow.
1. Each withdrawal must be at least $500 or the value that remains in the
General Account or a subaccount if smaller.
2. A minimum of $500 must remain in the account after you make a withdrawal
unless the account is eliminated by such withdrawal;
3. The maximum you may withdraw from any account is the value of the General
Account or a subaccount less the amount of any withdrawal charge. 4. Any
withdrawal amount you request will be increased by the withdrawal charge. 5.
We will limit a withdrawal from the General Account to an amount which
equals the General Account Contract Value less debt and interest on any such
loan to the end of the contract year.
WITHDRAWAL CHARGES - 1. All purchase payments in a given contract year and all
related accumulations are totaled by account and each total is used separately
in computing the withdrawal charge as stated in the Withdrawal Charge Table
shown in the contract schedule.
2. All amounts to be withdrawn and any applicable withdrawal charges will be
charged first against purchase payments and all related accumulations in
the chronological order we received such purchase payments by contract year.
3. Any amount withdrawn which is not subject to a withdrawal charge will be
considered a "partial free withdrawal."
4. In the event of a partial withdrawal, a "partial free withdrawal" is applied
against purchase payments and all related accumulations in the chronological
order we received such purchase payments by contract year even though
the purchase payments and related accumulations are no longer subject
to a withdrawal charge.
TRANSFER AND WITHDRAWAL PROCEDURES - Wewill withdraw or transfer from the
General Account as of the valuation date that follows the date we receive your
written or telephone transfer request. To process a withdrawal, the request
must contain all required information.
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We will redeem the necessary number of accumulation units to achieve the dollar
amount when the withdrawal or transfer is made from a subaccount. We will
reduce the number of accumulation units credited in each subaccount by the
number of accumulation units redeemed. The reduction in the number of
accumulation units is determined on the basis of the accumulation unit value at
the end of the valuation period when we receive the request, provided the
request contains all required information. We will pay the amount within seven
calendar days after the date we receive the request, except as provided below.
DEFERMENT OF WITHDRAWAL OR TRANSFER - If the withdrawal or transfer is to be
made from a subaccount, we may suspend the right of withdrawal or transfer or
delay payment more than seven calendar days: 1. during any period when the New
York Exchange is closed other than customary weekend and holiday closings; 2.
when trading in the markets normally utilized is restricted, or an emergency
exists as determined by the Securities and Exchange Commission, so that
disposal of investments or determination of the accumulation unit value is not
practical; or 3. for such other periods as the Securities and Exchange
Commission by order may permit for protection of owners.
We may defer the payment of a withdrawal or transfer from the General Account,
for the period permitted by law. This can never be more than six months after
you send us a written request. During the period of deferral, we will continue
to credit interest, at the then current interest rate(s), to the General
Account Contract Value.
LOAN PROVISIONS
LOANS - You may request a loan any time before the annuity date. You must
assign this contract to us as security for a loan.
The maximum loan available is the General Account Contract Value minus: 1. any
withdrawal charge that applies to the total General Account Contract Value in
the year in which you make the loan; and 2. interest on the loan paid to the
end of the contract year in which you make the loan.
We may defer granting a loan for six months from the date we receive the
written loan request.
LOAN INTEREST - The loan interest is 5.50% per year compounded daily at the
daily equivalent of a 5.50% annual rate. Interest is due at the end of each
contract year. If you do not pay interest when it is due, we will add it to the
loan and it will bear interest at the same rate as the loan. We will charge
interest on a daily basis.
LOAN PAYMENT - You may repay a debt in full or in part at any time prior to the
annuity date.
If the debt equals or exceeds the General Account Contract Value, less any
withdrawal charge that applies to the total withdrawal of the General Account,
your interest in the General Account will terminate. The termination occurs
thirty-one days after we mail notice of termination to your last known address
and that of any assignee of record.
We will apply any repayment of debt: first to reduce that part of the debt that
can be attributed to interest; and second to that part of the debt that can be
attributed to purchase payments.
EFFECT OF LOANS ON INTEREST RATES - While there is a loan, the portion of the
General Account Contract Value that equals the debt will earn interest at 3.00%
per year, compounded daily at the daily equivalent of a 3.00% annual rate,
instead of the current interest rate.
DEATH BENEFIT PROVISIONS
AMOUNT PAYABLE UPON DEATH - We compute the death benefit at the end of the
valuation period following: our receipt of due proof of death; and the return
of this contract.
If death occurs prior to attaining age 75, we will pay the greater of: a. the
contract value less debt; or b. the total amount of purchase payments, less
debt and the aggregate dollar amount of all previous withdrawals. We will pay
the contract value less debt if death occurs at age 75 or later.
PAYMENT OF DEATH BENEFITS - We will pay a death benefit before the annuity date
if: the owner who is also the annuitant dies; or either the annuitant or the
owner who is not the annuitant dies.
The death benefit will be paid upon the death of a joint owner. If joint
annuitants are named and they are not the owners of this contract, we will pay
the death benefit upon the death of the surviving joint annuitant.
We will pay the death benefit to the beneficiary when we receive due proof of
death. We will then have no further obligation under this contract.
When you die, we will pay the death benefit in a lump sum. This sum may be
deferred for up to five years from the date of your death. During this time it
will continue to accrue interest.
Instead of a lump sum payment the beneficiary may elect to have the death
benefit distributed as stated in Option 1 for a period not to exceed the
beneficiary's life expectancy; or Options 2, or 3 based upon the life
expectancy of the beneficiary as prescribed by federal regulations. The
beneficiary must make this choice within sixty days of the time we receive due
proof of death.
If the beneficiary is not a natural person, the beneficiary must elect that the
entire death benefit be distributed within five years of your death.
Distribution of the death benefit must start within one year after your death.
It may start later if prescribed by federal regulations.
<PAGE> 13
If the primary beneficiary is the surviving spouse when you die, the surviving
spouse may elect to be the successor owner of this contract. There will be no
requirement to start a distribution of death benefits.
ANNUITY PERIOD PROVISIONS
ELECTION OF ANNUITY OPTION - We must receive an election of an annuity option
in writing. You may make an election before the annuity date providing the
annuitant is alive. The annuitant may make an election on the annuity date
unless you have restricted the right to make such an election. The beneficiary
may make an election when we pay the death benefit.
An election will be revoked by: 1. a subsequent change of beneficiary; or 2. an
assignment of this contract unless the assignment provides otherwise.
Subject to the terms of the death benefit provision, the beneficiary may elect
to have the death benefit remain with us under one of the annuity options.
If an annuity option is not elected, an annuity will be paid under Option 3
for a guaranteed period of ten years and for as long thereafter as the
annuitant is alive.
If the total contract value is applied under one of the annuity options, this
contract must be surrendered to us.
An option can not be changed after the first annuity payment is made.
If, on the seventh calendar day before the first annuity payment due date, all
the contract value is allocated to the General Account, the annuity will be
paid as a fixed annuity. If all of the contract value on such date is allocated
to the Separate Account, the annuity will be paid as a variable annuity. If the
contract value on such date is allocated to both the General Account and a
subaccount, then the annuity will be paid as a combination of a fixed and
variable annuity. A fixed and variable annuity payment will reflect the
investment performance of the subaccounts in accordance with the allocation of
the contract values existing on such date. Allocations will not be changed
thereafter, except as provided in the Transfers During The Annuity Period
provision of this contract.
Payments for all options are derived from the applicable tables. Current
annuity rates will be used if they produce greater payments than those quoted
in the contract. The age in the tables is the age of the payee on the last
birthday before the first payment is due.
The option selected must result in a payment that is at least equal to our
minimum payment, according to our rules, at the time the annuity option is
chosen. If at any time the payments are less than the minimum payment, we have
the right to increase the period between payments to quarterly, semi-annual or
annual so that the payment is at least equal to the minimum payment or to make
payment in one lump sum.
OPTION 1
FIXED INSTALLMENT ANNUITY - We will make monthly payments for a fixed number of
installments. Payments must be made for at least 5 years, but not more than 30
years.
OPTION 2
LIFE ANNUITY - We will make monthly payments while the payee is alive.
OPTION 3
LIFE ANNUITY WITH INSTALLMENTS GUARANTEED - We will make monthly payments for a
guaranteed period and thereafter while the payee is alive. The guaranteed
period must be selected at the time the annuity option is chosen. The
guaranteed periods available are 5, 10, 15 and 20 years.
OPTION 4
JOINT AND SURVIVOR ANNUITY - We will pay the full monthly income while both
payees are alive. Upon the death of either payee, we will continue to pay the
surviving payee a percentage of the original monthly payment. The percentage
payable to the surviving payee must be selected at the time the annuity option
is chosen. The percentages available are 50%, 66 2/3%, 75%, and 100%.
OTHER OPTIONS
We may make other annuity options available. Payments are also available on a
quarterly, semi-annual or annual basis.
FIXED ANNUITY - The General Account Contract Value on the first day preceding
the date on which the first annuity payment is due, is first reduced by any
debt and premium taxes that apply. The value that remains will be used to
determine the fixed annuity monthly payment in accordance with the annuity
option selected.
VARIABLE ANNUITY - The Separate Account contract value, at the end of the
valuation period preceding the valuation period that includes the date on which
the first annuity payment is due, is first reduced by any premium taxes that
apply. The value that remains is used to determine the first monthly annuity
payment. The first monthly annuity payment is based upon the guaranteed annuity
option shown in the Annuity Option Table. You may elect any option available.
The dollar amount of subsequent payments may increase or decrease depending on
the investment experience of each subaccount. The number of annuity units per
payment will remain fixed for each subaccount unless a transfer is made. If a
transfer is made, the number of annuity units per payment will change.
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Z-4700 Page 8
The number of annuity units for each subaccount is calculated by dividing a. by
b. where:
a. is the amount of the monthly payment that can be attributed to that
subaccount; and
b. is the annuity unit value for that subaccount at the end of the valuation
period. The valuation period includes the date on which the payment is made.
Monthly annuity payments, after the first payment, are calculated by summing
up, for each subaccount, the product of a. times b. where:
a. is the number of annuity units per payment in each subaccount; and
b. is the annuity unit value for that subaccount at the end of the valuation
period. The valuation period includes the date on which the payment is made.
After the first payment, we guarantee that the dollar amount of each annuity
payment, will not be affected adversely by actual expenses or changes in
mortality experience from the expense and mortality assumptions on which we
based the first payment.
ANNUITY UNIT VALUE - The value of an annuity unit, for each subaccount, at the
end of any subsequent valuation period is determined by multiplying the result
of a. times b. by c. where:
a. is the annuity unit value for the immediately preceding valuation period;
and
b. is the net investment factor for the valuation period for which the annuity
unit value is being calculated; and
c. is the interest factor of .99993235 per calendar day of such subsequent
valuation period to offset the effect of the assumed rate of 2.50% per year
used in the Annuity Option Table.
The net investment factor for each subaccount for any valuation period is
determined by dividing a. by b. where:
a. is the value of an accumulation unit of the applicable subaccount as of the
end of the current valuation period plus or minus the per share charge or
credit for taxes reserved; and
b. is the value of an accumulation unit of the applicable subaccount as of the
end of the immediately preceding valuation period, plus or minus the per share
charge or credit for taxes reserved.
TRANSFERS DURING THE ANNUITY PERIOD - The payee(s) may not convert fixed
annuity payments to variable annuity payments. However, during the annuity
period, the payee(s), by sending us a written notice in a form satisfactory to
us, may: convert variable annuity payments to fixed annuity payments; or, have
variable annuity payments reflect the investment experience of other
subaccounts. A transfer may be made subject to the following:
1. Transfers from a subaccount to the General Account can be effective only on
an anniversary of the first annuity payment date. We must receive notice
of such transfer at least thirty days prior to the effective date of the
transfer;
2. Transfers from one subaccount to another subaccount will be effective during
the valuation period next succeeding the date the notice is received by us.
However, if the notice for the transfer is received within seven days
immediately preceding an annuity payment date, the transfer will be
effective during the valuation period next succeeding that annuity payment
date. No transfer to a subaccount may be made during the first year of the
annuity period. In subsequent years all transfers between subaccounts will
be made on the same day in a given year and are limited to one transfer each
year;
3. A payee may not have more than three subaccounts after any transfer; and
4. The payee's entire interest in a subaccount must be transferred.
The number of annuity units per payment attributable to a subaccount to which
transfer is made is equal to, in the case of a transfer between subaccounts,
the number of annuity units per payment in the subaccount from which transfer
is being made multiplied by the annuity unit value for that subaccount, such
amount being divided by the annuity unit value for the subaccount to which
transfer is being made.
The amount of money allocated to the General Account in the event of a transfer
from a subaccount equals the annuity reserve for the payee's interest in such
subaccount. The annuity reserve is the product of a. multiplied by b.
multiplied by c. where: a. is the number of annuity units representing the
payee's interest in such subaccount per annuity payment; b. is the annuity unit
value for such subaccount; and c. is the present value of $1.00 per payment
period using the attained age(s) of the payee(s) and any remaining guaranteed
payments that may be due at the time of the transfer. The guaranteed monthly
payments are based on an interest rate of 2.50% per year and, where mortality
is involved, the "1983 Table a" individual annuity mortality table developed by
the Society of Actuaries with a five year set back. Money allocated to the
General Account upon such transfer will be applied under the same annuity
option as originally elected. Any guaranteed period payments will be adjusted
to reflect the number of guaranteed payments already made. If all guaranteed
payments have already been made, no further payments will be guaranteed.
<PAGE> 15
All amounts and annuity unit values are determined as of the end of the
valuation period which precedes the effective date of the transfer.
We reserve the right at any time and without notice to any party to terminate,
suspend or modify the transfer privileges.
SUPPLEMENTARY AGREEMENT - A supplementary agreement will be issued to reflect
payments that will be made under a settlement option. If payment is made as a
death benefit distribution, the effective date will be the date of death.
Otherwise the effective date will be the date chosen by the owner.
DATE OF FIRST PAYMENT - Interest, under an option, will start to accrue on the
effective date of the supplementary agreement. If the normal effective date is
the 29th, 30th, or 31st of the month, the effective date will be the 28th day
of that month.
EVIDENCE OF AGE, SEX AND SURVIVAL - We may require satisfactory evidence of the
age, sex and the continued survival of any person on whose life the income is
based.
MISSTATEMENT OF AGE OR SEX - If the age or sex of the payee has been misstated,
the amount payable under this contract will be such as the purchase payments
sent to us would have purchased at the correct age or sex. Interest not to
exceed 6% compounded each year will be charged to any overpayment or credited
to any underpayment against future payments we may make under this contract.
BASIS OF ANNUITY OPTIONS - The guaranteed monthly payments are based on an
interest rate of 2.50% per year and, where mortality is involved, the "1983
Table a" individual annuity mortality table developed by the Society of
Actuaries, with a five year set back.
DISBURSEMENT OF FUNDS UPON DEATH OF PAYEE: UNDER OPTIONS 1 or 3 - When the
payee dies, the value of any unpaid installments will be paid, in one sum, to
the estate of the payee unless otherwise provided in the supplementary
agreement. The commuted value based upon a minimum interest rate of not less
than 2.50% will be paid. The commuted value of any variable installments will be
determined by applying the annuity unit value next determined following our
receipt of due proof of death.
PROTECTION OF BENEFITS - Unless otherwise provided in the supplementary
agreement, the payee may not commute, anticipate, assign, alienate or otherwise
hinder the receipt of any payment.
CREDITORS - The proceeds of this contract and any payment under an annuity
option will be exempt from the claim of creditors and from legal process to the
extent permitted by law.
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FIXED AND VARIABLE DEFERRED ANNUITY
NON-PARTICIPATING
ALL BENEFITS, PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED UPON
THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT. REFER TO THE VARIABLE ACCOUNT AND ANNUITY
PERIOD PROVISIONS FOR A DETERMINATION OF ANY VARIABLE BENEFITS.
This is a legal contract between the Owner and Zurich Life Insurance Company of
America.
READ YOUR CONTRACT CAREFULLY
ZURICH LIFE INSURANCE COMPANY OF AMERICA
An Illinois stock corporation
1400 American Lane, Schaumburg, Illinois 60173
Form Z-4700
<PAGE> 1
EXHIBIT 5
ZURICH LIFE INSURANCE COMPANY OF AMERICA
1400 American Way, Schaumburg, Illinois 60173
APPLICATION FOR FIXED AND VARIABLE ANNUITY
(For group payroll deduction plans) Name of Plan:
________________________________________________________________________________
1. Annuitant Information [ ] Male [ ] Female
Name___________________________________ Daytime Phone__________________________
Address________________________________ SS#____________________________________
City_______________State____Zip________ Date of Birth__________________________
________________________________________________________________________________
2. Owner Information (Please complete this section only if different from
Annuitant.) [ ] Male [ ] Female
Name___________________________________ Daytime Phone__________________________
Address________________________________ SS#____________________________________
City_______________State____Zip________ Date of Birth__________________________
________________________________________________________________________________
3. Beneficiary Information Please show % each is to receive (to list more
beneficiaries, use Section 10).
Full Name % Relationship to Annuitant
Primary_________________________________________________________________________
Contingent______________________________________________________________________
________________________________________________________________________________
4. Initial Payment $_____________________________________________
Are you applying for scheduled periodic payments through Salary Deferral/
Reduction Plans? [ ] Yes [ ] No If yes, complete Section 13.
Source of Money (Check one or both): [ ] Employee Contribution
[ ] Employer Contribution
Are employer contributions 100% immediately vested? [ ] Yes [ ] No
Initial and Subsequent payments will be allocated as shown below unless
otherwise directed in Section 10.
INVESTMENT OPTIONS:
Zurich Life Insurance Company of America Lexington Other
____________% Fixed Account ______% Natural Resources _____%________
______% Emerging Markets _____%________
_____%________
_____%________
Kemper Investors Fund
________% Small Cap
________% Equity Janus Aspen Series
________% International ------% Aggressive Growth
________% Total Return ______% Growth
________% High Yield ______% Worldwide Growth
________% Govt. Securities ______% Balanced
________% Money Market ______% Short-Term Bond
________________________________________________________________________________
5. Type of Qualified Plan Select one: [ ] Group [ ] Individual
Check [ X ] appropriate box(es):
[ ] 403(b) TSA I have read the Tax Sheltered Annuity section of the
prospectus and am aware of the rules regarding withdrawals.
[ ] Public School [ ] 501(c)(3) Non-Profit Organization
[ ] 457 Deferred Compensation
[ ] 401(a) (Indicate type of 401 plan):________________ [ ] 401(k)
[ ] 408(b) IRA The Annuitant has received, read and understands the
IRA Disclosure Statement.
Is this a spousal plan? [ ] Yes [ ] No For spousal plans,
please complete a separate application.
Tax Year of IRA Initial Contribution____________________
(Not applicable to direct transfers/rollovers)
[ ] SEP-IRA [ ] Direct Transfer/Rollover from: [ ] 403(b)
[ ] 401(a) [ ] 401(k) [ ] IRA [ ] SEP-IRA [ ] 457
________________________________________________________________________________
6. Replacement Compliance Is the annuity intended to replace or change any
existing life insurance or annuity?
[ ] Yes [ ] No This annuity is a: [ ]1035(a) Exchange
[ ] Periodic Contribution (group plans only)
________________________________________________________________________________
<PAGE> 2
7. Suitability (must be completed)
Occupation______________________________________________________________________
Employer_______________________________ Total Family Income $__________________
Address________________________________ Estimated Net Worth $__________________
City_______________State____Zip________ Number of Dependents___________________
Financial Objectives (Please check [ X ] one):
[ ] Long Term Growth [ ] Preservation of Capital
[ ] Maximum Capital Appreciation [ ] Other
Is the contract owner associated with an NASD member? [ ] Yes
[ ] No If yes, complete information below:
Broker/Dealer Name______________________________________________________________
Address______________________________State___________________________Zip________
[ ] Suitability information has been obtained and filed with the
broker/dealer.
