File Nos. 33-
811-
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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. ___ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. ___ [ ]
(Check appropriate box or boxes.)
Great American Reserve Variable Annuity Account G
_________________________________________________
(Exact Name of Registrant)
Great American Reserve Insurance Company
_________________________________________
(Name of Depositor)
11825 N. Pennsylvania Street, Carmel, Indiana 46032-4572
______________________________________________ __________
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (317) 817-3700
Name and Address of Agent for Service
Lawrence W. Inlow
Secretary and General Counsel
Great American Reserve Insurance Company
11825 N. Pennsylvania Street
Carmel, Indiana 46032-4572
Copies to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
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.
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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.
CROSS REFERENCE SHEET
(Required by Rule 495)
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Item No. Location
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PART A
Item 1. Cover Page . . . . . . . . . . . . . . . . . Cover Page
Item 2. Definitions. . . . . . . . . . . . . . . . . Definitions
Item 3. Synopsis . . . . . . . . . . . . . . . . . . Highlights
Item 4. Condensed Financial Information. . . . . . . Not Applicable
Information
Item 5. General Description of Registrant, Depositor,
and Portfolio Companies. . . . . . . . . . . . The Company;
Additional Infor-
mation About the
Company; The
Separate Account;
Eligible Funds
Item 6. Deductions and Expenses . . . . . . . . . . . Charges and
Deductions
Item 7. General Description of Variable Annuity
Contracts. . . . . . . . . . . . . . . . . . . The Contracts
and Certificates
Item 8. Annuity Period. . . . . . . . . . . . . . . . Annuity Provisions
Item 9. Death Benefit. . . . . . . . . . . . . . . . . Proceeds Payable on
Death
Item 10. Purchases and Contract Value.. . . . . . . . . Purchase Payments,
Contract Value and
Certificate Value
Item 11. Redemptions. . . . . . . . . . . . . . . . . . Withdrawals
Item 12. Taxes. . . . . . . . . . . . . . . . . . . . . Tax Status
Item 13. Legal Proceedings. . . . . . . . . . . . . . . Legal Proceedings
Item 14. Table of Contents of the Statement of
Additional Information. . . . . . . . . . . . Table of Contents of
the Statement of
Additional Information
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CROSS REFERENCE SHEET (CONT'D)
(REQUIRED BY RULE 495)
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Item No. Location
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PART B
Item 15. Cover Page. . . . . . . . . . . . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . . . . . The Company
Item 18. Services. . . . . . . . . . . . . .. . . . . . Not Applicable
Item 19. Purchase of Securities Being Offered. . . . . Not Applicable
Item 20. Underwriters. . . . . . . . . . . . . . . . . Distributor
Item 21. Calculation of Performance Data. . . .. . . . Performance
Information
Item 22. Annuity Payments. . . . . . . . . . . . . . . Annuity Provisions
Item 23. Financial Statements. . . . . . . . . . . . . Financial Statements
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PART C
Information required to be included in Part C is set forth under the
appropriate Item so numbered, in Part C to this Registration Statement.
GREAT AMERICAN RESERVE INSURANCE COMPANY
Administrative Office:
Great American Reserve Insurance Company
11815 N. Pennsylvania Street
Carmel, Indiana 46032
(317) 817-3700
INDIVIDUAL AND GROUP FIXED AND VARIABLE
DEFERRED ANNUITY CONTRACTS AND CERTIFICATES
issued by
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT G
and
GREAT AMERICAN RESERVE INSURANCE COMPANY
The Individual and Group Fixed and Variable Deferred Annuity Contracts and
Certificates (the "Contracts and Certificates") described in this Prospectus
provide for accumulation of values on a fixed and variable basis and monthly
payment of annuity payments on a fixed and variable basis. The Contracts and
Certificates are designed for use by individuals in retirement plans on a
Qualified or Non-Qualified basis. (See "Definitions.")
Purchase Payments for the Contracts/Certificates will be allocated to a
segregated investment account of Great American Reserve Insurance Company (the
"Company") which account has been designated Great American Reserve Variable
Annuity Account G (the "Variable Account") or to the Company's Market Value
Adjustment Account ("MVA Account"). THE MVA ACCOUNT WILL BE AVAILABLE ON OR
ABOUT OCTOBER 1, 1996 (check with your representative regarding availability).
The Variable Account invests in shares of the following: Conseco Series Trust
(Asset Allocation Portfolio, Common Stock Portfolio, Corporate Bond Portfolio,
Government Securities Portfolio and Money Market Portfolio); Evergreen
Variable Investment Trust (Evergreen VA Fund, Evergreen VA Foundation Fund
and Evergreen VA Growth and Income Fund); Insurance Management Series
(International Stock Fund); The Alger American Fund (Alger American Growth
Portfolio, Alger American Leveraged AllCap Portfolio, Alger American MidCap
Growth Portfolio and Alger American Small Capitalization Portfolio); INVESCO
Variable Investment Funds, Inc. (INVESCO VIF-High Yield Portfolio and INVESCO
VIF-Industrial Income Portfolio); Lord Abbett Series Fund, Inc. (Growth &
Income Portfolio); The OFFITBANK Variable Insurance Fund, Inc. (OFFITBANK
VIF-Investment Grade Global Debt Fund and OFFITBANK VIF-Total Return Fund);
Van Eck Worldwide Insurance Trust (Worldwide Emerging Markets Fund, Gold and
Natural Resources Fund and Worldwide Hard Assets Fund); and Tomorrow Funds
Retirement Trust (Institutional Class Shares) (Core Large-Cap Stock Fund and
Core Small-Cap Stock Fund).
See "Highlights" and "Tax Status - Diversification" for a discussion of owner
control of the underlying investments in a variable annuity contract.
THE CONTRACTS AND CERTIFICATES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY. INVESTMENT IN THE CONTRACTS AND CERTIFICATES IS
SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF THE OWNER'S OR CERTIFICATE OWNER'S
INVESTMENT TO FLUCTUATE, AND WHEN THE CONTRACTS AND CERTIFICATES ARE
SURRENDERED, THE VALUE MAY BE HIGHER OR LOWER THAN THE PURCHASE PAYMENTS.
This Prospectus concisely sets forth the information a prospective investor
should know before investing. Additional information about the Contracts and
Certificates is contained in the Statement of Additional Information which is
available at no charge. The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The Table of Contents of the Statement of Additional Information
can be found on the last page of this Prospectus. For the Statement of
Additional Information, call (800) 342-6307 or write to the Company's
Administrative Office at the address listed above.
INQUIRIES:
Any inquiries can be made by telephone or in writing to the Administrative
Office listed above.
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.
This Prospectus and the Statement of Additional Information are dated
_______________.
Investors should read and retain this Prospectus for future reference.
TABLE OF CONTENTS
PAGE
DEFINITIONS
HIGHLIGHTS
General
Variable Account
MVA Account
Right to Examine Period
Charges
Mortality and Expense Risk Charge
Administrative Charge
Contract and Certificate Maintenance Charges
Transfer Fee
Premium Taxes
Taxes
MVA Account
FEE TABLE
THE COMPANY
THE SEPARATE ACCOUNTS
ELIGIBLE FUNDS
Conseco Series Trust
Evergreen Variable Investment Trust
Insurance Management Series
The Alger American Fund
INVESCO Variable Investment Funds, Inc.
Lord Abbett Series Fund, Inc.
The OFFITBANK Variable Insurance Fund, Inc.
Van Eck Worldwide Insurance Trust
Tomorrow Funds Retirement Trust
Voting Rights
Substitution of Securities
THE MVA ACCOUNT
CHARGES AND DEDUCTIONS
Deduction for Mortality and Expense Risk Charge
Deduction for Administrative Charge
Deduction for Contract and Certificate Maintenance Charges
Deduction for Transfer Fee
Deduction for Premium and Other Taxes
Deduction for Expenses of the Eligible Funds
THE CONTRACTS AND CERTIFICATES
Owner/Certificate Owner
Joint Owners/Joint Certificate Owners
Group Contract Owner
Annuitant
Assignment
PURCHASE PAYMENTS, CONTRACT VALUE AND CERTIFICATE VALUE
Purchase Payment
Allocation of Purchase Payments
Dollar Cost Averaging
Rebalancing
Contract Value
Certificate Value
Accumulation Units
Accumulation Unit Value
TRANSFERS
Transfers During the Accumulation Period
Transfers During the Annuity Period
WITHDRAWALS
Systematic Withdrawal Program
Suspension or Deferral of Payments
PROCEEDS PAYABLE ON DEATH
Death of Owner or Certificate Owner During the Accumulation Period
Death Benefit Amount During the Accumulation Period
Death Benefit Options During the Accumulation Period
Death of Owner/Certificate Owner During the Annuity Period
Death of Annuitant
Payment of Death Benefit
Beneficiary
Change of Beneficiary
ANNUITY PROVISIONS
General
Annuity Date
Selection or Change of an Annuity Option
Frequency and Amount of Annuity Payments
Annuity Options
OPTION 1. LIFETIME ONLY ANNUITY
OPTION 2. LIFETIME ANNUITY WITH GUARANTEED PERIODS
OPTION 3. INSTALLMENT REFUND LIFE ANNUITY
OPTION 4. PAYMENT FOR A FIXED PERIOD
OPTION 5. JOINT AND SURVIVOR ANNUITY
Annuity
Fixed Annuity
Variable Annuity
DISTRIBUTOR
PERFORMANCE INFORMATION
Money Market Sub-Account
Other Sub-Accounts
Hypothetical Performance Information
TAX STATUS
General
Diversification
Multiple Contracts and Certificates
Contracts and Certificates Owned by Non-Natural Persons
Tax Treatment of Assignments
Income Tax Withholding
Tax Treatment of Withdrawals -- Non-Qualified Contracts and Certificates
Qualified Plans
Tax Treatment of Withdrawals -- Qualified Contracts and Certificates
Tax-Sheltered Annuities -- Withdrawal Limitations
ADDITIONAL INFORMATION ABOUT THE COMPANY
Selected Consolidated Financial Information
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Company's Directors and Executive Officers
Executive Compensation
STATE REGULATION
LEGAL PROCEEDINGS
EXPERTS
REGISTRATION STATEMENT
LEGAL OPINIONS
FINANCIAL STATEMENTS
APPENDIX A
APPENDIX B
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
DEFINITIONS
ACCOUNT(S): The MVA Account, the General Account and/or one or more of the
Sub-Accounts of the Variable Account.
ACCUMULATION PERIOD: The period prior to the Annuity Date during which
Purchase Payments may be made by an Owner or a Certificate Owner.
ACCUMULATION UNIT: A unit of measure used to determine the value of the
Owner's or Certificate Owner's interest in a Sub-Account of the Variable
Account during the Accumulation Period.
ADJUSTED CERTIFICATE VALUE: The Certificate Value less any applicable Premium
Tax, and Certificate Maintenance Charge and plus the applicable Market Value
Adjustment which may be positive or negative. This amount is applied to the
applicable Annuity Tables to determine Annuity Payments.
ADJUSTED CONTRACT VALUE: The Contract Value less any applicable Premium Tax
and Contract Maintenance Charge and plus the applicable Market Value
Adjustment which may be positive or negative. This amount is applied to the
applicable Annuity Tables to determine Annuity Payments under an individual
Contract.
ADMINISTRATIVE OFFICE: The office indicated on the Cover Page of this
Prospectus to which notices, requests and Purchase Payments must be sent. All
sums payable to the Company under a Contract or Certificate are payable at the
Administrative Office or an address designated by the Company.
AGE: The age of any Owner, Certificate Owner or Annuitant on his/her last
birthday. For Joint Owners and Joint Certificate Owners, all provisions which
are based on age are based on the Age of the older of the Joint Owners or
Joint Certificate Owners.
ANNUITANT: The natural person on whose life Annuity Payments are based. On or
after the Annuity Date, the Annuitant shall also include any Joint Annuitant.
ANNUITY DATE: The date on which Annuity Payments begin.
ANNUITY OPTIONS: Options available for Annuity Payments.
ANNUITY PAYMENTS: The series of payments made to the Owner or Certificate
Owner or any named payee after the Annuity Date under the Annuity Option
selected.
ANNUITY PERIOD: The period of time beginning with the Annuity Date during
which Annuity Payments are made.
ANNUITY UNIT: An accounting unit of measure used to calculate the amount of
Annuity Payments.
BENEFICIARY: The person(s) or entity(ies) who will receive the death benefit
payable under a Contract or Certificate.
CERTIFICATE: The document issued to a Certificate Owner to evidence a
Certificate Owner's Account established under a Group Contract.
CERTIFICATE ANNIVERSARY: An anniversary of the Certificate Issue Date.
CERTIFICATE ISSUE DATE: The date a Certificate is issued to a Certificate
Owner.
CERTIFICATE OWNER: A person who has established a Certificate Owner's
Account under a Group Contract.
CERTIFICATE OWNER'S ACCOUNT: A record established for each Certificate
Owner to maintain values under a Group Contract.
CERTIFICATE VALUE: The dollar value as of any Valuation Period of all amounts
in a Certificate Owner's Account.
CERTIFICATE WITHDRAWAL VALUE: The Certificate Value less any applicable
Premium Tax, less any applicable Certificate Maintenance Charge and plus any
Market Value Adjustment which may be positive or negative.
CERTIFICATE YEAR: The first Certificate Year is the annual period which begins
on the Certificate Issue Date. Subsequent Certificate Years begin on each
anniversary of the Certificate Issue Date.
COMPANY: Great American Reserve Insurance Company.
CONTRACT ANNIVERSARY: An anniversary of the Issue Date.
CONTRACT ISSUE DATE: The later of the date on the cover of the
Contract/Certificate or the date Purchase Payments are received.
CONTRACT VALUE: The dollar value as of any Valuation Period of all amounts in
an individual Contract.
CONTRACT WITHDRAWAL VALUE: The Contract Value of an individual Contract less
any applicable Premium Tax, less any applicable Contract Maintenance Charge
and plus any Market Value Adjustment which may be positive or negative.
CONTRACT YEAR: The first Contract Year is the annual period which begins on
the Issue Date. Subsequent Contract Years begin on each anniversary of the
Issue Date.
CREDITED INTEREST RATE: The interest rate credited to a Certificate Owner's
Account by the Company for any given Guarantee Period in the MVA Account.
EFFECTIVE DATE: The Effective Date of a Guarantee Period with a Credited
Interest Rate.
ELIGIBLE FUND: An investment entity into which assets of the Variable Account
will be invested.
FIXED ANNUITY: A series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company.
GENERAL ACCOUNT: The Company's general investment account which contains all
the assets of the Company with the exception of the Variable Account and other
segregated asset accounts.
GROUP CONTRACT OWNER: The person or entity to which a Group Contract is
issued.
GUARANTEE PERIOD: The period for which the Credited Interest Rate is credited
in the MVA Account. Each deposit or transfer to the MVA Account creates one
or more new Guarantee Period(s).
MARKET VALUE ADJUSTMENT: An adjustment to the amount withdrawn from or
transferred from the MVA Account prior to the end of the applicable Guarantee
Period. The adjustment reflects the change in the value of the funds
withdrawn or transferred due to the change in the interest rates since the
beginning of the Guarantee Period.
MVA ACCOUNT: A separate account which provides investment options where the
Company guarantees the rate of interest for a Guarantee Period and where
withdrawals or transfers may be subject to a Market Value Adjustment.
NET PURCHASE PAYMENT: A Purchase Payment less any applicable Premium Tax.
NON-QUALIFIED CONTRACTS AND CERTIFICATES: Contracts and Certificates issued
under non-qualified plans which are not Qualified Contracts and Certificates.
OWNER: The person or entity entitled to the ownership rights stated in an
individual Contract.
PORTFOLIO: A segment of an Eligible Fund which constitutes a separate and
distinct class of shares which may also sometimes be referred to herein as a
Fund.
PREMIUM TAX: Any premium taxes incurred to any governmental entity assessed
against Purchase Payments, Contract Values under individual Contracts or
Certificate Owners' Certificate Values.
PURCHASE PAYMENT: A payment made by or for an Owner or Certificate Owner.
QUALIFIED CONTRACTS AND CERTIFICATES: Contracts and Certificates issued under
a retirement plan which receives favorable tax treatment under Sections 403(b)
or 408 of the Code.
SUB-ACCOUNT: Variable Account assets are divided into Sub-Accounts. Assets of
each Sub-Account will be invested in shares of an Eligible Fund or a Portfolio
of an Eligible Fund.
VALUATION DATE: Each day on which the New York Stock Exchange ("NYSE") is
open for business.
VALUATION PERIOD: The period of time beginning at the close of business of
the NYSE on each Valuation Date and ending at the close of business for the
next succeeding Valuation Date.
VARIABLE ACCOUNT: The Company's Variable Account designated as Great American
Reserve Variable Annuity Account G which provides investment options where the
benefits are variable and are not guaranteed as to dollar amount.
WRITTEN REQUEST: A request in writing, in a form satisfactory to the Company,
which is received by the Administrative Office.
HIGHLIGHTS
GENERAL
The Contracts and Certificates offered by this Prospectus are combined fixed
and variable deferred annuity contracts and certificates issued by Great
American Reserve Insurance Company (the "Company"). Pursuant to selections
made by the Owner or Certificate Owner, Net Purchase Payments are allocated to
a segregated investment account of the Company which has been designated Great
American Reserve Variable Annuity Account G (the "Variable Account"), and/or
the MVA Account, which is a separate account where the Company guarantees the
rate of interest for a specified period and where withdrawals or transfers may
be subject to a Market Value Adjustment. The MVA Account will be available on
or about October 1, 1996 (check with your representative regarding
availability). Owners and Certificate Owners may invest in up to fifteen (15)
Sub-Accounts.
VARIABLE ACCOUNT
The Variable Account is divided into Sub-Accounts. The Sub-Accounts invest in
the following:
Conseco Series Trust
Asset Allocation Portfolio
Common Stock Portfolio
Corporate Bond Portfolio
Government Securities Portfolio
Money Market Portfolio
Evergreen Variable Investment Trust
Evergreen VA Fund
Evergreen VA Foundation Fund
Evergreen VA Growth and Income Fund
Insurance Management Series
International Stock Fund
The Alger American Fund
Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
INVESCO Variable Investment Funds, Inc.
INVESCO VIF - High Yield Portfolio
INVESCO VIF - Industrial Income Portfolio
Lord Abbett Series Fund, Inc.
Growth & Income Portfolio
The OFFITBANK Variable Insurance Fund, Inc.
OFFITBANK VIF - Investment Grade Global Debt Fund
OFFITBANK VIF - Total Return Fund
Van Eck Worldwide Insurance Trust
Worldwide Emerging Markets Fund
Gold and Natural Resources Fund
Worldwide Hard Assets Fund
Tomorrow Funds Retirement Trust (Institutional Class Shares)
Core Large-Cap Stock Fund
Core Small-Cap Stock Fund
Owners and Certificate Owners bear the investment risk for all amounts
allocated to the Variable Account.
MVA ACCOUNT
The MVA Account offers investment options which pay fixed rates of interest
declared by the Company for specified periods (currently, 1 year, 3 years, 5
years, 7 years and 10 years) from the date amounts are allocated to the MVA
Account. Please contact the Company or the representative from whom this
Prospectus was obtained for information as to currently available options.
Such declared rates will vary from time to time but will not be less than 3%
per annum, and, once established for a particular allocation, will not change
during the Guarantee Period. However, withdrawals, transfers or annuitization
prior to the end of the Guarantee Period may be subject to a Market Value
Adjustment. Owners and Certificate Owners bear the risk that amounts
reallocated within, or prematurely withdrawn, transferred or annuitized from
the MVA Account prior to the end of their respective Guarantee Period could
result in the Owner or Certificate Owner receiving less than the Purchase
Payments or amounts so allocated.
RIGHT TO EXAMINE PERIOD
The individual Contract or Certificate may be returned to the Company for any
reason within ten (10) calendar days, or longer in states where required (30
days if purchased by individuals who are 60 years of age or older in
California or twenty (20) calendar days from the date of receipt with respect
to the circumstances described in (c) below), after its receipt by the Owner
or Certificate Owner ("Right to Examine Period"). It may be returned to the
Company at its Administrative Office. When the Contract or Certificate is
received by the Company at its Administrative Office, it will be voided as if
it had never been in force. Upon its return, the Company will refund the
Contract Value or Certificate Value next computed after receipt of the
Contract or Certificate by the Company at its Administrative Office except in
the following circumstances: (a) where the Contract or Certificate is
purchased pursuant to an Individual Retirement Annuity; (b) in those states
which require the Company to refund Purchase Payments, less withdrawals; or
(c) in the case of Contracts or Certificates which are deemed by certain
states to be replacing an existing annuity or insurance contract and which
require the Company to refund Purchase Payments, less withdrawals. With
respect to the circumstances described in (a), (b) and (c) above, the Company
will refund Purchase Payments, less any withdrawals. The Company has reserved
the right, under certain circumstances, to allocate initial Purchase Payments
to the Money Market Sub-Account (except those allocated to the MVA Account)
until the expiration of the Right to Examine Period. In the event that the
Company does so allocate initial Purchase Payments to the Money Market
Sub-Account, at the end of the Right to Examine Period, the Contract
Value/Certificate Value allocated to the Money Market Sub-Account will be
allocated to the Sub-Account(s) selected by the Owner/Certificate Owner.
Currently, however, the Company will allocate the initial Purchase Payment
directly to the Sub-Account(s) of the Variable Account and/or the MVA Account
(subject to availability), as selected by the Owner/Certificate Owner.
CHARGES
MORTALITY AND EXPENSE RISK CHARGE . Each Valuation Period, the Company
deducts a Mortality and Expense Risk Charge from the Variable Account which is
equal, on an annual basis, to 1.15% of the average daily net asset value of
each Sub-Account of the Variable Account. However, the Company may increase
this Charge, but it will not exceed 1.25% of the average daily net asset value
of the Variable Account. This Charge compensates the Company for assuming the
mortality and expense risks under the Contracts and Certificates. (See
"Charges and Deductions -Deduction for Mortality and Expense Risk Charge.")
ADMINISTRATIVE CHARGE . Each Valuation Period, the Company deducts an
Administrative Charge from the Variable Account which is equal, on an annual
basis, to .15% of the average daily net asset value of each Sub-Account of
the Variable Account. However, the Company may increase this charge, but it
will not exceed .25% of the average daily net asset value of the Variable
Account. This Charge compensates the Company for costs associated with the
administration of the Contracts, Certificates and the Variable Account. (See
"Charges and Deductions -Deduction for Administrative Charge.")
CONTRACT AND CERTIFICATE MAINTENANCE CHARGES . The Company makes a
deduction of $30.00 each Contract or Certificate Year. However, during the
Accumulation Period if the Contract Value or the Certificate Value on the
Contract or Certificate Anniversary is at least $25,000, then no Contract or
Certificate Maintenance Charge is deducted. If a total withdrawal is made on
other than a Contract or Certificate Anniversary and the Owner's Contract
Value or the Certificate Owner's Certificate Value for the Valuation Period
during which the total withdrawal is made is less than $25,000, the full
Contract or Certificate Maintenance Charge will be deducted at the time of the
total withdrawal. During the Annuity Period, no Contract or Certificate
Maintenance Charge is deducted. (See "Charges and Deductions - Deduction for
Contract and Certificate Maintenance Charges.")
TRANSFER FEE . Under certain circumstances, a Transfer Fee may be
assessed when an Owner or Certificate Owner transfers Contract Values or
Certificate Values between Sub-Accounts of the Variable Account or to or from
the MVA Account. The Transfer Fee is the lesser of $25 or 2% of the amount
transferred. (See "Charges and Deductions - Deduction for Transfer Fee.")
PREMIUM TAXES . Certain states and other governmental entities impose a
Premium Tax (including a retaliatory tax). It is the Company's current
practice to deduct a charge for Premium Taxes from an Owner's Contract Value
or a Certificate Owner's Certificate Value, if applicable at the time Annuity
Payments begin or from amounts that are withdrawn (although the deduction
could be taken from Purchase Payments in the future). (See "Charges and
Deductions - Deduction for Premium and Other Taxes.")
TAXES
In the case of a Non-Qualified Contract or Certificate, there is a ten percent
(10%) federal income tax penalty applied to the taxable income portion of a
distribution. However, the penalty is not imposed on amounts received: (a) on
or after the taxpayer reaches age 59 1/2; (b) after the death of the Owner or
Certificate Owner; (c) if the taxpayer is totally disabled (for this purpose
disability is as defined in Section 72(m)(7) of the Code); (d) in a series of
substantially equal periodic payments made not less frequently than annually
for the life (or life expectancy) of the taxpayer and his or her Beneficiary;
(e) under an immediate annuity; or (f) which are allocable to Purchase
Payments made prior to August 14, 1982.
Separate tax withdrawal penalties and restrictions apply to Qualified
Contracts and Certificates. See "Tax Status - Tax Treatment of Withdrawals -
Qualified Contracts and Certificates."
Withdrawals of amounts attributable to contributions made pursuant to a salary
reduction agreement (as defined in Section 403(b)(11) of the Code) are limited
to circumstances only when an Owner/Certificate Owner (1) attains age 59 1/2;
(2) separates from service; (3) dies; (4) becomes disabled (within the meaning
of Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
Value or Certificate Owner's Certificate Value which represents contributions
made by the Owner/Certificate Owner and does not include any investment
results. The limitations on withdrawals became effective on January 1, 1989
and only apply to (i) salary reduction contributions made after December 31,
1988; (ii) to income attributable to such contributions; and (iii) to income
attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect rollovers or transfers between certain Qualified
Plans. Owners and Certificate Owners should consult their own tax counsel or
other tax adviser regarding distributions. (See "Tax Status - Tax Sheltered
Annuities - Withdrawal Limitations.")
The Treasury Department has indicated that guidelines may be forthcoming
under which a variable annuity contract will not be treated as an annuity
contract for tax purposes if the owner of the contract has excessive control
over the investment underlying the contract. The issuance of such guidelines
may require the Company to impose limitations on an Owner's or Certificate
Owner's right to control the investment. It is not known whether any such
guidelines would have a retroactive effect (see "Tax States -
Diversification").
For a further discussion of the taxation of the Contracts and Certificates,
see "Tax Status."
MVA ACCOUNT
Because of certain exemptive and exclusionary provisions, the MVA Account is
not registered as an investment company under the Investment Company Act of
1940, as amended.
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT G
FEE TABLE
OWNER AND CERTIFICATE OWNER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
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Sales Charge None
Transfer Fee (see Note 2 below) No charge for first transfer in a 30 day
period during the Accumulation Period and
no charge for four transfers per
Contract/Certificate Year during the
Annuity Period; thereafter the fee is the
lesser of $25 or 2% of the amount
transferred.
Contract and Certificate 30 per individual Contract or
Maintenance Charges Certificate per Contract or Certificate
(see Note 3 below) Year.
</TABLE>
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VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Charge 1.15%
Administrative Charge .15%
------
Total Variable Account Annual Expenses 1.30%
</TABLE>
CONSECO SERIES TRUST'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Other Total Expenses (after
Fees Expenses expense reimbursement)*
----------- --------- ------------------------
Asset Allocation Portfolio** .55% .20% .75%
Common Stock Portfolio** .60% .20% .80%
Corporate Bond Portfolio .50% .20% .70%
Government Securities Portfolio .50% .20% .70%
Money Market Portfolio** .25% .20% .45%
<FN>
* Conseco Capital Management, Inc., the investment adviser of Conseco Series
Trust, has voluntarily agreed to reimburse all expenses, including management
fees, in excess of the following percentage of the average annual net assets of
each listed Portfolio, so long as such reimbursement would not result in a
Portfolio's inability to qualify as a regulated investment company under the
Code: 0.75% for the Asset Allocation Portfolio; 0.80% for the Common Stock
Portfolio; 0.70% for the Corporate Bond Portfolio and Government Securities
Portfolio; and 0.45% for the Money Market Portfolio. The total percentages in the
above table is after reimbursement. In the absence of expense reimbursement, the
total fees and expenses in 1994 would have totaled: 1.00% for the Asset
Allocation Portfolio; 0.83% for the Common Stock Portfolio; 0.80% for the
Corporate Bond Portfolio; 0.81% for the Government Securities Portfolio; and
0.58% for the Money Market Portfolio.
**Conseco Capital Management, Inc., since January 1, 1993, has voluntarily waived
its Management Fees in excess of the annual rates set forth above. Absent such
fee waivers, the Management Fees would be: .65% for the Asset Allocation
Portfolio; .65% for the Common Stock Portfolio; and .50% for the Money Market
Portfolio.
</TABLE>
EVERGREEN VARIABLE INVESTMENT TRUST'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Other
Fees Expenses Total Expenses
----------- --------- --------------------
Evergreen VA Fund .24% .87% 1.00%
Evergreen VA Foundation Fund .365% .635% 1.00%
Evergreen VA Growth and Income
Fund .24% .87% 1.00%
<FN>
* Evergreen Asset Management Corp., the investment adviser to Evergreen
Variable Investment Trust, has voluntarily agreed to reimburse all expenses,
including Management Fees, such that the aggregate Total Expenses for each
Fund does not exceed 1.00%. Absent such reimbursement arrangements, the
Management Fees and Total Annual Expenses would be: 1.00% and 1.76% for the
Evergreen VA Fund and Evergreen VA Growth and Income Fund; and .875% and
1.635% for the Evergreen VA Foundation Fund.
</TABLE>
INSURANCE MANAGEMENT SERIES' ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Other Total
Fees Expenses Expenses
----------- --------- ----------
International Stock Fund* .52% .73% 1.25%
<FN>
*Federated Advisers, the investment adviser of the Insurance Management
Series, has voluntarily agreed to reimburse all or a portion of its advisory
fee to the extent that the total expenses are in excess of 1.00% of the
average annual assets. In the absence of such expense reimbursement, the
Management Fees would be 1.00% of the Fund's average daily net assets.
</TABLE>
THE ALGER AMERICAN FUND'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Management Other Interest Total
Fees Expenses Expenses Expenses
----------- --------- ---------- ----------
Alger American Growth Portfolio .75% .11% .00% .86%
Alger American Leveraged
AllCap Portfolio .85% .19% .75%` 1.79%
Alger American MidCap Growth
Portfolio .80% .17% .00% .97%
Alger American Small Capitali-
zation Portfolio .85% .11% .00% .96%
</TABLE>
INVESCO VARIABLE INVESTMENT FUNDS, INC.'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Other Expenses
Management (after expense Total Operating
Fees reimbursement) Expenses*
----------- --------------- -------------------
INVESCO VIF - High Yield
Portfolio .60% .20% .80%
INVESCO VIF - Industrial Income
Portfolio .75% .15% .90%
<FN>
*Certain expenses are being absorbed voluntarily by the investment adviser and
sub-adviser in order to ensure that the total operating expenses for the INVESCO
VIF - High Yield Portfolio and INVESCO VIF - Industrial Income Portfolio will not
exceed .80% and .90%, respectively, of each Portfolio's average net assets. Total
expenses (after expenses were absorbed) of the INVESCO VIF - High Yield Portfolio
and INVESCO VIF - Industrial Income Portfolio for the fiscal period ended December
31, 1994 amounted to .74% and .79%, respectively, of each Portfolio's average net
assets. In the absence of such voluntary expense limitation, the total operating
expenses of the INVESCO VIF - High Yield Portfolio and INVESCO VIF - Industrial
Income Portfolio for the fiscal period ended December 31, 1994 would have been
30.38% and 32.55%, respectively, of each Portfolio's average net assets.
</TABLE>
LORD ABBETT SERIES FUND, INC.'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Other Total
Management Maximum Operating Fund Annual
Fees 12b-1 Fees** Expenses Expenses
----------- ------------- ------------ -------------
Growth and Income
Portfolio .50% .00% .09% .59%
<FN>
**Although the expenses for the Growth and Income Portfolio of Lord Abbett
Series Fund, Inc. do not reflect a 12b-1 plan which provides for payments to
Lord Abbett for remittance to a life insurance company for certain
distribution expenses (see the Fund prospectus), the 12b-1 plan provides that
such remittances in the aggregate will not exceed .15%, on an annual basis, of
the daily net asset value of shares of the Growth and Income Portfolio. The
12b-1 plan has not been implemented. The examples below do not reflect the
imposition of the 12b-1 fee for this Portfolio.
</TABLE>
THE OFFITBANK VARIABLE INSURANCE FUND, INC.'S ANNUAL EXPENSES
(as a percentage of average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Other
Fees Expenses Total Expenses
----------- --------- --------------------
OFFITBANK VIF - Investment
Grade Global Debt Fund* .80% .70% 1.50%
OFFITBANK VIF - Total Return Fund* .80% .70% 1.50%
<FN>
*Other Expenses are based on estimated amounts for the Fund's current fiscal
year.
</TABLE>
VAN ECK WORLDWIDE INSURANCE TRUST'S ANNUAL EXPENSES
(As a percentage of average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Other
Fees Expenses Total Expenses
----------- --------- --------------------
Worldwide Emerging Markets Fund* 1.00% .36% 1.36%
Gold and Natural Resources
Fund* 1.00% .10% 1.10%
Worldwide Hard Assets Fund* 1.00% .33% 1.33%
<FN>
*Other Expenses are based on estimated amounts for the Fund's current fiscal
year.
</TABLE>
TOMORROW FUNDS RETIREMENT TRUST'S (INSTITUTIONAL CLASS SHARES) ANNUAL EXPENSES
(as a percentage of average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Management Fees Other Expenses
(after Voluntary (after expense Total Fund Operating Expenses
waiver)* limitation)* (after expense limitation)*
----------------- --------------- ------------------------------
Core Large-Cap Stock Fund 0% 1.50% 1.50%
Core Small-Cap Stock Fund 0% 1.50% 1.50%
<FN>
*The Adviser to Tomorrow Funds Retirement Trust has voluntarily agreed to limit temporarily
each Fund's operating expenses (excluding service fees applicable to Institutional Class
shares, any other class-specific expenses, litigation, indemnification and other
extraordinary expenses) to 1.25% of its average daily net assets. Each Fund will reimburse
the Adviser for fees foregone or other expenses paid by the Adviser pursuant to this expense
limitation in later years in which operating expenses for that Fund are less than the expense
limitations set forth above for any such year. (See the Trust Prospectus.) In the absence
of this agreement, Management Fees would be 0.75% of each Fund's average daily net assets and
Other Expenses and Total Fund Operating Expenses are estimated to be approximately 3.90% and
4.65%, respectively, of the average daily net assets attributable to the Institutional Class
shares of the Core Large-Cap Fund and 4.49% and 5.24%, respectively, of the average daily net
assets attributable to the Institutional Class shares of the Core Small-Cap Fund.
</TABLE>
EXAMPLES (See Note 4 below)
Owner/Certificate Owner would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets regardless of whether the
Contract/Certificate is surrendered at the end of each time period or if the
Contract/Certificate is annuitized.
<TABLE>
<CAPTION>
<S> <C> <C>
1 Year 3 Years
--------- ----------
Conseco Series Trust
Asset Allocation Portfolio $ 21 $ 66
Common Stock Portfolio $ 22 $ 67
Corporate Bond Portfolio $ 21 $ 64
Government Securities Portfolio $ 21 $ 64
Money Market Portfolio $ 18 $ 57
Evergreen Variable Investment Trust
Evergreen VA Fund $ 24 $ 73
Evergreen VA Foundation Fund $ 24 $ 73
Evergreen VA Growth and Income Fund $ 24 $ 73
Insurance Management Series
International Stock Fund $ 26 $ 81
The Alger American Fund
Alger American Growth Portfolio $ 22 $ 69
Alger American Leveraged AllCap
Portfolio $ 32 $ 97
Alger American MidCap Growth
Portfolio $ 23 $ 72
Alger American Small Capitalization
Portfolio $ 23 $ 72
INVESCO Variable Investment Funds, Inc.
INVESCO VIF - High Yield Portfolio $ 22 $ 67
INVESCO VIF - Industrial Income Portfolio $ 23 $ 70
Lord Abbett Series Fund, Inc.
Growth & Income Portfolio $ 20 $ 61
The OFFITBANK Variable Insurance
Fund, Inc.
OFFITBANK VIF - Investment Grade Global
Debt Fund $ 29 $ 88
OFFITBANK VIF - Total Return Fund $ 29 $ 88
Van Eck Worldwide Insurance Trust
Worldwide Emerging Markets Fund $ 27 $ 84
Gold and Natural Resources Fund $ 25 $ 76
Worldwide Hard Assets Fund $ 27 $ 83
Tomorrow Funds Retirement Trust
Core Large-Cap Stock Fund $ 29 $ 88
Core Small-Cap Stock Fund $ 29 $ 88
<FN>
THE ANNUAL EXPENSES OF THE ELIGIBLE FUNDS AND THE EXAMPLES ARE BASED ON DATA
PROVIDED BY THE RESPECTIVE ELIGIBLE FUNDS. THE COMPANY HAS NOT INDEPENDENTLY
VERIFIED SUCH DATA.
</TABLE>
NOTES TO FEE TABLE AND EXAMPLES
1. The Fee Table is provided to assist Owners and Certificate Owners in
understanding the various costs and expenses that they will bear directly or
indirectly. The Fee Table reflects expenses of both the Variable Account and
the Eligible Funds. For more complete descriptions of the various costs and
expenses involved, see "Charges and Deductions" in this Prospectus and the
Prospectuses for the Eligible Funds. Premium Taxes may also be applicable,
although they do not appear in this table.
2. Any transfers made pursuant to an approved Dollar Cost Averaging
Program and/or Rebalancing Program will not be counted in determining the
application of the Transfer Fee. All reallocations on the same day count as
one transfer.
3. During the Accumulation Period, if the Owner's Contract Value or the
Certificate Owner's Certificate Value on the Contract or Certificate
Anniversary is at least $25,000, then no Contract or Certificate Maintenance
Charge is deducted. If a total withdrawal is made on other than a Contract or
Certificate Anniversary and the Owner's Contract Value or Certificate Owner's
Certificate Value for the Valuation Period during which the total withdrawal
is made is less than $25,000, the full Contract or Certificate Maintenance
Charge will be deducted at the time of the total withdrawal. During the
Annuity Period, no Contract or Certificate Maintenance Charges are deducted.
4. The Examples assume an estimated $40,000 Contract Value or
Certificate Value so that the Contract and Certificate Maintenance
Charges per $1,000 of net asset value in the Variable Account is $.75. Such
charge would be higher for smaller values and lower for higher values.
THE COMPANY
Great American Reserve Insurance Company (the "Company"), originally organized
in 1937, is principally engaged in the life insurance business in 47 states
and the District of Columbia. The Company is a stock company organized under
the laws of the state of Texas and an indirect wholly owned subsidiary of
Conseco, Inc. ("Conseco"). The operations of the Company are handled by
Conseco. Conseco is a publicly owned financial services holding company, the
principal operations of which are the development, marketing and
administration of specialized annuity and life insurance products. Conseco is
located at 11825 N. Pennsylvania Street, Carmel, Indiana 46032.
All inquiries regarding Accounts, the Contracts/Certificates, or any related
matter should be directed to the Company's Variable Annuity Department at the
address and telephone number shown on the Cover Page of this Prospectus. The
financial statements of the Company included in this Prospectus should be
considered only as bearing upon the ability of the Company to meet the
obligations under the Contracts and Certificates. Neither the assets of CCP,
Conseco nor those of any company in the Conseco group of companies other than
the Company support these obligations. As of September 30, 1995, the Company
had total assets of $2.75 billion and total shareholder's equity of $404.2
million. The Company does not guarantee the investment performance of the
Variable Account investment options.
For further information about the Company, see "Additional Information About
the Company."
THE SEPARATE ACCOUNTS
The Board of Directors of the Company adopted resolutions to establish
segregated asset accounts pursuant to Texas insurance law on January 18,
1996. One segregated asset account has been designated Great American Reserve
Variable Annuity Account G (the "Variable Account"). The other separate
account has been designated Great American Reserve Market Value Adjustment
Account (the "MVA Account") (collectively, the "Separate Accounts"). The
Company has caused the Variable Account to be registered with the Securities
and Exchange Commission as a unit investment trust pursuant to the provisions
of the Investment Company Act of 1940, as amended.
The assets of the Separate Accounts are the property of the Company. However,
the assets of the Separate Accounts, equal to the reserves and other contract
liabilities with respect to the Separate Accounts, are not chargeable with
liabilities arising out of any other business the Company may conduct.
Income, gains and losses, whether or not realized, are, in accordance with the
Contracts and Certificates, credited to or charged against the Separate
Accounts without regard to other income, gains or losses of the Company. The
Company's obligations arising under the Contracts and Certificates are general
obligations.
The Separate Accounts meet the definition of a "separate account" under
federal securities laws.
The Variable Account is divided into Sub-Accounts. Each Sub-Account invests in
one Portfolio of an Eligible Fund.
ELIGIBLE FUNDS
The Variable Account invests in the shares of the Eligible Funds as described
below. The descriptions below contain a short discussion of the investment
objective(s). See Appendix A in this Prospectus and the Prospectuses for the
Eligible Funds for further information.
There is no assurance that the investment objective of any of the Portfolios
will be met. Owners and Certificate Owners bear the complete investment risk
for Purchase Payments allocated to a Portfolio. Contract Values and
Certificate Values will fluctuate in accordance with the investment
performance of the Portfolios to which Purchase Payments are allocated, and in
accordance with the imposition of the fees and charges assessed under the
Contracts and Certificates.
DETAILED INFORMATION ABOUT THE ELIGIBLE FUNDS IS CONTAINED IN THE ACCOMPANYING
CURRENT PROSPECTUSES OF THE ELIGIBLE FUNDS. AN INVESTOR SHOULD CAREFULLY READ
THIS PROSPECTUS AND THE PROSPECTUSES OF THE ELIGIBLE FUNDS BEFORE ALLOCATING
AMOUNTS TO BE INVESTED IN THE VARIABLE ACCOUNT.
CONSECO SERIES TRUST
ASSET ALLOCATION PORTFOLIO: The Asset Allocation Portfolio seeks a high
total investment return, consistent with the preservation of capital and
prudent investment risk. The Portfolio seeks to achieve this objective by
pursuing an active asset allocation strategy whereby investments are
allocated, based upon thorough investment research, valuation and analysis of
market trends and the anticipated relative total return available, among
various asset classes including debt securities, equity securities, and money
market instruments.
COMMON STOCK PORTFOLIO: The Common Stock Portfolio seeks to provide a
high total return consistent with preservation of capital and a prudent level
of risk primarily by investing in selected equity securities having the
investment characteristics of common stocks.
CORPORATE BOND PORTFOLIO: The Corporate Bond Portfolio seeks to provide
as high a level of income as is consistent with preservation of capital by
investing primarily in debt securities.
GOVERNMENT SECURITIES PORTFOLIO: The Government Securities Portfolio
seeks safety of capital, liquidity and current income by investing primarily
in securities issued by the U.S. Government, including mortgage-related
securities.
MONEY MARKET PORTFOLIO: The Money Market Portfolio seeks current income
consistent with stability of capital and liquidity. An investment in this
Portfolio is neither insured nor guaranteed by the U.S. Government and there
can be no assurance that the Portfolio will be able to maintain a stable net
asset value of $1.00 per share.
EVERGREEN VARIABLE INVESTMENT TRUST
EVERGREEN VA FUND: The Evergreen VA Fund seeks to achieve its investment
objective of capital appreciation principally through investments in common
stock and securities convertible or exchangeable for common stock of companies
which are little-known, relatively small or represent special situations
which, in the Advisors opinion, offer potential for capital appreciation.
Investments may also be made to a limited degree in non-convertible debt
securities and preferred stocks which offer an opportunity for capital
appreciation.
EVERGREEN VA FOUNDATION FUND: The Evergreen VA Foundation Fund seeks, in
order of priority, reasonable income, conservation of capital and capital
appreciation. The Fund will attempt to achieve its objective by investing in a
combination of common stocks (including those common stocks which pay
dividends), preferred stocks, securities convertible into or exchangeable for
common stocks and fixed income securities.
EVERGREEN VA GROWTH AND INCOME FUND: The Evergreen VA Growth and Income
Fund seeks to achieve a return composed of capital appreciation in the value
of its shares and current income. The Fund will attempt to meet its objective
by investing in the securities of companies which are undervalued in the
marketplace relative to those companies' assets, breakup value, earnings, or
potential earnings growth. The Fund will invest primarily in common stocks
and securities convertible into or exchangeable for common stock. In
addition, the Fund will invest in nonconvertible preferred stocks and debt
securities.
INSURANCE MANAGEMENT SERIES
INTERNATIONAL STOCK FUND: The International Stock Fund seeks to obtain a
total return on its assets by investing at least 65% of its assets (and under
normal market conditions substantially all of its assets) in equity securities
of issuers in at least three different countries outside of the United States.
Investing in foreign securities generally involves risks not ordinarily
associated with investing in securities of domestic issuers. Purchasers are
cautioned to read "Risks Associated with Non-U.S. Securities" in the Insurance
Management Series Prospectus.
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO: The Alger American Growth Portfolio
seeks long-term capital appreciation. Except during temporary defensive
periods, the Portfolio invests at least 65% of its total assets in equity
securities of companies that, at the time of purchase, have total market
capitalization of $1 billion or greater. The Portfolio may invest up to 35%
of its total assets in equity securities of companies that, at the time of
purchase, have total market capitalization of less than $1 billion and in
excess of that amount (up to 100% of its assets) during temporary defensive
periods.
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO: The Alger American Leveraged
AllCap Portfolio seeks long-term capital appreciation by investing in a
diversified, actively managed Portfolio of equity securities. Except during
temporary defensive periods, the Portfolio invests at least 85% of its net
assets in equity securities of companies of any size. The Portfolio may
engage in leveraging and options and futures transactions. These techniques
involve risks different from those associated with ordinary portfolio
securities transactions.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO: The Alger American MidCap Growth
Portfolio seeks long-term capital appreciation by investing in a diversified,
actively managed portfolio of equity securities, primarily of companies with
total market capitalization between $750 million and $3.5 billion.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO: The Alger American Small
Capitalization Portfolio seeks long-term capital appreciation. Except during
temporary defensive periods, the Portfolio invests at least 65% of its total
assets in equity securities of companies that, at the time of purchase, have
total market capitalization of less than $1 billion. The Portfolio may invest
up to 35% of its total assets in equity securities of companies that, at the
time of purchase, have total market capitalization of $1 billion or greater
and in excess of that amount (up to 100% of its assets) during temporary
defensive periods.
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - HIGH YIELD PORTFOLIO: The INVESCO VIF - High Yield
Portfolio seeks a high level of current income by investing substantially all
of its assets in lower rated bonds and other debt securities and in preferred
stock. The Portfolio pursues its investment objective through investment in a
variety of long-term, intermediate term, and short-term bonds. Potential
capital appreciation is a factor in the selection of investments, but is
secondary to the Portfolio's primary objective. The Portfolio invests
primarily in lower rated bonds, commonly known as "junk bonds." Investments
of this type are subject to greater risks, including default risks, than those
found in higher rated securities. See the Portfolio Prospectus for more
information on the risks associated with these types of investments.
INVESCO VIF - INDUSTRIAL INCOME PORTFOLIO: The INVESCO VIF - Industrial
Income Portfolio seeks the best possible current income while following sound
investment practices. Capital growth potential is an additional, but
secondary, consideration in the selection of Portfolio securities. The
Portfolio seeks to achieve its investment objective by investing in securities
which will provide a relatively high yield and stable return and which, over a
period of years, also may provide capital appreciation.
LORD ABBETT SERIES FUND, INC.
GROWTH & INCOME PORTFOLIO: The Growth and Income Portfolio seeks
long-term growth of capital and income without excessive fluctuation in market
value. The Portfolio will invest in securities which are selling at
reasonable prices in relation to value. The Portfolio will normally invest in
common stocks (including securities convertible into common stocks) of large,
seasoned companies in sound financial condition, which common stocks are
expected to show above-average price appreciation.
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
OFFITBANK VIF - INVESTMENT GRADE GLOBAL DEBT FUND: The OFFITBANK VIF -
Investment Grade Global Debt Fund seeks a competitive fixed-income total
investment return combining capital appreciation and capital income. Under
normal circumstances, at least 75% of the Fund's total assets will be invested
in a wide range of investment grade debt securities issued anywhere in the
world, including the United States and denominated in any currency, including
U.S. dollars. Up to 25% of the Fund's total assets may be invested in high
yield, high risk corporate debt securities and sovereign debt obligations,
commonly referred to as "junk bonds", which are considered speculative and
subject to certain risks. See The OFFITBANK Variable Insurance Fund, Inc.
Prospectus for more information on the risks associated with these types of
investments.
OFFITBANK VIF- TOTAL RETURN FUND: The OFFITBANK VIF - Total Return Fund
seeks to maximize total return consistent with preservation of capital and
prudent investment management. The Fund will seek to achieve its objective by
investing primarily in an internationally diversified portfolio of fixed
income securities, of varying maturities. All or a portion of the Fund's
total asset may be invested in high yield, high risk corporate debt securities
and sovereign debt obligations, commonly referred to as "junk bonds", which
are considered speculative and subject to certain risks. See The OFFITBANK
Variable Insurance Fund, Inc. Prospectus for more information on the risks
associated with these types of investments.
VAN ECK WORLDWIDE INSURANCE TRUST
WORLDWIDE EMERGING MARKETS FUND: The Worldwide Emerging Markets Fund
seeks long-term capital appreciation by investing primarily in equity
securities in emerging markets around the world. The Fund emphasizes countries
that, compared to the world's major economies, exhibit relatively low gross
national product per capita as well as the potential for rapid economic
growth. Emerging countries can be found in regions such as Asia, Latin
America, Eastern Europe and Africa. Peregrine Asset Management Limited (Hong
Kong) serves as sub-investment adviser to the Fund. Investing in foreign
securities generally involves risks not ordinarily associated with investing
in securities of domestic issuers. Purchasers are cautioned to read "Risk
Factors" in the Van Eck Worldwide Insurance Trust Prospectus.
GOLD AND NATURAL RESOURCES FUND: The Gold and Natural Resources Fund
seeks long-term capital appreciation by investing in equity and debt
securities of companies engaged in the exploration, development, production
and distribution of gold and other natural resources, such as strategic and
other metals, minerals, forest products, oil, natural gas and coal. Current
income is not an investment objective.
WORLDWIDE HARD ASSETS FUND: The Worldwide Hard Assets Fund seeks
long-term capital appreciation by investing globally, primarily in "Hard Asset
Securities." Hard Asset Securities include equity securities of "Hard Asset
Companies" and securities, including structured notes, whose value is linked
to the price of a Hard Asset commodity or a commodity index. The term "Hard
Asset Companies" includes companies that are directly or indirectly (whether
through supplier relationships, servicing agreements or otherwise) engaged to
a significant extent in the exploration, development, production or
distribution of one or more of the following (together "Hard Assets"): (i)
precious metals, (ii) ferrous and non-ferrous metals, (iii) gas, petroleum,
petrochemicals or other hydrocarbons, (iv) forest products, (v) real estate
and (vi) other basic non-agricultural commodities which, historically, have
been produced and marketed profitably during periods of significant inflation.
Under normal market conditions, the Fund will invest at least 5% of its
assets in each of the first five sectors listed above. Income is a secondary
consideration.
TOMORROW FUNDS RETIREMENT TRUST
CORE LARGE-CAP STOCK FUND: The Core Large-Cap Stock Fund seeks to exceed
the performance of publicly traded large capitalization stocks in the
aggregate, as represented by the Standard & Poor's Index of 500 Common Stocks.
CORE SMALL-CAP STOCK FUND: The Core Small-Cap Stock Fund seeks to exceed
the performance of publicly traded small capitalization stocks in the
aggregate, as represented by the Russell 2000 Index.
VOTING RIGHTS
In accordance with its view of present applicable law, the Company will vote
the shares of the Eligible Funds held in the Variable Account at special
meetings of the shareholders in accordance with instructions received from
persons having the voting interest in the Variable Account attributable to
that option. The Company will vote shares for which it has not received
instructions, as well as shares attributable to it, in the same proportion as
it votes shares for which it has received instructions. None of the Eligible
Funds hold regular meetings of shareholders.
The number of shares which a person has a right to vote will be determined as
of a date to be chosen by the Company. Voting instructions will be solicited
by written communication prior to the meeting.
SUBSTITUTION OF SECURITIES
If the shares of an Eligible Fund (or any Portfolio within an Eligible Fund or
any other Eligible Fund or Portfolio), are no longer available for investment
by the Variable Account or, if in the judgment of the Company's Board of
Directors, further investment in the shares should become inappropriate in
view of the purpose of the Contracts or Certificates, the Company may limit
further purchase of such shares or may substitute shares of another Eligible
Fund or Portfolio for shares already purchased under the Contracts and
Certificates. No substitution of securities may take place without prior
approval of the Securities and Exchange Commission and under the requirements
it may impose.
Shares of the Eligible Funds are issued and redeemed in connection with
investments in and payments under certain variable annuity contracts and
variable life insurance policies of various life insurance companies which may
or may not be affiliated. In addition, Tomorrow Funds Retirement Trust, The
Alger American Fund and Evergreen Variable Investment Trust offer their shares
to qualified pension and retirements plans ("Qualified Plans"). The Eligible
Funds do not foresee any disadvantage to Owners or Certificate Owners arising
out of the fact that the Eligible Funds offer their shares for products
offered by life insurance companies which are not affiliated (or with respect
to Tomorrow Funds Retirement Trust, The Alger American Fund and Evergreen
Variable Investment Trust, that may offer their shares to Qualified Plans).
Nevertheless, the Boards of Trustees or Boards of Directors, as applicable, of
the Eligible Funds intend to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to determine what
action, if any, should be taken in response thereto. If such a conflict were
to occur, one or more insurance company separate accounts (or Qualified Plans)
might withdraw its investments in an Eligible Fund. An irreconcilable
conflict might result in the withdrawal of a substantial amount of a
Portfolio's assets which could adversely affect such Portfolio's net asset
value per share.
THE MVA ACCOUNT
In addition to the Sub-Accounts of the Variable Account, Owners and
Certificate Owners may also allocate Net Purchase Payments or transfer values
to the MVA Account, which is a separate account where the Company guarantees
the rate of interest for a specified period.
Net Purchase Payments may be allocated to one or more of the MVA Account
Guarantee Period Options. Currently, the Company offers five MVA Account
Guarantee Periods - 1 Year, 3 years, 5 years, 7 years and 10 Years. In
addition, during the Accumulation Period, Contract Values and Certificate
Values can be transferred from the Variable Account to one or more of the MVA
Account Guarantee Period Options. There will be an initial Credited Interest
Rate for the initial Guarantee Period of the MVA Account. After the initial
Guarantee Period, the Credited Interest Rate for any subsequent Guarantee
Period of the MVA Account may change. All interest payable under a Contract
or Certificate is compounded daily at the stated effective annual interest
rate. In no event will the Credited Interest Rate be less than the Minimum
Guaranteed Interest Rate, prior to the application of the Market Value
Adjustment.
During the thirty (30) days prior to the end of a current Guarantee Period,
the Owner or Certificate Owner may, by Written Request or pursuant to a
telephone transfer authorization, elect to renew for the same or any other
Guarantee Period then available at the then Credited Interest Rate or may
elect to transfer all or a portion of the amount to the Variable Account. Any
transfer elected during the thirty (30) days prior to the end of a current
Guarantee Period will be made as of the date the request is received by the
Company and will not be subject to the Market Value Adjustment.
If the Owner or Certificate Owner does not specify a Guarantee Period at the
time of renewal, the Company will select and transfer to the same Guarantee
Period as has just expired, so long as such Guarantee Period does not extend
beyond the latest Annuity Date that can be selected by an Owner or Certificate
Owner. If such Guarantee Period does extend beyond the latest Annuity Date,
the Company will choose the one year period. If there is no Guarantee Period
for the same period available, the one year period will be selected. If the
one year period is no longer available, the next longest period available will
be selected.
The Owner or Certificate Owner may elect one or more Guarantee Periods subject
to the Company's underwriting rules. Multiple Guarantee Periods are treated
separately for purposes of applying the Market Value Adjustment. The Company
reserves the right to credit different Credited Interest Rates to the Owner's
Contract Value or the Certificate Owner's Certificate Value attributable to:
1. different Guarantee Periods; and
2. Guarantee Periods of the same duration with different Effective
Dates.
The Owner or Certificate Owner may upon Written Request or pursuant to a
telephone transfer authorization change to any Guarantee Period then being
offered by the Company with respect to contracts and certificates of this type
and class. The Market Value Adjustment will apply to a change made at any
time other than at the end of a Guarantee Period. The Market Value Adjustment
will not apply to a change made at the end of a Guarantee Period if a Written
Request or a telephone transfer authorization is received by the Company
within thirty (30) days prior to the end of the Guarantee Period. The Market
Value Adjustment will be an addition to or deduction from the remaining amount
of Contract Value or the Certificate Owner's Certificate Value except in the
case of a full surrender in which case the Market Value Adjustment will be an
addition to or deduction from the amount surrendered.
Any amount withdrawn, transferred or annuitized prior to the end of that
Guarantee Period may be subject to a Market Value Adjustment. Owners and
Certificate Owners bear the risk that amounts reallocated within, or
prematurely withdrawn, transferred or annuitized from the MVA Account prior to
the end of their respective Guarantee Period could result in the Owner or
Certificate Owner receiving less than the Purchase Payments or amounts so
allocated. The Market Value Adjustment will be calculated by multiplying the
amount withdrawn, transferred or annuitized by the formula set forth below.
There will be no Market Value Adjustment on withdrawals from the MVA Account
in the following situations: (1) payment of a death benefit under the Contract
or Certificate; (2) amounts withdrawn to pay fees or charges; (3) amounts
withdrawn or transferred from the MVA Account within 30 days prior to the end
of the Guarantee Period; (4) if an Owner/Certificate Owner annuitizes his/her
Contract/Certificate under an Annuity Option providing for at least 60 monthly
Annuity Payments; and (5) withdrawals once each Contract or Certificate Year,
after the first year in such Guarantee Period, of up to a total of 10% of each
Guarantee Period. See Appendix B for examples of the application of the
Market Value Adjustment.
The Market Value Adjustment factor is equal to:
( 1 + A ) N/365
(___________) - 1
( 1 + B )
<TABLE>
<CAPTION>
<S> <C> <C>
where: A = the U.S. Treasury rate in effect at the beginning of
the Guarantee Period for the length of the Guarantee
Period selected.
B = the current U.S. Treasury rate as of the transaction
date plus .005. Treasury rate period is determined by
N/365 rounded to the next highest year.
N = Number of days remaining in the MVA Guarantee Period.
</TABLE>
If the Treasury rate is not available for the period, the rate will be arrived
at by interpolation.
WITHDRAWALS, TRANSFERS OR ANNUITIZATION OF AMOUNTS FROM A GUARANTEE PERIOD
PRIOR TO THE END OF THAT GUARANTEE PERIOD MAY BE SUBJECT TO A MARKET VALUE
ADJUSTMENT. THE MARKET VALUE ADJUSTMENT MAY BE POSITIVE OR NEGATIVE AND MAY
RESULT IN THE OWNER OR CERTIFICATE OWNER RECEIVING LESS THAN HIS OR HER
PURCHASE PAYMENT OR CONTRACT VALUE OR CERTIFICATE OWNER'S CERTIFICATE VALUE
ALLOCATED TO THE MVA ACCOUNT.
CHARGES AND DEDUCTIONS
Various charges and deductions are made from Owner's Contract Value and
Certificate Owners' Certificate Value, the Variable Account and the MVA
Account. These charges and deductions are:
DEDUCTION FOR MORTALITY AND EXPENSE RISK CHARGE
Each Valuation Period, the Company deducts a Mortality and Expense Risk Charge
from the Variable Account which is equal, on an annual basis, to 1.15% of the
average daily net asset value of each Sub-Account of the Variable Account. The
Company may increase this charge, but it will not exceed 1.25% of the average
daily net asset value of the Variable Account. In the event of an increase,
the Company will give Owners and Certificate Owners 90 days prior notice of
the increase. The mortality risks assumed by the Company arise from its
contractual obligation to make Annuity Payments after the Annuity Date
(determined in accordance with the Annuity Option chosen by the
Owner/Certificate Owner) regardless of how long all Annuitants live. This
assures that neither an Annuitant's own longevity, nor an improvement in life
expectancy greater than that anticipated in the mortality tables, will have
any adverse effect on the Annuity Payments the Annuitant will receive under
the Contract/Certificate. Further, the Company bears a mortality risk in that
it guarantees the annuity purchase rates for the Annuity Options under the
Contracts and Certificates. Also, the Company bears a mortality risk with
respect to the death benefit. The expense risk assumed by the Company is that
all actual expenses involved in administering the Contracts and Certificates,
including Contract and Certificate maintenance costs, administrative costs,
mailing costs, data processing costs, legal fees, accounting fees, filing fees
and the costs of other services may exceed the amount recovered from the
Contract and Certificate Maintenance Charges and the Administrative Charge.
If the Mortality and Expense Risk Charge is insufficient to cover the actual
costs, the loss will be borne by the Company. Conversely, if the amount
deducted proves more than sufficient, the excess will be a profit to the
Company. The Company expects a profit from this charge.
DEDUCTION FOR ADMINISTRATIVE CHARGE
Each Valuation Period, the Company deducts an Administrative Charge from the
Variable Account which is equal, on an annual basis, to .15% of the average
daily net asset value of each Sub-Account of the Variable Account. However,
the Company may increase this charge, but it will not exceed .25% of the
average daily net asset value of the Variable Account. The Company will give
Owners/Certificate Owners 90 days notice before any increase is implemented.
This charge, together with the Contract and Certificate Maintenance Charges
(see below), is to reimburse the Company for the expenses it incurs in the
establishment and maintenance of the Contracts, Certificates and the Variable
Account. These expenses include but are not limited to: preparation of the
Contracts and Certificates, confirmations, annual reports and statements,
maintenance of Owner and Certificate Owner records, maintenance of Variable
Account records, administrative personnel costs, mailing costs, data
processing costs, legal fees, accounting fees, filing fees, the costs of other
services necessary for Owner and Certificate Owner servicing and all
accounting, valuation, regulatory and reporting requirements. Since this
charge is an asset-based charge, the amount of the charge attributable to a
particular Contract or Certificate may have no relationship to the
administrative costs actually incurred by that Contract or Certificate. The
Company does not intend to profit from this charge. This charge will be
reduced to the extent that the amount of this charge is in excess of that
necessary to reimburse the Company for its administrative expenses.
DEDUCTION FOR CONTRACT AND CERTIFICATE MAINTENANCE CHARGES
During the Accumulation Period, on each Contract or Certificate Anniversary,
the Company deducts a Contract or Certificate Maintenance Charge from the
Owner's Contract Value or the Certificate Owner's Certificate Value by
reducing the Owner's Contract Value/Certificate Owner's Certificate Value in
the MVA Account and by canceling Accumulation Units from each applicable
Sub-Account of the Variable Account to reimburse it for expenses relating to
the maintenance of the Contracts and Certificates. The Company makes a
deduction of $30.00 each Contract or Certificate Year. However, during the
Accumulation Period if the Owner's Contract Value or the Certificate Owner's
Certificate Value on the Contract or Certificate Anniversary is at least
$25,000, then no Contract or Certificate Maintenance Charges are deducted. If
a total withdrawal is made on other than a Contract or Certificate Anniversary
and the Owner's Contract Value or the Certificate Owner's Certificate Value
for the Valuation Period during which the total withdrawal is made is less
than $25,000, the full Contract or Certificate Maintenance Charge will be
deducted at the time of the total withdrawal. During the Annuity Period, no
Contract or Certificate Maintenance Charge is deducted. The Contract and
Certificate Maintenance Charges will be deducted from the Sub-Account or MVA
Account with the largest balance. The Company has set this charge at a level
so that, when considered in conjunction with the Administrative Charge (see
above), it will not make a profit from the charges assessed for
administration.
DEDUCTION FOR TRANSFER FEE
An Owner/Certificate Owner may transfer all or part of the Owner's/Certificate
Owner's interest in a Sub-Account or the MVA Account (subject to the MVA
Account provisions) after the expiration of any Right to Examine Period,
without the imposition of any fee or charge if there have been no more than
the number of free transfers made. An Owner/Certificate Owner may make one
transfer every 30 days without the imposition of the Transfer Fee during the
Accumulation Period and may make four transfers per Contract/Certificate Year
during the Annuity Period without the imposition of the Transfer Fee. The
Transfer Fee is the lesser of $25 or 2% of the amount transferred. The
Transfer Fee is deducted from the Account which is the source of the transfer.
However, if the Owner's or Certificate Owner's entire interest in an Account
is being transferred, the Transfer Fee will be deducted from the amount which
is transferred. If there are multiple source Accounts, the Transfer Fee will
be allocated to the Sub-Account or MVA Account with the largest balance
involved in the transfer transaction. A transfer made at the end of the Right
to Examine Period from the Money Market Sub-Account will not count in
determining the application of the Transfer Fee. If the Owner or Certificate
Owner is participating in an approved Dollar Cost Averaging Program or
Rebalancing Program, such transfers are not counted toward the number of
transfers for the year and are not taken into account in determining any
Transfer Fee. All reallocations made on the same day count as one transfer for
purposes of determining the Transfer Fee.
DEDUCTION FOR PREMIUM AND OTHER TAXES
Any taxes, including any Premium Taxes, paid to any governmental entity
relating to the Contracts and Certificates may be deducted from Purchase
Payments or Contract Values or Certificate Owner's Certificate Value when
incurred. The Company will, in its sole discretion, determine when taxes have
resulted from: the investment experience of the Variable Account; receipt by
the Company of the Purchase Payments; or commencement of Annuity Payments.
The Company may, at its sole discretion, pay taxes when due and deduct that
amount from the Contract Value or Certificate Owner's Certificate Value at a
later date. Payment at an earlier date does not waive any right the Company
may have to deduct amounts at a later date. The Company's current practice is
to deduct such taxes from an Owner's Contract Value/Certificate Owner's
Certificate Value at the time Annuity Payments begin or from amounts that are
withdrawn. Premium taxes currently range from 0% to 3.5%.
While the Company is not currently maintaining a provision for federal income
taxes with respect to the Variable Account, the Company has reserved the right
to establish a provision for the deductions of income taxes from the Variable
Account if it determines, in its sole discretion, that it will incur a tax as
a result of the operation of the Variable Account.
The Company will deduct any withholding taxes required by applicable law.
(See "Tax Status - Income Tax Withholding.")
DEDUCTION FOR EXPENSES OF THE ELIGIBLE FUNDS
There are other deductions from and expenses (including management fees paid
to the Advisers) paid out of the assets of the Eligible Funds which are
described in the Prospectuses for the Eligible Funds.
THE CONTRACTS AND CERTIFICATES
OWNER/CERTIFICATE OWNER
The Owner or Certificate Owner has all interest and rights to amounts held in
his or her Contract/Certificate. The Owner or Certificate Owner is the person
designated as such on the Issue Date/Certificate Issue Date, unless changed.
The Owner/Certificate Owner may change owners of the Contract/Certificate at
any time by Written Request. A change of Owner or Certificate Owner will
automatically revoke any prior designation of Owner/Certificate Owner. The
change will become effective as of the date the Written Request is signed. The
Company will not be liable for any payment made or action taken before it
records the change.
JOINT OWNERS/JOINT CERTIFICATE OWNERS
The Contract can be owned by Joint Owners. A Certificate may be owned by Joint
Certificate Owners. If Joint Owners or Joint Certificate Owners are named, any
Joint Owner or Joint Certificate Owner must be the spouse of the other Owner
or Joint Certificate Owner. Upon the death of either Owner/ Certificate Owner,
the surviving Joint Owner/surviving Joint Certificate Owner will be the
primary Beneficiary. Any other Beneficiary designation will be treated as a
contingent Beneficiary unless otherwise indicated in a Written Request.
GROUP CONTRACT OWNER
The Group Contract Owner has title to the Group Contract. The Group Contract
and any amounts accumulated thereunder are not subject to the claims of the
Group Contract Owner nor any of its creditors. The Group Contract Owner may
transfer ownership of the Group Contract. Any transfer of ownership terminates
the interest of any existing Group Contract Owner. It does not change the
rights of any Certificate Owner.
ANNUITANT
The Annuitant is the person on whose life Annuity Payments are based. The
Annuitant is the person designated by the Owner/Certificate Owner at the Issue
Date/Certificate Issue Date, unless changed prior to the Annuity Date. The
Owner/Certificate Owner may not change the Annuitant except in the event that
the Annuitant dies prior to the Annuity Date. If no new Annuitant is
designated by the Owner/Certificate Owner within 30 days, the
Owner/Certificate Owner becomes the Annuitant. The Annuitant may not be
changed in a Contract/Certificate which is owned by a non-natural person. Any
change of Annuitant is subject to the Company's underwriting rules then in
effect. A Written Request specifying the change of Annuitant must be provided
to the Administrative Office.
ASSIGNMENT
A Written Request specifying the terms of an assignment of the Contract or
Certificate must be provided to the Administrative Office. The Company will
not be liable for any payment made or action taken before it records the
assignment.
The Company will not be responsible for the validity or tax consequences of
any assignment. Any assignment made after the death benefit has become payable
will be valid only with the Company's consent.
If the Contract or Certificate is assigned, the Owner's or Certificate Owner's
rights may only be exercised with the consent of the assignee of record.
If the Contract or Certificate is issued pursuant to a retirement plan which
receives favorable tax treatment under the provisions of Sections 403(b) or
408 of the Code, it may not be assigned, pledged or otherwise transferred
except as may be allowed under applicable law.
PURCHASE PAYMENTS, CONTRACT VALUE AND CERTIFICATE VALUE
PURCHASE PAYMENT
The initial Purchase Payment is due on the Issue Date/Certificate Issue Date.
The minimum initial Purchase Payment is $50,000 (except for Qualified
Contracts and Certificates, the minimum initial Purchase Payment is $10,000).
The minimum subsequent Purchase Payment is $1,000, or if the automatic premium
check option is elected $250 monthly. The maximum total Purchase Payments the
Company will accept without Company approval is $1,000,000. The Company
reserves the right to change these Purchase Payment requirements. The Company
reserves the right to reject any Application or Purchase Payment.
ALLOCATION OF PURCHASE PAYMENTS
Net Purchase Payments are allocated to MVA Account Guarantee Period Option(s)
and/or to one or more Sub-Account(s) of the Variable Account in accordance
with the selections made by the Owner/Certificate Owner. THE MVA ACCOUNT WILL
BE AVAILABLE ON OR ABOUT OCTOBER 1, 1996 (check with your representative
regarding availability). The Company has reserved the right, under certain
circumstances, to allocate initial Purchase Payments to the Money Market
Sub-Account (except those allocated to the MVA Account) until the expiration
of the Right to Examine Period. In the event that the Company does so allocate
initial Purchase Payments to the Money Market Sub-Account, at the end of the
Right to Examine Period, the Contract Value/Certificate Value allocated to the
Money Market Sub-Account will be allocated to the Sub-Account(s) selected by
the Owner/Certificate Owner. Currently, however, the Company will allocate the
initial Purchase Payment directly to the Sub-Account(s) and/or the MVA
Account, as selected by the Owner/Certificate Owner. The allocation of the
initial Net Purchase Payment is made in accordance with the selection made by
the Owner or Certificate Owner at the Issue Date or Certificate Issue Date.
Unless otherwise changed by the Owner or Certificate Owner, subsequent Net
Purchase Payments are allocated in the same manner selected by the
Owner/Certificate Owner for the initial Net Purchase Payment. Allocation of
the Net Purchase Payment is subject to the terms and conditions imposed by the
Company. Currently, the Owner or Certificate Owner can select 15 Sub-Accounts
of the Variable Account and the MVA Account(SUBJECT TO THE MVA ACCOUNT
AVAILABILITY). The Company reserves the right to change this in the future.
Allocations must be in whole percentages with a minimum allocation of 1%. The
minimum amount which can be allocated to a Guarantee Period Option is $2,000.
The Company has reserved the right to change this minimum.
For initial Net Purchase Payments, if the forms required to issue a
Contract/Certificate are in good order, the Company will apply the Net
Purchase Payment to the Variable Account and credit the Contract/Certificate
with Accumulation Units and/or to the MVA Account and credit the
Contract/Certificate with dollars within two business days of receipt.
In addition to the underwriting requirements of the Company, good order means
that the Company has received federal funds (monies credited to a bank's
account with its regional Federal Reserve Bank). If the forms required to
issue a Contract or Certificate are not in good order, the Company will
attempt to get them in good order or the Company will return the forms and the
Purchase Payment within five business days. The Company will not retain the
Purchase Payment for more than five business days while processing incomplete
forms unless it has been so authorized by the purchaser. For subsequent Net
Purchase Payments, the Company will apply Net Purchase Payments to the
Variable Account and credit the Contract or Certificate with Accumulation
Units and/or to the MVA Account and credit the Contract or Certificate with
dollars as of the end of the Valuation Period during which the Purchase
Payment was received.
