<PAGE>
As filed with the Securities and Exchange Commission on February 16, 1996
Registration Nos. 333-_______
811-_______
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. __ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. [ ]
Variable Account A
-------------------
(Exact name of Registrant)
Keyport Life Insurance Company
------------------------------
(Name of Depositor)
125 High Street, Boston Massachusetts 02110
-------------------------------------------
(Address of Depositor's Principal Executive Offices (Zip Code)
Depositor's Telephone Number, including Area Code: 617-526-1400
Bernard R. Beckerlegge, Esq.
----------------------------
Senior Vice President and General Counsel
-----------------------------------------
Keyport Life Insurance Company
------------------------------
125 High Street, Boston, Massachusetts 02110
--------------------------------------------
(Name and Address of Agent for Service)
copy to:
Joan E. Boros, Esq.
Katten, Muchin & Zavis
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007
It is proposed that this filing will become effective:
( ) immediately upon filing pursuant to paragraph (b) of Rule 485
( ) on May 1, 1995 pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a) of Rule 485
( ) on [date] pursuant to paragraph (a) of Rule 485
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
<PAGE>
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.
Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Investment Company Act Rule 24f-2 and
the Rule 24f-2 Notice for Registrant's fiscal year 1996 will be filed on or
about February 28, 1997.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Exhibit List on Page ___
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
The Facing Sheet
The Contents Page
Cross-Reference Sheet
PART A
Prospectus
PART B
Statement of Additional Information
PART C
Items 24 - 32
The Signatures
Exhibits
<PAGE>
VARIABLE ACCOUNT A
KEYPORT LIFE INSURANCE COMPANY
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-4
N-4 ITEM CAPTION IN PROSPECTUS
1. . . . . . . . . . . Cover Page
2. . . . . . . . . . . Glossary of Special Terms
3. . . . . . . . . . . Summary of Expenses
4. . . . . . . . . . . Condensed Financial Information
5. . . . . . . . . . . Keyport and the Variable Account
Eligible Funds
6. . . . . . . . . . . Deductions
7. . . . . . . . . . . Allocations of Purchase Payments
Transfer of Variable Account Value
Substitution of Securities
Modification of the Contract
Death Provisions for Non-Qualified Contracts
Death Provisions for Qualified Contracts
Certificate Ownership
Assignment
Surrenders
Annuity Benefits
Suspension of Payments
Inquiries by Certificate Owners
8. . . . . . . . . . . Annuity Provisions
9. . . . . . . . . . . Death Provisions for Non-Qualified Contracts
Death Provisions for Qualified Contracts
Settlement Options
10. . . . . . . . . . . Purchase Payments and Applications
Variable Account Value
Valuation Periods
Net Investment Factor
Distribution of the Certificates
11. . . . . . . . . . . Surrenders
Option 1: Income For a Fixed Number of Years
Right to Revoke
12. . . . . . . . . . . Tax Status
13. . . . . . . . . . . Legal Proceedings
14. . . . . . . . . . . Table of Contents - Statement of Additional Information
CAPTION IN STATEMENT OF ADDITIONAL INFORMATION
15. . . . . . . . . . . Cover Page
16. . . . . . . . . . . Table of Contents
17. . . . . . . . . . . Keyport Life Insurance Company
<PAGE>
18. . . . . . . . . . . Experts
19. . . . . . . . . . . Not applicable
20. . . . . . . . . . . Principal Underwriter
21. . . . . . . . . . . Investment Performance
22. . . . . . . . . . . Variable Annuity Benefits
23. . . . . . . . . . . Financial Statements
<PAGE>
PART A
<PAGE>
GROUP FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
Variable Account A
OF
KEYPORT LIFE INSURANCE COMPANY
This Prospectus offers Group Variable Annuity Contracts (the "Contracts") and
the related Certificates (the "Certificates") that are designed to fund
benefits under certain group arrangements including those that qualify for
special tax treatment under the Internal Revenue Code of 1986 (the "Code").
As required by certain states, the Contracts may be offered as individual
contracts. Unless otherwise noted or the context so requires all references
to the Certificates include the Contracts and the individual Contracts. The
Certificates are offered on a flexible payment basis.