____________________________________________________________________________
8. Telephone Transfer Privilege [ ] Check here to authorize the telephone
transfer between accounts and subaccounts, subject to the conditions
stated on the reverse side of this application.
________________________________________________________________________________
9. Annuitization Annuitization payments will start on the 20th anniversary
unless another year is requested here or indicated by type of qualified
plan:
________________________________________________________________________________
10. Special Requests
________________________________________________________________________________
11. Signatures RECEIPT IS ACKNOWLEDGED OF THE CURRENT PROSPECTUS FOR THE
ZURICH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT AND FOR THE UNDERLYING FUND
FOR THE INVESTMENT OPTION SELECTED UNDER ITEM 4. PAYMENTS AND VALUES
PROVIDED BY THE CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF THE
SUBACCOUNTS, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. If
you want a Statement of Additional Information, please check here. [ ] I
agree that the above statements are true and correct to the best of my
knowledge and belief and are made as a basis for my application. Any
person who knowingly and with intent to defraud any insurance company or
other person files an application for insurance or statement of claim
containing any materially false information or conceals for the purpose of
misleading, information concerning any fact material thereto commits a
fraudulent insurance act, which is a crime and subjects such person to
criminal and civil penalties.
Application made at (City)______________________(State)__________Date__________
Signature of Annuitant__________________________Signature of Owner
(Owner unless otherwise indicated) (If other than Annuitant)
________________________________________________________________________________
12. Agent's Report is the annuity intended to replace or change any existing
life insurance or annuity? [ ] No [ ] Yes If yes, please indicate
annuity or life insurance below, enter the cost basis, the original
effective date and submit any required replacement forms.
[ ] Life Insurance [ ] Annuity Cost Basis________
Original Effective Date______
Signature of Agent____________________________ Daytime Phone___________________
Agent Name____________________________________ Agent Number____________________
Name and Address of Firm_______________________________________________________
City___________________________________________State____________Zip____________
1005FR (7/95)
________________________________________________________________________________
13. Salary Reduction/Deduction Plans (For 403(b), 457, 401(k), SEP or 401 (a)
plans)
Is this an existing group? [ ] Yes Please supply Group Number
Bill Number __________________
[ ] No Please also complete the Employer
Information and Billing Request,
Form L-6571
________________________________________________________________________________
A. Employee Salary Reduction Contribution (Please complete for both new and
existing groups.)
Employee Name _________________________SS#________________
Employee Periodic Contribution $_________________
Contribution type (Please check one and enter dollar amount):
[ ] % of Salary $______________________ Dollar Amount $__________
Billing Frequency (Check one): [ ] Monthly [ ] Semi-Monthly
[ ] Bi-Weekly [ ] Other ___________________________________
Excluded months from payment (Please circle all that apply): J F M
A M J J A S O N D
________________________________________________________________________________
<PAGE> 3
B. Employer Contribution Information (Please complete for new and existing
groups with employer contributions.)
Employer Name___________________________________________________________________
Address_______________________City________________State_______Zip Code__________
Annual Employer Contribution (if applicable): $________________
________________________________________________________________________________
C. Total Annual Periodic Payments $__________________
(Both Employee and Employer contributions)
Additional Lump Sum Payment $___________________
________________________________________________________________________________
D. Please complete for 401(a) Plans and 403(b) Plans with Employer
Contributions
Is the plan an ERISA plan? [ ] No [ ] Yes (If you are unsure,
please consult the plan administrator.)
Are all employer contributions 100% immediately vested? [ ] No [ ] Yes
________________________________________________________________________________
SPECIAL INSTRUCTIONS____________________________________________________________
________________________________________________________________________________
HOME OFFICE COPY
L-1005FR (7/95)
<PAGE> 4
ZURICH LIFE INSURANCE COMPANY OF AMERICA
1400 American Way, Schaumburg, Illinois 60173
APPLICATION FOR FIXED AND VARIABLE ANNUITY Name of Plan:
<TABLE>
<S> <C>
--------------------------------------------------------------------------------------------------------------------------------
1. Annuitant Information
Name of Annuitant ___________________________________________ Name of Joint Annuitant (if any)_______________________________
Address _____________________________________________________ Address________________________________________________________
City __________________ State __________ Zip_______________ City __________________ State __________ Zip_________________
Daytime Phone ( )_________________________________________ Daytime Phone ( )____________________________________________
[ ] Male [ ] Female SS# ___________________________ [ ] Male [ ] Female SS# _____________________________
Date of Birth _______________________________________________ Date of Birth _________________________________________________
- ---------------------------------------------------------------------------------------------------------------------------------
2. Owner Information Please complete this section only if Owner(s) is other than Proposed Annuitant (s)
Name of Owner_______________________________________________ Name of Joint Owner (if any)___________________________________
Address ____________________________________________________ Address________________________________________________________
City __________________ State __________ Zip_______________ City __________________ State __________ Zip_________________
Daytime Phone ( )_________________________________________ Daytime Phone ( )____________________________________________
[ ] Male [ ] Female SS# ___________________________ [ ] Male [ ] Female SS# _____________________________
Date of Birth _______________________________________________ Date of Birth _________________________________________________
- ---------------------------------------------------------------------------------------------------------------------------------
3. If you select joint ownership, do you also choose to have the surviving joint owner as the primary beneficiary upon the death
of a joint owner? (If yes, please complete contingent beneficiary section only.) [ ] Yes [ ] No
- ---------------------------------------------------------------------------------------------------------------------------------
4. Beneficiary Information Please show % each is to receive (to list more beneficiaries, Use Section 11).
Full Name % Relationship to Annuitant
Primary ________________________________________________________________________________________________________________________
Contingent______________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
- ---------------------------------------------------------------------------------------------------------------------------------
5. Initial Purchase Payment $ _____________________________ Planned Subsequent Payments $ ________________________________
Planned subsequent payments will be allocated as shown below unless directed otherwise in Section 11.
Total Asset Allocation must equal 100%.
INVESTMENT OPTIONS:
Zurich Life Insurance Company of America Lexington Other
_______ % Fixed Account _______ % Natural Resources _______ % _______
_______ % Emerging Markets _______ % _______
_______ % _______
Kemper Investors Fund _______ % _______
_______ % Small Cap
_______ %Equity Janus Aspen Series
_______ %International _______ % Aggressive Growth
_______ %Total Return _______ % Growth
_______ %High Yield _______ % Worldwide Growth
_______ %Govt. Securities _______ % Balanced
_______ %Money Market _______ % Short-Term Bond
- ---------------------------------------------------------------------------------------------------------------------------------
6. Type of Plan Check [ X ] appropriate box(es):
[ ] Non-Qualified [ ] Terminal Funding [ ] Non-Qualified Deferred Compensation
Qualified Plans: (If group plan, please use application number L-1005)
[ ] 403(b) TSA [ ] SEP-IRA
I have read the Tax Sheltered Annuity section of the [ ] 457 Deferred Compensation
prospectus and am aware of the rules regarding withdrawals. [ ] 401(k) [ ]401(a) indicate type of
[ ] Public School [ ] 501(c)(3) Non-Profit Organization 401(a) plan ______________________________
[ ] 408(b) IRA The annuitant has received, read and understands [ ] Direct Transfer/Rollover from:
the IRA Disclosure Statement. Is this a spousal plan? [ ]403(b) [ ]401(a) [ ]401(k)
[ ] Yes [ ] No [ ]IRA [ ]SEP-IRA [ ]457
For spousal plans, please complete a separate application.
Tax Year of IRA Initial Contribution ______________________
(Not applicable to direct transfers/rollovers)
- ---------------------------------------------------------------------------------------------------------------------------------
7. Suitability (must be completed)
Occupation _______________________________________________________________________________________________________________________
Employer ___________________________________________________ Total Family Income $ __________________________________
Address ____________________________________________________ Estimated Net Worth $ __________________________________
City __________________ State __________ Zip______________ Number of Dependents ____________________________________
L-1004FR (7/95)
</TABLE>
Page 1
<PAGE> 5
<TABLE>
<S> <C>
Financial Objectives (Please check [ X ] one):
[ ] Long Term Growth [ ] Preservation of Capital
[ ] Maximum Capital Appreciation [ ] Other ________________________________________________
Is the contract owner associated with an NASD member? [ ] Yes [ ] No If yes, complete information below:
Broker/Dealer Name _____________________________________________________________________________________________________________
Address ________________________________________________________________________________________________________________________
City________________________________________________ State__________________________ Zip________________________________________
[ ] Suitability information has been obtained and filed with the broker/dealer.
- ----------------------------------------------------------------------------------------------------------------------------------
8. Telephone Transfer Privilege [ ] Check here to authorize the telephone transfer among the general account and subaccounts,
subject to the conditions stated in Section 15 of this application.
- ----------------------------------------------------------------------------------------------------------------------------------
9. Replacement Compliance Is this annuity intended to replace or change any existing life insurance or annuity? [ ] Yes [ ] No
- ----------------------------------------------------------------------------------------------------------------------------------
10. Annuitization Annuitization payments will start on the 20th anniversary unless another year is requested here or indicated by
type of qualified plan:
- ----------------------------------------------------------------------------------------------------------------------------------
11. Special Requests
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
12. Signatures: RECEIPT IS ACKNOWLEDGED OF THE CURRENT PROSPECTUS FOR THE ZURICH LIFE VARIABLE ANNUITY SEPARATE ACCOUNT AND FOR
THE UNDERLYING FUND FOR THE INVESTMENT OPTION SELECTED UNDER ITEM 5. PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF THE SUBACCOUNTS, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
If you want a Statement of Additional Information, please check here. [ ]
I agree that the above statements are true and correct to the best of my knowledge and belief and are made as a basis for my
application. Any person who knowingly and with intent to defraud any insurance company or other person files an application for
insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information
concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and
civil penalties.
Application made at (City)____________________________________(State)__________________________________ Date ___________________
Signature of Annuitant _______________________________________ Signature of Owner __________________________________________
(Owner unless otherwise indicated) (If other than Annuitant)
Signature of Joint Annuitant _________________________________ Signature of Joint Owner ____________________________________
- ----------------------------------------------------------------------------------------------------------------------------------
13. Agent's Report Is the annuity intended to replace or change any existing life insurance or annuity? [ ] No [ ] Yes
If yes, please indicate annuity or life insurance below, enter the cost basis, the original effective date and submit any
required replacement forms.
[ ] Life Insurance [ ] Annuity Cost Basis _________ Original Effective Date _____________________________________
Signature of Agent ___________________________________________ Daytime Phone _______________________________________________
Agent Name ___________________________________________________ Agent Number ________________________________________________
Name and Address of Firm _______________________________________________________________________________________________________
City _____________________________________________ State _______________________________ Zip __________________________________
L-1004FR (7/95)
- ----------------------------------------------------------------------------------------------------------------------------------
14. This annuity is a (check any appropriate boxes):
[ ] 1035 Exchange [ ] Direct Funding from another qualified Plan
- ----------------------------------------------------------------------------------------------------------------------------------
15. By requesting the Telephone Transfer Authorization, the Owner(s) agrees and understands that:
1. Neither Zurich Life Insurance Company of America ("Zurich Life"), nor its agents or representatives who act on its behalf,
shall be subject to any claim, loss, liability, cost or expense, if the act is in good faith upon this telephone
conversation.
2. Transfers will be made subject to the conditions of the contract, administrative regulations of Zurich Life, and the
prospectus.
3. Transfers shall be based on the accumulation unit value next determined following receipt of a valid complete telephone
transfer instruction.
4. This authorization shall continue in force until the earlier of: a written revocation is received by Zurich Life, or Zurich
Life discontinues this privilege.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 2
<PAGE> 6
<TABLE>
<S><C>
I understand that as a condition of allowing telephone instructions to be made, Zurich Life, in its sole option and without prior
disclosure to me, any person or my representative, may record all or part of any telephone conversation containing such
instructions. All terms are binding upon my agents, heirs and assignees.
ADDITIONAL FEATURES
- ---------------------------------------------------------------------------------------------------------------------------------
Dollar Cost Averaging Program
[ ] Please transfer $ ___________________________________________________ from my Money Market Portfolio.
OR
[ ] Please transfer $ ___________________________________________________ from my Government Securities Portfolio.
Funds will be transferred on the second Tuesday of each month to the allocation(s) indicated below (a $500 minimum applies
to each transfer. Please select no more than five portfolios.):
INVESTMENT OPTIONS:
Zurich Life Insurance Company of America Lexington Other
_______ % Fixed Account _______ % Natural Resources _______ % _______
_______ % Emerging Markets _______ % _______
_______ % _______
Kemper Investors Fund _______ % _______
_______ % Small Cap
_______ %Equity Janus Aspen Series
_______ %International _______ % Aggressive Growth
_______ %Total Return _______ % Growth
_______ %High Yield _______ % Worldwide Growth
_______ %Govt. Securities _______ % Balanced
_______ %Money Market _______ % Short-Term Bond
OR:
[ ] Please transfer my interest earnings from the Fixed Account. Funds will be transferred every quarter
to the allocation(s) indicated below (a $10,000 minimum balance is required. Please select no more than five portfolios.):
INVESTMENT OPTIONS:
Zurich Life Insurance Company of America Lexington Other
_______ % Fixed Account _______ % Natural Resources _______ % _______
_______ % Emerging Markets _______ % _______
_______ % _______
Kemper Investors Fund _______ % _______
_______ % Small Cap
_______ %Equity Janus Aspen Series
_______ %International _______ % Aggressive Growth
_______ %Total Return _______ % Growth
_______ %High Yield _______ % Worldwide Growth
_______ %Govt. Securities _______ % Balanced
_______ %Money Market _______ % Short-Term Bond
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Systematic Withdrawal Plan
<TABLE>
<S><C>
[ ] Please provide me with systematic withdrawals in the amount of $___________ (NET). Funds will be withdrawn on the
second Tuesday of each month from the allocation(s) indicated below (a $100 minimum applies to each withdrawal, whole dollar
amounts only. Please select no more than two portfolios.):
INVESTMENT OPTIONS:
Zurich Life Insurance Company of America Lexington Other
_______ % Fixed Account _______ % Natural Resources _______ % _______
_______ % Emerging Markets _______ % _______
_______ % _______
Kemper Investors Fund _______ % _______
_______ %Small Cap
_______ %Equity Janus Aspen Series
_______ %International _______ % Aggressive Growth
_______ %Total Return _______ % Growth
_______ %High Yield _______ % Worldwide Growth
_______ %Govt. Securities _______ % Balanced
_______ %Money Market _______ % Short-Term Bond
</TABLE>
Page 3
<PAGE> 7
<TABLE>
<S><C>
I would like to receive my payments:
[ ] Monthly [ ] Quarterly* [ ] Semi-Annually* [ ] Annually*
*If you select a payment method other than monthly, please indicate the first month during which payments should begin:
-------------------------------------------------
OR
[ ] Please provide me with systematic withdrawals of my quarterly interest earnings from the Fixed Account. I
understand that I must maintain a minimum balance of $10,000 to continue the plan.
Lease check one: [ ] Checks should be payable to owner using the address currently on record at Zurich Life.
[ ] Checks should be payable to the owner, but sent to the address indicated below.
- ------------------------------------------------------------------------------------------------------------------------------
Owner(s) Name
- ------------------------------------------------------------------------------------------------------------------------------
Name of Financial Institution (if applicable) Acct. #
- ------------------------------------------------------------------------------------------------------------------------------
Mailing Address City State Zip
- ------------------------------------------------------------------------------------------------------------------------------
Owner's Daytime Phone
Withdrawals may be subject to surrender charges, income tax and a 10% IRS penalty. I understand that the Company will make
withdrawals from my contract value as indicated above. I understand that withdrawals will discontinue when: a) there are
insufficient funds to cover the requested withdrawals from my plan, or b) Zurich Life receives my written notification to
discontinue the systematic withdrawals.
- ------------------------------------------------------------------------------------------------------------------------------
Tax Withholding
20% Withholding: (for 403b, 501C3, ORP, ARP and certain 401 Plans)
Under current tax law, Zurich Life is required to withhold twenty percent (20%) from any withdrawals made from certain qualified
plans which are not rolled over directly into an IRA or another retirement annuity. In other words, 20% will be withheld if a
check is made payable directly to you. If the withdrawal amount is sent directly to another plan or company, the transfer is
excluded from the 20% mandatory withholding requirements.
If you would like a copy of Zurich Life's Special Tax Notice Regarding Qualified Distributions prior to receiving your withdrawal,
please call Client Services at 1-800-621-5001.
10% Withholding: (for all other plans)
Zurich Life is required to withhold ten percent (10%) of the taxable amount from all distributions. This requirement affects the
taxable amount of loans, partial withdrawals and total withdrawals. However, tax law allows you to elect not to have Zurich Life
withhold 10% from your distribution. If you elect not to have 10% withholding apply to your distribution, you may be responsible
for payment of estimated tax. You may incur penalties under the estimated tax rules if the amount withheld and estimated tax
payments are not sufficient.
Check [ X ] One: [ ] Withhold 10% of the taxable portion. [ ] Do not withhold 10% of the taxable portion.
- ------------------------------------------------------------------------------------------------------------------------------
The Company strongly suggests you consult your own attorney, accountant or tax advisor for information relating to your particular
situation. Please consult the brochures (L-DCA and L-SWP) and prospectus for more information about the benefits and limitations
of the Dollar Cost Averaging Program and Systematic Withdrawal Plan.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Zurich Life Insurance Company of America
Page 4
<PAGE> 1
EXHIBIT 6
CERTIFICATE REGARDING
ARTICLES OF INCORPORATION
ZURICH LIFE INSURANCE COMPANY OF AMERICA
______________________________________________________________________________
The undersigned, Peter P. Rill, Corporate Secretary of Zurich Life Insurance
Company of America, (referred to as the "Company") hereby states:
1. That the attached represents a true and accurate copy of the Articles of
Incorporation of the Company now on file and forming a part of the records
with the Illinois Department of Insurance and that there have been no
changes made thereto.
/s/ Peter P. Rill
---------------------------------------
Signature of Peter P. Rill
Corporate Secretary
Zurich Life Insurance Company of America
Subscribed to and sworn before me this 13th day of December, 1995.
/s/ Linda V. Woods
---------------------------------------
Signature of Notary Public
My commission expires on: 7-16-97
<PAGE> 2
AMENDED AND RESTATED ARTICLES OF INCORPORATION
ZURICH AMERICAN LIFE INSURANCE COMPANY
ARTICLE I
The name of this company shall be:
ZURICH LIFE INSURANCE COMPANY OF AMERICA
ARTICLE II
The principal office of the company is to be located in the Village of
Schaumburg, County of Cook, in the State of Illinois, and it shall have power
to conduct its business wherever authorized by law.
ARTICLE III
The duration of the company shall be perpetual.
ARTICLE IV
The object and purpose of the company is to transact the kinds of insurance
business specified in Article I, Section 4, Class 1(a) and (b) of the Illinois
Insurance Code as insurance on the lives of persons and every insurance
appertaining thereto or connected therewith and granting, purchasing or
disposing of annuities, and insurance against bodily injury, disablement or
death by accident and against disablement resulting from sickness or old age
and every insurance appertaining thereto, and to effect reinsurance of all
risks taken by it and to assume reinsurance of similar risks taken by other
insurers and reinsurers; and to transact such other insurance or other business
as a stock life insurance company now is or hereafter may be permitted to
transact under the Illinois Insurance code and for which the company shall have
the required capital and surplus.
ARTICLE V
The corporate powers of the company shall be exercised by a board of directors
consisting of not less than three nor more than twenty-one persons as fixed
from time to time in the company's by-laws. At least three directors shall be
residents and citizens of the state of Illinois.
The directors shall be elected at the annual meeting of the shareholders. The
directors shall hold office for one year and until their successors are
elected, and any vacancy in the board of directors, due to death, resignation,
removal or otherwise, shall be filled by a vote of the
Page 1 of 3 Page(s)
<PAGE> 3
shareholders at a special meeting called for that purpose. The shareholders may
remove any director at any meeting of the shareholders by affirmative vote of
the majority of all share of the company.