DOLLAR COST AVERAGING
Dollar Cost Averaging is a program which, if elected in writing, permits an
Owner or Certificate Owner to systematically transfer amounts monthly,
quarterly, semi-annually or annually during the Accumulation Period from the
Money Market Sub-Account to one or more of the other Sub-Accounts. By
allocating amounts on a regularly scheduled basis as opposed to allocating the
total amount at one particular time, an Owner or Certificate Owner may be less
susceptible to the impact of market fluctuations. A minimum of $2,000 must be
in the Money Market Sub-Account when Dollar Cost Averaging begins (the Company
reserves the right to change this amount). If the amount to be transferred
pursuant to Dollar cost Averaging exceeds the Contract Value/Certificate
Value, the total balance in the Money Market Sub-Account will be transferred.
Currently, an Owner or Certificate Owner may select up to 15 Sub-Accounts for
Dollar Cost Averaging.
There is no current charge for participating in the Dollar Cost Averaging
Program. However, the Company reserves the right to charge for Dollar Cost
Averaging in the future. Transfers made pursuant to the Dollar Cost Averaging
Program will occur on the first business day of the month. Dollar Cost
Averaging will discontinue when the Contract Value/Certificate Value in the
Money Market Sub-Account is zero. The Company will notify Owners/Certificate
Owners when the Dollar Cost Averaging Program is discontinued. The minimum
duration of participation in the Dollar Cost Averaging Program is currently 6
to 60 months. Transfers made pursuant to the Dollar Cost Averaging program are
not taken into account in determining any Transfer Fee. An Owner or
Certificate Owner participating in the Dollar Cost Averaging Program may not
also participate in the Systematic Withdrawal Program. The Company reserves
the right, at any time and without prior notice to any party, to terminate,
suspend or modify its Dollar Cost Averaging program.
REBALANCING
Rebalancing is a program, which if elected, provides for periodic
pre-authorized automatic transfers during the Accumulation Period among the
Sub-Accounts pursuant to written instructions from the Owner or Certificate
Owner. Such transfers are made to maintain a particular percentage allocation
among the Portfolios as selected by the Owner or Certificate Owner. Any
amounts in the MVA Account will not be transferred pursuant to the Rebalancing
Program. The Contract Value/Certificate Value must be at least $5,000 to have
transfers made pursuant to the Program. Any transfer made pursuant to the
Rebalancing Program must be in whole percentages in one (1%) percent
allocation increments. The maximum number of Sub-Accounts which can be used
for rebalancing is fifteen (15). An Owner or Certificate Owner may select
that Rebalancing occur on a quarterly, semi-annual or annual basis.
Rebalancing will occur on the date requested by the Owner or Certificate
Owner. Transfers made pursuant to the Rebalancing Program are not taken into
account in determining any Transfer Fee. There is no fee for participating in
the Rebalancing Program. The Company reserves the right to terminate, modify
or suspend its Rebalancing Program at any time.
CONTRACT VALUE
The Contract Value for any Valuation Period is the sum of the Contract Value
in each of the Sub-Accounts of the Variable Account and the Contract Value in
the MVA Account.
The Contract Value in a Sub-Account of the Variable Account is determined by
multiplying the number of Accumulation Units allocated to the Contract Value
for the Sub-Account by the Accumulation Unit value.
Withdrawals will result in the cancellation of Accumulation Units in a
Sub-Account or a reduction in the MVA Account, as applicable.
CERTIFICATE VALUE
The Certificate Value for any Valuation Period is the sum of the Certificate
Value in each of the Sub-Accounts of the Variable Account and the Certificate
Value in the MVA Account.
The Certificate Value in a Sub-Account of the Variable Account is determined
by multiplying the number of Accumulation Units allocated to the Certificate
Value for the Sub-Account by the Accumulation Unit Value.
Withdrawals will result in the cancellation of Accumulation Units in a
Sub-Account or a reduction in the MVA Account, as applicable.
ACCUMULATION UNITS
Accumulation Units will be used to account for all amounts allocated to or
withdrawn from the Sub-Accounts of the Variable Account as a result of Net
Purchase Payments, withdrawals, transfers, or fees and charges. The Company
will determine the number of Accumulation Units of a Sub-Account purchased or
canceled. This will be done by dividing the amount allocated to (or the amount
withdrawn from) the Sub-Account by the dollar value of one Accumulation Unit
of the Sub-Account as of the end of the Valuation Period during which the
request for the transaction is received at the Administrative Office.
ACCUMULATION UNIT VALUE
The Accumulation Unit Value for each Sub-Account was arbitrarily set initially
at $10. Subsequent Accumulation Unit Values for each Sub-Account are
determined by multiplying the Accumulation Unit Value for the immediately
preceding Valuation Period by the Net Investment Factor for the Sub-Account
for the current period.
The Net Investment Factor for each Sub-Account is determined by dividing A by
B and subtracting C where:
<TABLE>
<CAPTION>
<S> <C>
A is (i) the net asset value per share of the Eligible Fund or Portfolio
of an Eligible Fund held by the Sub-Account for the current
Valuation Period; plus
(ii) any dividend or capital gains per share declared on behalf of
such Eligible Fund or Portfolio that has an ex-dividend date
within the current Valuation Period; plus
(iii) a charge factor, if any, for taxes or any tax reserve
established by the Company as a result of the operation or
maintenance of the Sub-Account.
B is the net asset value per share of the Eligible Fund or Portfolio held
by the Sub-Account for the immediately preceding Valuation
Period.
C is the Valuation Period equivalent of the per month Mortality and
Expense Risk Charge and for the Administrative Charge.
</TABLE>
The Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
TRANSFERS
TRANSFERS DURING THE ACCUMULATION PERIOD
Subject to any limitation imposed by the Company on the number of transfers
that can be made during the Accumulation Period, the Owner or Certificate
Owner may transfer all or part of the Contract Value or Certificate Value in a
Sub-Account of the Variable Account or the MVA Account by Written Request.
Currently, Owners and Certificate Owners may make an unlimited number of
transfers during the Accumulation Period. All transfers are subject to the
following:
1. If more than the number of free transfers have been made in a
Contract or Certificate Year, the Company will deduct a Transfer Fee for each
subsequent transfer permitted. Currently, an Owner or Certificate Owner may
make one transfer every 30 days free. The Transfer Fee is the lesser of $25 or
2% of the amount transferred. The Transfer Fee is deducted from the Account
which is the source of the transfer. However, if the Owner's or Certificate
Owner's entire interest in an Account is being transferred, the Transfer Fee
will be deducted from the amount which is transferred. If there are multiple
source Accounts, the Transfer Fee will be allocated to the Sub-Account or MVA
Account with the largest balance involved in the transfer transaction. Any
transfers made pursuant to the Dollar Cost Averaging Program or Rebalancing
Program will not be counted in determining the application of the Transfer
Fee. All reallocations on the same day count as one transfer.
2. The minimum amount which can be transferred is $500 (from any
Sub-Account or any Guarantee Period in the MVA Account) or the Owner's or
Certificate Owner's entire interest in the Sub-Account or the Guarantee
Period, if less. The Company reserves the right to change this amount. This
requirement is waived if the transfer is made pursuant to the Dollar Cost
Averaging or Rebalancing Programs. The minimum amount which must remain in
each Account after a transfer is $500 per Sub-Account or a Guarantee Period in
the MVA Account, or $0 if the entire amount in any Sub-Account or a Guarantee
Period in the MVA Account is transferred. The Company reserves the right to
change this amount.
3. The Company reserves the right, at any time and without prior notice
to any party, to terminate, suspend or modify the transfer privilege described
above.
Transfers must be made by written authorization from the Owner/Certificate
Owner or from the person acting for the Owner or Certificate Owner as an
attorney-in-fact under a power-of-attorney if permitted by state law. By
authorizing the Company to accept telephone transfer instructions, the
Owner/Certificate Owner agrees to accept and be bound by the conditions and
procedures established by the Company from time to time. The Company has
instituted reasonable procedures to confirm that any instructions communicated
by telephone are genuine. All telephone calls will be recorded, and the caller
will be asked to produce the Owner/Certificate Owner's personalized data prior
to the Company initiating any transfer requests by telephone. Additionally, as
with other transactions, the Owner/Certificate Owner will receive a written
confirmation of the transfer. If reasonable procedures are employed, neither
the Company nor GARCO Equity Sales, Inc. will be liable for following
telephone instructions which it reasonably believes to be genuine. Written
transfer requests may be made by a person acting for the Owner or Certificate
Owner as an attorney-in-fact under a power-of-attorney.
Neither the Variable Account nor the Eligible Funds are designed for
professional market timing organizations or other entities using programmed
and frequent transfers. A pattern of exchanges that coincides with a "market
timing" strategy may be disruptive to a Portfolio. The Company reserves the
right to restrict the transfer privilege or reject any specific Purchase
Payment allocation request for any person whose transactions seem to follow a
timing pattern.
TRANSFERS DURING THE ANNUITY PERIOD
Subject to any limitations imposed by the Company on the number of transfers
that can be made during the Annuity Period, the Owner or Certificate Owner may
transfer Contract Values or Certificate Values by Written Request. Currently,
Owners and Certificate Owners may make four transfers per Contract/Certificate
Year during the Annuity Period. All transfers during the Annuity Period are
subject to the following:
1. Transfers may be made upon written notice to the Company at least 30
days before the due date of the first Annuity Payment for which the change
will apply. Transfers will be made by converting the number of Annuity Units
being transferred to the number of Annuity Units of the Sub-Account to which
the transfer is made, so that the next Annuity Payment, if it were made at
that time would be the same amount that it would have been without the
transfer. Thereafter Annuity Payments will reflect changes in the value of
the new Annuity Units.
2. If more than the number of free transfers have been made in a
Contract/Certificate Year, the Company will deduct a Transfer Fee for each
subsequent transfer permitted. Currently, the four transfers per
Contract/Certificate Year permitted during the Annuity Period are free. The
Transfer Fee is the lesser of $25 or 2% of the amount transferred. The
Transfer Fee is deducted from the Account which is the source of the transfer.
However, if the Owner's or Certificate Owner's entire interest in an Account
is being transferred, the Transfer Fee will be deducted from the amount which
is transferred. If there are multiple source Accounts, the Transfer Fee will
be allocated to the Sub-Account or MVA Account with the largest balance
involved in the transfer transaction. All reallocations on the same day count
as one transfer.
3. The minimum amount which can be transferred is $500 (from any
Sub-Account) or the Owner's/Certificate Owner's entire interest in the
Sub-Account, if less. The minimum amount which must remain in each Account
after a transfer is $500 per Sub-Account, or $0 if the entire amount in any
Sub-Account is transferred.
4. No transfers can be made between the General Account and the Variable
Account. Transfers may only be made among the Sub-Accounts.
5. The Company reserves the right, at any time and without prior notice
to any party, to terminate, suspend or modify the transfer privilege described
above.
WITHDRAWALS
During the Accumulation Period, the Owner or Certificate Owner may, upon a
Written Request, make total or partial withdrawals of the Contract Withdrawal
Value or Certificate Withdrawal Value.
The Owner/Certificate Owner must specify by Written Request which Sub-Account
of the Variable Account or Guarantee Period of the MVA Account, as applicable,
is the source of the partial withdrawal.
A withdrawal from the MVA Account may be subject to a Market Value Adjustment.
The Company will pay the amount of any withdrawal from the Variable Account
within seven (7) days of receipt of a request in good order unless the
Suspension or Deferral of Payments provision is in effect.
Each partial withdrawal must be for at least $500 from each Sub-Account and
each Guarantee Period of the MVA Account (unless the withdrawal is made
pursuant to the Systematic Withdrawal Option). The minimum Contract Value or
Certificate Value which must remain in the Contract or Certificate after a
partial withdrawal is $500. The minimum Contract Value or Certificate Value
which must remain in any Sub-Account after a partial withdrawal is $500.
Certain tax withdrawal penalties and restrictions may apply to withdrawals
from the Contracts and Certificates. (See "Tax Status"). For Contracts/
Certificates purchased in connection with 403(b) plans, the Code limits the
withdrawal of amounts attributable to contributions made pursuant to a salary
reduction agreement (as defined in Section 403(b)(11) of the Code) to
circumstances only when the Owner/Certificate Owner: (1) attains age 59 1/2;
(2) separates from service; (3) dies; (4) becomes disabled (within the meaning
of Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's
Contract Value or Certificate Owner's Certificate Value which represents
contributions made pursuant to a salary reduction agreement by the
Owner/Certificate Owner and does not include any investment results. The
limitations on withdrawals became effective on January 1, 1989 and apply only
to salary reduction contributions made after December 31, 1988, to income
attributable to such contributions and to income attributable to amounts held
as of December 31, 1988. The limitations on withdrawals do not affect
rollovers or transfers between certain Qualified Plans. Owners and
Certificate Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
SYSTEMATIC WITHDRAWAL PROGRAM
The Company offers a Systematic Withdrawal Program which enables an Owner or
Certificate Owner to pre-authorize by Written Request a periodic exercise of
the contractual withdrawal rights described above. The Systematic Withdrawal
Program is available if the Contract Value or Certificate Value is at least
$5,000 as of the Valuation Date this option is requested (the Company reserves
the right to change this requirement). Each withdrawal pursuant to the
Systematic Withdrawal Program must be for at least $100. Systematic
withdrawals may be made from any Sub-Account of the Variable Account.
Systematic withdrawals cannot be made from the MVA Account.
Owners/Certificate Owners must specify from which Sub-Accounts the withdrawals
are to be made. The amount of the withdrawal must be specified as a percentage
of Contract Value or Certificate Value or in round dollars. Withdrawals may
be scheduled monthly, quarterly, semi-annually or annually. The standard date
of the month for withdrawals is the last day of the month. The Owner, the
Certificate Owner or the Company may terminate systematic withdrawals at any
time and may reinstate the program at any time by completing the appropriate
forms. Systematic withdrawals will terminate if the Owner/Certificate Owner
makes a partial withdrawal outside the program and the remaining
Contract/Certificate Value or Certificate Value is less than $5,000. The
Systematic Withdrawal Option can be exercised at any time, including during
the first Contract/Certificate Year. There is currently no charge for
systematic withdrawals. An Owner or Certificate Owner participating in the
Systematic Withdrawal Program may not also participate in the Dollar Cost
Averaging Program.
Systematic withdrawals are available for Qualified and Non-Qualified Contracts
and Certificates. (See "Tax Status - Tax Treatment of Withdrawals -
Non-Qualified Contracts and Certificates.") Certain tax penalties and
restrictions may apply to systematic withdrawals from the Contracts and
Certificates. (See "Tax Status - Tax Treatment of Withdrawals -Qualified
Contracts and Certificates".)
SUSPENSION OR DEFERRAL OF PAYMENTS
The Company reserves the right to suspend or postpone payments from the
Variable Account for a withdrawal or transfer for any period when:
1. The New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. Trading on the New York Stock Exchange is restricted;
3. An emergency exists as a result of which disposal of securities held
in the Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Variable Account's net assets; or
4. During any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Owners or Certificate Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
The Company further reserves the right to postpone payments from the MVA
Account for a period of up to six months.
PROCEEDS PAYABLE ON DEATH
DEATH OF OWNER OR CERTIFICATE OWNER DURING THE ACCUMULATION PERIOD
Upon the death of the Owner or Certificate Owner, or any Joint Owner or Joint
Certificate Owner during the Accumulation Period, the death benefit will be
paid to the Beneficiary(ies) designated by the Owner or Certificate Owner.
Upon the death of any Joint Owner or Joint Certificate Owner, the surviving
Joint Owner or Joint Certificate Owner, if any, will be treated as the primary
Beneficiary. Any other Beneficiary designation on record at the time of death
will be treated as a contingent Beneficiary.
A Beneficiary may request that the death benefit be paid under one of the
Death Benefit Options below. If the Beneficiary is the spouse of the Owner or
Certificate Owner, he or she may elect to continue the Contract or Certificate
at the then current Contract Value or Certificate Value in his or her own name
and exercise all the Owner's or Certificate Owner's rights under the Contract
or Certificate.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD
Prior to the Owner/Certificate Owner attaining Age 80, the death benefit will
be the greater of: (i) the Purchase Payments, less any withdrawals; or (ii)
the Contract Value/Certificate Value determined as of the end of the Valuation
Period during which the Company receives both due proof of death and an
election for the payment method. If the death occurs after Age 80, the death
benefit will be the Contract Value/Certificate Value determined as of the end
of the Valuation Period during which the Company receives both due proof of
death and an election for the payment method.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD
A non-spousal Beneficiary must elect the death benefit to be paid under one of
the following options in the event of the death of the Owner or Certificate
Owner during the Accumulation Period:
OPTION 1 - lump sum payment of the death benefit; or
OPTION 2 - payment of the entire death benefit within 5 years of the
date of the death of the Owner/Certificate Owner or any Joint Owner/Joint
Certificate Owner; or
OPTION 3 - payment of the death benefit under an Annuity Option over
the lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one year of
the date of death of the Owner/Certificate Owner or any Joint Owner/Joint
Certificate Owner.
Any portion of the death benefit not applied under Option 3 within one year of
the date of the Owner's or Certificate Owner's death, must be distributed
within five years of the date of death.
A spousal Beneficiary may elect to continue the Contract or Certificate in his
or her own name at the then current Contract Value or Certificate Value, elect
a lump sum payment of the death benefit or apply the death benefit to an
Annuity Option.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments provision is in effect.
Payment to the Beneficiary, other than in a lump sum, may only be elected
during the sixty-day period beginning with the date of receipt of proof of
death.
DEATH OF OWNER/CERTIFICATE OWNER DURING THE ANNUITY PERIOD
If the Owner/Certificate Owner or any Joint Owner/Joint Certificate Owner, who
is not the Annuitant, dies during the Annuity Period, any remaining payments
under the Annuity Option elected will continue at least as rapidly as under
the method of distribution in effect at such Owner's/Certificate Owner's or
Joint Owner's/Joint Certificate Owner's death. Upon the death of any
Owner/Certificate Owner during the Annuity Period, the Beneficiary becomes the
Owner/Certificate Owner. Upon the death of any Joint Owner/Joint Certificate
Owner during the Annuity Period, the surviving Joint Owner/Joint Certificate
Owner, if any, will be treated as the primary Beneficiary. Any other
Beneficiary designation on record at the time of death will be treated as a
contingent Beneficiary.
DEATH OF ANNUITANT
Upon the death during the Accumulation Period of the Annuitant who is not the
Owner or Certificate Owner, the Owner/Certificate Owner may designate a new
Annuitant, subject to the Company's underwriting rules then in effect. If no
designation is made within 30 days of the death of the Annuitant, the Owner or
Certificate Owner will become the Annuitant. If the Owner or Certificate
Owner is a non-natural person, the death of the Annuitant will be treated as
the death of the Owner or Certificate Owner and a new Annuitant may not be
designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit,
if any, will be as specified in the Annuity Option elected. Death benefits
will be paid at least as rapidly as under the method of distribution in effect
at the Annuitant's death.
PAYMENT OF DEATH BENEFIT
The Company will require due proof of death before any death benefit is paid.
Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or
regulations governing death benefit payments.
BENEFICIARY
The Beneficiary designation in effect on the Issue Date/Certificate Issue
Date will remain in effect until changed. The Beneficiary is entitled to
receive the benefits to be paid at the death of the Owner/Certificate Owner.
Unless the Owner/Certificate Owner provides otherwise, the death benefit will
be paid in equal shares to the survivor(s) as follows:
1. to the primary Beneficiary(ies) who survive the Owner's/Certificate
Holder's and/or the Annuitant's death, as applicable; or if there are none
2. to the contingent Beneficiary(ies) who survive the
Owner's/Certificate Owner's and/or the Annuitant's death, as applicable; or if
there are none
3. to the estate of the Owner/Certificate Owner.
CHANGE OF BENEFICIARY
Subject to the rights of any irrevocable Beneficiary(ies), the
Owner/Certificate Owner may change the primary Beneficiary(ies) or contingent
Beneficiary(ies). Any change may be made by Written Request. The change will
take effect as of the date the Written Request is signed. The Company will not
be liable for any payment made or action taken before it records the change.
ANNUITY PROVISIONS
GENERAL
On the Annuity Date, the Adjusted Contract Value or Adjusted Certificate
Value, as applicable, will be applied under the Annuity Option selected by the
Owner or Certificate Owner. The Owner/Certificate Owner may elect to have the
Contract Value/Certificate Value applied to provide a Fixed Annuity, a
Variable Annuity or a combination Fixed and Variable Annuity. If a
combination is elected, the Owner/Certificate Owner must specify what part of
the Contract Value/Certificate Value is to be applied to the Fixed and
Variable Options.
ANNUITY DATE
The Annuity Date is selected by the Owner/Certificate Owner at the Issue
Date/Certificate Issue Date. The Annuity Date must be the first day of a
calendar month and must be at least 90 days after the Issue Date/Certificate
Issue Date. The Annuity Date may not be later than the earlier of when the
Annuitant reaches attained Age 90 or the maximum date permitted under state
law.
Prior to the Annuity Date, the Owner/Certificate Owner, subject to the above,
may change the Annuity Date by Written Request. Any change must be requested
at least thirty (30) days prior to the new Annuity Date.
SELECTION OR CHANGE OF AN ANNUITY OPTION
An Annuity Option may be selected by Written Request by the Owner/Certificate
Owner. If no Annuity Option is selected, Option 2 with 120 monthly payments
guaranteed will automatically be applied. Unless specified otherwise, that
portion of the Adjusted Contract Value or Adjusted Certificate Value allocated
to the Variable Account shall be used to provide a Variable Annuity and that
portion of the Adjusted Contract Value or Adjusted Certificate Value allocated
to the MVA Account will be used to provide a Fixed Annuity. Prior to the
Annuity Date, the Owner or Certificate Owner can change the Annuity Option
selected by Written Request. Any change must be requested at least thirty
(30) days prior to the Annuity Date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity Payments are paid in monthly installments. The Adjusted Contract
Value/Adjusted Certificate Value is applied to the Annuity Table for the
Annuity Option selected. If the Adjusted Contract Value/Adjusted Certificate
Value to be applied under an Annuity Option is less than $5,000, the Company
reserves the right to make a lump sum payment in lieu of Annuity Payments. If
the Annuity Payment would be or become less than $50, the Company reserves the
right to reduce the frequency of payments to an interval which will result in
each payment being at least $50.
The Mortality and Expense Risk Charge is assessed during both the Accumulation
Period and Annuity Period. The Company will continue to assess the Mortality
and Expense Risk Charge during payment of an Annuity Option that does not
involve a life contingency even though the Company no longer bears any
mortality risk on such payment obligation.
ANNUITY OPTIONS
The following Annuity Options or any other Annuity Option acceptable to the
Company may be selected:
OPTION 1. LIFETIME ONLY ANNUITY : The Company will make monthly payments
during the life of the Annuitant. If this option is elected, it is understood
and agreed that payments shall cease immediately upon the death of the
Annuitant and the annuity will terminate without further value.
OPTION 2. LIFETIME ANNUITY WITH GUARANTEED PERIODS : The Company will
make monthly payments for the guaranteed period selected and thereafter for
the life of the Annuitant. If this option is elected, it is understood and
agreed that upon the death of the Annuitant, any amounts remaining under the
guaranteed period selected will be distributed to the Beneficiary at least as
rapidly as under the method of distribution being used as of the date of the
Annuitant's death. The guaranteed period may be five (5) years, ten (10)
years or twenty (20) years.
OPTION 3. INSTALLMENT REFUND LIFE ANNUITY : The Company will make monthly
payments for the installment refund period (the time required for the sum of
the payments to equal the amount applied), and thereafter for the life of the
Annuitant. If this option is elected, it is understood and agreed that upon
the death of the Annuitant, any amounts remaining under the installment refund
period will be distributed to the Beneficiary at least as rapidly as under the
method of distribution being used at the time of the Annuitant's death.
OPTION 4. PAYMENT FOR A FIXED PERIOD : The Company will make monthly
payments for a fixed period of 3 to 20 years.
OPTION 5. JOINT AND SURVIVOR ANNUITY : The Company will make monthly
payments during the joint life time of the Annuitant and a Joint Annuitant.
Payments will continue during the lifetime of the surviving Annuitant and will
be computed on the basis of 100%, 50% or 66% of the Annuity Payment (or
limits) in effect during the joint life time.
ANNUITY
If the Owner or Certificate Owner selects a Fixed Annuity, the Adjusted
Contract Value or Adjusted Certificate Value is allocated to the General
Account and the Annuity is paid as a Fixed Annuity. If the Owner or
Certificate Owner selects a Variable Annuity, the Adjusted Contract Value or
Adjusted Certificate Value will be allocated to the Sub-Accounts of the
Variable Account in accordance with the selection made by the Owner or
Certificate Owner, and the Annuity will be paid as a Variable Annuity. If no
selection is made, the Adjusted Contract Value or Adjusted Certificate Value
will be applied in the same proportions to the same Sub-Accounts as the
allocations are at the time of election. Unless the Owner or Certificate Owner
specifies otherwise, the payee of the Annuity Payments shall be the Owner or
Certificate Owner. The Adjusted Contract Value or Adjusted Certificate Value
will be applied to the applicable Annuity Table contained in the Contract or
Certificate based upon the Annuity Option selected by the Owner or Certificate
Owner.
FIXED ANNUITY
The Owner or Certificate Owner may elect to have the Adjusted Contract Value
or the Adjusted Certificate Value applied to provide a Fixed Annuity.
The dollar amount of each Fixed Annuity Payment shall be determined in
accordance with Annuity Tables contained in the Contract or Certificate which
are based on the minimum guaranteed interest rate of 3% per year.
VARIABLE ANNUITY
The Owner or Certificate Owner may elect to have the Adjusted Contract Value
or the Adjusted Certificate Value applied to provide a Variable Annuity.
Variable Annuity Payments reflect the investment performance of the Variable
Account in accordance with the allocation of the Adjusted Contract Value or
Adjusted Certificate Value to the Sub-Accounts during the Annuity Period.
Variable Annuity Payments are not guaranteed as to dollar amount.
DISTRIBUTOR
GARCO Equity Sales, Inc. ("GES"), 11815 N. Pennsylvania Street, Carmel,
Indiana 46032, an affiliate of the Company, is the principal underwriter of
the Contracts and Certificates. GES is registered as a broker-dealer with the
Securities and Exchange Commission and is a member of the National Association
of Securities Dealers, Inc. ("NASD").
Commissions will be paid on the sale of the Contracts and Certificates.
Commissions will be paid which are equal to .75% of Purchase Payments plus an
annual trail commission in the amount of .75% of accumulation value at the end
of each Contract/Certificate Year, for promotional or distribution expenses
associated with the marketing of the Contracts and Certificates. In addition,
under certain circumstances, payments may be made to certain sellers for other
services not directly related to the sale of the Contracts and Certificates.
PERFORMANCE INFORMATION
MONEY MARKET SUB-ACCOUNT
From time to time, the Money Market Sub-Account of the Variable Account may
advertise its "current yield" and "effective yield." Both yield figures are
based on historical earnings and are not intended to indicate future
performance. The "current yield" of the Money Market Sub-Account refers to the
income generated by Contract Values or Certificate Values in the Money Market
Sub-Account over a seven-day period ending on the date of calculation (which
period will be stated in the advertisement). This income is "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the Contract Value or Certificate Value in the Money Market
Sub-Account. The "effective yield" is calculated similarly. However, when
annualized, the income earned by the Contract Value or the Certificate Value
is assumed to be reinvested. This results in the "effective yield" being
slightly higher than the "current yield" because of the compounding effect of
the assumed reinvestment. The yield figure will reflect the deduction of any
asset-based charges and any applicable Contract and Certificate Maintenance
Charge.
OTHER SUB-ACCOUNTS
From time to time, the Company may advertise performance data for the various
other Sub-Accounts. Such data will show the percentage change in the value of
an Accumulation Unit based on the performance of an investment medium over a
period of time, usually a calendar year, determined by dividing the increase
(decrease) in value for that Unit by the Accumulation Unit value at the
beginning of the period. This percentage figure will reflect the deduction of
any asset-based charges and any applicable Contract and Certificate
Maintenance Charges under the Contracts.
Any advertisement will also include total return figures calculated as
described in the Statement of Additional Information. The total return
figures reflect the deduction of any applicable Contract and Certificate
Maintenance Charge, as well as any asset-based charges.
The Company may make available yield information with respect to some of the
Sub-Accounts. Such yield information will be calculated as described in the
Statement of Additional Information. The yield information will reflect the
deduction of any applicable Contract and Certificate Maintenance Charge as
well as any asset-based charges.
The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the Sub-Accounts
against established market indices such as the Standard & Poor's 500 Composite
Stock Price Index, the Dow Jones Industrial Average or other management
investment companies which have investment objectives similar to the
underlying Portfolio being compared. The Standard & Poor's 500 Composite
Stock Price Index is an unmanaged, unweighted average of 500 stocks, the
majority of which are listed on the New York Stock Exchange. The Dow Jones
Industrial Average is an unmanaged, weighted average of thirty blue chip
industrial corporations listed on the New York Stock Exchange. Both the
Standard & Poor's 500 Composite Stock Price Index and the Dow Jones Industrial
Average assume quarterly reinvestment of dividends.
In addition, the Company may, as appropriate, compare each Sub-Account's or
Portfolio's performance to that of other types of investments such as
certificates of deposit, savings accounts and U.S. Treasuries, or to certain
interest rate and inflation indices, such as the Consumer Price Index, which
is published by the U.S. Department of Labor and measures the average change
in prices over time of a fixed "market basket" of certain specified goods and
services. Similar comparisons of Sub-Account and/or Portfolio performance may
also be made with appropriate indices measuring the performance of a defined
group of securities widely recognized by investors as representing a
particular segment of the securities markets. For example, Sub-Account and/or
Portfolio performance may be compared with Donoghue Money Market Institutional
Averages (money market rates), Lehman Brothers Corporate Bond Index (corporate
bond interest rates) or Lehman Brothers Government Bond Index (long-term U.S.
Government obligation interest rates).
The Company may also distribute sales literature which compares the
performance of the Accumulation Unit values of the Contracts issued through
the Variable Account with the unit values of variable annuities issued through
the separate accounts derived from the Lipper Variable Insurance Products
Performance Analysis Service, the VARDS Report or from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is
published by Lipper Analytical Services, Inc., a publisher of statistical data
which currently tracks the performance of almost 4,000 investment companies.
The rankings compiled by Lipper may or may not reflect the deduction of
asset-based insurance charges. The Company's sales literature utilizing these
rankings will indicate whether or not such charges have been deducted. Where
the charges have not been deducted, the sales literature will indicate that if
the charges had been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Atlanta and published by Financial
Planning Resources, Inc. The VARDS rankings may or may not reflect the
deduction of asset-based insurance charges. Where the charges have not been
deducted, the sales literature will indicate that if the charges had been
deducted, the rankings might have been lower.
Morningstar rates a variable annuity Sub-Account against its peers with
similar investment objectives. Morningstar does not rate any Sub-Account that
has less than three years of performance data. The Morningstar rankings may or
may not reflect the deduction of charges. Where charges have not been
deducted, the sales literature will indicate that if the charges had been
deducted, the rankings might have been lower.
HYPOTHETICAL PERFORMANCE INFORMATION
Although all of the Sub-Accounts of the Variable Account are new and therefore
have no investment performance history, certain of the corresponding
Portfolios of the Eligible Funds have been in existence for some time and
consequently have an investment performance history. In order to demonstrate
how the actual investment experience of the various Portfolios affects
Accumulation Unit values, the Company may develop hypothetical performance.
The information will be based upon the historical experience of the Portfolios
for the periods shown.
The performance of the various Sub-Accounts will vary and the hypothetical
results which will be shown will not necessarily be representative of future
results. Performance for periods ending after those which will be shown may
vary substantially from the examples which are shown. The performance of the
various Sub-Accounts will be calculated for a specified period of time by
assuming an initial Purchase Payment of $1,000 allocated to each of the
Sub-Accounts and a deduction of all charges and deductions. (See "Charges and
Deductions" for more information.) No withdrawals will be assumed. The
percentage increases are determined by subtracting the initial Purchase
Payment from the ending value and dividing the remainder by the beginning
value.
TAX STATUS
GENERAL
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE
COMPANY CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE
MADE. PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE
POSSIBILITY OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF
THE CONTRACTS AND CERTIFICATES. PURCHASERS BEAR THE COMPLETE RISK THAT THE
CONTRACTS AND CERTIFICATES MAY NOT BE TREATED AS "ANNUITY CONTRACTS" UNDER
FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER UNDERSTOOD THAT THE FOLLOWING
DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL RULES NOT DESCRIBED IN THIS
PROSPECTUS MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO ATTEMPT HAS
BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.
Section 72 of the Code governs taxation of annuities in general. An owner is
not taxed on increases in the value of a contract until distribution occurs,
either in the form of a lump sum payment or as annuity payments under the
Annuity Option selected. For a lump sum payment received as a total
withdrawal (total surrender), the recipient is taxed on the portion of the
payment that exceeds the cost basis of the Contract/Certificate. For
Non-Qualified Contracts and Certificates, this cost basis is generally the
Purchase Payments, while for Qualified Contracts and Certificates there may be
no cost basis. The taxable portion of the lump sum payment is taxed at
ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion
amount is includible in taxable income. The exclusion amount for payments
based on a fixed annuity option is determined by multiplying the payment by
the ratio that the cost basis of the Contract/Certificate (adjusted for any
period certain or refund feature) bears to the expected return under the
Contract/Certificate. Payments received after the investment in the Contract
has been recovered (i.e. when the total of the excludible amounts equal the
investment in the Contract) are fully taxable. The exclusion amount for
payments based on a variable annuity option is determined by dividing the cost
basis of the Contract/Certificate (adjusted for any period certain or refund
guarantee) by the number of years over which the annuity is expected to be
paid. Payments received after the investment in the Contract/Certificate has
been recovered (i.e. when the total of the excludable amounts equal the
investment in the Contract/Certificate) are fully taxable. The taxable portion
is taxed at ordinary income tax rates. For certain types of Qualified Plans
there may be no cost basis in the Contract within the meaning of Section 72 of
the Code. Owners, Certificate Owners, Annuitants and Beneficiaries under the
Contracts/Certificates should seek competent financial advice about the tax
consequences of any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Variable Account is not a separate entity from the
Company and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury
Department ("Treasury Department"), adequately diversified. Disqualification
of the Contract as an annuity contract would result in imposition of federal
income tax to the Owner with respect to earnings allocable to the Contract
prior to the receipt of payments under the Contract. The Code contains a safe
harbor provision which provides that annuity contracts such as the Contracts
meet the diversification requirements if, as of the end of each quarter, the
underlying assets meet the diversification standards for a regulated
investment company and no more than fifty-five percent (55%) of the total
assets consist of cash, cash items, U.S. Government securities and securities
of other regulated investment companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas. Reg.
1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts/Certificates.
The Regulations amplify the diversification requirements for variable
contracts set forth in the Code and provide an alternative to the safe harbor
provision described above. Under the Regulations, an investment portfolio
will be adequately diversified if: (1) no more than 55% of the value of the
total assets of the portfolio is represented by any one investment; (2) no
more than 70% of the value of the total assets of the portfolio is represented
by any two investments; (3) no more than 80% of the value of the total assets
of the portfolio is represented by any three investments; and (4) no more than
90% of the value of the total assets of the portfolio is represented by any
four investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable
contracts by Section 817(h) of the Code have been met, "each United States
government agency or instrumentality shall be treated as a separate issuer".
The Company intends that all Portfolios of the Eligible Funds underlying the
Contracts and Certificates will be managed by the investment advisers for the
Eligible Funds in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner/Certificate
Owner control of the investments of the Variable Account will cause the
Owner/Certificate Owner to be treated as the owner of the assets of the
Variable Account, thereby resulting in the loss of favorable tax treatment for
the Contract/Certificate. At this time it cannot be determined whether
additional guidance will be provided and what standards may be contained in
such guidance.
The amount of Owner/Certificate Owner control which may be exercised under the
Contract/Certificate is different in some respects from the situations
addressed in published rulings issued by the Internal Revenue Service in which
it was held that the policy owner was not the owner of the assets of the
separate account. It is unknown whether these differences, such as the
Owner's/Certificate Owner's ability to transfer among investment choices or
the number and type of investment choices available, would cause the
Owner/Certificate Owners to be considered as the owner of the assets of the
Variable Account resulting in the imposition of federal income tax to the
Owner/Certificate Owner with respect to earnings allocable to the
Contract/Certificate prior to receipt of payments under the
Contract/Certificate.
In the event any forthcoming guidance or ruling is considered to set forth a
new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the
Owner/Certificate Owner being retroactively determined to be the owner of the
assets of the Variable Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contracts or Certificates in an attempt to maintain favorable tax
treatment.
MULTIPLE CONTRACTS AND CERTIFICATES
The Code provides that multiple non-qualified annuity contracts and/or
certificates which are issued within a calendar year to the same contract
owner by one company or its affiliates are treated as one annuity contract
and/or certificate for purposes of determining the tax consequences of any
distribution. Such treatment may result in adverse tax consequences including
more rapid taxation of the distributed amounts from such combination of
contracts and/or certificates. Owners and Certificate Owners should consult a
tax adviser prior to purchasing more than one non-qualified annuity contract
in any calendar year.
CONTRACTS AND CERTIFICATES OWNED BY NON-NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts and Certificates will be taxed currently to the Owner/Certificate
Owner if the Owner/Certificate Owner is a non-natural person, e.g., a
corporation or certain other entities. Such Contracts/Certificates generally
will not be treated as annuities for federal income tax purposes. However,
this treatment is not applied to Contracts or Certificates held by: (a) a
trust or other entity as agent for a natural person; (b) Qualified Plans; or
(c) the estate of a decedent by reason of the death of the decedent.
Additionally, this treatment is not applied to a Contract or Certificate which
is a qualified funding asset for a structured settlement under Section 130(d)
of the Code. Purchasers should consult their own tax counsel or other adviser
before purchasing a Contract or Certificate to be owned by a non-natural
person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of all or any portion of a Contract or Certificate may
be treated as a taxable event. Any gain in the Contract or Certificate
subsequent to the assignment may also be treated as taxable income in the year
in which it is earned. Owners and Certificate Owners should therefore consult
competent tax advisers should they wish to assign or pledge their Contracts or
Certificates.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross
income of the Owner or Certificate Owner are subject to Federal income tax
withholding. Generally, amounts are withheld from periodic payments at the
same rate as wages and at the rate of 10% from non-periodic payments.
However, the Owner or Certificate Owner, in most cases, may elect not to have
taxes withheld or to have withholding done at a different rate.
Effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 or Section 403(b) of the Code, which are not
directly rolled over to another eligible retirement plan or individual
retirement account or individual retirement annuity, are subject to a
mandatory 20% withholding for Federal income tax. The 20% withholding
requirement generally does not apply to: a) a series of substantially equal
payments made at least annually for the life or life expectancy of the
participant or joint and last survivor expectancy of the participant and a
designated beneficiary or for a specified period of 10 years or more; or b)
distributions which are required minimum distributions; or c) the portion of
the distributions not includible in gross income (i.e. return of after-tax
contributions). Participants should consult their own tax counsel or other tax
advisor regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS -- NON-QUALIFIED CONTRACTS AND CERTIFICATES
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value or Certificate Value
exceeds the aggregate purchase payments made, any amount withdrawn will be
treated as coming first from the earnings and then, only after the income
portion is exhausted, as coming from the principal. Withdrawn earnings are
includible in gross income. It further provides that a ten percent (10%)
penalty will apply to the income portion of any distribution. However, the
penalty is not imposed on amounts received: (a) on or after the taxpayer
reaches age 59 1/2; (b) after the death of the Owner/Certificate Owner; (c) if
the taxpayer is totally disabled (for this purpose disability is as defined in
Section 72(m)(7) of the Code); (d) in a series of substantially equal periodic
payments made not less frequently than annually for the life (or life
expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his or her Beneficiary; (e) under an
immediate annuity; or (f) which are allocable to purchase payments made prior
to August 14, 1982.
QUALIFIED PLANS
The Contracts and Certificates offered by this Prospectus are designed to be
suitable for use under various types of qualified plans. Generally,
participants in a qualified plan are not taxed on increases to the value of
the contributions to the plan until distribution occurs, regardless of whether
the plan assets are held under an annuity contract. Taxation of participants
in each qualified plan varies with the type of plan and terms and conditions
of each specific plan. Owners, Certificate 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 Contract/Certificate issued pursuant to the plan. Some
retirement plans are subject to distribution and other requirements that are
not incorporated into the Company's administrative procedures. Owners,
Certificate Owners, participants and Beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts/Certificates comply with applicable law. Following
are general descriptions of the types of qualified plans with which the
Contracts/Certificates may be used. Such descriptions are not exhaustive and
are for general informational purposes only. The tax rules regarding
qualified plans are very complex and will have differing applications
depending on individual facts and circumstances. Each purchaser should obtain
competent tax advice prior to purchasing a Contract or Certificate issued
under a qualified plan.
Contracts and Certificates issued pursuant to qualified plans include special
provisions restricting Contract/Certificate provisions that may otherwise be
available as described in this Prospectus. Generally, Contracts/Certificates
issued pursuant to qualified plans are not transferable except upon surrender
or annuitization. Various penalty and excise taxes may apply to contributions
or distributions made in violation of applicable limitations. Furthermore,
certain withdrawal penalties and restrictions may apply to surrenders from
Qualified Contracts and Certificates. (See "Tax Treatment of Withdrawals --
Qualified Contracts and Certificates", below.)
A. TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c)(3) of the Code. These
qualifying employers may make contributions to the Contracts/Certificates for
the benefit of their employees. Such contributions are not includible in the
gross income of the employees until the employees receive distributions from
the Contracts/Certificates. The amount of contributions to the tax-sheltered
annuity is limited to certain maximums imposed by the Code. Furthermore, the
Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals -- Qualified Contracts and Certificates" and "Tax
Sheltered Annuities - Withdrawal Limitations" below.) Any employee should
obtain competent tax advice as to the tax treatment and suitability of such an
investment.
B. INDIVIDUAL RETIREMENT ANNUITIES
Section 408(b) of the Code permits eligible individuals to contribute to
an individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to
an IRA which will be deductible from the individual's gross income. These
IRAs are subject to limitations on eligibility, contributions, transferability
and distributions. (See "Tax Treatment of Withdrawals -- Qualified Contracts
and Certificates" below.) Under certain conditions, distributions from other
IRAs and other Qualified Plans may be rolled over or transferred on a
tax-deferred basis into an IRA. Sales of Contracts and Certificates for use
with IRAs are subject to special requirements imposed by the Code, including
the requirement that certain informational disclosure be given to persons
desiring to establish an IRA. Purchasers of Contracts and Certificates to be
qualified as Individual Retirement Annuities should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
TAX TREATMENT OF WITHDRAWALS -- QUALIFIED CONTRACTS AND CERTIFICATES
In the case of a withdrawal under a Qualified Contract/Certificate, a ratable
portion of the amount received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued benefit under the
retirement plan. Special tax rules may be available for certain distributions
from a Qualified Contract. Section 72(t) of the Code imposes a 10% penalty tax
on the taxable portion of any distribution from qualified retirement plans,
including Contracts and Certificates issued and qualified under Code Sections
403(b) (Tax-Sheltered Annuities) and 408(b) (Individual Retirement Annuities).
To the extent amounts are not includible in gross income because they have
been rolled over to an IRA or to another eligible qualified plan, no tax
penalty will be imposed. The tax penalty will not apply to the following
distributions: (a) if distribution is made on or after the date on which the
Owner/Certificate Owner or Annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the Owner/Certificate Owner
or Annuitant (as applicable) (for this purpose disability is as defined in
Section 72(m)(7) of the Code); (c) after separation from service,
distributions that are part of substantially equal periodic payments made not
less frequently than annually for the life (or life expectancy) of the
Owner/Certificate Owner or Annuitant (as applicable) or the joint lives (or
joint life expectancies) of such Owner/Certificate Owner or Annuitant (as
applicable) and his or her designated Beneficiary; (d) distributions to an
Owner/Certificate Owner or Annuitant (as applicable) who has separated from
service after he or she has attained age 55; (e) distributions made to the
Owner/Certificate Owner or Annuitant (as applicable) to the extent such
distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the Owner/Certificate Owner or Annuitant (as applicable) for
amounts paid during the taxable year for medical care; and (f) distributions
made to an alternate payee pursuant to a qualified domestic relations order.
The exceptions stated in (d), (e) and (f) above do not apply in the case of an
Individual Retirement Annuity. The exception stated in (c) above applies to
an Individual Retirement Annuity without the requirement that there be a
separation from service.
Generally, distributions from a qualified plan must commence no later than
April 1 of the calendar year, following the year in which the employee attains
age 70 1/2. Required distributions must be over a period not exceeding the
life expectancy of the individual or the joint lives or life expectancies of
the individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed. In addition, distributions in excess of $150,000 per year may be
subject to an additional 15% excise tax unless an exemption applies.
TAX-SHELTERED ANNUITIES -- WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only on or after when the Owner/Certificate Owner:
(1) attains age 59 1/2; (2) separates from service; (3) dies; (4) becomes
disabled (within the meaning of Section 72(m)(7) of the Code); or (5) in the
case of hardship. However, withdrawals for hardship are restricted to the
portion of the Owner's Contract Value or Certificate Owner's Certificate Value
which represents contributions made by the Owner/Certificate Owner and does
not include any investment results. The limitations on withdrawals became
effective on January 1, 1989 and apply only to salary reduction contributions
made after December 31, 1988, to income attributable to such contributions and
to income attributable to amounts held as of December 31, 1988. The
limitations on withdrawals do not affect transfers between certain Qualified
Plans. Owners and Certificate Owners should consult their own tax counsel or
other tax adviser regarding any distributions.
ADDITIONAL INFORMATION ABOUT THE COMPANY
SELECTED CONSOLIDATED FINANCIAL INFORMATION
[to be provided by Pre-Effective Amendment.]
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
[to be provided by Pre-Effective Amendment.]
THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS
The directors and principal executive officers of the Company as of December
15, 1995 are listed below, together with information as to their ages, dates
of election and principal business occupation during the last five years.
<TABLE>
<CAPTION>
<S> <C>
PRINCIPAL BUSINESS OCCUPATION
NAME DURING LAST FIVE YEARS
- -------------------- --------------------------------------------
Ngaire E. Cuneo Since 1993, Director of Conseco's principal
(Age 45) insurance subsidiaries. Since 1992,
Executive Vice President, Corporate
Development of Conseco, Inc. and various
positions with certain of its affiliates.
Prior thereto, Ms. Cuneo was Senior Vice
President/Managing Director of GE Capital
from 1986 - 1992.
Stephen C. Hilbert Since 1979, Chairman of the Board, Chief
(Age 49) Executive Officer and Director of Conseco,
Inc. Since 1988, President and various
positions with the Company and certain of
its affiliates.
Rollin M. Dick Since 1986, Executive Vice President, Chief
(Age 64) Financial Officer and Director of Conseco,
Inc. and various positions with the Company
and certain of its affiliates.
Lawrence W. Inlow Since 1987, Executive Vice President,
(Age 45) Secretary and General Counsel of Conseco,
Inc. and various positions (including
Directorships) with the Company and certain
of its affiliates.
Donald F. Gongaware Since 1985, Executive Vice President, Chief
(Age 60) Operations Officer and Director of Conseco,
Inc. and various positions with certain of
its affiliates.
Lynn C. Tyson Since June 1993, Director and President of
(Age 52 ) Conseco's principal insurance subsidiaries.
From March 1992 to June 1993 Vice President,
Marketing of Conseco's principal insurance
subsidiaries. From 1988 to 1992 self
employed as owner of an insurance marketing
company.
</TABLE>
EXECUTIVE COMPENSATION
[to be provided by Pre-Effective Amendment.]
STATE REGULATION
The Company is subject to regulation and supervision by the states in which it
transacts business. The laws of these jurisdictions generally establish
agencies with broad regulatory authority, including powers to : (i) grant and
revoke licenses to transact business; (ii) regulate and supervise trade
practices and market conduct; (iii) establish guaranty associations; (iv)
license agents; (v) approve policy forms; (vi) approve premium rates for some
lines of business; (vii) establish reserve requirements; (viii) prescribe the
form and content of required financial statements and reports; (ix) determine
the reasonableness and adequacy of statutory capital and surplus; and (x)
regulate the type and amount of permitted investments.
Most states have also enacted legislation which regulates insurance holding
company systems, including acquisitions, extraordinary dividends, the terms of
surplus debentures, the terms of affiliate transactions, and other related
matters. Currently, Conseco and its insurance subsidiaries have registered as
holding company systems pursuant to such legislation in Texas, Missouri,
Tennessee, California, Alabama, Iowa and Illinois, and they routinely report
to other jurisdictions. For further information on state laws regulating the
payment of dividends by insurance company subsidiaries, see "Management's
Discussion and Analysis of Results of Operations and Financial Condition -
Consolidated Financial Condition."
The federal government does not directly regulate the insurance business.
However, federal legislation and administrative policies in several areas,
including pension regulation, age and sex discrimination, financial services
regulation and federal taxation, do affect the insurance business. Recently,
increased scrutiny has been placed upon the insurance regulatory framework,
and a number of state legislatures have considered or enacted legislative
proposals that alter, and in many cases, increase, the authority of state
agencies to regulate insurance companies and holding company systems. In
addition, legislation has been introduced from time to time in recent years
which, if ever enacted, could result in the federal government assuming a more
direct role in the regulation of the insurance industry.
State insurance regulators and the National Association of Insurance
Commissioners ("NAIC") are continually re-examining existing laws and
regulations and their application to insurance companies. The NAIC recently
approved, and recommended to the states for adoption and implementation,
several regulatory initiatives designed to decrease the risk of insolvency of
insurance companies in general. These initiatives include risk-based capital
("RBC") requirements for determining the levels of capital and surplus an
insurer must maintain in relation to its insurance and investment risks. The
NAIC regulatory initiatives also impose restrictions on an insurance company's
ability to pay dividends to its stockholders. These initiatives may be
adopted by the various states in which the Company is licensed, but the
ultimate content and timing of any statutes and regulations to be adopted by
the states cannot be determined at this time. It is not possible to predict
the future impact of changing state and federal regulation on the operations
of the Company, and there can be no assurance that existing insurance related
laws and regulations will not become more restrictive in the future or that
laws and regulations enacted in the future will not be more restrictive.
The NAIC's RBC requirements, which became effective December 31, 1993, are
used by insurance regulators as an early warning tool to identify
deteriorating or weakly capitalized companies for the purpose of initiating
regulatory action. Such requirements are not designed as a mechanism for
ranking adequately capitalized companies. In addition, the formula defines a
new minimum capital standard which supplements the low, fixed minimum capital
and surplus requirements previously implemented on a state-by-state basis.
The Life/Health Task Force of the NAIC recently adopted Actuarial Guideline
GGG (the "Guideline") which defines minimum reserves for certain annuity
products which have multiple benefit streams (including certain of the
Company's annuity products). The requirements of the Guideline affect the
accounting for applicable contracts issued on or after January 1, 1981, in
financial statements prepared for state regulatory authorities for years
ending on or after December 31, 1995. Since some provisions of the Guideline
are subject to interpretation and no industry guidance is available, the
Company has not yet measured the statutory impact of the implementation of the
Guideline and cannot predict its impact.
Most states have enacted legislation or adopted administrative regulations
which affect the acquisition of control of insurance companies as well as
transactions between insurance companies and persons controlling them. The
nature and extent of such legislation and regulations vary from state to
state. Most states, however, require administrative approval of: (i) the
acquisition of 10 percent or more of the outstanding shares of an insurance
company incorporated in the state; or (ii) the acquisition of 10 percent or
more of the outstanding stock of an insurance holding company whose insurance
subsidiary is incorporated in the state. The acquisition of 10 percent of
such shares is generally deemed to be the acquisition of control for the
purpose of the holding company statutes. It requires not only the filing of
detailed information concerning the acquiring parties and the plan of
acquisition, but also the receipt of administrative approval prior to the
acquisition. In many states, an insurance authority may find that control
does not, in fact, exist in circumstances in which a person owns or controls
10 percent or a greater amount of securities.
Under the solvency or guaranty laws of most states in which it does business,
the Company also may be required to pay assessments (up to certain prescribed
limits) to fund policyholder losses or the liabilities of insolvent or
rehabilitated insurance companies. These assessments may be deferred or
forgiven under most guaranty laws if they would threaten an insurer's
financial strength. In certain instances, the assessments may be offset
against future premium taxes. Prior to 1991 these assessments were not
material. However, the amount of such assessments has increased in recent
years and may increase in future years.
As part of their routine regulatory oversight process, insurance departments
approximately once every three years conduct periodic detailed examination
("Triennial Examinations") of the books, records and accounts of insurance
companies domiciled in their states. Such Triennial Examinations are
generally conducted in cooperation with the departments of two or three other
states, under guidelines promulgated by the NAIC.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account is a party or to
which the assets of the Variable Account are subject. Neither the Company nor
the Distributor are involved in any litigation that is of material importance
in relation to their total assets or that relates to the Variable Account.
EXPERTS
The financial statements as of _______________ and for each of the three years
in the period ended ________________ included in this prospectus have been
audited by _________________________, independent auditors, as stated in their
report appearing herein, and have been so included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
REGISTRATION STATEMENT
A Registration Statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
Contracts and Certificates offered hereby. This Prospectus does not contain
all the information set froth in the Registration Statement and amendments
thereto and exhibits filed as a part thereof, to all of which reference is
hereby made for further information concerning the Company and the Contracts
and Certificates offered hereby. Statements contained in this Prospectus as to
the content of Contracts and Certificates and other legal instruments are
summaries. For a complete statement of the terms thereof, reference is made to
such instruments as filed.
LEGAL OPINIONS
Legal matters in connection with the Contracts and Certificates described
herein are being passed upon by the law firm of Blazzard, Grodd & Hasenauer,
P.C., Westport, Connecticut.
FINANCIAL STATEMENTS
Financial statements of the Company are included in this Prospectus. No
financial statements for the Variable Account have been included because, as
of the date of this Prospectus, the Variable Account had no assets. The
financial statements of the Company included herein should be considered only
as bearing upon the ability of the Company to meet its obligations under the
Contracts and Certificates.
[Financial statements to be provided by Pre-Effective Amendment.]
APPENDIX A
CONSECO SERIES TRUST
Conseco Series Trust is an open-end management investment company organized as
a business trust under the laws of the Commonwealth of Massachusetts on
November 15, 1982. Trust shares are offered only to separate accounts of
various insurance companies to fund benefits of variable life and variable
annuity contracts. Conseco Capital Management serves as the investment
adviser.
EVERGREEN VARIABLE INVESTMENT TRUST
Evergreen Variable Investment Trust is an open-end management investment
company. The Funds were organized to serve as investment vehicles for (a)
separate accounts funding variable annuity and variable life insurance
contracts issued by certain life insurance companies and (b) qualified pension
and retirement plans. Evergreeen Asset Management Corp. serves as the
investment adviser to the Funds.
INSURANCE MANAGEMENT SERIES
Insurance Management Series is an open-end management investment company
organized as a business trust under the laws of the Commonwealth of
Massachusetts on September 15, 1993. Trust shares are offered only to
separate accounts of various insurance companies to serve as the investment
medium of variable life insurance policies and variable annuity contracts
issued by the insurance companies. Federated Advisers serves as the
investment adviser.
THE ALGER AMERICAN FUND
The Alger American Fund is an open-end management investment company organized
as a business trust under the laws of the Commonwealth of Massachusetts on
April 6, 1988. Trust shares are offered to separate accounts of various life
insurance companies as investment options of variable life and variable
annuity contracts and as a funding vehicle for qualified pension and
retirement plans. Fred Alger Management, Inc. serves as the investment
adviser.
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO Variable Investment Funds, Inc. is a registered, open-end management
investment company that was organized as a Maryland corporation on August 19,
1993. Fund shares are intended to be funding vehicles for variable annuity
contracts and variable life insurance contracts to be offered by separate
accounts of certain life insurance companies. Fund shares are not available
for purchase other than through the purchase of such contracts. INVESCO Funds
Group, Inc. is the investment adviser. The investment adviser has retained
sub-advisers.
LORD ABBETT SERIES FUND, INC.
Lord Abbett Series Fund, Inc. is a diversified open-end management investment
company incorporated under the laws of Maryland on August 28, 1989.
Shares of the Fund are currently only offered to separate accounts of life
insurance companies to fund benefits of variable annuity contracts. Lord,
Abbett & Co. serves as the Funds investment manager.
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
The OFFITBANK Variable Insurance Fund, Inc. is an open-end management
investment company that was organized as a Maryland corporation on October 7,
1994. Shares of the Fund are sold only to certain life insurance companies
and their separate accounts to fund benefits under variable annuity contracts
and variable life insurance policies to be offered by the life insurance
companies. OFFITBANK, a trust company specializing in global fixed income
management, serves as the Funds investment adviser.
VAN ECK WORLDWIDE INSURANCE TRUST
Van Eck Worldwide Insurance Trust is an open-end management investment company
organized as a business trust under the laws of the Commonwealth of
Massachusetts on January 7, 1987. Trust shares are offered only to separate
accounts of various insurance companies to fund the benefits of variable life
and variable annuity contracts. The investment adviser and manager is Van Eck
Associates Corporation. Peregrine Asset Management Limited (Hong Kong) serves
as sub-investment adviser to the Worldwide Emerging Markets Fund.
TOMORROW FUNDS RETIREMENT TRUST
Tomorrow Funds Retirement Trust is an open-end management investment company
organized as a Delaware business trust. The Prospectuses of the Core
Large-Cap and Core Small-Cap Funds, which accompany this Prospectus describe
Institutional Class shares of the Funds. The Institutional Class shares of the
Funds are designed to provide investment vehicles for variable annuity and
variable life insurance contracts of various insurance companies.
Institutional Class shares may also be purchased by qualified pension or
retirement plans, including trustees of such plans for certain individuals
funding their individual retirement accounts or other qualified plans. Weiss,
Peck & Greer, L.L.C. serves as the investment adviser to the Funds.
A full description of each of the Eligible Funds, including the investment
objectives, policies and restrictions of each of the Portfolios, is contained
in the Prospectuses of the Eligible Funds which accompany this Prospectus and
should be read carefully by a prospective purchaser before investing.
APPENDIX B
Examples of Application of the Market Value Adjustment
CALCULATION OF MARKET VALUE ADJUSTMENT FACTOR:
( 1 + A ) N/365
(__________) - 1 = MVA factor
( 1 + B )
<TABLE>
<CAPTION>
<S> <C> <C>
Where:
A = the U.S. Treasury rate in effect at the beginning of the
Guarantee Period for the length of the Guarantee Period
selected.
B = the U.S. Treasury rate as of the transaction date plus
0.005%. The Treasury rate used is determined by taking
N/365 and rounding it to the next highest year.
N = Number of days remaining in the MVA Guarantee Period.
</TABLE>
If the Treasury rate is not available for the period, the rate will be arrived
at by interpolation.
EXAMPLE 1 FIVE-YEAR GUARANTEE PERIOD; INCREASE IN TREASURY RATE
Assume the Owner or Certificate Owner makes a $50,000 initial deposit on a
5-year Guarantee Period on January 1, 1996. The current 5-year Treasury rate
is 6.00%, and the current interest rate is 7.00%. On June 13, 1997 the Owner
or Certificate Owner surrenders the Contract/Certificate with 3 years and 202
days, or 1,297 days (12/31/2000 - 6/13/1997) remaining in the Guarantee
Period. The current Treasury rate at this point is found by rounding 3 years,
202 days to the next greatest year and taking the rate for that Guarantee
Period. In this case we would look at a 4 year rate. Assume that the 4-year
Treasury rate on June 13, 1997 is 6.50%. The Market Value Adjustment on the
Contract/Certificate would be calculated as follows:
Accumulation Value at 6/13/1997 (529 days from issue):
(529/365)
$50,000 x (1.07) = $55,151.38
( 1 + .06 ) (1,297/365)
$55,151.38 x[ ( ___________________) - 1 ] = $1,809.81
( 1 + .065 + .005)
resulting in an Adjusted Certificate Value of,
$55,151.38 - $1,809.81 = $53,341.57
EXAMPLE 2: FIVE-YEAR GUARANTEE PERIOD; DECREASE IN TREASURY RATE
Assuming a scenario identical to Example 1, but with a 4-year Treasury rate as
of the date of surrender of 5.00%, the following Market Value Adjustment would
result:
(1 + .06) (1,297/365)
$55,151.38 x[ ( __________________) - 1 ] = $934.43
( 1 + .050 + .005)
resulting in an Adjusted Contract Value/Adjusted Certificate Value of,
$55,151.38 + 943.43 = $56,085.81
EXAMPLE 3: TEN-YEAR GUARANTEE PERIOD; INCREASE IN TREASURY RATE
Assume the Owner or Certificate Owner makes a $50,000 initial deposit on a
10-year Guarantee Period on January 1, 1996. The current 10-year Treasury rate
is 7.00%, and the current interest rate is 7.50%. On October 31, 2002 the
Owner or Certificate Owner surrenders the Contract/Certificate with 3 years
and 61 days, or 1,157 days (12/31/2005 - 10/31/2002) remaining in the
Guarantee Period. The current Treasury rate at this point is found by rounding
3 years, 61 days to the next greatest year and taking the rate for that
Guarantee Period. In this case we would look at a 4 year rate. Assume that the
4-year Treasury rate on October 31, 2002 is 7.50%. The Market Value Adjustment
on the Contract/Certificate would be calculated as follows:
Accumulation Value at 10/31/2002 (2,495 days from issue):
(2,495/365)
$50,000 x (1.075) = $81,972.13
( 1 + .07) (1,157/365)
$81,972.13 x [ (_________________) - 1 ] = $2,381.85
( 1 + .075 + .005)
resulting in an Adjusted Contract Value/Adjusted Certificate Value of,
$81,972.13 + 2,381.85 = $79,590.28
EXAMPLE 4: DECREASE IN TREASURY RATE
Assuming a scenario identical to Example 3, but with a 4-year Treasury rate as
of the date of surrender of 6.00%, the following Market Value Adjustment would
result:
( 1 + .07) (1,157/365)
$81,972.13 x [ (__________________) - 1 ] = $1,226.13
( 1 + .060 + .005)
resulting in an Adjusted Certificate Value of,
$81,972.13 + 1,226.13 = $83,198.26
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
ITEM PAGE
Company..............................................................
Experts..............................................................
Legal Opinions.......................................................
Distributor..........................................................
Yield Calculation for Money Market Sub-Account.......................
Performance Information..............................................
Annuity Provisions...................................................
Financial Statements.................................................
If you would like a free copy of the Statement of Additional Information dated
_______________________ for this Prospectus, please complete this form,
detach, and mail to:
Great American Reserve Insurance Company
Administrative Office
11815 N. Pennsylvania Street
Carmel, Indiana 46032
Gentlemen:
Please send me a free copy of the Statement of Additional Information for
Great American Reserve Variable Annuity Account G at the following address:
Name:________________________________________________________________
Mailing Address:_____________________________________________________
_____________________________________________________
_____________________________________________________
Sincerely,
_____________________________________
(Signature)
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL AND GROUP FIXED AND VARIABLE DEFERRED
ANNUITY CONTRACTS AND CERTIFICATES
issued by
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT G
AND
GREAT AMERICAN RESERVE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED ______________, FOR THE
INDIVIDUAL AND GROUP FIXED AND VARIABLE DEFERRED ANNUITY CONTRACTS AND
CERTIFICATES WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR WRITE
THE COMPANY AT ITS ADMINISTRATIVE OFFICE: 11815 N. PENNSYLVANIA STREET,
CARMEL, INDIANA 46032 (317) 817-3700.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED ________________, 199__.
TABLE OF CONTENTS
PAGE
Company.................................................................. 3
Experts.................................................................. 3
Legal Opinions........................................................... 3
Distributor.............................................................. 3
Yield Calculation For Money Market Subaccounts........................... 3
Performance Information.................................................. 4
Annuity Provisions....................................................... 5
Financial Statements..................................................... 5
COMPANY
Information regarding Great American Reserve Insurance Company (the "Company")
and its ownership is contained in the Prospectus.
EXPERTS
The financial statements of the Company as of ____________ and for each of the
years in the three-year period ended __________________ have been included in
the Prospectus in reliance upon the reports of __________________________,
independent auditors, appearing elsewhere herein, and upon the authority of
such auditors as experts in accounting and auditing.
LEGAL OPINIONS
Legal matters in connection with the Contracts and Certificates described
herein are being passed upon by the law firm of Blazzard, Grodd & Hasenauer,
P.C., Westport, Connecticut.
DISTRIBUTOR
GARCO Equity Sales, Inc., an affiliate of the Company, acts as the
distributor. The offering is on a continuous basis.
YIELD CALCULATION FOR MONEY MARKET SUB-ACCOUNT
The Money Market Sub-Account of the Variable Account will calculate its
current yield based upon the seven days ended on the date of calculation. The
Money Market Sub-Account has yet to commence business.
The current yield of the Money Market Sub-Account is computed by determining
the net change (exclusive of capital changes) in the value of a hypothetical
pre-existing Owner or Certificate Owner account having a balance of one
Accumulation Unit of the Sub-Account at the beginning of the period,
subtracting the Mortality and Expense Risk Charge, the Administrative Charge
and the Contract and Certificate Maintenance Charges, dividing the difference
by the value of the account at the beginning of the same period to obtain the
base period return and multiplying the result by (365/7).
The Money Market Sub-Account computes its effective compound yield according
to the method prescribed by the Securities and Exchange Commission. The
effective yield reflects the reinvestment of net income earned daily on Money
Market Sub-Account assets.
Net investment income for yield quotation purposes will not include either
realized capital gains and losses or unrealized appreciation and depreciation,
whether reinvested or not.
The yields quoted should not be considered a representation of the yield of
the Money Market Sub-Account in the future since the yield is not fixed.
Actual yields will depend not only on the type, quality and maturities of the
investments held by the Money Market Sub-Account and changes in the interest
rates on such investments, but also on changes in the Money Market
Sub-Account's expenses during the period.
Yield information may be useful in reviewing the performance of the Money
Market Sub-Account and for providing a basis for comparison with other
investment alternatives. However, the Money Market Sub-Account's yield
fluctuates, unlike bank deposits or other investments which typically pay a
fixed yield for a stated period of time.
PERFORMANCE INFORMATION
From time to time, the Company may advertise performance data as described in
the Prospectus. Any such advertisement will include total return figures for
the time periods indicated in the advertisement. Such total return figures
will reflect the deduction of a 1.15% Mortality and Expense Risk Charge, a
..15% Administrative Charge, the investment advisory fee for the underlying
Portfolio being advertised and any applicable Contract and Certificate
Maintenance Charge.
The hypothetical value of a Contract or Certificate purchased for the time
periods described in the advertisement will be determined by using the actual
Accumulation Unit values for an initial $1,000 purchase payment, and deducting
any applicable Contract and Certificate Maintenance Charge to arrive at the
ending hypothetical value. The average annual total return is then determined
by computing the fixed interest rate that a $1,000 purchase payment would have
to earn annually, compounded annually, to grow to the hypothetical value at
the end of the time periods described. The formula used in these calculations
is:
n
P ( 1 + T ) = ERV
<TABLE>
<CAPTION>
<S> <C> <C>
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods used
(or fractional portion thereof) of a hypothetical $1,000
payment made at the beginning of the time periods used.
</TABLE>
In addition to total return data, the Company may include yield information in
its advertisements. For each Sub-Account (other than the Money Market
Sub-Account) for which the Company will advertise yield, it will show a yield
quotation based on a 30 day (or one month) period ended on the date of the
most recent balance sheet of the Variable Account included in the
registration statement, computed by dividing the 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:
6
Yield = 2 [ (a-b) + 1) - 1 ]
___
cd
Where:
<TABLE>
<CAPTION>
<S> <C>
a = Net investment income earned during the period by the Eligible
Fund 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.
</TABLE>
Owners and Certificate Owners should note that the investment results of each
Sub-Account will fluctuate over time, and any presentation of the
Sub-Account's total return or yield for any period should not be considered as
a representation of what an investment may earn or what a Owner's or
Certificate Owner's total return or yield may be in any future period.
ANNUITY PROVISIONS
The Company makes available payment plans on a fixed and variable basis.
VARIABLE ANNUITY PAYOUT
A Variable Annuity is an annuity with payments which: (1) are not
predetermined as to dollar amount; and (2) will vary in amount with the net
investment results of the applicable Sub-Accounts of the Variable Account.
Annuity Payments also depend upon the Age of the Annuitant and any Joint
Annuitant and the assumed interest factor utilized. The Annuity Table used
will depend upon the Annuity Option chosen. The dollar amount of Annuity
Payments after the first is determined as follows:
1. The dollar amount of the first Variable Annuity Payment is divided by
the value of an Annuity Unit for each applicable Sub-Account as of the Annuity
Date. This sets the number of Annuity Units for each monthly payment for the
applicable Sub-Account.
2. The fixed number of Annuity Units per payment in each Sub-Account is
multiplied by the Annuity Unit Value for that Sub-Account for the last
Valuation Period of the month preceding the month for which the payment is
due. This result is the dollar amount of the payment for each applicable
Sub-Account.
The total dollar amount of each Variable Annuity Payment is the sum of all
Sub-Account Variable Annuity Payments reduced by the applicable portion of the
Contract or Certificate Maintenance Charge.
FIXED ANNUITY PAYOUT
A fixed annuity is an annuity with payments which are guaranteed as to dollar
amount by the Company and do not vary with the investment experience of the
Variable Account. The dollar amount of each Fixed Annuity Payment is
determined in accordance with Annuity Tables contained in the
Contract/Certificate.
ANNUITY UNIT
The value of any Annuity Unit for each Sub-Account of the Variable Account was
arbitrarily set initially at $10.
The Sub-Account Annuity Unit Value at the end of any subsequent Valuation
Period is determined as follows:
1. The Net Investment Factor for the current Valuation Period is
multiplied by the value of the Annuity Unit for the Sub-Account for the
immediately preceding Valuation Period.
2. The result in (1) is then divided by the Assumed Investment Rate
Factor which equals 1.00 plus the Assumed Investment Rate for the number of
days since the preceding Valuation Date. The Owner/Certificate Owner can
choose either a 5% or a 3% Assumed Investment Rate.
(See "Annuity Provisions" in the Prospectus.)
FINANCIAL STATEMENTS
The financial statements of the Company included in the Prospectus should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts and Certificates.
PART C
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
A. FINANCIAL STATEMENTS
The financial statements of the Company will be included in a
Pre-Effective Amendment.
No financial statements for the Variable Account have been in-
cluded herein because, as of the date of this Prospectus, the
Variable Account had no assets.
B. EXHIBITS
<TABLE>
<CAPTION>
<C> <S>
1. Resolution of Board of Directors of the Company
authorizing the establishment of the Variable Account.
2. Not Applicable.
3. Form of Principal Underwriters Agreement.
4. (i) Individual Fixed and Variable Deferred Annuity
Contract.
(ii) Allocated Fixed and Variable Group Annuity
Contract.
(iii) Allocated Fixed and Variable Group Annuity
Certificate.
5. Application Form.
6. (i) Copy of Articles of Incorporation of the Company.
(ii) Copy of the Bylaws of the Company.
7. Not Applicable.
8. Form of Fund Participation Agreements
9. Opinion and Consent of Counsel (to be filed by amendment).
10. Consent of Independent Accountants (to be filed by
amendment).
11. Not Applicable.
12. Not Applicable.
13. Not Applicable.
14. Not Applicable.
15. Company Organizational Chart.
27. Financial Data Schedule (to be filed by amendment)
</TABLE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Executive Officers and Directors of the Company:
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Position and Offices
Business Address* with Depositor
- ------------------- ---------------------------------------
Ngaire E. Cuneo Director
Stephen C. Hilbert Chief Executive Officer and Director
Rollin M. Dick Chief Financial Officer and Director
Lawrence W. Inlow Secretary, General Counsel and Director
Donald F. Gongaware Chief Operating Officer and Director
Lynn C. Tyson President and Director
</TABLE>
*The Principal business address for all officers and directors listed above is
11825 N. Pennsylvania Street, Carmel, Indiana 46032.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT
The Company organizational is included as Exhibit 15.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not Applicable
ITEM 28. INDEMNIFICATION
The Bylaws (Article VI) of the Company provide, in part, that:
The Corporation shall indemnify 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, criminal, administrative, or
investigative, by reason of the fact that he is or was a director or officer
of the Corporation, or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (collectively, "Agent") against
expenses (including attorneys' fees), judgments, fines, penalties, court costs
and amounts paid in settlement actually and reasonably 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 not opposed to the best
interests of the Corporation, 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
(whether with or without court approval), conviction or upon a plea of NOLO
CONTENDERE or its equivalent, shall not, of itself, create a presumption that
the Agent 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 the Corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe that his conduct was unlawful. If several claims, issues or
matters are involved, an Agent may be entitled to indemnification as to some
matters even though he is not entitled as to other matters. Any director or
officer of the Corporation serving in any capacity of another corporation, of
which a majority of the shares entitled to vote in the election of its
directors is held, directly or indirectly, by the Corporation, shall be deemed
to be doing so at the request of the Corporation.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Not Applicable.