The variable annuity contract (form number DVA(1)) and the Certificates
described in this prospectus provide for accumulation of Certificate Values
and payment of periodic annuity payments on a variable basis, and also on a
fixed basis. The Certificates are designed for use by individuals for
retirement planning purposes.
This prospectus generally describes only the variable features of the
Certificate [(for a summary of the fixed features, see Appendix A on Page
xx)]. If the Certificate Owner elects to have Certificate Values accumulated
on a variable basis, purchase payments will be allocated to a segregated
investment account of Keyport Life Insurance Company ("Keyport"), designated
Variable Account A ("Variable Account").
The Variable Account invests in shares of the following Eligible Funds of The
XXXXX Trust ("XXXXX Trust") at their net asset value: X-1, X-2 and X-3. The
Variable Account also invests in shares of the following Eligible Funds of The
YYYYY Fund ("YYYYY Fund") at their net asset value: Y-1, Y-2, Y-3.
The Variable Account may offer other forms of the Contracts and Certificates
with features, and fees and charges which vary from the Certificates, and
provide for investment in other Sub-accounts which may invest in different or
additional mutual funds. Other Contracts and Certificates will be described
in separate prospectuses and statements of additional information.
A Statement of Additional Information dated the same as this prospectus has
been filed with the Securities and Exchange Commission and is herein
incorporated by reference. It is available, at no charge, by writing Keyport
at 125 High Street, Boston, MA 02110, by calling (800) 437-4466, or by
returning the postcard on the back cover of this prospectus. A table of
contents for the Statement of Additional Information is on Page xx.
THE CONTRACT MAY BE SOLD BY OR THROUGH BANKS OR OTHER DEPOSITORY INSTITUTIONS.
THE CONTRACT AND CERTIFICATES: ARE NOT INSURED BY THE FDIC; ARE NOT A DEPOSIT
OR OTHER
<PAGE>
OBLIGATION OF, OR GUARANTEED BY, THE DEPOSITORY INSTITUTION; AND ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
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 SETS FORTH THE INFORMATION A PROSPECTIVE INVESTOR SHOULD KNOW
BEFORE INVESTING. THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE OR JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED BY
KEYPORT TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION WITH THIS OFFERING, AND IF
GIVEN OR MADE, SUCH UNAUTHORIZED INFORMATION OR REPRESENTATIONS SHOULD NOT BE
RELIED UPON.
The date of this prospectus is _______________,1996
2
<PAGE>
TABLE OF CONTENTS
Page
Glossary of Special Terms
Summary of Expenses
Synopsis
Keyport and the Variable Account
Purchase Payments and Applications
Investments of the Variable Account
Allocations of Purchase Payments
Eligible Funds
Transfer of Variable Account Value
Substitution of Eligible Funds and
Other Variable Account Changes
Deductions
[Deductions for Contract Maintenance Charge]
Deductions for Mortality and Expense Risk Charge
[Deductions for Daily Distribution Charge]
[Deductions for Contingent Deferred Distribution Charge]
[Deductions for Transfers of Variable Account Value]
Deductions for Premium Taxes
Deductions for Income Taxes
Total Variable Account Expenses
Other Services
The Certificates
Variable Account Value
Valuation Periods
Net Investment Factor
Modification of the Certificate
Right to Revoke
Death Provisions for Non-Qualified Contracts
Death Provisions for Qualified Contracts
Ownership
Assignment
Surrenders
Annuity Provisions
Annuity Benefits
Income Date and Settlement Option
Change in Income Date and Settlement Option
Settlement Options
Variable Annuity Payment Values
Proof of Age, Sex, and Survival of Annuitant
Suspension of Payments
Tax Status
Introduction
3
<PAGE>
Taxation of Annuities in General
Qualified Plans
Tax-Sheltered Annuities
Corporate Pension and Profit-Sharing Plans
Deferred Compensation Plans with Respect to
Service for State and Local Governments
Variable Account Voting Privileges
Distribution of the Contract and Certificates
Legal Proceedings
Inquiries by Certificate Owners
Table of Contents--Statement of Additional Information
[Appendix A--The Fixed Account (also known as the
Guaranteed Rate Account)]
Appendix B--Telephone Instructions
[Appendix C--Dollar Cost Averaging]
4
<PAGE>
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate Variable
Account Value.