In the election of directors every shareholder shall have the right to vote,
in person or by proxy, for the number of share owned by him, for as many
persons as there are directors to be elected, or to accumulate such shares and
give one candidate as many votes as the number of directors multiplied by the
number of his shares shall equal, or distribute them on the same principle
among as many candidates as he shall think fit. Elections of directors shall be
by ballot and a plurality of votes shall elect.
At all shareholders' meetings, each shareholder may vote shares of stock owned
by him and standing in his name on the books of the company not less than 30
days immediately preceding such meeting.
The officers of the company shall be elected at a meeting of the directors held
immediately after the annual meeting of shareholders. Any vacancy may be filled
and additional officers may be elected or appointed at any meeting of the
directors.
The board of directors shall have power to make such by-laws, not inconsistent
with the constitution or laws of the sate of Illinois or of the United States
or with these Articles of Incorporation, as may be necessary for the management
of the company's property, the government of its officers, the regulation and
conduct of its affairs and the transfer of its capital stock, and shall have
power to alter, amend, suspend or add to the same.
ARTICLE VI
There shall be an annual meeting of the shareholders of the company on the
fourth Wednesday in the month of March of each year, or on such other day as
the directors may by resolution or by-law prescribe. Should the day designated
fall upon a legal holiday, then such annual meeting shall be held on the next
full business day following.
ARTICLE VII
The fiscal year of the company shall begin on the first day of January and
shall terminate on the 31st day of December in each year.
ARTICLE VIII
The amount of the authorized capital of the company shall be $4,000,000; the
aggregate number of common share which the company shall have the authority to
issue without further amendment of this Article shall be 20,000, and the par
value of each share shall be $200. Of the 20,000 share authorized, 13,300
shares have been issued to provide a paid-up capital of $2,660,000 and paid-in
surplus of not less than $1,000,000.
Page 2 of 3 Page(s)
<PAGE> 4
Prior to the issuance of the company's Certificate of Authority, the number of
shares issued was 5,000 to provide a paid-up capital of $500,000 and paid-in
surplus of not less than $985,000.
The board of directors shall have the power, by appropriate resolution, to
authorize the issuance or sale from time to time of the whole or any part of
said shares of authorized but unissued common shares as additions to paid-up
capital pursuant to permits issued from time to time by the Director of
Insurance of the State of Illinois.
ZURICH AMERICAN LIFE INSURANCE COMPANY
/s/ James E. Cassavoy James E. Cassavoy President
- ---------------------
/s/ Peter P. Rill Peter P. Rill Corporate Secretary
- -----------------
OATH AND ACKNOWLEDGMENT
STATE OF ILLINOIS )
) ss.
COUNTY OF COOK)
I, Maureen Howard, a Notary Public do hereby certify that on the ______ day of
June, 1993, James E. Cassavoy and Peter P. Rill personally appeared
before me and being first duly sworn by me severally acknowledged that they
signed the foregoing document in the respective capacities therein set forth
and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year above
written.
/s/ Maureen Howard
- ------------------
Page 3 of 3 Page(s)
<PAGE> 5
ZURICH LIFE INSURANCE COMPANY OF AMERICA
AMENDED BY-LAWS
ARTICLE I.
MEETING OF SHAREHOLDERS
SEC. 1. Annual meetings of shareholders shall be held at the
principal office of the company, or at such other place either within or
without the State of Illinois as may be designated in the notice of meeting,
during the month of March on such day as may be designated by the president.
SEC. 2. Special meetings of the shareholders may be called by
the president and shall be called whenever a meeting is ordered by a resolution
of the board of directors, or whenever the owners of one-fourth in amount of
the capital stock of the company shall, in writing, request the same. Business
transacted at special meetings of the shareholders shall be confined to the
purposes stated in the notice and matters germane thereto.
SEC. 3. The president and a secretary shall act,
respectively, as chairman and secretary of all meetings of the shareholders,
unless the shareholders qualified to vote thereat shall determine otherwise.
SEC. 4. Notice of all meetings of shareholders shall be given
by a secretary; such notice shall state the date, place and time of the meeting
and the purpose for which the meeting is to be held, and a copy thereof shall
be served, either personally or by mail, on each shareholder of record entitled
to vote at such meeting, not less than ten (10) nor more than forty (40) days
before the meeting, or in the case of a merger or consolidation, not less than
twenty (20) nor more than forty (40) days before the meeting. If mailed, such
notice shall be directed to the shareholder at his address as it appears on the
stock book, unless he shall have filed with a secretary a written request that
notice intended for him be mailed to some other address - in which case it
shall be mailed to the address designated in such request. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail, addressed to the shareholder at his address as it appears on the book or
in a written request filed with a secretary, with first-class postage thereon
prepaid. No notice of any meeting of shareholders need be published.
SEC. 5. Any shareholder may waive notice of any annual or
special meeting of shareholders by filing with a secretary a written waiver
and, in that event, shall be deemed to have received such notice.
SEC. 6. At each annual meeting, eight (8) directors shall be
elected to hold office for one (1) year, and until their successors are
elected. If any shares of the company are owned by an incorporated entity,
such entity shall be deemed to be personally present at any shareholders'
meeting or represented thereat by the president or any duly authorized
representative of such entity. The entire board of directors may be removed,
with or without cause, by the affirmative vote of a majority of the votes of
the shareholders of the company voting
Page 1 of 8 Page(s)
<PAGE> 6
therefor at any regular or special meeting of the shareholders. If less than
the entire board is to be removed, no director may be removed, with or without
cause, if the votes cast against his removal would be sufficient to elect him
if then cumulatively voted at an election of the entire board of directors.
SEC. 7. Any action required to be taken at a meeting of the
shareholders, or any other action which may be taken at a meeting of the
shareholders, may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof. Any such consent signed by
all the shareholders shall have the same effect as a unanimous vote and may be
stated as such in any document filed with the Director of Insurance.
ARTICLE II.
DIRECTORS AND THEIR MEETINGS
SEC. 1. The annual meeting of the board of directors shall be
held immediately after the annual meeting of the shareholders. Regular
meetings of the board of directors shall be held as frequently as may be
determined by the board. All regular meetings shall be held at the principal
office of the company, or at such other places, either within or without the
State of Illinois, as may be designated in the notice of meeting.
SEC. 2. Special meetings of the board of directors may be
held whenever the president or two (2) of the directors shall call the same.
Business transacted at special meetings shall be confined to the purposes
stated in the notice and matters germane thereto.
SEC. 3. Notice of the annual meeting and all regular meetings
of the board of directors shall be given by a secretary; such notice shall
state the date, place and time of the meeting and shall be served, either
personally or by mail, on such directors at least five (5) days before the date
set for such meeting. Notice of special meetings, stating the purposes of the
same, shall be given by a secretary at the direction of the president or the
directors calling the same, be in writing an and be served, either personally
or by mail, on each director at least three (3) days before the date set for
such meeting. Any director may waive notice of any regular or special meeting
by filing with a secretary a written waiver and, in that event, shall be deemed
to have received such notice. Attendance by a director at any meeting, regular
or special, shall constitute waiver of notice of such meeting, except where a
director attends the meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
SEC. 4. Five (5) directors shall constitute a quorum for the
transaction of business at any meeting of the board of directors, but a lesser
number may adjourn a meeting from time to time, until a quorum is present. The
act of the majority of the directors present and voting at a meeting at which a
quorum is present shall be the act of the board of directors.
SEC. 5. Any action required to be taken at a meeting of the
board of directors, or any other action which may be taken at a meeting of the
board of directors may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all the directors
entitled to vote with respect to the subject matter thereof. Any such consent
signed by all the directors
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<PAGE> 7
shall have the same effect as a unanimous vote, and may be stated as such in
any document filed with the Director of Insurance.
SEC. 6. The board of directors may appoint a chairman of the
board, whose duty it shall be to preside at the meetings of the board and to
assist the president in the performance of his duties.
SEC. 7. Any vacancy in the board of directors which shall
occur by death, resignation, removal or otherwise shall be filled by a new
incumbent elected for the balance of the unexpired term of the outgoing
director by the shareholders at a special meeting called for that purpose.
SEC. 8. The board of directors may limit, define, increase or
decrease at any time the duties or powers of any officer, or create other
offices, and may elect or appoint persons to fill such other offices and
prescribe their duties and powers, and may remove such persons filling such
other offices and/or abolish such duties, powers and offices.
SEC. 9. Any person who was or is a party, or is threatened to
be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil or criminal, administrative or investigative (other
than an action by or in the right of the company) by reason of the fact that
he, his testator or intestate, is or was a director, officer, employee or agent
of the company, or is or was serving at the request of the company as a
director, officer, employee, agent, partner, trustee, underwriter or
attorney-in-fact of another corporation, partnership, joint venture, trust,
employee benefit plan, Lloyds', association or other enterprise, shall be
indemnified by the company against reasonable expenses (including attorneys'
fees), judgments, penalties, fines and amounts paid in settlement actually
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in, or at least not
opposed to, the best interests of the company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, be determinative that the person did not act
in good faith and in a manner which he reasonably believed to be in, or at
least not opposed to, the best interests of the company, and with respect to
any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
SEC. 9.1. Any person who was or is a party, or is threatened to
be made a party, to any threatened, pending or completed action or suit by or
in the right of the company to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the company,
or is or was serving at the request of the company as a director, officer,
employee, agent, partner, trustee, underwriter or attorney-in-fact of another
corporation, partnership, joint venture, trust, employee benefit plan, Lloyds',
association or other enterprise, shall be indemnified by the company against
reasonable expenses (including attorneys' fees) actually incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in, or at least not
opposed to, the best interests of the company and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for the negligence or
misconduct in the performance of his duty to the company unless and only to the
extent that a court of appropriate jurisdiction in the State of Illinois or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
Page 3 of 8 Page(s)
<PAGE> 8
reasonably entitled to indemnity for such expenses which the court of the State
of Illinois or such other court shall deem proper.
SEC. 9.2. To the extent that any person has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred
to in Section 9 and Section 9.1 of this Article II or in defense of any claim,
issue or matter therein, he shall be indemnified against reasonable expenses
(including attorneys' fees) actually incurred by him in connection therewith.
SEC. 9.3. Any indemnification under Section 9 and Section 9.1
of this Article II (unless ordered by a court) shall be made by the company
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
in Section 9 and Section 9.1. Such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding; or (2) if such a quorum is
not obtainable, then by a majority vote of a committee of the board, duly
designated to act in the matter by a majority vote of the full board (in which
designation, directors who are parties may participate), consisting solely of
two or more directors not at the time parties to the proceeding; or (3) by
special legal counsel selected by the board of directors or a committee thereof
by vote as set forth in clauses (1) or (2) of this Section, or, if the
requisite quorum of the full board cannot be obtained therefor and such
committee cannot be established, by a majority vote of the full board (in which
selection directors who are parties may participate); or (4) by the
shareholders.
Authorization of indemnification and determination as to reasonableness or
expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses shall be
made in a manner specified in clause (3) in the preceding sentence for the
selection of such counsel. Share held by the director, officers, employees or
agents who are parties to the proceeding shall not be voted on the subject
matter under this Section.
SEC. 9.4. Reasonable expenses (including attorneys' fees)
incurred in defending a civil or criminal action, suit or proceeding may be
paid by the company in advance of the final disposition of such action, suit or
proceeding as would be authorized in Section 9.3 in the specific case upon
receipt by the corporation of (1) a written affirmation by the director,
officer, employee or agent of his good faith belief that he has met the
standard of conduct necessary for indemnification by the company as authorized
in this section, and (2) a written undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he has not met such standard of conduct, and after a
determination that the facts then known to those making the determination would
not preclude indemnification under this section. The undertaking required by
clause (2) shall be an unlimited general obligation of the director, officer,
employee or agent but need not be secured and may be accepted without reference
to financial ability to make repayment.
SEC. 9.5. If any such indemnity is paid otherwise than pursuant
to a court order or action by the shareholders, the company shall, within
eighteen (18) months from the date of such payment, mail to its shareholders at
the time entitled to vote for the election of directors, a statement specifying
the reasons paid, the amounts of the payments and the final disposition of the
action, suit or proceeding.
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<PAGE> 9
SEC. 9.6. The foregoing rights of indemnification shall not be
exclusive or any other rights to which any such director, officer, employee or
agent may be entitled under any present or future law, statute, agreement, vote
of shareholders or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of heirs, executors and administrators of such
person.
SEC. 9.7. The company shall be deemed to have requested a
director, officer, employee or agent to serve an employee benefit plan whenever
the performance by him of his duties to the company also imposes duties on, or
otherwise involves services by, him to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a director, officer,
employee or agent with respect to an employee benefit plan pursuant to
applicable law shall be deemed "fines"; and action taken or omitted by him with
respect to an employee benefit plan in the performance of his duties for a
purpose reasonable believed by him to be in the interest of the participants
and beneficiaries of the plan shall be deemed to be for a purpose which is at
least not opposed to the best interests of the company.
SEC. 9.8. The company may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the company, or is or was serving at the request of the company as a director,
officer, employee, agent, partner, trustee, underwriter or attorney-in-fact of
another corporation, partnership, joint venture, employee benefit plan,
Lloyds', association or other enterprise against any liability asserted against
him and incurred by him in any such capacity or arising out of his status as
such, whether or not the company would have the power to indemnify him against
such liability under Section 9 and Section 9.1 of this Article II, and the law
of the State of Illinois.
SEC. 9.9. As used in Section 9 through 9.9, agent is defined as
a person who, at the time of being an agent of the company, was also an
employee of Zurich Insurance Company, Zurich Life Insurance Company of Canada
or the company.
As used in Section 9 through 9.9, company or corporation includes any
predecessor entity of the company or corporation in a merger, consolidation or
other transaction in which the predecessor's existence ceased upon consummation
of such transaction.
As used in Section 9 through 9.9, party is defined as a person who was, is or
is threatened to be made, a named defendant or respondent in a proceeding.
ARTICLE III.
OFFICERS AND THEIR DUTIES
SEC. 1. The board of directors at the annual meeting shall
elect from their members a president. They shall also elect one or more
vice-presidents and one or more secretaries. The offices of president and
secretary cannot be held by the same person. They may also elect such other
officers as may be deemed necessary. All such elected persons shall be deemed
the officers of the company. If any such office shall become vacant, such
vacancy shall be filled by the board. Each elected officer shall hold office
for one year and until his successor is elected. The board at any regular or
special meeting
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<PAGE> 10
by a vote of two-thirds of the directors then in office may remove any elected
officer, provided that the notice of such meeting shall contain a statement of
such proposed action.
SEC. 2. The president shall be the chief executive officer of
the company and shall be a member of the executive committee and of any special
committees. He shall have charge of the business and affairs of the company
and shall report thereon at each regular meeting of the board and at such other
times as the board may require. He shall have the selection of all employees
and have supervision of and may suspend or remove any employee of the company.
The president may authorize or instruct any of the elected or appointed offices
to perform any duty or duties or to exercise any one or more of the powers with
which he is vested pursuant to these by-laws. The president, a vice-president,
or an assistant vice-president in a written instrument attested by a secretary
or an assistant secretary may appoint any person, legally qualified to act,
attorney-in-fact with authority to accept on behalf of the company any summons
or other process, including Federal process. Any such officer may revoke the
powers granted to any attorney-in-fact. In the absence of the president or in
the event of his inability to act, his powers and duties shall be exercised by
a person designated by the president, or if he fails to act, by a person
designated by the executive committee, but the board of directors may remove
such person and appoint any person to exercise the powers and duties of
president.
SEC. 3. All other officers shall have such powers and duties
as may be given to them from time to time by the president, the board of
directors or the executive committee, and generally, shall consult and advise
with the president and aid the president in the discharge of his duties.
SEC. 4. A secretary or an assistant secretary shall make up
and sign the minutes of all meetings of the board of directors, of the
executive committee and of any special committee, as well as of the meetings of
the shareholders; shall send notices of such meetings when such notices are
required; shall countersign stock certificates and affix the corporate seal
thereto; shall certify under the seal of the company, extracts from its
minutes; shall sign or countersign and affix such corporate seal to any other
instruments, documents or contracts; shall keep suitable books for the registry
and transfer of the shares of the capital stock of the company, and generally,
shall perform such other duties as may be incident to the office of secretary.
SEC. 5. All policies of insurance and other formal
underwriting contracts of the company in reference thereto shall be signed by
the president or a vice-president and attested by a secretary or an assistant
secretary. Such signatures may be facsimiles, but when such is the case, such
policies of insurance and other formal underwriting contracts in reference
thereto shall be countersigned by a duly authorized representative. All
documents or instruments required in connection with applications for licenses
from any states or the United States, all documents or instruments thereafter
required for any purpose by any states or the United States, and all other
documents or instruments (except checks, drafts, and other negotiable
instruments) shall be signed by the president, a vice-president, an assistant
vice-president or a person authorized by the president to sign such documents
or instruments. When the corporate seal is required, it shall be attached by a
secretary, or any other person authorized by the board of directors or the
executive committee to attach the corporate seal.
ARTICLE IV.
EXECUTIVE COMMITTEE
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<PAGE> 11
SEC. 1. There shall be an executive committee, consisting of
the president, ex officio, and not less than two (2) other directors, to be
elected by the board of directors. Such committee shall organize by the
election of its own chairman. Members of such committee - other than the
president - shall be designated by a resolution adopted by a majority of the
whole board of directors annually at the annual meeting of the board of
directors, and shall hold their offices during the pleasure of the board.
Vacancies shall be filled by the board of directors at any meeting by a
resolution adopted by a majority of the whole board of directors. In case such
vacancy shall occur in the office of chairman of the executive committee, such
vacancy shall be filled by the committee.
SEC. 2. Any action taken by two (2) or more members of the
executive committee and evidenced by their signatures to or approval of such
action, shall be deemed action by the committee, even though the committee
shall not actually have met; but such action shall be reported at the next
meeting of the committee and be included in its minutes. The executive
committee shall hold meetings at such time or times as it shall fix, and shall
also meet at the call of the chairman or of the president. Two members of the
committee shall constitute a quorum.
SEC. 3. Minutes of the proceedings of the executive committee
shall be kept in the minute book provided for that purpose, and shall always be
open for the inspection of any director. The proceedings of the committee
shall be reported at the succeeding regular meeting of the board of directors.
SEC. 4. When the board of directors is not in session, the
executive committee shall have and may exercise all the powers of the board to
the extent authorized by resolutions adopted by a majority of the entire board
of directors.
SEC. 5. The executive committee shall have power to delegate
to one of its members or to a subcommittee any of the powers or duties of the
executive committee.
ARTICLE V.
STOCK AND CERTIFICATES OF STOCK
SEC. 1. The board of directors shall cause suitable books to
be kept for the registry and transfer of the shares of the capital stock of the
company, and shall have power to close the transfer books, from time to time,
not exceeding a period of thirty (30) days at any one time, as the convenience
of the company may require. No transfer of stock shall be valid unless made
upon the books of the company by authority of the person owning such stock or
by his duly authorized legal representative and upon the surrender and
cancellation of the certificate or certificates owned by such person.
SEC. 2. Certificates of stock, numbered in the order in which
they are issued, shall be issued to the holders of fully paid stock and shall
be signed by the president or a vice-president, and countersigned by a
secretary and the corporate seal affixed thereto.
SEC. 3. If the holder of any certificate of stock shall lose
such certificate, the board of directors may, on the fact becoming known to
them, cause a new certificate to be issued to such
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<PAGE> 12
shareholder, subject to the deposit of a bond or other engagement in such form
and - if a bond - with such surety or sureties as the board may require.
ARTICLE VI.
DEPOSITS, CHECKS, DRAFTS, ETC.
SEC. 1. All uninvested funds of the company, except petty
cash to cover office expenses, shall be deposited in the name of the company
with such banks or trust companies as may be designated by the board of
directors or the executive committee.