(b) GARCO Equity Sales, Inc. ("GES") is the principal underwriter for the
Contracts and Certificates. The following persons are the officers and
directors of GES. The principal business address for each officer and
director of GES is 11815 N. Pennsylvania Street, Carmel, Indiana 46032.
<TABLE>
<CAPTION>
<C> <S> <C>
Name and Principal Positions and Offices
Business Address with Underwriter
------------------------ ---------------------------------------
Lynn C. Tyson President and Director
William P. Latimer Vice President, Senior Counsel,
Secretary and Director
James S. Adams Senior Vice President, Treasurer
and Director
William T. Devanney, Jr. Senior Vice President, Corporate
Taxes
David J. Barra Vice President, Financial Reporting
Patricia Barnard Second Vice President, Administration
Christene H. Darnell Assistant Vice President, Management
Reporting
Lisa M. Zimmerman Assistant Vice President, Corporate Tax
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Lowell Short, whose address is 11825 N. Pennsylvania Street, Carmel, IN
46032, maintains physical possession of the accounts, books or documents of
the Separate Account required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
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, or (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.
REPRESENTATIONS
The Company hereby represents that it is relying upon a No-Action Letter
issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase
the contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment
alternatives available under the employer's Section 403(b) arrangement to
which the participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on
its behalf, in the City of Carmel, and State of Indiana on this 18th day of
January, 1996.
<TABLE>
<CAPTION>
<S> <C> <C>
GREAT AMERICAN RESERVE VARIABLE ANNUITY
ACCOUNT G
Registrant
By: GREAT AMERICAN RESERVE INSURANCE COMPANY
By: /s/ LYNN C. TYSON
--------------------------------------------
President
By: GREAT AMERICAN RESERVE INSURANCE COMPANY
Depositor
By: /s/ LYNN C. TYSON
--------------------------------------------
President
Attest:
/s/ LAWRENCE W. INLOW
________________________
Secretary
</TABLE>
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
- ------------------------ -------------------------- ---------------
/s/ NGAIRE E. CUNEO Director January 18,1996
- ------------------------ -----------------
Ngaire E. Cuneo
/s/ STEPHEN C. HILBERT Chief Executive Officer January 18,1996
- ------------------------ -----------------
Stephen C. Hilbert and Director
/s/ ROLLIN M. DICK Chief Financial Officer January 18,1996
- ------------------------ -----------------
Rollin M. Dick and Director
/s/ LAWRENCE W. INLOW Secretary, General Counsel January 18,1996
- ------------------------ -----------------
Lawrence W. Inlow and Director
/s/ DONALD F. GONGAWARE Chief Operating Officer January 18,1996
- ------------------------ -----------------
Donald F. Gongaware and Director
/s/ LYNN C. TYSON President and Director January 18,1996
- ------------------------ -----------------
Lynn C. Tyson
</TABLE>
EXHIBITS
TO
FORM N-4
FOR
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT G
GREAT AMERICAN RESERVE INSURANCE COMPANY
INDEX TO EXHIBITS
EXHIBIT PAGE
1. Resolution of Board of Directors authorizing the establishment
of the Variable Account.
3. Form of Principal Underwriters Agreement
4.(i) Individual Fixed and Variable Deferred Annuity Contract
4.(ii) Allocated Fixed and Variable Annuity Group Contract
4.(iii) Allocated Fixed and Variable Annuity Group Certificate
5. Application Form
6.(i) Copy of Articles of Incorporation of the Company
6.(ii) Copy of the Bylaws of the Company
8. Form of Fund Participation Agreements
15. Company Organizational Chart
EXHIBIT 99.B1
RESOLUTION OF BOARD OF DIRECTORS
WRITTEN CONSENT TO RESOLUTIONS
OF THE BOARD OF DIRECTORS OF
GREAT AMERICAN RESERVE INSURANCE COMPANY
The undersigned, being all of the members of the Board of Directors of Great
American Reserve Insurance Company (the "Company") hereby unanimously consent
to the adoption of the following resolutions without a meeting of the Board of
Directors of the Company:
RESOLVED, that the Company develop and implement a program for the offer
and sale of individual and group fixed and variable annuity contracts (the
"Contracts") with market value adjustment account options and a fixed account
option, to be issued by the Company; and
RESOLVED, that the Company establish separate accounts pursuant to the
Texas Insurance Code, one said separate account being designated "Great
American Reserve Variable Annuity Account G" (the "Variable Account") and the
other said separate account being designated "Great American Reserve Market
Value Adjustment Account" (the "MVA Account"); and
RESOLVED, that the Contracts issued pursuant to these resolutions from
the Variable Account shall provide that the assets of the Variable Account,
equal to the reserves and other contract liabilities with respect to the
Variable Account, are not chargeable with liabilities out of any other
business the Company may conduct; and
RESOLVED, that the Contracts issued pursuant to these resolutions from the
MVA Account shall provide that the assets of the MVA Account, equal to the
reserves and other contract liabilities with respect to the MVA Account, are
not chargeable with liabilities out of any other business the Company may
conduct; and
RESOLVED, that the filing with the U.S. Securities and Exchange
Commission pursuant to Section 5 of the Securities Act of 1933 of a Form N-4
registration statement for the Variable Account and Contracts, including the
filing of any amendments thereto and all matters properly incident thereto, is
hereby authorized and approved; and
RESOLVED, that the filing with the U.S. Securities and Exchange
Commission pursuant to Section 5 of the Securities Act of 1933 of a Form S-1
registration statement for the MVA Account Guaranteed Period options in the
Contracts, including the filing of any amendments thereto and all matters
properly incident thereto, is hereby authorized and approved; and
RESOLVED, that the filing with the U.S. Securities and Exchange
Commission pursuant to Section 8 of the Investment Company Act of 1940 ("1940
Act"), registering the Variable Account as a unit investment trust under said
Act, including the filing of any amendments thereto and all matters properly
incident thereto, is hereby authorized and approved; and
RESOLVED, that the filing with the U.S. Securities and Exchange
Commission of applications, and amendments thereto, for exemptions from the
provisions of the Investment Company Act of 1940 and the rules and regulations
thereunder as may be necessary or appropriate to effectuate the purposes of
these resolutions, are hereby authorized and approved; and
RESOLVED, that the officers of the Company be, and each of them hereby
is, authorized to make all actions necessary to maintain the registration of
the Variable Account as a unit investment trust under the 1940 Act, and to
take such related actions as they deem necessary or appropriate to carry out
the foregoing, including, without limitation, the following: determining that
the fundamental investment policy of the Variable Account shall be to invest
and reinvest its assets in securities issued by such open-end management
investment companies registered under the 1940 Act as the officers may
designate consistent with provisions of the Contracts issued by the Company;
establishing one or more sub-accounts of the Variable Account to which
payments under the Contracts will be allocated in accordance with orders
received from Contract owners or Participants; reserving to the officers the
authority to increase or decrease the number of sub-accounts in the Variable
Account as they deem necessary or appropriate; investing each sub-account only
in shares of a single investment company or a single portfolio of an
investment company organized as a series fund pursuant to the 1940 Act,
including substituting from time to time the shares of another single
investment company or single portfolio of a series fund for such shares then
invested in such sub-account, as the officers acting in accordance with the
provisions of the Contracts deem necessary or appropriate; and the aforesaid
being subject to the commencement of the Variable Account's operations as a
unit investment trust which invests in shares of one or more portfolios of the
Conseco Series Trust; and
RESOLVED, that the officers of the Company be, and each of them hereby
is, authorized to take all actions necessary to establish and maintain the MVA
Account as a separate account under the Texas Insurance Code, and to take such
related actions as they deem necessary or appropriate to carry out the
foregoing, including, without limitation, the following: establishing, if
necessary, a Trust under the laws of the State of Texas; establishing one or
more sub-accounts of the MVA Account to which payments under the MVA Contracts
will be allocated in accordance with orders received from MVA Contract owners
or Participants; reserving to the officers the authority to increase or
decrease the number of sub-accounts in the MVA Account as they deem necessary
or appropriate; the aforesaid being subject to the commencement of the MVA
Account's operations as an option under the Contracts; and
RESOLVED, that in connection with the Variable Account and the MVA
Account and the offer and sale of Contracts and MVA Contracts, the officers of
the Company be, and each of them hereby is, authorized to execute and file
with such authorities of the states of the United States of America, and to
take such related actions as they deem necessary or appropriate to carry out
the foregoing, including, without limitation, the following: such
applications, notices, certificates, affidavits, powers of attorney, consents
of service of process, covenants of an issuer, bonds, escrow and impending
agreements, and other writing and instruments as may be necessary or
appropriate in order to render permissible the offering and sale of Contracts
and MVA Contracts in any jurisdiction within the United States of America;
the forms of any resolutions required by any state authority to be filed in
connection with any of the documents or instruments referred to above be, and
the same hereby are, adopted by this Board of Directors as if such resolutions
were fully set forth herein if (i) in the opinion of the officers of the
Company, the adoption of such resolutions is necessary or advisable, and (ii)
the Secretary or any Assistant Secretary of the Company evidences the adoption
of any such resolution by filing a copy of such resolution with this Written
Consent; and
RESOLVED, that the officers of the Company be and hereby are authorized
to take such further action and to execute such additional documents as they
deem necessary or appropriate to effectuate the purposes of the foregoing
resolutions.
The resolutions adopted pursuant to this Written Consent shall be effective as
of January 18, 1996.
/s/ NGAIRE E. CUNEO /s/ STEPHEN C. HILBERT
___________________________________ ___________________________________
Ngaire E. Cuneo Stephen C. Hilbert
/s/ ROLLIN M. DICK /s/ LAWRENCE W. INLOW
___________________________________ ___________________________________
Rollin M. Dick Lawrence W. Inlow
/s/ DONALD F. GONGAWARE /s/ LYNN C. TYSON
___________________________________ ___________________________________
Donald F. Gongaware Lynn C. Tyson
EXHIBIT 99.B3
PRINCIPAL UNDERWRITER'S AGREEMENT
PRINCIPAL UNDERWRITER'S AGREEMENT
IT IS HEREBY AGREED by and between GREAT AMERICAN RESERVE INSURANCE
COMPANY ("INSURANCE COMPANY") on behalf of GREAT AMERICAN RESERVE VARIABLE
ANNUITY ACCOUNT G (the "Variable Account") and GARCO EQUITY SALES, INC.
("PRINCIPAL UNDERWRITER") as follows:
I
INSURANCE COMPANY proposes to issue and sell Individual and Group Fixed
and Variable Deferred Annuity Contracts and Certificates (the "Contracts") of
the Variable Account to the public through PRINCIPAL UNDERWRITER. The
PRINCIPAL UNDERWRITER agrees to provide sales service subject to the terms and
conditions hereof. The Contracts to be sold are more fully described in the
registration statement and prospectus hereinafter mentioned. Such Contracts
will be issued by INSURANCE COMPANY through the Variable Account.
II
INSURANCE COMPANY grants PRINCIPAL UNDERWRITER the exclusive right,
during the term of this Agreement, subject to registration requirements of the
Securities Act of 1933 and the Investment Company Act of 1940 and the
provisions of the Securities Exchange Act of 1934, to be the distributor of
the Contracts issued through the Variable Account. PRINCIPAL UNDERWRITER will
sell the Contracts under such terms as set by INSURANCE COMPANY and will make
such sales to purchasers permitted to buy such Contracts as specified in the
prospectus.
III
PRINCIPAL UNDERWRITER shall be compensated for its distribution services
in such amount as to meet all of its obligations to selling broker_dealers
with respect to all Purchase Payments accepted by INSURANCE COMPANY on the
Contracts covered hereby.
IV
On behalf of the Variable Account, INSURANCE COMPANY shall furnish
PRINCIPAL UNDERWRITER with copies of all prospectuses, financial statements
and other documents which PRINCIPAL UNDERWRITER reasonably requests for use in
connection with the distribution of the Contracts. INSURANCE COMPANY shall
provide to PRINCIPAL UNDERWRITER such number of copies of the current
effective prospectuses as PRINCIPAL UNDERWRITER shall request.
V
PRINCIPAL UNDERWRITER is not authorized to give any information, or to
make any representations concerning the Contracts or the Variable Account of
INSURANCE COMPANY other than those contained in the current registration
statements or prospectuses relating to the Variable Account filed with the
Securities and Exchange Commission or such sales literature as may be
authorized by INSURANCE COMPANY.
VI
Both parties to this Agreement agree to keep the necessary records as
indicated by applicable state and federal law and to render the necessary
assistance to one another for the accurate and timely preparation of such
records.
VII
This Agreement shall be effective upon the execution hereof and will
remain in effect unless terminated as hereinafter provided. This Agreement
shall automatically be terminated in the event of its assignment by PRINCIPAL
UNDERWRITER.
This Agreement may at any time be terminated by either party hereto upon
60 days' written notice to the other party.
VIII
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been given on the
date of service if served personally on the party to whom notice is to be
given, or on the date of mailing if sent by First Class Mail, Registered or
Certified, postage prepaid and properly addressed.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf by their respective officers thereunto duly authorized.
EXECUTED this ____ day of ___________, 199_.
<TABLE>
<CAPTION>
<S> <C>
INSURANCE COMPANY
GREAT AMERICAN RESERVE INSURANCE COMPANY
BY:/s/ GREAT AMERICAN RESERVE INSURANCE COMPANY
---------------------------------------
ATTEST:/s/ SECRETARY
- ----------------------
Secretary
PRINCIPAL UNDERWRITER
GARCO EQUITY SALES, INC.
BY:/s/ GARCO EQUITY SALES, INC.
---------------------------------------
ATTEST:/s/ SECRETARY
- ----------------------
Secretary
</TABLE>
EXHIBIT 99.B4(i)
INDIVIDUAL FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT
GREAT AMERICAN RESERVE INSURANCE COMPANY
11815 N. PENNSYLVANIA STREET
CARMEL, INDIANA 46032-4572
(317) 817-3700
A STOCK COMPANY
GREAT AMERICAN RESERVE INSURANCE COMPANY (the "Company") agrees with the Owner
to provide benefits to the Owner, subject to the provisions set forth in this
Contract and in consideration of Purchase Payments received from the Owner.
RIGHT TO EXAMINE CONTRACT: Within 10 days of the date of receipt of this
Contract by the Owner, it may be returned by delivering or mailing it to the
Company at its Administrative Office. When the Contract is received by the
Company, it will be voided as if it had never been in force. The Company will
refund the Contract Value computed at the end of the Valuation Period during
which the Contract is received by the Company at its Administrative Office.
THIS IS A LEGAL CONTRACT BETWEEN THE OWNER AND THE COMPANY
READ YOUR CONTRACT CAREFULLY
SECRETARY PRESIDENT
INDIVIDUAL FIXED AND VARIABLE
ANNUITY CONTRACT
Non-participating
WITHDRAWAL VALUES AND THE DEATH BENEFITS PROVIDED BY THIS CONTRACT, WHEN BASED
ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT, ARE VARIABLE AND ARE
NOT GUARANTEED AS TO DOLLAR AMOUNT. NON FORFEITURE VALUES MAY INCREASE OR
DECREASE BASED ON THE MARKET VALUE ADJUSTMENT SPECIFIED IN THIS CONTRACT.
TABLE OF CONTENTS
CONTRACT SCHEDULE
DEFINITIONS
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS
ALLOCATION OF PURCHASE PAYMENTS
SEPARATE ACCOUNT PROVISIONS
THE SEPARATE ACCOUNTS
VALUATION OF ASSETS
ACCUMULATION UNITS
ACCUMULATION UNIT VALUE
MORTALITY AND EXPENSE RISK CHARGE
ADMINISTRATIVE CHARGE
DISTRIBUTION EXPENSE CHARGE
MVA ACCOUNT PROVISIONS
MVA ACCOUNT
INTEREST TO BE CREDITED
GUARANTEE PERIOD
MULTIPLE GUARANTEE PERIODS
CHANGE IN GUARANTEE PERIOD
MARKET VALUE ADJUSTMENT
MVA ACCOUNT VALUES
FIXED ACCOUNT PROVISIONS
FIXED ACCOUNT VALUES
INTEREST TO BE CREDITED
CONTRACT VALUE
CONTRACT MAINTENANCE CHARGE
DEDUCTION FOR CONTRACT MAINTENANCE CHARGE
TRANSFERS
TRANSFERS DURING THE ACCUMULATION PERIOD
TRANSFERS DURING THE ANNUITY PERIOD
WITHDRAWAL PROVISIONS
WITHDRAWALS
CONTINGENT DEFERRED SALES CHARGE
WITHDRAWAL CHARGE
PROCEEDS PAYABLE ON DEATH
DEATH OF OWNER DURING THE ACCUMULATION PERIOD
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD
DEATH OF OWNER DURING THE ANNUITY PERIOD
DEATH OF ANNUITANT
PAYMENT OF DEATH BENEFIT
BENEFICIARY
CHANGE OF BENEFICIARY
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
OWNER
JOINT OWNER
ANNUITANT
ASSIGNMENT OF A CONTRACT
ANNUITY PROVISIONS
GENERAL
ANNUITY DATE
SELECTION OF AN ANNUITY OPTION
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
ANNUITY OPTIONS
OPTION 1. LIFETIME ONLY ANNUITY:
OPTION 2. LIFETIME ANNUITY WITH GUARANTEED PERIODS
OPTION 3. INSTALLMENT REFUND LIFE ANNUITY
OPTION 4. PAYMENT FOR A FIXED PERIOD:
OPTION 5. JOINT AND SURVIVOR ANNUITY
ANNUITY
FIXED ANNUITY
VARIABLE ANNUITY
ANNUITY UNIT
MORTALITY TABLES
GENERAL PROVISIONS
THE CONTRACT
MISSTATEMENT OF AGE
INCONTESTABILITY
MODIFICATION
NON-PARTICIPATING
EVIDENCE OF SURVIVAL
PROOF OF AGE
PROTECTION OF PROCEEDS
REPORTS
TAXES
REGULATORY REQUIREMENTS
CONTRACT SCHEDULE
OWNER: [John Doe]
CONTRACT NUMBER: [12345] CONTRACT ISSUE DATE:[January 3, 1995]
ANNUITY DATE: [January 3, 2000]
PURCHASE PAYMENTS:
INITIAL PURCHASE PAYMENT: [$50,000 Non-Qual; $10,000
IRA - 403(b) rollover]
MINIMUM SUBSEQUENT PURCHASE PAYMENT: [$1,000; or if the automatic premium
check option is elected: $250
monthly]
MAXIMUM TOTAL PURCHASE PAYMENT: [$1,000,000, without prior Company
approval]
ALLOCATION GUIDELINES:
[1. Currently, the Owner can select all investment options, including
Sub-Accounts of the Variable Account and the MVA Account. The Company
reserves the right to change this in the future.
2. If the Purchase Payments and forms required to issue a Contract are in
good order, the initial Net Purchase Payment will be credited to the Contract
within two (2) business days after receipt at the Administrative Office.
Additional Purchase Payments will be credited to the Contract as of the
Valuation Period when they are received.
3. Allocation percentages must be in whole numbers. Each allocation must
be at least 1%.
4. Currently, the minimum amount which must be allocated to a Guarantee
Period in the MVA Account is $2,000. The Company reserves the right to
increase this minimum in the future.]
BENEFICIARY:
[As designated by the Owner at the Contract Issue Date, unless
subsequently changed.]
CONTRACT MAINTENANCE CHARGE:
[The Contract Maintenance Charge is currently $30.00 each Contract Year.
The Company reserves the right to increase the Contract Maintenance Charge but
it will not exceed $60 per Contract Year. However, during the Accumulation
Period if the Contract Value on the Contract Anniversary is at least $25,000,
then no Contract Maintenance Charge is deducted. If a total withdrawal is made
on other than a Contract Anniversary and the Contract Value for the Valuation
Period during which the total withdrawal is made is less than $25,000, the
full Contract Maintenance Charge will be deducted at the time of the total
withdrawal. If the Annuity Date is not the Contract Anniversary and the
Contract Value on the Annuity Date is less than $25,000, then the full
Contract Maintenance Charge will be deducted on the Annuity Date. During the
Annuity Period, no Contract Maintenance Charge will be deducted.]
MORTALITY AND EXPENSE RISK CHARGE:
[Equal, on an annual basis, to 1.15% of the average daily net asset value
of the Variable Account. The Company may increase this charge; however, the
maximum Mortality and Expense Risk Charge will not exceed 1.25% of the average
daily net asset value of the Variable Account. In the event of an increase,
the Company will give Owners 90 days prior notice of the increase.]
ADMINISTRATIVE CHARGE:
[Equal, on an annual basis, to .15% of the average daily net asset value
of the Variable Account. The Company may increase this charge; however, the
maximum Administrative Charge will not exceed .25% of the average daily net
asset value of the Variable Account. In the event of an increase, the Company
will give Owners 90 days prior notice of the increase.]
DISTRIBUTION EXPENSE CHARGE: [NONE]
TRANSFERS:
NUMBER OF TRANSFERS PERMITTED: [There are currently no limits on the
number of transfers that can be made during the Accumulation Period.
Currently, Owners are permitted four transfers per Contract Year during the
Annuity Period.]
TRANSFER FEE: [For each transfer, the Transfer Fee is the lesser of
$25.00 or 2% of the amount transferred. Currently, the Company does not
assess a Transfer Fee on one transfer in a 30-day period during the
Accumulation Period or the four transfers permitted during the Annuity Period.
All reallocations made on a given date count as one transfer. Transfers made
at the end of the Right to Examine Contract period by the Company and any
transfers made pursuant to a pre-approved Dollar Cost Averaging Program or
pursuant to a pre-approved Rebalancing Program will not be counted in
determining the application of the Transfer Fee.]
MINIMUM AMOUNT TO BE TRANSFERRED: [$500 (from any Sub-Account or any
Guarantee Period of the MVA Account), or the Owner's entire interest in the
Sub-Account or the Guarantee Period, if less. This requirement is waived if
the transfer is pursuant to a pre-approved Dollar Cost Averaging Program or
Rebalancing Program.]
MINIMUM AMOUNT WHICH MUST REMAIN IN EACH ACCOUNT AFTER A TRANSFER: [$500
per Sub-Account or a Guarantee Period in the MVA Account; or $0 if the entire
amount in any Sub-Account of the Variable Account or a Guarantee Period in the
MVA Account is transferred.]
MAXIMUM AMOUNT WHICH CAN BE TRANSFERRED FROM THE FIXED ACCOUNT OR MVA
ACCOUNT TO THE VARIABLE ACCOUNT: [NONE]
WITHDRAWALS:
CONTINGENT DEFERRED SALES CHARGE: [NONE]
WITHDRAWAL CHARGE: [NONE]
MINIMUM PARTIAL WITHDRAWAL: [$500 from each Sub-Account of the Variable
Account and each Guarantee Period of the MVA Account. This requirement is
waived if the partial withdrawal is pursuant to the Systematic Withdrawal
Program.]
MINIMUM CONTRACT VALUE WHICH MUST REMAIN IN CONTRACT AFTER A PARTIAL
WITHDRAWAL: [$500. The Company reserves the right to increase this amount.]
MINIMUM CONTRACT VALUE WHICH MUST REMAIN IN ANY SUB-ACCOUNT OF THE
VARIABLE ACCOUNT AFTER A PARTIAL WITHDRAWAL: [$500]
MAXIMUM AMOUNT WHICH CAN BE WITHDRAWN FROM THE FIXED AND MVA ACCOUNTS:
[The Fixed Account is not currently available. There is currently no
limitation on the maximum amount which can be withdrawn from the MVA Account.]
SEPARATE ACCOUNTS: Variable Account: [Great American Reserve Variable Annuity
Account G for the Variable Annuity
portion of the Contract.]
and
MVA Account:
[Great American Reserve Market Value
Adjustment Account for the portion of
the Contract that may be subject to a
Market Value Adjustment.]
ELIGIBLE FUNDS, SERIES & SUB-ACCOUNTS:
[The Conseco Series Trust]
[Conseco - Asset Allocation Portfolio] [Conseco - Asset Allocation Sub-
Account]
[Conseco - Common Stock Portfolio] [Conseco - Common Stock
Sub-Account]
[Conseco - Corporate Bond Portfolio] [Conseco - Corporate Bond Sub-
Account]
[Conseco - Government Securities [Conseco - Government Securities
Portfolio] Sub-Account]
[Conseco - Money Market Portfolio] [Conseco - Money Market
Sub-Account]
[Evergreen Variable Investment Trust]
[Evergreen VA Fund] [Evergreen VA Sub-Account]
[Evergreen VA Foundation Fund] [Evergreen VA Foundation Sub-
Account]
[Evergreen VA Growth and Income Fund] [Evergreen VA Growth and Income
Sub-Account]
[Insurance Management Series]
[International Stock Fund] [International Stock Sub-Account]
[The Alger American Fund]
[Alger American Growth Portfolio] [Alger American Growth
Sub-Account]
[Alger American Leveraged AllCap [Alger American Leveraged Allcap
Portfolio] Sub-Account]
[Alger American MidCap Growth Portfolio] [Alger American MidCap Growth Sub-
Account]
[Alger American Small Capitalization [Alger American Small Capitali-
Portfolio] zation Sub-Account]
[INVESCO Variable Investment Funds, Inc.]
[INVESCO VIF - High Yield Portfolio] [INVESCO VIF - High Yield Sub-
Account]
[INVESCO VIF - Industrial Income [INVESCO VIF - Industrial Income
Portfolio] Sub-Account]
[Lord Abbett Series Fund, Inc.]
[Growth & Income Portfolio] [Lord Abbett - Growth & Income
Sub-Account]
[The OFFITBANK Variable Insurance Fund, Inc.]
[OFFITBANK VIF - Investment Grade [OFFITBANK VIF - Investment Grade
Global Debt Fund] Global Debt Sub-Account]
[OFFITBANK VIF - Total Return Fund] [OFFITBANK VIF - Total Return
Sub-Account]
[Van Eck Worldwide Insurance Trust]
[Worldwide Emerging Markets Fund] [Van Eck - Worldwide Emerging
Markets Sub-Account]
[Gold and Natural Resources Fund] [Van Eck - Gold and Natural
Resources Sub-Account]
[Worldwide Hard Assets Fund] [Van Eck - Worldwide Hard Assets
Sub-Account]
[Tomorrow Funds Retirement Trust]
[Core Large-Cap Stock Fund] [Tomorrow Funds - Core Large-Cap
Stock Sub-Account]
[Core Small-Cap Stock Fund] [Tomorrow Funds - Core Small-Cap
Stock Sub-Account]
MVA ACCOUNT:
MINIMUM GUARANTEED INTEREST RATE: [3%]
CURRENT MVA ACCOUNT GUARANTEE PERIOD OPTIONS AND
CREDITED INTEREST RATES:
[1 Year] [XX%]
[3 Years] [XX%]
[5 Years] [XX%]
[7 Years] [XX%]
[10 Years] [XX%]
MARKET VALUE ADJUSTMENT FACTOR: [The Market Value Adjustment Factor is equal
to:
N/365
[ ( 1 + A )]
____________ - 1
[ ( 1 + B )]
<TABLE>
<CAPTION>
<S> <C> <C>
where: A = the U.S. Treasury rate in effect at the beginning of
the Guarantee Period for the length of the guarantee
period selected.
B = the current U.S. Treasury rate as of the transaction
date plus .005. Treasury rate period is determined
by N/365 rounded to the next highest year.
N = Number of days remaining in the MVA Guarantee
Period.]
</TABLE>
If the Treasury rate is not available for the period, the rate will be arrived
at by interpolation. If no Treasury Rates are available, an Index will be
selected by the Company and approved by the State Insurance Commissioner.]
[MVA Waiver: For withdrawals from MVA Account Guarantee Period Option, after
the first year in such Guarantee Period option, the Owner can make one
withdrawal each Contract Year of up to a total of 10% of each such Guarantee
Period option without the Market Value Adjustment.]
FIXED ACCOUNT:
Not Available
RIDERS:
[IRA ENDORSEMENT]
[TSA ENDORSEMENT]
ADMINISTRATIVE OFFICE:
[Great American Reserve Insurance Great American Reserve Insurance
Company Company
Administrative Office or Administrative Office
P.O. Box 1927 11815 N. Pennsylvania Street
Carmel, IN 46032 Carmel, IN 46032]
(800) 824-2726
(317) 817-3700CONTRACT SCHEDULE
DEFINITIONS
ACCOUNT(S): The Fixed Account, the MVA Account and the General Account and/or
one or more of the Sub-Accounts of the Variable Account.
ACCUMULATION PERIOD: The period prior to the Annuity Date during which
Purchase Payments may be made by an Owner.
ACCUMULATION UNIT: A unit of measure used to determine the value of an
Owner's interest in a Sub-Account of the Variable Account during the
Accumulation Period.
ADJUSTED CONTRACT VALUE: The Contract Value less any applicable Premium Tax,
and Contract Maintenance Charge and plus the applicable Market Value
Adjustment which may be positive or negative. This amount is applied to the
applicable Annuity Tables to determine Annuity Payments.
AGE: The age of any Owner or Annuitant on his/her last birthday. For Joint
Owners, all provisions which are based on age are based on the Age of the
older of the Joint Owners.
ADMINISTRATIVE OFFICE: The office indicated on the Contract Schedule of this
Contract to which notices, requests and Purchase Payments must be sent. All
sums payable to the Company under this Contract are payable at the
Administrative Office or an address designated by the Company.
ANNUITANT: The natural person on whose life Annuity Payments are based. On or
after the Annuity Date, the Annuitant shall also include any Joint Annuitant.
ANNUITY DATE: The date on which Annuity Payments begin. The Annuity Date is
shown on the Contract Schedule.
ANNUITY OPTIONS: Options available for Annuity Payments.
ANNUITY PAYMENTS: The series of payments made to the Owner or any named payee
after the Annuity Date under the Annuity Option selected.
ANNUITY PERIOD: The period of time beginning with the Annuity Date during
which Annuity Payments are made.
ANNUITY UNIT: An accounting unit of measure used to calculate the amount of
Annuity Payments.
AUTHORIZED REQUEST: A request, in a form satisfactory to the Company, which is
received by the Administrative Office.
BENEFICIARY: The person(s) or entity(ies) who will receive the death benefit
payable under this Contract.
COMPANY: Great American Reserve Insurance Company.
CONTRACT ANNIVERSARY: An Anniversary of the Contract Issue Date.
CONTRACT ISSUE DATE: The later of the date on the cover of the Contract or
the date Purchase Payments are received. The Contract Issue Date is shown on
the Contract Schedule.
CONTRACT VALUE: The dollar value as of any Valuation Period of all amounts in
the Contract.
CONTRACT WITHDRAWAL VALUE: The Contract Value less any applicable Premium
Tax, less any Contingent Deferred Sales Charge, less any applicable Contract
Maintenance Charge and plus any Market Value Adjustment which may be positive
or negative.
CONTRACT YEAR: The first Contract Year is the annual period which begins on
the Contract Issue Date. Subsequent Contract Years begin on each anniversary
of the Contract Issue Date.
CREDITED INTEREST RATE: The interest rate credited to the Contract by the
Company for any given Guarantee Period in the MVA Account or the Fixed
Account. The Credited Interest Rates for the available Guarantee Periods for
the Fixed Account and the MVA Account are shown on the Contract Schedule.
EFFECTIVE DATE: The Effective Date of a Guarantee Period with a Credited
Interest Rate.
ELIGIBLE FUND: An investment entity shown on the Contract Schedule.
FIXED ACCOUNT: An investment option within the General Account.
FIXED ANNUITY: A series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company.
GENERAL ACCOUNT: The Company's general investment account which contains all
the assets of the Company with the exception of the Variable Account and other
segregated asset accounts.
GUARANTEE PERIOD: The period for which the Credited Interest Rate is credited
in either the MVA Account or the Fixed Account. Each deposit or transfer to
the MVA Account creates one or more new Guarantee Period(s). The Guarantee
Periods selected by the Owner are shown on the Contract Schedule.
MARKET VALUE ADJUSTMENT: An adjustment to the amount withdrawn or transferred
from an MVA Account prior to the end of the applicable Guarantee Period. The
adjustment reflects the change in the value of the funds withdrawn or
transferred due to the change in the interest rates since the beginning of the
Guarantee Period.
MVA ACCOUNT: A separate account which provides investment options where the
Company guarantees the rate of interest for a specified Guarantee Period and
where withdrawals or transfers may be subject to a Market Value Adjustment.
NET PURCHASE PAYMENT: A Purchase Payment less any applicable Premium Tax.
OWNER: The person(s) who owns the Contract.
PORTFOLIO: A segment of an Eligible Fund which constitutes a separate and
distinct class of shares. Portfolios which are available for investment by
the Sub-Accounts of the Variable Account under this Contract are shown on the
Contract Schedule.
PREMIUM TAX: Any premium taxes incurred to any governmental entity and
assessed against Purchase Payments or Contract Value.
PURCHASE PAYMENT: A payment made by or for an Owner with respect to this
Contract.
SUB-ACCOUNT: Variable Account assets are divided into Sub-Accounts which are
listed on the Contract Schedule. Assets of each Sub-Account will be invested
in shares of an Eligible Fund or a Portfolio of an Eligible Fund.
VALUATION DATE: Each day on which the New York Stock Exchange ("NYSE") is
open for business.
VALUATION PERIOD: The period of time beginning at the close of business of
the NYSE on each Valuation Date and ending at the close of business for the
next succeeding Valuation Date.
VARIABLE ACCOUNT: A separate account designated on the Contract Schedule which
provides investment options where the benefits are variable and are not
guaranteed as to dollar amount.
WRITTEN REQUEST: A request in writing, in a form satisfactory to the Company,
which is received by the Administrative Office.
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS : The initial Purchase Payment for an Owner is due on the
Contract Issue Date. Subject to the maximum and minimum amounts shown on the
Contract Schedule, the Owner may make subsequent Purchase Payments and may
increase or decrease or change the frequency of such payments. The Company
reserves the right to reject any Application or Purchase Payment.
ALLOCATION OF PURCHASE PAYMENTS : Net Purchase Payments are allocated to one
or more of the Fixed Account and/or the MVA Account Guarantee Period options
and/or to one or more Sub-Accounts of the Variable Account in accordance with
the selections made by the Owner. The allocation of the initial Net Purchase
Payment for an Owner is made in accordance with the selection made by the
Owner at the Contract Issue Date. Unless otherwise changed by the Owner,
subsequent Net Purchase Payments are allocated in the same manner as the
initial Net Purchase Payment. Allocation of the Net Purchase Payments is
subject to the Allocation Guidelines shown on the Contract Schedule. The
Company has reserved the right to allocate initial Net Purchase Payments to
the Money Market Sub-Account (except for any amounts allocated to the Fixed
Account and/or MVA Account) until the expiration of the Right to Examine
period.
SEPARATE ACCOUNT PROVISIONS
THE SEPARATE ACCOUNTS : The Separate Accounts are designated on the Contract
Schedule and consists of assets set aside by the Company, which are kept
separate from that of the general assets and all other separate account assets
of the Company.
The assets of the Variable Account equal to reserves and other liabilities will
not be charged with liabilities arising out of any other business
the Company may conduct.
The Variable Account assets are divided into Sub-Accounts. The Sub-Accounts
which are available under this Contract are listed on the Contract Schedule.
The assets of the Sub-Accounts are allocated to the Eligible Funds(s) and the
Portfolio(s), if any, within an Eligible Fund, shown on the Contract Schedule.
The Company may, from time to time, add additional Eligible Fund (s) or
Portfolio(s) to those shown on the Contract Schedule. The Owner may be
permitted to transfer Contract Values or allocate Net Purchase Payments to the
additional Sub-Account(s) within the Variable Account. However, the right to
make such transfers or allocations will be limited by the terms and conditions
imposed by the Company.
Should the shares of any such Eligible Fund(s) or any Portfolio(s) within an
Eligible Fund become unavailable for investment by the Variable Account, or
the Company's Board of Directors deems further investment in these shares
inappropriate, the Company may limit further purchase of such shares or
substitute shares of another Eligible Fund or Portfolio for shares already
purchased under a Contract.
VALUATION OF ASSETS : The assets of the Accounts are valued at their fair
market value in accordance with procedures of the Company.
ACCUMULATION UNITS : Accumulation Units shall be used to account for all
amounts allocated to or withdrawn from the Sub-Accounts of the Variable
Account as a result of Net Purchase Payments, withdrawals, transfers, or fees
and charges. The Company will determine the number of Accumulation Units of a
Sub-Account purchased or canceled. This will be done by dividing the amount
allocated to (or the amount withdrawn from) the Sub-Account by the dollar
value of one Accumulation Unit of the Sub-Account as of the end of the
Valuation Period during which the request for the transaction is received at
the Administrative Office.
ACCUMULATION UNIT VALUE : The Accumulation Unit Value for each Sub-Account
was arbitrarily set initially at $10. Subsequent Accumulation Unit Values for
each Sub-Account are determined by multiplying the Accumulation Unit Value for
the immediately preceding Valuation Period by the Net Investment Factor for
the Sub-Account for the current period.
The Net Investment Factor for each Sub-Account is determined by dividing A by
B and subtracting C where:
<TABLE>
<CAPTION>
<S> <C>
A is (i) the net asset value per share of the Eligible Fund or
Portfolio of an Eligible Fund held by the Sub-Account at the end
of the current Valuation Period; plus
(ii) any dividend or capital gains per share declared on behalf
of such Eligible Fund or Portfolio that has an ex-dividend date
within the current Valuation Period; plus
(iii) a charge factor, if any, for any taxes or any tax reserve
established by the Company as a result of the operation or
maintenance of the Sub-Account.
B is the net asset value per share of the Eligible Fund or Portfolio
held by the Sub-Account for the immediately preceding Valuation
Period.
C is the Valuation Period equivalent of the per month Mortality and
Expense Risk Charge, for the Administrative Charge and for the
Distribution Charge, if any, which are shown on the Contract
Schedule.
</TABLE>
The Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
MORTALITY AND EXPENSE RISK CHARGE : Each Valuation Period, the Company
deducts a Mortality and Expense Risk Charge from the Variable Account which is
equal, on an annual basis, to the amount shown on the Contract Schedule. The
Mortality and Expense Risk Charge compensates the Company for assuming the
mortality and expense risks under this Contract.
ADMINISTRATIVE CHARGE : Each Valuation Period, the Company deducts an
Administrative Charge from the Variable Account which is equal, on an annual
basis, to the amount shown on the Contract Schedule. The Administrative
Charge compensates the Company for the costs associated with the
administration of this Contract and the Variable Account.
DISTRIBUTION EXPENSE CHARGE : Each Valuation Period, the Company deducts a
Distribution Expense Charge from the Variable Account which is equal, on an
annual basis, to the amount shown on the Contract Schedule. The Distribution
Charge compensates the Company for the costs associated with the distribution
of the Contracts.
MVA ACCOUNT PROVISIONS
MVA ACCOUNT : The assets of the MVA Account equal to the reserves and other
liabilities will not be charged with liabilities arising out of any other
business the Company may conduct.
Net Purchase Payments may be allocated to one or more of the MVA
Account Guarantee Period options which are available at the time the Purchase
Payment is made. The initial MVA Account Guarantee Period options are shown
on the Contract Schedule. In addition, during the Accumulation Period,
Contract Values can be transferred from the Variable Account and/or the Fixed
Account to one or more of the MVA Account Guarantee Period options.
INTEREST TO BE CREDITED : The Credited Interest Rate for the Guarantee
Period(s) of the MVA Account is shown on the Contract Schedule. After the
initial Guarantee Period, the Credited Interest Rate for any subsequent
Guarantee Period of the MVA Account may change. All interest payable under a
Contract is compounded daily at the stated effective annual interest rate. In
no event will the Credited Interest Rate be less than the Minimum Guaranteed
Interest Rate, prior to the application of the Market Value Adjustment,
specified on the Contract Schedule.
GUARANTEE PERIOD : The Current MVA Account Guarantee Period is shown on the
Contract Schedule. During the thirty (30) days prior to the end of a current
Guarantee Period, the Owner may renew for the same or any other Guarantee
Period then available at the then Credited Interest Rate or may elect to
transfer all or a portion of the amount to a Fixed Account option, if
available, or to the Variable Account. Any transfer elected during the thirty
(30) days prior to the end of a current Guarantee Period will be made as of
the date the request is received by the Company and will not be subject to the
Market Value Adjustment.
If the Owner does not specify a Guarantee Period at the time of renewal, the
Company will select and transfer to the same Guarantee Period as has just
expired, so long as such Guarantee Period does not extend beyond the latest
Annuity Date that can be selected by an Owner. If such Guarantee Period does
extend beyond the latest Annuity Date, the Company will choose the one year
period. If there is no Guarantee Period for the same period available, the
one year period will be selected. If the one year period is no longer
available, the next longest period available will be selected.
MULTIPLE GUARANTEE PERIODS : The Owner may elect one or more Guarantee Periods
subject to the Company's underwriting rules. Multiple Guarantee Periods are
treated separately for purposes of applying the Market Value Adjustment. The
Company reserves the right to credit different Credited Interest Rates to the
Contract Value attributable:
1. to different Guarantee Periods; and
2. to Guarantee Periods of the same duration with different Effective
Dates.
CHANGE IN GUARANTEE PERIOD : The Owner may upon Written Request change to any
Guarantee Period then being offered by the Company with respect to contracts
of this type and class. The Market Value Adjustment will apply to a change
made at any time other than at the end of a Guarantee Period. The Market
Value Adjustment will not apply to a change made at the end of a Guarantee
Period if Written Request is received by the Company within thirty (30) days
prior to the end of the Guarantee Period.
MARKET VALUE ADJUSTMENT : Any amount withdrawn, transferred or annuitized
prior to the end of that Guarantee Period may be subject to a Market Value
Adjustment. The Market Value Adjustment will be calculated by multiplying the
amount withdrawn, transferred or annuitized by the formula shown on the
Contract Schedule.
There will be no Market Value Adjustment on withdrawals from the MVA Account
in the following situations: (1) death benefit paid under a Contract; (2)
amounts withdrawn to pay fees or charges; (3) amounts withdrawn or transferred
from the MVA Account during the 30 days prior to the end of the Guarantee
Period; (4) an Owner annuitizes his/her Contract under an Annuity Option
providing for at least 60 monthly Annuity Payments; and (5) any withdrawal
subject to the MVA Waiver shown on the Contract Schedule.
MVA ACCOUNT VALUES : The MVA Account portion of a Contract at any time is
equal to:
1. the Net Purchase Payments allocated to the MVA Account on behalf of
an Owner; plus
2. the Contract Value transferred to the MVA Account; plus
3. interest credited to the Contract Value in the MVA Account; less
4. any prior withdrawals of Contract Value in the MVA Account and any
Contingent Deferred Sales Charge; less
5. any Contract Value transferred from the MVA Account; less
6. Contract Maintenance Charges or Transfer Fees deducted from the
Contract Value allocated to the MVA Account.
Any subsequent Purchase Payments and transfers to the MVA Account will be
allocated to a new Guarantee Period with a new Effective Date.
FIXED ACCOUNT PROVISIONS
FIXED ACCOUNT VALUES : The Fixed Account portion of a Contract at any time is
equal to:
1. the Net Purchase Payments allocated to the Fixed Account on behalf of
an Owner; plus
2. the Contract Value transferred to the Fixed Account; plus
3. interest credited to the Contract Value in the Fixed Account; less
4. any prior withdrawals of Contract Value in the Fixed Account and any
Contingent Deferred Sales Charge; less
5. any Contract Value transferred from the Fixed Account; less
6. Contract Maintenance Charges or Transfer Fees deducted from the
Contract Value allocated to the Fixed Account.
INTEREST TO BE CREDITED : The Company guarantees that the interest to be
credited to the Fixed Account will not be less than the Minimum Guaranteed
Interest Rate shown on the Contract Schedule. The Company may credit
additional interest at its sole discretion for any Fixed Account option. The
Fixed Account Option and the Initial Current Interest Rate are shown on the
Contract Schedule.
CONTRACT VALUE
The Contract Value for any Valuation Period is the sum of the Contract Value
in each of the Sub-Accounts of the Variable Account, the Contract Value in the
MVA Account and the Contract Value in the Fixed Account.
The Contract Value in a Sub-Account of the Variable Account is determined by
multiplying the number of Accumulation Units allocated to the Owner's Account
for the Sub-Account by the Accumulation Unit Value.
Withdrawals will result in the cancellation of Accumulation Units in a
Sub-Account or a reduction in the Contract Value in the Fixed Account or the
MVA Account, as applicable.
CONTRACT MAINTENANCE CHARGE
DEDUCTION FOR CONTRACT MAINTENANCE CHARGE : During the Accumulation Period, on
each Contract Anniversary the Company deducts a Contract Maintenance Charge
from the Contract Value by reducing the Contract Value in the Fixed Account
and/or the MVA Account and by canceling Accumulation Units from each
applicable Sub-Account to reimburse it for expenses relating to maintenance of
the Contract. The Contract Maintenance Charge will be deducted first from the
Fixed Account and if there is insufficient value in the Fixed Account, then
the Contract Maintenance Charge will be deducted from the MVA Account or the
Sub-Account of the Variable Account with the largest balance. The Contract
Maintenance Charge is shown on the Contract Schedule.
TRANSFERS
TRANSFERS DURING THE ACCUMULATION PERIOD : Subject to any limitation imposed
by the Company on the number of transfers during the Accumulation Period shown
on the Contract Schedule, an Owner may transfer all or part of his or her
Contract Value in the Fixed Account, the MVA Account or a Sub-Account by
Authorized Request without the imposition of any Transfer Fee if there have
been no more than the number of free transfers shown on the Contract Schedule
for the Contract Year. All transfers are subject to the following:
1. If more than the number of free transfers, shown on the Contract
Schedule, have been made in a Contract Year, the Company will deduct a
Transfer Fee, shown on the Contract Schedule, for each subsequent transfer
permitted. The Transfer Fee is deducted from the Account which is the source
of the transfer. However, if the Owner's entire interest in an Account is
being transferred, the Transfer Fee will be deducted from the amount which is
transferred. If there are multiple source Accounts, the Transfer Fee will be
allocated first to the Fixed Account and then to the Sub-Account or the MVA
Account with the largest balance involved in a transfer transaction.
2. The minimum amount which can be transferred from a Sub-Account is
shown on the Contract Schedule. The minimum amount which must remain in a
Sub-Account, the Fixed and the MVA Account is shown on the Contract Schedule.
The maximum amount which can be transferred from the Fixed Account or the MVA
Account to the Variable Account is shown on the Contract Schedule.
3. The Company reserves the right, at any time and without prior notice
to any party, to terminate, suspend or modify the transfer privilege described
above.
If an Owner elects to use this transfer privilege, the Company will not be
liable for transfers made in accordance with the instructions received from
the Owner or other authorized persons. All amounts and Accumulation Units will
be determined as of the end of the Valuation Period during which the request
for transfer is received at the Administrative Office.
TRANSFERS DURING THE ANNUITY PERIOD : Subject to any limitations imposed by
the Company on the number of transfers during the Annuity Period shown on the
Contract Schedule, the Owner may transfer Annuity Units in accordance with the
following:
1. Transfers may be made upon written notice to the Company at least
thirty (30) days before the due date of the first Annuity Payment for which
the change will apply. Transfers will be made by converting the number of
Annuity Units being transferred to the number of Annuity Units of the
Sub-Account to which the transfer is made, so that the next Annuity Payment,
if it were made at that time would be the same amount that it would have been
without the transfer. Thereafter, Annuity Payments will reflect changes in
the value of the new Annuity Units.
2. If more than the number of free transfers, shown on the Contract
Schedule, have been made in a Contract Year, the Company will deduct a
Transfer Fee, shown on the Contract Schedule, for each subsequent transfer
permitted. The Transfer Fee is deducted from the Account which is the source
of the transfer. However, if the Owner's entire interest in an Account is
being transferred, the Transfer Fee will be deducted from the amount which is
transferred. If there are multiple source Accounts, the Transfer Fee will be
allocated first to the Fixed Account and then the Sub-Account or the MVA
Account with the largest balance involved in a transfer transaction.
3. The minimum amount which can be transferred from a Sub-Account is
shown on the Contract Schedule. The minimum amount which must remain in a
Sub-Account after a transfer is shown on the Contract Schedule.
4. No transfers can be made between the General Account and the Variable
Account.
5. The Company reserves the right, at any time and without prior notice
to any party, to terminate, suspend or modify the transfer privilege described
above.
If an Owner elects to use this transfer privilege, the Company will not be
liable for transfers made in accordance with instructions received from the
Owner or other authorized persons. All amounts and Annuity Units will be
determined as of the end of the Valuation Period during which the request for
transfer is received at the Administrative Office.
WITHDRAWAL PROVISIONS
WITHDRAWALS : During the Accumulation Period, the Owner may, upon Written
Request, make a total or partial withdrawal of the Contract Withdrawal Value.
The Owner must specify by Written Request which Sub-Account or Guarantee
Period of the MVA Account or Fixed Account, as applicable, is the source of
the partial withdrawal.
A withdrawal from the MVA Account may be subject to a Market Value Adjustment.
The Company will pay the amount of any withdrawal from the Variable Account
within seven (7) days of receipt of a request in good order unless the
Suspension or Deferral of Payments Provision is in effect.
Each partial withdrawal must be for an amount which is not less than the
amount shown on the Contract Schedule. The minimum Contract Value which must
remain in a Sub-Account after a partial withdrawal is shown on the Contract
Schedule. The maximum amounts which can be withdrawn from the Fixed Account
and/or the MVA Account are shown on the Contract Schedule.
CONTINGENT DEFERRED SALES CHARGE : Upon a withdrawal of Contract Value, a
Contingent Deferred Sales Charge as set forth on the Contract Schedule may be
assessed.
WITHDRAWAL CHARGE : Upon a withdrawal of Contract Value, a Withdrawal Charge
as set forth on the Contract Schedule may be assessed.
PROCEEDS PAYABLE ON DEATH
DEATH OF OWNER DURING THE ACCUMULATION PERIOD : Upon the death of the Owner,
or any Joint Owner, during the Accumulation Period, the death benefit will be
paid to the Beneficiary(ies) designated by the Owner. Upon the death of any
Joint Owner, the surviving Joint Owner, if any, will be treated as the Primary
Beneficiary. Any other Beneficiary designation on record at the time of death
will be treated as a contingent Beneficiary.
A Beneficiary may request that the death benefit be paid under one of the
Death Benefit Options below. If the Beneficiary is the spouse of the Owner,
he or she may elect to continue the Contract at the then current Contract
Value in his or her own name and exercise all the Owner's rights under the
Contract.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD : Prior to the Owner
attaining Age 80, the death benefit will be the greater of: (i) the Purchase
Payments, less any withdrawals; or (ii) the Contract Value determined as of
the end of the Valuation Period during which the Company receives both due
proof of death and an election for the payment method. If the death occurs
after Age 80, the death benefit will be the Value determined as of the end of
the Valuation Period during which the Company receives both due proof of death
and an election for the payment method.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD : A non-spousal
Beneficiary must elect the death benefit to be paid under one of the following
options in the event of the death of the Owner or any Joint Owner during the
Accumulation Period:
OPTION 1 - lump sum payment of the death benefit; or
OPTION 2 - the payment of the entire death benefit within 5 years of
the date of the death of the Owner or any Joint Owner; or
OPTION 3 - payment of the death benefit under an Annuity Option over
the lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one year of
the date of death of the Owner or any Joint Owner.
Any portion of the death benefit not applied under Option 3 within one year of
the date of the Owner's death, must be distributed within five years of the
date of death.
A spousal Beneficiary may elect to continue the Contract in his or her own
name at the then current Contract Value, elect a lump sum payment of the death
benefit or apply the death benefit to an Annuity Option.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect.to the Beneficiary, other than in
a lump sum, may only be elected during the sixty-day period beginning with the
date of receipt of proof of death.
DEATH OF OWNER DURING THE ANNUITY PERIOD : If the Owner, or any Joint Owner,
who is not the Annuitant, dies during the Annuity Period, any remaining
payments under the Annuity Option elected will continue at least as rapidly as
under the method of distribution in effect at such Owner's or Joint Owner's
death. Upon the death of any Owner during the Annuity Period, the Beneficiary
becomes the Owner. Upon the death of any Joint Owner during the Annuity
Period, the surviving Joint Owner, if any, will be treated as the Primary
Beneficiary. Any other Beneficiary designation on record at the time of death
will be treated as a Contingent Beneficiary.
DEATH OF ANNUITANT : Upon the death of an Annuitant, who is not the Owner,
during the Accumulation Period, the Owner may designate a new Annuitant,
subject to the Company's underwriting rules then in effect. If no designation
is made within 30 days of the death of the Annuitant, the Owner will become
the Annuitant. If the Owner is a non-natural person, the death of the
Annuitant will be treated as the death of the Owner and a new Annuitant may
not be designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit,
if any, will be as specified in the Annuity Option elected. Death benefits
will be paid at least as rapidly as under the method of distribution in effect
at the Annuitant's death.
PAYMENT OF DEATH BENEFIT : The Company will require due proof of death before
any death benefit is paid. Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or
regulations governing death benefit payments.
BENEFICIARY : The Beneficiary designation in effect on the Contract Issue
Date will remain in effect until changed. The Beneficiary is entitled to
receive the benefits to be paid at the death of the Owner.
Unless the Owner provides otherwise, the death benefit will be paid in equal
shares to the survivor(s) as follows:
1. to the Primary Beneficiary(ies) who survive the Owner's and/or the
Annuitant's death, as applicable; or if there are none
2. to the Contingent Beneficiary(ies) who survive the Owner's and/or the
Annuitant's death, as applicable; or if there are none
3. to the estate of the Owner.
CHANGE OF BENEFICIARY : Subject to the rights of any irrevocable
Beneficiary(ies), the Owner may change the Primary Beneficiary(ies) or
Contingent Beneficiary(ies). A change may be made by Written Request. The
change will take effect as of the date the Written Request is signed. The
Company will not be liable for any payment made or action taken before it
records the change.
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
The Company reserves the right to suspend or postpone payments from the
Variable Account for a withdrawal or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held
in the Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Variable Account's net assets; or
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
The Company further reserves the right to postpone payments from the Fixed
Account and the MVA Account for a period of up to six months.
OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
OWNER : The Owner has all interest and right to amounts held in his or her
Contract. The Owner is the person designated as such on the Contract Issue
Date, unless changed.
The Owner may change owners of the Contract at any time by Written Request. A
change of Owner will automatically revoke any prior designation of Owner. The
change will become effective as of the date the Written Request is signed.
The Company will not be liable for any payment made or action taken before it
records the change.
JOINT OWNER : A Contract may be owned by Joint Owners. If Joint Owners are
named, any Joint Owner must be the spouse of the other Owner. Upon the death
of either Owner, the surviving spouse will be the Primary Beneficiary. Any
other Beneficiary designation will be treated as a Contingent Beneficiary
unless otherwise indicated in a Written Request.
ANNUITANT : The Annuitant is the person on whose life Annuity Payments are
based. The Annuitant is the person designated by the Owner at the Contract
Issue Date, unless changed prior to the Annuity Date. The Owner may not change
the Annuitant except in the event that the Annuitant dies prior to the Annuity
Date. If no new Annuitant is designated by the Owner within 30 days of the
death of the Annuitant, the Owner becomes the Annuitant. The Annuitant may
not be changed in a Contract which is owned by a non-natural person. Any
change of Annuitant is subject to the Company's underwriting rules then in
effect.
ASSIGNMENT OF A CONTRACT : A Written Request specifying the terms of an
assignment of a Contract must be provided to the Administrative Office. The
Company will not be liable for any payment made or action taken before it
records the assignment.
The Company will not be responsible for the validity or tax consequences of
any assignment. Any assignment made after the death benefit has become payable
will be valid only with Company consent.
If the Contract is assigned, the Owner's rights may only be exercised with
the consent of the assignee of record.
ANNUITY PROVISIONS
GENERAL : On the Annuity Date, the Adjusted Contract Value will be applied
under the Annuity Option selected by the Owner. The Owner may elect to have
the Contract Value applied to provide a Fixed Annuity, a Variable Annuity or a
combination Fixed and Variable Annuity. If a combination is elected, the
Owner must specify what part of the Contract Value is to be applied to the
Fixed and Variable Options.
ANNUITY DATE : The Annuity Date is selected by the Owner at the Contract
Issue Date. The Annuity Date must be the first day of a calendar month and
must be at least 90 days after the Contract Issue Date. The Annuity Date may
not be later than the earlier of when the Annuitant reaches attained age 90
or the maximum date permitted under state law.
Prior to the Annuity Date, the Owner subject to the above, may change the
Annuity Date by Written Request. Any change must be requested at least thirty
(30) days prior to the new Annuity Date.
SELECTION OF AN ANNUITY OPTION : An Annuity Option may be selected by Written
Request of the Owner. If no Annuity Option is selected, Option B with 120
monthly payments guaranteed will automatically be applied. Unless specified
otherwise, that portion of the Adjusted Contract Value allocated to the
Variable Account shall be used to provide a Variable Annuity and that portion
of the Adjusted Contract Value allocated to the Fixed Account and the MVA
Account will be used to provide a Fixed Annuity. Prior to the Annuity Date,
the Owner can change the Annuity Option selected by Written Request. Any
change must be requested at least thirty (30) days prior to the Annuity Date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS : Annuity Payments are paid in
monthly installments. The Adjusted Contract Value is applied to the Annuity
Table for the Annuity Option selected. If the Adjusted Contract Value to be
applied under an Annuity Option is less than $5,000, the Company reserves the
right to make a lump sum payment in lieu of Annuity Payments. If the Annuity
Payment would be or become less than $50, the Company reserves the right to
reduce the frequency of payments to an interval which will result in each
payment being at least $50.
ANNUITY OPTIONS : The following Annuity Options or any other annuity option
acceptable to the Company may be selected:
OPTION 1. LIFETIME ONLY ANNUITY: The Company will make monthly payments
during the life of the Annuitant. If this option is elected, it is understood
and agreed that payments shall cease immediately upon the death of the
Annuitant and the annuity will terminate without further value.
OPTION 2. LIFETIME ANNUITY WITH GUARANTEED PERIODS : The Company will
make monthly payments for the guaranteed period selected and thereafter for
the life of the Annuitant. If this option is elected, it is understood and
agreed that upon the death of the Annuitant, any amounts remaining under the
guaranteed period selected will be distributed to the Beneficiary at least as
rapidly as under the method of distribution being used as of the date of the
Annuitant's death. The guaranteed period may be five (5) years, ten (10)
years or twenty (20) years.
OPTION 3. INSTALLMENT REFUND LIFE ANNUITY : The Company will make monthly
payments for the installment refund period (the time required for the sum of
the payments to equal the amount applied), and thereafter for the life of the
Annuitant. If this option is elected, it is understood and agreed that upon
the death of the Annuitant, any amounts remaining under the installment refund
period will be distributed to the Beneficiary at least as rapidly as under the
method of distribution being used at the time of the Annuitant's death.
OPTION 4. PAYMENT FOR A FIXED PERIOD: The Company will make monthly
payments for a fixed period of 3 to 20 years.
OPTION 5. JOINT AND SURVIVOR ANNUITY : The Company will make monthly
payments during the joint life time of the Annuitant and a Joint Annuitant.
Payments will continue during the lifetime of the surviving Annuitant and will
be computed on the basis of 100%, 50% or 66% of the Annuity Payment (or
limits) in effect during the joint life time.
ANNUITY : If the Owner selects a Fixed Annuity, the Adjusted Contract Value
is allocated to the General Account and the Annuity is paid as a Fixed
Annuity. If the Owner selects a Variable Annuity, the Adjusted Contract Value
will be allocated to the Sub-Accounts of the Variable Account in accordance
with the selection made by the Owner, and the Annuity will be paid as a
Variable Annuity. If no selection is made, the Adjusted Contract Value will
be applied in the same proportions to the same Sub-Accounts as the allocations
are at the time of election. Unless the Owner specifies otherwise, the payee
of the Annuity Payments shall be the Owner. The Adjusted Contract Value will
be applied to the applicable Annuity Table contained in the Contract based
upon the Annuity Option selected by the Owner. The amount of the first
payment for each $1,000 of Adjusted Contract Value is shown in the Annuity
Tables.
FIXED ANNUITY : The Owner may elect to have the Adjusted Contract Value
applied to provide a Fixed Annuity.
The dollar amount of each Fixed Annuity Payment shall be determined in
accordance with Annuity Tables contained in this Contract which are based on
the minimum guaranteed interest rate of 3% per year.
VARIABLE ANNUITY : The Owner may elect to have the Adjusted Contract Value
applied to provide a Variable Annuity. Variable Annuity Payments reflect the
investment performance of the Variable Account in accordance with the
allocation of the Adjusted Contract Value to the Sub-Accounts during the
Annuity Period. Variable Annuity Payments are not guaranteed as to dollar
amount.
The dollar amount of the first Variable Annuity Payment is determined in
accordance with the description above. The dollar amount of the Variable
Annuity Payments for each applicable Sub-Account after the first Variable
Annuity Payment is determined as follows:
1. The dollar amount of the first Variable Annuity Payment is divided by
the value of an Annuity Unit for each applicable Sub-Account as of the Annuity
Date. This sets the number of Annuity Units for each monthly payment for the
applicable Sub-Account.
2. The fixed number of Annuity Units per payment in each Sub-Account is
multiplied by the Annuity Unit Value for that Sub-Account for the last
Valuation Period of the month preceding the month for which the payment is
due. This result is the dollar amount of the payment for each applicable
Sub-Account.
The total dollar amount of each Variable Annuity Payment is the sum of all
Sub-Account Variable Annuity Payments reduced by the applicable portion of the
Contract Maintenance Charge.
ANNUITY UNIT : The value of any Annuity Unit for each Sub-Account of the
Variable Account was arbitrarily set initially at $10.
The Sub-Account Annuity Unit Value at the end of any subsequent Valuation
Period is determined as follows:
1. The Net Investment Factor for the current Valuation Period is
multiplied by the value of the Annuity Unit for the Sub-Account for the
immediately preceding Valuation Period.
2. The result in (1) is then divided by the Assumed Investment Rate
Factor which equals 1.00 plus the Assumed Investment Rate for the number of
days since the preceding Valuation Date. The Owner can choose either a 5% or
a 3% Assumed Investment Rate.
MORTALITY TABLES : The mortality table used in establishing the Annuity Table
is 1983 Individual Annuity Mortality, (IAM) Table, Unisex.
The dollar amount of an Annuity Payment for any Age or combination of Ages not
shown in the Tables or for any other form of Annuity Option agreed to by the
Company will be provided by the Company upon request.
GENERAL PROVISIONS
THE CONTRACT : The entire Contract consists of this Contract, the
Application, if any, and any riders or endorsements attached to this Contract.
This Contract may be changed or altered only by the President or Vice
President and the Secretary of the Company. A change or alteration must be
made in writing.
MISSTATEMENT OF AGE : If the Age of any Annuitant has been misstated, any
Annuity benefits payable will be the Annuity benefits provided by the correct
Age. After Annuity Payments have begun, any underpayments will be made up in
one sum with the next Annuity Payment. Any overpayments will be deducted from
future Annuity Payments until the total is repaid.
INCONTESTABILITY : This Contract will not be contestable from the date of
issue.
MODIFICATION : This Contract may be modified in order to maintain compliance
with applicable state and federal law.
NON-PARTICIPATING : This Contract will not share in any distribution of
dividends.
EVIDENCE OF SURVIVAL : The Company may require satisfactory evidence of the
continued survival of any person(s) on whose life Annuity Payments are based.
PROOF OF AGE : The Company may require evidence of Age of any Annuitant and
any Owner.
PROTECTION OF PROCEEDS : To the extent permitted by law, death benefits and
Annuity Payments shall be free from legal process and the claim of any
creditor other than the person entitled to them under any Contract. No
payment and no amount under this Contract can be taken or assigned in advance
of its payment date unless the Company receives the Owner's written consent.
REPORTS : At least once each calendar year, the Company will furnish each
Owner with a report showing the Contract Value and any other information as
may be required by law. The Company will also furnish an annual report of the
Variable Account.
TAXES : Any taxes paid to any governmental entity relating to any Contract
will be deducted from the Purchase Payment or Contract Value when incurred.
The Company will, in its sole discretion, determine when taxes have resulted
from: the investment experience of the Variable Account; receipt by the
Company of the Purchase Payments; or commencement of Annuity Payments. The
Company may, in its sole discretion, pay taxes when due and deduct that amount
from the Contract Value at a later date. Payment at an earlier date does not
waive any right the Company may have to deduct amounts at a later date. The
Company reserves the right to establish a provision for federal income taxes
if it determines, in its sole discretion, that it will incur a tax as a result
of the operation of the Variable Account. The Company will deduct for any
income taxes incurred by it as a result of the operation of the Variable
Account whether or not there was a provision for taxes and whether or not it
was sufficient. The Company will deduct any withholding taxes required by
applicable law.
REGULATORY REQUIREMENTS : All values payable under any Contract will not be
less than the minimum benefits required by the laws and regulations of the
states in which the Contract is delivered.
EXHIBIT 4.(ii)
ALLOCATED FIXED AND VARIABLE GROUP ANNUITY CONTRACT
GREAT AMERICAN RESERVE INSURANCE COMPANY
11815 N. PENNSYLVANIA STREET
CARMEL, INDIANA 46032-4572
(317) 817-3700
A STOCK COMPANY
GREAT AMERICAN RESERVE INSURANCE COMPANY (the "Company") agrees with the Group
Contract Owner to provide benefits to the Certificate Owners, subject to the
provisions set forth in this Contract and in consideration of Purchase
Payments received from Certificate Owners.
RIGHT TO EXAMINE CERTIFICATE: Within 10 days of the date of receipt of a
Certificate under this Contract by a Certificate Owner, it may be returned by
delivering or mailing it to the Company at its Administrative Office. When
the Certificate is received by the Company, it will be voided as if it had
never been in force. The Company will refund the Certificate Value computed
at the end of the Valuation Period during which the Certificate is received by
the Company at its Administrative Office.
THIS IS A LEGAL CONTRACT BETWEEN THE CONTRACT OWNER AND THE COMPANY
READ YOUR CONTRACT CAREFULLY
SECRETARY PRESIDENT
ALLOCATED FIXED AND VARIABLE
GROUP ANNUITY CONTRACT
Non-participating
WITHDRAWAL VALUES AND THE DEATH BENEFITS PROVIDED BY THIS CONTRACT, WHEN BASED
ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT, ARE VARIABLE AND ARE
NOT GUARANTEED AS TO DOLLAR AMOUNT. NON FORFEITURE VALUES MAY INCREASE OR
DECREASE BASED ON THE MARKET VALUE ADJUSTMENT SPECIFIED IN THIS CONTRACT.
TABLE OF CONTENTS
CONTRACT SCHEDULE
DEFINITIONS
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS
ALLOCATION OF PURCHASE PAYMENTS
SEPARATE ACCOUNT PROVISIONS
THE SEPARATE ACCOUNTS
VALUATION OF ASSETS
ACCUMULATION UNITS
ACCUMULATION UNIT VALUE
MORTALITY AND EXPENSE RISK CHARGE
ADMINISTRATIVE CHARGE
DISTRIBUTION EXPENSE CHARGE
MVA ACCOUNT PROVISIONS
MVA ACCOUNT
INTEREST TO BE CREDITED
GUARANTEE PERIOD
MULTIPLE GUARANTEE PERIODS
CHANGE IN GUARANTEE PERIOD
MARKET VALUE ADJUSTMENT
MVA ACCOUNT VALUES
FIXED ACCOUNT PROVISIONS
FIXED ACCOUNT VALUES
INTEREST TO BE CREDITED
CERTIFICATE VALUE
CERTIFICATE MAINTENANCE CHARGE
DEDUCTION FOR CERTIFICATE MAINTENANCE CHARGE
TRANSFERS
TRANSFERS DURING THE ACCUMULATION PERIOD
TRANSFERS DURING THE ANNUITY PERIOD
WITHDRAWAL PROVISIONS
WITHDRAWALS
CONTINGENT DEFERRED SALES CHARGE
WITHDRAWAL CHARGE
PROCEEDS PAYABLE ON DEATH
DEATH OF CERTIFICATE OWNER DURING THE ACCUMULATION PERIOD
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD
DEATH OF CERTIFICATE OWNER DURING THE ANNUITY PERIOD
DEATH OF ANNUITANT
PAYMENT OF DEATH BENEFIT
BENEFICIARY
CHANGE OF BENEFICIARY
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
CERTIFICATE OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
CERTIFICATE OWNER
JOINT CERTIFICATE OWNER
GROUP CONTRACT OWNER
ANNUITANT
ASSIGNMENT OF A CERTIFICATE
ANNUITY PROVISIONS
GENERAL
ANNUITY DATE
SELECTION OF AN ANNUITY OPTION
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
ANNUITY OPTIONS
OPTION 1. LIFETIME ONLY ANNUITY:
OPTION 2. LIFETIME ANNUITY WITH GUARANTEED PERIODS
OPTION 3. INSTALLMENT REFUND LIFE ANNUITY
OPTION 4. PAYMENT FOR A FIXED PERIOD:
OPTION 5. JOINT AND SURVIVOR ANNUITY
ANNUITY
FIXED ANNUITY
VARIABLE ANNUITY
ANNUITY UNIT
MORTALITY TABLES
GENERAL PROVISIONS
THE CONTRACT
MISSTATEMENT OF AGE
INCONTESTABILITY
MODIFICATION
NON-PARTICIPATING
EVIDENCE OF SURVIVAL
PROOF OF AGE
PROTECTION OF PROCEEDS
REPORTS
TAXES
REGULATORY REQUIREMENTS
CONTRACT SCHEDULE
CONTRACT OWNER: [ABC Trust]
CONTRACT NUMBER: [12345] CONTRACT ISSUE DATE:[January 3, 1995]
ANNUITY DATE: [ ]
PURCHASE PAYMENTS UNDER EACH CERTIFICATE:
INITIAL PURCHASE PAYMENT: [$50,000 Non-Qual; $10,000
IRA - 403(b) rollover]
MINIMUM SUBSEQUENT PURCHASE PAYMENT: [$1,000; or if the automatic
premium check option is elected:
$250 monthly]
MAXIMUM TOTAL PURCHASE PAYMENT: [$1,000,000, without prior Company
approval]
ALLOCATION GUIDELINES:
[1. Currently, the Certificate Owner can select all investment options,
including Sub-Accounts of the Variable Account and the MVA Account. The
Company reserves the right to change this in the future.
2. If the Purchase Payments and forms required to issue a Certificate
are in good order, the initial Net Purchase Payment will be credited to the
Certificate Owner's Account within two (2) business days after receipt at the
Administrative Office. Additional Purchase Payments will be credited to the
Certificate Owner's Account as of the Valuation Period when they are received.
3. Allocation percentages must be in whole numbers. Each allocation
must be at least 1%.
4. Currently, the minimum amount which must be allocated to a Guarantee
Period in the MVA Account is $2,000. The Company reserves the right to
increase this minimum in the future.]
BENEFICIARY:
[As designated by the Certificate Owner at the Certificate Issue Date,
unless subsequently changed.]
CERTIFICATE MAINTENANCE CHARGE:
[The Certificate Maintenance Charge is currently $30.00 each Certificate
Year. The Company reserves the right to increase the Certificate Maintenance
Charge but it will not exceed $60 per Certificate Year. However, during the
Accumulation Period if the Certificate Value on the Certificate Anniversary is
at least $25,000, then no Certificate Maintenance Charge is deducted. If a
total withdrawal is made on other than a Certificate Anniversary and the
Certificate Value for the Valuation Period during which the total withdrawal
is made is less than $25,000, the full Certificate Maintenance Charge will be
deducted at the time of the total withdrawal. If the Annuity Date is not the
Certificate Anniversary and the Certificate Value on the Annuity Date is less
than $25,000, then the full Certificate Maintenance Charge will be deducted on
the Annuity Date. During the Annuity Period, no Certificate Maintenance
Charge will be deducted.]
MORTALITY AND EXPENSE RISK CHARGE:
[Equal, on an annual basis, to 1.15% of the average daily net asset value of
the Variable Account. The Company may increase this charge; however, the
maximum Mortality and Expense Risk Charge will not exceed 1.25% of the average
daily net asset value of the Variable Account. In the event of an increase,
the Company will give Certificate Owners 90 days prior notice of the
increase.]
ADMINISTRATIVE CHARGE:
[Equal, on an annual basis, to .15% of the average daily net asset value
of the Variable Account. The Company may increase this charge; however, the
maximum Administrative Charge will not exceed .25% of the average daily net
asset value of the Variable Account. In the event of an increase, the Company
will give Certificate Owners 90 days prior notice of the increase.]