ANNUITANT: The Annuitant is the natural person to whom any annuity payments
will be made starting on the Income Date. The Annuitant may not be over age
[80] on the Issue Date (age [75] for Qualified Contracts).
CERTIFICATE ANNIVERSARY: The same month and day as the Issue Date in each
subsequent year of the Certificate.
CERTIFICATE OWNER: The person (or persons in the case of joint ownership) who
possesses all the ownership rights under the Certficate. The primary
Certificate Owner may not be over age [80] on the Issue Date (age [75] for
Qualified Contracts and age [85] for a joint Owner).
CERTIFICATE VALUE: The sum of the Variable Account Value and the Fixed Account
Value.
CERTIFICATE WITHDRAWAL VALUE: The Certificate Value less any premium taxes
[Certificate Maintenance Charge] and [applicable Contingent Deferred
Distribution Charges].
CERTIFICATE YEAR: Any period of 12 months commencing with the Issue Date and
each Certificate Anniversary thereafter shall be a Certificate Year.
DESIGNATED BENEFICIARY: The person who may be entitled to receive benefits
following the death of the Annuitant, Certificate Owner, or joint Certificate
Owner. The Designated Beneficiary will be the first person among the
following who is alive on the date of death: primary Certificate Owner; joint
Certificate Owner; primary beneficiary; contingent beneficiary; and if no one
is alive, the primary Certificate Owner's estate. If the primary Certificate
Owner and joint Certificate Owner are both alive, they will be the Designated
Beneficiary together.
ELIGIBLE FUNDS: The mutual funds that are eligible investments for the
Variable Account under the Certificates.
[FIXED ACCOUNT: Part of Keyport's general account to which purchase payments
may be allocated.]
[FIXED ACCOUNT VALUE: The value of all Fixed Account amounts accumulated under
the Certificate prior to the Income Date.]
IN FORCE: The status of the Certificate before the Income Date so long as it
is not totally surrendered and there has not been a death of the Annuitant or
any Certificate Owner that will cause the Certfificate to end within at most
five years of the date of death.
INCOME DATE: The date on which annuity payments are to begin.
5
<PAGE>
ISSUE DATE: The effective date of the Certificate; it is shown on Page 3 of
the Certificate.
NON-QUALIFIED CONTRACT AND CERTIFICATE: Any Contract and Certificate that is
not issued under a Qualified Plan.
OFFICE: Keyport's executive office, which is 125 High Street, Boston,
Massachusetts 02110.
QUALIFIED CONTRACT AND CERTIFICATE: Contracts and Certificates issued under
Qualified Plans.
QUALIFIED PLAN: A retirement plan established pursuant to the provisions of
Sections 401, 403(b) or 408(b) of the Internal Revenue Code. Keyport treats
Section 457 plans as Qualified Plans.
SURRENDER VALUE: The Certificate Value less the deductions made upon a total
surrender of the Certificate.
VARIABLE ACCOUNT: A separate investment account of Keyport into which purchase
payments under the Certificates may be allocated.
VARIABLE ACCOUNT VALUE: The value of all Variable Account amounts accumulated
under the Certificate prior to the Income Date.
WRITTEN REQUEST: A request written on a form satisfactory to Keyport, signed
by the Certificate Owner and a disinterested witness, and filed at Keyport's
Office.
6
<PAGE>
SUMMARY OF EXPENSES
The expense summary format below, including the examples, was adopted by the
Securities and Exchange Commission to assist the owner of a variable annuity
certificate in understanding the transaction and operating expenses the owner
will directly or indirectly bear under a certificate. The values reflect
expenses of the Variable Account as well as the Eligible Funds under the
Certificates. The expenses shown for the Eligible Funds and the examples
should not be considered a representation of future expenses.