SEC. 2. Checks on the company's bank deposits and all drafts
or other negotiable instruments creating a liability of the company shall be
signed and countersigned by such persons as may be authorized by the board of
directors or the executive committee to sign and/or countersign the same, but
no person shall have authority to sign and countersign the same check, draft or
other negotiable instrument, provided the president or a vice-president or any
person authorized by any such officer may appoint any person to sign drafts on
the company (but not against its bank deposits) and such drafts need not be
countersigned.
ARTICLE VII.
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall
be circular in form and shall have inscribed thereon the name of the Company
and the state of incorporation and the words "Corporate Seal."
ARTICLE VIII.
AMENDMENTS
These by-laws may be repealed, altered or modified and further
by-laws may be adopted by a majority vote at any regular or special meeting of
the board of directors, provided the notice of special meeting includes the
proposed changes or the substance thereof.
Page 8 of 8 Page(s)
<PAGE> 1
EXHIBIT 8.1
FORM OF FUND PARTICIPATION AGREEMENT
Zurich Life Insurance Company of America (the "Company") and Lexington
Natural Resources Trust ("Lexington Fund" or the "Fund") and its investment
adviser, Lexington Management Corporation ("LMC") hereby agree to an
arrangement whereby shares of the Fund shall be made available to serve as
underlying investment media for Variable Annuity Contracts ("Contracts") to be
issued by the Company, subject to the following provisions:
1. Establishment of Accounts: Availability of Funds.
(a) The Company represents that it has established variable
annuity accounts and variable life accounts (the "Accounts"),
each of which is a separate account under Illinois Insurance
law, and has registered each of the Accounts as a unit
investment trust under the Investment Company Act of 1940 (the
"1940") to serve as an investment vehicle for the Contracts.
Each Contract provides for the allocation of net amounts
received by the Company to an Account for investment in the
shares of one or more specified open-end companies available
through that account as underlying investment media.
Selection of a particular fund and changes therein from time
to time are made by the Contract owner, as applicable under a
particular Contract.
(b) Lexington Fund and LMC represent and warrant that the
investments of the Fund will at all times be adequately
diversified within the meaning of Section 817(h) of the
Internal Revenue Service Code of 1986, as amended (the
"Code"), and the Regulations thereunder, and that at all times
while the Accounts are invested in the Fund all beneficial
interests will be owned by one or more insurance companies or
by any other party permitted under Section 1.817-5(f)(3) of
the Regulations promulgated under the Code.
2. Marketing and Promotion.
The Fund agrees to provide the Company with monthly and/or quarterly
performance information and such other information as the parties deem
appropriate for the promotion of the Fund within five (5) days of the end of
each month for monthly information and within (10) days of the end of each
calendar quarter for quarterly information.
<PAGE> 2
3. Pricing Information; Orders; Settlement
(a) Lexington Fund will make shares available to be purchased by
the Company, and will accept redemption orders from the
Company, on behalf of each Account at the net asset value
applicable to each order. Fund shares shall be purchased and
redeemed in such quantity and at such time determined by the
Company to be necessary to meet the requirements of those
Contracts for which the Fund serves as underlying investment
media.
(b) Lexington Fund will provide to the Company closing net asset
value, dividend and capital gain information at the close of
trading each day that the New York Stock Exchange (the
"Exchange") is open (each such day, a "business day"). The
Company will send via facsimile transmission to Lexington Fund
or its specified agent orders to purchase and/or redeem Fund
shares by 10:00 a.m., Eastern Time the following business day.
Payment for net purchases will be wired by the Company to a
custodial account designated by Lexington Fund to coincide
with the order for shares of the Fund not later than 12 noon,
Eastern Time on the day of the transaction.
(c) Orders from Contract owners or Participants received by the
Company and sent by the Company prior to the close of the
Exchange on any given business day via facsimile transmission
to Lexington Fund or its specified agent by 10:00 a.m.,
Eastern Time, the following business day will be executed by
Lexington Fund at the net asset value determined as of the
close of the Exchange on such prior business day. Any orders
received by the Company after the close of the Exchange on
such prior business day (or not meeting the foregoing
sentence's requirements) will be executed by Lexington Fund at
the net asset value determined as of the close of the
Exchange on the next business day following the day of receipt
of such order.
(d) Payments for net redemptions of shares of the Fund will be
wired by Lexington Fund from the Lexington Fund custodial
account to an account designated by the Company not later than
12 noon, Eastern Time on the day of the transaction.
(e) Each party has the right to rely on information or
confirmations provided by the other party (or by any
affiliate of the other party), and shall not be liable in the
event that an error is a result of any misinformation
supplied by the other party. If a mistake is caused in
supplying such information or confirmations, which results in
a reconciliation with incorrect information, the amount
required to make a Contract owner's account whole shall be
borne by the party providing the incorrect information.
2
<PAGE> 3
(f) LMC shall provide the Company within fifteen (15) business
days after the end of each calendar quarter a letter from a
Fund officer or compliance officer certifying to the continued
accuracy of the representations contained in Item 1 (b) above
and attaching a detailed listing of the individual securities
and other assets, if any, held by the Fund as of the end of
such calendar quarter.
(g) LMC agrees to provide the Company within ten (10) business
days after the end of each month a monthly statement of
account confirming all transactions made during the month.
4. Expenses.
(a) Except as otherwise provided in this Agreement, all expenses
incident to the performance by Lexington Fund under this
Agreement shall be paid by Lexington Fund including the cost
of registration of Lexington Fund shares with the Securities
and Exchange Commission (the "SEC") and in states where
required.
(b) Lexington Fund shall distribute to the Company its proxy
material, periodic fund reports to shareholders and other
material that are required by law to be sent to Contract
owners. In addition, Lexington Fund shall provide the
Company with a sufficient quantity of its prospectuses to be
used in connection with the offerings and transaction
contemplated by this Agreement. Subject to subsection (c)
below, the cost of preparing and printing such materials shall
be paid by Lexington Fund, and the cost of distributing such
materials shall be paid by the Company. However, if Lexington
Fund makes changes to its prospectus for its own benefit or
the benefit of someone other than the Company resulting in the
need to print and distribute one or more supplements to
contract holders, all costs associated with printing and
distributing any such supplement shall be borne by Lexington
Fund. In addition, Lexington Fund and LMC agree that to the
extent the Fund decides in the future to finance distribution
expenses pursuant to Rule 12b-1 of the 1940 Act, the Fund will
undertake to have the board of directors, a majority of whom
are not interested persons of the Fund, formulate and approve
any plan under Rule 12b-1 to finance distribution expenses.
3
<PAGE> 4
(c) In lieu of Lexington Fund's providing printed copies of
prospectuses and periodic fund reports to shareholder, the
Company shall have the right to request that Lexington Fund
provide a copy of such materials in an electronic format,
which the Company may use to have such materials printed
together with similar materials of other Account funding media
that the Company or any distributor will distribute to
existing or prospective Contract owners or participants. In
that event Lexington Fund shall reimburse the Company for the
same proportion of the total printing expense for such
materials as the number of pages in each such printed
document provided by Lexington Fund bears to the total number
of pages in such printed document.
5. Representations.
(a) The Company agrees that it and its agents shall not, without
the written consent of Lexington Fund, make representations
concerning Lexington Fund or its shares except those contained
in the then current prospectuses and in current printed sales
literature of Lexington Fund.
(b) The Company represents and warrants that interests in
Contracts are or will be registered under the Securities Act
of 1933 ("1933 Act") or are exempt from registration
thereunder; that the Contracts will be issued and sold in
compliance in all material respects with all applicable
federal and state laws and that the sale of the Contracts
shall comply in all material respects with state insurance
suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and
validly established each Account prior to any issuance or
sale thereof as a segregated asset account and that each
Account is or will be registered as a unit investment trust
in accordance with the provisions of the 1940 Act to serve as
a segregated investment account for the Contracts or is exempt
from registration thereunder.
(c) The Company represents that the Contracts are currently
treated as annuity contracts under applicable provisions of
the Code and that it will make every effort to maintain such
treatment and that it will notify Lexington Fund and LMC
immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might
not be so treated in the future.
4
<PAGE> 5
(d) The Company represents and warrants that all of its directors,
officers and employees, if any, dealing with the money and/or
securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage
for the benefit of the Fund in an amount not less than $2
million. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable
bonding company.
(e) LMC and Lexington Fund make no representation as to whether
any aspect of the Fund's operations (including, but not
limited to, fees and expenses and investment policies)
complies with the insurance laws or regulations of the
various states.
(f) The Lexington Fund represents that it will sell and distribute
Fund's shares in accordance with any applicable federal and
state securities laws, including without limitation, the 1933
Act, the Securities Exchange Act of 1934, and the 1940 Act.
(g) Lexington Fund represents it is currently qualified as a
regulated investment company under Subchapter M of the Code
and that it will maintain such qualification (under Subchapter
M or any successor or similar provision) and that it will
notify the Company immediately upon having a reasonable basis
for believing that it ceased to so qualify or might not so
qualify in the future. Lexington Fund and LMC acknowledge
that any failure to qualify as a regulated investment company
under Subchapter M of the Code would constitute a breach of
its representation and warranty under item 1 (b) of this
Agreement.
(h) LMC and Lexington Fund represent and warrant that the Funds'
shares sold pursuant to this Agreement shall be registered
under the 1933 Act, duly authorized for issuance and sold in
compliance with the laws of the State of Illinois and all
applicable federal and state securities laws and that the Fund
are and shall remain registered under the 1940 Act. The Fund
shall amend the registration statement for its shares under
the 1933 Act and 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The
Fund shall also register and qualify its shares for sale in
accordance with the laws of the various states only if and to
the extent deemed advisable by the Fund or LMC.
(i) Lexington Fund represents that it is lawfully organized and
validly existing under the laws of its state of domicile and
that it is and will comply in all material respects with the
1940 Act.
5
<PAGE> 6
(j) LMC and Lexington Fund represent and warrant that LMC is duly
organized under its state of domicile, and is and shall
remain duly registered in all material respects under any
applicable federal and state securities laws, and further
that LMC shall perform its obligations for the Fund in
compliance in all material respects with applicable federal
and state securities laws.
(k) LMC and Lexington Fund represent and warrant that all of their
respective directors, officers, and employees dealing with
the money and/or securities of the Fund are and shall continue
to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Fund in an amount not
less than the minimal coverage as required currently by Rule
17g-(1) of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond shall
include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
6. Administration of Accounts.
(a) Administrative services to Contract owners shall be the
responsibility of the Company and shall not be the
responsibility of Lexington Fund or LMC. LMC recognizes the
Company as the sole shareholder of fund shares issued under
this Agreement. From time to time, LMC may pay amounts from
its past profits to the Company for providing certain
administrative services for the Fund or for providing other
services that relate to the Fund. In consideration of the
savings resulting from such arrangement, and to compensate the
Company for its costs, LMC agrees to pay to the Company an
amount equal to 25 basis points (0.25%) per annum of the
average aggregate amount invested by the Company in the Fund
under this Agreement. Payment of such amounts by LMC will
not increase the fees paid by the Fund or its shareholders.
(b) The parties agree that LMC's payments to the Company are for
administrative services only and do not constitute payment in
any manner for investment advisory services or for costs of
distribution.
(c) For the purposes of computing the administrative fee
reimbursement contemplated by this Section 6, the average
aggregate amount invested by the Company over a one month
period shall be computed by totaling the Company's aggregate
investment (share net asset value multiplied by total number
of shares held by the Company) on each business day during the
month and dividing by the total number of business days during
each month.
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<PAGE> 7
(d) LMC will calculate the reimbursement of administrative
expenses at the end of each calendar quarter and will make
such reimbursement to the Company within 30 days thereafter.
The reimbursement check will be accompanied by a statement
showing the calculation of the monthly amounts payable by LMC
and such other supporting data as may be reasonably requested
by the Company.
7. Termination.
This agreement shall terminate as to the sale and issuance of new Contracts:
(a) at the option of either the Company or Lexington Fund, upon
three months advance written notice to the other;
(b) at the option of the Company, upon one week advance written
notice to Lexington Fund, if Lexington Fund shares are not
available for any reason to meet the requirement of Contracts
as determined by the Company.
(c) at the option of either the Company or Lexington Fund,
immediately upon institution of formal proceedings against
the broker-dealer or broker-dealers marketing the Contracts,
the Account, the Company, Lexington Fund, or LMC by the
National Association of Securities Dealers, Inc. (the "NASD"),
Securities and Exchange Commission (the "SEC") or any other
regulatory body;
(d) upon the requisite vote of Contract owners having an interest
in the Fund, to substitute for the Fund's shares the shares
of another investment company in accordance with the terms of
the applicable Contracts. The Company will give 60 days
written notice to Lexington Fund of any proposed vote to
replace the Fund's shares;
(e) upon assignment of the Agreement, unless made with the written
consent of all other parties hereto:
(f) if the Fund's shares are not registered, issued or sold in
conformance with Federal law or such law precludes the use of
Fund's shares as an underlying investment medium for Contracts
issued or to be issued by the Company. Prompt notice shall
be given by either party should such situation occur.
7
<PAGE> 8
(g) If the need for substitution of the shares of another
investment company, pursuant to Section 20(b) of the 1940
Act, arises out of the Fund's failure to be registered, issued
or sold in conformance with federal law or such law precludes
the use of the Fund as an underlying investment medium of
contracts issued or to be issued by the Company, the expenses
of obtaining such order shall be reimbursed by the Lexington
Fund or LMC. Lexington Fund and LMC shall cooperate with the
company in connection with such application.
8. Continuation of Agreement.
Termination as the result of any cause listed in Section 7 shall not affect
Lexington Fund's obligation to furnish its shares to Contracts then in force
for which its shares serve or may serve as the underlying medium unless such
further sale of Fund's shares is proscribed by law or the SEC or other
regulatory body.
9. Advertising Materials; Filed Documents
(a) Advertising and sales literature with respect to the Fund
prepared by the Company or its agents for use in marketing its
Contracts will be submitted to Lexington Fund or LMC for
review before such material is submitted to any regulatory
body for review.
(b) Lexington Fund will provide to the Company at least one
complete copy of all registration statements, prospectuses,
statements of additional information, annual and semiannual
reports, proxy statements and all amendments or supplements to
any of the above that relate to the Fund promptly after the
filing of such document with the SEC or other regulatory
authorities. The Company will provide to Lexington Fund at
least one complete copy of all registration statements,
prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, and all amendments or
supplements to any of the above that relate to each Account
promptly after the filing of such document with the SEC or
other regulatory authority.
10. Proxy Voting.
(a) The Company shall provide pass-through voting privileges on
Fund's shares to all Contract owners to the extent the SEC
continues to interpret the 1940 Act as requiring such
privileges. If shares are held in any other separate account
not required to be registered under the 1940 Act, those shares
will be voted in the Company's sole discretion.
8
<PAGE> 9
(b) The Company will distribute to Contract owners and
participants, as appropriate, all proxy material furnished by
Lexington Fund and will vote Fund's shares in accordance with
instructions received from Contract owners. The Company,
with respect to each Contract and in each Account, shall vote
Fund shares for which no instructions have been received in
the same proportion as shares for which such instructions have
been received. The Company and its agents shall not oppose or
interfere with the solicitation of proxies for Fund shares
held for such Contract owners.
11. Indemnification.
(a) The Company agrees to indemnify and hold harmless Lexington
Fund, LMC, and each of its directors, trustees, officers,
employees, agents and each person, if any, who controls the
Fund or its investment adviser within the meaning of the
Securities Act of 1933 (the "1933 Act") against any losses,
claims, damages or liabilities to which the Fund or any such
director, officer, employee, agent, or controlling person may
become subject, under the 1933 Act or otherwise, insofar as
such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in the Registration Statement, prospectus or sales
literature of the Company, or arise out of or are based upon
the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements or representations (other than statements
or representations contained in the prospectuses or sales
literature of the Fund) of the Company or its agents, with
respect to the sale and distribution of Contracts for which
Fund shares are the underlying investment. The Company will
reimburse any legal or other expenses reasonably incurred by
the Fund or any such director, officer, employee, agent,
investment adviser, or controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based
upon an untrue statement or omission or alleged omission made
in such Registration Statement or prospectus in conformity
with written materials furnished to the Company by the Fund
specifically for use therein. This indemnity agreement will
be in addition to any liability which the Company may
otherwise have.
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<PAGE> 10
(b) The Company shall not be liable under this Section 11. to
Lexington Fund, LMC or other parties covered under Section 11.
(a) with respect to any losses, claims, damages or liabilities
(or actions in respect thereof) incurred or assessed against
any such party (including Lexington Fund and LMC) as such may
arise from such party's willful misfeasance, bad faith, or
negligence in the performance of such party's duties or by
reason of such party's reckless disregard of obligations or
duties under this Agreement.
(c) Lexington Fund and LMC agree to indemnify and hold harmless
the Company and its directors, officers, employees, agents and
each person, if any, who controls the Company within the
meaning of the 1933 Act against any losses, claims, damages or
liabilities to which the Company or any such director,
officer, employee, agent or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in
the Registration Statement, prospectuses or sales literature
of the Fund, or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading. Lexington Fund will reimburse any
legal or other expenses reasonably incurred by the Company or
any such director, officer, employee, agent, or controlling
person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however,
that LMC and Lexington Fund will not be liable in any such
case to the extent that any such loss, claim, damage or
liability rises out of or is based upon a Registration
Statement or prospectuses which are in conformity with written
materials furnished to Lexington Fund by the Company
specifically for use therein. This indemnity agreement will
be in addition to any liability which Lexington Fund of LMC
may otherwise have.
(d) Lexington Fund and LMC agree to indemnify and hold harmless
the Company and its directors, officers, employees, agents and
each person, if any, who controls the Company within the
meaning of the 1933 Act against any losses, claims, damages or
liabilities to which the Company or any such director,
officer, employee, agent or controlling person may become
subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon the breach of any
representation or warranty in this Agreement by Lexington Fund
or LMC including but not limited to a failure of the Fund to
qualify under Subchapter M or a finding or claim that the
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<PAGE> 11
Funds are not adequately diversified within the meaning of
Section 817(h) of the Code and/or that while this agreement is
in effect, all beneficial interests will be owned by one or
more insurance companies or by any other party permitted under
Section 1.817-5 (f)(3) of the Regulations promulgated under
the Code.
(e) Lexington Fund and LMC shall not be liable under this Section
11. to the Company or other parties covered under Section
11.(c) with respect to any losses, claims, damages or
liabilities (or actions in respect thereof) incurred or
assessed against any such party (including the Company) as
such may arise from such party's willful misfeasance, bad
faith, or negligence in the performance of such party's duties
or by reason of such party's reckless disregard of obligations
or duties under this Agreement.
(f) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of action, such indemnified party
will, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party
of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than
under this Section 11. In case any such action is brought
against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein
and, to the extent that it may wish to, assume the defense
thereof, with counsel satisfactory to such indemnified party
of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified
party under this Section 11 for any legal or other expenses
subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of
investigation.
12. Potential Conflicts.
(a) The Company has received a copy of an application for
exemptive relief, as amended, filed by Lexington Fund on
March 21, 1994, with the SEC and the order issued by the SEC
in response thereto (the "Shared Funding Exemptive Order").
The Company has reviewed the conditions to the requested
relief set forth in such application for exemptive relief. As
set forth in such application, the Board of Directors of Fund
(the "Board") will monitor the
11
<PAGE> 12
Fund for the existence of any material irreconcilable conflict
between the interests of the contract holders of all separate
accounts ("Participating Companies") investing in the Fund.
An irreconcilable material conflict may arise for a variety of
reasons, including: (i) an action by any state insurance
regulatory authority; (ii) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a
public ruling, private letter ruling, no-action or
interpretative letter, or any similar actions by insurance,
tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant
proceeding; (iv) the manner in which the investments of any
portfolio are being managed; (v) a difference in voting
instructions given by variable annuity contract holders and
variable life insurance contract holders; or (vi) a decision
by an insurer to disregard the voting instruction of contract
holders. The Board shall promptly inform the Company if it
determines that an irreconcilable material conflict exists and
the implications thereof.