DISTRIBUTION EXPENSE CHARGE:
[NONE]
TRANSFERS:
NUMBER OF TRANSFERS PERMITTED: [There are currently no limits on the
number of transfers that can be made during the Accumulation Period.
Currently, Certificate Owners are permitted four transfers per Certificate
Year during the Annuity Period.]
TRANSFER FEE: [For each transfer, the Transfer Fee is the lesser of
$25.00 or 2% of the amount transferred. Currently, the Company does not
assess a Transfer Fee on one transfer in a 30-day period during the
Accumulation Period or the four transfers permitted during the Annuity Period.
All reallocations made on a given date count as one transfer. Transfers made
at the end of the Right to Examine Certificate period by the Company and any
transfers made pursuant to a pre-approved Dollar Cost Averaging Program or
pursuant to a pre-approved Rebalancing Program will not be counted in
determining the application of the Transfer Fee.]
MINIMUM AMOUNT TO BE TRANSFERRED: [$500 (from any Sub-Account or any
Guarantee Period of the MVA Account), or the Certificate Owner's entire
interest in the Sub-Account or the Guarantee Period, if less. This requirement
is waived if the transfer is pursuant to a pre-approved Dollar Cost Averaging
Program or Rebalancing Program.]
MINIMUM AMOUNT WHICH MUST REMAIN IN EACH ACCOUNT AFTER A TRANSFER: [$500
per Sub-Account or a Guarantee Period in the MVA Account; or $0 if the entire
amount in any Sub-Account of the Variable Account or a Guarantee Period in the
MVA Account is transferred.]
MAXIMUM AMOUNT WHICH CAN BE TRANSFERRED FROM THE FIXED ACCOUNT OR MVA
ACCOUNT TO THE VARIABLE ACCOUNT: [NONE]
WITHDRAWALS:
CONTINGENT DEFERRED SALES CHARGE: [NONE]
WITHDRAWAL CHARGE: [NONE]
MINIMUM PARTIAL WITHDRAWAL: [$500 from each Sub-Account of the Variable
Account and each Guarantee Period of the MVA Account. This requirement is
waived if the partial withdrawal is pursuant to the Systematic Withdrawal
Program.]
MINIMUM CERTIFICATE VALUE WHICH MUST REMAIN IN CERTIFICATE AFTER A
PARTIAL WITHDRAWAL: [$500. The Company reserves the right to increase this
amount.]
MINIMUM CERTIFICATE VALUE WHICH MUST REMAIN IN ANY SUB-ACCOUNT OF THE
VARIABLE ACCOUNT AFTER A PARTIAL WITHDRAWAL: [$500]
MAXIMUM AMOUNT WHICH CAN BE WITHDRAWN FROM THE FIXED AND MVA ACCOUNTS:
[The Fixed Account is not currently available. There is currently no
limitation on the maximum amount which can be withdrawn from the MVA Account.]
SEPARATE ACCOUNTS: Variable Account: [Great American Reserve Variable Annuity
Account G for the Variable Annuity
portion of the Contract.]
and
MVA Account: [Great American Reserve Market Value
Adjustment Account for the portion of
the Contract that may be subject to
a Market Value Adjustment.]
ELIGIBLE FUNDS, SERIES & SUB-ACCOUNTS:
[The Conseco Series Trust]
[Conseco - Asset Allocation Portfolio] [Conseco - Asset Allocation Sub-
Account]
[Conseco - Common Stock Portfolio] [Conseco - Common Stock Sub-Account]
[Conseco - Corporate Bond Portfolio] [Conseco - Corporate Bond Sub-
Account]
[Conseco - Government Securities [Conseco - Government Securities Sub-
Portfolio] Account]
[Conseco - Money Market Portfolio] [Conseco - Money Market Sub-Account]
[Evergreen Variable Investment Trust]
[Evergreen VA Fund] [Evergreen VA Sub-Account]
[Evergreen VA Foundation Fund] [Evergreen VA Foundation Sub-Account]
[Evergreen VA Growth and Income Fund] [Evergreen VA Growth and Income Sub-
Account]
[Insurance Management Series]
[International Stock Fund] [International Stock Sub-Account]
[The Alger American Fund]
[Alger American Growth Portfolio] [Alger American Growth Sub-Account]
[Alger American Leveraged AllCap [Alger American Leveraged Allcap Sub-
Portfolio] Account]
[Alger American MidCap Growth [Alger American MidCap Growth Sub-
Portfolio] Account]
[Alger American Small Capitalization [Alger American Small Capitalization
Portfolio] Sub-Account]
[INVESCO Variable Investment Funds, Inc.]
[INVESCO VIF - High Yield Portfolio] [INVESCO VIF - High Yield Sub-Account]
[INVESCO VIF - Industrial Income [INVESCO VIF - Industrial Income Sub-
Portfolio] Account]
[Lord Abbett Series Fund, Inc.]
[Growth & Income Portfolio] [Lord Abbett - Growth & Income Sub-
Account]
[The OFFITBANK Variable Insurance Fund, Inc.]
[OFFITBANK VIF - Investment Grade [OFFITBANK VIF - Investment Grade
Global Debt Fund] Global Debt Sub-Account]
[OFFITBANK VIF - Total Return Fund] [OFFITBANK VIF - Total Return Sub-
Account]
[Van Eck Worldwide Insurance Trust]
[Worldwide Emerging Markets Fund] [Van Eck - Worldwide Emerging Markets
Sub-Account]
[Gold and Natural Resources Fund] [Van Eck - Gold and Natural Resources
Sub-Account]
[Worldwide Hard Assets Fund] [Van Eck - Worldwide Hard Assets Sub-
Account]
[Tomorrow Funds Retirement Trust]
[Core Large-Cap Stock Fund] [Tomorrow Funds - Core Large-Cap
Stock Sub-Account]
[Core Small-Cap Stock Fund] [Tomorrow Funds - Core Small-Cap
Stock Sub-Account]
MVA ACCOUNT:
MINIMUM GUARANTEED INTEREST RATE: [3%]
CURRENT MVA ACCOUNT GUARANTEE PERIOD OPTIONS AND
CREDITED INTEREST RATES:
[1 Year] [XX%]
[3 Years] [XX%]
[5 Years] [XX%]
[7 Years] [XX%]
[10 Years] [XX%]
MARKET VALUE ADJUSTMENT FACTOR: [The Market Value Adjustment Factor is equal
to:
N/365
[ ( 1 + A ) ]
______________ - 1
[ ( 1 + B ) ]
<TABLE>
<CAPTION>
<S> <C> <C>
where: A = the U.S. Treasury rate in effect at the beginning of the
Guarantee Period for the length of the guarantee period
selected.
B = the current U.S. Treasury rate as of the transaction date
plus .005. Treasury rate period is determined by N/365
rounded to the next highest year.
N = Number of days remaining in the MVA Guarantee Period.]
</TABLE>
If the Treasury rate is not available for the period, the rate will be arrived
at by interpolation. If no Treasury Rates are available, an Index will be
selected by the Company and approved by the State Insurance Commissioner.]
[MVA Waiver: For withdrawals from MVA Account Guarantee Period Option, after
the first year in such Guarantee Period option, the Certificate Owner can make
one withdrawal each Certificate Year of up to a total of 10% of each such
Guarantee Period option without the Market Value Adjustment.]
FIXED ACCOUNT:
Not Available
RIDERS:
[IRA ENDORSEMENT]
[TSA ENDORSEMENT]
ADMINISTRATIVE OFFICE:
[Great American Reserve Insurance Great American Reserve Insurance
Company Company
Administrative Office or Administrative Office
P.O. Box 1927 11815 N. Pennsylvania Street
Carmel, IN 46032 Carmel, IN 46032]
(800) 824-2726
(317) 817-3700
DEFINITIONS
ACCOUNT(S): The Fixed Account, the MVA Account and the General Account and/or
one or more of the Sub-Accounts of the Variable Account.
ACCUMULATION PERIOD: The period prior to the Annuity Date during which
Purchase Payments may be made by a Certificate Owner.
ACCUMULATION UNIT: A unit of measure used to determine the value of a
Certificate Owner's interest in a Sub-Account of the Variable Account during
the Accumulation Period.
ADJUSTED CERTIFICATE VALUE: The Certificate Value less any applicable Premium
Tax, and Certificate Maintenance Charge and plus the applicable Market Value
Adjustment which may be positive or negative. This amount is applied to the
applicable Annuity Tables to determine Annuity Payments.
AGE: The age of any Certificate Owner or Annuitant on his/her last birthday.
For Joint Certificate Owners, all provisions which are based on age are based
on the Age of the older of the Joint Certificate Owners.
ADMINISTRATIVE OFFICE: The office indicated on the Contract Schedule of this
Contract to which notices, requests and Purchase Payments must be sent. All
sums payable to the Company under this Contract or any Certificate are payable
at the Administrative Office or an address designated by the Company.
ANNUITANT: The natural person on whose life Annuity Payments are based. On or
after the Annuity Date, the Annuitant shall also include any Joint Annuitant.
ANNUITY DATE: The date on which Annuity Payments begin. The Annuity Date is
shown on the Certificate Schedule.
ANNUITY OPTIONS: Options available for Annuity Payments.
ANNUITY PAYMENTS: The series of payments made to the Certificate Owner or any
named payee after the Annuity Date under the Annuity Option selected.
ANNUITY PERIOD: The period of time beginning with the Annuity Date during
which Annuity Payments are made.
ANNUITY UNIT: An accounting unit of measure used to calculate the amount of
Annuity Payments.
AUTHORIZED REQUEST: A request, in a form satisfactory to the Company, which is
received by the Administrative Office.
BENEFICIARY: The person(s) or entity(ies) who will receive the death benefit
payable under a Certificate.
CERTIFICATE: The document issued to a Certificate Owner to evidence a
Certificate Owner's Account established under this Group Contract.
CERTIFICATE ANNIVERSARY: An Anniversary of the Certificate Issue Date.
CERTIFICATE ISSUE DATE: The later of the date on the cover of the Contract or
the date Purchase Payments are received. The Certificate Issue Date is shown
on the Certificate Schedule.
CERTIFICATE OWNER: A person who has established a Certificate Owner's Account
under this Group Contract.
CERTIFICATE OWNER'S ACCOUNT: A record established for each Certificate to
maintain values under this Group Contract.
CERTIFICATE VALUE: The dollar value as of any Valuation Period of all amounts
in a Certificate Owner's Account.
CERTIFICATE WITHDRAWAL VALUE: The Certificate Value less any applicable
Premium Tax, less any Contingent Deferred Sales Charge, less any applicable
Certificate Maintenance Charge and plus any Market Value Adjustment which may
be positive or negative.
CERTIFICATE YEAR: The first Certificate Year is the annual period which
begins on the Certificate Issue Date. Subsequent Certificate Years begin on
each anniversary of the Certificate Issue Date.
COMPANY: Great American Reserve Insurance Company.
CREDITED INTEREST RATE: The interest rate credited to a Certificate Owner's
Account by the Company for any given Guarantee Period in the MVA Account or
the Fixed Account. The Credited Interest Rates for the available Guarantee
Periods for the Fixed Account and the MVA Account are shown on the Certificate
Schedule.
EFFECTIVE DATE: The Effective Date of a Guarantee Period with a Credited
Interest Rate.
ELIGIBLE FUND: An investment entity shown on the Contract Schedule.
FIXED ACCOUNT: An investment option within the General Account.
FIXED ANNUITY: A series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company.
GENERAL ACCOUNT: The Company's general investment account which contains all
the assets of the Company with the exception of the Variable Account and other
segregated asset accounts.
GROUP CONTRACT OWNER: The person or entity to which this Group Contract is
issued.
GUARANTEE PERIOD: The period for which the Credited Interest Rate is credited
in either the MVA Account or the Fixed Account. Each deposit or transfer to
the MVA Account creates one or more new Guarantee Period(s). The Guarantee
Periods selected by the Certificate Owner are shown on the Certificate
Schedule.
MARKET VALUE ADJUSTMENT: An adjustment to the amount withdrawn or transferred
from an MVA Account prior to the end of the applicable Guarantee Period. The
adjustment reflects the change in the value of the funds withdrawn or
transferred due to the change in the interest rates since the beginning of the
Guarantee Period.
MVA ACCOUNT: A separate account which provides investment options where the
Company guarantees the rate of interest for a specified Guarantee Period and
where withdrawals or transfers may be subject to a Market Value Adjustment.
NET PURCHASE PAYMENT: A Purchase Payment less any applicable Premium Tax.
PORTFOLIO: A segment of an Eligible Fund which constitutes a separate and
distinct class of shares. Portfolios which are available for investment by
the Sub-Accounts of the Variable Account under this Contract are shown on the
Contract Schedule.
PREMIUM TAX: Any premium taxes incurred to any governmental entity and assessed
against Purchase Payments or Certificate Value.
PURCHASE PAYMENT: A payment made by or for a Certificate Owner with respect
to this Contract.
SUB-ACCOUNT: Variable Account assets are divided into Sub-Accounts which are
listed on the Contract Schedule. Assets of each Sub-Account will be invested
in shares of an Eligible Fund or a Portfolio of an Eligible Fund.
VALUATION DATE: Each day on which the New York Stock Exchange ("NYSE") is
open for business.
VALUATION PERIOD: The period of time beginning at the close of business of
the NYSE on each Valuation Date and ending at the close of business for the
next succeeding Valuation Date.
VARIABLE ACCOUNT: A separate account designated on the Contract Schedule which
provides investment options where the benefits are variable and are not
guaranteed as to dollar amount.
WRITTEN REQUEST: A request in writing, in a form satisfactory to the Company,
which is received by the Administrative Office.
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS : The initial Purchase Payment for a Certificate Owner is
due on the Certificate Issue Date. Subject to the maximum and minimum amounts
shown on the Certificate Schedule, the Certificate Owner may make subsequent
Purchase Payments and may increase or decrease or change the frequency of such
payments. The Company reserves the right to reject any Application or
Purchase Payment.
ALLOCATION OF PURCHASE PAYMENTS : Net Purchase Payments are allocated to one
or more of the Fixed Account and/or the MVA Account Guarantee Period options
and/or to one or more Sub-Accounts of the Variable Account in accordance with
the selections made by the Certificate Owner. The allocation of the initial
Net Purchase Payment for a Certificate Owner is made in accordance with the
selection made by the Certificate Owner at the Certificate Issue Date. Unless
otherwise changed by the Certificate Owner, subsequent Net Purchase Payments
are allocated in the same manner as the initial Net Purchase Payment.
Allocation of the Net Purchase Payments is subject to the Allocation
Guidelines shown on the Contract Schedule. The Company has reserved the right
to allocate initial Net Purchase Payments to the Money Market Sub-Account
(except for any amounts allocated to the Fixed Account and/or MVA Account)
until the expiration of the Right to Examine period.
SEPARATE ACCOUNT PROVISIONS
THE SEPARATE ACCOUNTS : The Separate Accounts are designated on the Contract
Schedule and consists of assets set aside by the Company, which are kept
separate from that of the general assets and all other separate account assets
of the Company.
The assets of the Variable Account equal to reserves and
other liabilities will not be charged with liabilities arising out of any
other business the Company may conduct.
The Variable Account assets are divided into Sub-Accounts. The Sub-Accounts
which are available under this Contract are listed on the Contract Schedule.
The assets of the Sub-Accounts are allocated to the Eligible Funds(s) and the
Portfolio(s), if any, within an Eligible Fund, shown on the Contract Schedule.
The Company may, from time to time, add additional Eligible Fund (s) or
Portfolio(s) to those shown on the Contract Schedule. The Certificate Owner
may be permitted to transfer Certificate Values or allocate Net Purchase
Payments to the additional Sub-Account(s) within the Variable Account.
However, the right to make such transfers or allocations will be limited by
the terms and conditions imposed by the Company.
Should the shares of any such Eligible Fund(s) or any Portfolio(s) within an
Eligible Fund become unavailable for investment by the Variable Account, or
the Company's Board of Directors deems further investment in these shares
inappropriate, the Company may limit further purchase of such shares or
substitute shares of another Eligible Fund or Portfolio for shares already
purchased under a Certificate.
VALUATION OF ASSETS : The assets of the Accounts are valued at their fair
market value in accordance with procedures of the Company.
ACCUMULATION UNITS : Accumulation Units shall be used to account for all
amounts allocated to or withdrawn from the Sub-Accounts of the Variable
Account as a result of Net Purchase Payments, withdrawals, transfers, or fees
and charges. The Company will determine the number of Accumulation Units of a
Sub-Account purchased or canceled. This will be done by dividing the amount
allocated to (or the amount withdrawn from) the Sub-Account by the dollar
value of one Accumulation Unit of the Sub-Account as of the end of the
Valuation Period during which the request for the transaction is received at
the Administrative Office.
ACCUMULATION UNIT VALUE : The Accumulation Unit Value for each Sub-Account
was arbitrarily set initially at $10. Subsequent Accumulation Unit Values for
each Sub-Account are determined by multiplying the Accumulation Unit Value for
the immediately preceding Valuation Period by the Net Investment Factor for
the Sub-Account for the current period.
The Net Investment Factor for each Sub-Account is determined by dividing A by
B and subtracting C where:
A is (i) the net asset value per share of the Eligible Fund or Portfolio
of an Eligible Fund held by the Sub-Account at the end of the
current Valuation Period; plus
(ii) any dividend or capital gains per share declared on behalf of
such Eligible Fund or Portfolio that has an ex-dividend date within
the current Valuation Period; plus
(iii) a charge factor, if any, for any taxes or any tax reserve
established by the Company as a result of the operation or
maintenance of the Sub-Account.
B is the net asset value per share of the Eligible Fund or Portfolio held
by the Sub-Account for the immediately preceding Valuation Period.
C is the Valuation Period equivalent of the per month Mortality and
Expense Risk Charge, for the Administrative Charge and for the
Distribution Charge, if any, which are shown on the Contract
Schedule.
The Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
MORTALITY AND EXPENSE RISK CHARGE : Each Valuation Period, the Company
deducts a Mortality and Expense Risk Charge from the Variable Account which is
equal, on an annual basis, to the amount shown on the Contract Schedule. The
Mortality and Expense Risk Charge compensates the Company for assuming the
mortality and expense risks under this Contract and each Certificate issued
hereunder.
ADMINISTRATIVE CHARGE : Each Valuation Period, the Company deducts an
Administrative Charge from the Variable Account which is equal, on an annual
basis, to the amount shown on the Contract Schedule. The Administrative
Charge compensates the Company for the costs associated with the
administration of this Contract and each Certificate issued hereunder and the
Variable Account.
DISTRIBUTION EXPENSE CHARGE : Each Valuation Period, the Company deducts a
Distribution Expense Charge from the Variable Account which is equal, on an
annual basis, to the amount shown on the Contract Schedule. The Distribution
Charge compensates the Company for the costs associated with the distribution
of the Contracts and Certificates.
MVA ACCOUNT PROVISIONS
MVA ACCOUNT : The assets of the MVA Account equal to reserves and other
liabilities will not be charged with liabilities arising out of any other
business the Company may conduct.
Net Purchase Payments may be allocated to one or more of the MVA
Account Guarantee Period options which are available at the time the Purchase
Payment is made. The initial MVA Account Guarantee Period options are shown
on the Contract Schedule. In addition, during the Accumulation Period,
Certificate Values can be transferred from the Variable Account and/or the
Fixed Account to one or more of the MVA Account Guarantee Period options.
INTEREST TO BE CREDITED : The Credited Interest Rate for the Guarantee
Period(s) of the MVA Account is shown on the Certificate Schedule. After the
initial Guarantee Period, the Credited Interest Rate for any subsequent
Guarantee Period of the MVA Account may change. All interest payable under a
Certificate is compounded daily at the stated effective annual interest rate.
In no event will the Credited Interest Rate be less than the Minimum
Guaranteed Interest Rate, prior to the application of the Market Value
Adjustment, specified on the Contract Schedule.
GUARANTEE PERIOD : The Current MVA Account Guarantee Period is shown on the
Contract Schedule. During the thirty (30) days prior to the end of a current
Guarantee Period, the Certificate Owner may renew for the same or any other
Guarantee Period then available at the then Credited Interest Rate or may
elect to transfer all or a portion of the amount to a Fixed Account option, if
available, or to the Variable Account. Any transfer elected during the thirty
(30) days prior to the end of a current Gaurantee Period will be made as of
the date the request is received by the Company and will not be subject to the
Market Value Adjustment.
If the Certificate Owner does not specify a Guarantee Period at the time of
renewal, the Company will select and transfer to the same Guarantee Period as
has just expired, so long as such Guarantee Period does not extend beyond the
latest Annuity Date that can be selected by a Certificate Owner. If such
Guarantee Period does extend beyond the latest Annuity Date, the Company will
choose the one year period. If there is no Guarantee Period for the same
period available, the one year period will be selected. If the one year
period is no longer available, the next longest period available will be
selected.
MULTIPLE GUARANTEE PERIODS : The Certificate Owner may elect one or more
Guarantee Periods subject to the Company's underwriting rules. Multiple
Guarantee Periods are treated separately for purposes of applying the Market
Value Adjustment. The Company reserves the right to credit different Credited
Interest Rates to the Certificate Value attributable:
1. to different Guarantee Periods; and
2. to Guarantee Periods of the same duration with different
Effective Dates.
CHANGE IN GUARANTEE PERIOD : The Certificate Owner may upon Written Request
change to any Guarantee Period then being offered by the Company with respect
to contracts and certificates of this type and class. The Market Value
Adjustment will apply to a change made at any time other than at the end of a
Guarantee Period. The Market Value Adjustment will not apply to a change made
at the end of a Guarantee Period if Written Request is received by the Company
within thirty (30) days prior to the end of the Guarantee Period.
MARKET VALUE ADJUSTMENT : Any amount withdrawn, transferred or annuitized
prior to the end of that Guarantee Period may be subject to a Market Value
Adjustment. The Market Value Adjustment will be calculated by multiplying the
amount withdrawn, transferred or annuitized by the formula shown on the
Contract Schedule.
There will be no Market Value Adjustment on withdrawals from the MVA Account
in the following situations: (1) death benefit paid under a Certificate; (2)
amounts withdrawn to pay fees or charges; (3) amounts withdrawn or transferred
from the MVA Account during the 30 days prior to the end of the Guarantee
Period; (4) a Certificate Owner annuitizes his/her Certificate under an
Annuity Option providing for at least 60 monthly Annuity Payments; and (5) any
withdrawal subject to the MVA Waiver shown on the Contract Schedule.
MVA ACCOUNT VALUES : The MVA Account portion of a Certificate at any time is
equal to:
1. the Net Purchase Payments allocated to the MVA Account on behalf of
a Certificate Owner; plus
2. the Certificate Value transferred to the MVA Account; plus
3. interest credited to the Certificate Value in the MVA Account;
less
4. any prior withdrawals of Certificate Value in the MVA Account and
any Contingent Deferred Sales Charge; less
5. any Certificate Value transferred from the MVA Account; less
6. Certificate Maintenance Charges or Transfer Fees deducted from
the Contract Value allocated to the MVA Account.
Any subsequent Purchase Payments and transfers to the MVA Account will be
allocated to a new Guarantee Period with a new Effective Date.
FIXED ACCOUNT PROVISIONS
FIXED ACCOUNT VALUES : The Fixed Account portion of a Certificate at any time
is equal to:
1. the Net Purchase Payments allocated to the Fixed Account on behalf
of a Certificate Owner; plus
2. the Certificate Value transferred to the Fixed Account; plus
3. interest credited to the Certificate Value in the Fixed Account;
less
4. any prior withdrawals of Certificate Value in the Fixed Account
and any Contingent Deferred Sales Charge; less
5. any Certificate Value transferred from the Fixed Account; less
6. Certificate Maintenance Charges or Transfer Fees deducted from the
Contract Value allocated to the Fixed Account.
INTEREST TO BE CREDITED : The Company guarantees that the interest to be
credited to the Fixed Account will not be less than the Minimum Guaranteed
Interest Rate shown on the Contract Schedule. The Company may credit
additional interest at its sole discretion for any Fixed Account option. The
Fixed Account Option and the Initial Current Interest Rate are shown on the
Contract Schedule.
CERTIFICATE VALUE
The Certificate Value for any Valuation Period is the sum of the Certificate
Value in each of the Sub-Accounts of the Variable Account, the Certificate
Value in the MVA Account and the Certificate Value in the Fixed Account.
The Certificate Value in a Sub-Account of the Variable Account is determined
by multiplying the number of Accumulation Units allocated to the Certificate
Owner's Account for the Sub-Account by the Accumulation Unit Value.
Withdrawals will result in the cancellation of Accumulation Units in a
Sub-Account or a reduction in the Certificate Value in the Fixed Account or
the MVA Account, as applicable.
CERTIFICATE MAINTENANCE CHARGE
DEDUCTION FOR CERTIFICATE MAINTENANCE CHARGE : During the Accumulation Period,
on each Certificate Anniversary the Company deducts a Certificate Maintenance
Charge from the Certificate Value by reducing the Certificate Value in the
Fixed Account and/or the MVA Account and by canceling Accumulation Units from
each applicable Sub-Account to reimburse it for expenses relating to
maintenance of a Certificate issued under this Contract. The Certificate
Maintenance Charge will be deducted first from the Fixed Account and if there
is insufficient value in the Fixed Account, then the Certificate Maintenance
Charge will be deducted from the MVA Account or the Sub-Account of the
Variable Account with the largest balance. The Certificate Maintenance Charge
is shown on the Contract Schedule.
TRANSFERS
TRANSFERS DURING THE ACCUMULATION PERIOD : Subject to any limitation imposed
by the Company on the number of transfers during the Accumulation Period shown
on the Contract Schedule, a Certificate Owner may, transfer all or part of his
or her Certificate Value in the Fixed Account, the MVA Account or a
Sub-Account by Authorized Request without the imposition of any Transfer Fee
if there have been no more than the number of free transfers shown on the
Contract Schedule for the Certificate Year. All transfers are subject to the
following:
1. If more than the number of free transfers, shown on the Contract
Schedule, have been made in a Certificate Year, the Company will deduct a
Transfer Fee, shown on the Contract Schedule, for each subsequent transfer
permitted. The Transfer Fee is deducted from the Account which is the source
of the transfer. However, if the Certificate Owner's entire interest in an
Account is being transferred, the Transfer Fee will be deducted from the
amount which is transferred. If there are multiple source Accounts, the
Transfer Fee will be allocated first to the Fixed Account and then to the
Sub-Account or the MVA Account with the largest balance involved in a transfer
transaction.
2. The minimum amount which can be transferred from a Sub-Account is
shown on the Contract Schedule. The minimum amount which must remain in a
Sub-Account, the Fixed and the MVA Account is shown on the Contract Schedule.
The maximum amount which can be transferred from the Fixed Account or the MVA
Account to the Variable Account is shown on the Contract Schedule.
3. The Company reserves the right, at any time and without prior notice
to any party, to terminate, suspend or modify the transfer privilege described
above.
If a Certificate Owner elects to use this transfer privilege, the Company will
not be liable for transfers made in accordance with the instructions received
from the Certificate Owner or other authorized person. All amounts and
Accumulation Units will be determined as of the end of the Valuation Period
during which the request for transfer is received at the Administrative
Office.
TRANSFERS DURING THE ANNUITY PERIOD : Subject to any limitations imposed by
the Company on the number of transfers during the Annuity Period shown on the
Contract Schedule, the Certificate Owner may transfer Annuity Units in
accordance with the following:
1. Transfers may be made upon written notice to the Company at least
thirty (30) days before the due date of the first Annuity Payment for which
the change will apply. Transfers will be made by converting the number of
Annuity Units being transferred to the number of Annuity Units of the
Sub-Account to which the transfer is made, so that the next Annuity Payment,
if it were made at that time would be the same amount that it would have been
without the transfer. Thereafter, Annuity Payments will reflect changes in
the value of the new Annuity Units.
2. If more than the number of free transfers, shown on the Contract
Schedule, have been made in a Certificate Year, the Company will deduct a
Transfer Fee, shown on the Contract Schedule, for each subsequent transfer
permitted. The Transfer Fee is deducted from the Account which is the source
of the transfer. However, if the Certificate Owner's entire interest in an
Account is being transferred, the Transfer Fee will be deducted from the
amount which is transferred. If there are multiple source Accounts, the
Transfer Fee will be allocated first to the Fixed Account and then the
Sub-Account or the MVA Account with the largest balance involved in a transfer
transaction.
3. The minimum amount which can be transferred from a Sub-Account is
shown on the Contract Schedule. The minimum amount which must remain in a
Sub-Account after a transfer is shown on the Contract Schedule.
4. No transfers can be made between the General Account and the Variable
Account.
5. The Company reserves the right, at any time and without prior notice
to any party, to terminate, suspend or modify the transfer privilege described
above.
If a Certificate Owner elects to use this transfer privilege, the Company will
not be liable for transfers made in accordance with instructions received from
the Certificate Owner or other authorized person. All amounts and Annuity
Units will be determined as of the end of the Valuation Period during which
the request for transfer is received at the Administrative Office.
WITHDRAWAL PROVISIONS
WITHDRAWALS : During the Accumulation Period, the Certificate Owner may, upon
Written Request, make a total or partial withdrawal of the Certificate
Withdrawal Value.
The Certificate Owner must specify by Written Request which Sub-Account or
Guarantee Period of the MVA Account or Fixed Account, as applicable, is the
source of the partial withdrawal.
A withdrawal from the MVA Account may be subject to a Market Value Adjustment.
The Company will pay the amount of any withdrawal from the Variable Account
within seven (7) days of receipt of a request in good order unless the
Suspension or Deferral of Payments Provision is in effect.
Each partial withdrawal must be for an amount which is not less than the
amount shown on the Contract Schedule. The minimum Certificate Value which
must remain in a Sub-Account after a partial withdrawal is shown on the
Contract Schedule. The maximum amounts which can be withdrawn from the Fixed
Account and/or the MVA Account are shown on the Contract Schedule.
CONTINGENT DEFERRED SALES CHARGE : Upon a withdrawal of Certificate Value, a
Contingent Deferred Sales Charge as set forth on the Contract Schedule may be
assessed.
WITHDRAWAL CHARGE : Upon a withdrawal of Certificate Value, a Withdrawal
Charge as set forth on the Contract Schedule may be assessed.
PROCEEDS PAYABLE ON DEATH
DEATH OF CERTIFICATE OWNER DURING THE ACCUMULATION PERIOD : Upon the death of
the Certificate Owner, or any Joint Certificate Owner, during the Accumulation
Period, the death benefit will be paid to the Beneficiary(ies) designated by
the Certificate Owner. Upon the death of any Joint Certificate Owner, the
surviving Joint Certificate Owner, if any, will be treated as the Primary
Beneficiary. Any other Beneficiary designation on record at the time of death
will be treated as a contingent Beneficiary.
A Beneficiary may request that the death benefit be paid under one of the
Death Benefit Options below. If the Beneficiary is the spouse of the
Certificate Owner, he or she may elect to continue the Certificate at the then
current Certificate Value in his or her own name and exercise all the
Certificate Owner's rights under the Certificate.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD : Prior to the Certificate
Owner attaining Age 80, the death benefit will be the greater of: (i) the
Purchase Payments, less any withdrawals; or (ii) the Certificate Value
determined as of the end of the Valuation Period during which the Company
receives both due proof of death and an election for the payment method. If
the death occurs after Age 80, the death benefit will be the Certificate
Value determined as of the end of the Valuation Period during which the
Company receives both due proof of death and an election for the payment
method.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD : A non-spousal
Beneficiary must elect the death benefit to be paid under one of the following
options in the event of the death of the Certificate Owner or any Joint
Certificate Owner during the Accumulation Period:
OPTION 1 - lump sum payment of the death benefit; or
OPTION 2 - the payment of the entire death benefit within 5 years of
the date of the death of the Certificate Owner or any Joint Certificate Owner;
or
OPTION 3 - payment of the death benefit under an Annuity Option over
the lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one year of
the date of death of the Certificate Owner or any Joint Certificate Owner.
Any portion of the death benefit not applied under Option 3 within one year of
the date of the Certificate Owners' death, must be distributed within five
years of the date of death. spousal Beneficiary may elect to continue the
Certificate in his or her own name at the then current Certificate Value,
elect a lump sum payment of the death benefit or apply the death benefit to an
Annuity Option.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect.
Payment to the Beneficiary, other than in a lump sum, may only be elected
during the sixty-day period beginning with the date of receipt of proof of
death.
DEATH OF CERTIFICATE OWNER DURING THE ANNUITY PERIOD : If the Certificate
Owner, or any Joint Certificate Owner, who is not the Annuitant, dies during
the Annuity Period, any remaining payments under the Annuity Option elected
will continue at least as rapidly as under the method of distribution in
effect at such Certificate Owner's or Joint Certificate Owner's death. Upon
the death of any Certificate Owner during the Annuity Period, the Beneficiary
becomes the Certificate Owner. Upon the death of any Joint Certificate Owner
during the Annuity Period, the surviving Joint Certificate Owner, if any, will
be treated as the Primary Beneficiary. Any other Beneficiary designation on
record at the time of death will be treated as a Contingent Beneficiary.
DEATH OF ANNUITANT : Upon the death of an Annuitant, who is not the
Certificate Owner, during the Accumulation Period, the Certificate Owner may
designate a new Annuitant, subject to the Company's underwriting rules then in
effect. If no designation is made within 30 days of the death of the
Annuitant, the Certificate Owner will become the Annuitant. If the
Certificate Owner is a non-natural person, the death of the Annuitant will be
treated as the death of the Certificate Owner and a new Annuitant may not be
designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit,
if any, will be as specified in the Annuity Option elected. Death benefits
will be paid at least as rapidly as under the method of distribution in effect
at the Annuitant's death.
PAYMENT OF DEATH BENEFIT : The Company will require due proof of death before
any death benefit is paid. Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or
regulations governing death benefit payments.
BENEFICIARY : The Beneficiary designation in effect on the Certificate Issue
Date will remain in effect until changed. The Beneficiary is entitled to
receive the benefits to be paid at the death of the Certificate Owner.
Unless the Certificate Owner provides otherwise, the death benefit will be
paid in equal shares to the survivor(s) as follows:
1. to the Primary Beneficiary(ies) who survive the Certificate Owner's
and/or the Annuitant's death, as applicable; or if there are none
2. to the Contingent Beneficiary(ies) who survive the Certificate
Owner's and/or the Annuitant's death, as applicable; or if there are
none
3. to the estate of the Certificate Owner.
CHANGE OF BENEFICIARY : Subject to the rights of any irrevocable
Beneficiary(ies), the Certificate Owner may change the Primary
Beneficiary(ies) or Contingent Beneficiary(ies). A change may be made by
Written Request. The change will take effect as of the date the Written
Request is signed. The Company will not be liable for any payment made or
action taken before it records the change.
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
The Company reserves the right to suspend or postpone payments from the
Variable Account for a withdrawal or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held
in the Variable Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the
Variable Account's net assets; or
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Certificate Owners;
provided that applicable rules and regulations of the Securities and
Exchange Commission will govern as to whether the conditions
described in (2) and (3) exist.
The Company further reserves the right to postpone payments from the Fixed
Account and the MVA Account for a period of up to six months.
CERTIFICATE OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
CERTIFICATE OWNER : The Certificate Owner has all interest and right to
amounts held in his or her Certificate Owner's Account. The Certificate Owner
is the person designated as such on the Certificate Issue Date, unless
changed.
The Certificate Owner may change owners of the Certificate at any time by
Written Request. A change of Certificate Owner will automatically revoke any
prior designation of Certificate Owner. The change will become effective as of
the date the Written Request is signed. The Company will not be liable for
any payment made or action taken before it records the change.
JOINT CERTIFICATE OWNER : A Certificate may be owned by Joint Certificate
Owners. If Joint Certificate Owners are named, any Joint Certificate Owner
must be the spouse of the other Certificate Owner. Upon the death of either
Certificate Owner, the surviving spouse will be the Primary Beneficiary. Any
other Beneficiary designation will be treated as a Contingent Beneficiary
unless otherwise indicated in a Written Request.
GROUP CONTRACT OWNER : The Group Contract Owner has title to the Contract. The
Contract and any amounts accumulated thereunder are not subject to the claims
of the Group Contract Owner nor any of its creditors. The Group Contract Owner
may transfer ownership of this Group Contract. Any transfer of ownership
terminates the interest of any existing Group Contract Owner. It does not
change the rights of any Certificate Owner.
ANNUITANT : The Annuitant is the person on whose life Annuity Payments are
based. The Annuitant is the person designated by the Certificate Owner at the
Certificate Issue Date, unless changed prior to the Annuity Date. The
Certificate Owner may not change the Annuitant except in the event that the
Annuitant dies prior to the Annuity Date. If no new Annuitant is designated
by the Certificate Owner within 30 days of the death of the Annuitant, the
Certificate Owner becomes the Annuitant. The Annuitant may not be changed in
a Certificate which is owned by a non-natural person. Any change of Annuitant
is subject to the Company's underwriting rules then in effect.
ASSIGNMENT OF A CERTIFICATE : A Written Request specifying the terms of an
assignment of a Certificate must be provided to the Administrative Office.
The Company will not be liable for any payment made or action taken before it
records the assignment.
The Company will not be responsible for the validity or tax consequences of
any assignment. Any assignment made after the death benefit has become payable
will be valid only with Company consent.
If the Certificate is assigned, the Certificate Owner's rights may only be
exercised with the consent of the assignee of record.
ANNUITY PROVISIONS
GENERAL : On the Annuity Date, the Adjusted Certificate Value will be applied
under the Annuity Option selected by the Certificate Owner. The Certificate
Owner may elect to have the Certificate Value applied to provide a Fixed
Annuity, a Variable Annuity or a combination Fixed and Variable Annuity. If a
combination is elected, the Certificate Owner must specify what part of the
Certificate Value is to be applied to the Fixed and Variable Options.
ANNUITY DATE : The Annuity Date is selected by the Certificate Owner at the
Certificate Issue Date. The Annuity Date must be the first day of a calendar
month and must be at least 90 days after the Certificate Issue Date. The
Annuity Date may not be later than the earlier of when the Annuitant reaches
attained age 90 or the maximum date permitted under state law.
Prior to the Annuity Date, the Certificate Owner subject to the above, may
change the Annuity Date by Written Request. Any change must be requested at
least thirty (30) days prior to the new Annuity Date.
SELECTION OF AN ANNUITY OPTION : An Annuity Option may be selected by Written
Request of the Certificate Owner. If no Annuity Option is selected, Option B
with 120 monthly payments guaranteed will automatically be applied. Unless
specified otherwise, that portion of the Adjusted Certificate Value allocated
to the Variable Account shall be used to provide a Variable Annuity and that
portion of the Adjusted Certificate Value allocated to the Fixed Account and
the MVA Account will be used to provide a Fixed Annuity. Prior to the Annuity
Date, the Certificate Owner can change the Annuity Option selected by Written
Request. Any change must be requested at least thirty (30) days prior to the
Annuity Date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS : Annuity Payments are paid in
monthly installments. The Adjusted Certificate Value is applied to the
Annuity Table for the Annuity Option selected. If the Adjusted Certificate
Value to be applied under an Annuity Option is less than $5,000, the Company
reserves the right to make a lump sum payment in lieu of Annuity Payments. If
the Annuity Payment would be or become less than $50, the Company reserves the
right to reduce the frequency of payments to an interval which will result in
each payment being at least $50.
ANNUITY OPTIONS : The following Annuity Options or any other annuity option
acceptable to the Company may be selected:
OPTION 1. LIFETIME ONLY ANNUITY: The Company will make monthly payments
during the life of the Annuitant. If this option is elected, it is understood
and agreed that payments shall cease immediately upon the death of the
Annuitant and the annuity will terminate without further value.
OPTION 2. LIFETIME ANNUITY WITH GUARANTEED PERIODS : The Company will
make monthly payments for the guaranteed period selected and thereafter for
the life of the Annuitant. If this option is elected, it is understood and
agreed that upon the death of the Annuitant, any amounts remaining under the
guaranteed period selected will be distributed to the Beneficiary at least as
rapidly as under the method of distribution being used as of the date of the
Annuitant's death. The guaranteed period may be five (5) years, ten (10)
years or twenty (20) years.
OPTION 3. INSTALLMENT REFUND LIFE ANNUITY : The Company will make
monthly payments for the installment refund period (the time required for the
sum of the payments to equal the amount applied), and thereafter for the life
of the Annuitant. If this option is elected, it is understood and agreed that
upon the death of the Annuitant, any amounts remaining under the installment
refund period will be distributed to the Beneficiary at least as rapidly as
under the method of distribution being used at the time of the Annuitant's
death.
OPTION 4. PAYMENT FOR A FIXED PERIOD: The Company will make monthly
payments for a fixed period of 3 to 20 years.
OPTION 5. JOINT AND SURVIVOR ANNUITY : The Company will make monthly
payments during the joint life time of the Annuitant and a Joint Annuitant.
Payments will continue during the lifetime of the surviving Annuitant and will
be computed on the basis of 100%, 50% or 66 2/3% of the Annuity Payment (or
limits) in effect during the joint life time.
ANNUITY : If the Certificate Owner selects a Fixed Annuity, the Adjusted
Certificate Value is allocated to the General Account and the Annuity is paid
as a Fixed Annuity. If the Certificate Owner selects a Variable Annuity, the
Adjusted Certificate Value will be allocated to the Sub-Accounts of the
Variable Account in accordance with the selection made by the Certificate
Owner, and the Annuity will be paid as a Variable Annuity. If no selection is
made, the Adjusted Certificate Value will be applied in the same proportions
to the same Sub-Accounts as the allocations are at the time of election.
Unless the Certificate Owner specifies otherwise, the payee of the Annuity
Payments shall be the Certificate Owner. The Adjusted Certificate Value will
be applied to the applicable Annuity Table contained in the Certificate based
upon the Annuity Option selected by the Certificate Owner. The amount of the
first payment for each $1,000 of Adjusted Certificate Value is shown in the
Annuity Tables.
FIXED ANNUITY : The Certificate Owner may elect to have the Adjusted
Certificate Value applied to provide a Fixed Annuity.
The dollar amount of each Fixed Annuity Payment shall be determined in
accordance with Annuity Tables contained in this Contract which are based on
the minimum guaranteed interest rate of 3% per year.
VARIABLE ANNUITY : The Certificate Owner may elect to have the Adjusted
Certificate Value applied to provide a Variable Annuity. Variable Annuity
Payments reflect the investment performance of the Variable Account in
accordance with the allocation of the Adjusted Certificate Value to the
Sub-Accounts during the Annuity Period. Variable Annuity Payments are not
guaranteed as to dollar amount.
The dollar amount of the first Variable Annuity Payment is determined in
accordance with the description above. The dollar amount of the Variable
Annuity Payments for each applicable Sub-Account after the first Variable
Annuity Payment is determined as follows:
1. The dollar amount of the first Variable Annuity Payment is divided by
the value of an Annuity Unit for each applicable Sub-Account as of the Annuity
Date. This sets the number of Annuity Units for each monthly payment for the
applicable Sub-Account.
2. The fixed number of Annuity Units per payment in each Sub-Account is
multiplied by the Annuity Unit Value for that Sub-Account for the last
Valuation Period of the month preceding the month for which the payment is
due. This result is the dollar amount of the payment for each applicable
Sub-Account.
The total dollar amount of each Variable Annuity Payment is the sum of all
Sub-Account Variable Annuity Payments reduced by the applicable portion of the
Certificate Maintenance Charge.
ANNUITY UNIT : The value of any Annuity Unit for each Sub-Account of the
Variable Account was arbitrarily set initially at $10.
The Sub-Account Annuity Unit Value at the end of any subsequent Valuation
Period is determined as follows:
1. The Net Investment Factor for the current Valuation Period is
multiplied by the value of the Annuity Unit for the Sub-Account for the
immediately preceding Valuation Period.
2. The result in (1) is then divided by the Assumed Investment Rate
Factor which equals 1.00 plus the Assumed Investment Rate for the number of
days since the preceding Valuation Date. The Certificate Owner can choose
either a 5% or a 3% Assumed Investment Rate.
MORTALITY TABLES : The mortality table used in establishing the Annuity Table
is 1983 Individual Annuity Mortality, (IAM) Table, Unisex.
The dollar amount of an Annuity Payment for any Age or combination of Ages not
shown in the Tables or for any other form of Annuity Option agreed to by the
Company will be provided by the Company upon request.
GENERAL PROVISIONS
THE CONTRACT : The entire Contract consists of this Contract, the
Application, if any, and any riders or endorsements attached to this Contract.
This Contract may be changed or altered only by the President or Vice
President and the Secretary of the Company. A change or alteration must be
made in writing.
MISSTATEMENT OF AGE : If the Age of any Annuitant has been misstated, any
Annuity benefits payable will be the Annuity benefits provided by the correct
Age. After Annuity Payments have begun, any underpayments will be made up in
one sum with the next Annuity Payment. Any overpayments will be deducted from
future Annuity Payments until the total is repaid.
INCONTESTABILITY : A Certificate will not be contestable from the date of
issue.
MODIFICATION : This Contract and any Certificate issued hereunder may be
modified in order to maintain compliance with applicable state and federal
law.
NON-PARTICIPATING : This Contract and any Certificate issued hereunder will
not share in any distribution of dividends.
EVIDENCE OF SURVIVAL : The Company may require satisfactory evidence of the
continued survival of any person(s) on whose life Annuity Payments are based.
PROOF OF AGE : The Company may require evidence of Age of any Annuitant and
any Certificate Owner.
PROTECTION OF PROCEEDS : To the extent permitted by law, death benefits and
Annuity Payments shall be free from legal process and the claim of any
creditor other than the person entitled to them under any Certificate. No
payment and no amount under any Certificate can be taken or assigned in
advance of its payment date unless the Company receives the Certificate
Owner's written consent.
REPORTS : At least once each calendar year, the Company will furnish each
Certificate Owner with a report showing the Certificate Value and any other
information as may be required by law. The Company will also furnish an
annual report of the Variable Account.
TAXES : Any taxes paid to any governmental entity relating to any Certificate
will be deducted from the Purchase Payment or Certificate Value when incurred.
The Company will, in its sole discretion, determine when taxes have resulted
from: the investment experience of the Variable Account; receipt by the
Company of the Purchase Payments; or commencement of Annuity Payments. The
Company may, in its sole discretion, pay taxes when due and deduct that amount
from the Certificate Value at a later date. Payment at an earlier date does
not waive any right the Company may have to deduct amounts at a later date.
The Company reserves the right to establish a provision for federal income
taxes if it determines, in its sole discretion, that it will incur a tax as a
result of the operation of the Variable Account. The Company will deduct for
any income taxes incurred by it as a result of the operation of the Variable
Account whether or not there was a provision for taxes and whether or not it
was sufficient. The Company will deduct any withholding taxes required by
applicable law.
REGULATORY REQUIREMENTS : All values payable under any Certificate will not
be less than the minimum benefits required by the laws and regulations of the
states in which the Certificate is delivered.
EXHIBIT 99.B4(iii)
ALLOCATED FIXED AND VARIABLE GROUP ANNUITY CERTFICIATE
GREAT AMERICAN RESERVE INSURANCE COMPANY
11815 N. PENNSYLVANIA STREET
CARMEL, INDIANA 46032-4572
(317) 817-3700
A STOCK COMPANY
GREAT AMERICAN RESERVE INSURANCE COMPANY (the "Company") agrees with the Group
Contract Owner to provide benefits to the Certificate Owner, subject to the
provisions set forth in this Certificate and in consideration of Purchase
Payments received from the Certificate Owner.
RIGHT TO EXAMINE CERTIFICATE: Within 10 days of the date of receipt of this
Certificate by the Certificate Owner, it may be returned by delivering or
mailing it to the Company at its Administrative Office. When the Certificate
is received by the Company, it will be voided as if it had never been in
force. The Company will refund the Certificate Value computed at the end of
the Valuation Period during which the Certificate is received by the Company
at its Administrative Office.
THIS IS A LEGAL CONTRACT BETWEEN THE CERTIFICATE OWNER AND THE COMPANY
READ YOUR CONTRACT CAREFULLY
SECRETARY PRESIDENT
ALLOCATED FIXED AND VARIABLE
GROUP ANNUITY CERTIFICATE
Non-participating
WITHDRAWAL VALUES AND THE DEATH BENEFITS PROVIDED BY THIS CERTIFICATE, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT, ARE VARIABLE AND
ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. NON FORFEITURE VALUES MAY INCREASE
OR DECREASE BASED ON THE MARKET VALUE ADJUSTMENT SPECIFIED IN THIS
CERTIFICATE.
TABLE OF CONTENTS
DEFINITIONS
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS
ALLOCATION OF PURCHASE PAYMENTS
SEPARATE ACCOUNT PROVISIONS
THE SEPARATE ACCOUNTS
VALUATION OF ASSETS
ACCUMULATION UNITS
ACCUMULATION UNIT VALUE
MORTALITY AND EXPENSE RISK CHARGE
ADMINISTRATIVE CHARGE
DISTRIBUTION EXPENSE CHARGE
MVA ACCOUNT PROVISIONS
MVA ACCOUNT
INTEREST TO BE CREDITED
GUARANTEE PERIOD
MULTIPLE GUARANTEE PERIODS
CHANGE IN GUARANTEE PERIOD
MARKET VALUE ADJUSTMENT
MVA ACCOUNT VALUES
FIXED ACCOUNT PROVISIONS
FIXED ACCOUNT VALUES
INTEREST TO BE CREDITED
CERTIFICATE VALUE
CERTIFICATE MAINTENANCE CHARGE
DEDUCTION FOR CERTIFICATE MAINTENANCE CHARGE
TRANSFERS
TRANSFERS DURING THE ACCUMULATION PERIOD
TRANSFERS DURING THE ANNUITY PERIOD
WITHDRAWAL PROVISIONS
WITHDRAWALS
CONTINGENT DEFERRED SALES CHARGE
WITHDRAWAL CHARGE
PROCEEDS PAYABLE ON DEATH
DEATH OF CERTIFICATE OWNER DURING THE ACCUMULATION PERIOD
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD
DEATH OF CERTIFICATE OWNER DURING THE ANNUITY PERIOD
DEATH OF ANNUITANT
PAYMENT OF DEATH BENEFIT
BENEFICIARY
CHANGE OF BENEFICIARY
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
CERTIFICATE OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
CERTIFICATE OWNER
JOINT CERTIFICATE OWNER
GROUP CONTRACT OWNER
ANNUITANT
ASSIGNMENT OF A CERTIFICATE
ANNUITY PROVISIONS
GENERAL
ANNUITY DATE
SELECTION OF AN ANNUITY OPTION
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
ANNUITY OPTIONS
OPTION 1. LIFETIME ONLY ANNUITY:
OPTION 2. LIFETIME ANNUITY WITH GUARANTEED PERIODS
OPTION 3. INSTALLMENT REFUND LIFE ANNUITY
OPTION 4. PAYMENT FOR A FIXED PERIOD:
OPTION 5. JOINT AND SURVIVOR ANNUITY
ANNUITY
FIXED ANNUITY
VARIABLE ANNUITY
ANNUITY UNIT
MORTALITY TABLES
GENERAL PROVISIONS
THE CERTIFICATE
MISSTATEMENT OF AGE
INCONTESTABILITY
MODIFICATION
NON-PARTICIPATING
EVIDENCE OF SURVIVAL
PROOF OF AGE
PROTECTION OF PROCEEDS
REPORTS
TAXES
REGULATORY REQUIREMENTS
CERTIFICATE SCHEDULE
CERTIFICATE OWNER: [John Doe]
CERTIFICATE NUMBER: [12345] CERTIFICATE ISSUE DATE:[January 3, 1995]
ANNUITY DATE: [January 3, 2000]
PURCHASE PAYMENTS:
INITIAL PURCHASE PAYMENT: [$50,000 Non-Qual; $10,000
IRA - 403(b) rollover]
MINIMUM SUBSEQUENT PURCHASE PAYMENT: [$1,000; or if the automatic premium
check option is elected: $250 monthly]
MAXIMUM TOTAL PURCHASE PAYMENT: [$1,000,000, without prior Company
approval]
ALLOCATION GUIDELINES:
[1. Currently, the Certificate Owner can select all investment options,
including Sub-Accounts of the Variable Account and the MVA Account. The
Company reserves the right to change this in the future.
2. If the Purchase Payments and forms required to issue a Certificate are
in good order, the initial Net Purchase Payment will be credited to the
Certificate Owner's Account within two (2) business days after receipt at the
Administrative Office. Additional Purchase Payments will be credited to the
Certificate Owner's Account as of the Valuation Period when they are received.
3. Allocation percentages must be in whole numbers. Each allocation must
be at least 1%.
4. Currently, the minimum amount which must be allocated to a Guarantee
Period in the MVA Account is $2,000. The Company reserves the right to
increase this minimum in the future.]
BENEFICIARY:
[As designated by the Certificate Owner at the Certificate Issue Date,
unless subsequently changed.]
CERTIFICATE MAINTENANCE CHARGE:
[The Certificate Maintenance Charge is currently $30.00 each Certificate
Year. The Company reserves the right to increase the Certificate Maintenance
Charge but it will not exceed $60 per Certificate Year. However, during the
Accumulation Period if the Certificate Value on the Certificate Anniversary is
at least $25,000, then no Certificate Maintenance Charge is deducted. If a
total withdrawal is made on other than a Certificate Anniversary and the
Certificate Value for the Valuation Period during which the total withdrawal
is made is less than $25,000, the full Certificate Maintenance Charge will be
deducted at the time of the total withdrawal. If the Annuity Date is not the
Certificate Anniversary and the Certificate Value on the Annuity Date is less
than $25,000, then the full Certificate Maintenance Charge will be deducted on
the Annuity Date. During the Annuity Period, no Certificate Maintenance
Charge will be deducted.]
MORTALITY AND EXPENSE RISK CHARGE:
[Equal, on an annual basis, to 1.15% of the average daily net asset value
of the Variable Account. The Company may increase this charge; however, the
maximum Mortality and Expense Risk Charge will not exceed 1.25% of the average
daily net asset value of the Variable Account. In the event of an increase,
the Company will give Certificate Owners 90 days prior notice of the
increase.]
ADMINISTRATIVE CHARGE:
[Equal, on an annual basis, to .15% of the average daily net asset value
of the Variable Account. The Company may increase this charge; however, the
maximum Administrative Charge will not exceed .25% of the average daily net
asset value of the Variable Account. In the event of an increase, the Company
will give Certificate Owners 90 days prior notice of the increase.]
DISTRIBUTION EXPENSE CHARGE: [NONE]
TRANSFERS:
NUMBER OF TRANSFERS PERMITTED: [There are currently no limits on the
number of transfers that can be made during the Accumulation Period.
Currently, Certificate Owners are permitted four transfers per Certificate
Year during the Annuity Period.]
TRANSFER FEE: [For each transfer, the Transfer Fee is the lesser of
$25.00 or 2% of the amount transferred. Currently, the Company does not
assess a Transfer Fee on one transfer in a 30-day period during the
Accumulation Period or the four transfers permitted during the Annuity Period.
All reallocations made on a given date count as one transfer. Transfers made
at the end of the Right to Examine Certificate period by the Company and any
transfers made pursuant to a pre-approved Dollar Cost Averaging Program or
pursuant to a pre-approved Rebalancing Program will not be counted in
determining the application of the Transfer Fee.]
MINIMUM AMOUNT TO BE TRANSFERRED: [$500 (from any Sub-Account or any
Guarantee Period of the MVA Account), or the Certificate Owner's entire
interest in the Sub-Account or the Guarantee Period, if less. This requirement
is waived if the transfer is pursuant to a pre-approved Dollar Cost Averaging
Program or Rebalancing Program.]
MINIMUM AMOUNT WHICH MUST REMAIN IN EACH ACCOUNT AFTER A TRANSFER: [$500
per Sub-Account or a Guarantee Period in the MVA Account; or $0 if the entire
amount in any Sub-Account of the Variable Account or a Guarantee Period in the
MVA Account is transferred.]
MAXIMUM AMOUNT WHICH CAN BE TRANSFERRED FROM THE FIXED ACCOUNT OR MVA
ACCOUNT TO THE VARIABLE ACCOUNT: [NONE]
WITHDRAWALS:
CONTINGENT DEFERRED SALES CHARGE: [NONE]
WITHDRAWAL CHARGE: [NONE]
MINIMUM PARTIAL WITHDRAWAL: [$500 from each Sub-Account of the Variable
Account and each Guarantee Period of the MVA Account. This requirement is
waived if the partial withdrawal is pursuant to the Systematic Withdrawal
Program.]
MINIMUM CERTIFICATE VALUE WHICH MUST REMAIN IN CERTIFICATE AFTER A
PARTIAL WITHDRAWAL: [$500. The Company reserves the right to increase this
amount.]
MINIMUM CERTIFICATE VALUE WHICH MUST REMAIN IN ANY SUB-ACCOUNT OF THE
VARIABLE ACCOUNT AFTER A PARTIAL WITHDRAWAL: [$500]
MAXIMUM AMOUNT WHICH CAN BE WITHDRAWN FROM THE FIXED AND MVA ACCOUNTS:
[The Fixed Account is not currently available. There is currently no
limitation on the maximum amount which can be withdrawn from the MVA Account.]
SEPARATE ACCOUNTS: Variable Account: [Great American Reserve Variable Annuity
Account G for the Variable Annuity
portion of the Contract.]
and
MVA Account: [Great American Reserve Market Value
Adjustment Account for the portion of the
Contract that may be subject to
a Market Value Adjustment.]
ELIGIBLE FUNDS, SERIES & SUB-ACCOUNTS:
[The Conseco Series Trust]
[Conseco - Asset Allocation Portfolio] [Conseco - Asset Allocation
Sub-Account]
[Conseco - Common Stock Portfolio] [Conseco - Common Stock Sub-Account]
[Conseco - Corporate Bond Portfolio] [Conseco - Corporate Bond
Sub-Account]
[Conseco - Government Securities [Conseco - Government Securities
Portfolio] Sub-Account]
[Conseco - Money Market Portfolio] [Conseco - Money Market Sub-Account]
[Evergreen Variable Investment Trust]
[Evergreen VA Fund] [Evergreen VA Sub-Account]
[Evergreen VA Foundation Fund] [Evergreen VA Foundation
Sub-Account]
[Evergreen VA Growth and Income Fund] [Evergreen VA Growth and Income Sub-
Account]
[Insurance Management Series]
[International Stock Fund] [International Stock Sub-Account]
[The Alger American Fund]
[Alger American Growth Portfolio] [Alger American Growth Sub-Account]
[Alger American Leveraged AllCap [Alger American Leveraged Allcap
Portfolio] Sub-Account]
[Alger American MidCap Growth [Alger American MidCap Growth Sub-
Portfolio] Account]
[Alger American Small Capitalization [Alger American Small Capitalization
Portfolio] Sub-Account]
[INVESCO Variable Investment Funds, Inc.]
[INVESCO VIF - High Yield Portfolio] [INVESCO VIF - High Yield
Sub-Account]
[INVESCO VIF - Industrial Income [INVESCO VIF - Industrial Income
Portfolio] Sub-Account]
[Lord Abbett Series Fund, Inc.]
[Growth & Income Portfolio] [Lord Abbett - Growth & Income Sub-
Account]
[The OFFITBANK Variable Insurance Fund, Inc.]
[OFFITBANK VIF - Investment Grade [OFFITBANK VIF - Investment Grade
Global Debt Fund] Global Debt Sub-Account]
[OFFITBANK VIF - Total Return Fund] [OFFITBANK VIF - Total Return Sub-
Account]
[Van Eck Worldwide Insurance Trust]
[Worldwide Emerging Markets Fund] [Van Eck - Worldwide Emerging
Markets Sub-Account]
[Gold and Natural Resources Fund] [Van Eck - Gold and Natural
Resources Sub-Account]
[Worldwide Hard Assets Fund] [Van Eck - Worldwide Hard Assets
Sub-Account]
[Tomorrow Funds Retirement Trust]
[Core Large-Cap Stock Fund] [Tomorrow Funds - Core Large-Cap
Stock Sub-Account]
[Core Small Cap-Stock Fund] [Tomorrow Funds - Core Smal- Cap
Stock Sub-Account]
MVA ACCOUNT:
MINIMUM GUARANTEED INTEREST RATE: [3%]
CURRENT MVA ACCOUNT GUARANTEE PERIOD OPTIONS AND
CREDITED INTEREST RATES:
[1 Year] [XX%]
[3 Years] [XX%]
[5 Years] [XX%]
[7 Years] [XX%]
[10 Years] [XX%]VALUE ADJUSTMENT FACTOR: The Market
Value Adjustment Factor is equal to:
N/365
( 1 + A )
[ _________ ] - 1
( 1 + B )
<TABLE>
<CAPTION>
<S> <C> <C>
where: A = the U.S. Treasury rate in effect at the beginning of the
Guarantee Period for the length of the guarantee period
selected.
B = the current U.S. Treasury rate as of the transaction date
plus .005. Treasury rate period is determined by N/365
rounded to the next highest year.
N = Number of days remaining in the MVA Guarantee Period.]
</TABLE>
If the Treasury rate is not available for the period, the rate will be arrived
at by interpolation. If no Treasury Rates are available, an Index will be
selected by the Company and approved by the State Insurance Commissioner.]
[MVA Waiver: For withdrawals from MVA Account Guarantee Period Option, after
the first year in such Guarantee Period option, the Certificate Owner can make
one withdrawal each Certificate Year of up to a total of 10% of each such
Guarantee Period option without the Market Value Adjustment.]
FIXED ACCOUNT:
Not Available
RIDERS:
[IRA ENDORSEMENT]
[TSA ENDORSEMENT]
ADMINISTRATIVE OFFICE:
[Great American Reserve Insurance Great American Reserve Insurance
Company Company
Administrative Office or Administrative Office
P.O. Box 1927 11815 N. Pennsylvania Street
Carmel, IN 46032 Carmel, IN 46032]
(800) 824-2726
(317) 817-3700
DEFINITIONS
ACCOUNT(S): The Fixed Account, the MVA Account and the General Account and/or
one or more of the Sub-Accounts of the Variable Account.
ACCUMULATION PERIOD: The period prior to the Annuity Date during which
Purchase Payments may be made by a Certificate Owner.
ACCUMULATION UNIT: A unit of measure used to determine the value of a
Certificate Owner's interest in a Sub-Account of the Variable Account during
the Accumulation Period.
ADJUSTED CERTIFICATE VALUE: The Certificate Value less any applicable Premium
Tax, and Certificate Maintenance Charge and plus the applicable Market Value
Adjustment which may be positive or negative. This amount is applied to the
applicable Annuity Tables to determine Annuity Payments.
AGE: The age of any Certificate Owner or Annuitant on his/her last birthday.
For Joint Certificate Owners, all provisions which are based on age are based
on the Age of the older of the Joint Certificate Owners.
ADMINISTRATIVE OFFICE: The office indicated on the Certificate Schedule of
this Certificate to which notices, requests and Purchase Payments must be
sent. All sums payable to the Company under this Certificate are payable at
the Administrative Office or an address designated by the Company.
ANNUITANT: The natural person on whose life Annuity Payments are based. On or
after the Annuity Date, the Annuitant shall also include any Joint Annuitant.
ANNUITY DATE: The date on which Annuity Payments begin. The Annuity Date is
shown on the Certificate Schedule.
ANNUITY OPTIONS: Options available for Annuity Payments.
ANNUITY PAYMENTS: The series of payments made to the Certificate Owner or any
named payee after the Annuity Date under the Annuity Option selected.
ANNUITY PERIOD: The period of time beginning with the Annuity Date during
which Annuity Payments are made.
ANNUITY UNIT: An accounting unit of measure used to calculate the amount of
Annuity Payments.
AUTHORIZED REQUEST: A request, in a form satisfactory to the Company, which is
received by the Administrative Office.
BENEFICIARY: The person(s) or entity(ies) who will receive the death benefit
payable under a Certificate.
CERTIFICATE: The document issued to a Certificate Owner to evidence a
Certificate Owner's Account established under a Group Contract.
CERTIFICATE ANNIVERSARY: An Anniversary of the Certificate Issue Date.
CERTIFICATE ISSUE DATE: The later of the date on the cover of the Certificate
or the date Purchase Payments are received. The Certificate Issue Date is
shown on the Certificate Schedule.
CERTIFICATE OWNER: A person who has established a Certificate Owner's Account
under a Group Contract.
CERTIFICATE OWNER'S ACCOUNT: A record established for each Certificate to
maintain values under a Group Contract.
CERTIFICATE VALUE: The dollar value as of any Valuation Period of all amounts
in a Certificate Owner's Account.
CERTIFICATE WITHDRAWAL VALUE: The Certificate Value less any applicable
Premium Tax, less any Contingent Deferred Sales Charge, less any applicable
Certificate Maintenance Charge and plus any Market Value Adjustment which may
be positive or negative.
CERTIFICATE YEAR: The first Certificate Year is the annual period which
begins on the Certificate Issue Date. Subsequent Certificate Years begin on
each anniversary of the Certificate Issue Date.
COMPANY: Great American Reserve Insurance Company.
CREDITED INTEREST RATE: The interest rate credited to a Certificate Owner's
Account by the Company for any given Guarantee Period in the MVA Account or
the Fixed Account. The Credited Interest Rates for the available Guarantee
Periods for the Fixed Account and the MVA Account are shown on the Certificate
Schedule.
EFFECTIVE DATE: The Effective Date of a Guarantee Period with a Credited
Interest Rate.
ELIGIBLE FUND: An investment entity shown on the Certificate Schedule.
FIXED ACCOUNT: An investment option within the General Account.
FIXED ANNUITY: A series of payments made during the Annuity Period which are
guaranteed as to dollar amount by the Company.
GENERAL ACCOUNT: The Company's general investment account which contains all
the assets of the Company with the exception of the Variable Account and other
segregated asset accounts.
GROUP CONTRACT OWNER: The person or entity to which a Group Contract is
issued.
GUARANTEE PERIOD: The period for which the Credited Interest Rate is credited
in either the MVA Account or the Fixed Account. Each deposit or transfer to
the MVA Account creates one or more new Guarantee Period(s). The Guarantee
Periods selected by the Certificate Owner are shown on the Certificate
Schedule.
MARKET VALUE ADJUSTMENT: An adjustment to the amount withdrawn or transferred
from an MVA Account prior to the end of the applicable Guarantee Period. The
adjustment reflects the change in the value of the funds withdrawn or
transferred due to the change in the interest rates since the beginning of the
Guarantee Period.
MVA ACCOUNT: A separate account which provides investment options where the
Company guarantees the rate of interest for a specified Guarantee Period and
where withdrawals or transfers may be subject to a Market Value Adjustment.
NET PURCHASE PAYMENT: A Purchase Payment less any applicable Premium Tax.
PORTFOLIO: A segment of an Eligible Fund which constitutes a separate and
distinct class of shares. Portfolios which are available for investment by
the Sub-Accounts of the Variable Account under this Certificate are shown on
the Certificate Schedule.
PREMIUM TAX: Any premium taxes incurred to any governmental entity and
assessed against Purchase Payments or Certificate Value.
PURCHASE PAYMENT: A payment made by or for a Certificate Owner with respect
to this Certificate.
SUB-ACCOUNT: Variable Account assets are divided into Sub-Accounts which are
listed on the Certificate Schedule. Assets of each Sub-Account will be
invested in shares of an Eligible Fund or a Portfolio of an Eligible Fund.
VALUATION DATE: Each day on which the New York Stock Exchange ("NYSE") is
open for business.
VALUATION PERIOD: The period of time beginning at the close of business of
the NYSE on each Valuation Date and ending at the close of business for the
next succeeding Valuation Date.
VARIABLE ACCOUNT: A separate account designated on the Certificate Schedule
which provides investment options where the benefits are variable and are not
guaranteed as to dollar amount.
WRITTEN REQUEST: A request in writing, in a form satisfactory to the Company,
which is received by the Administrative Office.
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS : The initial Purchase Payment for a Certificate Owner is
due on the Certificate Issue Date. Subject to the maximum and minimum amounts
shown on the Certificate Schedule, the Certificate Owner may make subsequent
Purchase Payments and may increase or decrease or change the frequency of such
payments. The Company reserves the right to reject any Application or
Purchase Payment.
ALLOCATION OF PURCHASE PAYMENTS : Net Purchase Payments are allocated to one
or more of the Fixed Account and/or the MVA Account Guarantee Period options
and/or to one or more Sub-Accounts of the Variable Account in accordance with
the selections made by the Certificate Owner. The allocation of the initial
Net Purchase Payment for a Certificate Owner is made in accordance with the
selection made by the Certificate Owner at the Certificate Issue Date. Unless
otherwise changed by the Certificate Owner, subsequent Net Purchase Payments
are allocated in the same manner as the initial Net Purchase Payment.
Allocation of the Net Purchase Payments is subject to the Allocation
Guidelines shown on the Certificate Schedule. The Company has reserved the
right to allocate initial Net Purchase Payments to the Money Market
Sub-Account (except for any amounts allocated to the Fixed Account and/or MVA
Account) until the expiration of the Right to Examine period.
SEPARATE ACCOUNT PROVISIONS
THE SEPARATE ACCOUNTS : The Separate Accounts are designated on the
Certificate Schedule and consists of assets set aside by the Company, which
are kept separate from that of the general assets and all other separate
account assets of the Company.
The assets of the Variable Account equal to reserves and other liabilities
will not be charged with liabilities arising out of any other business
the Company may conduct.
The Variable Account assets are divided into Sub-Accounts. The Sub-Accounts
which are available under this Certificate are listed on the Certificate
Schedule. The assets of the Sub-Accounts are allocated to the Eligible
Funds(s) and the Portfolio(s), if any, within an Eligible Fund, shown on the
Certificate Schedule. The Company may, from time to time, add additional
Eligible Fund (s) or Portfolio(s) to those shown on the Certificate Schedule.
The Certificate Owner may be permitted to transfer Certificate Values or
allocate Net Purchase Payments to the additional Sub-Account(s) within the
Variable Account. However, the right to make such transfers or allocations
will be limited by the terms and conditions imposed by the Company.
Should the shares of any such Eligible Fund(s) or any Portfolio(s) within an
Eligible Fund become unavailable for investment by the Variable Account, or
the Company's Board of Directors deems further investment in these shares
inappropriate, the Company may limit further purchase of such shares or
substitute shares of another Eligible Fund or Portfolio for shares already
purchased under a Certificate.
VALUATION OF ASSETS : The assets of the Accounts are valued at their fair
market value in accordance with procedures of the Company.
ACCUMULATION UNITS : Accumulation Units shall be used to account for all
amounts allocated to or withdrawn from the Sub-Accounts of the Variable
Account as a result of Net Purchase Payments, withdrawals, transfers, or fees
and charges. The Company will determine the number of Accumulation Units of a
Sub-Account purchased or canceled. This will be done by dividing the amount
allocated to (or the amount withdrawn from) the Sub-Account by the dollar
value of one Accumulation Unit of the Sub-Account as of the end of the
Valuation Period during which the request for the transaction is received at
the Administrative Office.
ACCUMULATION UNIT VALUE : The Accumulation Unit Value for each Sub-Account
was arbitrarily set initially at $10. Subsequent Accumulation Unit Values for
each Sub-Account are determined by multiplying the Accumulation Unit Value for
the immediately preceding Valuation Period by the Net Investment Factor for
the Sub-Account for the current period.
The Net Investment Factor for each Sub-Account is determined by dividing A by
B and subtracting C where:
<TABLE>
<CAPTION>
<S> <C>
A is (i) the net asset value per share of the Eligible Fund or Portfolio
of an Eligible Fund held by the Sub-Account at the end of the
current Valuation Period; plus
(ii) any dividend or capital gains per share declared on behalf of
such Eligible Fund or Portfolio that has an ex-dividend date within
the current Valuation Period; plus
(iii) a charge factor, if any, for any taxes or any tax reserve
established by the Company as a result of the operation or
maintenance of the Sub-Account.
B is the net asset value per share of the Eligible Fund or Portfolio
held by the Sub-Account for the immediately preceding Valuation
Period.
C is the Valuation Period equivalent of the per month Mortality and
Expense Risk Charge, for the Administrative Charge and for the
Distribution Charge, if any, which are shown on the Certificate
Schedule.
</TABLE>
The Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
MORTALITY AND EXPENSE RISK CHARGE : Each Valuation Period, the Company
deducts a Mortality and Expense Risk Charge from the Variable Account which is
equal, on an annual basis, to the amount shown on the Certificate Schedule.
The Mortality and Expense Risk Charge compensates the Company for assuming the
mortality and expense risks under this Certificate.
ADMINISTRATIVE CHARGE : Each Valuation Period, the Company deducts an
Administrative Charge from the Variable Account which is equal, on an annual
basis, to the amount shown on the Certificate Schedule. The Administrative
Charge compensates the Company for the costs associated with the
administration of this Certificate and the Variable Account.
DISTRIBUTION EXPENSE CHARGE : Each Valuation Period, the Company deducts a
Distribution Expense Charge from the Variable Account which is equal, on an
annual basis, to the amount shown on the Certificate Schedule. The
Distribution Charge compensates the Company for the costs associated with the
distribution of the Contracts and Certificates.