CERTIFICATE OWNER TRANSACTION EXPENSES
Sales Load Imposed on Purchases: 0%
Maximum Contingent Deferred Distribution Charge
(as a percentage of purchase payments): [7%(1)
YEARS FROM DATE OF PAYMENT DISTRIBUTION CHARGE
-------------------------- --------------------
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
8 or later 0%]
Maximum Total Certificate Owner Transaction Expenses(2)
(as a percentage of purchase payments): [7%]
Annual Contract Fee $[36]
VARIABLE ACCOUNT ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Mortality and Expense Risk Charge: [1.25%]
[Asset-based Distribution Charge:] [ .15%]
[Administrative Charge:] [ .15%]
Total Variable Account Annual Expenses: [1.55%]
7
<PAGE>
XXXXX TRUST AND YYYYY FUND ANNUAL EXPENSES(3)
(as a percentage of average net assets)
MANAGEMENT OTHER TOTAL FUND
FUND FEES EXPENSES OPERATING EXPENSES(4)
- ---- ---------- -------- ------------------
EXAMPLE #1 -- ASSUMING SURRENDER OF THE CERTIFICATE AT THE END OF THE PERIODS
SHOWN.(5)
A $1,000 INVESTMENT IN EACH SUB-ACCOUNT LISTED WOULD BE SUBJECT TO THE
EXPENSES SHOWN, ASSUMING 5% ANNUAL RETURN ON ASSETS.
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ------ ------- ------- --------
EXAMPLE #2 -- ASSUMING ANNUITIZATION OF THE CERTIFICATE AT THE END OF THE
PERIODS SHOWN.(5)
A $1,000 INVESTMENT IN EACH SUB-ACCOUNT LISTED WOULD BE SUBJECT TO THE
EXPENSES SHOWN, ASSUMING 5% ANNUAL RETURN ON ASSETS.
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ----- ------- ------- --------
EXAMPLE #3 -- ASSUMING THE CERTIFICATE STAYS IN FORCE THROUGH THE PERIODS
SHOWN.
A $1,000 INVESTMENT IN EACH SUB-ACCOUNT LISTED WOULD BE SUBJECT TO THE SAME
EXPENSES SHOWN IN EXAMPLE #2, ASSUMING 5% ANNUAL RETURN ON ASSETS.
[(1)Contingent Deferred Distribution Charges are deducted only if the
Certificate is fully or partially surrendered. A surrender will not incur the
Charge percentage shown: 1. to the extent the amount of that surrender does
not exceed the Certificate's increase in value at the time of surrender or, 2.
after the first Certificate Year, the positive difference between the amount
withdrawn under 1. and [10]% of the Certificate Value on the prior Certificate
Anniversary if this [10]% amount is greater.]
8
<PAGE>
(2)[Keyport reserves the right to impose a transfer fee after prior notice to
Certificate Owners, but currently does not impose any charge.] Premium taxes
are not shown. Keyport deducts the amount of premium taxes, if any, when paid
unless Keyport elects to defer such deduction.
(3)The XXXXX Trust expenses are for 199[4]. The YYYYY Fund expenses are
estimated and reflect the YYYYY Fund's Manager's agreement to reimburse
expenses above certain limits (see footnote 4).
[(4)YYYYY Fund's manager has agreed until [?/?/??] to reimburse all expenses,
including management fees, in excess of the following percentage of the
average annual net assets of each Fund, so long as such reimbursement would
not result in the Fund's inability to qualify as a regulated investment
company under the Internal Revenue Code. The total percentages shown in the
table for YY-1, YY-2 and YY-3 are after expense reimbursement. Each
percentage shown in the parentheses is what the total for 199[ ] would be in
the absence of expense reimbursement: for YY-1 -???%; for YY-2 - ???%; and
for YYY-3 -???%.]
(5)The annuity is designed for retirement planning purposes. Surrenders prior
to the Income Date are not consistent with the long-term purposes of the
Contract and the applicable tax laws.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND CHARGES OF THE SUB-ACCOUNTS. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. SIMILARLY, THE ASSUMED 5% ANNUAL RATE OF RETURN IS NOT
AN ESTIMATE OR A GUARANTEE OF FUTURE INVESTMENT PERFORMANCE. See "Deductions"
in this prospectus, ["How the Funds are Managed"] in the prospectus for XXXXX
Trust, and ["Trust Management Organizations"] and ["Expenses of the Funds"] in
the prospectus for YYYYY Fund.
SYNOPSIS
The following Synopsis should be read in conjunction with the detailed
information in this prospectus and the Statement of Additional Information.
Please refer to the Glossary of Special Terms for the meaning of certain
defined terms. Variations from the information appearing in this prospectus
due to individual state requirements are described in supplements which are
attached to this prospectus, or in endorsements to the Certificates, as
appropriate.