(b) The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the
Board in carrying out its responsibilities under the Shared
Funding Exemptive Order by providing the Board with all
information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever
contract holder voting instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable
conflict exists with regard to contract holder investments in
the Fund, the Board shall give prompt notice to all
Participating Companies. If the Lexington Fund or LMC is
responsible for causing or creating said conflict, the Company
shall at its sole cost and expense, and to the extent
reasonably practicable (as determined by a majority of the
disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict.
If the Board determines that the Company is responsible for
causing or creating said conflict, the Company shall at its
sole cost and expense, and to the extent reasonably
practicable (as determined by a majority of the disinterested
Board members), take such action as is necessary to remedy or
eliminate the irreconcilable material conflict. Such
necessary action may include but shall not be limited to:
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<PAGE> 13
(i) withdrawing the assets allocable to the Account from
the Fund and reinvesting such assets in a different
investment medium or submitting the question of
whether such segregation should be implemented to a
vote of all affected contract holders and as
appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners,
life insurance contract owners, or variable contract
owners of one or more Participating Companies) that
votes in favor of such segregation, or offering to
the affected contract holders the option of making
such a change; and/or
(ii) establishing a new registered management investment
company or managed separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contract holder
voting instructions and said decision represents a minority
position or would preclude a majority vote by all of its
contract holders having an interest in the Fund, the Company
at its sole cost, may be required, at the Board's election, to
withdraw an Account's investment in the Fund and terminate
this Agreement; provided, however, that such withdrawal and
termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a
majority of the disinterested members of the Board.
(e) For the purpose of this Section 12, a majority of the
disinterested Board members shall determine whether or not
any proposed action adequately remedies any irreconcilable
material conflict, but in no event will Lexington Fund be
required to establish a new funding medium for any Contract.
The Company shall not be required by this Section 12 to
establish a new funding medium for any Contract if an offer
to do so has been declined by vote of a majority of the
Contract owners or participants materially adversely affected
by the irreconcilable material conflict.
13. Miscellaneous.
(a) Amendment and Waiver. Neither this Agreement, nor any
provision hereof, may be amended, waived, discharged or
terminated orally, but only by an instrument in writing signed
by all parties hereto.
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<PAGE> 14
(b) Notices. All notices and other communications hereunder shall
be given or made in writing and shall be delivered
personally, or sent by telex, telecopier or registered or
certified mail, postage prepaid, return receipt requested, to
the party or parties to whom they are directed at the
following addresses, or at such other addresses as may be
designated by notice from such party to all other parties.
To the Company:
Zurich Life Insurance Company of America
1 Kemper Drive
Long Grove, IL 60049
Attention: General Counsel
To Lexington Management Corporation:
Lexington Management Corporation
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
Attention: Lisa Curcio
Senior Vice President & Secretary
Any notice, demand or other communication given in a manner
prescribed in this subsection (b) shall be deemed to have been delivered on
receipt.
(c) Successors and Assigns. This agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute
one agreement, and any party hereto may execute this Agreement
by signing any such counterpart.
(e) Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
(f) Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto and
supersedes all prior agreement and understandings relating to
the subject matter hereof.
(g) Governing Law. This Agreement shall be governed and
interpreted in accordance with the laws of the State of New
Jersey.
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<PAGE> 15
14. Limitation on Liability of Trustees/Directors, etc.
This Agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his/her capacity as an Officer of the Fund. The
obligations of this Agreement that pertain to the Fund shall only be binding
upon the assets and property of the Fund and shall not be binding upon any
individual trustee, director, officer or shareholder of the Fund. This
provision shall not affect the obligations or liabilities of LMC under this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by their
duly authorized officers as of this 17th day of July, 1995.
ZURICH LIFE INSURANCE COMPANY OF LEXINGTON MANAGEMENT CORPORATION
AMERICA
BY: /s/ BY: /s/
------------------------------ --------------------------------
Name: Name:
Title: Title:
LEXINGTON NATURAL RESOURCES TRUST
BY: /s/
-----------------------------
Name:
Title:
15
<PAGE> 1
EXHIBIT 8.2
FORM OF FUND PARTICIPATION AGREEMENT
Zurich Life Insurance Company of America (the "Company") and Lexington
Emerging Markets Fund ("Lexington Fund" or the "Fund") and its investment
adviser, Lexington Management Corporation ("LMC") hereby agree to an
arrangement whereby shares of the Fund shall be made available to serve as
underlying investment media for Variable Annuity Contracts ("Contracts") to be
issued by the Company, subject to the following provisions:
1. Establishment of Accounts: Availability of Funds.
(a) The Company represents that it has established variable
annuity accounts and variable life accounts (the "Accounts"),
each of which is a separate account under Illinois Insurance
law, and has registered each of the Accounts as a unit
investment trust under the Investment Company Act of 1940 (the
"1940") to serve as an investment vehicle for the Contracts.
Each Contract provides for the allocation of net amounts
received by the Company to an Account for investment in the
shares of one or more specified open-end companies available
through that account as underlying investment media.
Selection of a particular fund and changes therein from time
to time are made by the Contract owner, as applicable under a
particular Contract.
(b) Lexington Fund and LMC represent and warrant that the
investments of the Fund will at all times be adequately
diversified within the meaning of Section 817(h) of the
Internal Revenue Service Code of 1986, as amended (the
"Code"), and the Regulations thereunder, and that at all times
while the Accounts are invested in the Fund all beneficial
interests will be owned by one or more insurance companies or
by any other party permitted under Section 1.817-5(f)(3) of
the Regulations promulgated under the Code.
2. Marketing and Promotion.
The Fund agrees to provide the Company with monthly and/or quarterly
performance information and such other information as the parties deem
appropriate for the promotion of the Fund within five (5) days of the
end of each month for monthly information and within (10) days of the
end of each calendar quarter for quarterly information.
<PAGE> 2
3. Pricing Information; Orders; Settlement
(a) Lexington Fund will make shares available to be purchased by
the Company, and will accept redemption orders from the
Company, on behalf of each Account at the net asset value
applicable to each order. Fund shares shall be purchased and
redeemed in such quantity and at such time determined by the
Company to be necessary to meet the requirements of those
Contracts for which the Fund serves as underlying investment
media.
(b) Lexington Fund will provide to the Company closing net asset
value, dividend and capital gain information at the close of
trading each day that the New York Stock Exchange (the
"Exchange") is open (each such day, a "business day"). The
Company will send via facsimile transmission to Lexington Fund
or its specified agent orders to purchase and/or redeem Fund
shares by 10:00 a.m., Eastern Time the following business day.
Payment for net purchases of the Fund and any other funds for
which LMC is the investment adviser, will be wired by the
Company to a custodial account designated by Lexington Fund to
coincide with the order for shares of the Fund not later
than 12 noon, Eastern Time on the day of the transaction.
(c) Orders from Contract owners or Participants received by
the Company and sent by the Company prior to the close of
the Exchange on any given business day via facsimile
transmission to Lexington Fund or its specified agent by
10:00 a.m., Eastern Time, the following business day will
be executed by Lexington Fund at the net asset value
determined as of the close of the Exchange on such prior
business day. Any orders received by the Company after the
close of the Exchange on such prior business day (or
not meeting the foregoing sentence's requirements) will be
executed by Lexington Fund at the net asset value
determined as of the close of the Exchange on the next
business day following the day of receipt of such order.
(d) Payments for net redemptions of shares of the Fund will
be wired by Lexington Fund from the Lexington Fund
custodial account to an account designated by the Company
not later than 12 noon, Eastern Time on the day of the
transaction.
(e) Each party has the right to rely on information or
confirmations provided by the other party (or by any
affiliate of the other party), and shall not be liable in
the event that an error is a result of any misinformation
supplied by the other party. If a mistake is caused in
supplying such information or confirmations, which results
in a reconciliation with incorrect information,
the amount required to make a Contract owner's account whole
shall be borne by the party providing the incorrect
information.
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<PAGE> 3
(f) LMC shall provide the Company within fifteen (15)
business days after the end of each calendar quarter a letter
from a Fund officer or compliance officer certifying to
the continued accuracy of the representations contained
in Item 1 (b) above and attaching a detailed listing
of the individual securities and other assets, if any, held by
the Fund as of the end of such calendar quarter.
(g) LMC agrees to provide the Company within ten (10)
business days after the end of each month a monthly
statement of account confirming all transactions made
during the month.
4. Expenses.
(a) Except as otherwise provided in this Agreement, all
expenses incident to the performance by Lexington Fund
under this Agreement shall be paid by Lexington Fund
including the cost of registration of Lexington Fund shares
with the Securities and Exchange Commission (the
"SEC") and in states where required.
(b) Lexington Fund shall distribute to the Company its proxy
material, periodic fund reports to shareholders and other
material that are required by law to be sent to Contract
owners. In addition, Lexington Fund shall provide the
Company with a sufficient quantity of its prospectuses to
be used in connection with the offerings and transaction
contemplated by this Agreement. Subject to subsection
(c) below, the cost of preparing and printing such
materials shall be paid by Lexington Fund, and the cost
of distributing such materials shall be paid by the
Company. However, if Lexington Fund makes changes to its
prospectus for its own benefit or the benefit of someone
other than the Company resulting in the need to print and
distribute one or more supplements to contract holders, all
costs associated with printing and distributing any
such supplement shall be borne by Lexington Fund. In
addition, Lexington Fund and LMC agree that to the extent
the Fund decides in the future to finance distribution
expenses pursuant to Rule 12b-1 of the 1940 Act, the Fund
will undertake to have the board of directors, a majority
of whom are not interested persons of the Fund, formulate
and approve any plan under Rule 12b-1 to finance distribution
expenses.
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<PAGE> 4
(c) In lieu of Lexington Fund's providing printed copies of
prospectuses and periodic fund reports to shareholder, the
Company shall have the right to request that
Lexington Fund provide a copy of such materials in an
electronic format, which the Company may use to have such
materials printed together with similar materials of other
Account funding media that the Company or any
distributor will distribute to existing or prospective
Contract owners or participants. In that event Lexington
Fund shall reimburse the Company for the same proportion of
the total printing expense for such materials as the
number of pages in each such printed document provided by
Lexington Fund bears to the total number of pages in such
printed document.
5. Representations.
(a) The Company agrees that it and its agents shall not,
without the written consent of Lexington Fund, make
representations concerning Lexington Fund or its shares
except those contained in the then current prospectuses and
in current printed sales literature of Lexington
Fund.
(b) The Company represents and warrants that interests in
Contracts are or will be registered under the Securities
Act of 1933 ("1933 Act") or are exempt from registration
thereunder; that the Contracts will be issued and sold in
compliance in all material respects with all applicable
federal and state laws and that the sale of the Contracts
shall comply in all material respects with state
insurance suitability requirements. The Company further
represents and warrants that it is an insurance company
duly organized and in good standing under applicable law
and that it has legally and validly established each
Account prior to any issuance or sale thereof as a
segregated asset account and that each Account is or will
be registered as a unit investment trust in accordance with
the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts or is
exempt from registration thereunder.
(c) The Company represents that the Contracts are currently
treated as annuity contracts under applicable provisions of
the Code and that it will make every effort to
maintain such treatment and that it will notify Lexington
Fund and LMC immediately upon having a reasonable basis
for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the
future.
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<PAGE> 5
(d) The Company represents and warrants that all of its
directors, officers and employees, if any, dealing with the
money and/or securities of the Fund are and shall
continue to be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund in
an amount not less than $2 million. The aforesaid bond
shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
(e) LMC and Lexington Fund make no representation as to
whether any aspect of the Fund's operations (including, but
not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of
the various states.
(f) The Lexington Fund represents that it will sell and
distribute Fund's shares in accordance with any
applicable federal and state securities laws, including
without limitation, the 1933 Act, the Securities Exchange
Act of 1934, and the 1940 Act.
(g) Lexington Fund represents it is currently qualified as a
regulated investment company under Subchapter M of the Code
and that it will maintain such qualification
(under Subchapter M or any successor or similar
provision) and that it will notify the Company
immediately upon having a reasonable basis for believing
that it ceased to so qualify or might not so
qualify in the future. Lexington Fund and LMC acknowledge
that any failure to qualify as a regulated
investment company under Subchapter M of the Code would
constitute a breach of its representation and warranty
under item 1 (b) of this Agreement.
(h) LMC and Lexington Fund represent and warrant that the
Funds' shares sold pursuant to this Agreement shall be
registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State
of Illinois and all applicable federal and state
securities laws and that the Fund are and shall remain
registered under the 1940 Act. The Fund shall amend the
registration statement for its shares under the 1933 Act
and 1940 Act from time to time as required in order to
effect the continuous offering of its shares. The Fund
shall also register and qualify its shares for sale in
accordance with the laws of the various states only if and
to the extent deemed advisable by the Fund or LMC.
(i) Lexington Fund represents that it is lawfully organized
and validly existing under the laws of its state of
domicile and that it is and will comply in all material
respects with the 1940 Act.
5
<PAGE> 6
(j) LMC and Lexington Fund represent and warrant that LMC is
duly organized under its state of domicile, and is and
shall remain duly registered in all material respects
under any applicable federal and state securities laws, and
further that LMC shall perform its obligations for
the Fund in compliance in all material respects with
applicable federal and state securities laws.
(k) LMC and Lexington Fund represent and warrant that all of
their respective directors, officers, and employees dealing
with the money and/or securities of the Fund are
and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit
of the Fund in an amount not less than the minimal coverage
as required currently by Rule 17g-(1) of the
1940 Act or related provisions as may be promulgated from
time to time. The aforesaid bond shall include coverage
for larceny and embezzlement and shall be issued by a
reputable bonding company.
6. Administration of Accounts.
(a) Administrative services to Contract owners shall be the
responsibility of the Company and shall not be the
responsibility of Lexington Fund or LMC. LMC recognizes
the Company as the sole shareholder of fund shares issued
under this Agreement. From time to time, LMC may pay
amounts from its past profits to the Company for
providing certain administrative services for the Fund or
for providing other services that relate to the Fund. In
consideration of the savings resulting from such
arrangement, and to compensate the Company for its costs, LMC
agrees to pay to the Company an amount equal to 25
basis points (0.25%) per annum of the average aggregate
amount invested by the Company in the Fund under this
Agreement. Payment of such amounts by LMC will not
increase the fees paid by the Fund or its
shareholders.
(b) The parties agree that LMC's payments to the Company are
for administrative services only and do not constitute
payment in any manner for investment advisory services or
for costs of distribution.
(c) For the purposes of computing the administrative fee
reimbursement contemplated by this Section 6, the average
aggregate amount invested by the Company over a one month
period shall be computed by totaling the Company's aggregate
investment (share net asset value multiplied by
total number of shares held by the Company) on each business
day during the month and dividing by the total
number of business days during each month.
6
<PAGE> 7
(d) LMC will calculate the reimbursement of administrative
expenses at the end of each calendar quarter and will make
such reimbursement to the Company within 30 days
thereafter. The reimbursement check will be accompanied by
a statement showing the calculation of the monthly
amounts payable by LMC and such other supporting data as may
be reasonably requested by the Company.
7. Termination.
This agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of either the Company or Lexington Fund,
upon three months advance written notice to the other;
(b) at the option of the Company, upon one week advance
written notice to Lexington Fund, if Lexington Fund shares
are not available for any reason to meet the
requirement of Contracts as determined by the Company.
(c) at the option of either the Company or Lexington Fund,
immediately upon institution of formal proceedings against
the broker-dealer or broker-dealers marketing the
Contracts, the Account, the Company, Lexington Fund, or LMC
by the National Association of Securities Dealers,
Inc. (the "NASD"), Securities and Exchange Commission (the
"SEC") or any other regulatory body;
(d) upon the requisite vote of Contract owners having an
interest in the Fund, to substitute for the Fund's shares
the shares of another investment company in accordance
with the terms of the applicable Contracts. The Company
will give 60 days written notice to Lexington Fund of any
proposed vote to replace the Fund's shares;
(e) upon assignment of the Agreement, unless made with the
written consent of all other parties hereto:
(f) if the Fund's shares are not registered, issued or sold
in conformance with Federal law or such law precludes the
use of Fund's shares as an underlying investment medium
for Contracts issued or to be issued by the Company.
Prompt notice shall be given by either party should such
situation occur.
7
<PAGE> 8
(g) If the need for substitution of the shares of another
investment company, pursuant to Section 20(b) of the 1940
Act, arises out of the Fund's failure to be registered,
issued or sold in conformance with federal law or such law
precludes the use of the Fund as an underlying
investment medium of contracts issued or to be issued by the
Company, the expenses of obtaining such order shall
be reimbursed by the Lexington Fund or LMC. Lexington Fund
and LMC shall cooperate with the company in
connection with such application.
8. Continuation of Agreement.
Termination as the result of any cause listed in Section 7 shall
not affect Lexington Fund's obligation to furnish its shares to Contracts then
in force for which its shares serve or may serve as the underlying medium
unless such further sale of Fund's shares is proscribed by law or the
SEC or other regulatory body.
9. Advertising Materials; Filed Documents
(a) Advertising and sales literature with respect to the Fund
prepared by the Company or its agents for use in marketing its
Contracts will be submitted to Lexington Fund or LMC for
review before such material is submitted to any regulatory
body for review.
(b) Lexington Fund will provide to the Company at least one
complete copy of all registration statements, prospectuses,
statements of additional information, annual and semiannual
reports, proxy statements and all amendments or supplements to
any of the above that relate to the Fund promptly after the
filing of such document with the SEC or other regulatory
authorities. The Company will provide to Lexington Fund at
least one complete copy of all registration statements,
prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, and all amendments or
supplements to any of the above that relate to each Account
promptly after the filing of such document with the SEC or
other regulatory authority.
10. Proxy Voting.
(a) The Company shall provide pass-through voting privileges
on Fund's shares to all Contract owners to the extent the
SEC continues to interpret the 1940 Act as requiring such
privileges. If shares are held in any other separate
account not required to be registered under the 1940 Act,
those shares will be voted in the Company's sole discretion.
8
<PAGE> 9
(b) The Company will distribute to Contract owners and
participants, as appropriate, all proxy material
furnished by Lexington Fund and will vote Fund's shares
in accordance with instructions received from Contract
owners. The Company, with respect to each Contract and
in each Account, shall vote Fund shares for which no
instructions have been received in the same proportion as
shares for which such instructions have been received. The
Company and its agents shall not oppose or interfere
with the solicitation of proxies for Fund shares held for
such Contract owners.
11. Indemnification.
(a) The Company agrees to indemnify and hold harmless
Lexington Fund, LMC, and each of its directors, trustees,
officers, employees, agents and each person, if any, who
controls the Fund or its investment adviser within the meaning
of the Securities Act of 1933 (the "1933 Act") against any
losses, claims, damages or liabilities to which the Fund or
any such director, officer, employee, agent, or controlling
person may become subject, under the 1933 Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, prospectus or
sales literature of the Company, or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements or representations (other than statements
or representations contained in the prospectuses or sales
literature of the Fund) of the Company or its agents, with
respect to the sale and distribution of Contracts for which
Fund shares are the underlying investment. The Company will
reimburse any legal or other expenses reasonably incurred
by the Fund or any such director, officer, employee, agent,
investment adviser, or controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based
upon an untrue statement or omission or alleged omission made
in such Registration Statement or prospectus in conformity
with written materials furnished to the Company by the Fund
specifically for use therein. This indemnity agreement will
be in addition to any liability which the Company may
otherwise have.
9
<PAGE> 10
(b) The Company shall not be liable under this Section 11. to
Lexington Fund, LMC or other parties covered under Section 11.
(a) with respect to any losses, claims, damages or liabilities
(or actions in respect thereof) incurred or assessed against
any such party (including Lexington Fund and LMC) as such may
arise from such party's willful misfeasance, bad faith, or
negligence in the performance of such party's duties or by
reason of such party's reckless disregard of obligations or
duties under this Agreement.