MVA ACCOUNT PROVISIONS
MVA ACCOUNT : The assets of the MVA Account equal to reserves and other
liabilities will not be charged with liabilities arising out of any other
business the Company may conduct.
Net Purchase Payments may be allocated to one or more of the MVA
Account Guarantee Period options which are available at the time the Purchase
Payment is made. The initial MVA Account Guarantee Period options are shown
on the Certificate Schedule. In addition, during the Accumulation Period,
Certificate Values can be transferred from the Variable Account and/or the
Fixed Account to one or more of the MVA Account Guarantee Period options.
INTEREST TO BE CREDITED : The Credited Interest Rate for the Guarantee
Period(s) of the MVA Account is shown on the Certificate Schedule. After the
initial Guarantee Period, the Credited Interest Rate for any subsequent
Guarantee Period of the MVA Account may change. All interest payable under a
Certificate is compounded daily at the stated effective annual interest rate.
In no event will the Credited Interest Rate be less than the Minimum
Guaranteed Interest Rate, prior to the application of the Market Value
Adjustment, specified on the CertificateSchedule.
GUARANTEE PERIOD : The Current MVA Account Guarantee Period is shown on the
Certificate Schedule. During the thirty (30) days prior to the end of a
current Guarantee Period, the Certificate Owner may renew for the same or any
other Guarantee Period then available at the then Credited Interest Rate or
may elect to transfer all or a portion of the amount to a Fixed Account
option, if available, or to the Variable Account. Any transfer elected during
the thirty (30) days prior to the end of a current Guarantee Period will be
made as of the date the request is received by the Company and will not be
subject to the Market Value Adjustment.
If the Certificate Owner does not specify a Guarantee Period at the time of
renewal, the Company will select and transfer to the same Guarantee Period as
has just expired, so long as such Guarantee Period does not extend beyond the
latest Annuity Date that can be selected by a Certificate Owner. If such
Guarantee Period does extend beyond the latest Annuity Date, the Company will
choose the one year period. If there is no Guarantee Period for the same
period available, the one year period will be selected. If the one year
period is no longer available, the next longest period available will be
selected.
MULTIPLE GUARANTEE PERIODS : The Certificate Owner may elect one or more
Guarantee Periods subject to the Company's underwriting rules. Multiple
Guarantee Periods are treated separately for purposes of applying the Market
Value Adjustment. The Company reserves the right to credit different Credited
Interest Rates to the Certificate Value attributable:
1. to different Guarantee Periods; and
2. to Guarantee Periods of the same duration with different Effective
Dates.
CHANGE IN GUARANTEE PERIOD : The Certificate Owner may upon Written Request
change to any Guarantee Period then being offered by the Company with respect
to contracts and certificates of this type and class. The Market Value
Adjustment will apply to a change made at any time other than at the end of a
Guarantee Period. The Market Value Adjustment will not apply to a change made
at the end of a Guarantee Period if Written Request is received by the Company
within thirty (30) days prior to the end of the Guarantee Period.
MARKET VALUE ADJUSTMENT : Any amount withdrawn, transferred or annuitized
prior to the end of that Guarantee Period may be subject to a Market Value
Adjustment. The Market Value Adjustment will be calculated by multiplying the
amount withdrawn, transferred or annuitized by the formula shown on the
Certificate Schedule.
There will be no Market Value Adjustment on withdrawals from the MVA Account
in the following situations: (1) death benefit paid under a Certificate; (2)
amounts withdrawn to pay fees or charges; (3) amounts withdrawn or transferred
from the MVA Account during the 30 days prior to the end of the Guarantee
Period; (4) a Certificate Owner annuitizes his/her Certificate under an
Annuity Option providing for at least 60 monthly Annuity Payments; and (5) any
withdrawal subject to the MVA Waiver shown on the Contract Schedule.
MVA ACCOUNT VALUES : The MVA Account portion of a Certificate at any time is
equal to:
1. the Net Purchase Payments allocated to the MVA Account on behalf of a
Certificate Owner; plus
2. the Certificate Value transferred to the MVA Account; plus
3. interest credited to the Certificate Value in the MVA Account; less
4. any prior withdrawals of Certificate Value in the MVA Account and any
Contingent Deferred Sales Charge; less
5. any Certificate Value transferred from the MVA Account; less
6. Certificate Maintenance Charges or Transfer Fees deducted from the
Certificate Value allocated to the MVA Account.
Any subsequent Purchase Payments and transfers to the MVA Account will be
allocated to a new Guarantee Period with a new Effective Date.
FIXED ACCOUNT PROVISIONS
FIXED ACCOUNT VALUES : The Fixed Account portion of a Certificate at any time
is equal to:
1. the Net Purchase Payments allocated to the Fixed Account on behalf of
a Certificate Owner; plus
2. the Certificate Value transferred to the Fixed Account; plus
3. interest credited to the Certificate Value in the Fixed Account; less
4. any prior withdrawals of Certificate Value in the Fixed Account and
any Contingent Deferred Sales Charge; less
5. any Certificate Value transferred from the Fixed Account; less
6. Certificate Maintenance Charges or Transfer Fees deducted from the
Certificate Value allocated to the Fixed Account.
INTEREST TO BE CREDITED : The Company guarantees that the interest to be
credited to the Fixed Account will not be less than the Minimum Guaranteed
Interest Rate shown on the Certificate Schedule. The Company may credit
additional interest at its sole discretion for any Fixed Account option. The
Fixed Account Option and the Initial Current Interest Rate are shown on the
Certificate Schedule.
CERTIFICATE VALUE
The Certificate Value for any Valuation Period is the sum of the Certificate
Value in each of the Sub-Accounts of the Variable Account, the Certificate
Value in the MVA Account and the Certificate Value in the Fixed Account.
The Certificate Value in a Sub-Account of the Variable Account is determined
by multiplying the number of Accumulation Units allocated to the Certificate
Owner's Account for the Sub-Account by the Accumulation Unit Value.
Withdrawals will result in the cancellation of Accumulation Units in a
Sub-Account or a reduction in the Certificate Value in the Fixed Account or
the MVA Account, as applicable.
CERTIFICATE MAINTENANCE CHARGE
DEDUCTION FOR CERTIFICATE MAINTENANCE CHARGE : During the Accumulation Period,
on each Certificate Anniversary the Company deducts a Certificate Maintenance
Charge from the Certificate Value by reducing the Certificate Value in the
Fixed Account and/or the MVA Account and by canceling Accumulation Units from
each applicable Sub-Account to reimburse it for expenses relating to
maintenance of a Certificate. The Certificate Maintenance Charge will be
deducted first from the Fixed Account and if there is insufficient value in
the Fixed Account, then the Certificate Maintenance Charge will be deducted
from the MVA Account or the Sub-Account of the Variable Account with the
largest balance. The Certificate Maintenance Charge is shown on the
Certificate Schedule.
TRANSFERS
TRANSFERS DURING THE ACCUMULATION PERIOD : Subject to any limitation imposed
by the Company on the number of transfers during the Accumulation Period shown
on the Certificate Schedule, a Certificate Owner may, transfer all or part of
his or her Certificate Value in the Fixed Account, the MVA Account or a
Sub-Account by Authorized Request without the imposition of any Transfer Fee
if there have been no more than the number of free transfers shown on the
Certificate Schedule for the Certificate Year. All transfers are subject to
the following:
1. If more than the number of free transfers, shown on the Certificate
Schedule, have been made in a Certificate Year, the Company will deduct a
Transfer Fee, shown on the Certificate Schedule, for each subsequent transfer
permitted. The Transfer Fee is deducted from the Account which is the source
of the transfer. However, if the Certificate Owner's entire interest in an
Account is being transferred, the Transfer Fee will be deducted from the
amount which is transferred. If there are multiple source Accounts, the
Transfer Fee will be allocated first to the Fixed Account and then to the
Sub-Account or the MVA Account with the largest balance involved in a transfer
transaction.
2. The minimum amount which can be transferred from a Sub-Account is
shown on the Certificate Schedule. The minimum amount which must remain in a
Sub-Account, the Fixed and the MVA Account is shown on the Certificate
Schedule. The maximum amount which can be transferred from the Fixed Account
or the MVA Account to the Variable Account is shown on the Certificate
Schedule.
3. The Company reserves the right, at any time and without prior notice
to any party, to terminate, suspend or modify the transfer privilege described
above.
If a Certificate Owner elects to use this transfer privilege, the Company will
not be liable for transfers made in accordance with instructions received from
the Certificate Owner or other authorized persons. All amounts and
Accumulation Units will be determined as of the end of the Valuation Period
during which the request for transfer is received at the Administrative
Office.
TRANSFERS DURING THE ANNUITY PERIOD : Subject to any limitations imposed by
the Company on the number of transfers during the Annuity Period shown on the
Certificate Schedule, the Certificate Owner may transfer Annuity Units in
accordance with the following:
1. Transfers may be made upon written notice to the Company at least 30
days before the due date of the first Annuity Payment for which the change
will apply. Transfers will be made by converting the number of Annuity Units
being transferred to the number of Annuity Units of the Sub-Account to which
the transfer is made, so that the next Annuity Payment, if it were made at
that time would be the same amount that it would have been without the
transfer. Thereafter, Annuity Payments will refelect changes in the value of
the new Annuity Units.
2. If more than the number of free transfers, shown on the Certificate
Schedule, have been made in a Certificate Year, the Company will deduct a
Transfer Fee, shown on the Certificate Schedule, for each subsequent transfer
permitted. The Transfer Fee is deducted from the Account which is the source
of the transfer. However, if the Certificate Owner's entire interest in an
Account is being transferred, the Transfer Fee will be deducted from the
amount which is transferred. If there are multiple source Accounts, the
Transfer Fee will be allocated first to the Fixed Account and then the
Sub-Account or the MVA Account with the largest balance involved in a transfer
transaction.
3. The minimum amount which can be transferred from a Sub-Account is
shown on the Certificate Schedule. The minimum amount which must remain in a
Sub-Account after a transfer is shown on the Certificate Schedule.
4. No transfers can be made between the General Account and the Variable
Account.
5. The Company reserves the right, at any time and without prior notice
to any party, to terminate, suspend or modify the transfer privilege described
above.
If a Certificate Owner elects to use this transfer privilege, the Company will
not be liable for transfers made in accordance with instructions received from
the Certificate Owner or other authorized persons. All amounts and Annuity
Units will be determined as of the end of the Valuation Period during which
the request for transfer is received at the Administrative Office.
WITHDRAWAL PROVISIONS
WITHDRAWALS : During the Accumulation Period, the Certificate Owner may, upon
Written Request, make a total or partial withdrawal of the Certificate
Withdrawal Value.
The Certificate Owner must specify by Written Request which Sub-Account or
Guarantee Period of the MVA Account or Fixed Account, as applicable, is the
source of the partial withdrawal.
A withdrawal from the MVA Account may be subject to a Market Value Adjustment.
Company will pay the amount of any withdrawal from the Variable Account within
seven (7) days of receipt of a request in good order unless the Suspension or
Deferral of Payments Provision is in effect.
Each partial withdrawal must be for an amount which is not less than the
amount shown on the Certificate Schedule. The minimum Certificate Value which
must remain in a Sub-Account after a partial withdrawal is shown on the
Certificate Schedule. The maximum amounts which can be withdrawn from the
Fixed Account and/or the MVA Account are shown on the Certificate Schedule.
CONTINGENT DEFERRED SALES CHARGE : Upon a withdrawal of Certificate Value, a
Contingent Deferred Sales Charge as set forth on the Certificate Schedule may
be assessed.
WITHDRAWAL CHARGE : Upon a withdrawal of Certificate Value, a Withdrawal
Charge as set forth on the Certificate Schedule may be assessed.
PROCEEDS PAYABLE ON DEATH
DEATH OF CERTIFICATE OWNER DURING THE ACCUMULATION PERIOD : Upon the death of
the Certificate Owner, or any Joint Certificate Owner, during the Accumulation
Period, the death benefit will be paid to the Beneficiary(ies) designated by
the Certificate Owner. Upon the death of any Joint Certificate Owner, the
surviving Joint Certificate Owner, if any, will be treated as the Primary
Beneficiary. Any other Beneficiary designation on record at the time of death
will be treated as a contingent Beneficiary.
A Beneficiary may request that the death benefit be paid under one of the
Death Benefit Options below. If the Beneficiary is the spouse of the
Certificate Owner, he or she may elect to continue the Certificate at the then
current Certificate Value in his or her own name and exercise all the
Certificate Owner's rights under the Certificate.
DEATH BENEFIT AMOUNT DURING THE ACCUMULATION PERIOD : Prior to the Certificate
Owner attaining Age 80, the death benefit will be the greater of: (i) the
Purchase Payments, less any withdrawals; or (ii) the Certificate Value
determined as of the end of the Valuation Period during which the Company
receives both due proof of death and an election for the payment method. If
the death occurs after Age 80, the death benefit will be the Certificate
Value determined as of the end of the Valuation Period during which the
Company receives both due proof of death and an election for the payment
method.
DEATH BENEFIT OPTIONS DURING THE ACCUMULATION PERIOD : A non-spousal
Beneficiary must elect the death benefit to be paid under one of the following
options in the event of the death of the Certificate Owner or any Joint
Certificate Owner during the Accumulation Period:
OPTION 1 - lump sum payment of the death benefit; or
OPTION 2 - the payment of the entire death benefit within 5 years of
the date of the death of the Certificate Owner or any Joint Certificate Owner;
or
OPTION 3 - payment of the death benefit under an Annuity Option over
the lifetime of the Beneficiary or over a period not extending beyond the life
expectancy of the Beneficiary with distribution beginning within one year of
the date of death of the Certificate Owner or any Joint Certificate Owner.
Any portion of the death benefit not applied under Option 3 within one year of
the date of the Certificate Owners' death, must be distributed within five
years of the date of death.
A spousal Beneficiary may elect to continue this Certificate in his or her own
name at the then current Certificate Value, elect a lump sum payment of the
death benefit or apply the death benefit to an Annuity Option.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the Suspension or
Deferral of Payments Provision is in effect.
Payment to the Beneficiary, other than in a lump sum, may only be elected
during the sixty-day period beginning with the date of receipt of proof of
death.
DEATH OF CERTIFICATE OWNER DURING THE ANNUITY PERIOD : If the Certificate
Owner, or any Joint Certificate Owner, who is not the Annuitant, dies during
the Annuity Period, any remaining payments under the Annuity Option elected
will continue at least as rapidly as under the method of distribution in
effect at such Certificate Owner's or Joint Certificate Owner's death. Upon
the death of any Certificate Owner during the Annuity Period, the Beneficiary
becomes the Certificate Owner. Upon the death of any Joint Certificate Owner
during the Annuity Period, the surviving Joint Certificate Owner, if any, will
be treated as the Primary Beneficiary. Any other Beneficiary designation on
record at the time of death will be treated as a Contingent Beneficiary.
DEATH OF ANNUITANT : Upon the death of an Annuitant, who is not the
Certificate Owner, during the Accumulation Period, the Certificate Owner may
designate a new Annuitant, subject to the Company's underwriting rules then in
effect. If no designation is made within 30 days of the death of the
Annuitant, the Certificate Owner will become the Annuitant. If the
Certificate Owner is a non-natural person, the death of the Annuitant will be
treated as the death of the Certificate Owner and a new Annuitant may not be
designated.
Upon the death of the Annuitant during the Annuity Period, the death benefit,
if any, will be as specified in the Annuity Option elected. Death benefits
will be paid at least as rapidly as under the method of distribution in effect
at the Annuitant's death.
PAYMENT OF DEATH BENEFIT : The Company will require due proof of death before
any death benefit is paid. Due proof of death will be:
1. a certified death certificate; or
2. a certified decree of a court of competent jurisdiction as to the
finding of death; or
3. any other proof satisfactory to the Company.
All death benefits will be paid in accordance with applicable law or
regulations governing death benefit payments.
BENEFICIARY : The Beneficiary designation in effect on the Certificate Issue
Date will remain in effect until changed. The Beneficiary is entitled to
receive the benefits to be paid at the death of the Certificate Owner.
Unless the Certificate Owner provides otherwise, the death benefit will be
paid in equal shares to the survivor(s) as follows:
1. to the Primary Beneficiary(ies) who survive the Certificate Owner's
and/or the Annuitant's death, as applicable; or if there are none
2. to the Contingent Beneficiary(ies) who survive the Certificate
Owner's and/or the Annuitant's death, as applicable; or if there are none
3. to the estate of the Certificate Owner.
CHANGE OF BENEFICIARY : Subject to the rights of any irrevocable
Beneficiary(ies), the Certificate Owner may change the Primary
Beneficiary(ies) or Contingent Beneficiary(ies). A change may be made by
Written Request. The change will take effect as of the date the Written
Request is signed. The Company will not be liable for any payment made or
action taken before it records the change.
SUSPENSION OR DEFERRAL OF PAYMENTS PROVISION
The Company reserves the right to suspend or postpone payments from the
Variable Account for a withdrawal or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of securities held
in the Variable Account is not reasonably practicable or it is not reasonably
practicable to determine the value of the Variable Account's net assets; or
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Certificate Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
The Company further reserves the right to postpone payments from the Fixed
Account and the MVA Account for a period of up to six months.
CERTIFICATE OWNER, ANNUITANT, OWNERSHIP, ASSIGNMENT PROVISIONS
CERTIFICATE OWNER : The Certificate Owner has all interest and right to
amounts held in his or her Certificate Owner's Account. The Certificate Owner
is the person designated as such on the Certificate Issue Date, unless
changed.
The Certificate Owner may change owners of the Certificate at any time by
Written Request. A change of Certificate Owner will automatically revoke any
prior designation of Certificate Owner. The change will become effective as of
the date the Written Request is signed. The Company will not be liable for
any payment made or action taken before it records the change.
JOINT CERTIFICATE OWNER : A Certificate may be owned by Joint Certificate
Owners. If Joint Certificate Owners are named, any Joint Certificate Owner
must be the spouse of the other Certificate Owner. Upon the death of either
Certificate Owner, the surviving spouse will be the Primary Beneficiary. Any
other Beneficiary designation will be treated as a Contingent Beneficiary
unless otherwise indicated in a Written Request.
GROUP CONTRACT OWNER : The Group Contract Owner has title to the Contract. The
Contract and any amounts accumulated thereunder are not subject to the claims
of the Group Contract Owner nor any of its creditors. The Group Contract Owner
may transfer ownership of this Group Contract. Any transfer of ownership
terminates the interest of any existing Group Contract Owner. It does not
change the rights of any Certificate Owner.
ANNUITANT : The Annuitant is the person on whose life Annuity Payments are
based. The Annuitant is the person designated by the Certificate Owner at the
Certificate Issue Date, unless changed prior to the Annuity Date. The
Certificate Owner may not change the Annuitant except in the event that the
Annuitant dies prior to the Annuity Date. If no new Annuitant is designated
by the Certificate Owner within 30 days of the death of the Annuitant, the
Certificate Owner becomes the Annuitant. The Annuitant may not be changed in
a Certificate which is owned by a non-natural person. Any change of Annuitant
is subject to the Company's underwriting rules then in effect.
ASSIGNMENT OF A CERTIFICATE : A Written Request specifying the terms of an
assignment of a Certificate must be provided to the Administrative Office.
The Company will not be liable for any payment made or action taken before it
records the assignment.
The Company will not be responsible for the validity or tax consequences of
any assignment. Any assignment made after the death benefit has become payable
will be valid only with Company consent.
If the Certificate is assigned, the Certificate Owner's rights may only be
exercised with the consent of the assignee of record.
ANNUITY PROVISIONS
GENERAL : On the Annuity Date, the Adjusted Certificate Value will be applied
under the Annuity Option selected by the Certificate Owner. The Certificate
Owner may elect to have the Certificate Value applied to provide a Fixed
Annuity, a Variable Annuity or a combination Fixed and Variable Annuity. If a
combination is elected, the Certificate Owner must specify what part of the
Certificate Value is to be applied to the Fixed and Variable Options.
ANNUITY DATE : The Annuity Date is selected by the Certificate Owner at the
Certificate Issue Date. The Annuity Date must be the first day of a calendar
month and must be at least 90 days after the Certificate Issue Date. The
Annuity Date may not be later than the earlier of when the Annuitant reaches
attained age 90 or the maximum date permitted under state law.
Prior to the Annuity Date, the Certificate Owner subject to the above, may
change the Annuity Date by Written Request. Any change must be requested at
least thirty (30) days prior to the new Annuity Date.
SELECTION OF AN ANNUITY OPTION : An Annuity Option may be selected by Written
Request of the Certificate Owner. If no Annuity Option is selected, Option B
with 120 monthly payments guaranteed will automatically be applied. Unless
specified otherwise, that portion of the Adjusted Certificate Value allocated
to the Variable Account shall be used to provide a Variable Annuity and that
portion of the Adjusted Certificate Value allocated to the Fixed Account and
the MVA Account will be used to provide a Fixed Annuity. Prior to the Annuity
Date, the Certificate Owner can change the Annuity Option selected by Written
Request. Any change must be requested at least thirty (30) days prior to the
Annuity Date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS : Annuity Payments are paid in
monthly installments. The Adjusted Certificate Value is applied to the
Annuity Table for the Annuity Option selected. If the Adjusted Certificate
Value to be applied under an Annuity Option is less than $5,000, the Company
reserves the right to make a lump sum payment in lieu of Annuity Payments. If
the Annuity Payment would be or become less than $50, the Company reserves the
right to reduce the frequency of payments to an interval which will result in
each payment being at least $50.
ANNUITY OPTIONS : The following Annuity Options or any other annuity option
acceptable to the Company may be selected:
OPTION 1. LIFETIME ONLY ANNUITY: The Company will make monthly payments
during the life of the Annuitant. If this option is elected, it is understood
and agreed that payments shall cease immediately upon the death of the
Annuitant and the annuity will terminate without further value.
OPTION 2. LIFETIME ANNUITY WITH GUARANTEED PERIODS : The Company will
make monthly payments for the guaranteed period selected and thereafter for
the life of the Annuitant. If this option is elected, it is understood and
agreed that upon the death of the Annuitant, any amounts remaining under the
guaranteed period selected will be distributed to the Beneficiary at least as
rapidly as under the method of distribution being used as of the date of the
Annuitant's death. The guaranteed period may be five (5) years, ten (10)
years or twenty (20) years.
OPTION 3. INSTALLMENT REFUND LIFE ANNUITY : The Company will make
monthly payments for the installment refund period (the time required for the
sum of the payments to equal the amount applied), and thereafter for the life
of the Annuitant. If this option is elected, it is understood and agreed that
upon the death of the Annuitant, any amounts remaining under the installment
refund period will be distributed to the Beneficiary at least as rapidly as
under the method of distribution being used at the time of the Annuitant's
death.
OPTION 4. PAYMENT FOR A FIXED PERIOD: The Company will make monthly
payments for a fixed period of 3 to 20 years.
OPTION 5. JOINT AND SURVIVOR ANNUITY : The Company will make monthly
payments during the joint life time of the Annuitant and a Joint Annuitant.
Payments will continue during the lifetime of the surviving Annuitant and will
be computed on the basis of 100%, 50% or 66 2/3% of the Annuity Payment (or
limits) in effect during the joint life time.
ANNUITY : If the Certificate Owner selects a Fixed Annuity, the Adjusted
Certificate Value is allocated to the General Account and the Annuity is paid
as a Fixed Annuity. If the Certificate Owner selects a Variable Annuity, the
Adjusted Certificate Value will be allocated to the Sub-Accounts of the
Variable Account in accordance with the selection made by the Certificate
Owner, and the Annuity will be paid as a Variable Annuity. If no selection is
made, the Adjusted Certificate Value will be applied in the same proportions
to the same Sub-Accounts as the allocations are at the time of election.
Unless the Certificate Owner specifies otherwise, the payee of the Annuity
Payments shall be the Certificate Owner. The Adjusted Certificate Value will
be applied to the applicable Annuity Table contained in the Certificate based
upon the Annuity Option selected by the Certificate Owner. The amount of the
first payment for each $1,000 of Adjusted Certificate Value is shown in the
Annuity Tables.
FIXED ANNUITY : The Certificate Owner may elect to have the Adjusted
Certificate Value applied to provide a Fixed Annuity.
The dollar amount of each Fixed Annuity Payment shall be determined in
accordance with Annuity Tables contained in this Certificate which are based
on the minimum guaranteed interest rate of 3% per year.
VARIABLE ANNUITY : The Certificate Owner may elect to have the Adjusted
Certificate Value applied to provide a Variable Annuity. Variable Annuity
Payments reflect the investment performance of the Variable Account in
accordance with the allocation of the Adjusted Certificate Value to the
Sub-Accounts during the Annuity Period. Variable Annuity Payments are not
guaranteed as to dollar amount.
The dollar amount of the first Variable Annuity Payment is determined in
accordance with the description above. The dollar amount of the Variable
Annuity Payments for each applicable Sub-Account after the first Variable
Annuity Payment is determined as follows:
1. The dollar amount of the first Variable Annuity Payment is divided by
the value of an Annuity Unit for each applicable Sub-Account as of the Annuity
Date. This sets the number of Annuity Units for each monthly payment for the
applicable Sub-Account.
2. The fixed number of Annuity Units per payment in each Sub-Accountis
multiplied by the Annuity Unit Value for that Sub-Account for the last
Valuation Period of the month preceding the month for which the payment is
due. This result is the dollar amount of the payment for each applicable
Sub-Account.
The total dollar amount of each Variable Annuity Payment is the sum of all
Sub-Account Variable Annuity Payments reduced by the applicable portion of the
Certificate Maintenance Charge.
ANNUITY UNIT : The value of any Annuity Unit for each Sub-Account of the
Variable Account was arbitrarily set initially at $10.
The Sub-Account Annuity Unit Value at the end of any subsequent Valuation
Period is determined as follows:
1. The Net Investment Factor for the current Valuation Period is
multiplied by the value of the Annuity Unit for the Sub-Account for the
immediately preceding Valuation Period.
2. The result in (1) is then divided by the Assumed Investment Rate
Factor which equals 1.00 plus the Assumed Investment Rate for the number of
days since the preceding Valuation Date. The Certificate Owner can choose
either a 5% or a 3% Assumed Investment Rate.
MORTALITY TABLES : The mortality table used in establishing the Annuity Table
is 1983 Individual Annuity Mortality, (IAM) Table, Unisex.
The dollar amount of an Annuity Payment for any Age or combination of Ages not
shown in the Tables or for any other form of Annuity Option agreed to by the
Company will be provided by the Company upon request.
GENERAL PROVISIONS
THE CERTIFICATE : The entire Certificate consists of this Certificate, the
Application, if any, and any riders or endorsements attached to this
Certificate.
This Certificate may be changed or altered only by the President or Vice
President and the Secretary of the Company. A change or alteration must be
made in writing.
MISSTATEMENT OF AGE : If the Age of any Annuitant has been misstated, any
Annuity benefits payable will be the Annuity benefits provided by the correct
Age. After Annuity Payments have begun, any underpayments will be made up in
one sum with the next Annuity Payment. Any overpayments will be deducted from
future Annuity Payments until the total is repaid.
INCONTESTABILITY : A Certificate will not be contestable from the date of
issue.
MODIFICATION : This Certificate may be modified in order to maintain
compliance with applicable state and federal law.
NON-PARTICIPATING : This Certificate will not share in any distribution of
dividends.
EVIDENCE OF SURVIVAL : The Company may require satisfactory evidence of the
continued survival of any person(s) on whose life Annuity Payments are based.
PROOF OF AGE : The Company may require evidence of Age of any Annuitant and
any Certificate Owner.
PROTECTION OF PROCEEDS : To the extent permitted by law, death benefits and
Annuity Payments shall be free from legal process and the claim of any
creditor other than the person entitled to them under any Certificate. No
payment and no amount under any Certificate can be taken or assigned in
advance of its payment date unless the Company receives the Certificate
Owner's written consent.
REPORTS : At least once each calendar year, the Company will furnish each
Certificate Owner with a report showing the Certificate Value and any other
information as may be required by law. The Company will also furnish an
annual report of the Variable Account.
TAXES : Any taxes paid to any governmental entity relating to any Certificate
will be deducted from the Purchase Payment or Certificate Value when incurred.
The Company will, in its sole discretion, determine when taxes have resulted
from: the investment experience of the Variable Account; receipt by the
Company of the Purchase Payments; or commencement of Annuity Payments. The
Company may, in its sole discretion, pay taxes when due and deduct that amount
from the Certificate Value at a later date. Payment at an earlier date does
not waive any right the Company may have to deduct amounts at a later date.
The Company reserves the right to establish a provision for federal income
taxes if it determines, in its sole discretion, that it will incur a tax as a
result of the operation of the Variable Account. The Company will deduct for
any income taxes incurred by it as a result of the operation of the Variable
Account whether or not there was a provision for taxes and whether or not it
was sufficient. The Company will deduct any withholding taxes required by
applicable law.
REGULATORY REQUIREMENTS : All values payable under any Certificate will not
be less than the minimum benefits required by the laws and regulations of the
states in which the Certificate is delivered.
EXHIBIT 99.B5
APPLICATION FORM
VARIABLE ANNUITY APPLICATION
GREAT AMERICAN RESERVE INSURANCE COMPANY
Administrative Office: 11815 N. Pennsylvania Street
P.O. Box 1911, Carmel, IN 46032-4911
[ ] For Group Applicants ONLY:
Application is hereby made to the GARCO Group Benefits Insurance Trust.
1. ANNUITANT (OWNER IF NO OTHER SPECIFIED IN SECTION 3)
Name ____________________________________________ DOB ____/____/____ Age____
first mi last
Street Address __________________________________ Sex _____ Marital Status___
City __________________ State _______ Zip _______ SS# _____-_____-_____
Home Phone # (___) ___________________ Work Phone # (___) __________________
2. EMPLOYMENT GROUP INFORMATION (REQUIRED ONLY FOR GROUP APPLICANTS)
Specify the nature of the industry in which you are (or were at retirement)
employed:
[ ] A. Education, Government Employees, Service Industry
[ ] B. Wholesale Trade Industry
[ ] C. Retail Trade Industry
[ ] D. Agriculture
[ ] E. Finance, Insurance, Real Estate Industry
[ ] F. Transportation, Communication, Public Utilities
[ ] G. Manufacturing, Contract Construction Industry
3. CONTRACT/CERTIFICATE OWNER(S) (COMPLETE IF DIFFERENT FROM ANNUITANT IN
SEC. 1 - MUST BE THE SAME FOR 403(B), IRA, IRA/SEP. USE SECTION 8 FOR
ADDITIONAL SPACE. ANY JOINT OWNER MUST BE THE SPOUSE OF THE OTHER OWNER. WE
MUST HAVE THE SOCIAL SECURITY NUMBER AND ALL OTHER INFORMATION FOR EACH
OWNER.)
Name(s) _________________________________________ DOB ____/____/____ Age____
first mi last
Street Address __________________________________ Sex _____ Marital Status___
City __________________ State _______ Zip _______ SS# _____-_____-_____
Home Phone # (___) ___________________ Work Phone # (___) __________________
4. BENEFICIARY (UPON DEATH OF A JOINT OWNER, THE SURVIVING JOINT OWNER WILL
BE TREATED AS THE PRIMARY BENEFICIARY)
Primary _____________________________________ Relationship_________________
Contingent __________________________________ Relationship_________________
5. TYPE OF PLAN (PLEASE CHECK APPROPRIATE BOX(ES) IN SECTION (A) OR (B))
a. [ ] Nonqualified
b. [ ] Qualified [ ] 403(b) [ ] IRA/SEP [ ] ORP [ ] 457 [ ] _____
6. PRODUCT SELECTION
[ ] Monument [ ] Achievement [ ] Educator [ ] Maxiflex [ ] Group Maxiflex
7. PORTFOLIO SELECTION
Portfolio selections are made on the attached "Variable Annuity Application
Supplement For Portfolio Selection" dated: ______________________
8. SPECIAL REQUESTS (INCLUDE ADDITIONAL INFORMATION FOR ANY ANSWERS TO
APPLICATION QUESTIONS)
9. TELEPHONE TRANSFER
I hereby authorize and direct Great American Reserve Insurance Company (GARCO)
to act on telephone instructions, when proper identification is furnished, to
exchange units from any fixed, Market Value Adjustment (MVA) or sub-account to
any other fixed, MVA or other sub-account and/or to change the allocation of
future deposits. The undersigned agrees that GARCO is not liable for any loss
arising from any exchange or change in allocation of future deposits by acting
in accordance with these telephone instructions. GARCO will employ reasonable
procedures to confirm that telephone instructions are genuine. If it does not,
it may be liable for any losses due to unauthorized or fraudulent transfers.
Please refer to the Prospectus for restrictions regarding the MVA accounts.
Initials of contract owner:________
10. INVESTMENT AMOUNT, REPLACEMENT INFORMATION
a. Initial Investment: $____________________
b. Periodic Investment: ____________________ beginning ____/____/____
c. Will the proposed contract replace any existing annuity or insurance
contract? [ ] Yes [ ] No
If Yes, list company name, plan and year of issue ________________________
__________________________________________________________________________
d. Is this a transfer or rollover? [ ] No [ ] Yes - Check one: [ ] 90-24
[ ] 102-318 (ADDITIONAL FORMS REQUIRED)
11. BILLING INFORMATION (NOT APPLICABLE TO IRA OR IRA/SEP CONTRACTS)
a. Bill to the: [ ] Annuitant [ ] Owner [ ] See Section 8 or Section 11b.
b. Billing Address: _________________________________________________________
_________________________________________________________
c. Billing Frequency: [ ] Annual [ ] Quarterly [ ] Monthly [ ] Semi-Mon
[ ] _______________________
d. Non-Paying Months (X): [J] [F] [M] [A] [M] [J] [J] [A] [S] [O] [N] [D]
==============================================================================
All statements made in this application (including the reverse side) are true
to the best of our knowledge and belief, and we agree to all terms and
conditions as shown on the front and back. We further agree that this
application shall be a part of the annuity contract, and verify our
understanding that all payments and values provided by the contract, when
based on investment experience of the variable account, are variable and not
guaranteed as to dollar amount. We acknowledge receipt of current
prospectuses. The variable annuity applied for is not unsuitable for my
investment objective, financial situation and needs. Under penalty of perjury,
the contract owner(s) certifies that the Social Security (or Taxpayer
Identification) number is correct as it appears in this application.
Signed at _______________________ this _____ day of _______________, 19__
___________________________________ X_______________________________________
Signature of Joint Owner/Applicant Signature of Annuitant
(if other than Annuitant) Amounts payable under the contract may
be subject to a market value adjustment
if withdrawals or transfers are made
___________________________________ prior to a date specified in the
Signature of Owner/Applicant contract.
(if other than Annuitant)
AGENT'S REPORT
Will the proposed contract replace any existing annuity or insurance contract?
[ ] No [ ] Yes - replacement requirements must be completed. Agent's initials
certifying any replacement requirement has been met: ____________
REGISTERED REPRESENTATIVE CERTIFICATION
I certify that I have asked all the questions in the application and correctly
recorded the proposed Annuitant's answers. To the best of my knowledge I have
presented to the Company all the pertinent facts, and I know nothing
unfavorable about the proposed Annuitant that is not stated in the
application.
I further certify that I am properly licensed to sell variable annuities in
the state in which the proposed Annuitant resides and that no sales material
other than that furnished by the Home Office was used.
Signed at _______________________ this _____ day of _______________, 19__
(Where applicable)
____________________ [ ] Trail [ ] No Trail __________________________________
Agent Number Registered Representative
VARIABLE ANNUITY APPLICATION
SUPPLEMENT FOR INVESTMENT SELECTION
GREAT AMERICAN RESERVE INSURANCE COMPANY
Administrative Office: 11815 N. Pennsylvania Street
P.O. Box 1911, Carmel, IN 46032-4911
[ ] For Group Applicants ONLY:
Application is hereby made to the GARCO Group Benefits Insurance Trust.
1. CONTRACT/CERTIFICATE OWNER(S) (SAME AS THE APPLICATION TO WHICH THIS
SUPPLEMENT IS ATTACHED)
Name(s) __________________________________________________ Age(s) ____________
first mi last
2. PRODUCT SELECTION (SAME AS THE APPLICATION TO WHICH THIS SUPPLEMENT IS
ATTACHED)
[X] MONUMENT
This Supplement is a part of the application attached and dated: __/__/__
3. INVESTMENT SELECTION
Limit of 15 funds per payment type. Use whole percentages. The percentages for
all portfolios must equal 100%.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CONSECO CAPITAL MGMT FRED ALGER MGMT VAN ECK ASSOCIATES FEDERATED ADVISERS
[ ] % Asset Allocation [ ] % Growth [ ] % Worldwide [ ] % International Stock
[ ] % Common Stock [ ] % Leveraged AllCap Emerging Markets
[ ] % Corp. Bond [ ] % MidCap Growth [ ] % Gold/Natural Res. MARKET VALUE
[ ] % Gov't Securities [ ] % Small Cap [ ] % Worldwide Hard ADJUSTMENT ACCOUNTS
[ ] % Money Market Assets
EVERGREEN ASSET WEISS, PECK & GREER Indicate percentage and
MANAGEMENT [ ] % Core Large-Cap Stock OFFITBANK period for each selected.
[ ] % VA Foundation [ ] % Core Small-Cap Stock [ ] % Investment Grade
[ ] % VA Growth & Income Global Debt Time periods up to 10
[ ] % Evergreen VA LORD, ABBETT & CO. [ ] % Total Return years will vary in
[ ] % Growth & Income availability.
INVESCO FUND GROUP [ ] % _______ Years
[ ] % High Yield [ ] % _______ Years
[ ] % Industrial Income [ ] % _______ Years
[ ] % _______ Years
[ ] % _______ Years
</TABLE>
=============================================================================
All statements made in this application supplemental form are true to the best
of our knowledge and belief, and we agree to all terms and conditions as shown
on this supplemental form. We further agree that this supplement shall be a
part of the annuity contract, and verify our understanding that all payments
and values provided by the contract, when based on investment experience of
the variable account, are variable and not guaranteed as to dollar amount. We
acknowledge receipt of current prospectuses. The variable annuity applied for
is not unsuitable for my investment objective, financial situation and needs.
Under penalty of perjury, the contract owner(s) certifies that the Social
Security (or Taxpayer Identification) number is correct as it appears in the
application to which this supplemental form is attached.
Signed at _______________________ this _____ day of _______________, 19__
X__________________________________ X____________________________________
Signature of Joint Owner Signature of Owner/Applicant
(if other than Annuitant)
RESTRICTIONS ON DISTRIBUTIONS ACKNOWLEDGMENT (403(B) ONLY)
Section 403(b) of the Internal Revenue Code of 1986 provides that
distributions (including surrenders, partial surrenders and contract proceeds)
under an annuity policy attributable to contributions made pursuant to a
salary reduction agreement shall not begin prior to the time the employee:
(a) attains age 59 1/2, separates from the service of his or her
employer, dies or becomes disabled or
(b) suffers a financial hardship as defined in the then current Internal
Revenue Service regulations, with distribution limited to actual
salary deferral contributions without earnings thereon.
This Section applies only to distributions attributable to amounts accrued
under any such policy after December 31, 1988.
I understand (1) the above restrictions on distributions imposed by Section
403(b) of the Internal Revenue Code of 1986 and (2) the other investment
alternatives available under my employer's 403(b) plan, to which I may elect
to transfer my contract value.
_________________________ X_________________________________________
Date Signature of Owner/Annuitant
EXHIBIT 99.B6(i)
COPY OF ARTICLES OF INCORPORATION OF THE COMPANY
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
GREAT AMERICAN RESERVE INSURANCE COMPANY
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act and Article 3.05 of the Insurance Code of Texas, Great
American Reserve Insurance Company (herein after referred to as the
"Corporation") adopts the following Articles of Amendment to its Articles of
Incorporation:
ARTICLE ONE
The name of the corporation is Great American Reserve Insurance Company.
ARTICLE TWO
The following amendment to the Articles of Incorporation was adopted by
the sole shareholder of the Corporation pursuant to a written consent dated
June 27, 1990:
RESOLVED, that Article II of the Articles of Incorporation of the
Corporation be amended to read as follows:
"ARTICLE II
The location of its home office shall be Amarillo, Potter County, Texas."
ARTICLE THREE
The following amendment to the Articles of Incorporation was adopted by
the sole shareholder of the Corporation pursuant to a written consent dated
June 27, 1990:
RESOLVED, that Article VI of the Articles of Incorporation of the
Corporation be amended to read as follows:
"ARTICLE VI
The corporation shall have a Board of Directors of not less than five (5)
nor more than fifteen (15), which shall manage the affairs and property of the
corporation. The By-Laws shall specify the number of directors within the
limits herein specified, and such number may be increased or decreased from
time to time by amendment to the By-Laws of the corporation, but shall never
be decreased to less than five (5) in number. The directors shall be elected
annually or as provided by law and shall hold office until their successors
are elected and qualify. The initial Board of Directors shall consist of
seven (7) directors."
ARTICLE FOUR
The total number of shares of the Corporation outstanding at the time of
such adoption was one million fifty-three thousand five hundred sixty-five
(1,053,565) and the number of shares entitled to vote thereon was one million
forty-three thousand five hundred sixty-five (1,043,565).
ARTICLE FIVE
The holder of all of the one million forty-three thousand five hundred
sixty-five (1,043,565) shares outstanding and entitled to vote on said
amendment has signed a consent in writing voting for said amendment. No votes
were cast against said amendment.
IN WITNESS WHEREOF, the undersigned officer executes these Articles of
Amendment to the Articles of Incorporation of Great American Reserve Insurance
Company, this 28th day of September, 1990.
GREAT AMERICAN RESERVE INSURANCE
COMPANY
/s/DONALD F. GONGAWARE
____________________________
Donald F. Gongaware, President
Attest:
/s/ ERIC S. TOOKER
________________________________
Eric S. Tooker, Assistant
Secretary
STATE OF INDIANA )
)
COUNTY OF HAMILTON )
Before me, a Notary Public in and for said County and State personally
appeared Donald F. Gongaware, President, and Eric S. Tooker, Assistant
Secretary, of Great American Reserve Insurance Company who acknowledged the
execution of the foregoing instrument, and who, having been duly sworn, stated
that any representations contained therein are true.
Witness my hand and Notarial Seal this 28th day of September, 1990.
/s/DEBORAH A. NEAL
_____________________________
Deborah A. Neal, Notary Public
Residing in Clinton County, IN
Commission Expires 8/4/94
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
GREAT AMERICAN RESERVE INSURANCE COMPANY
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act and Article 3.05 of the Insurance Code of Texas, the
undersigned corporation adopts the following Articles of Amendment to the
Articles of Incorporation of GREAT AMERICAN RESERVE INSURANCE COMPANY, which
amendment has the effect of eliminating the personal liability of a director
of the corporation to the corporation or its stockholders for monetary damages
for an act or omission in the director's capacity as a director as authorized
by Article 13.02-7.06, Texas Miscellaneous Corporation Laws Act.
ARTICLE ONE
The name of the corporation is GREAT AMERICAN RESERVE INSURANCE COMPANY.
ARTICLE TWO
The following amendment to the Articles of Incorporation was adopted by
the shareholders of the Corporation on the 17th day of December, 1987. The
Amendment, Article VII, is an addition to the Articles of Incorporation as
amended and the full text of the provision added is as follows:
"ARTICLE VII
A director of the corporation shall not be liable to the corporation or
its shareholders for monetary damages for an act or omission in the director's
capacity as a director, except that this Article does not eliminate or limit
the liability of a director for:
(1) a breach of a director's duty of loyalty to the corporation or its
shareholders;
(2) an act or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law;
(3) a transaction from which a director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope of
the director's office;
(4) an act or omission for which the liability of a director is expressly
provided for by statute; or
(5) an act related to an unlawful stock repurchase or payment of a
dividend.
No repeal or modification of this Article VII by the shareholders of the
corporation shall adversely affect any right or protection of a director
existing at the time of such repeal or modification with respect to events or
circumstances occurring or existing prior to such time.
ARTICLE THREE
The total number of shares of the corporation outstanding at the time of
such adoption was one million fifty-three thousand five hundred sixty-five
(1,053,565) and the number of shares entitled to vote thereon was one million
forty-three thousand five hundred sixty-five (1,043,565).
ARTICLE FOUR
The holder of all of the one million forty-three thousand five hundred
sixty-five (1,043,565) shares outstanding and entitled to vote on said
amendment has signed a consent in writing voting for said amendment. No votes
were cast against said amendment.
Date: December 17, 1987 GREAT AMERICAN RESERVE INSURANCE
COMPANY
By: /s/ THOMAS C. HARDY
_____________________________
THOMAS C. HARDY, President
By: /s/ J. RALPH WOOD, JR.
______________________________
J. RALPH WOOD, JR., SECRETARY
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
Before me, a Notary Public on this 17th day of December, 1987, personally
appeared Thomas C. Hardy, known to me to be the person whose name is
subscribed to the foregoing document, and being by me first duly sworn,
declared that the statements therein contained are true and correct.
Given under my hand and seal of office, this day of December 17, 1987.
(Notary Seal) /s/ ISABEL WOODFORD
_______________________
Notary Public in and for
the State of Texas
My commission expires:
3-23-91
_______
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
GREAT AMERICAN RESERVE INSURANCE COMPANY
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act and Article 3.05 of the Insurance Code of Texas, the
undersigned corporation adopts the following Articles of Amendment to the
Articles of Incorporation of GREAT AMERICAN RESERVE INSURANCE COMPANY, which
amendment has the effect of increasing the authorized capital stock from
$5,112,000.00 to $9,112,000.00 by creating a new class of preferred stock of
40,000 shares of the par value of $100.00 each so that the capital stock of
the corporation shall be $9,112,000.00 divided into 1,065,000 shares of common
stock of the par value of $4.80 each and 40,000 shares of preferred stock of
the par value of $100.00 each.
ARTICLE ONE
The name of the corporation is GREAT AMERICAN RESERVE INSURANCE COMPANY.
ARTICLE TWO
The following amendment to the Articles of Incorporation was adopted by
the shareholders on the 28th day of May, 1985.
"Article IV of the Article of Incorporation of GREAT AMERICAN RESERVE
INSURANCE COMPANY is hereby amended so as to hereafter read as follows:
"ARTICLE IV
"The aggregate amount of the authorized capital stock of this corporation
shall be $9,112,000.00, divided into: (1) 1,065,000 shares of common stock,
each of the par value of $4.80; and (2) 40,000 shares of preferred stock, each
of the par value of $100.00.
"The preferred stock may be issued in one or more series. The
designations, preferences and other special rights, of the preferred stock of
each series shall be such as are stated and expressed herein and, to the
extent not stated and expressed herein, shall be such as may be fixed by the
Board of Directors (authority so to do being hereby expressly granted) and
stated and expressed in a resolution of resolutions adopted by the Board of
Directors providing for the issue of preferred stock of such series. Such
resolution or resolutions shall (a) specify the series to which the preferred
stock shall belong, (b) state whether a dividend shall be payable in cash,
stock or otherwise, whether such dividend shall be cumulative or
non-cumulative and whether the preferred stock of such series shall rank on
parity with any other series of preferred stock as to dividend and fix the
dividend rate therefor (or the manner of computing the rate of such dividends
thereon), (c) fix the amount which the holders of the preferred stock of such
series shall be entitled to be paid in the event of a voluntary or involuntary
liquidation, dissolution or winding up of the corporation, (d) state whether
or not the preferred stock of such series shall be redeemable and at what
times and under what conditions and the amount or amounts payable thereon in
the event of redemption; and may provide for a sinking fund for the purchase
or redemption; or a purchase fund for the purchase of shares of such series
and the terms and provisions governing the operation of any such fund and the
status as to reissuance of shares of preferred stock purchased or otherwise
reacquired or redeemed or retired through operation thereof, and that so long
as the corporation is in default as to such sinking or purchase fund the
corporation shall not (with such exceptions, if any, as may be provided) pay
any dividends upon or purchase or redeem shares of capital common stock with
respect to dividends or distribution of assets upon liquidation; and grant
such other special rights to the holders of shares of such series as the Board
of Directors may determine and as shall not be inconsistent with the
provisions of this Article."
ARTICLE THREE
The total number of shares of the corporation outstanding at the time of
such adoption was one million forty-three thousand five hundred sixty-five
(1,043,565) and the number of shares entitled to vote thereon was one million
forty-three thousand five hundred sixty-five (1,043,565).
ARTICLE FOUR
The holder of all of the one million forty three thousand five hundred
sixty-five (1,043,565) shares outstanding and entitled to vote on said
amendment has signed a consent in writing voting for said amendment. No votes
were cast against said amendment.
ARTICLE FIVE
The amendment does not provide for any exchange, reclassification or
cancellation of issued shares. The amendment does not change the amount of
stated capital, but creates a new class of shares, same being forty thousand
(40,000) preferred shares of $100.00 par value, with all the rights and
privileges specified in Article Two hereof, which will be authorized but
unissued. If any of such preferred shares are issued, the amount of stated
capital will be increased by a sum equal to the par value of those shares
issued.
DATED: May 28, 1985. GREAT AMERICAN RESERVE INSURANCE
COMPANY
By: /s/ THOMAS C. HARDY
_____________________________
THOMAS C. HARDY, President
By: /s/ J. RALPH WOOD, JR.
_______________________________
J. RALPH WOOD, JR., SECRETARY
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
I, Wanda Lee, a Notary Public, do hereby certify that on this the 28th
day of May, 1985, personally appeared before me Thomas C. Hardy, who declared
that he is President of the corporation executing the foregoing instrument,
and being by me first duly sworn, acknowledged that he signed the foregoing
document in the capacity therein set forth and declared that the statements
therein contained are true.
IN WITNESS WHEREOF, I hereunto set my hand and seal of office, the date
and year before written.
(Notary Seal) /s/ WANDA LEE
_______________________
Notary Public in and for
the State of Texas
My commission expires:
November 30, 1988 WANDA LEE
_________________ _______________________
(Printed Name of Notary)
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
I, Wanda Lee, a Notary Public, do hereby certify that on this the 28th
day of May, 1985, personally appeared before me J. Ralph Wood, Jr., who
declared that he is Secretary of the corporation executing the foregoing
instrument, and being by me first duly sworn, acknowledged that he signed the
foregoing document in the capacity therein set forth and declared that the
statements therein contained are true.
IN WITNESS WHEREOF, I hereunto set my hand and seal of office, the date
and year before written.
(Notary Seal) /s/ WANDA LEE
_______________________
Notary Public in and for
the State of Texas
My commission expires:
November 30, 1988 WANDA LEE
_________________ ________________________
(Printed Name of Notary)
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
GREAT AMERICAN RESERVE INSURANCE COMPANY
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act and Article 3.05 of the Insurance Code of Texas, the
undersigned corporation adopts the following Articles of Amendment to the
Articles of Incorporation of GREAT AMERICAN RESERVE INSURANCE COMPANY, which
amendment has the effect of increasing the authorized capital stock from
$2,130,000.00 to $5,112,000.00 by increasing the par value of the shares of
common stock from Two and No/100 Dollars ($2.00) par value to Four and 80/100
Dollars ($4.80) par value; the number of authorized shares remains unchanged.
ARTICLE ONE
The name of the corporation is GREAT AMERICAN RESERVE INSURANCE COMPANY.
ARTICLE TWO
The following amendment to the Articles of Incorporation was adopted by
the shareholders on the 8th day of November, 1984.
"Article IV of the Articles of Incorporation of GREAT AMERICAN RESERVE
INSURANCE COMPANY is hereby amended so as to hereafter read as follows:
"ARTICLE IV.
"The amount of the authorized capital stock of this corporation shall be
$5,112,000.00, divided into 1,063,000 shares of common stock of the par value
of $4.80 each."
ARTICLE THREE
The total number of shares of the corporation outstanding at the time of
such adoption was one million forty-three thousand five hundred sixty-five
(1,043,565) and the number of shares entitled to vote thereon was one million
forty-three thousand five hundred sixty-five (1,043,565).
ARTICLE FOUR
The holder of all of the shares outstanding and entitled to vote on said
amendment has signed a consent in writing adopting said amendment.
ARTICLE FIVE
The amendment does not provide for any reclassification or cancellation
of issued shares; present shares of $2.00 par value will be exchanged for
shares of $4.80 par value.
ARTICLE SIX
The manner in which such amendments effect a change in the amount of the
stated capital, and the amount of stated capital as changed by such amendment,
are as follows: The amount of stated capital is increased from Two Million
Eighty-seven Thousand One Hundred Thirty and No/100 Dollars ($2,087,130.00) to
Five Million Nine Thousand One Hundred Twelve and No/100 Dollars
(5,009,112.00), and the number of authorized shares representing such capital
shall remain the same but the par value of each share shall be increased from
Two and No/100 Dollars ($2.00) to Four and 80/100 Dollars ($4.80). Such
increase in stated capital will be effected by a transfer of Two Million Nine
Hundred Twenty-One Thousand Nine Hundred Eighty-two and No/100 Dollars
($2,921,982.00) from contributed surplus of the corporation to its capital
account. Present outstanding shares of $2.00 par value common stock shall be
exchanged share for share for $4.80 par value common stock.
DATED: November 8, 1984.
GREAT AMERICAN RESERVE INSURANCE
COMPANY
By: /s/ THOMAS C. HARDY
_____________________________
Thomas C. Hardy, President
and
By: /s/ TERRENCE L. WHITWORTH
_____________________________
Terrence L. Whitworth, SECRETARY
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
I, Nancy L. Casper, a Notary Public, do hereby certify that on this the
8th day of November, 1984, personally appeared before me Tom Hardy, who
declared that he is President of the corporation executing the foregoing
instrument, and being by me first duly sworn, acknowledged that he signed the
foregoing document in the capacity therein set forth and declared that the
statements therein contained are true.
IN WITNESS WHEREOF, I hereunder set my hand and seal of office, the date
and year before written.
(Notary Seal) /s/ NANCY L. CASPER
_______________________
Notary Public in and for
the State of Texas
My commission expires:
May 24, 1988 Nancy L. Casper
_________________ ________________________
(Printed Name of Notary)
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
I, Nancy L. Casper, a Notary Public, do hereby certify that on this the
8th day of November, 1984, personally appeared before me Terrence L.
Whitworth, who declared that he is Secretary of the corporation executing the
foregoing instrument, and being by me first duly sworn, acknowledged that he
signed the foregoing document in the capacity therein set forth and declared
that the statements therein contained are true.
IN WITNESS WHEREOF, I hereunder set my hand and seal of office, the date
and year before written.
(Notary Seal) /s/ NANCY L. CASPER
_______________________
Notary Public in and for
the State of Texas
My commission expires:
May 24, 1988 NANCY L. CASPER
_________________ ____________________________
(Printed Name of Notary)
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
GREAT AMERICAN RESERVE INSURANCE COMPANY
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act and the provisions of Chapter 3 of the Insurance Code of
Texas, the undersigned corporation adopts the following Articles of Amendment
to its Articles of Incorporation:
ARTICLE ONE. The name of the corporation is GREAT AMERICAN RESERVE
INSURANCE COMPANY.
ARTICLE TWO. The following amendment to the Articles of Incorporation
was adopted by the shareholders of the corporation on April 28, 1965. Article
IV of the Articles of Incorporation was amended to increase the capital stock
of the corporation from $2,100,000.00, divided into 1,050,000 shares of common
stock of the par value of $2.00 each to $2,130,000.00 by increasing the number
of shares to 1,065,000 of the common stock of the par value of $2.00 each.
The amendment changes Article IV of the Articles of Incorporation, and
said Article IV is hereby amended to read as follows:
"ARTICLE IV.
"The amount of the authorized capital stock of this corporation shall be
$2,130,000.00 divided into 1,065,000 shares of common stock of the par value
of $2.00 each."
ARTICLE THREE. The number of shares outstanding at the time of the
adoption of such amendment was 1,050,000 of common stock, all of the same
class and all entitled to vote.
ARTICLE FOUR. The number of shares voting for such amendment was
959,014 and the number of shares voting against such amendment was none.
ARTICLE FIVE. The manner in which the amendment shall be effected is
as follows:
14,900 shares will be issued to the stockholders of Hub Insurance Company
pursuant to Articles of Merger filed contemporaneously herewith.
ARTICLE SIX. The manner in which such amendment effects a change in
the amount of stated capital, and the amount of stated capital as changed by
the amendment, are as follows:
The amount of stated capital is increased from $2,100,000.00 to
$2,129,800.00. Said increase results from the application to capital of
$29,800.00 of earned surplus of the Company. The remaining 100 shares have
not been issued or paid for, and shall not constitute capital or stock or
capital stock of this company.
Dated this 3rd day of May, 1965.
GREAT AMERICAN RESERVE INSURANCE COMPANY
By /s/ C. D. SCOTT
___________________________________
Its President
And /s/ C. ROBERT HALL, JR.
____________________________________
Its Secretary
THE STATE OF TEXAS )
COUNTY OF DALLAS )
I, Peggy L. Edwards, a Notary Public, do hereby certify that on the 3rd
day of May, 1965, personally appeared before me C. D. SCOTT and C. ROBERT
HALL, JR., who declared to me that they are President and Secretary,
respectively, of the corporation executing the foregoing document, and being
first duly sworn, each acknowledged that they signed the foregoing document in
the capacities therein set forth and declared that the said statements therein
contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
/s/ PEGGY L. EDWARDS
____________________________________
Notary Public, Dallas County, Texas
My Commission Expires:
June 1, 1968
ARTICLES OF MERGER
OF DOMESTIC CORPORATIONS
Pursuant to the provisions of Article 5.07 of the Texas Business
Corporation Act, the undersigned domestic corporations adopt the following
Articles of Merger for the purpose of merging them into one of such
corporations:
1. The names of the undersigned corporations of the State of Texas are:
GREAT AMERICAN RESERVE INSURANCE COMPANY
HUB INSURANCE COMPANY
2. The name of the surviving corporation is GREAT AMERICAN RESERVE
INSURANCE COMPANY.
3. There is attached hereto a copy of the Plan of Merger.
4. The Plan of Merger hereto attached was approved by the shareholders
of the undersigned corporations in the manner prescribed by the Texas Business
Corporation Act.
5. As to each of the undersigned corporations, only stock of one class
is outstanding; and the number of shares outstanding, the number entitled to
vote, and the total voted for or against are shown in the following
tabulation, to-wit:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Name of Corporation Outstanding Entitled to Vote Voted for Voted Against
- ---------------------- ----------- ---------------- --------- -------------
Great American Reserve
Insurance Company 1,050,000 1,050,000 959,014 None
Hub Insurance Company 150,000 150,000 150,000 None
</TABLE>
Dated May 3rd, 1965.
GREAT AMERICAN RESERVE INSURANCE COMPANY
By /s/ C. D. SCOTT
______________________________________
Its President
And /s/ C. ROBERT HALL, JR.
_______________________________________
Its Secretary
HUB INSURANCE COMPANY
By /s/ E. C. PANNELL
______________________________________
Its President
And
______________________________
Its Secretary
THE STATE OF TEXAS )
OF DALLAS )
I, Peggy L. Edwards, a Notary Public, do hereby certify that on this 30th
day of April, 1965, personally appeared before me C. D. SCOTT, who, being by
me first duly sworn, declared that he is President of Great American Reserve
Insurance Company, that he signed the foregoing document as President of the
corporation, and that the statements therein contained are true.
/s/ PEGGY L. EDWARDS
____________________________________
Notary Public, Dallas County, Texas
THE STATE OF TEXAS )
COUNTY OF DALLAS )
I, Bernice L. Stedwick, a Notary Public, do hereby certify that on this
5th day of May, 1965, personally appeared before me E. C. PANNELL, who, being
by me first duly sworn, declared that he is President of Hub Insurance
Company, that he signed the foregoing document as President of the
corporation, and that the statements therein contained are true.
/s/ BERNICE L. STEDWICK
____________________________________
Notary Public, Dallas County, Texas
GREAT AMERICAN RESERVE INSURANCE COMPANY
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act and the provisions of Chapter 3 of the Insurance Code of
Texas, the undersigned corporation adopts the following Articles of Amendment
to its Articles of Incorporation:
ARTICLE ONE. The name of the corporation is GREAT AMERICAN RESERVE
INSURANCE COMPANY.
ARTICLE TWO. The following amendment to the Articles of Incorporation
was adopted by the shareholders of the corporation on March 10, 1964. Article
IV of the Articles of Incorporation was amended to increase the capital stock
of the corporation from $1,545,000.00 to $2,100,000.00, reducing the par value
of shares from $3.00 to $2.00 per share, and thus increasing the number of
shares from 515,000 of common stock of the par value of $3.00 per share to
1,050,000 shares of common stock of the par value of $2.00 per share.
The amendment changes Article IV of the Articles of Incorporation, and
said Article IV is hereby amended to read as follows:
"ARTICLE IV.
"The amount of the capital stock of this corporation shall be
$2,100,000.00, divided into 1,050,000 shares of common stock of the par value
of $2.00 each."
ARTICLE THREE. The number of shares outstanding at the time of the
adoption of such amendment was 515,000 of common stock, all of the same class
and all entitled to vote.
ARTICLE FOUR. The number of shares voting for such amendment was
428,690 and the number voting against such amendment was none.
ARTICLE FIVE. The manner in which the amendment shall be effected is
as follows:
To accomplish the net result of the reduction in par value and the stock
dividend, one additional share will be issued for each outstanding share.
ARTICLE SIX. The manner in which such amendment effects a change in
the amount of stated capital, and the amount of stated capital as changed by
the amendment, are as follows:
The amount of stated capital is increased from $1,545,000.00 to
$2,060,000.00. Said increase results from the application to capital of
$515,000.00 of surplus of the Company, for which a stock dividend of 257,500
shares of the par value of $2.00 each has been declared pro rata to all
stockholders of record as of March 6, 1964. The remaining 20,000 shares have
not been issued or paid for, and shall not constitute capital or stock or
capital stock of this Company.
Dated this 10th day of March, 1964.
GREAT AMERICAN RESERVE INSURANCE COMPANY
By /s/ C. D. SCOTT
___________________________________
Its President
And /s/ C. ROBERT HALL, JR.
____________________________________
Its Secretary
THE STATE OF TEXAS )
COUNTY OF DALLAS )
I, Doris L. Pockmann, a Notary Public, do hereby certify that on the 12th
day of March, 1964, personally appeared before me C. D. SCOTT and C. ROBERT
HALL, JR., who, declared to me that they are President and Secretary,
respectively, of the corporation executing the foregoing document, and being
first duly sworn, each acknowledged that they signed the foregoing document in
the capacities therein set forth and declared that the said statements therein
contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
/s/ DORIS L. POCKMANN
____________________________________
Notary Public, Dallas County, Texas
My Commission Expires
June 1, 1965
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF DALLAS )
That we, C.V. Compton, T. W. Reagan, William Crawford III, T. V. Meyer
and Julia Shapard, all residents of the City and County of Dallas and citizens
of the State of Texas, under and by virtue of the laws of this State, do
hereby form and organize a body corporate for the purpose of transacting a
health, life and accident insurance business, and to that end we do hereby
adopt and subscribe the following Charter and Articles of Incorporation:
ARTICLE I.
The name of this company shall be ALL AMERICAN ASSURANCE COMPANY.
ARTICLE II.
The principal business office of said company shall be located at the
City of Dallas, County of Dallas, State of Texas.
ARTICLE III.
The purpose for which this corporation is formed is to engage in the
life, health and accident insurance business, and it shall have power only to
transact business within this State, and to write insurance only on the weekly
or monthly premium plan, and to issue no policy promising to pay more than one
thousand dollars in the event of death of the insured from natural causes, nor
more than two thousand dollars in the event of death of any person from
accidental causes, and it may issue, combined or separately, life, accident or
health insurance policies; all of which business may be conducted in one
department, and to do and perform all other kinds and character of business,
as such limited capital stock, life, health and accident insurance company,
permitted or authorized by the laws of the State of Texas.
ARTICLE IV.
The amount of its capital stock shall be $25,000.00, divided into 2,500
shares of $10.00 each. The entire amount of said capital has been subscribed
and paid in and is possessed by said company in money and the same is the bona
fide property of the said company.
ARTICLE V.
The period of time for which this company shall exist shall be 100 years.
ARTICLE VI.
The business and affairs of this corporation shall be supervised, managed
and controlled by a Board of Directors, the number of which is fixed at this
time at seven.
IN TESTIMONY WHEREOF, we hereunto subscribe our names this 8th day of
February, A. D. 1937.
NAME ADDRESS
/s/ C.V. COMPTON Dallas, Texas
________________________ _________________
/s/ T. W. REAGAN Dallas, Texas
________________________ _________________
/s/ WILLIAM CRAWFORD III Dallas, Texas
________________________ _________________
/s/ T. V. MEYER Dallas, Texas
________________________ _________________
/s/ JULIA SHAPARD Dallas, Texas
________________________ _________________
THE STATE OF TEXAS )
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, in and for the
County of Dallas, State of Texas, on this day personally appeared C.V.
Compton, T. W. Reagan, William Crawford III, T. V. Meyer and Julia Shapard, of
Dallas County, Texas, who being by me duly sworn do jointly and severally
depose and say:
That all of the material allegations and facts set forth and contained in
the annexed and foregoing Charter and Articles of Incorporation are to us as
therein stated, and we are and each of us is personally cognizant of all of
said facts.
That the $27,500.00 in cash representing the present capital stock of
said company and $2,500.00 surplus is now actually on deposit with the First
National Bank in Dallas, Texas, to the credit of said insurance company and
subject to the check of said company, and that the entire amount thereof has
been paid in and is possessed by said company in money and that the same is
the bona fide property of said insurance company.
WITNESS our hands this the 9th day of February, A. D. 1937.
/s/ C.V. Compton
________________________
/s/ T. W. Reagan
________________________
/s/ William Crawford III
________________________
/s/ T. V. Meyer
________________________
/s/ Julia Shapard
________________________
SWORN TO AND SUBSCRIBED BEFORE ME, by C.V. Compton, T. W. Reagan, William
Crawford III, T. V. Meyer and Julia Shapard, this the 9th day of February A.
D. 1937.
/s/ FAE WELLS
___________________________________
Notary Public, Dallas County, Texas
THE STATE OF TEXAS )
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, within and for the County of
Dallas, State of Texas, on this day personally appeared C.B. Parrott, who
being duly sworn, says on oath:
I am Active Vice President of the First National Bank in Dallas, of
Dallas, Texas, and am duly authorized to make this affidavit.
That All American Assurance Company, of Dallas, Texas, now in process of
being chartered, has now in the said First National Bank in Dallas, of Dallas,
Texas, to its credit, subject to its draft when organized, in actual cash,
$27,500.00, the amount of its capital stock and surplus; that said funds
belong to and are the property of the said proposed corporation and that said
funds are absolutely and unconditionally the property of the said corporation.
WITNESS MY HAND at Dallas, Texas, this the 9th day of February, A. D.
1937.
/s/ C. B. PARROTT
______________________________
SUBSCRIBED AND SWORN TO BEFORE ME, this the 9th day of February, A. D.
1937.
/s/ JACK C. BURBRON
______________________________
Notary Public, Dallas County, Texas
AMENDMENT TO THE ARTICLES OF INCORPORATION
OF GREAT AMERICAN RESERVE INSURANCE COMPANY
INCREASING ITS CAPITAL STOCK
TO $1,545,000.00
THE STATE OF TEXAS )
COUNTY OF DALLAS )
WHEREAS, at the regular meeting of the stockholders of Great American
Reserve Insurance Company, a corporation heretofore duly organized and
chartered under the laws of the State of Texas, held at the office of the
company in the City of Dallas, Dallas County, Texas, on the 8th day of March,
1960, in conformity with the laws of this State and the By-Laws of said
corporation, a majority of the stockholders of said corporation voted to
increase the authorized capital of said corporation from $1,030,000.00 to
$1,545,000.00, by increasing the number of shares to 515,000 and reducing the
par value of all shares to $3.00 per share; and
WHEREAS, at a meeting of the Board of Directors of said Great American
Reserve Insurance Company held on the 8th day of March, 1960 in the City of
Dallas, Texas, a quorum of said Board of Directors being present, pursuant to
the action and vote of the stockholders of said corporation above referred to,
said Board of Directors did unanimously vote to amend the Charter and Articles
of Incorporation of said Great American Reserve Insurance Company by
increasing the capital stock of said corporation from the present authorized
capital of $1,030,000.00 to the amount of $1,545,000.00, by increasing the
number of shares to 515,000 and reducing the par value of all shares to $3.00
per share; and
WHEREAS, pursuant to Resolutions of the stockholders and Board of
Directors, $515,000.00 of the increase in capital stock has been paid in by
application of earned surplus to capital and a stock dividend has been
declared, authorizing the issuance of an additional 171,666-2/3 shares of
common stock of the par value of $3.00 each, all as reflected in the certified
copy of the Resolutions and the affidavits of the officers of said corporation
hereto attached and accompanying this amendment, and the said amount of
$515,000.00 being now in possession of the company and credited to capital:
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, being a majority of the Board of Directors of
said Great American Reserve Insurance Company, and also being stockholders of
said corporation, by virtue of the laws of the State of Texas and the
authority vested in us by the action of the stockholders and the Board of
Directors of said corporation above referenced to, do hereby amend Article IV
of the Articles of Incorporation of said Great American Reserve Insurance
Company now on file with the State Board of Insurance of Texas, by changing
and increasing the amount of authorized capital stock of said corporation from
$1,030,000.00 to $1,545,000.00, divided into 515,000 shares of the par value
of $3.00 each, so that said Article IV shall hereafter read as follows:
"ARTICLE IV.
"The amount of the capital stock of this corporation shall be
$1,545,000.00, divided into 515,000 shares of common stock of the par value of
$3.00 each."
And we do hereby adopt, authenticate and certify this amendment to the
State Board of Insurance of Texas for the purpose and to the end that this
amendment when approved and filed, together with the original Charter and
Articles of Incorporation and all prior amendments thereto filed with said
State Board of Insurance of Texas, shall constitute the amended Articles of
Incorporation and Charter of said Great American Reserve Insurance Company.
IN WITNESS WHEREOF, we have hereunto subscribed our names this the 15th
day of March, 1960.
/s/ EARLE E. BAILEY
_______________________________
Earle E. Bailey
/s/ E. E. COMBEST
_______________________________
E. E. Combest
/s/ JEROME K. CROSSMAN
_______________________________
Jerome K. Crossman
/s/ L. E. ELLIOTT
_______________________________
L. E. Elliott
/s/ RICHARD J. HAMBLETON
_______________________________
Richard J. Hambleton
/s/ ORLO L. KARSTEN
_______________________________
Orlo L. Karsten
/s/ BLAGDEN MANNING
_______________________________
Blagden Manning
/s/ AVERY MAYS
_______________________________
Avery Mays
/s/ HENRY NEUHOFF, JR.
_______________________________
Henry Neuhoff, Jr.
/s/ W. H. PIERCE
_______________________________
W. H. Pierce
/s/ CHARLES D. SCOTT
_______________________________
Charles D. Scott
/s/ GLEN WALLACE
_______________________________
Glen Wallace
/s/ TRAVIS T. WALLACE
_______________________________
Travis T. Wallace
/s/ JOHN W. CROMWELL
_______________________________
John W. Cromwell
THE STATE OF TEXAS )
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Earle E. Bailey, E. E. Combest, John W. Cromwell, Jerome K. Crossman, L. E.
Elliott, Richard J. Hambleton, Orlo L. Karsten, Blagden Manning, Avery Mays,
Henry Neuhoff, Jr., W. H. Pierce, Charles D. Scott, Glen Wallace and Travis T.
Wallace, known to me to be the persons whose names are subscribed to the
foregoing instrument (Amendment to the Charter and Articles of Incorporation
of Great American Reserve Insurance Company) and severally acknowledged to me
that they each executed the same for the purposes and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 15th day of March, 1960.