The Contract allows Certificate Owners to allocate purchase payments to the
Variable Account [and also to the Fixed Account.] The Variable Account is a
separate investment account maintained by Keyport. [The Fixed Account is part
of Keyport's "general account", which consists of all Keyport's assets except
the Variable Account and the assets of other separate accounts maintained by
Keyport.] Certificate Owners may allocate payments to, and receive annuity
payments from the Variable Account [and/or the Fixed Account]. If the
Certificate Owner allocates payments to the Variable Account, the accumulation
values and annuity payments will fluctuate according to the investment
experience of the Sub-Accounts chosen. [If
9
<PAGE>
the Certificate Owner allocates payments to the Fixed Account, the
accumulation values will increase at guaranteed interest rates and annuity
payments will be of a fixed amount. (See Appendix A on Page ?? for more
information on the Fixed Account.)] [If the Certificate Owner allocates
payments to both Accounts, then the accumulation values and annuity payments
will be variable in part and fixed in part.]
The Certificate permits purchase payments to be made on a flexible purchase
payment basis. The minimum initial payment is $[5,000]. The minimum amount
for each subsequent payment is $[1,000] or such lesser amount as Keyport may
permit from time to time [(currently $250)]. (See "Purchase Payments" on Page
x.)
There are no deductions made from purchase payments for distribution charges
at the time of purchase. [A Contingent Deferred Distribution Charge may be
deducted in the event of a total or partial surrender (see "Surrenders" on
Page xx). The Contingent Deferred Distribution Charge is based on a graded
table of charges. The charge will not exceed [7]% of that portion of the
amount surrendered that represents purchase payments made during the [seven]
years immediately preceding the request for surrender. (See "Deductions for
Contingent Deferred Distribution Charge" on Page xx.)]
Keyport deducts a Mortality and Expense Risk Charge, which is equal on an
annual basis to [1.25]% of the average daily net asset values in the Variable
Account attributable to the Contracts. (See "Deductions for Mortality and
Expense Risk Charge" on Page xx.) [Keyport also deducts a daily distribution
charge which is equal on an annual basis to [.15%] of the same values. (See
"Deductions for Daily Distribution Charge" on Page xx.)] [Keyport deducts a
Daily Administrative Charge which is equal on an annual basis to [.15]% of the
same values. (See "Deductions for Daily Administrative Charge" on Page xx.)]
[Keyport deducts an annual Contract Maintenance Charge (currently $[36.00])
from the Variable Account Value for administrative expenses. Prior to the
Income Date, Keyport reserves the right to change this charge for future
years. (See "Deductions for Contract Maintenance Charge" on Page xx.)]
Keyport reserves the right to deduct a charge of [$10] for each transfer in
excess of [12] per year.
Premium taxes will be charged against Certificate Value. Currently such
premium taxes range from 0% to 5.0%. (See "Deductions for Premium Taxes" on
Page xx.)
There are no federal income taxes on increases in the value of a Certificate
until a distribution occurs, in the form of a lump sum payment, annuity
payments, or the making of a gift or assignment of the Certificate. A federal
penalty tax (currently 10%) may also apply. (See "Tax Status" on Page xx.)
10
<PAGE>
The Certificate allows the Certificate Owner to revoke the Certificate
generally within 10 days of delivery (see "Right to Revoke" on Page xx). For
most states, Keyport will refund the Certificate Value as of the date the
returned Certificate is received by Keyport, plus any distribution charges
previously deducted. The Certificate Owner thus will bear the investment risk
during the revocation period. In other states, Keyport will return purchase
payments.
The full financial statements for [the Variable Account and] Keyport are in
the Statement of Additional Information.
PERFORMANCE INFORMATION
The Variable Account may from time to time advertise certain performance
information concerning its various Sub-Accounts.
[Keyport and certain of the Eligible Funds have been offering contracts for
periods prior to the commencement of the offering of the Certificates
described in this prospectus. The performance information will be based on
historical results of Eligible Funds that apply to the Certificate for the
specified time periods.]
This performance information is not intended to indicate either past
performance under an actual Certificate or future performance.
The Sub-Accounts may advertise total return information for various periods of
time. Total return performance information is based on the overall percentage
change in value of a hypothetical investment in the specific Sub-Account over
a given period of time.