(c) Lexington Fund and LMC agree to indemnify and hold harmless
the Company and its directors, officers, employees, agents and
each person, if any, who controls the Company within the
meaning of the 1933 Act against any losses, claims, damages or
liabilities to which the Company or any such director,
officer, employee, agent or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in
the Registration Statement, prospectuses or sales literature
of the Fund, or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading. Lexington Fund will reimburse any
legal or other expenses reasonably incurred by the Company or
any such director, officer, employee, agent, or controlling
person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however,
that LMC and Lexington Fund will not be liable in any such
case to the extent that any such loss, claim, damage or
liability rises out of or is based upon a Registration
Statement or prospectuses which are in conformity with written
materials furnished to Lexington Fund by the Company
specifically for use therein. This indemnity agreement will
be in addition to any liability which Lexington Fund of LMC
may otherwise have.
(d) Lexington Fund and LMC agree to indemnify and hold harmless
the Company and its directors, officers, employees, agents and
each person, if any, who controls the Company within the
meaning of the 1933 Act against any losses, claims, damages or
liabilities to which the Company or any such director,
officer, employee, agent or controlling person may become
subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon the breach of any
representation or warranty in this Agreement by Lexington Fund
or LMC including but not limited to a failure of the Fund to
qualify under Subchapter M or a finding or claim that the
10
<PAGE> 11
Funds are not adequately diversified within the meaning of
Section 817(h) of the Code and/or that while this agreement is
in effect, all beneficial interests will be owned by one or
more insurance companies or by any other party permitted under
Section 1.817-5 (f)(3) of the Regulations promulgated under
the Code.
(e) Lexington Fund and LMC shall not be liable under this
Section 11. to the Company or other parties covered under
Section 11.(c) with respect to any losses, claims,
damages or liabilities (or actions in respect thereof)
incurred or assessed against any such party (including
the Company) as such may arise from such party's willful
misfeasance, bad faith, or negligence in the performance
of such party's duties or by reason of such party's
reckless disregard of obligations or duties under this
Agreement.
(f) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of action, such indemnified party
will, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party of
the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than
under this Section 11. In case any such action is brought
against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein
and, to the extent that it may wish to, assume the defense
thereof, with counsel satisfactory to such indemnified party
of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified
party under this Section 11 for any legal or other expenses
subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of
investigation.
12. Potential Conflicts.
(a) The Company has received a copy of an application for
exemptive relief, as amended, filed by Lexington Fund on
March 21, 1994, with the SEC and the order issued by the
SEC in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the
requested relief set forth in such application for exemptive
relief. As set forth in such application, the
Board of Directors of Fund (the "Board") will monitor the
11
<PAGE> 12
Fund for the existence of any material irreconcilable conflict
between the interests of the contract holders of all separate
accounts ("Participating Companies") investing in the Fund.
An irreconcilable material conflict may arise for a variety of
reasons, including: (i) an action by any state insurance
regulatory authority; (ii) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a
public ruling, private letter ruling, no-action or
interpretative letter, or any similar actions by insurance,
tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant
proceeding; (iv) the manner in which the investments of any
portfolio are being managed; (v) a difference in voting
instructions given by variable annuity contract holders and
variable life insurance contract holders; or (vi) a decision
by an insurer to disregard the voting instruction of contract
holders. The Board shall promptly inform the Company if it
determines that an irreconcilable material conflict exists and
the implications thereof.
(b) The Company will report any potential or existing
conflicts of which it is aware to the Board. The Company will
assist the Board in carrying out its responsibilities under
the Shared Funding Exemptive Order by providing the Board
with all information reasonably necessary for the Board to
consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Board whenever
contract holder voting instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable
conflict exists with regard to contract holder investments in
the Fund, the Board shall give prompt notice to all
Participating Companies. If the Lexington Fund or LMC is
responsible for causing or creating said conflict, the Company
shall at its sole cost and expense, and to the extent
reasonably practicable (as determined by a majority of the
disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict.
If the Board determines that the Company is responsible for
causing or creating said conflict, the Company shall at its
sole cost and expense, and to the extent reasonably
practicable (as determined by a majority of the disinterested
Board members), take such action as is necessary to remedy or
eliminate the irreconcilable material conflict. Such
necessary action may include but shall not be limited to:
12
<PAGE> 13
(i) withdrawing the assets allocable to the Account from
the Fund and reinvesting such assets in a different
investment medium or submitting the question of
whether such segregation should be implemented to
a vote of all affected contract holders and as
appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners,
life insurance contract owners, or variable contract
owners of one or more Participating Companies)
that votes in favor of such segregation, or offering
to the affected contract holders the option of making
such a change; and/or
(ii) establishing a new registered management investment
company or managed separate account.
(d) If a material irreconcilable conflict arises as a result
of a decision by the Company to disregard its contract
holder voting instructions and said decision represents
a minority position or would preclude a majority vote by
all of its contract holders having an interest in the
Fund, the Company at its sole cost, may be required, at the
Board's election, to withdraw an Account's investment
in the Fund and terminate this Agreement; provided,
however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of
the disinterested members of the Board.
(e) For the purpose of this Section 12, a majority of the
disinterested Board members shall determine whether or not
any proposed action adequately remedies any
irreconcilable material conflict, but in no event will
Lexington Fund be required to establish a new funding
medium for any Contract. The Company shall not be required
by this Section 12 to establish a new funding
medium for any Contract if an offer to do so has been
declined by vote of a majority of the Contract owners or
participants materially adversely affected by the
irreconcilable material conflict.
13. Miscellaneous.
(a) Amendment and Waiver. Neither this Agreement, nor any
provision hereof, may be amended, waived, discharged or
terminated orally, but only by an instrument in writing
signed by all parties hereto.
13
<PAGE> 14
(b) Notices. All notices and other communications hereunder
shall be given or made in writing and shall be delivered
personally, or sent by telex, telecopier or registered or
certified mail, postage prepaid, return receipt requested, to
the party or parties to whom they are directed at the
following addresses, or at such other addresses as may be
designated by notice from such party to all other parties.
To the Company:
Zurich Life Insurance Company of America
1 Kemper Drive
Long Grove, IL 60049
Attention: General Counsel
To Lexington Management Corporation:
Lexington Management Corporation
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
Attention: Lisa Curcio
Senior Vice President & Secretary
Any notice, demand or other communication given in a manner prescribed
in this subsection (b) shall be deemed to have been delivered on
receipt.
(c) Successors and Assigns. This agreement shall be binding
upon and inure to the benefit of the parties hereto and
their respective permitted successors and assigns.
(d) Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one agreement, and any party hereto may
execute this Agreement by signing any such counterpart.
(e) Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired
thereby.
(f) Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto and
supersedes all prior agreement and understandings
relating to the subject matter hereof.
(g) Governing Law. This Agreement shall be governed and
interpreted in accordance with the laws of the State of New
Jersey.
14
<PAGE> 15
14. Limitation on Liability of Trustees/Directors, etc.
This Agreement has been executed on behalf of the Fund by the undersigned
officer of the Fund in his/her capacity as an Officer of the Fund. The
obligations of this Agreement that pertain to the Fund shall only be binding
upon the assets and property of the Fund and shall not be binding upon any
individual trustee, director, officer or shareholder of the Fund. This
provision shall not affect the obligations or liabilities of LMC under this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement by
their duly authorized officers as of this day of ,1995.
ZURICH LIFE INSURANCE LEXINGTON MANAGEMENT CORPORATION
COMPANY OF AMERICA
BY: /s/ BY: /s/
----------------------------- ----------------------------
Name: Name:
Title: Title:
LEXINGTON EMERGING MARKETS FUND
BY: /s/
------------------------------
Name:
Title:
15
<PAGE> 1
EXHIBIT 8.3
FORM OF
JANUS ASPEN SERIES
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this day of , 1995, between
JANUS ASPEN SERIES, an open-end management investment company organized as a
Delaware business trust (the "Trust"), JANUS CAPITAL CORPORATION, a Colorado
corporation (the "Adviser"), and ZURICH LIFE INSURANCE COMPANY OF AMERICA, a
life insurance company organized under the laws of the State of Illinois (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A, as may be amended from time to time (the
"Accounts").
W I T N E S S E T H:
WHEREAS, the Trust is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Trust has
registered its shares under the Securities Act of 1933, as amended (the "1933
Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the Trust issues shares of beneficial interest, divided into
several series of shares, each series representing an interest in a particular
managed portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Trust has received an order from the SEC granting
Participating Insurance Companies and their separate accounts exemptions from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Trust to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies and certain qualified pension and retirement plans
(the "Exemptive Order"); and
WHEREAS, the Company desires to utilize shares of one or more
Portfolios as an investment vehicle for variable life insurance and/or variable
annuity contracts ("Contracts") funded by the Accounts; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Adviser serves as investment adviser to the Trust;
<PAGE> 2
NOW THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I.
Sale of Trust Shares
1.1. The Trust shall make shares of its Portfolios available to the
Accounts at the net asset value next computed after receipt of such purchase
order by the Trust (or its agent), as established in accordance with the
provisions of the then current prospectus of the Trust. Shares of a particular
Portfolio of the Trust shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of the
Contracts. The Trustees of the Trust (the "Trustees") may refuse to sell shares
of any Portfolio to any person, or suspend or terminate the offering of shares
of any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Trustees acting in
good faith and in light of their fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of
such Portfolio.
1.2. The Trust will redeem any full or fractional shares of any
Portfolio when requested by the Company on behalf of an Account at the net
asset value next computed after receipt by the Trust (or its agent) of the
request for redemption, as established in accordance with the provisions of the
then current prospectus of the Trust.
1.3. For the purposes of Sections 1.1 and 1.2, the Trust hereby
appoints the Company as its agent for the limited purpose of receiving and
accepting purchase and redemption orders resulting from investment in and
payments under the Contracts. Receipt by the Company shall constitute receipt
by the Trust provided that i) such orders are received by the Company in good
order prior to the time the net asset value of each Portfolio is priced in
accordance with its prospectus and ii) the Trust receives notice of such orders
by 11:00 a.m. New York time on the next following Business Day. "Business Day"
shall mean any day on which the New York Stock Exchange is open for trading and
on which the Trust calculates its net asset value pursuant to the rules of the
SEC.
1.4. Purchase orders that are transmitted to the Trust in accordance
with Section 1.3 shall be paid for by the Company no later than 12:00 noon New
York time on the same Business Day that the Trust receives notice of the order.
The Trust shall pay and transmit the proceeds of redemption orders that are
transmitted to the Trust in accordance with Section 1.3 no later than 12:00
noon New York time on the same Business Day that the Trust receives notice of
the redemption, except that the Trust reserves the right to postpone payment
upon redemption consistent with Section 22(e) of the 1940 Act and any rules
thereunder. Payments for such purchase orders will be made net of any
redemptions received on the same day as the purchase. Payments shall be made
in federal funds transmitted by wire.
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<PAGE> 3
1.5. Issuance and transfer of the Trust's shares will be by book
entry only. Stock certificates will not be issued to the Company or the
Account. Shares ordered from the Trust will be recorded in the appropriate
title for each Account or the appropriate subaccount of each Account.
1.6. The Trust shall furnish prompt notice to the Company of any
income dividends or capital gain distributions payable on the Trust's shares.
The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Trust shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.7. The Trust shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 6 p.m. New
York time. Any material error in the calculation or reporting of net asset
value per share shall be reported immediately upon discovery to the Company.
In such event the Company shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct net asset value per share
and the Trust or the Adviser shall bear the cost of correcting such errors.
Any error of a lesser amount shall be corrected in the next Business Day's net
asset value per share.
1.8. The Trust agrees that its shares will be sold only to
Participating Insurance Companies and their separate accounts and to certain
qualified pension and retirement plans to the extent permitted by the Exemptive
Order. No shares of any Portfolio will be sold directly to the general public.
The Company agrees that Trust shares will be used only for the purposes of
funding the Contracts and Accounts listed in Schedule A, as amended from time
to time.
1.9. The Trust agrees that all Participating Insurance Companies
shall have the obligations and responsibilities regarding pass-through voting
and conflicts of interest corresponding to those contained in Section 2.8 and
Article IV of this Agreement.
ARTICLE II.
Obligations of the Parties
2.1. The Trust shall prepare and be responsible for filing with the
SEC and any state regulators requiring such filing all shareholder reports,
notices, proxy materials (or similar materials such as voting instruction
solicitation materials), prospectuses and statements of additional information
of the Trust. The Trust shall bear the costs of registration and qualification
of its shares, preparation and filing of the documents listed in this Section
2.1. and all taxes to which an issuer is subject on the issuance and transfer
of its shares.
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<PAGE> 4
2.2. At the option of the Company, the Trust shall either (a) provide
the Company (at the Company's expense) with as many copies of the Trust's
current prospectus, annual report, semi-annual report and other shareholder
communications, including any amendments or supplements to any of the
foregoing, as the Company shall reasonably request; or (b) provide the Company
with a camera ready copy of such documents in a form suitable for printing.
The Trust shall provide the Company with a copy of its statement of additional
information in a form suitable for duplication by the Company. The prospectus
and statement of additional information provided by the Trust shall relate
either to all Portfolios of the Trust or only selected Portfolios of the Trust,
as the Company shall reasonably request. The Trust (at its expense) shall
provide the Company with copies of any Trust-sponsored proxy materials in such
quantity as the Company shall reasonably require for distribution to Contract
owners.
2.3. The Company shall bear the costs of printing and distributing
the Trust's prospectus, statement of additional information, shareholder
reports and other shareholder communications to owners of and applicants for
policies for which the Trust is serving or is to serve as an investment
vehicle. The Company shall bear the costs of distributing proxy materials (or
similar materials such as voting solicitation instructions) to Contract owners.
The Company assumes sole responsibility for ensuring that such materials are
delivered to Contract owners in accordance with applicable federal and state
securities laws.
2.4. The Company agrees and acknowledges that the Adviser is the sole
owner of the name and mark "Janus" and that all use of any designation
comprised in whole or part of Janus (a "Janus Mark") under this Agreement shall
inure to the benefit of the Adviser. Except as provided in Section 2.5, the
Company shall not use any Janus Mark on its own behalf or on behalf of the
Accounts or Contracts in any registration statement, advertisement, sales
literature or other materials relating to the Accounts or Contracts without the
prior written consent of the Adviser. Upon termination of this Agreement for
any reason, the Company shall cease all use of any Janus Mark(s) as soon as
reasonably practicable.
2.5. The Company shall furnish, or cause to be furnished, to the
Trust (or its designee), a copy of the initial Contract prospectus and
statement of additional information in which the Trust or the Adviser is first
named prior to the filing of such document with the SEC. The Company shall
furnish, or shall cause to be furnished, to the Trust (or its designee) a copy
of each subsequent Contract prospectus and statement of additional information
in which the Trust or the Adviser is named concurrently with the filing of such
document with the SEC provided that there are no material changes in disclosure
related to the Trust or the Adviser. The Trust may, in its reasonable
discretion, request that the Company modify any references to the Trust or the
Adviser in subsequent filings. The Company shall furnish, or shall cause to be
furnished, to the Trust (or its designee), each piece of sales literature or
other promotional material in which the Trust or the Adviser is named, at least
five Business Days prior to its use or concurrently with the filing of such
document with the National Association of Securities Dealers, Inc. ("NASD"),
whichever is greater. No such material shall be used if the Trust (or its
designee) reasonably objects to such use within five Business Days after
receipt of such material.
-4-
<PAGE> 5
2.6 The Trust shall furnish, or cause to be furnished, to the Company
(or its designee), a copy of any initial Trust prospectus and statement of
additional information in which the Company is first named prior to the filing
of such document with the SEC. The Trust shall furnish, or shall cause to be
furnished, to the Company (or its designee) a copy of each subsequent Trust
prospectus and statement of additional information in which the Company is
named concurrently with the filing of such document with the SEC provided that
there are no material changes in disclosure related to the Company. The
Company may, in its reasonable discretion, request that the Trust modify any
references to the Company in subsequent filings. The Trust shall furnish, or
shall cause to be furnished to the Company (or its designee) each piece of
sales literature or other promotional material in which the Company is named,
at least five Business Days prior to its use or concurrently with the filing of
such document with the NASD, whichever is greater. No such material shall be
used if the Company (or its designee) reasonably objects to such use within
five Business Days after receipt of such material.
2.7. The Company shall not give any information or make any
representations or statements on behalf of the Trust or the Adviser or
concerning the Trust or the Adviser in connection with the sale of the
Contracts other than information or representations contained in and accurately
derived from the registration statement or prospectus for the Trust shares (as
such registration statement and prospectus may be amended or supplemented from
time to time), reports of the Trust, Trust-sponsored proxy statements, or in
sales literature or other promotional material approved by the Trust or its
designee or the Adviser, except as required by legal process or regulatory
authorities or with the written permission of the Trust or its designee or the
Adviser.
2.8. Neither the Trust nor the Adviser shall give any information or
make any representations or statements on behalf of the Company or concerning
the Company, the Accounts or the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Contracts (as such registration statement and
prospectus may be amended or supplemented from time to time), or in materials
approved by the Company for distribution including sales literature or other
promotional materials, except as required by legal process or regulatory
authorities or with the written permission of the Company.
2.9. The Trust or the Adviser will provide the Company with as much
advance notice as is reasonably practicable of any material change affecting
the Portfolios (including, but not limited to, any material change in its
registration statement or prospectus affecting the Portfolios and any proxy
solicitation sponsored by the Trust or the Adviser affecting the Portfolios)
and consult with the Company in order to implement any such change in an
orderly manner, recognizing the expenses of changes and attempting to minimize
such expenses by implementing them in conjunction with regular annual updates
of the prospectus for the Contracts.
2.10. The Trust and the Adviser agree to maintain a blanket fidelity
bond or similar coverage for the benefit of the Trust in an amount not less
than the minimal coverage required by Section 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time under the 1940 Act.
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<PAGE> 6
2.11. So long as, and to the extent that the SEC interprets the 1940
Act to require pass-through voting privileges for variable policyowners, the
Company will provide pass-through voting privileges to owners of policies whose
cash values are invested, through the Accounts, in shares of the Trust. The
Trust shall require all Participating Insurance Companies to calculate voting
privileges in the same manner and the Company shall be responsible for assuring
that the Accounts calculate voting privileges in the manner established by the
Trust. With respect to each Account, the Company will vote shares of the Trust
held by the Account and for which no timely voting instructions from
policyowners are received as well as shares it owns that are held by that
Account, in the same proportion as those shares for which voting instructions
are received. The Company and its agents will in no way recommend or oppose or
interfere with the solicitation of proxies for Trust shares held by Contract
owners without the prior written consent of the Trust, which consent may be
withheld in the Trust's sole discretion, except in the event that the Company
determines, in reliance on an opinion of counsel, that a proxy proposal would
result in a violation of applicable insurance laws.
2.12. The Trust and Adviser shall use their best efforts to maintain
qualification of each Portfolio as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code of 1986, as amended ("Code") and
shall notify the Company immediately upon having a reasonable basis for
believing that a Portfolio has ceased to so qualify or that it might not so
qualify in the future. The Trust and the Adviser acknowledge that compliance
with Subchapter M is an essential element of compliance with Section 817(h).
2.13. The Trust and Adviser shall use their best efforts to enable
each Portfolio to comply with the requirements of Section 817(h) of the Code
and the regulations issued thereunder relating to the diversification
requirements for variable life insurance policies and variable annuity
contracts, and shall notify the Company immediately upon having a reasonable
basis for believing that any Portfolio has ceased or might cease to comply.
2.14. The Trust shall provide the Company or its designee with
reports certifying compliance with the aforesaid Section 817(h) diversification
and Subchapter M qualification requirements on a quarterly basis.
ARTICLE III.