/s/ PAT HOFFMAN
____________________________________
Notary Public, Dallas County, Texas
My commission expires June 1, 1961
AMENDMENT TO THE CHARTER
OF GREAT AMERICAN RESERVE INSURANCE COMPANY
INCREASING ITS CAPITAL STOCK
TO $1,030,000.00
THE STATE OF TEXAS )
COUNTY OF DALLAS )
WHEREAS, at the regular annual meeting of the Stockholders of Great
American Reserve Insurance Company held at the office of said company in the
City of Dallas, Dallas County, Texas, on the 8th day of March, 1955, in
conformity with the laws of this State and the By-Laws of said corporation,
the Stockholders of said corporation by a vote of more than a majority of all
the stock of said company, voted to increase the authorized capital of said
corporation; and
WHEREAS, at a meeting of the Board of Directors of said Great American
Reserve Insurance Company held on the 8th day of March, 1955 at the office of
said company in the City of Dallas, Texas, a quorum of said Board of Directors
being present, pursuant to the action and vote of the Stockholders of said
corporation above referred to, said Board of Directors did unanimously vote to
amend the Charter of said Great American Reserve Insurance Company by
increasing the capital stock of said corporation from the present authorized
capital of $400,000.00 to the amount of $1,030,000.00, said total capital of
said $1,030,000.00 to be divided into 103,000 shares of the par value of
$10.00 each; and
WHEREAS, pursuant to Resolutions of the Stockholders and Board of
Directors, $600,000.00 of the increase in capital stock has been paid in by
application of earned surplus to capital and a stock dividend has been
declared, authorizing the issuance of an additional 60,000 shares of common
stock of the par value of $10.00 each, all as reflected in the certified copy
of the Resolutions and the affidavits of the officers of said corporation
hereto attached and accompanying this amendment, and the said amount of
$600,000.00 is now in possession of the company and credited to capital; and
WHEREAS, the remaining 3,000 shares of the increase of capital was
subscribed by Travis T. Wallace, as Trustee, and paid in cash and is now in
possession of the company; NOW, THEREFORE,
KNOW ALL MEN BY THESE PRESENTS:
That we, Travis T. Wallace and John W. Cromwell, being the President and
Secretary respectively of said Great American Reserve Insurance Company, and
also being Stockholders and Directors of said corporation, by virtue of the
laws of the State of Texas and the authority vested in us by the action of the
Stockholders and the Board of Directors of said corporation above referred to,
do hereby amend Article IV of the Charter of said Great American Reserve
Insurance Company now on file with the Board of Insurance Commissioners of the
State of Texas, by changing and increasing the amount of authorized capital
stock of said corporation from $4,000,000.00 to $1,030,000.00 divided into
103,000 shares of the par value of $10.00 each, and we do hereby adopt,
authenticate and certify this amendment to the Board of Insurance
Commissioners of the State of Texas for action thereon as required by law,
for the purpose and to the end that this amendment when approved and filed,
together with the original Charter and all prior amendments thereto filed with
the Board of Insurance Commissioners of the State of Texas, shall constitute
the amended Charter of said Great American Reserve Insurance Company.
IN WITNESS WHEREOF, we have hereunto subscribed our names this the 23rd
day of March, 1955.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ JOHN W. CROMWELL
____________________________________
Secretary
THE STATE OF TEXAS )
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Travis T. Wallace and John W. Cromwell, President and Secretary respectively
of Great American Reserve Insurance Company, known to me to be the persons
whose names are subscribed to the foregoing instrument (Amendment to the
Charter of Great American Reserve Insurance Company), and severally
acknowledged to me that they each executed the same for the purposes and
consideration therein expressed, and in the capacities therein stated.
GIVEN under my hand and seal of office this 23rd day of March, 1955.
/s/ RUTH WYLIE
____________________________________
Notary Public, Dallas County, Texas.
AMENDMENT TO THE CHARTER
OF GREAT AMERICAN RESERVE INSURANCE COMPANY
INCREASING ITS CAPITAL STOCK
TO $1,030,000.00
THE STATE OF TEXAS )
COUNTY OF DALLAS )
WHEREAS, at the regular annual meeting of the Stockholders of Great
American Reserve Insurance Company held at the office of said company in the
City of Dallas, Dallas County, Texas, on the 8th day of March, 1955, in
conformity with the laws of this State and the By-Laws of said corporation,
the Stockholders of said corporation by a vote of more than a majority of all
the stock of said company, voted to increase the authorized capital of said
corporation; and
WHEREAS, at a meeting of the Board of Directors of said Great American
Reserve Insurance Company held on the 8th day of March, 1955, at the office of
said company in the City of Dallas, Texas, a quorum of said Board of Directors
being present, pursuant to the action and vote of the Stockholders of said
corporation above referred to, said Board of Directors did unanimously vote to
amend the Charter of said Great American Reserve Insurance Company by
increasing the capital stock of said corporation from the present authorized
capital of $400,000.00 to the amount of $1,030,000.00, said total capital of
said $1,030,000.00 to be divided into 103,000 shares of the par value of
$10.00 each; and
WHEREAS, pursuant to Resolutions of the Stockholders and Board of
Directors, $600,000.00 of the increase in capital stock has been paid in by
application of earned surplus to capital and a stock dividend has been
declared, authorizing the issuance of an additional 60,000 shares of common
stock of the par value of $10.00 each, all as reflected in the certified copy
of the Resolutions and the affidavits of the officers of said corporation
hereto attached and accompanying this amendment, and the said amount of
$600,000.00 is now in possession of the company and credited to capital; and
WHEREAS, the remaining 3,000 shares of the increase of capital was
subscribed by Travis T. Wallace, as Trustee, and paid in in cash and is now in
possession of the company; NOW, THEREFORE,
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, being a majority of the Board of Directors of
said Great American Reserve Insurance Company, and also being Stockholders of
said corporation, by virtue of the laws of the State of Texas and the
authority vested in us by the action of the Stockholders and the Board of
Directors of said corporation above referred to, do hereby amend Article IV of
the Charter of said Great American Reserve Insurance Company now on file with
the Board of Insurance Commissioners of the State of Texas, by changing and
increasing the amount of authorized capital stock of said corporation from
$400,000.00 to $1,030,000.00 divided into 103,000 shares of the par value of
$10.00 each; and we do hereby adopt, authenticate and certify this amendment
to the Board of Insurance Commissioners of the State of Texas for the purpose
and to the end that this amendment when approved and filed, together with the
original Charter and all prior amendments thereto filed with the Board of
Insurance Commissioners of the State of Texas, shall constitute the amended
Charter of said Great American Reserve Insurance Company.
IN WITNESS WHEREOF, we have hereunto subscribed our names this the 8th
day of April, 1955.
/s/ TRAVIS T. WALLACE
____________________________________
/s/ C. O. HAMBLETON
____________________________________
/s/ EARLE E. BAILEY
____________________________________
/s/ E. E. COMBEST
____________________________________
/s/ CHARLES D. SCOTT
____________________________________
/s/ CECIL H. JONES
____________________________________
/s/ JOHN W. CROMWELL
____________________________________
/s/ L. E. ELLIOTT
____________________________________
/s/ C. C. MARTIN, SR.
____________________________________
THE STATE OF TEXAS )
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Travis T. Wallace, C. O. Hambleton, Earle E. Bailey, E. E. Combest, Charles D.
Scott, Cecil H. Jones, John W. Cromwell, L. E. Elliott and C. C. Martin, Sr.,
known to me to be the persons whose names are subscribed to the foregoing
instrument (Amendment to the Charter of Great American Reserve Insurance
Company), and severally acknowledged to me that they each executed the same
for the purposes and consideration therein expressed, and in the capacities
therein stated.
GIVEN under my hand and seal of office this 8th day of April, 1955.
/s/ SALLY JONES
____________________________________
Notary Public, Dallas County, Texas.
AMENDMENT TO THE CHARTER
OF GREAT AMERICAN RESERVE INSURANCE COMPANY
INCREASING ITS CAPITAL STOCK
TO $400,000.00
THE STATE OF TEXAS )
COUNTY OF DALLAS )
WHEREAS, at the regular annual meeting of the Stockholders of Great
American Reserve Insurance Company held at the office of said company in the
City of Dallas, Dallas County, Texas, on the 8th day of March, 1949, in
conformity with the laws of this State and the By-Laws of said corporation,
the Stockholders of said corporation by a vote of more than two-thirds of all
of the stock of said company, voted to increase the authorized capital of said
corporation; and
WHEREAS, at a meeting of the Board of Directors of said Great American
Reserve Insurance Company held on the 8th day of March, 1949, at the office of
said company in the City of Dallas, Texas, a quorum of said Board of Directors
being present, pursuant to the action and vote of the Stockholders of said
corporation above referred to, said Board of Directors did unanimously vote to
amend the Charter of said Great American Reserve Insurance Company by
increasing the capital stock of said corporation from the present authorized
capital of $250,000.00 to the amount of $400,000.00, said total capital of
said $400,000.00 to be divided into 40,000 shares of the par value of $10.00
each, and did furthermore authorize and direct said corporation to take all
necessary and proper legal steps to certify the Amendment to the Charter and
the increase in the capital of said corporation to the Board of Insurance
Commissions of the State of Texas for the purpose and to the end that said
amendment and the original Charter now on file with the said Board of
Insurance Commissioners, together with all amendments thereto heretofore made,
shall constitute the amended Charter of said corporation; and
WHEREAS, the said Stockholders and Board of Directors did by Resolution
duly adopted, authorize and declare a stock dividend of $150,000.00, by
increasing the 10,000 shares of the par value of $25.00 each to 40,000 shares
of the par value of $10.00 each: NOW, THEREFORE,
KNOW ALL MEN BY THESE PRESENTS: that
We, Travis T. Wallace and Cecil H. Jones, being the President and
Secretary respectively of said Great American Reserve Insurance Company, and
also being Stockholders and Directors of said corporation, by virtue of the
laws of the State of Texas and the authority vested in us by the action of the
Stockholders and the Board of Directors of said corporation above referred to,
do hereby amend Article IV of the original Charter of said Great American
Reserve Insurance Company now on file with the Board of Insurance
Commissioners of the State of Texas, by changing and increasing the amount of
authorized capital stock of said corporation from $250,000.00 to $400,000.00
divided into 40,000 shares of $10.00 each; and we do hereby adopt,
authenticate and certify this amendment to the Board of Insurance
Commissioners of the State of Texas for action thereon as required by law, for
the purpose and to the end that this amendment when approved and filed,
together with the original Charter and all prior amendments thereto filed with
the Board of Insurance Commissioners of the State of Texas, shall constitute
the amended Charter of said Great American Reserve Insurance Company.
IN WITNESS WHEREOF, we have hereunto subscribed our names this the 8th
day of March, 1949.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ CECIL H. JONES
____________________________________
Secretary
THE STATE OF TEXAS )
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Travis T. Wallace and Cecil H. Jones, President and Secretary respectively of
Great American Reserve Insurance Company, known to me to be the persons whose
names are subscribed to the foregoing instrument (Amendment to the Charter of
Great American Reserve Insurance Company), and severally acknowledged to me
that they each executed the same for the purposes and consideration therein
expressed, and in the capacities therein stated.
GIVEN under my hand and seal of office this 8th day of March, 1949.
/s/ RUTH WYLIE
___________________________________
Notary Public, Dallas County, Texas.
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
We, Travis T. Wallace and Cecil H. Jones, President and Secretary
respectively of Great American Reserve Insurance Company of Dallas, Texas,
being duly sworn, do jointly and severally depose and say:
That all of the material allegations and facts set forth and contained in
the annexed and foregoing Amendment to the Charter of Great American Reserve
Insurance Company of Dallas, Texas, are true as therein stated, and that they
are personally cognizant of all of said facts.
That the earned surplus of said corporation is in excess of said sum of
$150,000.00; that the Great American Reserve Insurance Company actually has on
hand on this date, in cash and other admissible property and securities under
the laws of the State of Texas, surplus in excess of said $150,000.00; that
the same is the bona fide property of said Great American Reserve Insurance
Company, and that there are no liens or claims of any kind against the same,
and it is available for transfer to the capital of said corporation as of this
date.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ CECIL H. JONES
____________________________________
Secretary
SUBSCRIBED and sworn to before me by Travis T. Wallace and Cecil H. Jones
this the 8th day of March, 1949.
/s/ RUTH WYLIE
___________________________________
Notary Public, Dallas County, Texas.
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
We, Travis T. Wallace, President and Cecil H. Jones, Secretary of Great
American Reserve Insurance Company, being duly sworn, do jointly and severally
depose and say:
That the above and foregoing is a true and correct statement of the
financial condition of Great American Reserve Insurance Company as of December
31, 1948, and shows an earned surplus in excess of $150,000.00, which said
surplus is possessed by Great American Reserve Insurance Company in cash and
other admitted assets, and that the amount of said earned surplus of said
corporation on March 8, 1949, is equal to or in excess of the surplus shown by
said statement as of December 31, 1948.
That the cash balances in bank, as shown by the attached and foregoing
statement, do not to any extent, directly or indirectly, represent borrowed
money; that the company is not indebted to said banks or to any of them, or to
any one else for the whole or any part of the funds represented by such bank
balances; that the same are unconditionally the property of the company, and
that there are no collateral agreements by which such funds or any part
thereof are withdrawable by any one except by the company for its own proper
uses, and as its unconditional assets; that the cash, securities and other
property of the company are unconditionally the assets of the company, and
sufficient in amount and value to provide the payment of the increased capital
stock of $150,000.00 in full, with surplus in addition thereto of
approximately $400,000.00.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ CECIL H. JONES
____________________________________
Secretary
SUBSCRIBED and sworn to before me by Travis T. Wallace and Cecil H. Jones
this the 8th day of March, 1949.
/s/ RUTH WYLIE
___________________________________
Notary Public, Dallas County, Texas
AMENDMENT OF CHARTER
OF GREAT AMERICAN RESERVE INSURANCE COMPANY
INCREASING ITS CAPITAL STOCK
TO $250,000.00
THE STATE OF TEXAS )
COUNTY OF DALLAS )
WHEREAS, at a Special Meeting of the stockholders of Great American
Reserve Insurance Company held at the office of said company in the City of
Dallas, Dallas County, Texas, on the 30th day of December, A.D., 1946, in
conformity with the laws of this state and the By-Laws of said Corporation,
the stockholders of said Corporation by a vote of more than two-thirds of all
the stock of said company, voted to increase the authorized capital of said
Corporation; and
WHEREAS, at a meeting of the Board of Directors of said Great American
Reserve Insurance Company held on the 30th day of December, 1946, in the
office of said company in the City of Dallas, Dallas County, Texas, a quorum
of said Board of Directors being present, pursuant to the action and vote of
the stockholders of said Corporation above referred to, said Board of
Directors did unanimously vote to amend the Charter of said Great American
Reserve Insurance Company by increasing the capital stock of said Corporation
from the present authorized capital of $100,000.00 to the amount of
$250,000.00, said total capital of said $250,000.00 to be divided into 10,000
shares of the par value of $25.00 each, and did furthermore authorize and
direct said Corporation to take all necessary and proper legal steps to
certify the amendment to the Charter and the increase in the capital of said
Corporation to the Board of Insurance Commissioners of the State of Texas for
the purpose and to the end that said amendment and original Charter now on
file with the said Board of Insurance Commissioners, together with all
amendments thereto heretofore made, shall constitute the amended charter of
said Corporation; and,
WHEREAS, the said stockholders and Board of Directors did by Resolutions
duly adopted, authorize and declare a stock dividend of 150% by increasing the
par value of each share issued and outstanding stock of said Corporation from
its present par value to the par value of $25.00:
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS: that we, Travis T.
Wallace and Earle E. Bailey, being the President and Secretary, respectively,
of said Great American Reserve Insurance Company, and also being stockholders
and directors of said Corporation, by virtue of the laws of the State of Texas
and the authority vested in us by action of the stockholders and Board of
Directors of said Corporation above referred to, do hereby amend Article IV of
the Original Charter of the said Great American Reserve Insurance Company now
on file with the Board of Insurance Commissioners of the State of Texas, by
changing and increasing the amount of authorized capital stock of said
Corporation from $100,000.00 to $250,000.00, divided into 10,000 shares of
$25.00 each, and we do hereby adopt, authenticate and certify this amendment
to the Board of Insurance Commissioners of the State of Texas for action
thereon as required by law, for the purpose and to the end that this
amendment, when approved and filed, together with the original Charter and all
prior amendments thereto filed with the Board of Insurance Commissioners of
the State of Texas shall constitute the Amended Charter of said Great American
Reserve Insurance Company.
IN WITNESS WHEREOF, we have hereunto subscribed our names this the 30th
day of December, 1946.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ EARLE E. BAILEY
____________________________________
Secretary
THE STATE OF TEXAS )
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
TRAVIS T. WALLACE and EARLE E. BAILEY, known to me to be the persons whose
names are subscribed to the foregoing instrument (Amendment to the Charter of
Great American Reserve Insurance Company), and severally acknowledged to me
that they each executed the same for the purposes and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 30th day of December,
1946.
/s/ SALLY JONES
___________________________________
Notary Public, Dallas County, Texas.
THE STATE OF TEXAS )
COUNTY OF DALLAS )
We, Travis T. Wallace and Earle E. Bailey, President and Secretary,
respectively, of the Great American Reserve Insurance Company, of Dallas,
Texas, being duly sworn, do jointly and severally depose and say:
That all of the material allegations and facts set forth and contained in
the annexed and foregoing amendment to the Charter of the Great American
Reserve Insurance Company of Dallas, Texas, are true, as therein stated, and
that they are personally cognizant of all the said facts.
That the earned surplus of said Corporation is in excess of the said sum
of $150,000.00. That the Great American Reserve Insurance Company actually
has on hand on this date in cash and other admissible property and securities,
under the laws of the State of Texas, surplus in excess of said amount of
$150,000.00; that the same is the bona fide property of said Great American
Reserve Insurance Company.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ EARLE E. BAILEY
____________________________________
Secretary
SUBSCRIBED AND SWORN TO before me by Travis T. Wallace and Earle E.
Bailey this the 30th day of December, 1946.
/s/ SALLY JONES
___________________________________
Notary Public, Dallas County, Texas.
THE STATE OF TEXAS )
COUNTY OF DALLAS )
WHEREAS, at a meeting of the stockholders of Great American Reserve
Insurance Company, held at the offices of said company in the City of Dallas,
Dallas County, Texas, on the 14th day of March, A.D. 1944, in conformity with
the laws of this State and the By-Laws of said corporation, the stockholders
of said corporation, by a vote of a majority of all of the stockholders of
said company, voted to change, amend and modify the purpose clause of said
corporation; and,
WHEREAS, at a meeting of the Board of Directors of said Great American
Reserve Insurance Company, held on the 14th day of March, A.D. 1944, at the
offices of said company in the City of Dallas, Dallas County, Texas, a quorum
of said Board of Directors being present, pursuant to the action and vote of
the stockholders of said corporation above referred to, did vote to amend
Article III of the Charter of said corporation, changing, amending and
modifying the purpose clause of the Charter of said corporation; and did
further authorize and direct the President and Secretary of said corporation
to take all necessary, and proper legal steps to certify the said amendment to
the charter of said corporation to the Board of Insurance Commissioners of the
State of Texas:
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, That we, Travis T.
Wallace and Earle E. Bailey, being the President and Secretary respectively of
said Great American Reserve Insurance Company, by virtue of the laws of the
State of Texas and the authority vested in us by the action of the
stockholders and the Board of Directors of said corporation above referred to;
DO HEREBY CERTIFY that Article III of the Charter of this corporation has
been, and is hereby amended to read as follows:
"ARTICLE III. The purpose for which this corporation is formed is to
engage in the life, health and accident insurance business, in accordance with
and as defined by Chapter 3 of Title 78 of the Revised Statutes of the State
of Texas, and to do and perform all other kinds and character of business, as
such life, health and accident insurance company is permitted or authorized to
do by the laws of the State of Texas."
AND WE DO HEREBY ADOPT, AUTHENTICATE AND CERTIFY this Amendment to the
Board of Insurance Commissioners of the State of Texas for action thereon as
required by law, for the purpose and to the end that this Amendment, when
approved and filed by said Board, together with the original Charter and
former amendments now on file with said Board of Insurance Commissioners,
shall constitute the amended charter of said Great American Reserve Insurance
Company.
IN WITNESS WHEREOF, we hereunto subscribe our names this the 15th day of
March, A.D. 1944.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ EARLE E. BAILEY
____________________________________
Secretary
STATE OF TEXAS )
COUNTY OF DALLAS )
BEFORE ME, THE UNDERSIGNED AUTHORITY, on this day personally appeared
Travis T. Wallace and Earle E. Bailey, known to me to be the persons whose
names are subscribed to the foregoing instrument, (amendment to the charter of
Great American Reserve Insurance Company) and severally, as President and
Secretary, respectively, of the Great American Reserve Insurance Company,
acknowledged to me that they each executed the same for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 16th day of March, A. D.
1944.
/s/ H. WALLACE
___________________________________
Notary Public, Dallas County, Texas.
THE STATE OF TEXAS )
COUNTY OF DALLAS )
We, Travis T. Wallace, President, and Earle E. Bailey, Secretary,
respectively, of the Great American Reserve Insurance Company, being duly
sworn, do jointly and severally depose and say:
That all of the material allegations of fact set forth and contained in
the annexed and foregoing amendment to the Charter of Great American Reserve
Insurance Company of Dallas, Texas, are true as therein stated, and that we
are personally cognizant of all of said facts.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ EARLE E. BAILEY
____________________________________
Secretary
SUBSCRIBED AND SWORN to before me by Travis T. Wallace and Earle E.
Bailey this the 16th day of March, A. D. 1944.
/s/ H. WALLACE
___________________________________
Notary Public, Dallas County, Texas.
AMENDMENT TO THE CHARTER
OF GREAT AMERICAN RESERVE INSURANCE COMPANY
INCREASING ITS CAPITAL STOCK TO $100,000.00
THE STATE OF TEXAS )
COUNTY OF DALLAS )
WHEREAS, at the annual meeting of the stockholders of Great American
Reserve Insurance Company held at the office of said Company in the City of
Dallas, Dallas County, Texas, on the 9th day of March, A. D. 1943, in
conformity with the laws of this State, and the By-Laws of said corporation,
the stockholders of said corporation by a vote of more than two-thirds of all
of the stock of said Company, voted to increase the authorized capital of said
corporation; and
WHEREAS, at a meeting of the Board of Directors of said Great American
Reserve Insurance Company held on the 9th day of March, A. D. 1943 at the
offices of said Company in the City of Dallas, Dallas County, Texas, a quorum
of said Board of Directors being present, pursuant to the action and vote of
the stockholders of said corporation above referred to, said Board of
Directors did unanimously vote to amend the Charter of the said Great American
Reserve Insurance Company by increasing the capital stock of said corporation
from the present authorized capital of $33,330.00 to the amount of
$100,000.00, said total capital of said $100,000.00 to be divided into 10,000
shares of the par value of $10.00 each, and did furthermore authorize and
direct the President and Secretary of said corporation to take all necessary
and proper legal steps to certify the amendment to the Charter and the
increase in the capital of said corporation to the Board of Insurance
Commissioners of the State of Texas, for the purpose and to the end that said
amendment and the original Charter now on file with said Board of Insurance
Commissioners, together with all amendments thereto heretofore made, shall
constitute the amended Charter of said corporation; and,
WHEREAS, the said stockholders and Board of Directors did, by Resolution
duly adopted, authorize and declare a stock dividend of two hundred per cent
(200%), being 6,666 shares of said increased capital stock to be issued to the
present stockholders of said corporation; and,
WHEREAS, the full amount of the balance of said increased capital, namely
$10.00, has been in good faith subscribed and paid in, and is possessed by
said Company in money, all of the aforesaid authorizations, actions and
proceedings of the stockholders and directors of said corporation, and the
subscriptions and payment to capital being reflected and set forth in the
certified copy of Resolution and the affidavit of the officers of said
corporation hereto attached, and accompanying this amendment:
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, That we, Travis T.
Wallace and C. O. Hambleton, being the President and Secretary, respectively,
of said Great American Reserve Insurance Company, and also being stockholders
and directors of said corporation, by virtue of the laws of the State of Texas
and the authority vested in us by the action of the stockholders and Board of
Directors of said corporation above referred to, do hereby amend Article IV,
of the original Charter of said Great American Reserve Insurance Company, now
on file with the Board of Insurance Commissioners of the State of Texas, by
changing and increasing the amount of authorized capital stock of said
corporation from $33,330.00 to $100,000.00 to be divided into 10,000 shares of
$10.00 each, and do hereby adopt, authenticate and certify this amendment to
the Board of Insurance Commissioners of the State of Texas for action thereon
as required by law, for the purpose and to the end that this amendment, when
approved and filed, together with the original Charter and all amendments
thereon filed with the Board of Insurance Commissioners of the State of Texas,
shall constitute the amended Charter of said Great American Reserve Insurance
Company.
IN WITNESS WHEREOF, we hereunto subscribe our names, this the 9th day of
March, A.D. 1943.
/s/ TRAVIS T. WALLACE
____________________________________
/s/ C. O. HAMBLETON
____________________________________
THE STATE OF TEXAS )
COUNTY OF DALLAS )
BEFORE ME, THE UNDERSIGNED AUTHORITY, on this day personally appeared
Travis T. Wallace and C. O. Hambleton, known to me to be the persons whose
names are subscribed to the foregoing instrument (amendment to the Charter of
Great American Reserve Insurance Company) and severally acknowledged to me
that they each executed the same for the purposes and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 9th day of March, A. D.
1943.
/s/ E. ACHILLES
___________________________________
E. ACHILLES, Notary Public, Dallas County, Texas
Notary Public, Dallas County, Texas.
THE STATE OF TEXAS )
COUNTY OF DALLAS )
We, Travis T. Wallace and C. O. Hambleton, President and Secretary,
respectively, of the Great American Reserve Insurance Company, of Dallas,
Texas, being duly sworn, do jointly and severally depose and say:
That all of the material allegations and facts set forth and contained in
the annexed and foregoing amendment to the Charter of the Great American
Reserve Insurance Company of Dallas, Texas, are true, as therein stated, and
that we are personally cognizant of all of said facts.
That the sum of $20.00 in cash representing one (1) share of the
increased capital stock of said Great American Reserve Insurance Company, and
an increase in the surplus of said Company of a like amount, has been
actually deposited by Travis T. Wallace to the credit of Great American
Reserve Insurance Company in the Texas Bank & Trust Company of Dallas, Texas,
and is possessed by said Company, and that the same is the bona fide property
of the said Great American Reserve Insurance Company. That the Great American
Reserve Insurance Company actually has on hand on this date, in cash and other
admissible property and securities, under the laws of the State of Texas,
surplus in the amount of $66,660.00; that the same is the bona fide property
of said Great American Reserve Insurance Company.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ C. O. HAMBLETON
____________________________________
Secretary
SWORN TO AND SUBSCRIBED before me, by Travis T. Wallace and C. O.
Hambleton, this the 9th day of March, A. D. 1943.
/s/ E. ACHILLES
____________________________________
Notary Public, Dallas County, Texas.
THE STATE OF TEXAS )
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared E. O. Terry, President of Texas Bank & Trust Company, of
Dallas, Texas, who, after being by me duly sworn, deposes and says: That he is
President of the Texas Bank & Trust Company, of Dallas. That the Great
American Reserve Insurance Company has on deposit in said Bank on this date
the sum of $53,958.77, and that said funds are free of all claims of any kind
or character insofar as said bank is concerned, and is the bona fide property
of the said Great American Reserve Insurance Company insofar as affiant has
any knowledge of.
Affiant further says that he is cognizant of the facts herein stated, and
makes this affidavit for the purpose of assisting the Great American Reserve
Insurance Company in securing an amendment to its charter, by which the
capital stock of said Company is increased from $33,330.00 to $100,000.00, one
(1) share of which has been paid by the deposit of Travis T. Wallace in this
bank to the credit of said corporation this date in the sum of $20.00.
/s/ E. O. TERRY
_____________________________
President, Texas Bank & Trust
Company of Dallas, Texas.
SUBSCRIBED AND SWORN TO BEFORE ME this the 9th day of March, A. D. 1943.
/s/ E. ACHIILLES
______________________________
Notary Public, Dallas County,
Texas
THE STATE OF TEXAS )
COUNTY OF DALLAS )
WHEREAS, at a meeting of the stockholders of Great American Reserve
Insurance Company, held at the Home Office of said corporation in the City of
Dallas, Dallas County, Texas, on the 10th day of March, A.D. 1942, in
conformity with the laws of this State and the by-laws of said corporation,
the stockholders of said corporation by a vote of more than two-thirds of all
of the stock of said company voted to increase the authorized capital stock of
said corporation; and
WHEREAS, at a meeting of the Board of Directors of said Great American
Reserve Insurance Company, held on the 10th day of March, A.D. 1942, at the
offices of said company in the City of Dallas, Dallas County, Texas, a quorum
of said Board of Directors being present, pursuant to the action and vote of
the stockholders of said corporation above referred to, said Board of
Directors did unanimously vote to amend the charter of said Great American
Reserve Insurance Company by increasing the capital stock of said corporation
from $31,000.00 to $33,330.00, said total capital stock of $33,330.00 to be
divided into 3,333 shares of the par value of $10.00 each; and did furthermore
authorize and direct the President and Secretary of corporation to take all
necessary and proper legal steps to certify the amendment to its charter
and the increase in the capital stock of said corporation to the Board of
Insurance Commissioners of the State of Texas, for the purpose and to the end
that said amendment and the original charter now on file with said Board of
Insurance Commissioners, together with such other amendments as have
heretofore been approved, shall constitute the amended charter of said
corporation; and
WHEREAS, said increased capital to the number of 233 shares has been in
good faith subscribed, and the sum of $2,330.00 is possessed by said company
in money, and in addition thereto the sum of $1165.00. has been in good faith
subscribed and paid in cash to the surplus of said corporation; and
WHEREAS, the stockholders and directors of said corporation have voted to
issue 233 shares of stock as set out and reflected in the certified copy of
resolution and the affidavit of the officers of said corporation hereto
attached and accompanying this amendment; NOW, THEREFORE,
KNOW ALL MEN BY THESE PRESENTS, That we, Travis T. Wallace, President,
and C. O. Hambleton, Secretary, of said Great American Reserve Insurance
Company, by virtue of the laws of the State of Texas and the authority vested
in us by the action of the stockholders and the Board of Directors of said
corporation, above referred to, do hereby amend Article V of the original
charter of said Great American Reserve Insurance Company, now on file with the
Board of Insurance Commissioners of the State of Texas, by changing and
increasing the amount of the authorized capital of said corporation from
$31,000.00 to $33,330.00 to be divided into 3,333 shares of $10.00 each, and
we do hereby adopt, authenticate and certify this amendment to the Board of
Insurance Commissioners of the State of Texas for action thereon as required
by law, for the purpose and to the end that this amendment, when approved and
filed by them, together with the original charter and prior amendment now on
file with said Board of Insurance Commissioners, shall constitute the amended
charter of said Great American Reserve Insurance Company.
IN WITNESS WHEREOF, we hereunto subscribe our names, this 10th day of
March, A.D. 1942.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ C. O. HAMBLETON
____________________________________
Secretary
THE STATE OF TEXAS )
COUNTY OF DALLAS )
Before me, the undersigned authority, on this day personally appeared
Travis T. Wallace and C. O. Hambleton, known to me to be the persons whose
names are subscribed to the foregoing instrument (amendment to charter of
Great American Reserve Insurance Company), and severally acknowledged to me
that they each executed the same for the purposes and consideration therein
expressed and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 10th day of March, A. D.
1942.
/s/ H. JOHNSEY
___________________________________
Notary Public, Dallas County, Texas
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
We, Travis T. Wallace, President, and C. O. Hambleton, Secretary,
respectively, of the Great American Reserve Insurance Company of Dallas,
Texas, being duly sworn, do jointly and severally depose and say:
That all of the material allegations and facts set forth and contained in
the annexed and foregoing amendment to the charter of Great American Reserve
Insurance Company are true as therein stated, and that we are personally
cognizant of all of said facts.
That the sum of $2,330.00 in cash, representing the full amount of
subscription for 233 shares of increased capital stock of the Great American
Reserve Insurance Company, and $1165.00 in cash, representing the increase in
surplus of said company, is now on deposit in the Texas Bank & Trust Company
of Dallas, Texas, to the credit of said Great American Reserve Insurance
Company and subject to the check of said company; that said amount of said
capital and surplus has been paid in and is possessed by said company in
money, and that the same is the bona fide property of the said Great American
Reserve Insurance Company. The certificate of the said Texas Bank & Trust
Company is hereto attached and made a part hereof showing such cash to be so
deposited and held by said bank.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ C. O. HAMBLETON
____________________________________
Secretary
SWORN TO AND SUBSCRIBED BEFORE ME by Travis T. Wallace and C. O.
Hambleton, this 10th day of March, A. D. 1942.
/s/ H. JOHNSEY
___________________________________
Notary Public, Dallas County, Texas
THE STATE OF TEXAS )
COUNTY OF DALLAS )
WHEREAS, at a meeting of the stockholders of Great American Reserve
Insurance Company, held at the Home Office of said corporation in the City of
Dallas, Dallas County, Texas, on the 12th day of March, A. D. 1940, in
conformity with the laws of this State and the by-laws of said corporation,
the stockholders of said corporation by a vote of more than two-thirds of all
of the stock of said company voted to increase the authorized capital stock of
said corporation; and,
WHEREAS, at a meeting of the Board of Directors of said Great American
Reserve Insurance Company, held on the 12th day of March, A. D. 1940, at the
offices of said company in the City of Dallas, Dallas County, Texas, a quorum
of said Board of Directors being present, pursuant to the action and vote of
the stockholders of said corporation above referred to, said Board of
Directors did unanimously vote to amend the charter of the said Great American
Reserve Insurance Company by increasing the capital stock of said corporation
from $25,000.00 to $31,000.00, said total capital of $31,000.00 to be divided
into 3,100 shares of the par value of $10.00 each; and did furthermore
authorize and direct the President and Secretary of said corporation to take
all necessary and proper legal steps to certify the amendment to its charter
and the increase in the capital of said corporation to the Board of Insurance
Commissioners of the State of Texas, for the purpose and to the end that said
amendment and the original charter now on file with said Board of Insurance
Commissioners, together with such other amendments as have heretofore been
approved, shall constitute the amended charter of said corporation; and,
WHEREAS, said increased capital to the number of 600 shares, has been in
good faith subscribed, and the sum of $6,000.00 is possessed by said company
in money, and in addition thereto the sum of $3,000.00 has been in good faith
subscribed and paid in cash to the surplus of said corporation; and,
WHEREAS, the stockholders and directors of said corporation have voted to
issue 600 shares of stock as set out and reflected in the certified copy of
resolution and the affidavit of the officers of said corporation hereto
attached and accompanying this amendment; NOW, THEREFORE,
KNOW ALL MEN BY THESE PRESENTS, That we, Travis T. Wallace, President,
and C. O. Hambleton, Secretary, of the said Great American Reserve Insurance
Company, by virtue of the laws of the State of Texas and the authority vested
in us by the action of the stockholders and Board of Directors of said
corporation, above referred to, do hereby amend Article V of the original
charter of said Great American Reserve Insurance Company, now on file with the
Board of Insurance Commissioners of the State of Texas, by changing and
increasing the amount of the authorized capital stock of said corporation from
$25,000.00 to $31,000.00, to be divided into 3,100 shares of $10.00 each, and
we do hereby adopt, authenticate and certify this amendment to the Board of
Insurance Commissioners of the State of Texas for action thereon as required
by law, for the purpose and to the end that this amendment, when approved and
filed by them, together with the original charter and prior amendment now on
file with said Board of Insurance Commissioners, shall constitute the amended
charter of said Great American Reserve Insurance Company.
IN WITNESS WHEREOF, we hereunto subscribe our names, this 12th day of
March, A.D. 1940.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ C. O. HAMBLETON
____________________________________
Secretary
THE STATE OF TEXAS )
COUNTY OF DALLAS )
Before me, the undersigned authority, on this day personally appeared
Travis T. Wallace and C. O. Hambleton, known to me to be the persons whose
names are subscribed to the foregoing instrument (amendment to charter of
Great American Reserve Insurance Company), and severally acknowledged to me
that they each executed the same for the purposes and consideration therein
expressed and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 14th day of March, A. D.
1940.
/s/ H. JOHNSEY
___________________________________
Notary Public, Dallas County, Texas.
THE STATE OF TEXAS )
COUNTY OF DALLAS )
We, Travis T. Wallace, President, and C. O. Hambleton, Secretary,
respectively, of the Great American Reserve Insurance Company of Dallas,
Texas, being duly sworn, do jointly and severally depose and say:
That all of the material allegations and facts set forth and contained in
the annexed and foregoing amendment to the charter of the Great American
Reserve Insurance Company are true as therein stated, and that we are
personally cognizant of all of said facts.
That the sum of $6,000.00 in cash, representing the full amount of
subscriptions for 600 shares of increased capital stock of the Great American
Reserve Insurance Company, and $3,000.00 in cash, representing the increase
in surplus of said company, is now on deposit in the Texas Bank & Trust
Company of Dallas, Texas, to the credit of said Great American Reserve
Insurance Company and subject to the check of said company; that said amount
of said capital and surplus has been paid in and is possessed by said company
in money, and that the same is the bona fide property of said Great American
Reserve Insurance Company. The certificate of said Texas Bank & Trust Company
is hereto attached and made a part hereof showing such cash to be so deposited
and held by said bank.
/s/ TRAVIS T. WALLACE
____________________________________
President
/s/ C. O. HAMBLETON
____________________________________
Secretary
SWORN TO AND SUBSCRIBED BEFORE ME by Travis T. Wallace and C. O.
Hambleton this 14th day of March, A. D. 1940.
/s/ H. JOHNSEY
___________________________________
Notary Public, Dallas County, Texas.
THE STATE OF TEXAS )
COUNTY OF DALLAS )
WHEREAS, at a special meeting of the Stockholders of All American
Assurance Company, held at the office of said Company, in the City of Dallas,
Dallas County, Texas, on the 16th day of July, A. D. 1937, in conformity with
the laws of the State and by-laws of said corporation, the stockholders of
said corporation by a vote of more than two-thirds of all of the stock of said
company voted to change the name of said corporation; and,
WHEREAS, at a meeting of the Board of Directors of said All American
Assurance Company, held on the 16th day of July, A.D. 1937, at the office of
the Company, in the City of Dallas, Dallas County, Texas, a quorum of said
Board of Directors being present, pursuant to the action and vote of the
stockholders of said corporation above referred to, the said Board of
Directors did unanimously vote to amend Article I of the Charter of said
corporation by changing the name of said corporation; and did further
authorize and direct the President and Assistant Secretary of said corporation
to take all necessary and proper legal steps to certify the aforesaid
amendment to the Charter of said corporation to the Board of Insurance
Commissioners of the State of Texas, for the purpose and to the end that said
amendment and the original Charter now on file with said Board of Insurance
Commissioners shall constitute the amended Charter of said corporation; and,
WHEREAS, all the aforesaid authorizations, actions and proceedings of the
stockholders and directors of said corporation are reflected and set forth in
certified copies of the resolutions hereto attached and accompanying this
amendment.
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, That we, C.V. Compton,
President, and T. V. Meyer, Assistant Secretary, of said All American
Assurance Company, by virtue of the laws of the State of Texas and the
authority vested in us by the action of the stockholders and Board of
Directors of said corporation above referred to,
DO HEREBY CERTIFY that Article I of the Charter of this corporation has
been and is hereby amended to read as follows:
"ARTICLE I.
"The name of this corporation shall be GREAT AMERICAN RESERVE INSURANCE
COMPANY."
And we do hereby adopt, authenticate and certify this amendment to the
Board of Insurance Commissioners of the State of Texas for action on as
required by law, for the purpose and to the end that this amendment when
approved and filed by said Board, together with the original Charter now on
file with said Board of Insurance Commissioners, shall constitute the amended
charter of said All American Assurance Company.
IN WITNESS WHEREOF we hereunto subscribe our names, this 16th day of
July, A. D. 1937.
/s/ C.V. COMPTON
____________________
President
/s/ T. V. MEYER
____________________
Assistant Secretary
THE STATE OF TEXAS )
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared C.
V. Compton and T. V. Meyer, known to me to be the persons whose names are
subscribed to the foregoing instrument ( amendment to the charter of All
American Assurance Company), and severally, as President and Assistant
Secretary, respectively, of the All American Assurance Company, acknowledged
to me that they executed the same for the purposes and consideration therein
expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 16th day of July, A. D.
1937.
/s/ O. D. BROWDRIDGE
___________________________________
Notary Public, Dallas County, Texas.
EXHIBIT 99.B6(ii)
BY-LAWS OF THE COMPANY
Amended and Restated
BY-LAWS
_______
OF
GREAT AMERICAN RESERVE INSURANCE COMPANY
_______________________________________
June 8, 1993
TABLE OF CONTENTS
_________________
Page
____
ARTICLE I Identification
Section 1. Name
Section 2. Registered Office and Registered Agent
Section 3. Principal Office
Section 4. Other Offices
Section 5. Seal
Section 6. Fiscal Year
ARTICLE II Shareholders
Section 1. Place of Meeting
Section 2. Annual Meetings
Section 3. Special Meetings
Section 4. Notice of Meeting
Section 5. Waiver of Notice
Section 6. Voting at Meetings
(a) Voting Rights
(b) Record Date
(c) Proxies
(d) Quorum
(e) Adjournments
Section 7. List of Shareholders
Section 8. Action by Written Consent
Section 9. Meeting by Telephone or Similar Communications Equipment
ARTICLE III Directors
Section 1. Duties
Section 2. Number of Directors
Section 3. Election and Term
Section 4. Resignation
Section 5. Vacancies
Section 6. Annual Meetings
Section 7. Regular Meetings
Section 8. Special Meetings
Section 9. Notice
Section 10. Waiver of Notice
Section 11. Business to be Transacted
Section 12. Quorum - Adjournment if Ouorum is Not Present
Section 13. Presumption of Assent
Section 14. Action by Written Consent
Section 15. Committees
Section 16. Meeting by Telephone or Similar Communication Equipment
ARTICLE IV Officers
Section 1. Principal Officers
Section 2. Election and Terms
Section 3. Resignation and Removal
Section 4. Vacancies
Section 5. Powers and Duties of Officers
Section 6. Chairman of the Board
Section 7. President
Section 8. Vice Presidents
Section 9. Secretary
Section 10. Treasurer
Section 11. Assistant Secretaries
Section 12. Assistant Treasurers
Section 13. Delegation of Authority
Section 14. Securities of Other Corporations
ARTICLE V Directors' Services, Limitation of Liability and Reliance on
Corporate Records, and Interest of Directors in Contracts
Section 1. Services
Section 2. General Limitation of Liability
Section 3. Reliance on Corporate Records and Other Information
Section 4. Interest of Directors in Contracts
ARTICLE VI Indemnification
Section 1. Indemnification Against Underlying Liability
Section 2. Successful Defense
Section 3. Determination of Conduct
Section 4. Payment of Expenses in Advance
Section 5. Indemnity Not Exclusive
Section 6. Insurance Indemnification
Section 7. Employee Benefit Plans
Section 8. Application of Indemnification and Advancement of Expenses
Section 9. Indemnification Payments
ARTICLE VII Shares
Section 1. Share Certificates
Section 2. Transfer of Shares
Section 3. Registered Holders
Section 4. Lost, Destroyed and Mutilated Certificates
Section 5. Consideration for Shares
Section 6. Payment for Shares
Section 7. Distributions to Shareholders
Section 8. Regulations
ARTICLE VIII Corporate Books and Reports
Section 1. Place of Keeping Corporate Books and Records
Section 2. Place of Keeping Certain Corporate Books and Records
Section 3. Permanent Records
Section 4. Shareholder Records
Section 5. Shareholder Rights of Inspection
Section 6. Additional Rights of Inspection
ARTICLE IX Miscellaneous
Section 1. Notice and Waiver of Notice
Section 2. Depositories
Section 3. Signing of Checks, Notes, etc.
Section 4. Gender and Number
Section 5. Laws
Section 6. Headings
ARTICLE X Amendments
ARTICLE XI The Texas Business Corporation Act
BY-LAWS
_______
OF
GREAT AMERICAN RESERVE INSURANCE COMPANY
________________________________________
ARTICLE I
_________
Identification
_______________
Section 1. Name. The name of the Corporation is Great American
Reserve Insurance Company (hereinafter referred to as the "Corporation").
Section 2. Registered Office and Registered Agent. The street
address of the Registered Office of the Corporation is 205 E. 10th Street,
Amarillo, Texas 79105; and the name of its Registered Agent located at such
office is William O. Daniel, Jr.
Section 3. Principal Office. The address of the Principal
Office of the Corporation is 11815 North Pennsylvania Street, Carmel, Indiana
46032. The Principal Office of the Corporation shall be the principal
executive and administrative offices of the Corporation, and such Principal
Office may be changed from time to time by the Board of Directors in the
manner provided by law and need not be the same as the Registered Office of
the Corporation.
Section 4. Other Offices. The Corporation may also have offices
at such other places or locations, within or without the State of Texas, as
the Board of Directors may determine or the business of the Corporation may
require.
Section 5. Seal. The Corporation need not use a seal. If one
is used, it shall be circular in form and mounted upon a metal die suitable
for impressing the same upon paper. About the upper periphery of the seal
shall appear the words "Great American Reserve Insurance Company" and about
the lower periphery thereof the word "Texas". In the center of the seal shall
appear the word "Seal". The seal may be altered by the Board of Directors at
its pleasure and may be used by causing it or a facsimile thereof to be
impressed, affixed, printed or otherwise reproduced.
Section 6. Fiscal Year. The fiscal year of the Corporation
shall begin at the beginning of the first day of January in each year and end
at the close of the last day of December next succeeding.
ARTICLE II
__________
Shareholders
____________
Section 1. Place of Meeting. All meetings of shareholders of
the Corporation shall be held at such place, within or without the State of
Texas, as may be determined by the President or Board of Directors and
specified in the notices or waivers of notice thereof or proxies to represent
shareholders at such meetings.
Section 2. Annual Meetings. An annual meeting of shareholders
shall be held each year on such date and at such time as may be determined by
the President or Board of Directors. The failure to hold an annual meeting at
the designated time shall not affect the validity of any corporate action. Any
and all business of any nature or character may be transacted, and action may
be taken thereon, at any annual meeting, except as otherwise provided by law
or by these By-laws.
Section 3. Special Meetings. A special meeting of shareholders
shall be held: (a) on call of the Board of Directors or the President; or (b)
if the holders of at least twenty-five percent (25%) of all the votes entitled
to be cast on any issue proposed to be considered at the proposed special
meeting sign, date and deliver to the Secretary one (1) or more written
demands for the meeting describing the purpose or purposes for which it is to
be held. At any special meeting of the shareholders, only business within the
purpose or purposes described in the notice of the meeting may be conducted.
Section 4. Notice of Meeting. Written or printed notice stating
the date, time and place of a meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered or
mailed by the Secretary, or by the officers or persons calling the meeting, to
each shareholder of record of the Corporation entitled to vote at the meeting,
at such address as appears upon the records of the Corporation, no fewer than
ten (10) days nor more than sixty (60) days, before the meeting date. If
mailed, such notice shall be effective when mailed if correctly addressed to
the shareholder's address shown in the Corporation's current record of
shareholders.
Section 5. Waiver of Notice. A shareholder may waive any notice
required by law, the Articles of Incorporation or these By-laws before or
after the date and time stated in the notice. The waiver by the shareholder
entitled to the notice must be in writing and be delivered to the Corporation
for inclusion in the minutes or filing with the corporate records. A
shareholder's attendance at a meeting, in person or by proxy: (a) waives
objection to lack of notice or defective notice of the meeting, unless the
shareholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting; and (b) waives objection to consideration
of a particular matter at the meeting that is not within the purpose or
purposes described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.
Section 6. Voting at Meetings.
(a) Voting Rights. At each meeting of the shareholders, each
outstanding share, regardless of class, is entitled to one (1) vote on each
matter voted on at such meeting, except to the extent cumulative voting is
allowed by the Articles of Incorporation. Only shares are entitled to vote.
(b) Record Date. The record date for purposes of determining
shareholders entitled to vote at any meeting shall be ten (10) days prior to
the date of such meeting or such different date not more than seventy (70)
days prior to such meeting as may be fixed by the Board of Directors.
(c) Proxies.
(1) A shareholder may vote the shareholder's shares in person or by proxy.
(2) A shareholder may appoint a proxy to vote or otherwise act for the
shareholder by executing in writing an appointment form, either personally or
by the shareholder's attorney-in-fact. For purposes of this Section, a proxy
appointed by telegram, telex, telecopy or other document transmitted
electronically for or by a shareholder shall be deemed "executed in writing"
by the shareholder.
(3) An appointment of a proxy is effective when received by the Secretary or
other officer or agent authorized to tabulate votes. An appointment is valid
for eleven (11) months, unless a longer period is expressly provided in the
appointment form.
(4) An appointment of a proxy is revocable by the shareholder, unless the
appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest.
(d) Quorum. At all meetings of shareholders, a majority of the
votes entitled to be cast on a particular matter constitutes a quorum on that
matter. If a quorum exists, action on a matter (other than the election of
directors) is approved if the votes cast favoring the action exceed the votes
cast opposing the action, unless the Articles of Incorporation or law require
a greater number of affirmative votes.
(e) Adjournments. Any meeting of shareholders, including both
annual and special meetings and any adjournments thereof, may be adjourned to
a different date, time or place. Notice need not be given of the new date,
time or place if the new date, time or place is announced at the meeting
before adjournment, even though less than a quorum is present. At any such
adjourned meeting at which a quorum is present, in person or by proxy, any
business may be transacted which might have been transacted at the meeting as
originally notified or called.
Section 7. List of Shareholders.
(a) After a record date has been fixed for a meeting of shareholders,
the Secretary shall prepare or cause to be prepared an alphabetical list of
the names of the shareholders of the Corporation who are entitled to vote at
such meeting. The list shall show the address of and number of shares held by
each shareholder.
(b) The shareholders' list must be available for inspection by any
shareholder entitled to vote at the meeting, beginning five (5) business days
before the date of the meeting for which the list was prepared and continuing
through the meeting, at the Corporation's principal office or at a place
identified in the meeting notice in the city where the meeting will be held.
Subject to the restrictions of applicable law, a shareholder, or the
shareholder's agent or attorney authorized in writing, is entitled on written
demand to inspect and to copy the list, during regular business hours and at
the shareholder's expense, during the period it is available for inspection.
(c) The Corporation shall make the shareholders' list available at the
meeting, and any shareholder, or the shareholder's agent or attorney
authorized in writing, is entitled to inspect the list at any time during the
meeting or any adjournment.
Section 8. Action by Written Consent. Any action required or
permitted to be taken at any meeting of the shareholders may be taken without
a meeting if the action is taken by all the shareholders entitled to vote on
the action.
The action must be evidenced by one or more written consents describing the
action taken, signed by all the shareholders entitled to vote on the action,
and delivered to the Corporation for inclusion in the minutes or filing with
the corporate records. Such action is effective when the last shareholder
signs the consent, unless the consent specifies a different prior or
subsequent effective date. Such consent shall have the same force and effect
as a unanimous vote at a meeting of the shareholders, and may be described as
such in any document or instrument.
Section 9. Meeting by Telephone or Similar Communications
Equipment. Any or all shareholders may participate in and hold a meeting of
shareholders by, or through the use of, any means of conference telephone or
other similar communications equipment by which all persons participating in
the meeting may simultaneously hear each other during the meeting.
Participation in a meeting pursuant to this Section shall constitute presence
in person at such meeting, except where a person participates in the meeting
for the express purposes of: (a) objecting to holding the meeting or
transacting business at the meeting on the ground that the meeting is not
lawfully called or convened; or (b) objecting to the consideration of a
particular matter that is not within the purpose or purposes described in the
meeting notice.
ARTICLE III
Directors
Section 1. Duties. The business, property and affairs of the
Corporation shall be managed and controlled by the Board of Directors and,
subject to such restrictions, if any, as may be imposed by law, the Articles
of Incorporation or by these By-laws, the Board of Directors may, and are
fully authorized to, do all such lawful acts and things as may be done by the
Corporation which are not directed or required to be exercised or done by the
shareholders. Directors need not be residents of the State of Texas or
shareholders of the Corporation.
Section 2. Number of Directors. The Board of Directors shall
consist of at least five (5) and not more than fifteen (15) directors. A Board
of Directors shall be chosen annually by the shareholders at their annual
meeting, except as hereinafter provided. Subject to Article VI of the Articles
of Incorporation, the number of directors may be increased or decreased from
time to time by amendment to these By-Laws, but no decrease shall have the
effect of shortening the term of any incumbent director. A person need not be
a shareholder of the Corporation to serve as a Director. The Directors' terms
of office shall be for one year, or until their successors are elected and
have qualified.
Section 3. Election and Term. Except as otherwise provided in
Section 5 of this Article, the directors shall be elected each year at the
annual meeting of the shareholders, or at any special meeting of the
shareholders. Each such director shall hold office, unless he is removed in
accordance with the provisions of these By-laws or he resigns or dies or
becomes so incapacitated he can no longer perform any of his duties as a
director, for the term for which he is elected and until his successor shall
have been elected and qualified. Each director shall qualify by accepting his
election to office either expressly or by acting as a director. The
shareholders or directors may remove any director, with or without cause, and
elect a successor at a meeting called expressly for such purpose.
Section 4. Resignation. Any director may resign at any time by
delivering written notice to the Board of Directors, the President, or the
Secretary of the Corporation. A resignation is effective when the notice is
delivered unless the notice specifies a later effective date. The acceptance
of a resignation shall not be necessary to make it effective, unless expressly
so provided in the resignation.
Section 5. Vacancies. Vacancies occurring in the membership of
the Board of Directors caused by resignation, death or other incapacity, or
increase in the number of directors shall be filled by a majority vote of the
remaining members of the Board, and each director so elected shall serve until
the next meeting of the shareholders, or until a successor shall have been
duly elected and qualified.
Section 6. Annual Meetings. The Board of Directors shall meet
annually, without notice, immediately following, and at the same place as, the
annual meeting of the shareholders.
Section 7. Regular Meetings. Regular meetings shall be held at
such times and places, either within or without the State of Texas, as may be
determined by the President or the Board of Directors.
Section 8. Special Meetings. Special meetings of the Board of
Directors may be called by the President or by two (2) or more members of the
Board of Directors, at any place within or without the State of Texas, upon
twenty-four (24) hours' notice, specifying the time, place and general
purposes of the meeting, given to each director personally, by telephone,
telegraph, teletype, or other form of wire or wireless communication; or
notice may be given by mail if mailed at least three (3) days before such
meeting.
Section 9. Notice. The Secretary or an Assistant Secretary
shall give notice of each special meeting, and of the date time and place of
the particular meeting, in person or by mail, or by telephone, telegraph,
teletype, or other form of wire or wireless communication, and in the event of
the absence of the Secretary or an Assistant Secretary or the failure,
inability, refusal or omission on the part of the Secretary or an Assistant
Secretary so to do, any other officer of the Corporation may give said notice.
Section 10. Waiver of Notice. A director may waive any notice
required by law, the Articles of Incorporation, or these By-laws before or
after the date and time stated in the notice. Except as otherwise provided in
this Section, the waiver by the director must be in writing, signed by the
director entitled to the notice, and included in the minutes or filed with the
corporate records. A director's attendance at or participation in a meeting
waives any required notice to the director of the meeting unless the director
at the beginning of the meeting (or promptly upon the director's arrival)
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote for or assent to action taken at the meeting.
Section 11. Business to be Transacted. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or any waiver of notice of
such meeting. Any and all business of any nature or character whatsoever may
be transacted and action may be taken thereon at any meeting, regular or
special, of the Board of Directors.
Section 12. Quorum - Adjournment if Quorum is Not Present. A
majority of the number of directors fixed by, or in the manner provided in,
the Articles of Incorporation or these By-laws shall constitute a quorum for
the transaction of any and all business, unless a greater number is required
by law or Articles of Incorporation or these By-laws. At any meeting, regular
or special, of the Board of Directors, if there be less than a quorum present,
a majority of those present, or if only one director be present, then such
director, may adjourn the meeting from time to time without notice until the
transaction of any and all business submitted or proposed to be submitted to
such meeting or any adjournment thereof shall have been completed. In the
event of such adjournment, written, telegraphic or telephonic announcement of
the time and place at which the meeting will reconvene must be provided to all
directors. The act of the majority of the directors present at any meeting of
the Board of Directors at which a quorum is present shall constitute the act
of the Board of Directors, unless the act of a greater number is required by
law or the Articles of Incorporation or these By-laws.
Section 13. Presumption of Assent. A director of the
Corporation who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken shall be presumed to have assented to
the action taken unless his dissent or abstention shall be entered in the
minutes of the meeting or unless he shall file his written dissent or
abstention to such action with the presiding officer of the meeting before the
adjournment thereof or to the Secretary of the Corporation immediately after
the adjournment of the meeting. Such right to dissent or abstain shall not
apply to a director who voted in favor of such action.
Section 14. Action by Written Consent. Any action required or
permitted to be taken at a meeting of the Board of Directors or any committee
thereof may be taken without a meeting if the action is taken by all the
members of the Board of Directors or committee, as the case may be. The action
must be evidenced by one or more written consents describing the action taken,
signed by each director or committee member, and included in the minutes or
filed with the corporate records reflecting the action taken. Such action is
effective when the last director or committee member signs the consent, unless
the consent specifies a different prior or subsequent effective date. Such
consent shall have the same force and effect as a unanimous vote at a meeting,
and may be described as such in any document or instrument.
Section 15. Committees. The Board of Directors, by resolution
adopted by a majority of the Board of Directors, may designate from among its
members an executive committee and one or more other committees, each of
which, to the extent provided in such resolution or in the Articles of
Incorporation or in these By-laws of the Corporation, shall have and may
exercise such authority of the Board of Directors as shall be expressly
delegated by the Board from time to time; except that no such committee shall
have the authority of the Board of Directors in reference to (a) amending the
Articles of Incorporation; (b) approving a plan of merger even if the plan
does not require shareholder approval; (c) authorizing dividends or
distributions, except a committee may authorize or approve a reacquisition of
shares, if done according to a formula or method prescribed by the Board of
Directors; (d) approving or proposing to shareholders action that requires
shareholder approval; (e) amending, altering or repealing the By-laws of the
Corporation or adopting new By-laws for the Corporation; (f) filling vacancies
in the Board of Directors or in any of its committees; or (g) electing or
removing officers or members of any such committee. A majority of all the
members of any such committee may determine its action and fix the time and
place of its meetings, unless the Board of Directors shall otherwise provide.
The Board of Directors shall have power at any time to change the number and
members of any such committee, to fill vacancies and to discharge any such
committee. The designation of such committee and the delegation thereto of
authority shall not alone constitute compliance by the Board of Directors, or
any member thereof, with the standard of conduct imposed upon it or him by the
Texas Business Corporation Act, as the same may, from time to time, be
amended.
Section 16. Meeting by Telephone or Similar Communication
Equipment. Any or all directors may participate in and hold a regular or
special meeting of the Board of Directors or any committee thereof by, or
through the use of, any means of conference telephone or other similar
communications equipment by which all directors participating in the meeting
may simultaneously hear each other during the meeting. Participation in a
meeting pursuant to this Section shall constitute presence in person at such
meeting, except where a director participates in the meeting for the express
purpose of objecting to holding the meeting or transacting business at the
meeting on the ground that the meeting is not lawfully called or convened.
ARTICLE IV
Officers
Section 1. Principal Officers. The officers of the Corporation
shall be chosen by the Board of Directors and shall consist of a Chairman of
the Board, a President, a Treasurer and a Secretary. There may also be one or
more Vice Presidents and such other officers or assistant officers as the
Board shall from time to time create and so elect. Any two (2) or more offices
may be held by the same person.
Section 2. Election and Terms. Each officer shall be elected by
the Board of Directors at the annual meeting thereof and shall hold office
until the next annual meeting of the Board or until his or her successor shall
have been elected and qualified or until his or her death, resignation or
removal. The election of an officer shall not of itself create contract
rights.
Section 3. Resignation and Removal. An officer may resign at
any time by delivering notice to the Board of Directors, its President or the
Secretary of the Corporation. A resignation is effective when the notice is
delivered unless the notice specifies a later effective date. If an officer's
resignation is made effective at a later date and the Corporation accepts the
future effective date, the Board of Directors may fill the pending vacancy
before the effective date, if the Board of Directors provides that the
successor does not take office until the effective date. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly
provided in the resignation. An officer's resignation does not affect the
Corporation's contract rights, if any, with the officer. Any officer may be
removed at any time, with or without cause, by vote of a majority of the whole
Board. Such removal shall not affect the contract rights, if any, of the
officer so removed.
Section 4. Vacancies. Whenever any vacancy shall occur in any
office by death, resignation, increase in the number of officers of the
Corporation, or otherwise, the same shall be filled by the Board of Directors,
and the officer so elected shall hold office until the next annual meeting of
the Board or until his or her successor shall have been elected and qualified.
Section 5. Powers and Duties of Officers. The officers so
chosen shall perform the duties and exercise the powers expressly conferred or
provided for in these By-laws, as well as the usual duties and powers incident
to such office, respectively, and such other duties and powers as may be
assigned to them by the Board of Directors or by the President.
Section 6. Chairman of the Board. The Chairman of the Board
shall be the Chief Executive Officer of the Corporation and shall have general
charge of, and supervision and authority over, all of the affairs and business
of the Corporation. He shall have general supervision of and direct all
officers, agents and employees of the Corporation; shall see that all orders
and resolutions of the Board are carried into effect; and in general, shall
exercise all powers and perform all duties incident to his office and such
other powers and duties as may from time to time be assigned to him by the
Board.
Section 7. President. The President shall be the Chief
Marketing Officer of the Corporation. He shall have the authority to sign,
with the Secretary or an Assistant Secretary, any and all certificates for
shares of the capital stock of the Corporation, and shall have the authority
to sign singly deeds, bonds, mortgages, contracts, or other instruments to
which the Corporation is a party (except in cases where the signing and
execution thereof shall be expressly delegated by the Board or by these
By-laws, or by law to some other officer or agent of the Corporation); and, in
the absence, disability or refusal to act of the Chairman of the Board, shall
preside at meetings of the shareholders and of the Board of Directors and
shall possess all of the powers and perform all of the duties of the Chairman
of the Board. He shall also serve the Corporation in such other capacities and
perform such other duties and have such additional authority and powers as are
incident to his office or as may be defined in these By-laws or delegated to
him from time to time by the Board of Directors or by the Chairman of the
Board.
Section 8. Vice Presidents. The Vice Presidents shall assist
the President and shall perform such duties as may be assigned to them by the
Board of Directors or the President. Unless otherwise provided by the Board,
in the absence or disability of the President, the Vice President (or, if
there be more than one, the Vice President first named as such by the Board of
Directors at its most recent meeting at which Vice Presidents were elected)
shall execute the powers and perform the duties of the President. Any action
taken by a Vice President in the performance of the duties of the President
shall be conclusive evidence of the absence or inability to act of the
President at the time such action was taken.
Section 9. Secretary. The Secretary (a) shall keep the minutes
of all meetings of the Board of Directors and the minutes of all meetings of
the shareholders in books provided for that purpose; (b) shall attend to the
giving and serving of all notices; (c) when required, may sign with the
President or a Vice President in the name of the Corporation, and may attest
the signature of any other officers of the Corporation to all contracts,
conveyances, transfers, assignments, encumbrances, authorizations and all
other instruments, documents and papers, of any and every description
whatsoever, of or executed for or on behalf of the Corporation and affix the
seal of the Corporation thereto; (d) may sign with the President or a Vice
President all certificates for shares of the capital stock of the Corporation
and affix the corporate seal of the Corporation thereto; (e) shall have charge
of and maintain and keep or supervise and control the maintenance and keeping
of the stock certificate books, transfer books and stock ledgers and such
other books and papers as the Board of Directors may authorize, direct or
provide for, all of which shall at all reasonable times be open to the
inspection of any director, upon request, at the office of the Corporation
during business hours; (f) shall, in general, perform all the duties incident
to the office of Secretary; and (g) shall have such other powers and duties as
may be conferred upon or assigned to him by the Board of Directors.
Section 10. Treasurer. The Treasurer shall have custody of all
the funds and securities of the Corporation which come into his hands. When
necessary or proper, he may endorse on behalf of the Corporation, for
collection, checks, notes and other obligations, and shall deposit the same to
the credit of the Corporation in such banks or depositories as shall be
selected or designated by or in the manner prescribed by the Board of
Directors. He may sign all receipts and vouchers for payments made to the
Corporation, either alone or jointly with such officer as may be designated by
the Board of Directors. Whenever required by the Board of Directors, he shall
render a statement of his cash account. He shall enter or cause to be entered,
punctually and regularly, on the books of the Corporation, to be kept by him
or under his supervision or direction for that purpose, full and accurate
accounts of all moneys received and paid out by, for or on account of the
Corporation. He shall at all reasonable times exhibit his books and accounts
and other financial records to any director of the Corporation during business
hours. He shall have such other powers and duties as may be conferred upon or
assigned to him by the Board of Directors. The Treasurer shall perform all
acts incident to the position of Treasurer, subject always to the control of
the Board of Directors. He shall, if required by the Board of Directors, give
such bond for the faithful discharge of his duties in such form and amount as
the Board of Directors may require.
Section 11. Assistant Secretaries. The Assistant Secretaries
shall assist the Secretary in the performance of his or her duties. In the
absence of the Secretary, any Assistant Secretary shall exercise the powers
and perform the duties of the Secretary. The Assistant Secretaries shall
exercise such other powers and perform such other duties as may from time to
time be assigned to them by the Board, the President, or the Secretary.
Section 12. Assistant Treasurers. The Assistant Treasurers
shall assist the Treasurer in the performance of his or her duties. Any
Assistant Treasurer shall, in the absence or disability of the Treasurer,
exercise the powers and perform the duties of the Treasurer. The Assistant
Treasurers shall exercise such other duties as may from time to time be
assigned to them by the Board, the President, or the Treasurer.
Section 13. Delegation of Authority. In case of the absence of
any officer of the Corporation, or for any reason that the Board may deem
sufficient, a majority of the entire Board may transfer or delegate the powers
or duties of any officer to any other officer or officers for such length of
time as the Board may determine.
Section 14. Securities of Other Corporations. The President or
any Vice President or Secretary or Treasurer of the Corporation shall have
power and authority to transfer, endorse for transfer, vote, consent or take
any other action with respect to any securities of another issuer which may be
held or owned by the Corporation and to make, execute and deliver any waiver,
proxy or consent with respect to any such securities.
ARTICLE V
Directors' Services, Limitation of Liability
and Reliance on Corporate Records, and
Interest of Directors in Contracts
Section 1. Services. No director of this Corporation who is not
an officer or employee of this Corporation shall be required to devote his
time or any particular portion of his time or render services or any
particular services exclusively to this Corporation. Every director of this
Corporation shall be entirely free to engage, participate and invest in any
and all such businesses, enterprises and activities, either similar or
dissimilar to the business, enterprise and activities of this Corporation,
without breach of duty to this Corporation or to its shareholders and without
accountability or liability to this Corporation or to its shareholders.
Every director of this Corporation shall be entirely free to act for,
serve and represent any other corporation, any entity or any person, in any
capacity, and be or become a director or officer, or both, of any other
corporation or any entity, irrespective of whether or not the business,
purposes, enterprises and activities, or any of them thereof, be similar or
dissimilar to the business, purposes, enterprises and activities, or any of
them, of this Corporation, without breach of duty to this Corporation or to
its shareholders and without accountability or liability of any character or
description to this Corporation or to its shareholders.
Section 2. General Limitation of Liability. A director shall,
based on facts then known to the director, discharge the duties as a director,
including the director's duties as a member of a committee, in good faith,
with the care an ordinarily prudent person in a like position would exercise
under similar circumstances, and in a manner the director reasonably believes
to be in the best interests of the Corporation. A director is not liable to
the Corporation for any action taken as a director, or any failure to take any
action, unless: (a) the director has breached or failed to perform the duties
of the director's office in accordance with the standard of care set forth
above; and (b) the breach or failure to perform constitutes willful misconduct
or recklessness.
Section 3. Reliance on Corporate Records and Other Information.
Any person acting as a director of the Corporation shall be fully protected,
and shall be deemed to have complied with the standard of care set forth in
Section 2 of this Article, in relying in good faith upon any information,
opinions, reports or statements, including financial statements and other
financial data, if prepared or presented by (a) one or more officers or
employees of the Corporation whom such person reasonably believes to be
reliable and competent in the matters presented; (b) legal counsel, public
accountants, or other persons as to matters such person reasonably believes
are within the person's professional or expert competence; or (c) a committee
of the Board of Directors of which such person is not a member, if such person
reasonably believes the committee merits confidence; provided, however, that
such person shall not be considered to be acting in good faith if such person
has knowledge concerning the matter in question that would cause such reliance
to be unwarranted.
Section 4. Interest of Directors in Contracts. Any contract or
other transaction between the Corporation and (a) any director, or (b) any
corporation, unincorporated association, business trust, estate, partnership,
trust, joint venture, individual or other legal entity (1) in which any
director has a material financial interest or is a general partner, or (2) of
which any director is a director, officer, or trustee, shall be valid for all
purposes, if the material facts of the contract or transaction and the
director's interest were disclosed or known to the Board of Directors, a
committee of the Board of Directors with authority to act thereon, or the
shareholders entitled to vote thereon, and the Board of Directors, such
committee or such shareholders authorized, approved or ratified the contract
or transaction. Such a contract or transaction is authorized, approved or
ratified: (i) by the Board of Directors or such committee, if it receives the
affirmative vote of a majority of the directors who have no interest in the
contract or transaction, notwithstanding the fact that such majority may not
constitute a quorum or a majority of the directors present at the meeting, and
notwithstanding the presence or vote of any director who does have such an
interest; provided, however, that no such contract or transaction may be
authorized, approved or ratified by a single director; and (ii) by such
shareholders, if it receives the vote of a majority of the shares entitled to
be counted, in which vote shares owned by or voted under the control of any
director who, or of any corporation, unincorporated association, business
trust, estate, partnership, trust, joint venture, individual or other legal
entity that, has an interest in the contract or transaction may be counted;
provided, however, that a majority of such shares, whether or not present,
shall constitute a quorum for the purpose of authorizing, approving or
ratifying such a contract or transaction. This Section shall not be construed
to require authorization, ratification or approval by the shareholder of any
such contract or transaction, or to invalidate any such contract or
transaction that is fair to the Corporation or would otherwise be valid under
the common and statutory law applicable thereto.
ARTICLE VI
Indemnification
Section 1. Indemnification Against Underlying Liability. The
Corporation shall indemnify 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, criminal, administrative, or investigative, by
reason of the fact that he is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (collectively, "Agent") against expenses (including
attorneys' fees), judgments, fines, penalties, court costs and amounts paid in
settlement actually and reasonably 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 not opposed to the best interests of the
Corporation, 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 (whether with or
without court approval), conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the Agent 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 the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. If several claims, issues or matters are involved, an
Agent may be entitled to indemnification as to some matters even though he is
not entitled as to other matters. Any director or officer of the Corporation
serving in any capacity of another corporation, of which a majority of the
shares entitled to vote in the election of its directors is held, directly or
indirectly, by the Corporation, shall be deemed to be doing so at the request
of the Corporation.
Section 2. Successful Defense. To the extent that an Agent of
the Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Section 1 of this Article, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection therewith.
Section 3. Determination of Conduct. Subject to any rights
under any contract between the Corporation and any Agent, any indemnification
against underlying liability provided for in Section 1 of this Article (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the Agent is proper
in the circumstances because he has met the applicable standard of conduct set
forth in said Section. Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum consisting of directors not at the
time parties to the proceeding; (b) if such an independent quorum is not
obtainable, by majority vote of a committee duly designated by the full Board
of Directors (in which designation directors who are parties may participate),
consisting solely of one or more directors not at the time parties to the
proceeding; (c) by special legal counsel (1) selected by the independent
quorum of the Board of Directors (or the independent committee thereof if no
such quorum can be obtained), or (2) if no such independent quorum or
committee thereof can be obtained, selected by majority vote of the full Board
of Directors (in which selection directors who are parties may participate);
or (d) by the shareholders, but shares owned by or voted under the control of
directors who are at the time parties to the proceeding may not be voted on
the determination. Notwithstanding the foregoing, an Agent shall be able to
contest any determination that the Agent has not met the applicable standard
of conduct by petitioning a court of appropriate jurisdiction.
Section 4. Payment of Expenses in Advance. Expenses incurred in
defending or settling a civil, criminal, administrative or investigative
action, suit or proceeding by an Agent who may be entitled to indemnification
pursuant to Section 1 of this Article shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of a written affirmation by the Agent of his good faith belief that he
has met the applicable standard of conduct set forth in Section 1 of this
Article and a written undertaking by or on behalf of the Agent to repay such
amount if it is ultimately determined that he is not entitled to be
indemnified by the Corporation as authorized in this Article. Notwithstanding
the foregoing, such expenses shall not be advanced if the Corporation conducts
the determination of conduct procedure referred to in Section 3 of this
Article and it is determined from the facts then known that the Agent will be
precluded from indemnification against underlying liability because he has
failed to meet the applicable standard of conduct set forth in Section 1 of
this Article. The full Board of Directors (including directors who are
parties) may authorize the Corporation to implement the determination of
conduct procedure, but such procedure is not required for the advancement of
expenses. The full Board of Directors (including directors who are parties)
may authorize the Corporation to assume the Agent's defense where appropriate
rather than to advance expenses for such defense.