Representations and Warranties
3.1. The Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the State of
Illinois and that it has legally and validly established each Account as a
segregated asset account under such law on the date set forth in Schedule A.
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<PAGE> 7
3.2. The Company represents and warrants that each of the Accounts
(1) has been registered as a unit investment trust in accordance with the
provisions of the 1940 Act or, alternatively (2) has not been registered in
proper reliance upon an exclusion from registration under the 1940 Act.
3.3. The Company represents and warrants that the Contracts or
interests in the Accounts (1) are or, prior to issuance, will be registered as
securities under the 1933 Act or, alternatively (2) are not registered because
they are properly exempt from registration under the 1933 Act or will be
offered exclusively in transactions that are properly exempt from registration
under the 1933 Act. The Company further represents and warrants that the
Contracts will be issued and sold in compliance in all material respects with
all applicable federal and state laws; and the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
3.4. The Trust represents and warrants that it is duly organized and
validly existing under the laws of the State of Delaware.
3.5. The Trust represents and warrants that the Trust shares offered
and sold pursuant to this Agreement are registered under the 1933 Act and the
Trust is registered under the 1940 Act. The Trust shall amend its registration
statement under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Trust shall
register and qualify its shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Trust.
3.6. The Trust and the Adviser represent and warrant that the
investments of each Portfolio will comply with the diversification requirements
set forth in Section 817(h) of the Code and the rules and regulations
thereunder.
3.7. The Adviser represents and warrants that it is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended, and
any applicable state securities laws.
ARTICLE IV.
Potential Conflicts
4.1. The parties acknowledge that the Trust's shares may be made
available for investment to other Participating Insurance Companies. In such
event, the Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed;
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<PAGE> 8
(e) a difference in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of contract owners. The Trustees shall
promptly inform the Company if they determine that an irreconcilable material
conflict exists and the implications thereof.
4.2. The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Exemptive Order by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
4.3. If it is determined by a majority of the Trustees, or a majority
of the disinterested Trustees, that a material irreconcilable conflict exists
that affects the interests of Contract owners, the Company shall, in
cooperation with other Participating Insurance Companies whose contract owners
are also affected, at its expense and to the extent reasonably practicable (as
determined by the Trustees) take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, which steps could include: (a)
withdrawing the assets allocable to some or all of the Accounts from the Trust
or any Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Trust, or submitting
the question of whether or not such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (b) establishing a new
registered management investment company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting instructions and
that decision represents a minority position or would preclude a majority vote,
the Company may be required, at the Trust's election, to withdraw the affected
Account's investment in the Trust and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees. Any such
withdrawal and termination must take place within six (6) months after the
Trust gives written notice that this provision is being implemented. Until the
end of such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of
the Trust.
4.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company will
withdraw the affected Account's investment in the Trust and terminate this
Agreement with respect to such Account within six (6) months after the Trustees
inform the Company in writing that it has determined that such decision has
created an irreconcilable material conflict; provided, however, that such
withdrawal and termination shall
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<PAGE> 9
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested Trustees. Until the
end of such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares of
the Trust.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Company be required to establish a new funding medium for the
Contracts if an offer to do so has been declined by vote of a majority of
Contract owners materially adversely affected by the irreconcilable material
conflict. In the event that the Trustees determine that any proposed action
does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the Account's investment in the Trust and terminate this
Agreement within six (6) months after the Trustees inform the Company in
writing of the foregoing determination; provided, however, that such withdrawal
and termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested
Trustees.
4.7. The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Exemptive
Order, and said reports, materials and data shall be submitted more frequently
if deemed appropriate by the Trustees.
4.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder with respect to
mixed or shared funding (as defined in the Exemptive Order) on terms and
conditions materially different from those contained in the Exemptive Order,
then the Trust and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable.
ARTICLE V.
Indemnification
5.1. Indemnification By the Company. The Company agrees to indemnify
and hold harmless the Trust, the Adviser, and each of their Trustees or
Directors, officers, employees and agents and each person, if any, who controls
the Trust or the Adviser within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Article V)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties
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<PAGE> 10
may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement or prospectus for the Contracts or in the
Contracts themselves or in sales literature generated or approved by
the Company on behalf of the Contracts or Accounts (or any amendment
or supplement to any of the foregoing) (collectively, "Company
Documents" for the purposes of this Article V), or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this indemnity shall
not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and was
accurately derived from written information furnished to the Company
by or on behalf of the Trust or the Adviser for use in Company
Documents or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Trust Documents as defined in Section 5.2(a)) or wrongful
conduct of the Company or persons under its control, with respect to
the sale or acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if
such statement or omission was made in reliance upon and accurately
derived from written information furnished to the Trust or the Adviser
by or on behalf of the Company; or
(d) arise out of or result from any failure by the Company to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company.
5.2. Indemnification By the Trust and the Adviser. The Trust and
Adviser agree to indemnify and hold harmless the Company and each of its
directors, officers, employees and agents and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Article V) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Adviser) or expenses (including the reasonable costs
of investigating or defending any alleged loss, claim, damage, liability or
expense and reasonable legal counsel fees incurred
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<PAGE> 11
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the Trust (or any amendment
or supplement thereto), (collectively, "Trust Documents" for the
purposes of this Article V), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this indemnity shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and was
accurately derived from written information furnished to the Trust by
or on behalf of the Company for use in Trust Documents or otherwise
for use in connection with the sale of the Contracts or Trust shares;
or
(b) arise out of or result from statements or representations
(other than statements or representations contained in and accurately
derived from Company Documents) or wrongful conduct of the Trust or
persons under its control, with respect to the sale or acquisition of
the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written information
furnished to the Company by or on behalf of the Trust; or
(d) arise out of or result from any failure by the Trust or
the Adviser to provide the services or furnish the materials required
under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Trust or Adviser in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Trust or Adviser.
5.3. None of the parties to this Agreement shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
5.4. None of the parties to this Agreement shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other parties in writing within a reasonable time after
the summons, or other first written notification, giving information
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<PAGE> 12
of the nature of the claim shall have been served upon or otherwise received by
such Indemnified Party (or after such Indemnified Party shall have received
notice of service upon or other notification to any designated agent), but
failure to notify the party against whom indemnification is sought of any such
claim or shall not relieve that party from any liability which it may have to
the Indemnified Party in the absence of Sections 5.1 and 5.2.
5.5. In case any such action is brought against the Indemnified
Parties, the indemnifying party shall be entitled to participate, at its own
expense, in the defense of such action. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from the indemnifying party to the
Indemnified Party of an election to assume such defense, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the indemnifying party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
ARTICLE VI.
Termination
6.1 This Agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of any party, for any reason upon ninety
(90) days advance written notice to the other parties, unless a
shorter time period is agreed to in writing by the parties to this
Agreement;
(b) at the option of the Company, upon one week advance
written notice to the Trust, if the Trust shares are not reasonably
available to meet the requirements of the Contracts as determined by
the Company;
(c) at the option of the Company, immediately upon
institution of formal proceedings against the Trust or Adviser by the
NASD, SEC, or any other regulatory body that are deemed by the Company
to materially affect the performance of the obligations under this
Agreement;
(d) at the option of the Trust or the Adviser, immediately
upon institution of formal proceedings against the broker-dealer or
broker-dealers marketing the Contracts, the Account, or the Company by
the NASD, SEC, or any other regulatory body that are deemed by the
Trust or Adviser to materially affect the performance of the
obligations under this Agreement;
(e) upon the requisite vote of Contract owners having an
interest in the Trust, or SEC approval of an application pursuant to
Section 26(b) of the 1940 Act, to substitute
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<PAGE> 13
for the Trust's shares the shares of another investment company in
accordance with the terms of the applicable Contracts. The Company
will give sixty (60) days written notice to the Trust of any proposed
application or vote to replace the Trust's shares. The Trust and
Adviser shall cooperate with the Company in connection with such
application;
(f) upon assignment (as defined in Section 2(a)(4) of the
1940 Act) of the Agreement, unless made with the written consent of
all other parties hereto;
(g) if the Trust's shares are not registered, issued or sold
in conformance with Federal law or such law precludes the use of the
Trust's shares as an underlying investment medium for Contracts issued
or to be issued by the Company. Prompt notice shall be given by each
party should such situation occur;
(h) by any party to the Agreement upon a determination by a
majority of the Trustees of the Trust, or a majority of its
disinterested Trustees, that an irreconcilable material conflict
exists;
(i) at the option of the Trust or Adviser if the Contracts
cease to qualify as annuity contracts or life insurance contracts, as
applicable, under the Code or if the Contracts are not registered,
issued or sold in accordance with applicable state and/or federal law;
or
(j) if the need for substitution of the shares of another
investment company, pursuant to Section 26(b) of the 1940 Act, arises
out of the Trust's failure to be registered, issued or sold in
conformance with federal law, including applicable tax law, the
expenses of obtaining such order shall be reimbursed by the Trust or
Adviser. The Trust and Adviser shall cooperate with the Company in
connection with such application.
6.2 Notwithstanding any termination of this Agreement, the Trust
shall, at the option of the Company, continue to make available additional
shares of the Trust (or any Portfolio) pursuant to the terms and conditions of
this Agreement for all Contracts in effect on the effective date of termination
of this Agreement provided that the Company continues to pay the costs set
forth in Section 2.3.
6.3. The provisions of Articles III and V shall survive the
termination of this Agreement, and the provisions of Article IV and Section
2.11 shall survive the termination of this Agreement as long as shares of the
Trust are held on behalf of Contract owners in accordance with Section 6.2.
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<PAGE> 14
ARTICLE VII.
Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
100 Fillmore Street, Suite 300
Denver, Colorado 80206
Attention: David C. Tucker, Esq.
If to the Company:
1 Kemper Drive
Long Grove, Illinois 60049
Attention: General Counsel
If to the Adviser:
100 Fillmore Street, Suite 300
Denver, Colorado 80206
Attention: David C. Tucker, Esq.
ARTICLE VIII.
Miscellaneous
8.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
8.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
8.4. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of State of Colorado.
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<PAGE> 15
8.5. The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
8.6. Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
8.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
8.8. The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder
may be assigned by either party without the prior written approval of the other
party.
8.10. No provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
ZURICH LIFE INSURANCE COMPANY OF AMERICA
By: /s/
---------------------------
Name:
---------------------------
Title:
---------------------------
JANUS ASPEN SERIES
By: /s/
---------------------------
Name:
---------------------------
Title:
---------------------------
JANUS CAPITAL CORPORATION
By: /s/
---------------------------
Name:
---------------------------
Title:
---------------------------
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<PAGE> 17
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Contracts Funded
Date Established by Board of Directors By Separate Account
Zurich Life Variable Annuity
Separate Account established
1995
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<PAGE> 1
EXHIBIT 13
SCHEDULES FOR COMPUTATION OF PERFORMANCE CALCULATIONS
This exhibit reflects the calculation of certain
performance figures that appear under "Performance"
in Part B.
A. TOTAL RETURN
Formula. The total return performance of the Subaccounts for a
specified period equals the change in the value of a hypothetical initial
purchase payment of $10,000 ("Purchase Payment") from the beginning of the
period to the end of the period. The total return performance is calculated
assuming the change in the value of the Purchase Payment fully allocated to
each subaccount and the deduction of all expenses and fees, including a
prorated portion of the $36 annual policy fee. This proration is based on the
total number of contract holders. No withdrawals are assumed. Total Return
may be expressed either as a dollar value or as a percentage change. The
percentage change in the value of the Purchase Payment for the period is
calculated by subtracting the initial Purchase Payment from the ending value
and dividing the remainder by the beginning value:
EV - P
Percentage Change = ------
P
P = Purchase Payment
The decimal return is converted to a percentage by multiplying by 100.
B. AVERAGE ANNUAL TOTAL RETURN
Formula. The average annual total return (AATR) performance of the
Subaccounts for a specified period equals the change in the value of a
hypothetical initial purchase payment of $1,000 ("Purchase Payment") from the
beginning of the period to the end of the period. The AATR performance is
calculated assuming the change in the value of the Purchase Payment fully
allocated to each subaccount and the deduction of all expenses and fees,
including a prorated portion of the $36 annual policy fee. This proration is
based on the total number of contract holders. At the end of the specified
period, it is assumed that a full surrender is taken. The AATR for a specific
period is found by taking a hypothetical $1,000 Purchase Payment and computing
the redeemable value at the end of the period after all fees and surrender
charges. The Ending Redeemable Value (ERV) is then divided by the
<PAGE> 2
Purchase Payment, and this quotient is taken to the Nth root (N representing
the number of years in the period) and 1 is subtracted from the result, which
is then expressed as a percentage. Thus, the following formula applies:
(ERV)
Average Annual Total Return = (---) 1/N - 1
( P )
ERV = Ending Redeemable Value
P = Purchase Payment
N = Number of years
The decimal return is converted to a percentage by multiplying by 100
<PAGE> 3
YIELD CALCULATION
The yield for a Subaccount is computed in accordance, with a standard
method prescribed by rules of the Securities and Exchange Commission. Yield is
a measure of the net dividend and interest income earned over a specific one
month or 30-day period. The yield quotations are based on a 30-day (or one
month) period and computed by dividing that net investment income per
accumulation unit earned during the period by the maximum offering price per
unit on the last day of the period according to the following formula;
a - b
YIELD = 2 [( ----- + 1)6 - 1]
cd
WHERE:
a = net investment income earned during the period by the
portfolio attributable to shares owned by the subaccount.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of accumulation units outstanding
during the period.
d = the maximum offering price per accumulation unit on the last
day of the period.
MONEY MARKET SUBACCOUNTS
YIELD CALCULATION
1. FORMULA. Each Subaccount's current yield quotation is based on a
seven-day period and is calculated as follows. The first calculation is "base
period return before maintenance fee", which is the net change in the
Accumulation Unit Value ("AUV") during the period resulting from net investment
income divided by the AUV at the beginning of the period. Realized capital
gains or losses and unrealized appreciation or depreciation are not included in
the calculation. The next calculation is "base period maintenance fee", which
is the annual maintenance fee prorated for the seven-day period and divided by
the average contract size.
The "base period return" is then calculated by subtracting the base
period maintenance fee from the base period return before maintenance fee. The
result is then divided by 7 and multiplied by 365 and the resulting yield
figure is carried to the nearest one-hundredth of one percent.
Each Subaccount's effective yield is determined by taking the base
period return (calculated as described above) and calculating the effect of
assumed compounding. The formula for the effective yield is:
365/7
(base period return + 1) - 1.
<PAGE> 1
EXHIBIT 14
CHART OF ZURICH INSURANCE GROUP - UNITED STATES
SHOWING RELATIONSHIP WITH SUBSIDIARIES
AND OTHER COMPANIES
<TABLE>
<S><C>
ZURICH INSURANCE COMPANY
ZURICH, SWITZERLAND
Owns 100% of - Zurich Holding Co. of America [US-DE]
owns 100% of - American Guarantee and Liability Insurance Co. [US-NY]
owns 100% of - Steadfast Insurance Co. [US-DE]
owns 100% of - American Zurich Ins. Co. [US-IL]
owns 100% of - Zurich American Insurance Co. of Illinois [US-IL]
owns 100% of - Atlas General, Inc. [US-FL]
owns 100% of - Atlas General Agency, Inc. [US-FL]
Trust Agreements Zurich American Lloyds [US-TX]
owns 100% of - Empire Fire & Marine Ins. Co. [US-NE]
owns 100% of - Empire Indemnity Ins. Co. [US-OK]
owns 100% of - Douglas Street Premium Finance Co. of California [US-CA]
owns 100% of - Douglas Street Premium Finance Co. [US-NE]
owns 51% of - Truckwriters, Inc. [US-NE]
owns 100% of - Zurich Global Ltd. (Bda)
owns 100% of - Universal Underwriters Acceptance Corp. [US-KA]
owns 100% of - Universal Underwriters Service Corp. [US-MO]
owns 100% of - Universal Underwriters Service Corp. of Texas [US-TX]
owns 100% of - The Zurich Services Corporation [US-IL]
owns 100% of - Zurich American Brokerage, Inc. [US-NY]
owns 100% of - Zurich Direct, Inc. [US-IL]
-----------------------------------------------------
owns 17.5% of - Maryland Casualty Co. [US-MD]
owns 82.5% of - Maryland Casualty Co. [US-MD]
-----------------------------------------------------
owns 100% of - Assurance Company of America [US-NY]
owns 100% of - Maine Bonding & Casualty Co. [US-ME]
owns 100% of - Maryland Insurance Company [US-TX]
owns 100% of - The Maryland Insurance Group Agency, Inc. [US-MD]
owns 100% of - Maryland Management Corp. [US-TX]
Trust Agreements - Maryland Lloyds [US-TX]
owns 100% of - Maryland Construction Agency Services, Inc. [US-TX]
owns 100% of - National Standard Ins. Co. [US-TX]
owns 100% of - Northern Insurance Co. of New York [US-NY]
owns 100% of - Steadfast Reinsurance Co. Ltd. (Bda)
owns 100% of - Valiant Insurance Co. [US-IA]
owns 100% of - Fidelity & Deposit Company of Maryland [US-MD]
owns 100% of - Colonial American Casualty & Surety Co. [US-MD]
owns 100% of - 300 St. Paul Corporation [US-MD]
owns 51% of - Maryland Netherlands Credit Ins. Co. [US-MD]
owns 100% of - Universal Underwriters Ins. Co. [US-MO]
owns 100% of - Universal Underwriters of Texas [US-TX]
owns 100% of - Mountain Ins. Agency [US-MA]
owns 100% of - Universal Underwriters Life Ins. Co. [US-MO]
owns 82.7% of - Zurich Life Insurance Company of America [US-IL]
</TABLE>
<PAGE> 2
CHART OF ZURICH INSURANCE GROUP - UNITED STATES
SHOWING RELATIONSHIP WITH SUBSIDIARIES
AND OTHER COMPANIES
<TABLE>
<S><C>
ZURICH INSURANCE COMPANY
ZURICH, SWITZERLAND
owns 99+% of - Zurich Life Insurance Co. (Zurich, Switzerland)
Zurich Life Insurance Company of America [US-IL]
owns 100% of - Zurich International (Bermuda) Ltd. [Bda]
-------------------------------------------------------------
owns 35% of - Zurich Centre Investments Limited [Bda]
owns 65% of - Zurich Centre Investments Limited [Bda]
-------------------------------------------------------------
Owns 100% of - Centre Reinsurance Services (Bermuda) Limited [Bda]
Owns 48% of - Titan Insurance Holding Co., Ltd. [Bda]
Owns 100% of - Titan Insurance Co., Ltd. [Bda]
Owns 44% of - Insurance GenPar (Bermuda), L.P. [Bda]
Owns 1% and serves as GP of -
Insurance Partners Offshore (Bermuda) (Bermuda) Limited [Bda]
Owns 100% of - Centre Reinsurance Holdings Limited [Bda]
Owns 100% of - Centre Reinsurance (Bermuda) Limited [Bda]
Owns 19.9% of - Risk Management Solutions [US]
Owns 24% of - Centre Cat Limited [Bda]
Owns 100% of - Centre Reinsurance Limited [Bda]
Owns 54% of - Insurance Partners Offshore (Bermuda) (Bermuda) Limited [Bda]
Owns 33% of - International Insurance Advisors, Inc. [US]
Owns 100% of - Anglo American Insurance Group Limited [Bda]
Owns 100% of - Anglo American Insurance Co. (Bermuda) Limited [Bda]
Owns 100% of - Centre Reinsurance Representatives Limited [UK]
Owns 100% of - Centre Reinsurance Services (Bermuda) III Limited [Bda]
Owns 100% of - Superior National Capital, L.P. [Bda]
Owns 100% of - Centre Reinsurance Holdings (Delaware)
Owns 100% of - Centre Finance Dublin [Ire]
Owns 100% of - CentreLine Reinsurance Limited [Bda]
Owns 100% of - Mendip Insurance & Reinsurance Company Limited [Bda]
Owns 100% of - Centre Reinsurance Services (Bermuda) IV Limited [Bda]
Owns 100% of - ZC Healthcare Risk Solutions [US-DE]
--------------------------------------------------------------
Owns 58% of - Zurich Reinsurance Centre Holdings, Inc. [US-De]
42% Publicly Owned
--------------------------------------------------------------
Owns 100% of - Zurich Reinsurance Centre, Inc. [US-CT]
Owns 100% of - Re Capital [US-NJ]
Owns 100% of - RCI Systems, Inc. [US-DE]
Owns 94% of - Cedar Hill Holdings Inc. [US-DE]
Owns 100% of - Cedar Hill Assurance Company [US-TX]
Owns 100% of - Centre ReSource Limited [US-DE]
Owns 100% of - Centre Financial Services Holdings Limited [Bda]
Owns 5% of - The Pharmacy Fund, Inc. [US-NY]
Owns 100% of - Synthetic Re Advisors Limited [US-DE]
Owns 1% and serves as GP of - Synthetic Re Advisors
Owns 100% of - Centre Trading Holdings Limited [Bda]
Owns 34.5% of - Centre Trading Partners, L.P. [US-DE]
Owns 50% of - CentRe Mortgage Capital LLC [US-DE]
Owns 100% of - National Mortgage Capital LLC [US-MD]
Owns 45% of - Centre Trading Corporation [US-DE]
Owns 1% of - Centre Trading Parnters, L.P. [US-DE]
Owns 100% of - Centre Software Corporation [US-DE]
Owns 1% and serves as GP of - Centre Software Partners, L.P. [US-DE]
Owns 100% of - CF Products Incorporated [US-DE]
Owns 1% and serves as GP of - CF Products Partners L.P. [US-DE]
Owns 100% of - ZCI Investments Limited [Bda]
Zurich Home Investments Limited [Bda]
Owns 4% of - Home Holdings, Inc. [US-DE]
</TABLE>
<PAGE> 3
CHART OF ZURICH INSURANCE GROUP - UNITED STATES
SHOWING RELATIONSHIP WITH SUBSIDIARIES
AND OTHER COMPANIES
<TABLE>
<S><C>
ZURICH INSURANCE COMPANY
ZURICH, SWITZERLAND
-------------------------------------------------------------
owns 35% of - Zurich Centre Investments Limited [Bda]
owns 65% of - Zurich Centre Investments Limited [Bda]
-------------------------------------------------------------
Owns 100% of - Centre Investment Services Limited [Bda]
Owns 100% of - Centre Investment Services II Limited (Bermuda) [Bda]
Owns 100% of - Centre Investment Services (Delaware) Limited [US-DE]
Owns 50% of - Centre Chase Investment Advisors L.P. [US-DE]
Owns 75% of - Risk Enterprise Management Limited [US-DE]
Owns 100% of - Centre Reinsurance Services (Bermuda) II Limited [Bda]
Owns 44% of - Insurance GenPar LP [US-De]
Owns 1% and serves as GP of - Insurance Partners LP [US-DE]
Owns 43% of - IPC GenPar (Bermuda) LP [Bda]
Owns 1% and serves as GP of - Insurance Partners Charman (Bermuda) LP [Bda]
Owns 100% of - Centre Reinsurance Services (Delaware) Limited [US-DE]
Owns 44% of - Service GenPar LP [US-DE]
Owns 1% and serves as GP of Insurance Partners Advisors LP [US-DE]
</TABLE>
<PAGE> 4
CHART OF ZURICH INSURANCE GROUP - UNITED STATES
SHOWING RELATIONSHIP WITH SUBSIDIARIES
AND OTHER COMPANIES
<TABLE>
<S><C>
ZURICH INSURANCE COMPANY
ZURICH, SWITZERLAND
-------------------------------------------------------------
owns 35% of - Zurich Centre Investments Limited [Bda]
owns 65% of - Zurich Centre Investments Limited [Bda]
-------------------------------------------------------------
Owns 100% of - Centre Reinsurance Holdings Limited [Bda]
Owns 100% of - Centre Reinsurance (Bermuda) Limited [Bda]
Owns 100% of - Centre Reinsurance Limited [Bda]
Owns 32.22% of - International Insurance Investors, L.P. [Bda]
Owns 4% of - Home Holdings, Inc. [US-DE]
Owns 100% of - The Home Insurance Co. [US-NH]
Owns 100% of - Centre Reinsurance International Company [Ire]
Owns 100% of - Centre Insurance International Co. [Ire]
Owns 100% of - Centre Reinsurance Dublin [Ire]
Owns 100% of - Centre Finance Dublin International [Ire]
Owns 100% of - Anglo American Insurance Group (UK) PLC [UK]
Owns 100% of - Anglo American Insurance Holdings Limited [UK]
Owns 100% of - Anglo American Underwriting Underwriting Management Limited [UK]
Owns 100% of - Anglo American Insurance Management Services Limited [UK]
Owns 100% of - Anglo American Insurance Co. Limited [UK]
Owns 100% of - Mercantile Indemnity Limited [UK]
Owns 100% of - Centre Reinsurance Holdings (Delaware)
Owns 100% of - Centre Reinsurance (US) Limited [Bda]
Owns 100% of - Centre Reinsurance Company of New York [US-NY]
Owns 19% of - Insurance Partners Advisors LP [US-DE]
Owns 5% of - Risk Enterprise Management Limited [US-DE]
Owns 100% of - Constellation Reinsurance Company [US-NY]
Owns 100% of - BDA/US Services Limited [US-DE]
Owns 100% of - Centre Re Services, Inc. [US-NY]
Owns 49% of - Integrated Runoff Insurance Services Corp. (IRISC) [US-NJ]
Owns 100% of - IRISC London Limited [UK]
Owns 20% of - Risk Enterprise Management Limited [US-DE]
</TABLE>
<PAGE> 5
CHART OF ZURICH INSURANCE GROUP - UNITED STATES
SHOWING RELATIONSHIP WITH SUBSIDIARIES
AND OTHER COMPANIES
<TABLE>
<S><C>
ZURICH INSURANCE COMPANY
ZURICH, SWITZERLAND
Owns 100% of - Zurich International Service [Ire]
Owns 100% of - Zurich International Service [Lxm]
Owns 99.99% - of Marofinac [Mor]
Owns 5% of - Arab International Insurance Co. [Egy]
Owns 99.99% of - La Garantie Generale Marocaine (GGM) [Mor]
Owns 0.923% of - Genevoise Generale (Geneva General Insurance Co.) [Sw]
Owns 80% of - Zurich Life Assurance Company Ltd. [UK]
Owns 50% of - Previservice S.p.A. [Ity]
Owns 67% of - Genevoise Vie (Geneva Life Insurance Co.) [Sw]
Owns 0.923% of - Zurich International [Blg]
Owns 100% of - Assuricum Zurich [Sw]
Owns 99.87% of - Zurich Leben (Life) Insurance Company [Sw]
Owns 100% of - Zurich-Leben PKB [Sw]
Owns 5% of - National Insurance Company (Runoff) [Lxm]
Owns 100% of - Societe Jacquet [Blg]
Owns 90% of - Zurich Life International Services, Ltd. [UK]
Owns 20% of - Zurich Life Assurance Company Ltd. [UK]
Owns 50% of - Previservice S.p.A. [Ity]
Owns 22.6% of - Genevoise Vie (Geneva Life Insurance Co.) [Sw]
Owns 99.075% of - Zurich International [Blg]
Owns 15% of Alstadt Insurance Co. [Sw]
Owns 1% of - ASSURYS Compagnie d'Assurances [Fra]
Owns 10% of - Zurich Epargne Compagnie d'Assurances [Fra]
Owns 100% of - Rud, Blass & Cie AG [Sw]
Owns 5% of - National Insurance Company (Runoff) [Sau]
Owns 100% of Genevoise Generale (Geneva General Insurance Co.) [Sw]
Owns 10.32% of Zurich International (France) S.A. [Fra]
Owns 99.99% of - S.G.E.A. [Fra]
Owns 20% of - ASSURYS Compagnie d'Assurances [Fra]
Owns 2% of - Zurich Epargne Compagnie d'Assurances [Fra]
Owns 90% of - Zurich Insurance Services [Bah]
Owns 99.46% of - Zurich do Brazil [Brz]
Owns 32% of - CAARS [Brz]
Owns 100% of - Zurich-Anglo Seguradora S.A. [Brz]
Owns 60% of - Zurich Asia Holdings Ltd. [Ber]
Owns 80.77% of - Danubio Compagnia di Assicurazioni S.p.A. [Ity]
Owns 58.64% of - Zurich International (France) S.A. [Fra]
Owns 96.99% of - ASSURYS Compagnie d'Assurances [Fra]
Owns 99.87% of - Alpina Insurance Co. [Sw]
Owns 19.23% of - Danubio Compagnia di Assicurazioni S.p.A. [Ity]
Owns 31.01% of - Zurich International (France) S.A. [Fra]
Owns 69.99% of - Zurich Epargne Compagnie d'Assurances [Fra]
Owns 74.05% of - Alstadt Insurance Co. [Sw]
Owns 100% of - Turegum Insurance Co. [Sw]
Owns 33.3% of Zurich Holdings (UK) Ltd. [UK]
Owns 100% of - Pilot Association [UK]
Owns 10% of - Zurich Life International Services, Ltd. [UK]
Owns 100% of Zurich Re (UK) Ltd. [UK]
Owns 100% of - Zurich International (UK) Ltd. [UK]
Owns 100% of - General Surety Holding, Ltd. [UK]
Owns 100% of - General Surety & Guarantee Co. [UK]
Owns 10% of - Zurich Insurance Services [Bah]
Owns 0.54% of - Zurich do Brazil [Brz]
Owns 7.5% of - Zurich Asia Holdings Ltd. [Ber]
Owns 56.7% of - Zurich Insurance (Malaysia) Sdn Bhd. [Mal]
Owns 100% of - Malayan Zurich Insurance (runoff) [Png]
Owns 100% of - Zurich Insurance (Guam) Inc. [Gua]
Owns 66.6% of - Zurich Holdings (UK) Ltd. [UK]
Owns 100% of - Zurich Investment Management AG [Sw]
</TABLE>
<PAGE> 6
CHART OF ZURICH INSURANCE GROUP - UNITED STATES
SHOWING RELATIONSHIP WITH SUBSIDIARIES
AND OTHER COMPANIES
<TABLE>
<S><C>
ZURICH INSURANCE COMPANY
ZURICH, SWITZERLAND
Owns 99.025% of - Agrippina Verischerung [Ger]
Owns 100% of - Central Lloyd Verwaltungsges mbH [Ger]
Owns 100% of - Anas Inv. Ltd. Dublin [Ire]
Owns 96.224% of - Agrippina Lebensverischerung AG [Ger]
Owns 1.52% of Agrippina Ruckverischerung AG [Ger]
Owns 87.222% of - Agrippina Ruckverischerung AG [Ger]
Owns 99.275% of - Patria Versicherung AG [Ger]
Owns 1.367% of - Agrippina Ruckverischerung AG [Ger]
Owns 100% of - Agrippina Rechtsschutzverischerung AG [Ger]
Owns 50% of - ZBV Beratungs-u. Verkaufs-AG [Sw]
Owns 100% of - HERA Vermogensverwaltung GmbH [Ger]
Owns 5% of - Saudi National Insurance Company, E.C. (SNIC) [Sau]
Owns 50% of - African International Insurances (A.I.I.) [Kny]
Owns 42.7% of - Iguazu Compania de Seguros [Arg]
Owns 69.3% of - Zurich Iguazu Compania de Seguros de Retiro S.A. [Arg]
Owns 30% of - Zurich Iguazu Compania de Seguros de Retiro S.A. [Arg]
Owns 100% of - Zurich Internacional de Venezuela [Ven]
Owns 30% of - Zurich Chapultepec Compania de de Seguros S.A. [Mex]
Owns 100% of - Zurich Beteiligungs - AG [Ger]
Owns 16.7% of - BFI Betieigungsges fur Industriewerte [Ger]
Owns 2% of - Deutsche Bank Bauspar AG [Ger]
Owns 100% of - Deutsche Allgemeine Leben Verischerung AG [Ger]
Owns 100% of - Zurich Allgemeine Verischerung AG [Ger]
Owns 100% of - Zurich Rechtsschutz-Versicherungs-AG [Ger]
Owns 100% of - Zurich Kautions-und Kredit-AG [Ger]
Owns 100% of - Zurich International (Deutschland) [Ger]
Owns 80% of - Zurich Investmentges [Ger]
Owns 100% of - Zurich Gesellschaft fur Vermogensanlagen [Ger]
Owns 96% of - D. Kern Steuerberatung [Ger]
Owns 100% of - Zurich International (Netherland) N.V. [Nth]
Owns 100% of - Bastion B.V. [Nth]
Owns 100% of - Zurich International (Italia) S.p.A. [Ity]
Owns 100% of - Zurich Insurance Company, U.K. [UK]
Owns 100% of - Metropole [Spn]
Owns 100% of - Fairfax House Securities Ltd. [UK]
Owns 100% of - Caudal S.A. de Seguros y Reaseguros [Spn]
Owns 100% of - Zurich International (Espana) Compania [Spn]
Owns 100% of - Gestora [Spn]
Owns 100% of - Santorio Zurbaran [Spn]
Owns 100% of - Consultores de Pensiones [Spn]
Owns 100% of - Carteastur [Spn]
Owns 100% of - Zurich Kosmos Verischerungen AG [Aus]
Owns 15% of - Garant Eurasco [Aus]
Owns 100% of - Zurich Uberzpieczenle Service Sp.z.o.o. (Zurich Verischerung Service GmbH) [Pol]
Owns 100% of - Zurich Biztositasi Szolgaltato Kft. (Zurich Verischerung Service GmbH) [Hun]
Owns 99.99% of - Inversiones Suizo Chilena [Chl]
Owns 99.65% of - Compania de Seguros Chilena de Vida (Life Insurance Co.) [Chl]
Owns 73.15% of - Compania de Seguros Chilena Generales (Chilean General Insurance) [Chl]
Owns 2.36% of - Compania de Seguros Chilena Generales (Chilean General Insurance) [Chl]
Owns 49.96% of - Minerva Assicurazioni S.p.A. [Ity]
Owns 99.96% of - SIAR (Societa Italiana Assicurazioni e Riassicurazionio) S.p.A. [Ity]
Owns 42.51% of Minerva Vita Assicurazioni S.p.A. [Ity]
Owns 63.5% of - Sicurta 1879 Assicurazioni S.p.A. [Ity]
Owns 50.02% of - Minerva Assicurazioni S.p.A. [Ity]
Owns 24.95% of - Minerva Vita Assicurazioni S.p.A. [Ity]
Owns 63.53% of - Zeta Finanza S.p.A. [Ity]
Owns 0.08% of - Zetasim [Ity]
Owns 35% of ATAM [Ity]
Owns 63% of - Zetasim [Ity]
Owns 1.13% of - Zeta Finanza S.p.A. [Ity]
Owns 35.71% of Edil-Spettacolo [Ity]
Owns 0.05% of - Zetasim [Ity]
Owns 50% of - Toscana Uno [Ity]
Owns 63.11% of - ATAM [Ity]
Owns 36.5% of - Sicurta 1879 Assicurazioni S.p.A. [Ity]
Owns 29.01% of - Minerva Vita Assicurazioni S.p.A. [Ity]
Owns 19.54% of Zeta Finanza S.p.A. [Ity]
Owns 100% of - Zeta Fiduciaria [Ity]
Owns 100% of - Zeta Fondi [Ity]
Owns 100% of - Zetagest [Ity]
Owns 100% of - Erbasei S.p.A. [Ity]
Owns 36.07% of Zetasim [Ity]
</TABLE>
<PAGE> 7
CHART OF ZURICH INSURANCE GROUP - UNITED STATES
SHOWING RELATIONSHIP WITH SUBSIDIARIES
AND OTHER COMPANIES
<TABLE>
<S><C>
ZURICH INSURANCE COMPANY
ZURICH, SWITZERLAND
Owns 75% of - Zurich Australian Insurance Holdings, Ltd. [Ast]
Owns 25% of - Zurich Australian Insurance Properties Pty. Ltd. [Ast]
Owns 100% of - Zurich Australian Insurance Ltd. [Ast]
Owns 25% of - Zurich Australian Insurance Properties Pty. Ltd. [Ast]
Owns 100% of - Zurich Australian Life Insurance Ltd. [Ast]
Owns 50% of - Zurich Australian Insurance Properties Pty. Ltd. [Ast]
Owns 51% of - National Accountancy Management Services Pty. Ltd. (NAMS) [Ast]
Owns 100% of - Zurich Investment Management AG [Ast]
Owns 100% of - Zurich Australian Superannuation Pty. Ltd. [Ast]
Owns 100% of - Zurich Properties Ltd. [Ast]
Owns 100% of - Zurich Australian Insurance Ltd. [Ast]
Owns 100% of - Zurich Australian Workers Compensation Victoria Pty. Ltd [Ast]
Owns 25% of - Australian Insurance Systems Holdings Pty. Ltd. [Ast]
Owns 33% of - Machinery Insurance Services Pty. Ltd. [Ast]
Owns 87.25% of - Zurich Pacific Insurance Pty. Ltd. [Png]
Owns 100% of - Zurich Australian Workers Compensation Ltd. [Ast]
Owns 50% of - Associated Marine Insurers [Ast]
Owns 100% of - Zurich Canadian Holdings Ltd. [Can]
Owns 100% of - Zurich Indemnity of Canada [Can]
Owns 50% of - Multi Services Canada, Inc. [Can]
Owns 50% of - World Travel Protection, Inc. [Can]
Owns 50% of - Zurich Canada Investment Management, Ltd. [Can]
Owns 100% of - ZURMEX Canadian Holdings, Ltd. [Can]
Owns 100% of - Zurich Life of Canada Holdings, Ltd. [Can]
Owns 100% of - Zurich Life & Health Insurance Company [Can]
Owns 90% of - Zurich Life Insurance Company of Canada [Can]
Owns 10% of - Zurich Life Insurance Company of Canada [Can]
Owns 100% of - MICO Holdings Ltd. [Bah]
Owns 100% of - MICO Holdings Ltd. [Bah]
Owns 15.91% of - MICO Equities Inc. [Phl]
Owns 51.37% of - Eastern General Reinsurance Corp. [Phl]
Owns 47.98% of - First Nationwide Assurance Corporation [Phl]
Owns 14.40% of - MICO Equities Inc. [Phl]
Owns 99.99% of - Malayan International Insurance Company [Bah]
Owns 100% of - Malayan Insurance Co. (UK) Ltd. [UK]
Owns 18.23% of - Eastern General Reinsurance Corp. [Phl]
Owns 11.51% of - First Nationwide Assurance Corporation [Phl]
Owns 100% of - Trans-Pacific Insurance Co. (Australia) Ltd. (In liquidation) [Ast]
Owns 100% of - Malayan Insurance Co., Inc. (MICO) [Phl]
Owns 70% of - Malayan Zurich Insurance Co. [Phl]
Owns 70% of - Eastern General Reinsurance Corp. [Phl]
Owns 38.03% of - First Nationwide Assurance Corporation [Phl]
Owns 60% of - Pan Malayan Insurance Co. [Phl]
Owns 15.96% of - First Nationwide Assurance Corporation [Phl]
Owns 99.99% of - Asia-Pacific Reinsurance Co., Ltd. [Bvi]
Owns 100% of - Malayan Insurance Co. (Hong Kong) Ltd. [Hkg]
Owns 100% of - American Bristol Corp. [US]
Owns 100% of - American Bristol Insurance Company [US]
Owns 80% of - P.T. Zurich Insurance Indonesia [Ind]
Owns 70% of - P.T. PSP Life Insurance Indonesia [Ind]
Owns 75% of - Zurich Insurance Co. (Asia) Ltd. [Hkg]
Owns 30% of - Malayan Zurich Insurance Co. [Phl]
</TABLE>