Section 5. Indemnity Not Exclusive. The indemnification against
underlying liability, and advancement of expenses provided by, or granted
pursuant to, this Article shall not be deemed exclusive of, and shall be
subject to, any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any By-law, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 6. Insurance Indemnification. The Corporation shall
have the power to purchase and maintain insurance on behalf of any person who
is or was an Agent of the Corporation, or is or was serving at the request of
the Corporation as an Agent 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 Corporation would have the power to indemnify him against
such liability under the provisions of this Article.
Section 7. Employee Benefit Plans. For purposes of this
Article, references to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a
person with respect to any employee benefit plan; and references to "serving
at the request of the Corporation" shall include any service as a director,
officer, employee or agent of the Corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries. A person who
acted in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests
of the Corporation" as referred to in this Article.
Section 8. Application of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article shall, unless otherwise provided when
authorized or ratified, be applicable to claims, actions, suits or proceedings
made or commenced after the adoption thereof, whether arising from acts or
omissions to act during, before or after the adoption hereof, 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 the heirs, executors and
administrators of such a person. The right of any person to indemnification
and advancement of expenses shall vest at the time of occurrence or
performance of any event, act or omission giving rise to any action, suit or
proceeding of the nature referred to in Section 1 of this Article and, once
vested, shall not later be impaired as a result of any amendment, repeal,
alteration or other modification of any or all of these provisions.
Section 9. Indemnification Payments. Any payments made to any
indemnified party under this Article or under any other right to
indemnification shall be deemed to be an ordinary and necessary business
expense of the Corporation, and payment thereof shall not subject any person
responsible for the payment, or the Board of Directors, to any action for
corporate waste or to any similar action. Such payments shall be reported to
the shareholders of the Corporation before or with the notice of the next
shareholders' meeting.
ARTICLE VII
Shares
Section 1. Share Certificates. The certificate for shares of
the Corporation shall be in such form as shall be approved by the Board of
Directors. Each share certificate shall state on its face the name and state
of organization of the Corporation, the name of the person to whom the
certificate is issued, and the number and class of shares the certificate
represents. Share certificates shall be consecutively numbered and shall be
entered in the books of the Corporation as they are issued. Every certificate
for shares of the Corporation shall be signed (either manually or in
facsimile) by, or in the name of, the Corporation by the Chairman of the
Board, President or a Vice President and either the Secretary or an Assistant
Secretary of the Corporation, with the seal of the Corporation, if any, or a
facsimile thereof impressed or printed thereon. If the person who signed
(either manually or in facsimile) a share certificate no longer holds office
when the certificate is issued, the certificate is nevertheless valid.
Section 2. Transfer of Shares. Except as otherwise provided by
law, transfers of shares of the capital stock of the Corporation, whether part
paid or fully paid, shall be made only on the books of the Corporation by the
owner thereof in person or by duly authorized attorney, on payment of all
taxes thereon and surrender for cancellation of the certificate or
certificates for such shares (except as hereinafter provided in the case of
loss, destruction or mutilation of certificate) properly endorsed by the
holder thereof or accompanied by the proper evidence of succession, assignment
or authority to transfer, and delivered to the Secretary or an Assistant
Secretary.
Section 3. Registered Holders. The Corporation shall be
entitled to treat the person in whose name any share of stock or any warrant,
right or option is registered as the owner thereof for all purposes and shall
not be bound to recognize any equitable or other claim to, or interest in,
such share, warrant, right or option on the part of any other person, whether
or not the Corporation shall have notice thereof, save as may be expressly
provided otherwise by the laws of the State of Texas, the Articles of
Incorporation of the Corporation or these By-laws. In no event shall any
transferee of shares of the Corporation become a shareholder of the
Corporation until express notice of the transfer shall have been received by
the Corporation.
Section 4. Lost, Destroyed and Mutilated Certificates. The
holder of any share certificate of the Corporation shall immediately notify
the Corporation of any loss, destruction or mutilation of the certificate, and
the Board may, in its discretion, cause to be issued to such holder of shares
a new certificate or certificates of shares of capital stock, upon the
surrender of the mutilated certificate, or, in case of loss or destruction,
upon the furnishing of an affidavit or satisfactory proof of such loss or
destruction. The Board may, in its discretion, require the owner of the lost
or destroyed certificate or such owner's legal representative to give the
Corporation a bond in such sum and in such form, and with such surety or
sureties as it may direct, to indemnify the Corporation, its transfer agents
and registrars, if any, against any claim that may be made against them or any
of them with respect to the certificate or certificates alleged to have been
lost or destroyed, but the Board may, in its discretion, refuse to issue a new
certificate or new certificates, save upon the order of a court having
jurisdiction in such matters.
Section 5. Consideration for Shares. The Corporation may issue
shares for such consideration received or to be received as the Board of
Directors determines to be adequate. That determination by the Board of
Directors is conclusive insofar as the adequacy of consideration for the
issuance of shares relates to whether the shares are validly issued, fully
paid and nonassessable. When the Corporation receives the consideration for
which the Board of Directors authorized the issuance of shares, the shares
issued therefor are fully paid and nonassessable.
Section 6. Payment for Shares. The Board of Directors may
authorize shares to be issued for consideration consisting of any tangible or
intangible property or benefit to the Corporation, including cash, promissory
notes, services performed, contracts for services to be performed, or other
securities of the Corporation. If shares are authorized to be issued for
promissory notes or for promises to render services in the future, the
Corporation must report in writing to the shareholders the number of shares
authorized to be so issued before or with the notice of the next shareholders'
meeting.
Section 7. Distributions to Shareholders. The Board of
Directors may authorize and the Corporation may make distributions to the
shareholders subject to any restrictions set forth in the Articles of
Incorporation of the Corporation and any limitations in the Texas Business
Corporation Act, as amended.
Section 8. Regulations. The Board of Directors shall have power
and authority to make all such rules and regulations as they may deem
expedient concerning the issue, transfer and registration or the replacement
of certificates for shares of the Corporation.
ARTICLE VIII
Corporate Books and Reports
Section 1. Place of Keeping Corporate Books and Records. Except
as expressly provided otherwise in this Article, the books of account,
records, documents and papers of the Corporation shall be kept at any place or
places, within or without the State of Texas, as directed by the Board of
Directors. In the absence of a direction, the books of account, records,
documents and papers shall be kept at the principal office of the Corporation.
Section 2. Place of Keeping Certain Corporate Books and Records.
The Corporation shall keep a copy of the following records at its principal
office:
(1) Its Articles or restated Articles of Incorporation and all amendments
to them currently in effect;
(2) Its By-laws or restated By-laws and all amendments to them currently
in effect;
(3) Resolutions adopted by the Board of Directors with respect to one or
more classes or series of shares and fixing their relative rights, preferences
and limitations, if shares issued pursuant to those resolutions are
outstanding;
(4) The minutes of all shareholders' meetings and records of all action
taken by shareholders without a meeting for the past three (3) years;
(5) All written communications to shareholders generally within the past
three (3) years, including financial statements furnished to shareholders:
(6) A list of the names and business addresses of its current directors
and officers; and
(7) The Corporation's most recent annual report.
Section 3. Permanent Records. The Corporation shall keep as
permanent records minutes of all meetings of its shareholders and Board of
Directors, a record of all actions taken by the shareholders or Board of
Directors without a meeting, and a record of all actions taken by a committee
of the Board of Directors in place of the Board of Directors on behalf of the
Corporation. The Corporation shall also maintain appropriate accounting
records.
Section 4. Shareholder Records. The Corporation shall maintain
a record of its shareholders, in a form that permits preparation of a list of
the names and addresses of all shareholders, in alphabetical order by class of
shares showing the number and class of shares held by each.
Section 5. Shareholder Rights of Inspection. The records
designated in Section 2 of this Article may be inspected and copied by
shareholders of record, during regular business hours at the Corporation's
principal office, provided that the shareholder gives the Corporation written
notice of the shareholder's demand at least five (5) business days before the
date on which the shareholder wishes to inspect and copy. A shareholder's
agent or attorney, if authorized in writing, has the same inspection and
copying rights as the shareholder represented. The Corporation may impose a
reasonable charge, covering the costs of labor and material, for copies of any
documents provided to the shareholder.
Section 6. Additional Rights of Inspection. Shareholder rights
enumerated in Section 5 of this Article may also apply to the following
corporate records, provided that the notice requirements of Section 5 are met,
the shareholder's demand is made in good faith and for a proper purpose, the
shareholder describes with reasonable particularity the shareholder's purpose
and the records the shareholder desires to inspect, and the records are
directly connected with the shareholder's purpose: excerpts from minutes of
any meeting of the Board of Directors, records of any action of a committee of
the Board of Directors while acting in place of the Board of Directors on
behalf of the Corporation, minutes of any meeting of the shareholders, and
records of action taken by the shareholders or Board of Directors without a
meeting, to the extent not subject to inspection under Section 5 of this
Article, as well as accounting records of the Corporation and the record of
shareholders. Such inspection and copying is to be done during regular
business hours at a reasonable location specified by the Corporation. The
Corporation may impose a reasonable charge, covering the costs of labor and
material, for copies of any documents provided to the shareholder.
ARTICLE IX
Miscellaneous
Section 1. Notice and Waiver of Notice. Subject to the specific
and express notice requirements set forth in other provisions of these
By-laws, the Articles of Incorporation, and the Texas Business Corporation
Act, as the same may, from time to time, be amended, notice may be
communicated to any shareholder or director in person, by telephone,
telegraph, teletype, or other form of wire or wireless communication, or by
mail. If the foregoing forms of personal notice are deemed to be
impracticable, notice may be communicated in a newspaper of general
circulation in the area where published or by radio, television, or other form
of public broadcast communication. Subject to Section 4 of ARTICLE II of these
By-laws, written notice is effective at the earliest of the following: (a)
when received; (b) if correctly addressed to the address listed in the most
current records of the Corporation, five days after its mailing, as evidenced
by the postmark or private carrier receipt; or (c) if sent by registered or
certified United States mail, return receipt requested, on the date shown on
the return receipt which is signed by or on behalf of the addressee. Oral
notice is effective when communicated. A written waiver of notice, signed by
the person or persons entitled to such notice, whether before or after the
time stated therein, shall be equivalent to the giving of such notice.
Section 2. Depositories. Funds of the Corporation not otherwise
employed shall be deposited in such banks or other depositories as the Board
of Directors, the President or the Treasurer may select or approve.
Section 3. Signing of Checks, Notes, etc. In addition to and
cumulative of, but in no way limiting or restricting, any other provision of
these By-laws which confers any authority relative thereto, all checks, drafts
and other orders for the payment of money out of funds of the Corporation and
all notes and other evidence of indebtedness of the Corporation may be signed
on behalf of the Corporation, in such manner, and by such officer or person as
shall be determined or designated by the Board of Directors; provided,
however, that if, when, after and as authorized or provided for by the Board
of Directors, the signature of any such officer or person may be a facsimile
or engraved or printed, and shall have the same force and effect and bind the
Corporation as though such officer or person had signed the same personally;
and, in the event of the death, disability, removal or resignation of any such
officer or person, if the Board of Directors shall so determine or provide, as
though and with the same effect as if such death, disability, removal or
resignation had not occurred.
Section 4. Gender and Number. Wherever used or appearing in
these By-laws, pronouns of the masculine gender shall include the female
gender and the neuter gender, and the singular shall include the plural
wherever appropriate.
Section 5. Laws. Wherever used or appearing in these By-laws,
the words "law" or "laws" shall mean and refer to laws of the State of Texas,
to the extent only that such are expressly applicable, except where otherwise
expressly stated or the context requires that such words not be so limited.
Section 6. Headings. The headings of the Certificate and
Sections of these By-laws are inserted for convenience of reference only and
shall not be deemed to be a part thereof or used in the construction or
interpretation thereof.
ARTICLE X
Amendments
These By-laws may, from time to time, be added to, changed, altered,
amended or repealed or new By-laws may be made or adopted by a majority vote
of the whole Board of Directors at any meeting of the Board of Directors, if
the notice or waiver of notice of such meeting shall have stated that the
By-laws are to be amended, altered or repealed at such meeting, or if all
directors at the time are present at such meeting, have waived notice of such
meeting, or have consented to such action in writing.
ARTICLE XI
The Texas Business Corporation Act
The provisions of the Texas Business Corporation Act, as the same may,
from time to time, be amended, applicable to any of the matters not herein
specifically covered by these By-laws, are hereby incorporated by reference in
and made a part of these By-laws.
EXHIBIT 99.B8
FORM OF FUND PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT
______________________
AMONG
_____
INVESCO VARIABLE INVESTMENT FUNDS, INC.
______________________________________
INVESCO FUNDS GROUP, INC.
_______________________
AND
___
[NAME OF THE INSURANCE COMPANY]
THIS AGREEMENT, made and entered into this ___ day of _______________,
199_ by and among _____________________________COMPANY, (hereinafter the
"Insurance Company"), a ____________ corporation, on its own behalf and on
behalf of each segregated asset account of the Insurance Company set forth on
Schedule A hereto as may be amended from time to time (each such account
hereinafter referred to as the "Account"), INVESCO VARIABLE INVESTMENT FUNDS,
INC., a Maryland corporation (the "Company") and INVESCO FUNDS GROUP, INC.
("INVESCO"), a Delaware corporation.
WHEREAS, the Company engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable annuity and life insurance
contracts to be offered by insurance companies which have entered into
participation agreements substantially identical to this Agreement
("Participating Insurance Companies"),and
WHEREAS, the beneficial interest in the Company is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Company has obtained an order from the Securities and
Exchange Commission (the "Commission"), dated December 29, 1993 (File No.
812-8590), 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 Investment Company Act of 1940, as amended, (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 Company to be sold to and held by variable annuity and
variable life insurance separate accounts of life insurance companies that may
or may not be affiliated with one another (the "Mixed and Shared Funding
Exemptive Order"); and
WHEREAS, the Company is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, INVESCO is duly registered as an investment adviser under the
Investment Advisers Act of 1940 and any applicable state securities law and as
a broker dealer under the Securities Exchange Act of 1934, as amended, (the
"1934 Act"), and is a member in good standing of the National Association
of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Insurance Company has registered under the 1933 Act, or will
register under the 1933 Act, certain variable [annuity / life insurance]
contracts identified by the form number(s) listed on Schedule B to this
Agreement, as amended from time to time hereafter by mutual written agreement
of all the parties hereto (the "Contracts"); and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the board of directors of the
Insurance Company on the date shown for that Account on Schedule A hereto, to
set aside and invest assets attributable to the Contracts; and
WHEREAS, the Insurance Company has registered or will register each
Account as a unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Insurance Company intends to purchase shares in the Funds on
behalf of the Accounts to fund the Contracts and INVESCO is authorized to sell
such shares to unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Insurance
Company, the Company and INVESCO agree as follows:
ARTICLE I. SALE OF COMPANY SHARES
1.1. INVESCO agrees to sell to the Insurance Company those shares of
the Company which each Account orders, executing such orders on a daily basis
at the net asset value next computed after receipt by the Company or its
designee of the order for the shares of the Company. For purposes of this
Section 1.1, the Insurance Company shall be the designee of the Company for
receipt of such orders from the Accounts and receipt by such designee shall
constitute receipt by the Company; provided that the Company receives notice
of such order by 8:00 a.m., Mountain 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 Company calculates its net asset value pursuant
to the rules of the Commission.
1.2. The Company agrees to make its shares available for purchase at the
applicable net asset value per share by the Insurance Company and its Accounts
on those days on which the Company calculates its Funds' net asset values
pursuant to rules of the Commission and the Company shall use reasonable
efforts to calculate its Funds' net asset values on each day on which the New
York Stock Exchange is open for trading. Notwithstanding the foregoing, the
board of directors of the Company (hereinafter the "Board") may refuse to sell
shares of any Fund to any person, or suspend or terminate the offering of
shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
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 that Fund.
1.3. The Company and INVESCO agree that shares of the Company will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Fund will be sold to the general public.
1.4. The Company and INVESCO will not sell Company shares to any
insurance company or separate account unless an agreement containing
provisions substantially the same as Sections 2.1, 3.4, 3.5 and Article VII of
this Agreement is in effect to govern such sales.
1.5. The Company agrees to redeem, on the Insurance Company's request,
any full or fractional shares of the Company held by the Insurance Company,
executing such requests on a daily basis at the net asset value next computed
after receipt by the Company or its designee of the request for redemption.
For purposes of this Section 1.5, the Insurance Company shall be the designee
of the Company for receipt of requests for redemption from each Account and
receipt by that designee shall constitute receipt by the Company; provided
that the Company receives notice of the request for redemption by 8:00 a.m.,
Mountain Time, on the next following Business Day.
1.6. The Insurance Company agrees to purchase and redeem the shares of
each Fund offered by the then-current prospectus of the Company in accordance
with the provisions of that prospectus. The Insurance Company agrees that all
net amounts available under the Contracts shall be invested in the Company, in
such other Funds advised by INVESCO as may be mutually agreed to in writing by
the parties hereto, or in the Insurance Company's general account, provided
that such amounts may also be invested in an investment company other than the
Company if (a) the other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Funds of the Company; or (b) the Insurance
Company gives the Company and INVESCO 45 days written notice of its intention
to make the other investment company available as a funding vehicle for the
Contracts; or (c) the other investment company was available as a funding
vehicle for the Contracts prior to the date of this Agreement and the
Insurance Company so informs the Company and INVESCO prior to their signing
this Agreement; or (d) the Company or INVESCO consents to the use of the other
investment company.
1.7. The Insurance Company shall pay for Company shares by 9:00 a.m.,
Mountain Time, on the next Business Day after an order to purchase Company
shares is made in accordance with the provisions of Section 1.1 hereof.
Payment shall be in federal funds transmitted by wire. For the purpose of
Sections 2.10 and 2.11, upon receipt by the Company of the federal funds so
wired, such funds shall cease to be the responsibility of the Insurance
Company and shall become the responsibility of the Company. Payment of net
redemption proceeds (aggregate redemptions of a Fund's shares by an Account
minus aggregate purchases of that Fund's shares by that Account) of less than
$1 million for a given Business Day will be made by wiring federal funds to
the Insurance Company on the next Business Day after receipt of the redemption
request. Payment of net redemption proceeds of $1 million or more will be by
wiring federal funds within seven days after receipt of the redemption
request. Notwithstanding the foregoing, in the event that one or more Funds
has insufficient cash on hand to pay net redemptions on the next Business
Day, and if such Fund has determined to settle redemption transactions for all
of its shareholders on a delayed basis (more than one Business Day, but in no
event more than seven calendar days, after the date on which the redemption
order is received, unless otherwise permitted by an order of the Commission
under Section 22(e) of the 1940 Act), the Company shall be permitted to delay
sending redemption proceeds to the Insurance Company by the same number of
days that the Company is delaying sending redemption proceeds to the other
shareholders of the Fund.
Redemptions of up to the lesser of $250,000 or 1% of the net asset value
of the Fund whose shares are to be redeemed in any 90-day period will be made
in cash. Redemptions in excess of that amount in any 90-day period may, in the
sole discretion of the Company, be in-kind redemptions, with the securities to
be delivered in payment of redemptions selected by the Company and valued at
the value assigned to them in computing the Fund's net asset value per share.
1.8. Issuance and transfer of the Company's shares will be by book entry
only. Stock certificates will not be issued to the Insurance Company or any
Account. Shares ordered from the Company will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
1.9. The Company shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Insurance Company of any income,
dividends or capital gain distributions payable on the Funds' shares. The
Insurance Company hereby elects to receive all income dividends and capital
gain distributions payable on a Fund's shares in additional shares of that
Fund. The Insurance Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Company shall notify the Insurance Company of the number of shares issued as
payment of dividends and distributions.
1.10. The Company shall make the net asset value per share for each Fund
available to the Insurance 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 those per-share net asset values available by 6:00 p.m.,
Mountain Time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Insurance Company represents and warrants that the Contracts
are, or will be, registered under the 1933 Act; 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 applicable state insurance suitability requirements.
The Insurance 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 the Account prior to any issuance or sale
thereof as a segregated asset account under Section _____ of the
_______________Insurance Code and has registered, or prior to any issuance or
sale of the Contracts will register, the Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Company represents and warrants that Company shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sale in compliance with the laws of the State of
Maryland and all applicable federal securities laws and that the Company is
and shall remain registered under the 1940 Act. The Company shall amend the
registration statement for its shares 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 Company shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Company or INVESCO.
2.3. The Company represents that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal Revenue Code
of 1986, as amended, (the "Code") and that it will make every effort to
maintain that qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Insurance Company immediately upon
having a reasonable basis for believing that it has ceased to so qualify or
that it might not so qualify in the future.
2.4. The Insurance Company represents and warrants that the Contracts
are currently treated as [annuity / life insurance / endowment / modified
endowment] contracts, under applicable provisions of the Code and that it will
make every effort to maintain such treatment and that it will notify the
Company and INVESCO 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.
2.5. The Company currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. To the extent
that it decides to finance distribution expenses pursuant to Rule 12b-1, the
Company undertakes to have a board of directors, a majority of whom are not
interested persons of the Company, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
2.6. The Company makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states.
2.7. INVESCO represents and warrants that it is a member in good standing
of the NASD and is registered as a broker-dealer with the Commission. INVESCO
further represents that it will sell and distribute the Company shares in
accordance with the laws of the __________ of __________ and all applicable
state and federal securities laws, including without limitation the 1933 Act,
the 1934 Act, and the 1940 Act.
2.8. The Company represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act.
2.9. INVESCO represents and warrants that it is and shall remain duly
registered in all material respects under all applicable federal and state
securities laws and that it shall perform its obligations for the Company in
compliance in all material respects with the laws of the __________ of
__________ and any applicable state and federal securities laws.
2.10. The Company and INVESCO represent and warrant that all of their
officers, employees, investment advisers, investment sub-advisers, and other
individuals or entities dealing with the money and/or securities of the
Company are, and shall continue to be at all times, covered by a blanket
fidelity bond or similar coverage for the benefit of the Company in an amount
not less than the minimum coverage required currently by Section 17g-(1) of
the 1940 Act or related provisions as may be promulgated from time to time.
That fidelity bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.11. The Insurance Company represents and warrants that all of its
officers, employees, investment advisers, and other individuals or entities
dealing with the money and/or securities of the Company are and shall continue
to be at all times covered by a blanket fidelity bond or similar coverage for
the benefit of the Company, in an amount not less than the minimum coverage
required currently for entities subject to the requirements of Rule 17g-1 of
the 1940 Act or related provisions or 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. The Insurance Company further
represents and warrants that the employees of Insurance Company, or such other
persons designated by Insurance Company, listed on Schedule C have been
authorized by all necessary action of Insurance Company to give directions,
instructions and certifications to the Company and INVESCO on behalf of
Insurance Company. The Company and INVESCO are authorized to act and rely upon
any directions, instructions and certifications received from such persons
unless and until they have been notified in writing by the Insurance Company
of a change in such persons, and the Company and INVESCO shall incur no
liability in doing so.
2.12. The Insurance Company represents and warrants that it will not
purchase Company shares with Account assets derived from tax-qualified
retirement plans except indirectly, through Contracts purchased in connection
with such plans.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. INVESCO shall provide the Insurance Company (at the Insurance
Company's expense) with as many copies of the Company's current prospectus as
the Insurance Company may reasonably request. If requested by the Insurance
Company in lieu thereof, the Company shall provide such documentation
(including a final copy of the new prospectus as set in type at the Company's
expense) and other assistance as is reasonably necessary in order for the
Insurance Company once each year (or more frequently if the prospectus for the
Company is amended) to have the prospectus for the Contracts and the Company's
prospectus printed together in one document (at the Insurance Company's
expense).
3.2. The Company's prospectus shall state that the Statement of
Additional Information for the Company (the "SAI") is available from INVESCO
(or in the Company's discretion, the Prospectus shall state that the SAI is
available from the Company), and INVESCO (or the Company), at its expense,
shall print and provide the SAI free of charge to the Insurance Company and to
any owner of a Contract or prospective owner who requests the SAI.
3.3. The Company, at its expense, shall provide the Insurance Company
with copies of its proxy material, reports to stockholders and other
communications to stockholders in such quantity as the Insurance Company shall
reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law, the Insurance Company shall:
<TABLE>
<CAPTION>
<C> <S>
(i) solicit voting instructions from Contract owners;
(ii) vote the Company shares in accordance with instructions
received from Contract owners; and
(iii) vote Company shares for which no instructions have been
received in the same proportion as Company shares of such
portfolio for which instructions have been received:
</TABLE>
so long as and to the extent that the Commission continues to interpret the
1940 Act to require pass-through voting privileges for variable contract
owners. The Insurance Company reserves the right to vote Company shares held
in any segregated asset account in its own right, to the extent permitted by
law. Participating Insurance Companies shall be responsible for assuring that
each of their separate accounts participating in the Company calculates voting
privileges in a manner consistent with the standards set forth on Schedule D
attached hereto and incorporated herein by this reference, which standards
will also be provided to the other Participating Insurance Companies. The
Insurance Company shall fulfill its obligations under, and abide by the terms
and conditions of, the Mixed and Shared Funding Exemptive Order.
3.5. The Company will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Company will either
provide for annual meetings (except insofar as the Commission may interpret
Section 16 of the 1940 Act not to require such meetings) or, as the Company
currently intends, comply with Section 16(c) of the 1940 Act (although the
Company is not one of the trusts described in Section 16(c) of that Act) as
well as with Sections 16(a) and, if and when applicable, 16(b). Further, the
Company will act in accordance with the Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of directors
and with whatever rules the Commission may promulgate with respect thereto.IV.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Insurance Company 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, a sub-adviser of one of the
Funds, or INVESCO is named, at least fifteen calendar days prior to its use.
No such material shall be used if the Company or its designee objects to such
use within ten calendar days after receipt of such material.
4.2. The Insurance Company shall not give any information or make any
representations or statements on behalf of the Company or concerning the
Company in connection with the sale of the Contracts other than the
information or representations contained in the registration statement or
prospectus for the Company's shares, as such registration statement and
prospectus may be amended or supplemented from time to time, or in reports or
proxy statements for the Company, or in sales literature or other promotional
material approved by the Company or its designee or by INVESCO, except with
the permission of the Company or INVESCO.
4.3. The Company, INVESCO, or its designee shall furnish, or shall cause
to be furnished, to the Insurance Company or its designee, each piece of sales
literature or other promotional material in which the Insurance Company and/or
its separate account(s), is named at least fifteen calendar days prior to its
use. No such material shall be used if the Insurance Company or its designee
object to such use within ten calendar days after receipt of that material.
4.4. The Company and INVESCO shall not give any information or make any
representations on behalf of the Insurance Company or concerning the Insurance
Company, the Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as that registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for the Account which
are in the public domain or approved by the Insurance Company for distribution
to Contract owners, or in sales literature or other promotional material
approved by the Insurance Company or its designee, except with the permission
of the Insurance Company.
4.5. The Company will provide to the Insurance Company at least one
complete copy of each registration statement, prospectus, statement of
additional information, report, proxy statement, piece of sales literature or
other promotional material, application for exemption, request for no-action
letter, and any amendment to any of the above, that relate to the Company or
its shares, contemporaneously with the filing of the document with the
Commission, the NASD, or other regulatory authorities.
4.6. The Insurance Company will provide to the Company at least one
complete copy of each registration statement, prospectus, statement of
additional information, report, solicitation for voting instructions, piece of
sales literature and other promotional material, application for exemption,
request for no action letter, and any amendment to any of the above, that
relates to the Contracts or the Account, contemporaneously with the filing of
the document with the Commission, the NASD, or other regulatory authorities.
4.7. For purposes of this Agreement, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements,
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media, sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees,
and registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials.
4.8. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records, data and
access to operating procedures that may be reasonably requested. Company
agrees that Insurance Company shall have the right to inspect, audit and copy
all records pertaining to the performance of services under this Agreement
pursuant to the requirements of the California Insurance Department. However,
Company and INVESCO shall own and control all of their respective records
pertaining to their performance of the services under this Agreement.
ARTICLE V. FEES AND EXPENSES
5.1. The Company and INVESCO shall pay no fee or other compensation to
the Insurance Company under this agreement, except that if the Company or any
Fund adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then INVESCO may make payments to the Insurance Company
if and in amounts agreed to by INVESCO in writing, subject to review by the
board of directors of the Company. No such payments shall be made directly by
the Company.
5.2. All expenses incident to performance by the Company under this
Agreement shall be paid by the Company. The Company shall see to it that all
its shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the
Company or INVESCO, in accordance with applicable state laws prior to their
sale. The Company shall bear the expenses for the cost of registration and
qualification of the Company's shares, preparation and filing of the Company's
prospectus and registration statement, proxy materials and reports, setting
the prospectus in type, setting in type and printing the proxy materials and
reports to shareholders (including the costs of printing a prospectus that
constitutes an annual report), the preparation of all statements and notices
required by any federal or state law, and all taxes on the issuance or
transfer of the Company's shares.
5.3. The Insurance Company shall bear the expenses of printing and
distributing to Contract owners the Contract prospectuses and of distributing
to Contract owners the Company's prospectus, proxy materials and reports.
ARTICLE VI. DIVERSIFICATION
6.1. The Company will, at the end of each calendar quarter, comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5 relating to the
diversification requirements for variable annuity, endowment, modified
endowment or life insurance contracts and any amendments or other
modifications to that Section or Regulation.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Company for the existence of any
material irreconcilable conflict between the interests of the variable
contract owners of all separate accounts investing in the Company. 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
interpretive 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 Fund are
being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (f) a
decision by a Participating Insurance Company to disregard the voting
instructions of variable contract owners. The Board shall promptly inform the
Insurance Company if it determines that an irreconcilable material conflict
exists and the implications thereof. The Board shall have sole authority to
determine whether an irreconcilable material conflict exists and such
determination shall be binding upon the Insurance Company.
7.2 The Insurance Company will report promptly any potential or existing
conflicts of which it is aware to the Board. The Insurance Company will assist
the Board in carrying out its responsibilities under the Mixed and 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 Insurance Company to
inform the Board whenever Contract owner voting instructions are to be
disregarded. Such responsibilities shall be carried out by Insurance Company
with a view only to the interests of the Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of
its directors who are not interested persons of the Company, INVESCO, or any
sub-adviser to any of the Funds (the "Independent Directors"), that a
material irreconcilable conflict exists, the Insurance Company and/or other
Participating Insurance Companies shall, at their expense and to the extent
reasonably practicable (as determined by a majority of the Independent
Directors), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (1), withdrawing the
assets allocable to some or all of the separate accounts from the Company or
any Fund and reinvesting those assets in a different investment medium,
including (but not limited to) another Fund of the Company, or submitting the
question whether such segregation should be implemented to a vote of all
affected variable contract owners and, as appropriate, segregating the assets
of any appropriate group (e.g., 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 variable contract owners the option of making such a change; and
(2), establishing a new registered management investment company or managed
separate account and obtaining approval thereof by the Commission.
7.4. If a material irreconcilable conflict arises because of a decision
by the Insurance Company to disregard Contract owner voting instructions and
that decision represents a minority position or would preclude a majority
vote, the Insurance Company may be required, at the Company's election, to
withdraw the affected Account's investment in the Company and terminate this
Agreement with respect to that 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
Independent Directors. Any such withdrawal and termination must take place
within six (6) months after the Company gives written notice that this
provision is being implemented, and until the end of that six month period
INVESCO and the Company shall continue to accept and implement orders by the
Insurance Company for the purchase (and redemption)of shares of the Company.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Insurance Company
conflicts with the majority of other state regulators, then the Insurance
Company will withdraw the affected Account's investment in the Company and
terminate this Agreement with respect to that Account within six months after
the Board informs the Insurance Company in writing that it has determined that
the state insurance regulator's decision has created an irreconcilable
material conflict; 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 Independent
Directors. Until the end of the foregoing six month period, INVESCO and the
Company shall continue to accept and implement orders by the Insurance Company
for the purchase (and redemption) of shares of the Company.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the Independent Directors 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. The Insurance Company shall not be required by Section 7.3 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 Board
determines that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Insurance Company will withdraw the
Account's investment in the Company and terminate this Agreement within six
(6) months after the Board informs the Insurance Company in writing of the
foregoing determination, provided, however, that the withdrawal and
termination shall be limited to the extent required by the material
irreconcilable conflict, as determined by a majority of the Independent
Directors.
7.7. 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
Actor the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (as the Company 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 those rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2,
7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to those Sections are
contained in the Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE INSURANCE COMPANY
8.1(a). The Insurance Company agrees to indemnify and hold harmless the
Company and each director of the Board and officers 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 Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Insurance Company) or
litigation(including legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) or settlements are related to the sale or
acquisition of the Company's shares or the Contracts and:
<TABLE>
<CAPTION>
<C> <S>
(i) 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 Contracts or contained in the Contracts or sales
literature for the Contracts (or any amendment or
supplement to any of the foregoing), 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 agreement to indemnify
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 in conformity
with information furnished in writing to the Insurance
Company by or on behalf of the Company for use in the
registration statement or prospectus for the Contracts
or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or shares of
the Company;
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration statement,
prospectus or sales literature of the Company not
supplied by the Insurance Company, or persons under its
control) or wrongful conduct of the Insurance Company or
persons under its control, with respect to the sale or
distribution of the Contracts or Company Shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
of the Company or any amendment thereof or supplement
thereto 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 a statement or omission was made in reliance
upon information furnished in writing to the Company by
or on behalf of the Insurance Company: or
(iv) arise as a result of any failure by the Insurance
Company to provide the services and furnish the
materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the Insurance
Company in this Agreement or arise out of or result from
any other material breach of this Agreement by the
Insurance Company,
</TABLE>
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Insurance Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party
that may arise from that Indemnified Party's willful misfeasance, bad faith,
or gross negligence in the performance of that Indemnified Party's duties or
by reason of that Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Company, whichever is applicable.
8.1(c). The Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless that Indemnified Party shall have notified the
Insurance Company in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim shall
have been served upon that indemnified Party (or after the Indemnified Party
shall have received notice of such service on any designated agent).
Notwithstanding the foregoing, the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Insurance Company of its
obligations hereunder except to the extent that the Insurance Company has been
prejudiced by such failure to give notice. In addition, any failure by the
Indemnified Party to notify the Insurance Company of any such claim shall not
relieve the Insurance Company from any liability which it may have to the
Indemnified Party against whom the action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, the Insurance Company shall be entitled to
participate, at its own expense, in the defense of the action. The Insurance
Company also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action; PROVIDED, HOWEVER, that if the
Indemnified Party shall have reasonably concluded that there may be defenses
available to it which are different from or additional to those available to
the Insurance Company, the Insurance Company shall not have the right to
assume said defense, but shall pay the costs and expenses thereof (except that
in no event shall the Insurance Company be liable for the fees and expenses of
more than one counsel for Indemnified Parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances). After notice
from the Insurance Company to the Indemnified Party of the Insurance Company's
election to assume the defense thereof, and in the absence of such a
reasonable conclusion that there may be different or additional defenses
available to the Indemnified Party, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and the Insurance
Company will not be liable to that party under this Agreement for any legal or
other expenses subsequently incurred by the party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Insurance
Company of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Company's shares or the Contracts
or the operation of the Company.
8.2. INDEMNIFICATION BY INVESCO
8.2(a). INVESCO agrees to indemnify and hold harmless the Insurance
Company and each of its directors and officers and each person, if any, who
controls the Insurance Company within the meaning of Section 15 of the 1933
Act(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of INVESCO) or litigation
(including legal and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the
Company's shares or the Contracts and:
<TABLE>
<CAPTION>
<C> <S>
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the registration statement or prospectus or
sales literature of the Company (or any amendment or
supplement to any of the foregoing), 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 agreement to indemnify
shall not apply as to any Indemnified Party if the
statement or omission or alleged statement or omission
was made in reliance upon and in conformity with
information furnished in writing to INVESCO or the
Company by or on behalf of the Insurance Company for use
in the registration statement or prospectus for the
Company or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the
sale of the Contracts or Company shares: or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the registration statement,
prospectus or sales literature for the Contracts not
supplied by INVESCO or persons under its control) or
wrongful conduct of the Company, INVESCO or persons
under their control, with respect to the sale or
distribution of the Contracts or shares of the Company;
or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission
to state therein a material fact required to be stated
therein or necessary to make the statement or statements
therein not misleading, if such statement or omission
was made in reliance upon information furnished in
writing to the Insurance Company by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the
terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply
with the diversification requirements specified in
Article VI of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by INVESCO in
this Agreement or arise out of or result from any other
material breach of this Agreement by INVESCO; as limited
by and in accordance with the provisions of Sections
8.2(b) and 8.2(c) hereof.
</TABLE>
8.2(b) INVESCO shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party that may arise from the
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of the Indemnified Party's duties or by reason of the Indemnified
Party's reckless disregard of obligations and duties under this Agreement or
to the Insurance Company or the Account, whichever is applicable.
8.2(c) INVESCO shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless the
Indemnified Party shall have notified INVESCO in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the Indemnified Party (or
after the Indemnified Party shall have received notice of such service on any
designated agent). Notwithstanding the foregoing, the failure of any
Indemnified Party to give notice as provided herein shall not relieve INVESCO
of its obligations hereunder except to the extent that INVESCO has been
prejudiced by such failure to give notice. In addition, any failure by the
Indemnified Party to notify INVESCO of any such claim shall not relieve
INVESCO from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
INVESCO will be entitled to participate, at its own expense, in the defense
thereof. INVESCO also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action; PROVIDED, HOWEVER, that
if the Indemnified Party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to those
available to INVESCO, INVESCO shall not have the right to assume said defense,
but shall pay the costs and expenses thereof (except that in no event shall
INVESCO be liable for the fees and expenses of more than one counsel for
Indemnified Parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances). After notice from INVESCO to the Indemnified
Party of INVESCO's election to assume the defense thereof, and in the absence
of such a reasonable conclusion that there may be different or additional
defenses available to the Indemnified Party, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and INVESCO
will not be liable to that party under this Agreement for any legal or other
expenses subsequently incurred by that party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.2(d) The Insurance Company agrees to notify INVESCO promptly of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Contracts
or the operation of the Account.
8.3 INDEMNIFICATION BY THE COMPANY
8.3(a). The Company agrees to indemnify and hold harmless the Insurance
Company, and each of its directors and officers and each person, if any, who
controls the Insurance Company within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" for purposes of this Section
8.3) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or
litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as those losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements result from the gross negligence, bad faith
or willful misconduct of the Board or any member thereof, are related to the
operations of the Company and:
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(i) arise as a result of any failure by the Company to
provide the services and furnish the materials under the
terms of this Agreement (including a failure to comply
with the diversification requirements specified in
Article VI of this Agreement); or
(ii) 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;
</TABLE>
as limited by, and in accordance with the provisions of, Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party that may arise
from the Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of the Indemnified Party's duties or by reason
of the Indemnified Party's reckless disregard of obligations and duties under
this Agreement or to the Insurance Company, the Company, INVESCO or the
Account, whichever is applicable.
8.3(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
the Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Indemnified Party (or after the Indemnified Party shall have received notice
of such service on any designated agent). Notwithstanding the foregoing, the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Company of its obligations hereunder except to the extent that the
Company has been prejudiced by such failure to give notice. In addition, any
failure by the Indemnified Party to notify the Company of any such claim shall
not relieve the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company will be entitled to participate,
at its own expense, in the defense thereof. The Company also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action; PROVIDED, HOWEVER, that if the Indemnified Party shall have
reasonably concluded that there may be defenses available to it which are
different from or additional to those available to the Company, the Company
shall not have the right to assume said defense, but shall pay the costs and
expenses thereof (except that in no event shall the Company be liable for the
fees and expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances). After notice from the Company to the Indemnified Party of the
Company's election to assume the defense thereof, and in the absence of such a
reasonable conclusion that there may be different or additional defenses
available to the Indemnified Party, the Indemnified Party shall bear the fees
and expenses of any additional counsel retained by it, and the Company will
not be liable to that party under this Agreement for any legal or other
expenses subsequently incurred by that party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.3(d). The Insurance Company and INVESCO agree promptly to notify the
Company of the commencement of any litigation or proceedings against it or any
of its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale
or acquisition of shares of the Company.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and provisions hereof
interpreted under and in accordance with the laws of the State of Colorado.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934, and 1940 acts, and the rules and regulations and rulings thereunder,
including any exemptions from those statutes, rules and regulations the
Commission may grant (including, but not limited to, the Mixed and Shared
Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
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(a) at the option of any party upon one year advance written notice
to the other parties; provided, however such notice shall not be
given earlier than one year following the date of this Agreement; or
(b) at the option of the Insurance Company to the extent that
shares of Funds are not reasonably available to meet the
requirements of the Contracts as determined by the Insurance
Company, provided however, that such a termination shall apply only
to the Fund(s) not reasonably available. Prompt written notice of
the election to terminate for such cause shall be furnished by the
Insurance Company; or
(c) at the option of the Company in the event that formal
administrative proceedings are instituted against the Insurance
Company by the NASD, the Commission, an insurance commissioner or
any other regulatory body regarding the Insurance Company's duties
under this Agreement or related to the sale of the Contracts, the
operation of any Account, or the purchase of the Company's shares,
provided, however, that the Company determines in its sole judgment
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the
Insurance Company to perform its obligations under this Agreement;
or
(d) at the option of the Insurance Company in the event that formal
administrative proceedings are instituted against the Company or
INVESCO by the NASD, the Commission, or any state securities or
insurance department or any other regulatory body, provided,
however, that the Insurance Company determines in its sole judgement
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Company
or INVESCO to perform its obligations under this Agreement; or
(e) with respect to any Account, upon requisite vote of the
Contract owners having an interest in that Account (or any
subaccount) to substitute the shares of another investment company
for the corresponding Fund shares in accordance with the terms of
the Contracts for which those Fund shares had been selected to serve
as the underlying investment media. The Insurance Company will give
at least 30 days' prior written notice to the Company of the date of
any proposed vote to replace the Company's shares; or
(f) at the option of the Insurance Company, in the event any of the
Company's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or exemptions therefrom, or
such law precludes the use of those shares as the underlying
investment media of the Contracts issued or to be issued by the
Insurance Company; or
(g) at the option of the Insurance Company, if the Company ceases
to qualify as a regulated investment company under Subchapter M of
the Code or under any successor or similar provision, or if the
Insurance Company reasonably believes that the Company may fail to
so qualify; or
(h) at the option of the Insurance Company, if the Company fails to
meet the diversification requirements specified in Article VI
hereof; or
(i) at the option of either the Company or INVESCO, if (1) the
Company or INVESCO, respectively, shall determine, in their sole
judgment reasonably exercised in good faith, that the Insurance
Company has suffered a material adverse change in its business or
financial condition or is the subject of material adverse publicity
and that material adverse change or material adverse publicity will
have a material adverse impact upon the business and operations of
either the Company or INVESCO, (2) the Company or INVESCO shall
notify the Insurance Company in writing of that determination and
its intent to terminate this Agreement, and (3) after considering
the actions taken by the Insurance Company and any other changes in
circumstances since the giving of such a notice, the determination
of the Company or INVESCO shall continue to apply on the sixtieth
(60th) day following the giving of that notice, which sixtieth day
shall be the effective date of termination; or
(j) at the option of the Insurance Company, if (1) the Insurance
Company shall determine, in its sole judgment reasonably exercised
in good faith, that either the Company or INVESCO has suffered a
material adverse change in its business or financial condition or is
the subject of material adverse publicity and that material adverse
change or material adverse publicity will have a material adverse
impact upon the business and operations of the Insurance Company,
(2) the Insurance Company shall notify the Company and INVESCO in
writing of the determination and its intent to terminate the
Agreement, and (3) after considering the actions taken by the
Company and/or INVESCO and any other changes in circumstances since
the giving of such a notice, the determination shall continue to
apply on the sixtieth (60th) day following the giving of the notice,
which sixtieth day shall be the effective date of termination; or
(k) at the option of either the Company or INVESCO, if the
Insurance Company gives the Company and INVESCO the written notice
specified in Section 1.6(b) hereof and at the time that notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however any termination under
this Section 10.1(k) shall be effective forty five (45) days after
the notice specified in Section 1.6(b) was given.
</TABLE>
10.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for any
reason or for no reason.
10.3 NOTICE REQUIREMENT. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to
terminate, which notice shall set forth the basis for the termination.
Furthermore,
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(a) in the event that any termination is based upon the provisions
of Article VII, or the provisions of Section 10.1(a), 10.1(i),
10.1(j), or 10.1(k) of this Agreement, the prior written notice
shall be given in advance of the effective date of termination
as required by those provisions; and
(b) in the event that any termination is based upon the provisions
of Section 10.1(c) or 10.1(d) of this Agreement, the prior
written notice shall be given at least ninety (90) days before
the effective date of termination.
</TABLE>
10.4. EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Company and INVESCO shall at the option of the Insurance
Company, continue to make available additional shares of the Company pursuant
to the terms and conditions of this Agreement, for all Contracts in effect on
the effective date of termination of this Agreement ("Existing Contracts").
Specifically, without limitation, the owners of the Existing Contracts shall
be permitted to reallocate investments in the Company, redeem investments in
the Company and/or invest in the Company upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.4 shall not apply to any terminations under Article VII and the
effect of Article VII terminations shall be governed by Article VII of this
Agreement.
10.5. The Insurance Company shall not redeem Company shares attributable
to the Contracts (as opposed to Company shares attributable to the Insurance
Company's assets held in the Account) except (i) as necessary to implement
Contract-owner-initiated transactions, or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of general
application (a "Legally Required Redemption"). Upon request, the Insurance
Company will promptly furnish to the Company and INVESCO the opinion of
counsel for the Insurance Company (which counsel shall be reasonably
satisfactory to the Company and INVESCO) to the effect that any redemption
pursuant to clause (ii)above is a Legally Required Redemption.
ARTICLE XI. NOTICES.
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of that other party set forth
below or at such other address as the other party may from time to time
specify in writing.
If to the Company:
P.O. Box 173706
Denver, Colorado 80217-3706
Attention: General Counsel
If to the Insurance Company:
____________________________
____________________________
Attention: __________________
If to INVESCO:
P.O. Box 173706
Denver, Colorado 80217-3706
Attention: General Counsel
ARTICLE XII. MISCELLANEOUS
12.1. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize such
names and addresses and other confidential information without the express
written consent of the affected party unless and until that information may
come into the public domain.
12.2. 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.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. 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.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and shall permit those
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.6. 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.
12.7. No party may assign this Agreement without the prior written
consent of the others.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
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Insurance Company:
____________________ COMPANY
By its authorized officer,
SEAL By:__________________________
Title:_______________________
Date:________________________
Company:
INVESCO VARIABLE INVESTMENT FUNDS, INC.
By its authorized officer,
SEAL By:___________________________
Title:________________________
Date:_________________________
INVESCO:
INVESCO FUNDS GROUP, INC.
By its authorized officer,
SEAL By:___________________________
Title:________________________
Date:_________________________
</TABLE>
SCHEDULE A
CONTRACTS
1. Contract Form________________________
SCHEDULE B
ACCOUNTS
Name of Account Date of Resolution of Insurance Company's
Board which Established the Account
SCHEDULE C
PERSONS AUTHORIZED TO GIVE INSTRUCTIONS TO THE COMPANY AND INVESCO
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NAME ADDRESS AND PHONE NUMBER
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(1)______________________________ ____________________________
Print or Type Name
______________________________ Phone:______________________
Signature
(2)______________________________ ____________________________
Print or Type Name
______________________________ Phone:______________________
Signature
(3)______________________________ ____________________________
Print or Type Name
______________________________ Phone:______________________
Signature
(4)______________________________ ____________________________
Print or Type Name
______________________________ Phone:______________________
Signature
</TABLE>
SCHEDULE D
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for
the handling of proxies relating to the Company by INVESCO, the Company and
the Insurance Company. The defined terms herein shall have the meanings
assigned in the Participation Agreement except that the term "Insurance
Company" shall also include the department or third party assigned by the
Insurance Company to perform the steps delineated below.
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1. The number of proxy proposals is given to the Insurance Company by INVESCO
as early as possible before the date set by the Company for the
shareholder meeting to facilitate the establishment of tabulation
procedures. At this time INVESCO will inform the Insurance Company of the
Record, Mailing and Meeting dates. This will be done verbally
approximately two months before meeting.
2. Promptly after the Record Date, the Insurance Company will perform a "tape
run", or other activity, which will generate the names, addresses and
number of units which are attributed to each contract owner/policyholder
(the "Customer") as of the Record Date. Allowance should be made for
account adjustments made after this date that could affect the status of
the Customers' accounts of the Record Date.
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Note: The number of proxy statements is determined by the activities
described in Step #2. The Insurance Company will use its best
efforts to call in the number of Customers to INVESCO, as soon
as possible, but no later than one week after the Record Date.
</TABLE>
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3. The Company's Annual Report must be sent to each Customer by the Insurance
Company either before or together with the Customers' receipt of a proxy
statement. INVESCO will provide at least one copy of the last Annual
Report to the Insurance Company.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Insurance Company by the Company. The Insurance
Company, at its expense, shall produce and personalize the Voting
Instruction cards. The Legal Department of INVESCO ("INVESCO Legal") must
approve the Card before it is printed. Allow approximately 2-4 business
days for printing information on the Cards. Information commonly found on
the Cards includes:
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a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes (already on Cards as printed
by the Company).
(This and related steps may occur later in the chronological process due
to possible uncertainties relating to the proposals.)
5. During this time, INVESCO Legal will develop, produce, and the Company
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Insurance
Company for insertion into envelopes (envelopes and return envelopes are
provided and paid for by the Insurance Company). Contents of envelope
sent to customers by Insurance Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Insurance Company)
addressed to the Insurance Company or its tabulation agent
d. "Urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to vote
as quickly as possible and that their vote is important. One
copy will be supplied by the Company.)
e. Cover letter - optional, supplied by Insurance Company and
reviewed and approved in advance by INVESCO Legal.
6. The above contents should be received by the Insurance Company
approximately 3-5 business days before mail date. Individual in charge at
Insurance Company reviews and approves the contents of the mailing package
to ensure correctness and completeness. Copy of this approval sent to
INVESCO Legal.
7. Package mailed by the Insurance Company.
* The Company must allow at least a 15-day solicitation
time to the Insurance Company as the shareowner. (A 5-week period
is recommended.) Solicitation time is calculated as calendar days
from (but not including) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal
procedure.
9. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to the Customer with an explanatory letter,
a new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be not received for purposes of vote
tabulation. Such mutilated or illegible Cards are "hand verified," i.e.,
examined as to why they did not complete the system. Any questions on
those Cards are usually remedied individually.
10. There are various control procedures used to ensure proper tabulation of
votes and accuracy of the tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
11. The actual tabulation of votes is done in units which are then converted
to shares. (It is very important that the Company receives the
tabulations stated in terms of a percentage and the number of shares.)
INVESCO Legal must review and approve tabulation format.
12. Final tabulation in shares is verbally given by the Insurance Company to
INVESCO Legal on the morning of the meeting not later than 10:00 a.m.
Denver time. INVESCO Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
13. A Certificate of Mailing and Authorization to Vote Shares will be required
from the Insurance Company as well as an original copy of the final vote.
INVESCO Legal will provided a standard form for each Certification.
14. The Insurance Company will be required to box and archive the Cards
received from the Customers. In the event that any vote is challenged or
if otherwise necessary for legal, regulatory, or accounting purposes,
INVESCO Legal will be permitted reasonable access to such Cards.
15. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
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EXHIBIT 99.B8
FORM OF FUND PARTICIPATION AGREEMENTS
PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 31 day of March, 1995, by and among The
Alger American Fund (the "Trust"), an open-end management investment company
organized as a Massachusetts business trust, GREAT AMERICAN RESERVE INSURANCE
COMPANY, a life insurance company organized as a corporation under the laws
of the State of TEXAS, (the "Company"), on its own behalf and on behalf of
each segregated asset account of the Company set forth in Schedule A, as may
be amended from time to time (the "Accounts"), and Fred Alger and Company,
Incorporated, a Delaware corporation, the Trust's distributor (the
"Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and has
an effective registration statement relating to the offer and sale of the
various series of its shares under the Securities Act of 1933, as amended (the
"1933 Act");
WHEREAS, the Trust and the Distributor desire that Trust shares be used
as an investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements with
the Trust (the "Participating Insurance Companies");
WHEREAS, shares of beneficial interest in the Trust are divided into the
following series which are available for purchase by the Company for the
Accounts: Alger American Small Capitalization Portfolio, Alger American Growth
Portfolio, Alger American Income & Growth Portfolio, Alger American Balanced
Portfolio, Alger American MidCap Growth Portfolio, and Alger American
Leveraged AllCap Portfolio;
WHEREAS, the Trust has received an order from the Commission, dated
February 17, 1989 (File No. 812-7076), 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
Portfolios 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 (the "Shared Funding Exemptive Order");
WHEREAS, the Company has registered or will register under the 1933 Act
certain variable life insurance policies and variable annuity contracts to be
issued by the Company under which the Portfolios are to be made available as
investment vehicles (the "Contracts");
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act unless an exemption from registration
under the 1940 Act is available and the Trust has been so advised;
WHEREAS, the Company desires to use shares of one or more Portfolios as
investment vehicles for the Accounts;
NOW THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I.
PURCHASE AND REDEMPTION OF TRUST PORTFOLIO SHARES
1.1 For purposes of this Article I, the Company shall be the Trust's agent
for the receipt from each account of purchase orders and requests for
redemption pursuant to the Contracts relating to each Portfolio, provided that
the Company notifies the Trust of such purchase orders and requests for
redemption by 9:30 a.m. Eastern time on the next following Business Day, as
defined in Section 1.3.
1.2. The Trust shall make shares of the Portfolios available to the Accounts
at the net asset value next computed after receipt of a purchase order by the
Trust (or its agent), as established in accordance with the provisions of the
then current prospectus of the Trust describing Portfolio purchase procedures.
The Company will transmit orders from time to time to the Trust for the
purchase and redemption of shares of the Portfolios. 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 if, 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, such action is
deemed in the best interests of the shareholders of such Portfolio.
1.3. The Company shall pay for the purchase of shares of a Portfolio on behalf
of an Account with federal funds to be transmitted by wire to the Trust, with
the reasonable expectation of receipt by the Trust by 2:00 p.m. Eastern time
on the next Business Day after the Trust (or its agent) receives the purchase
order. Upon receipt by the Trust of the federal funds so wired, such funds
shall cease to be the responsibility of the Company and shall become the
responsibility of the Trust for this purpose. "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 Commission.
1.4. The Trust will redeem for cash 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 describing Portfolio redemption
procedures. The Trust shall make payment for such shares in the manner
established from time to time by the Trust. Proceeds of redemption with
respect to a Portfolio will normally be paid to the Company for an Account in
federal funds transmitted by wire to the Company by order of the Trust with
the reasonable expectation of receipt by the Company by 2:00 p.m. Eastern time
on the next Business Day after the receipt by the Trust (or its agent) of the
request for redemption. Such payment may be delayed if, for example, the
Portfolio's cash position so requires or if extraordinary market conditions
exist, but in no event shall payment be delayed for a greater period than is
permitted by the 1940 Act. The Trust reserves the right to suspend the right
of redemption, consistent with Section 22(e) of the 1940 Act and any rules
thereunder.
1.5. Payments for the purchase of shares of the Trust's Portfolios by the
Company under Section 1.3 and payments for the redemption of shares of the
Trust's Portfolios under Section 1.4 on any Business Day may be netted against
one another for the purpose of determining the amount of any wire transfer.
1.6. Issuance and transfer of the Trust's Portfolio shares will be by book
entry only. Stock certificates will not be issued to the Company or the
Accounts. Portfolio Shares purchased from the Trust will be recorded in the
appropriate title for each Account or the appropriate subaccount of each
Account.
1.7. The Trust shall furnish, on or before the ex-dividend date, notice to the
Company of any income dividends or capital gain distributions payable on the
shares of any Portfolio of the Trust. 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.
1.8. The Trust shall calculate the net asset value of each Portfolio on each
Business Day, as defined in Section 1.3. The Trust shall make the net asset
value per share for each Portfolio available to the Company or its designated
agent 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 to the Company by 6:30 p.m. Eastern time each
Business Day.
1.9. The Trust agrees that its Portfolio shares will be sold only to
Participating Insurance Companies and their segregated asset accounts, to the
Fund Sponsor or its affiliates and to such other entities as may be permitted
by Section 817(h) of the Code, the regulations hereunder, or judicial or
administrative interpretations thereof. No shares of any Portfolio will be
sold directly to the general public. The Company agrees that it will use Trust
shares only for the purposes of funding the Contracts through the Accounts
listed in Schedule A, as amended from time to time.
1.10. The Trust agrees that all Participating Insurance Companies shall have
the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding materially to those contained in Section
2.9 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 Commission
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 shares of the Portfolios, 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.
2.2. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Trust to the Contract owners as required to be
distributed to such Contract owners under applicable federal or state law.
2.3. The Trust shall provide such documentation (including a final copy of the
Trust's prospectus as set in type or in camera-ready copy) and other
assistance as is reasonably necessary in order for the Company to print
together in one document the current prospectus for the Contracts issued by
the Company and the current prospectus for the Trust. The Trust shall bear the
expense of printing copies of its current prospectus that will be distributed
to existing Contract owners, and the Company shall bear the expense of
printing copies of the Trust's prospectus that are used in connection with
offering the Contracts issued by the Company.
2.4. The Trust and the Distributor shall provide (1) at the Trust's expense,
one copy of the Trust's current Statement of Additional Information ("SAI") to
the Company and to any Contract owner who requests such SAI, (2) at the
Company's expense, such additional copies of the Trust's current SAI as the
Company shall reasonably request and that the Company shall require in
accordance with applicable law in connection with offering the Contracts
issued by the Company.
2.5. The Trust, at its expense, shall provide the Company with copies of its
proxy material, periodic reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require for
purposes of distributing to Contract owners. The Trust, at the Company's
expense, shall provide the Company with copies of its periodic reports to
shareholders and other communications to shareholders in such quantity as the
Company shall reasonably request for use in connection with offering the
Contracts issued by the Company. If requested by the Company in lieu thereof,
the Trust shall provide such documentation (including a final copy of the
Trust's proxy materials, periodic reports to shareholders and other
communications to shareholders, as set in type or in camera-ready copy) and
other assistance as reasonably necessary in order for the Company to print
such shareholder communications for distribution to Contract owners.
2.6. The Company agrees and acknowledges that the Distributor is the sole
owner of the name and mark "Alger" and that all use of any designation
comprised in whole or part of such name or mark under this Agreement shall
insure to the benefit of the Distributor. Except as provided in Section 2.5,
the Company shall not use any such name or 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 Distributor. Upon termination of this
Agreement for any reason, the Company shall cease all use of any such name or
mark as soon as reasonably practicable.
2.7. The Company shall furnish, or cause to be furnished, to the Trust or its
designee a copy of each Contract prospectus and/or statement of additional
information describing the Contracts, each report to Contract owners, proxy
statement, application for exemption or request for no-action letter in which
the Trust or the Distributor is named contemporaneously with the filing of
such document with the Commission. 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 Distributor is named,
at least five Business Days prior to its use. No such material shall be used
if the Trust or its designee reasonably objects to such use within three
Business Days after receipt of such material.
2.8. The Company shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust or the Distributor
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), annual and
semi-annual reports of the Trust, Trust-sponsored proxy statements, or in
sales literature or other promotional material approved by the Trust or its
designee, except as required by legal process or regulatory authorities or
with the prior written permission of the Trust, the Distributor or their
respective designees. The Trust and the Distributor agree to respond to any
request for approval on a prompt and timely basis. The Company shall adopt and
implement procedures reasonably designed to ensure that "broker only"
materials including information therein about the Trust or the Distributor are
not distributed to existing or prospective Contract owners.
2.9. The Trust shall use its best efforts to provide the Company, on a timely
basis, with such information about the Trust, the Portfolios and the
Distributor, in such form as the Company may reasonably require, as the
Company shall reasonably request in connection with the preparation of
registration statements, prospectuses and annual and semi-annual reports
pertaining to the Contracts.
2. 10. The Trust and the Distributor shall not give, and agree that no
affiliate of either of them 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 prior written permission of the Company. The Company
agrees to respond to any request for approval on a prompt and timely basis.
2.11. So long as, and to the extent that, the Commission interprets the 1940
Act to require pass-through voting privileges for Contract owners, the Company
will provide pass-through voting privileges to Contract owners whose cash
values are invested, through the registered Accounts, in shares of one or more
Portfolios 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
registered Account, the Company will vote shares of each Portfolio of the
Trust held by a registered Account and for which no timely voting instructions
from Contract owners are received 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
Portfolio shares held to fund the Contacts without the prior written consent
of the Trust, which consent may be withheld in the Trust's sole discretion.
The Company reserves the right, to the extent permitted by law, to vote shares
held in any Account in its sole discretion.
2.12. The Company and the Trust will each provide to the other information
about the results of any regulatory examination relating to the Contracts or
the Trust, including relevant portions of any "deficiency letter" and any
response thereto.
2.13. No compensation shall be paid by the Trust to the Company, or by the
Company to the Trust, under this Agreement (except for specified expense
reimbursements). However, nothing herein shall prevent the parties hereto from
otherwise agreeing to perform, and arranging for appropriate compensation for,
other services relating to the Trust, the Accounts or both.
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 TEXAS and that
it has legally and validly established each Account as a segregated asset
account under such law as of the date set forth in Schedule A, and that GARCO
EQUITY SALES, INC., the principal underwriter for the Contracts, is
registered as a broker-dealer under the Securities Exchange Act of 1934 and is
a member in good standing of the National Association of Securities Dealers,
Inc.
3.2. The Company represents and warrants that it has registered or, prior to
any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act and cause
each Account to remain so registered to serve as a segregated asset account
for the Contracts, unless an exemption from registration is available.The
Company represents and warrants that the Contracts will be registered under
the 1933 Act unless an exemption from registration is available prior to any
issuance or sale of the Contracts; the Contracts will be issued and sold in
compliance in all materials respects with all applicable federal and state
laws; and the sale of the Contracts shall comply in all material respects with
state insurance law suitability requirements.
3.4. The Trust represents and warrants that it is duly organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act and the rules and
regulations thereunder.
3.5. The Trust and the Distributor represent and warrant that the Portfolio
shares offered and sold pursuant to this Agreement will be registered under
the 1933 Act and sold in accordance with all applicable federal and state
laws, and the Trust shall be registered under the 1940 Act prior to and at the
time of any issuance or sale of such shares. 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 represents and warrants that the investments of each Portfolio
will comply with the diversification requirements for variable annuity,
endowment or life insurance contracts set forth in Section 817(h) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the rules and
regulations thereunder, including without limitation Treasury Regulation
1.817-5, and will notify the Company immediately upon having a reasonable
basis for believing any Portfolio has ceased to comply or might not so comply
and will immediately take all reasonable steps to adequately diversify the
Portfolio to achieve compliance within the grace period afforded by Regulation
1.817-5.
3.7. The Trust represents and warrants that it is currently qualified as a
"regulated investment company" under Subchapter M of the Code, that it will
make every effort to maintain such qualification and will notify the Company
immediately upon having a reasonable basis for believing it has ceased to so
qualify or might not so qualify in the future.
3.8. The Trust represents and warrants that it, its directors, officers,
employees and others dealing with the money or securities, or both, of a
Portfolio shall at all times be covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust in an amount not less than the minimum
coverage required by Rule 17g-1 or other applicable regulations under the 1940
Act. Such bond shall include coverage for larceny and embezzlement and be
issued by a reputable bonding company.
3.9. The Distributor represents that it is duly organized and validly existing
under the laws of the State of Delaware and that it is registered, and will
remain registered, during the term of this Agreement, as a broker-dealer under
the Securities Exchange Act of 1934 and is a member in good standing of the
National Association of Securities Dealers, Inc.
ARTICLE IV.
POTENTIAL CONFLICTS
4.1. The parties acknowledge that a Portfolio'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. A material irreconcilable 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; (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 Trust shall promptly inform the Company
of any determination by the Trustees that a material irreconcilable conflict
exists and of the implications thereof.
4.2. The Company agrees to report promptly 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 Shared Funding Exemptive Order
by providing the Trustees with all information reasonably necessary for and
requested by 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. All communications from the Company to the Trustees
may be made in care of the Trust.
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 own expense and to the extent reasonably practicable (as
determined by the Trustees) take whatever steps are necessary to remedy or
eliminate the material irreconcilable 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 the Trust has determined that such decision has
created a material irreconcilable conflict; 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. 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 Section 4.3 through 4.6 of this Agreement, a majority of
the disinterested Trustees shall determine whether any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the Trust be required to establish a new funding medium for any Contract. The
Company shall not 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 material irreconcilable
conflict. In the event that the Trustees determine that any proposed action
does not adequately remedy any material irreconcilable 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 Shared Funding
Exemptive Order, and said reports, materials and data shall be submitted more
frequently if reasonably deemed appropriate by the Trustees.
4.8. If and to the extent that Rule 6e-3(T) is 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 Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive
Order, then the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule
6e-3(T), as amended, or 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 Distributor, the Trust and each of its Trustees, officers,
employees and agents and each person, if any, who controls the Trust within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 5.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company, which consent shall not be unreasonably withheld) 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 may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses are related to the sale or
acquisition of the Contracts or Trust shares and:
(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 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 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; or
(f) arise out or result from the provision by the Company to the Trust
of insufficient or incorrect information regarding the purchase or sale of
shares of any Portfolio, or the failure of the Company to provide such
information on a timely basis.
5.2. INDEMNIFICATION BY THE DISTRIBUTOR. The Distributor agrees 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 the purposes of this Section 5.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Distributor, which consent shall not be unreasonably withheld)
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 may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses are related to the sale or
acquisition of the Contracts or Trust shares and:
(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 Distributor or 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 and; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived form
Company Documents) or wrongful conduct of the Distributor or persons under its
control, with respect to the sale or acquisition of the Contracts or Portfolio
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 Distributor or the
Trust 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 Distributor or the Trust in this
Agreement or arise out of or result from any other material breach of this
Agreement by the Distributor or the Trust.
5.3. None of the Company, the Trust or the Distributor 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 Company, the Trust or the Distributor 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 party in writing within a reasonable time
after the summons, or other first written notification, giving information 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 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 an Indemnified Party, 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:
(a) at the option of any party upon 60 days advance written notice to
the other parties, unless a shorter time is agreed to by the parties;
(b) at the option of the Trust or the Distributor if the Contracts
issued by the Company 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
(c) at the option of any party upon a determination by a majority of the
Trustees of the Trust, or a majority of its disinterested Trustees, that a
material irreconcilable conflict exists; or
(d) at the option of the Company upon institution of formal proceedings
against the Trust or the Distributor by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body regarding the
Trust's or the Distributor's duties under this Agreement or related to the
sale of Trust shares or the operation of the Trust; or
(e) at the option of the Company if the Trust or a Portfolio fails to
meet the diversification requirements specified in Section 3.6 hereof; or.
(f) at the option of the Company if shares of the Series are not
reasonably available to meet the requirements of the Variable Contracts issued
by the Company, as determined by the Company, and upon prompt notice by the
Company to the other parties; or
(g) at the option of the Company in the event any of the shares of the
Portfolio are not registered, issued or sold in accordance with applicable
state and/or federal law, or such law precludes the use of such shares as the
underlying investment media of the Variable Contracts issued or to be issued
by the Company; or
(h) at the option of the Company, if the Portfolio fails to qualify as a
Regulated Investment Company under Subchapter M of the Code; or
(i) at the option of the Distributor if it shall determine in its sole
judgment exercised in good faith, that the Company and/or its affiliated
companies has suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or is the
subject of material adverse publicity.
6.2. Notwithstanding any termination of this Agreement, the Trust shall, at
the option of the Company, continue to make available additional shares of any
Portfolio and redeem shares of 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.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.9 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.
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 or its Distributor:
Fred Alger Management, Inc.
30 Montgomery Street
Jersey City, NJ 07302
Attn: Gregory S. Duch
If to the Company:
Great American Reserve Insurance Company
11825 N. Pennsylvania Street
Carmel, IN 46032
Attn: L. Gregory Gloeckner
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 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 the State of New York. It shall also
be subject to the provisions of the federal securities laws and the rules and
regulations thereunder and to any orders of the Commission granting exemptive
relief therefrom and the conditions of such orders. Copies of any such orders
shall be promptly forwarded by the Trust to the Company.
8.5. 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 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 Commission, the
National Association of Securities Dealers, Inc. 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. 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.
8.11. Each party hereto shall, except as required by law or otherwise
permitted by this Agreement, treat as confidential the names and addresses of
the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto, and shall not disclose such
confidential information without the written consent of the affected party
unless such information has become publicly available.
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.
Fred Alger and Company, Incorporated
By: /s/ GREGORY S. DUCH
____________________
Name: Gregory S. Duch
Title: Executive Vice President and Treasurer
Alger American Fund
By: /s/ GREGORY S. DUCH
____________________
Name: Gregory S. Duch
Title: Executive Vice President and Treasurer
Great American Reserve Insurance Company
________________________________________
By: /s/ L. GREGORY GLOECKNER
_________________________
Name: L. Gregory Gloeckner
Title: Senior Vice President
SCHEDULE A
SEGREGATED ACCOUNT ASSETS
Great American Reserve Variable Annuity Account C
Great American Reserve Variable Annuity Account E
EXHIBIT 99.B8
FORM OF FUND PARTICIPATION AGREEMENTS
FUND PARTICIPATION AGREEMENT
____________________________
Great American Reserve Insurance Company ("Insurance Company"), Van Eck
Worldwide Insurance Trust ("Trust") and the Trust's investment adviser, Van
Eck Associates Corporation ("Adviser") hereby agree that shares of the series
of the Trust as listed on Exhibit A, as it may, from time to time, be amended
("Portfolios"), shall be made available to serve as an underlying investment
medium for Individual and Group Deferred Variable Annuity and Variable Life
Contracts ("Contracts") to be offered by Insurance Company subject to the
following provisions:
1. Insurance Company represents that it has established the segregated
asset accounts listed in Exhibit B (the "Variable Account"), each a separate
account under Texas law, and has registered each as a unit investment trust
under the Investment Company Act of 1940 ("1940 Act") to serve as an
investment vehicle for the Contracts. The Contracts provide for the allocation
of net amounts received by Insurance Company to separate series of the
Variable Account for investment in the shares of specified investment
companies selected among those companies available through the Variable
Account to act as underlying investment media. Selection of a particular
investment company is made by the Contract owner who may change such selection
from time to time in accordance with the terms of the applicable Contract.
2. Insurance Company agrees to make every reasonable effort to market
its Contracts. It will use its best efforts to give equal emphasis and
promotion to shares of the Trust as is given to other underlying investments
of the Variable Account. In marketing its Contracts, Insurance Company will
comply with all applicable state or Federal laws.
3. The Trust or the Adviser will provide closing net asset value,
dividend and capital gain information at the close of trading each business
day to Insurance Company. Insurance Company will use this data to calculate
unit values, which will in turn be used to process that same business day's
Variable Account unit value. The Variable Account processing will be done the
same evening, and orders will be placed the morning of the following business
day. Orders will be sent directly to the Trust or its specified agent, and
payment for purchases will be wired to a custodial account designated by the
Trust or the Adviser, so as to coincide with the order for Trust shares. The
Trust will execute the orders at the net asset value as determined as of the
close of trading on the prior day. Dividends and capital gains distributions
shall be reinvested in additional shares at the ex-date net asset value.
4. All expenses incident to the performance by the Trust under this
Agreement shall be paid by the Trust. The Trust shall pay the cost of
registration of Trust shares with the Securities and Exchange Commission
("SEC"). The Trust shall distribute, to the Variable Account, proxy material,
periodic Trust reports to shareholders and other material the Trust may
require to be sent to Contract owners. The Trust shall pay the cost of
qualifying Trust shares in states where required. The Trust will provide
Insurance Company with a reasonable quantity of the Trust's Prospectus and the
reports to be used in contemplation of this Agreement. The Trust will provide
Insurance Company with a copy of the Statement of Additional Information
suitable for duplication.
5. Insurance Company and its agents shall make no representations
concerning the Trust or Trust shares except those contained in the then
current prospectuses of the Trust and in current printed sales literature of
the Trust.
6. Administrative services to Contract owners shall be the
responsibility of Insurance Company, and shall not be the responsibility of
the Trust or the Adviser. The Trust and Adviser recognize that Insurance
Company will be the sole shareholder of Trust shares issued pursuant to the
Contracts. Such arrangement will result in multiple share orders.
7. The Trust shall comply with Sections 817(h) and 851 of the Internal
Revenue Code of 1986, if applicable, and the regulations thereunder, and the
applicable provisions of the 1940 Act relating to the diversification
requirements for variable annuity, endowment, and life insurance contracts.
Upon request, the Trust shall provide Insurance Company with a letter from the
appropriate Trust officer certifying the Trust's compliance with the
diversification requirements and qualification as a regulated investment
company.
8. Insurance Company agrees to inform the Board of Trustees of the Trust
of the existence of, or any potential for, any material irreconcilable
conflict of interest between the interests of the Contract owners of the
Variable Account investing in the Trust and/or any other separate account of
any other insurance company investing in the Trust.
A material irreconcilable conflict may arise for a variety of reasons,
including:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities
laws or regulations, or a public ruling, private letter ruling, 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;
(e) a difference in voting instructions given by Contract owners and
variable annuity insurance contract owners or by variable annuity or life
insurance contract owners of different life insurance companies utilizing the
Trust; or
(f) a decision by Insurance Company to disregard the voting
instructions of contract owners.
Insurance Company will be responsible for assisting the Board of Trustees
of the Trust in carrying out its responsibilities by providing the Board with
all information reasonably necessary for the Board to consider any issue
raised, including information as to a decision by Insurance Company to
disregard voting instructions of Contract owners.
It is agreed that if it is determined by a majority of the members of the
Board of Trustees of the Trust or a majority of its disinterested Trustees
that a material irreconcilable conflict exists affecting Insurance Company,
Insurance Company shall, at its own expense, take whatever steps are necessary
to remedy or eliminate the irreconcilable material conflict, which steps may
include, but are not limited to,
(a) withdrawing the assets allocable to some or all of the separate
accounts from the Trust or any Portfolio and reinvesting such assets in a
different investment medium, including another Portfolio of the Trust or
submitting the questions of whether such segregation should be implemented to
a vote of all affected Contract owners and, as appropriate, segregating the
assets of any particular group (i.e., annuity Contract owners, life insurance
Contract owners or qualified Contract owners) that votes in favor of such
segregation, or offering to the affected Contract owners the option of making
such a change;
(b) establishing a new registered management investment company or
managed separate account.
If a material irreconcilable conflict arises because of Insurance
Company's decision to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
Insurance Company may be required, at the Trust's election, to withdraw the
Variable Account's investment in the Trust. No charge or penalty will be
imposed against the Variable Account as a result of such withdrawal. Insurance
Company agrees that any remedial action taken by it in resolving any material
conflicts of interest will be carried out with a view only to the interests of
Contract owners.
For purposes hereof, a majority of the disinterested members of the Board
of Trustees of the Trust shall determine whether any proposed action
adequately remedies any material irreconcilable conflict. In no event will the
Trust be required to establish a new funding medium for any Contracts.
Insurance Company shall not be required by the terms hereof to establish a new
funding medium for any Contracts if an offer to do so has been declined by
vote of a majority of affected Contract owners.
The Trust will undertake to promptly make known to Insurance Company the
Board of Trustees' determination of the existence of a material irreconcilable
conflict and its implications.
9. This Agreement shall terminate as to the sale and issuance of new
Contracts:
(a) at the option of Insurance Company, the Adviser or the Trust upon
six months' advance written notice to the other parties;
(b) at the option of Insurance Company, if Trust shares are not
available for any reason to meet the requirements of Contracts as determined
by Insurance Company. Reasonable advance notice of election to terminate shall
be furnished by Insurance Company;
(c) at the option of Insurance Company, the Adviser or the Trust, upon
institution of formal proceedings against the Broker-Dealer or Broker-Dealers
marketing the Contracts, the Variable Account, Insurance Company or the Trust
by the National Association of Securities Dealers ("NASD"), the SEC or any
other regulatory body;
(d) upon a decision by Insurance Company, in accordance with regulations
of the SEC, to substitute such Trust shares with the shares of another
investment company for Contracts for which the Trust shares have been selected
to serve as the underlying investment medium. Insurance Company will give 60
days' written notice to the Trust and the Adviser of any proposed vote to
replace Trust shares;
(e) upon assignment of this Agreement unless made with the written
consent of each other party;
(f) in the event Trust shares are not registered, issued or sold in
conformance with Federal law or such law precludes the use of Trust shares as
an underlying investment medium of Contracts issued or to be issued by
Insurance Company. Prompt notice shall be given by either party to the other
in the event the conditions of this provision occur.
10. Termination as the result of any cause listed in the preceding
paragraph shall not affect the Trust's obligation to furnish Trust shares for
Contracts then in force for which the shares of the Trust serve or may serve
as an underlying medium, unless such further sale of Trust shares is
proscribed by law or the SEC or other regulatory body.
11. Each notice required by this Agreement shall be given by wire and
confirmed in writing to:
Great American Reserve Insurance Company
11815 N. Pennsylvania Street
Carmel, Indiana 46032
Attn.: Senior Vice President, Marketing
Van Eck Worldwide Insurance Trust
99 Park Avenue, 8th Floor
New York, New York 10016
Attn.: President
Van Eck Associates Corporation
99 Park Avenue, 8th Floor
New York, New York 10016
Attn.: President
12. Advertising and sales literature with respect to the Trust prepared
by Insurance Company or its agents for use in marketing its Contracts will be
submitted to the Trust for review before such material is submitted to the SEC
or NASD for review.
13. Insurance Company will distribute all proxy material furnished by
the Trust and will vote Trust shares in accordance with instructions received
from the Contract owners of such Trust shares. Insurance Company shall vote
the Trust shares for which no instructions have been received in the same
proportion as Trust shares for which said instructions have been received from
Contract owners. Insurance Company and its agents will in no way recommend
action in connection with or oppose or interfere with the solicitation of
proxies for the Trust shares held for such Contract owners.
14. (a) Insurance Company agrees to indemnify and hold harmless the
Trust, the Adviser, and each of its trustees, directors, officers, employees,
agents and each person, if any, who controls the Trust within the meaning of
the Securities Act of 1933 (the "Act") (the Trust and such persons
collectively, "Trust Indemnified Person") against any losses, claims, damages
or liabilities to which a Trust Indemnified Person may become subject, under
the 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
information furnished by Insurance Company for use in the Registration
Statement or prospectus of the Trust or in the Registration Statement or
prospectus for the Variable Account, 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,
or arise out of or as a result of conduct, statements or representations
(other than statements or representations contained in the prospectus and
Trust-prepared sales literature of the Trust) of Insurance Company or its
agents with respect to the sale and distribution of contracts for which Trust
shares are an underlying investment or arise out of a breach of this
Agreement; and Insurance Company will reimburse any legal or other expenses
reasonably incurred by a Trust Indemnified Person in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which Insurance
Company may otherwise have.
(b) The Trust agrees to indemnify and hold harmless Insurance Company
and each of its directors, officers, employees, agents and each person, if
any, who controls Insurance Company within the meaning of the Act (Insurance
Company and such persons collectively, "Insurance Company Indemnified Person")
against any losses, claims, damages or liabilities to which an Insurance
Company Indemnified Person may become subject, under the 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 or
prospectus or Trust-prepared sales literature of the Trust, 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, or arise out of or are based upon the
Trust's failure to keep each of the Trust options fully diversified and
qualified as a regulated investment company as required by the applicable
provisions of the Internal Revenue Code, the Investment Company Act of 1940,
and any other law or regulation, or arise out of a breach of this Agreement
and the Trust will reimburse any legal or other expenses reasonably incurred
by an Insurance Company Indemnified Person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Trust 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 information furnished to
the Trust by Insurance Company specifically for use therein or in Insurance
Company-prepared sales literature. This indemnity agreement will be in
addition to any liability which the Trust may otherwise have.
(c) The Adviser agrees to indemnify and hold harmless each Insurance
Company Indemnified Person against any losses, claims, damages or liabilities
to which an Insurance Company Indemnified Person may become subject, under the
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 or prospectus or Adviser-prepared sales literature of
the Trust, 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, or arise out of or
are based upon the Adviser's failure to keep each of the Trust and its
Portfolios fully diversified and qualified as a regulated investment company
as required by the applicable provisions of the Internal Revenue Code, the
1940 Act, and any other law or regulation, or arise out of a breach of this
Agreement and the Adviser will reimburse any legal or other expenses
reasonably incurred by each Insurance Company Indemnified Person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Adviser 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
information furnished to the Adviser by Insurance Company specifically for use
therein or Insurance Company-prepared sales literature. This indemnity
agreement will be in addition to any liability which the Adviser may otherwise
have.
(d) The Trust and the Adviser shall indemnify and hold Insurance Company
harmless against any and all liability, loss, damages, costs or expenses which
Insurance Company may incur, suffer or be required to pay directly due to the
Trust's or Adviser's (or their designated agent's) (1 ) incorrect calculation
of the daily net asset value, dividend rate or capital gain distribution rate;
(2) incorrect reporting of the daily net asset value, dividend rate or capital
gain distribution rate; or (3) untimely reporting of the net asset value,
dividend rate or capital gain distribution rate. Any gain to Insurance Company
attributable to the Trust's, or Adviser's (or their designated agent's)
incorrect calculation or reporting of the daily net asset value shall be
immediately returned to the Trust.
(e) Promptly after receipt by an indemnified party under this paragraph
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 under
this paragraph, 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
paragraph. In case any such action is brought against any indemnified party,
and it notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, assume the defense thereof, with counsel satisfactory to
such indemnified party, after notice from the indemnifying party to such
indemnified party under this paragraph for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
(f) Nothing herein shall entitle an indemnified party to special,
consequential or exemplary damages or damages of like kind or nature and with
respect to section 14(d) hereof all liability, loss and damages shall be
limited to the amount required to correct the value of the account as if there
had been no incorrect calculation or reporting or untimely reporting of net
asset value, dividend rate or capital gain distribution rate.
15. If, in the course of future marketing of the Contracts, Insurance
Company or its agents shall request the continued assistance of the Trust's
sales personnel, compensation (which will be negotiated by the Trust and
Insurance Company) shall be paid by Insurance Company to the Trust.
GREAT AMERICAN RESERVE INSURANCE
COMPANY
March 1, 1995 By /s/ L. GREGORY GLOECKNER
__________________________ ______________________________
Date
VAN ECK WORLDWIDE INSURANCE TRUST
March 1, 1995 By /s/
__________________________ __________________________________
Date
VAN ECK ASSOCIATES CORPORATION
3-1-95 By /s/
__________________________ ___________________________________
Date
EXHIBIT A
Gold and Natural Resources Fund
Worldwide Income Fund
Hard Assets Fund
EXHIBIT B
Great American Reserve Variable Account C
Great American Reserve Variable Account E
EXHIBIT 99.B8
FORM OF FUND PARTICIPATION AGREEMENT
FUND PARTICIPATION AGREEMENT
This AGREEMENT is made this 6TH day of MARCH, 1995, by and between
Great American Reserve Insurance Company (the "Insurer"), a life insurance
company domiciled in Texas, on its behalf and on behalf of the segregated
asset accounts of the Insurer listed on Exhibit A to this Agreement (the
"Separate Accounts"); Insurance Management Series (the "Fund"), a
Massachusetts business trust; and Federated Securities Corp. (the
"Distributor"), a Pennsylvania corporation.
WITNESSETH
WHEREAS, the Fund 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 ("1940 Act") and the Fund is
authorized to issue separate classes of shares of beneficial interests
("shares"), each representing an interest in a separate portfolio of assets
known as a "portfolio" and each portfolio has its own investment objective,
policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its
portfolios to separate accounts of insurance companies that fund variable
annuity contracts ("Variable Contracts") and to serve as an investment medium
for Variable Contracts offered by insurance companies that have entered into
participation agreements substantially similar to this agreement
("Participating Insurance Companies"), and the Fund will be made available in
the future to offer shares of one or more of its portfolios to separate
accounts of insurance companies that fund variable life insurance policies (at
which time such policies would also be "Variable Contracts" hereunder), and
WHEREAS, the Fund is currently comprised of five separate portfolios, and
other portfolios may be established in the future; and
WHEREAS, the Fund has obtained an order from the SEC dated December
29,1993 (File No. 812-8620), granting Participating Insurance Companies and
variable annuity and variable life insurance 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 Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of life insurance companies that may
or may not be affiliated with one another (hereinafter the "Shared Funding
Exemptive Order"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended ("1934 Act"), and is a
member in good standing of the National Association of Securities Dealers,
Inc. ("NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Insurer wishes to purchase shares of one or more of the
Fund's portfolios on behalf of its Separate Accounts to serve as an investment
medium for Variable Contracts funded by the Separate Accounts, and the
Distributor is authorized to sell shares of the Fund's portfolios;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE I. SALE OF FUND SHARES
1.1 The Distributor agrees to sell to the Insurer those shares of the
portfolios offered and made available by the Fund and identified on Exhibit B
("Portfolios") that the Insurer orders on behalf of its Separate Accounts, and
agrees to execute such orders on each day on which the Fund calculates its net
asset value pursuant to rules of the SEC ("business day") at the net asset
value next computed after receipt and acceptance by the Fund or its agent of
the order for the shares of the Fund.
1.2 The Fund agrees to make available on each business day shares of the
Portfolios for purchase at the applicable net asset value per share by the
Insurer on behalf of its Separate Accounts; provided, however, that the Board
of Trustees of the Fund 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 the Trustees' fiduciary duties under applicable law,
necessary in the best interests of the shareholders of any Portfolio.
1.3 The Fund and the Distributor agree that shares of the Portfolios of
the Fund will be sold only to Participating Insurance Companies, their
separate accounts, and other persons consistent with each Portfolio being
adequately diversified pursuant to Section 817(h) of the Internal Revenue Code
of 1986, as amended ("Code"), and the regulations thereunder. No shares of any
Portfolio will be sold directly to the general public to the extent not
permitted by applicable tax law.
1.4 The Fund and the Distributor will not sell shares of the Portfolios
to any insurance company or separate account unless an agreement containing
provisions substantially the same as the provisions in Article IV of this
Agreement is in effect to govern such sales.
1.5 Upon receipt of a request for redemption in proper form from the
Insurer, the Fund agrees to redeem any full or fractional shares of the
Portfolios held by the Insurer, ordinarily executing such requests on each
business day at the net asset value next computed after receipt and acceptance
by the Fund or its agent of the request for redemption, except that the Fund
reserves the right to suspend the right of redemption, consistent with Section
22(e) of the 1940 Act and any rules thereunder. Such redemption shall be paid
consistent with applicable rules of the SEC and procedures and policies of the
Fund as described in the current prospectus.
1.6 For purposes of Sections 1.2 and 1.5, the Insurer shall be the agent
of the Fund for the limited purpose of receiving and accepting purchase and
redemption orders from each Separate Account and receipt of such orders by
4:00 p.m. Eastern time by the Insurer shall be deemed to be receipt by the
Fund for purposes of Rule 22c-1 of the 1940 Act; provided that the Fund
receives notice of such orders on the next following business day prior to
4:00 p.m. Eastern time on such day, although the Insurer will use its best
efforts to provide such notice by 12:00 noon Eastern time.
1.7 The Insurer agrees to purchase and redeem the shares of each
Portfolio in accordance with the provisions of the current prospectus for the
Fund.
1.8 The Insurer shall pay for shares of the Portfolio on the next
business day after it places an order to purchase shares of the Portfolio
Payment shall be in federal funds transmitted by wire.
1.9 Issuance and transfer of shares of the Portfolios will be by book
entry only unless otherwise agreed by the Fund. Stock certificates will not be
issued to the Insurer or the Separate Accounts unless otherwise agreed by the
Fund. Shares ordered from the Fund will be recorded in an appropriate title
for the Separate Accounts or the appropriate subaccounts of the Separate
Accounts.
1.10 The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Insurer of any income dividends or
capital gain distributions payable on the shares of the Portfolios. The
Insurer hereby elects to reinvest in the Portfolio all such dividends and
distributions as are payable on a Portfolio's shares and to receive such
dividends and distributions in additional shares of that Portfolio. The
Insurer reserves the right to revoke this election in writing and to receive
all such dividends and distributions in cash. The Fund shall notify the
Insurer of the number of shares so issued as payment of such dividends and
distributions.
1.11 The Fund shall instruct its recordkeeping agent to advise the
Insurer on each business day of the net asset value per share for each
Portfolio 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 7:00 p.m. Eastern time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Insurer represents and warrants that it is an insurance company
duly organized and in good standing under applicable law and that it is taxed
as an insurance company under Subchapter L of the Code.
2.2 The Insurer represents and warrants that it has legally and validly
established each of the Separate Accounts as a segregated asset account under
the Texas Insurance Code, and that each of the Separate Accounts is a validly
existing segregated asset account under applicable federal and state law.
2.3 The Insurer represents and warrants that the Variable Contracts
issued by the Insurer or interests in the Separate Accounts under such
Variable Contracts (1) are or, prior to issuance, will be registered as
securities under the Securities Act of 1933 ("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.
2.4 The Insurer represents and warrants that each of the Separate
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.
2.5 The Insurer represents that it believes, in good faith, that the
Variable Contracts issued by the Insurer are currently treated as annuity
contracts or life insurance policies (which may include modified endowment
contracts), whichever is appropriate, under applicable provisions of the Code.
2.6 The Fund represents and warrants that it is duly organized as a
business trust under the laws of the Commonwealth of Massachusetts, and is in
good standing under applicable law.
2.7 The Fund represents and warrants that the shares of the Portfolios
are duly authorized for issuance in accordance with applicable law and that
the Fund is registered as an open-end management investment company under the
1940 Act.
2.8 The Fund represents, in good faith, that the Portfolios currently
comply with the diversification provisions 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.
2.9 The Distributor represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
ARTICLE III. GENERAL DUTIES
3.1 The Fund shall take all such actions as are necessary to permit the
sale of the shares of each Portfolio to the Separate Accounts, including
maintaining its registration as an investment company under the 1940 Act, and
registering the shares of the Portfolios sold to the Separate Accounts under
the 1933 Act for so long as required by applicable law. The Fund shall amend
its Registration Statement filed with the SEC under the 1933 Act and the 1940
Act from time to time as required in order to effect the continuous offering
of the shares of the Portfolios. The Fund shall register and qualify the
shares for sale in accordance with the laws of the various states to the
extent deemed necessary by the Fund or the Distributor.
3.2 The Fund shall make every effort to maintain qualification of each
Portfolio as a Regulated Investment Company under Subchapter M of the Code (or
any successor or similar provision) and shall notify the Insurer 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.
3.3 The Fund shall make every effort to enable each Portfolio to comply
with the diversification provisions 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 any
prospective amendments or other modifications to Section 817 or regulations
thereunder, and shall notify the Insurer immediately upon having a reasonable
basis for believing that any Portfolio has ceased to comply.
3.4 The Insurer shall take all such actions as are necessary under
applicable federal and state law to permit the sale of the Variable Contracts
issued by the Insurer, including registering each Separate Account as an
investment company to the extent required under the 1940 Act, and registering
the Variable Contracts or interests in the Separate Accounts under the
Variable Contracts to the extent required under the 1933 Act, and obtaining
all necessary approvals to offer the Variable Contracts from state insurance
commissioners.
3.5 The Insurer shall make every effort to maintain the treatment of the
Variable Contracts issued by the Insurer as annuity contracts or life
insurance policies, whichever is appropriate, under applicable provisions of
the Code, and shall notify the Fund and the Distributor immediately upon
having a reasonable basis for believing that such Variable Contracts have
ceased to be so treated or that they might not be so treated in the future.
3.6 The Insurer shall offer and sell the Variable Contracts issued by the
Insurer in accordance with applicable provisions of the 1933 Act, the 1934
Act, the 1940 Act, the NASD Rules of Fair Practice, and state law respecting
the offering of variable life insurance policies and variable annuity
contracts.
3.7 The Distributor shall sell and distribute the shares of the
Portfolios of the Fund in accordance with the applicable provisions of the
1933 Act, the 1934 Act, the 1940 Act, the NASD Rules of Fair Practice, and
state law.
3.8 During such time as the Fund engages in Mixed Funding or Shared
Funding, a majority of the Board of Trustees of the Fund shall consist of
persons who are not "interested persons" of the Fund ("disinterested
Trustees"), as defined by Section 2(a)(19) of the 1940 Act and the rules
thereunder, and as modified by any applicable orders of the SEC, except that
if this provision of this Section 3.8 is not met by reason of the death,
disqualification, or bona fide resignation of any Trustee or Trustees, then
the operation of this provision shall be suspended (a) for a period of 45 days
if the vacancy or vacancies may be filled by the Fund's Board; (b) for a
period of 60 days if a vote of shareholders is required to fill the vacancy or
vacancies; or (c) for such longer period as the SEC may prescribe by order
upon application.
3.9 The Insurer and its agents will not in any way recommend any proposal
or oppose or interfere with any proposal submitted by the Fund at a meeting of
owners of Variable Contracts or shareholders of the Fund, and will in no way
recommend, oppose, or interfere with the solicitation of proxies for Fund
shares held by Contract Owners, without the prior written consent of the Fund,
which consent may be withheld in the Fund's sole discretion.
3.10 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having jurisdiction (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.
ARTICLE IV. POTENTIAL CONFLICTS
4.1 During such time as the Fund engages in Mixed Funding or Shared
Funding, the parties hereto shall comply with the conditions in this Article
IV.
4.2 The Fund's Board of Trustees shall monitor the Fund for the existence
of any material irreconcilable conflict (1) between the interests of owners of
variable annuity contracts and variable life insurance policies, and (2)
between the interests of owners of Variable Contracts ("Variable Contract
Owners") issued by different Participating Life Insurance Companies that
invest in the Fund. A material irreconcilable 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 interpretive 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 of the Fund are being managed; (e) a difference in voting
instructions given by variable annuity and variable life insurance contract
owners; or (f) a decision by a Participating Insurance Company to disregard
the voting instructions of Variable Contract Owners.
4.3 The Insurer agrees that it shall report any potential or existing
conflicts of which it is aware to the Fund's Board of Trustees. The Insurer
will be responsible for assisting the Board of Trustees of the Fund in
carrying out its responsibilities under the Mixed and Shared Funding Exemptive
Order, or, if the Fund is engaged in Mixed Funding or Shared Funding in
reliance on Rule 6e-2, 6e-3(T), or any other regulation under the 1940 Act,
the Insurer will be responsible for assisting the Board of Trustees of the
Fund in carrying out its responsibilities under such regulation, 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
Insurer to inform the Board whenever Variable Contract Owner voting
instructions are disregarded. The Insurer shall carry out its responsibility
under this Section 4.3 with a view only to the interests of the Variable
Contract Owners.
4.4 The Insurer agrees that in the event that it is determined by a
majority of the Board of Trustees of the Fund or a majority of the Fund's
disinterested Trustees that a material irreconcilable conflict exists, the
Insurer shall, at its expenses and to the extent reasonably practicable (as
determined by a majority of the disinterested Trustees of the Board of the
Fund), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the Separate Accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including another portfolio of the Fund, or submitting the question as to
whether such segregation should be implemented to a vote of all affected
Variable Contract Owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners or life insurance contract
owners of contracts issued by one or more Participating Insurance Companies),
that votes in favor of such segregation, or offering to the affected Variable
Contract Owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account. If a
material irreconcilable conflict arises because of the Insurer's decision to
disregard Variable Contract Owners' voting instructions and that decision
represents a minority position or would preclude a majority vote, the Insurer
shall be required, at the Fund's election, to withdraw the Separate Accounts'
investment in the Fund, 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, and no charge or penalty will be imposed as a result of such
withdrawal. These responsibilities shall be carried out with a view only to
the interests of the Variable Contract Owners. A majority of the disinterested
Trustees of the Fund shall determine whether or not any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the Fund or its investment adviser or the Distributor be required to establish
a new funding medium for any Variable Contract. The Insurer shall not be
required by this Section 4.4 to establish a new funding medium for any
Variable Contract if any offer to do so has been declined by vote of a
majority of Variable Contract Owners materially adversely affected by the
material irreconcilable conflict.
4.5 The Insurer, at least annually, shall submit to the Fund's Board of
Trustees such reports, materials, or data as the Board reasonably may request
so that the Trustees of the Fund may fully carry out the obligations imposed
upon the Board by the conditions contained in the application for the Mixed
and Shared Funding Exemptive Order and said reports, materials, and data shall
be submitted more frequently if deemed appropriate by the Board.
4.6 All reports of potential or existing conflicts received by the Fund's
Board of Trustees, and all Board action with regard to determining the
existence of a conflict, notifying Participating Insurance Companies of a
conflict, and determining whether any proposed action adequately remedies a
conflict, shall be properly recorded in the minutes of the Board of Trustees
of the Fund or other appropriate records, and such minutes or other records
shall be made available to the SEC upon request.
4.7 The Board of Trustees of the Fund shall promptly notify the Insurer
in writing of its determination of the existence of an irreconcilable material
conflict and its implications.
ARTICLE V. PROSPECTUSES AND PROXY STATEMENTS; VOTING
5.1 The Insurer shall distribute such prospectuses, proxy statements and
periodic reports of the Fund to the owners of Variable Contracts issued by the
Insurer as required to be distributed to such Variable Contract Owners under
applicable federal or state law.
5.2 The Distributor shall provide the Insurer with as many copies of the
current prospectus of the Fund as the Insurer may reasonably request. If
requested by the Insurer in lieu thereof, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in type
or in camera-ready copy) and other assistance as is reasonably necessary in
order for the Insurer to either print a stand-alone document or print together
in one document the current prospectus for the Variable Contracts issued by
the Insurer and the current prospectus for the Fund, or a document combining
the Fund prospectus with prospectuses of other funds in which the Variable
Contracts may be invested. The Fund shall bear the expense of printing copies
of its current prospectus that will be distributed to existing Variable
Contract Owners, and the Insurer shall bear the expense of printing copies of
the Fund's prospectus that are used in connection with offering the Variable
Contracts issued by the Insurer.
5.3 The Fund and the Distributor shall provide, at the Fund's expense,
such copies of the Fund's current Statement of Additional Information ("SAI")
as may reasonably be requested, to the Insurer and to any owner of a Variable
Contract issued by the Insurer who requests such SAI.
5.4 The Fund, at its expense, shall provide the Insurer with copies of
its proxy materials, periodic reports to shareholders, and other
communications to shareholders in such quantity as the Insurer shall
reasonably require for purposes of distributing to owners of Variable
Contracts issued by the Insurer. The Fund, at the Insurer's expense, shall
provide the Insurer with copies of its periodic reports to shareholders and
other communications to shareholders in such quantity as the Insurer shall
reasonably request for use in connection with offering the Variable Contracts
issued by the Insurer. If requested by the Insurer in lieu thereof, the Fund
shall provide such documentation (including a final copy of the Fund's proxy
materials, periodic reports to shareholders, and other communications to
shareholders, as set in type or in camera-ready copy) and other assistance as
reasonably necessary in order for the Insurer to print such shareholder
communications for distribution to owners of Variable Contracts issued by the
Insurer.
5.5 For so long as the SEC interprets the 1940 Act to require
pass-through voting by Participating Insurance Companies whose Separate
Accounts are registered as investment companies under the 1940 Act, the
Insurer shall vote shares of each Portfolio of the Fund held in a Separate
Account or a subaccount thereof, whether or not registered under the 1940 Act,
at regular and special meetings of the Fund in accordance with instructions
timely received by the Insurer (or its designated agent) from owners of
Variable Contracts funded by such Separate Account or subaccount thereof
having a voting interest in the Portfolio. The Insurer shall vote shares of a
Portfolio of the Fund held in a Separate Account or a subaccount thereof that
are attributable to the Variable Contracts as to which no timely instructions
are received, as well as shares held in such Separate Account or subaccount
thereof that are not attributable to the Variable Contracts and owned
beneficially by the Insurer (resulting from charges against the Variable
Contracts or otherwise), in the same proportion as the votes cast by owners of
the Variable Contracts funded by that Separate Account or subaccount thereof
having a voting interest in the Portfolio from whom instructions have been
timely received. The Insurer shall vote shares of each Portfolio of the Fund
held in its general account, if any, in the same proportion as the votes cast
with respect to shares of the Portfolio held in all Separate Accounts of the
Insurer or subaccounts thereof, in the aggregate.
5.6 During such time as the Fund engages in Mixed Funding or Shared
Funding, the Fund shall disclose in its prospectus that (1) the Fund is
intended to be a funding vehicle for variable annuity and variable life
insurance contracts offered by various insurance companies, (2) material
irreconcilable conflicts possibly may arise, and (3) the Board of Trustees of
the Fund will monitor events in order to identify the existence of any
material irreconcilable conflicts and to determine what action, if any, should
be taken in response to any such conflict. The Fund hereby notifies the
Insurer that prospectus disclosure may be appropriate regarding potential
risks of offering shares of the Fund to separate accounts funding both
variable annuity contracts and variable life insurance policies and to
separate accounts funding Variable Contracts of unaffiliated life insurance
companies.
ARTICLE VI. SALES MATERIAL AND INFORMATION
6.1 The Insurer shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund (or any Portfolio thereof) or its investment
adviser or the Distributor is named at least 15 days prior to the anticipated
use of such material, and no such sales literature or other promotional
material shall be used unless the Fund and the Distributor or the designee of
either approve the material or do not respond with comments on the material
within 10 days from receipt of the material.
6.2 The Insurer agrees that neither it nor any of its affiliates or
agents shall give any information or make any representations or statements on
behalf of the Fund or concerning the Fund other than the information or
representations contained in the Registration Statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the
Fund, or in sales literature or other promotional material approved by the
Fund or its designee and by the Distributor or its designee, except with the
permission of the Fund or its designee and the Distributor or its designee.
6.3 The Fund or the Distributor or the designee of either shall furnish
to the Insurer or its designee each piece of sales literature or other
promotional material in which the Insurer or its Separate Accounts are named
at least 15 days prior to the anticipated use of such material, and no such
material shall be used unless the Insurer or its designee approves the
material or does not respond with comments on the material within 10 days from
receipt of the material.
6.4 The Fund and the Distributor agree that each and the affiliates and
agents of each shall not give any information or make any representations on
behalf of the Insurer or concerning the Insurer, the Separate Accounts, or the
Variable Contracts issued by the Insurer, other than the information or
representations contained in a registration statement or prospectus for such
Variable Contracts, as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports for the Separate
Accounts or prepared for distribution to owners of such Variable Contracts, or
in sales literature or other promotional material approved by the Insurer or
its designee, except with the permission of the Insurer.
6.5 The Fund will provide to the Insurer at least one complete copy of
the Mixed and Shared Funding Exemptive Application and any amendments thereto,
all prospectuses, Statements of Additional Information, reports, proxy
statements and other voting solicitation materials, and all amendments and
supplements to any of the above, that relate to the Fund or its shares,
promptly after the filing of such document with the SEC or other regulatory
authorities.
6.6 The Insurer will provide to the Fund all prospectuses (which shall
include an offering memorandum if the Variable Contracts issued by the Insurer
or interests therein are not registered under the 1933 Act), Statements of
Additional Information, reports, solicitations for voting instructions
relating to the Fund, and all amendments or supplements to any of the above
that relate to the Variable Contracts issued by the Insurer or the Separate
Accounts which utilize the Fund as an underlying investment medium, promptly
after the filing of such document with the SEC or other regulatory authority.
6.7 For purposes of this Article VI, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use, in a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, computerized media, or other
public media), sales literature (i.e., any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all agents or employees.
ARTICLE VII. INDEMNIFICATION
7.1 INDEMNIFICATION BY THE INSURER
7.1(a) The Insurer agrees to indemnify and hold harmless the Fund, each
of its Trustees and officers, any affiliated person of the Fund within the
meaning of Section 2(a)(3) of the 1940 Act, and the Distributor (collectively,
the "Indemnified Parties" for purposes of this Section 7.1) against any and
all losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Insurer) or litigation expenses (including
legal and other expenses), to which the Indemnified Parties may become subject
under any statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or litigation expenses are related to the
sale or acquisition of the Fund's shares or the Variable Contracts issued by
the Insurer and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
or prospectus (which shall include an offering memorandum) for the Variable
Contracts issued by the Insurer or sales literature for such Variable
Contracts (or any amendment or supplement to any of the foregoing), 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 agreement to indemnify
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 in conformity
with information furnished to the Insurer by or on behalf of the Fund for use
in the registration statement or prospectus for the Variable Contracts issued
by the Insurer or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of such Variable Contracts or
Fund shares; or
(ii) arise out of or as a result of any statement or representation
(other than statements or representations contained in the registration
statement, prospectus or sales literature of the Fund not supplied by the
Insurer or persons under its control) or wrongful conduct of the Insurer or
any of its affiliates, employees or agents with respect to the sale or
distribution of the Variable Contracts issued by the Insurer or the Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement, prospectus, or sales
literature of the Fund or any amendment thereof or supplement thereto 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 a statement or omission was made in reliance upon information furnished
to the Fund by or on behalf of the Insurer; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Insurer in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Insurer;
except to the extent provided in Sections 7.1(b) and 7.1(c) hereof.
7.1(b) The Insurer shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation expenses to which an Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of the Indemnified Party's duties or by reason of the Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund.
7.1(c) The Insurer shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Party shall have notified the Insurer in writing within a reasonable time
after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or
after such Party shall have received notice of such service on any designated
agent), but failure to notify the Insurer of any such claim shall not relieve
the Insurer from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Insurer shall be entitled to participate, at its own
expense, in the defense of such action. The Insurer also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the Insurer to such party of the Insurer's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Insurer
will not be liable to such 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.
7.1(d) The Indemnified Parties shall promptly notify the Insurer of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Variable Contracts issued by
the Insurer or the operation of the Fund.
7.2 INDEMNIFICATION BY THE DISTRIBUTOR
7.2(a) The Distributor agrees to indemnify and hold harmless the Insurer,
its affiliated principal underwriter of the Variable Contracts, and each of
their directors and officers and any affiliated person of the Insurer within
the meaning of Section 2(a)(3) of the 1940 Act (collectively, the "Indemnified
Parties" for purposes of this Section 7.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Distributor) or litigation expenses (including legal and other
expenses) to which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or litigation expenses are related to the sale or
acquisition of the Fund's shares or the Variable Contracts issued by the
Insurer and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
or prospectus or sales literature of the Fund (or any amendment or supplement
to any of the foregoing), 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 agreement to indemnify 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 in conformity with information furnished to the
Distributor or the Fund or the designee of either by or on behalf of the
Insurer for use in the registration statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or otherwise for use in the
registration statement or prospectus for the Fund or in sales literature (or
any amendment or supplement) or otherwise for use in connection with the sale
of the Variable Contracts issued by the Insurer or Fund shares; or
(ii) arise out of or as a result of any statement or representations
(other than statements or representations contained in the registration
statement, prospectus or sales literature for the Variable Contracts not
supplied by the Distributor or any employees or agents thereof) or wrongful
conduct of the Fund or Distributor, or the affiliates, employees, or agents of
the Fund or the Distributor with respect to the sale or distribution of the
Variable Contracts issued by the Insurer or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement, prospectus, or sales
literature covering the Variable Contracts issued by the Insurer, or any
amendment thereof or supplement thereto, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the Insurer by or
on behalf of the Fund; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor in this Agreement or
arise out of or result from any other material breach of this Agreement by the
Distributor;
except to the extent provided in Sections 7.2(b) and 7.2(c) hereof.
7.2(b) The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation expenses to which an Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of the Indemnified Party's duties or by reason of the Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Insurer or the Separate Accounts.
7.2(c) The Distributor shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Party shall have notified the Distributor in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or
after such Party shall have received notice of such service on any designated
agent), but failure to notify the Distributor of any such claim shall not
relieve the Distributor from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Distributor will be entitled to
participate, at is own expense, in the defense thereof. The Distributor also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Distributor to such party
of the Distributor's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by
it, and the Distributor will not be liable to such party under this Agreement
for any legal or other expense subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
7.2(d) The Insurer shall promptly notify the Distributor of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the Variable
Contracts issued by the Insurer or the operation of the Separate Accounts.
7.3 INDEMNIFICATION BY THE FUND
7.3(a) The Fund agrees to indemnify and hold harmless the Insurer, its
affiliated principal underwriter of the Variable Contracts, and each of their
directors and officers and any affiliated person of the Insurer within the
meaning of Section 2(a)(3) of the 1940 Act (collectively, the "Indemnified
Parties" for purposes of this Section 7.3) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Fund) or litigation expenses (including legal and other
expenses) to which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or litigation expenses are related to the sale or
acquisition of the Fund's shares or the Variable Contracts issued by the
Insurer and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
or prospectus or sales literature of the Fund (or any amendment or supplement
to any of the foregoing), 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 agreement to indemnify 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 in conformity with information furnished to the
Distributor or the Fund or the designee of either by or on behalf of the
Insurer for use in the registration statement or prospectus for the Fund or in
sales literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Variable Contracts issued by the Insurer or
Fund shares; or
(ii) arise out of or as a result of any statement or representation
(other than statements or representations contained in the registration
statement, prospectus or sales literature for the Variable Contracts not
supplied by the Distributor or any employees or agents thereof) or wrongful
conduct of the Fund, or the affiliates, employees, or agents of the Fund, with
respect to the sale or distribution of the Variable Contracts issued by the
Insurer or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement, prospectus or sales
literature covering the Variable Contracts issued by the Insurer, or any
amendment thereof or supplement thereto, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the Insurer by or
on behalf of the Fund; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or arise out
of or result from any other material breach of this Agreement by the Fund;
except to the extent provided in Sections 7.3(b) and 7.3(c) hereof.
7.3(b) The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of the
Indemnified Party's duties or by reason of the Indemnified Party's reckless
disregard of obligations or duties under this Agreement or to the Insurer or
the Separate Accounts.
7.3(c) The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such party
shall have notified the Fund in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such Party
shall have received notice of such service on any designated agent), but
failure to notify the Fund of any such claim shall not relieve the Fund from
any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified Parties, the Fund
will be entitled to participate, at its own expense, in the defense thereof.
The Fund also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Fund to
such party of the Fund's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Fund will not be liable to such 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.
7.3(d) The Insurer shall promptly notify the Fund of the commencement of
any litigation or proceedings against it or any of its officers or directors
in connection with the issuance or sale of the Variable Contracts issued by
the Insurer or the sale of the Fund's shares.
ARTICLE VIII. APPLICABLE LAW
8.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of
Pennsylvania.
8.2 This Agreement shall be subject to the provisions of the 1933, 1934,
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may
grant (including, but not limited to, the Mixed and Shared Funding Exemptive
Order), and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE IX. TERMINATION
9.1 This Agreement shall terminate:
(a) at the option of any party upon 180 days advance written notice to
the other parties; or
(b) at the option of the Insurer if shares of the Portfolios are not
reasonably available to meet the requirements of the Variable Contracts issued
by the Insurer, as determined by the Insurer, and upon prompt notice by the
Insurer to the other parties; or
(c) at the option of the Fund or the Distributor upon institution of
formal proceedings against the Insurer or its agent by the NASD, the SEC, or
any state securities or insurance department or any other regulatory body
regarding the Insurer's duties under this Agreement or related to the sale of
the Variable Contracts issued by the Insurer, the operation of the Separate
Accounts, or the purchase of the Fund shares; or
(d) at the option of the Insurer upon institution of formal proceedings
against the Fund or the Distributor by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body; or
(e) upon requisite vote of the Variable Contract Owners having an
interest in the Separate Accounts (or any subaccounts thereof) to substitute
the shares of another investment company for the corresponding shares of the
Fund or a Portfolio in accordance with the terms of the Variable Contracts for
which those shares had been selected or serve as the underlying investment
media; or
(f) in the event any of the shares of a Portfolio are not registered,
issued or sold in accordance with applicable state and/or federal law, or such
law precludes the use of such shares as the underlying investment media of the
Variable Contracts issued or to be issued by the Insurer; or
(g) by any party to the Agreement upon a determination by a majority of
the Trustees of the Fund, or a majority of its disinterested Trustees, that an
irreconcilable conflict, as described in Article IV hereof, exists; or
(h) at the option of the Insurer if the Fund or a Portfolio fails to meet
the requirements under Subchapter M of the Code for qualification as a
Regulated Investment Company specified in Section 3.2 hereof or the
diversification requirements specified in Section 3.3 hereof.
9.2 Each party to this Agreement shall promptly notify the other parties
to the Agreement of the institution against such party of any such formal
proceedings as described in Sections 9.1(c) and (d) hereof. The Insurer shall
give 60 days prior written notice to the Fund of the date of any proposed vote
of Variable Contract Owners to replace the Fund's shares as described in
Section 9.1(e) hereof.
9.3 Except as necessary to implement Variable Contract Owner initiated
transactions, or as required by state insurance laws or regulations, the
Insurer shall not redeem Fund shares attributable to the Variable Contracts
issued by the Insurer (as opposed to Fund shares attributable to the Insurer's
assets held in the Separate Accounts), and the Insurer shall not prevent
Variable Contract Owners from allocating payments to a Portfolio, until 60
days after the Insurer shall have notified the Fund or Distributor of its
intention to do so.
9.4 Notwithstanding any termination of this Agreement, the Fund and the
Distributor shall at the option of the Insurer continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Variable Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, based upon instructions from
the owners of the Existing Contracts, the Separate Accounts shall be permitted
to reallocate investments in the Portfolios of the Fund and redeem investments
in the Portfolios, and shall be permitted to invest in the Portfolios in the
event that owners of the Existing Contracts make additional purchase payments
under the Existing Contracts. If this Agreement terminates, the parties agree
that Sections 3.10, 7.1, 7.2, 7.3, 8.1, and 8.2, and, to the extent that all
or a portion of the assets of the Separate Accounts continue to be invested in
the Fund or any Portfolio of the Fund, Articles I, II, and IV and Sections 5.5
and 5.6 will remain in effect after termination.
ARTICLE X. 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 Fund:
Insurance Management Series
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
Attn.: John W. McGonigle
If to the Distributor:
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
Attn.: John W. McGonigle
If to the Insurer:
Great American Reserve Insurance Company
11825 North Pennsylvania Street
Carmel, Indiana 46032
Attn.: President
ARTICLE XI: MISCELLANEOUS
11.1 The Fund and the Insurer agree that if and to the extent Rule 6e-2
or Rule 6e-3(T) under the 1940 Act is amended or if Rule 6e-3 is adopted in
final form, to the extent applicable, the Fund and the Insurer shall each take
such steps as may be necessary to comply with the Rule as amended or adopted
in final form.
11.2 A copy of the Fund's Agreement and Declaration of Trust is on file
with the Secretary of the Commonwealth of Massachusetts and notice is hereby
given that any agreements that are executed on behalf of the Fund by any
Trustee or officer of the Fund are executed in his or her capacity as Trustee
or officer and not individually. The obligations of this Agreement shall only
be binding upon the assets and property of the Fund and shall not be binding
upon any Trustee, officer or shareholder of the Fund individually.
11.3 Nothing in this Agreement shall impede the Fund's Trustees or
shareholders of the shares of the Fund's Portfolios from exercising any of the
rights provided to such Trustees or shareholders in the Fund's Agreement and
Declaration of Trust, as amended, a copy of which will be provided to the
Insurer upon request.
11.4 Administrative services to Variable Contract Owners shall be the
responsibility of Insurer. Insurer, on behalf of its separate accounts will be
the sole shareholder of record of Fund shares. Fund and Distributor recognize
that they will derive a substantial savings in administrative expense by
virtue of having a sole shareholder rather than multiple shareholders. In
consideration of the administrative savings resulting from having a sole
shareholder rather than multiple shareholders, Distributor agrees to pay to
Insurer an amount computed at an annual rate of .25 of 1% of the average daily
net asset value of shares held in subaccounts for which Insurer provides
administrative services. Distributor's payments to Insurer are for
administrative services only and do not constitute payment in any manner for
investment advisory services.
11.5 It is understood that the name "Federated" or any derivative thereof
or logo associated with that name is the valuable property of the Distributor
and its affiliates, and that the Insurer has the right to use such name (or
derivative or logo) only so long as this Agreement is in effect. Upon
termination of this Agreement the Insurer shall forthwith cease to use such
name (or derivative or logo).
11.6 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.
11.7 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.8 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.
11.9 This Agreement may not be assigned by any party to the Agreement
except with the written consent of the other parties to the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
INSURANCE MANAGEMENT
SERIES
ATTEST: /s/ S. ELLIOTT COHAN BY: /s/ JOHN W. MCGONIGLE
_____________________________ __________________________
Name: S. Elliott Cohan Name: John W. McGonigle
_____________________________ __________________________
Title: Assistant Secretary Title: Vice President
_____________________________ ___________________________
FEDERATED SECURITIES CORP.
ATTEST: /s/ S. ELLIOTT COHAN BY: /s/ JOHN W. MCGONIGLE
_____________________________ __________________________
Name: S. Elliott Cohan Name: John W. McGonigle
_____________________________ __________________________
Title: Assistant Secretary Title: Vice President
_____________________________ ___________________________
GREAT AMERICAN RESERVE
INSURANCE COMPANY
ATTEST: /s/ Lisa R. Nordhoff BY: /s/ L. GREGORY GLOECKNER
_____________________________ _____________________________
Name: Lisa R. Nordhoff Name: L. Gregory Gloeckner
_____________________________ _____________________________
Title: Second Vice President Title: Senior Vice President
_____________________________ _____________________________
EXHIBIT A
Great American Reserve Variable Annuity Account C
Great American Reserve Variable Annuity Account E
EXHIBIT 99.B8
FORM OF FUND PARTICIPATION AGREEMENTS
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the ___ day of ________, __________, by and
between TOMORROW FUNDS RETIREMENT TRUST ("TRUST"), a Delaware business trust,
WEISS, PECK & GREER, L.L.C. ("WPG") a Delaware Limited Liability Company, and
______________ ("LIFE COMPANY"), a life insurance company organized under the
laws of the State of __________.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "'40 Act"),
as an open-end, diversified management investment company; and
WHEREAS, TRUST is organized as a series fund comprised of several Funds
("Funds"), those currently available are listed on Appendix A hereto; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable
Contracts") offered by life insurance companies through separate accounts
("Separate Accounts") of such life insurance companies ("Participating
Insurance Companies") and also offers its shares to certain qualified pension
and retirement plans ("Qualified Plans"); and
WHEREAS, TRUST has applied for 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 '40 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Funds of the TRUST to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and Qualified Plans ("Exemptive
Order"); and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having TRUST as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, WPG is registered with the SEC as an investment adviser under
the Investment Advisers Act of 1940 and as a broker-dealer under the
Securities Exchange Act of 1934, as amended and acts as the TRUST's investment
adviser and principal underwriter; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares
to LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY,
TRUST, and WPG agree as follows:
Article I. SALE OF TRUST SHARES
1.1 TRUST agrees to make available to the Separate Accounts of LIFE
COMPANY shares of the selected Funds as listed on Appendix B for investment of
purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in TRUST's Registration Statement.
1.2 TRUST agrees to sell to LIFE COMPANY those shares of the selected
Funds of TRUST which LIFE COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section
1.2, LIFE COMPANY shall be the designee of TRUST for receipt of such orders
from the designated Separate Account and receipt by such designee shall
constitute receipt by TRUST; provided that LIFE COMPANY receives the order by
4:00 p.m. New York time and TRUST receives notice from LIFE COMPANY by
telephone or facsimile (or by such other means as TRUST and LIFE COMPANY may
agree in writing) of such order by 9:00 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 TRUST calculates its net
asset value pursuant to the rules of the SEC.
1.3 TRUST agrees to redeem on LIFE COMPANY's request, any full or
fractional shares of TRUST held by LIFE COMPANY, executing such requests on a
daily basis at the net asset value next computed after receipt by TRUST or its
designee of the request for redemption, in accordance with the provisions of
this agreement and TRUST's Registration Statement. For purposes of this
Section 1.3, LIFE COMPANY shall be the designee of TRUST for receipt of
requests for redemption from the designated Separate Account and receipt by
such designee shall constitute receipt by TRUST; provided that LIFE COMPANY
receives the request for redemption by 4:00 p.m. New York time and TRUST
receives notice from LIFE COMPANY by telephone or facsimile (or by such other
means as TRUST and LIFE COMPANY may agree in writing) of such request for
redemption by 9:00 a.m. New York time on the next following Business Day.
1.4 TRUST shall furnish, on or before the ex-dividend date, notice to
LIFE COMPANY of any income dividends or capital gain distributions payable on
the shares of any Fund of TRUST. LIFE COMPANY hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Fund's shares in additional shares of the Fund. TRUST shall notify LIFE
COMPANY or its designee of the number of shares so issued as payment of such
dividends and distributions.
1.5 TRUST shall make the net asset value per share for the selected
Fund(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use
its best efforts to make such net asset value available by 6:30 p.m. New York
time. If TRUST provides LIFE COMPANY with materially incorrect share net
asset value information through no fault of LIFE COMPANY, LIFE COMPANY on
behalf of the Separate Accounts, shall be entitled to an adjustment to the
number of shares purchased or redeemed to reflect the correct share net asset
value. Any material error in the calculation of net asset value per share,
dividend or capital gain information shall be reported promptly upon discovery
to LIFE COMPANY.
1.6 At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar
amount of TRUST shares which shall be purchased or redeemed at that day's
closing net asset value per share. The net purchase or redemption orders so
determined shall be transmitted to TRUST by LIFE COMPANY by 9:00 a.m. New York
Time on the Business Day next following LIFE COMPANY's receipt of such
requests and premiums in accordance with the terms of Sections 1.2 and 1.3
hereof.
1.7 If LIFE COMPANY's order requests the purchase of TRUST shares, LIFE
COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is transmitted by LIFE
COMPANY. If LIFE COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to LIFE COMPANY, TRUST shall use its best
efforts to wire the redemption proceeds to LIFE COMPANY by the next Business
Day, unless doing so would require TRUST to dispose of Fund securities or
otherwise incur additional costs. In any event, proceeds shall be wired to
LIFE COMPANY within three Business Days or such longer period permitted by the
'40 Act or the rules, orders or regulations thereunder and TRUST shall notify
the person designated in writing by LIFE COMPANY as the recipient for such
notice of such delay by 3:00 p.m. New York Time the same Business Day that
LIFE COMPANY transmits the redemption order to TRUST. If LIFE COMPANY's order
requests the application of redemption proceeds from the redemption of shares
to the purchase of shares of another Fund advised by WPG, TRUST shall so apply
such proceeds the same Business Day that LIFE COMPANY transmits such order to
TRUST.
1.8 TRUST agrees that all shares of the Funds of TRUST will be sold only
to Participating Insurance Companies which have agreed to participate in
TRUST to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h) of the Internal Revenue
Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of
the Funds of TRUST will not be sold directly to the general public.
1.9 TRUST may refuse to sell shares of any Fund to any person, or suspend
or terminate the offering of the shares of or liquidate any Fund or TRUST if
such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board of Trustees of the
TRUST (the "Board"), acting in good faith and in light of its duties under
federal and any applicable state laws, deemed necessary, desirable or
appropriate and in the best interests of the shareholders of such Funds.
1.10 Issuance and transfer of Fund shares will be by book entry only.
Stock certificates will not be issued to LIFE COMPANY or the Separate
Accounts. Shares ordered from Fund will be recorded in appropriate book entry
titles for the Separate Accounts.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 LIFE COMPANY represents and warrants that it is an insurance company
duly organized and in good standing under the laws of ___________________ and
that it has legally and validly established each Separate Account as a
segregated asset account under such laws, and that ___________________, the
principal underwriter for the Contracts, is registered as a broker-dealer
under the Securities Exchange Act of 1934 (the "'34 Act").
2.2 LIFE COMPANY represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the '40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable Contracts
will be registered under the Securities Act of 1933 (the "'33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and further that the sale of the Variable Contracts shall comply in all
material respects with state insurance law suitability requirements.
2.4 LIFE COMPANY represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that
it will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have
ceased to be so treated or that they might not be so treated in the future.
2.5 TRUST represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and TRUST shall be
registered under the '40 Act prior to and at the time of any issuance or sale
of such shares. TRUST, subject to Section 1.9 above, shall amend its
registration statement under the '33 Act and the '40 Act from time to time as
required in order to effect the continuous offering of its shares. 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 TRUST.
2.6 TRUST represents and warrants that each Fund will comply with the
diversification requirements set forth in Section 817(h) of the Code, and the
rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing any Fund has ceased to comply or might not so
comply and will immediately take all reasonable steps to adequately diversify
the Fund to achieve compliance.
2.7 TRUST represents and warrants that each Fund invested in by the
Separate Account intends to elect to be treated as a "regulated investment
company" under Subchapter M of the Code, and to qualify for such treatment for
each taxable year and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
2.8 WPG represents and warrants that it is and will be a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and
is and will be registered as a broker-dealer with the SEC. WPG further
represents that it will sell and distribute Fund shares in accordance with all
applicable state and federal laws and regulations, including without
limitation the '33 Act, the '34 Act and the '40 Act. WPG represents that its
operations are and shall at all times remain in material compliance with the
laws of the State of Delaware to the extent required to perform this
Agreement.
2.9 WPG represents and warrants that it is and will remain duly
registered and licensed in all material respects under all applicable federal
and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal
laws.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 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 TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Funds, preparation and filing of the documents listed in this Section 3.1 and
all taxes and filing fees to which an issuer is subject on the issuance and
transfer of its shares.
3.2 At least annually, TRUST or its designee shall provide LIFE COMPANY,
free of charge, with as many copies of the current prospectus for the shares
of the Funds as LIFE COMPANY may reasonably request for distribution to
existing Variable Contract owners whose Variable Contracts are funded by such
shares. TRUST or its designee shall provide LIFE COMPANY, at LIFE COMPANY's
expense, with as many copies of the current prospectus for the shares as LIFE
COMPANY may reasonably request for distribution to prospective purchasers of
Variable Contracts. If requested by LIFE COMPANY in lieu thereof, TRUST or its
designee shall provide such documentation (including a "camera ready" copy of
the new prospectus as set in type or, at the request of LIFE COMPANY, as a
diskette in the form sent to the financial printer) and other assistance as is
reasonably necessary in order for the parties hereto once a year (or more
frequently if the prospectus for the shares is supplemented or amended) to
have the prospectus for the Variable Contracts and the prospectus for the
TRUST shares printed together in one document. The expenses of such printing
will be apportioned between (a) LIFE COMPANY and (b) TRUST in proportion to
the number of pages of the Variable Contract and shares' prospectus, taking
account of other relevant factors affecting the expense of printing, such as
covers, columns, graphs and charts; TRUST to bear the cost of printing the
shares' prospectus portion of such document for distribution only to owners of
existing Variable Contracts funded by the TRUST shares and LIFE COMPANY to
bear the expense of printing the portion of such documents relating to the
Separate Account; provided, however, LIFE COMPANY shall bear all printing
expenses of such combined documents where used for distribution to prospective
purchasers or to owners of existing Variable Contracts not funded by the
shares. In the event that LIFE COMPANY requests that TRUST or its designee
provide TRUST's prospectus in a "camera ready" or diskette format, TRUST shall
be responsible for providing the prospectus in the format in which it is
accustomed to formatting prospectuses and shall bear the expense of providing
the prospectus in such format (e.g. typesetting expenses), and Life Company
shall bear the expense of adjusting or changing the format to conform with any
of its prospectuses.
3.3 TRUST will provide LIFE COMPANY with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Funds promptly after the
filing of each such document with the SEC or other regulatory authority. LIFE
COMPANY will provide TRUST with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to a Separate Account promptly
after the filing of each such document with the SEC or other regulatory
authority.
Article IV. SALES MATERIALS
4.1 LIFE COMPANY will furnish, or will cause to be furnished, to TRUST
and WPG, each piece of sales literature or other promotional material in which
TRUST or WPG is named, at least fifteen (15) Business Days prior to its
intended use. No such material will be used if TRUST or WPG objects to its
use in writing within ten (10) Business Days after receipt of such material.
4.2 TRUST and WPG will furnish, or will cause to be furnished, to LIFE
COMPANY, each piece of sales literature or other promotional material in which
LIFE COMPANY or its Separate Accounts are named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if
LIFE COMPANY objects to its use in writing within ten (10) Business Days after
receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information or
make any representations on behalf of LIFE COMPANY or concerning LIFE COMPANY,
the Separate Accounts, or the Variable Contracts issued by LIFE COMPANY, other
than the information or representations contained in a registration statement
or prospectus for such Variable Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in reports of
the Separate Accounts or reports prepared for distribution to owners of such
Variable Contracts, or in sales literature or other promotional material
approved by LIFE COMPANY or its designee, except with the written permission
of LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and
prospectus may be amended or supplemented from time to time, or in sales
literature or other promotional material approved by TRUST or its designee,
except with the written permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use,
in a newspaper, magazine or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures or
other public media), sales literature (such as any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters, seminar
texts, or reprints or excerpts of any other advertisement, sales literature,
or published article), educational or training materials or other
communications distributed or made generally available to some or all agents
or employees, registration statements, prospectuses, statements of additional
information, shareholder reports and proxy materials, and any other material
constituting sales literature or advertising under National Association of
Securities Dealers, Inc. rules, the '40 Act or the '33 Act.
Article V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that TRUST has filed an application with the
SEC to request an order granting relief from various provisions of the '40 Act
and the rules thereunder to the extent necessary to permit TRUST shares to be
sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated Participating Insurance Companies
and Qualified Plans. It is anticipated that the Exemptive Order, when and if
issued, shall require TRUST and each Participating Insurance Company to comply
with conditions and undertakings substantially as provided in this Section 5.
If the Exemptive Order imposes conditions materially different from those
provided for in this Section 5, the conditions and undertakings imposed by the
Exemptive Order shall govern this Agreement and the parties hereto agree to
amend this Agreement consistent with the Exemptive Order. The Fund will not
enter into a participation agreement with any other Participating Insurance
Company unless it imposes the same conditions and undertakings as are imposed
on LIFE COMPANY hereby.
5.2 The Board will monitor TRUST for the existence of any material
irreconcilable conflict between the interests of Variable Contract owners of
all separate accounts investing in TRUST. An irreconcilable material conflict
may arise for a variety of reasons, which may include: (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 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 TRUST are
being managed; (e) a difference in voting instructions given by variable
annuity and variable life insurance Contract owners; (f) a decision by a
Participating Insurance Company to disregard the voting instructions of
Variable Contract owners and (g) if applicable, a decision by a Qualified Plan
to disregard the voting instructions of plan participants.
5.3 LIFE COMPANY will report any potential or existing conflicts to the
Board. LIFE COMPANY will be responsible for assisting the Board in carrying
out its duties in this regard by providing the Board with all information
reasonably necessary for the Board to consider any issues raised. The
responsibility includes, but is not limited to, an obligation by the LIFE
COMPANY to inform the Board whenever it has determined to disregard Variable
Contract owner voting instructions. These responsibilities of LIFE COMPANY
will be carried out with a view only to the interests of the Variable Contract
owners.
5.4 If a majority of the Board or majority of its disinterested
trustees, determines that a material irreconcilable conflict exists, affecting
LIFE COMPANY, LIFE COMPANY, at its expense and to the extent reasonably
practicable (as determined by a majority of the Board's disinterested
trustees), will take any steps necessary to remedy or eliminate the
irreconcilable material conflict, including; (a) withdrawing the assets
allocable to some or all of the Separate Accounts from TRUST or any Fund
thereof and reinvesting those assets in a different investment medium, which
may include another Fund of the TRUST, or another investment company; (b)
submitting the question as to whether such segregation should be implemented
to a vote of all affected Variable Contract owners and as appropriate,
segregating the assets of any appropriate group (i.e variable annuity or
variable life insurance Contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the
affected Variable Contract owners the option of making such a change; and (c)
establishing a new registered management investment company (or series
thereof) or managed separate account. If a material irreconcilable conflict
arises because of LIFE COMPANY's decision to disregard Variable Contract owner
voting instructions, and that decision represents a minority position or would
preclude a majority vote, LIFE COMPANY may be required, at the election of the
TRUST, to withdraw the Separate Account's investment in TRUST, and no charge or
penalty will be imposed as a result of such withdrawal. The responsibility to
take such remedial action shall be carried out with a view only to the
interests of the Variable Contract owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
the TRUST or WPG (or any other investment adviser of the TRUST) be required to
establish a new funding medium for any Variable Contract. Further, LIFE
COMPANY shall not be required by this Section 5.4 to establish a new funding
medium for any Variable Contracts if any offer to do so has been declined by a
vote of a majority of Variable Contract owners materially and adversely
affected by the irreconcilable material conflict.
5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to LIFE COMPANY.
5.6 No less than annually, LIFE COMPANY shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the
Board may fully carry out its obligations. Such reports, materials, and data
shall be submitted more frequently if deemed appropriate by the Board.
Article VI. VOTING
6.1 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, LIFE COMPANY, where applicable, will vote shares of the Fund held
in its Separate Accounts in a manner consistent with voting instructions
timely received from its Variable Contract owners. LIFE COMPANY will be
responsible for assuring that each of its Separate Accounts that participates
in TRUST calculates voting privileges in a manner consistent with other
Participating Insurance Companies. LIFE COMPANY will vote shares for which it
has not received timely voting instructions, as well as shares it owns, in the
same proportion as its votes those shares for which it has received voting
instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
'40 Act or the rules thereunder with respect to mixed and shared funding on
terms and conditions materially different from any exemptions granted in the
Exemptive Order, then TRUST, and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule
6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent
such Rules are applicable.
Article VII. INDEMNIFICATION
7.1 Indemnification by LIFE COMPANY. LIFE COMPANY agrees to indemnify
and hold harmless TRUST, WPG and each of their Trustees, directors,
principals, officers, employees and agents and each person, if any, who
controls TRUST or WPG within the meaning of Section 15 of the '33 Act
(collectively, the "Indemnified Parties" for purposes of this Article VII)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of LIFE COMPANY, which consent
shall not be unreasonably withheld) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of TRUST's shares or the
Variable Contracts and:
(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 Variable Contracts or contained in the Variable
Contracts (or any amendment or supplement to any of the foregoing), 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 agreement to indemnify
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 in conformity
with information furnished to LIFE COMPANY by or on behalf of TRUST for use in
the registration statement or prospectus for the Variable Contracts or in the
Variable Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Variable Contracts or
TRUST shares; or
(b) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus or sales literature of TRUST not supplied by LIFE COMPANY, or
persons under its control) or wrongful conduct of LIFE COMPANY or persons
under its control, with respect to the sale or distribution of the Variable
Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature of the TRUST or any amendment thereof or supplement thereto 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 or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to TRUST by or on
behalf of LIFE COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to provide
substantially the services and furnish the materials 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 LIFE COMPANY in this Agreement or arise
out of or result from any other material breach of this Agreement by LIFE
COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
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.
7.3 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify LIFE COMPANY
of any such claim shall not relieve LIFE COMPANY from any liability which it
may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against an Indemnified Party, LIFE COMPANY shall be entitled
to participate at its own expense in the defense of such action. LIFE COMPANY
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from LIFE COMPANY
to such party of LIFE COMPANY's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and LIFE COMPANY will not be liable to such 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.
7.4 Indemnification by WPG. WPG agrees to indemnify and hold harmless
LIFE COMPANY and each of its directors, officers, employees, and agents and
each person, if any, who controls LIFE COMPANY within the meaning of Section
15 of the '33 Act (collectively, the "Indemnified Parties" for the purposes of
this Article VII) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of WPG which
consent shall not be unreasonably withheld) or litigation (including legal and
other expenses) to which the Indemnified Parties may become subject under any
statute, or regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of TRUST's shares or the
Variable Contracts and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
or prospectus or sales literature of TRUST (or any amendment or supplement to
any of the foregoing), 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 agreement to indemnify 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 in conformity with information furnished to WPG or TRUST
by or on behalf of LIFE COMPANY for use in the registration statement or
prospectus for TRUST or in sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the Variable contracts or
TRUST shares; or
(b) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus or sales literature for the Variable Contracts not supplied by WPG
or persons under its control) or wrongful conduct of TRUST or WPG or persons
under their control, with respect to the sale or distribution of the Variable
Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature covering the Variable Contracts, or any amendment thereof or
supplement thereto 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 or such
alleged statement or omission was made in reliance upon and in conformity with
information furnished to LIFE COMPANY for inclusion therein by or on behalf of
TRUST; or
(d) arise as a result of (i) a failure by TRUST to provide substantially
the services and furnish the materials under the terms of this Agreement; or
(ii) a failure by a Fund(s) invested in by the Separate Account to comply
with the diversification requirements of Section 817(h) of the Code; or (iii)
a failure by a Fund(s) invested in by the Separate Account to qualify as a
"regulated investment company" under Subchapter M of the Code; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by WPG in this Agreement or arise out of
or result from any other material breach of this Agreement by WPG.
7.5 WPG shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
7.6 WPG shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified WPG in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify WPG of any such claim shall not relieve WPG from
any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified Parties, WPG shall
be entitled to participate at its own expense in the defense thereof. WPG
also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from WPG to such
party of WPG election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
WPG will not be liable to such 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 VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of LIFE COMPANY or TRUST at any time from the date
hereof upon 180 days' notice, unless a shorter time is agreed to by the
parties;
(b) At the option of LIFE COMPANY, if TRUST shares are not reasonably
available to meet the requirements of the Variable Contracts as determined by
LIFE COMPANY. Prompt notice of election to terminate shall be furnished by
LIFE COMPANY, said termination to be effective ten days after receipt of
notice unless TRUST makes available a sufficient number of shares to
reasonably meet the requirements of the Variable Contracts within said ten-day
period;
(c) At the option of LIFE COMPANY, upon the institution of formal
proceedings against TRUST by the SEC, the National Association of Securities
Dealers, Inc., or any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in LIFE COMPANY's reasonable
judgment, materially impair TRUST's ability to meet and perform TRUST's
obligations and duties hereunder. Prompt notice of election to terminate
shall be furnished by LIFE COMPANY with said termination to be effective upon
receipt of notice;
(d) At the option of TRUST, upon the institution of formal proceedings
against LIFE COMPANY by the SEC, the National Association of Securities
Dealers, Inc., or any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in TRUST's reasonable judgment,
materially impair LIFE COMPANY's ability to meet and perform its obligations
and duties hereunder. Prompt notice of election to terminate shall be
furnished by TRUST with said termination to be effective upon receipt of
notice;
(e) In the event TRUST's shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law precludes the use
of such shares as the underlying investment medium of Variable Contracts
issued or to be issued by LIFE COMPANY. Termination shall be effective upon
such occurrence without notice;
(f) At the option of TRUST if the Variable Contracts cease to qualify as
annuity contracts or life insurance contracts, as applicable, under the Code,
or if TRUST reasonably believes that the Variable Contracts may fail to so
qualify. Termination shall be effective upon receipt of notice by LIFE
COMPANY;
(g) At the option of LIFE COMPANY, upon TRUST's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of LIFE COMPANY within ten days after written notice of such
breach is delivered to TRUST;
(h) At the option of TRUST, upon LIFE COMPANY's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of TRUST within ten days after written notice of such breach is
delivered to LIFE COMPANY;
(i) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal and/or state
law. Termination shall be effective immediately upon such occurrence without
notice;
(j) In the event this Agreement is assigned without the prior written
consent of LIFE COMPANY, TRUST, and WPG, termination shall be effective
immediately upon such occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, TRUST at its option may elect to continue to make
available additional TRUST shares, as provided below, for so long as TRUST
desires pursuant to the terms and conditions of this Agreement, for all
Variable Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, if TRUST so elects to make additional TRUST shares
available, the owners of the Existing Contracts or LIFE COMPANY, whichever
shall have legal authority to do so, shall be permitted to reallocate
investments in TRUST, redeem investments in TRUST and/or invest in TRUST upon
the payment of additional premiums under the Existing Contracts. In the event
of a termination of this Agreement pursuant to Section 8.2 hereof, TRUST and
WPG, as promptly as is practicable under the circumstances, shall notify LIFE
COMPANY whether TRUST elects to continue to make TRUST shares available after
such termination. If TRUST shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect and
thereafter either TRUST or LIFE COMPANY may terminate the Agreement, as so
continued pursuant to this Section 8.3, upon sixty (60) days prior written
notice to the other party.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, LIFE
COMPANY shall not redeem the shares attributable to the Variable Contracts (as
opposed to the shares attributable to LIFE COMPANY's assets held in the
Separate Accounts), and LIFE COMPANY shall not prevent Variable Contract
owners from allocating payments to a Fund that was otherwise available under
the Variable Contracts until thirty (30) days after the LIFE COMPANY shall
have notified TRUST of its intention to do so.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail
return receipt requested 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 TRUST, or WPG.
Weiss, Peck & Greer, L.L.C.
One New York Plaza
New York, NY 10004
Attention: Jay C. Nadel
If to LIFE COMPANY:
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 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.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 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.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
It shall also be subject to the provisions of the federal securities laws and
the rules and regulations thereunder and to any orders of the SEC granting
exemptive relief therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the
shareholders of shares of any Fund nor the Trustees or officers of the TRUST
or any Fund shall be personally liable hereunder. No Fund shall be liable
for the liabilities of any other Fund. All persons dealing with the TRUST
or a Fund must look solely to the property of the TRUST or that Fund,
respectively, for enforcement of any claims against the TRUST or that Fund.
It is also understood that each of the Funds shall be deemed to be entering
into a separate Agreement with LIFE COMPANY so that it is as if each of the
Funds had signed a separate Agreement with LIFE COMPANY and that a single
document is being signed simply to facilitate the execution and administration
of the Agreement.
10.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the National
Association of Securities Dealers, Inc. 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.
10.7 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.
10.8 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by
TRUST, WPG and the LIFE COMPANY.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
TOMORROW FUNDS
RETIREMENT TRUST
By:_____________________________
Name:
Title:
WEISS, PECK & GREER, L.L.C.
By:_____________________________
Name:
Title:
LIFE COMPANY
By:______________________________
Name:
Title:
APPENDIX A
Tomorrow Funds Retirement Trust and its Funds
Tomorrow Long-Term Retirement Fund
Tomorrow Medium-Term Retirement Fund
Tomorrow Short-Term Retirement Fund
Tomorrow Post-Retirement Fund
Core Large-Cap Stock Fund
Core Small-Cap Stock Fund
APPENDIX B
Separate Accounts Selected Funds
EXHIBIT 99.B15
COMPANY ORGANIZATIONAL CHART
CONSECO ORGANIZATIONAL CHART
SEPTEMBER 30, 1995
CONSECO, INC. - a publicly traded holding company which owns 100% of the
following:
1. Conseco Partnership Management, Inc.
2. Lincoln American Life Insurance Company
3. CIHC, Incorporated
4. GARCO Equity Sales, Inc.
5. Conseco Capital Management, Inc.
6. Conseco Risk Management, Inc.
7. Conseco Mortgage Capital, Inc.
8. Marketing Distribution Systems Consulting Group, Inc.
9. Conseco Private Capital Group, Inc.
10. CNC Real Estate, Inc.
11. Conseco Entertainment Inc.
and 10% of Conseco L.L.C.
JEFFERSON NATIONAL LIFE INSURANCE COMPANY OF TEXAS is a wholly owned
subsidiary of CIHC, Incorporated.
BANKERS NATIONAL LIFE INSURANCE COMPANY is a wholly owned subsidiary of CIHC,
Incorporated.
CONSECO L.L.C. is a 90% owned subsidiary of CIHC, Incorporated.
CONSECO ENTERTAINMENT, L.L.C. is owned 99% by Conseco Entertainment, Inc. and
1% owned by CIHC, Incorporated.
MDS OF NEW JERSEY INC. is a wholly owned subsidiary of Marketing Distribution
Systems Consulting Group, Inc.
BENEFICIAL STANDARD LIFE INSURANCE COMPANY is a wholly owned subsidiary of
Jefferson National Life Insurance Company of Texas.
GREAT AMERICAN RESERVE INSURANCE COMPANY is a wholly owned subsidiary of
Jefferson National Life Insurance Company of Texas.
NATIONAL FIDELITY LIFE INSURANCE COMPANY is a wholly owned subsidiary of
Bankers National Life Insurance Company.
BANKERS LIFE HOLDING CORPORATION is a subsidiary owned:
1. 4.50% by Bankers National Life Insurance Company
2. 82.26% by CIHC, Incorporated
3. 13.24% by the public.
CONSECO CAPITAL PARTNERS II, L.P. is a subsidiary owned:
1. 75.95% by other parties
2. 1.00% by Conseco Partnership Management, Inc.
3. 19.04% by CIHC, Incorporated
4. 4.01% by Bankers Life Holding Corporation
BANKERS LIFE HOLDING CORPORATION owns 100% of:
1. Bankers Life Insurance Company of Illinois
2. K.F. Agency, Inc.
BANKERS LIFE AND CASUALTY COMPANY is a wholly owned subsidiary of Bankers Life
Insurance Company of Illinois.
CERTIFIED LIFE INSURANCE COMPANY is a wholly owned subsidiary of Bankers Life
and Casualty Company.
AMERICAN LIFE GROUP, INC. is owned:
1. 80.00% by Conseco Capital Partners II
2. 7.37% by CIHC, Incorporated
3. 9.10% by Bankers Life Holding Corporation
4. 3.53% by other parties
AMERICAN LIFE HOLDING COMPANY is a wholly owned subsidiary of American Life
Group, Inc.
AMERICAN LIFE AND CASUALTY INSURANCE COMPANY is a wholly owned subsidiary of
American Life Holding Company.
AMERICAN LIFE AND CASUALTY MARKETING DIVISION COMPANY is a wholly owned
subsidiary of American Life Holding Company.
VULCAN LIFE INSURANCE COMPANY is owned:
1. 98% by American Life and Casualty Insurance Company
2. 2% by other parties