Average annual total return information shows the average percentage change in
the value of an investment in the Sub-Account from the beginning date of the
measuring period to the end of that period. This standardized version of
average annual total return reflects all historical investment results, less
all charges and deductions applied against the Sub-Account and a Certificate
[(including any Contingent Deferred Distribution Charge that would apply if a
Certificate Owner surrendered the Certificate at the end of each period
indicated)]. Average total return does not take into account any premium
taxes and would be lower if these taxes were included.
In order to calculate average annual total return, Keyport divides the change
in value of a Sub-Account under a Certificate surrendered on a particular date
by a hypothetical $1,000 investment in the Sub-Account made by the Certificate
Owner at the beginning of the period illustrated. The resulting total rate
for the period is then annualized to obtain the average annual percentage
change during the period. Annualization assumes that the application of a
single rate of return each year during the period will produce the ending
value, taking into account the effect of compounding.
11
<PAGE>
The Sub-Accounts may present additional total return information computed on a
different basis.
[First, the Sub-Accounts may present total return information computed on the
same basis as described above, except deductions will not include the
Contingent Deferred Distribution Charge. This presentation assumes that the
investment in the Certificate continues beyond the period when the Contingent
Deferred Distribution Charge applies, consistent with the long-term investment
and retirement objectives of the Certificate. The total return percentage
will thus be higher under this method than the standard method described
above.]
[Second,] the Sub-Accounts may present total return information calculated by
dividing the change in a Sub-Account's Accumulation Unit value over a
specified time period by the Accumulation Unit value of that Sub-Account at
the beginning of the period. This computation results in a 12-month change
rate or, for longer periods, a total rate for the period which Keyport
annualizes in order to obtain the average annual percentage change in the
Accumulation Unit value for that period. The change percentages do not take
into account [the Contingent Deferred Distribution Charge, the Certificate
Maintenance Charge and] premium tax charges. The percentages would be lower
if these charges were included.
The XX-1 Sub-Account is a money market Sub-Account that also may advertise
yield and effective yield information. The yield of the Sub-Account refers to
the income generated by an investment in the Sub-Account over a specifically
identified 7-day period. This income is annualized by assuming that the
amount of income generated by the investment during that week is generated
each week over a 52-week period and is shown as a percentage. The yield
reflects the deduction of all charges assessed against the Sub-Account and a
Certificate but does not take into account [Contingent Deferred Distribution
Charges and] premium tax charges. The yield would be lower if these charges
were included.
The effective yield of the XX-1 Sub-Account is calculated in a similar manner
but, when annualizing such yield, income earned by the Sub-Account is assumed
to be reinvested. This compounding effect causes effective yield to be higher
than yield.
KEYPORT AND THE VARIABLE ACCOUNT
Keyport Life Insurance Company was incorporated in Rhode Island in 1957 as a
stock life insurance company. Its executive and administrative offices are at
125 High Street, Boston, Massachusetts 02110 and its home office is at 235
Promenade Street, Providence, Rhode Island 02903.
Keyport writes individual life insurance and individual and group annuity
contracts on a non-participating basis. Keyport is licensed to do business in
all states except New York and is also licensed in the District of Columbia
and the Virgin Islands. Keyport has been rated A+ (Superior) by A.M. Best and
Company, independent analysts of the insurance industry. Keyport has been
rated A+ each year since 1976, the first year Keyport was subject to Best's
alphabetic
12
<PAGE>
rating system. Standard & Poor's ("S & P") has rated Keyport AA- for
excellent financial security, Moody's has rated Keyport A1 for good financial
strength and Duff & Phelps has rated Keyport AA- for very high claims paying
ability. The Best's A+ rating is in the highest rating category, which also
includes A++. S & P and Duff & Phelps have one rating category above AA and
Moody's has two rating categories above A. The Moody's "1" modifier signifies
that Keyport is in the higher end of the A category while the S&P and Duff &
Phelps "-" modifier signifies that Keyport is at the lower end of the AA
category. These ratings merely reflect the opinion of the rating company as
to the relative financial strength of Keyport and Keyport's ability to meet
its contractual obligations to its policyholders. Even though assets in the
Variable Account are held separately from Keyport's other assets, ratings of
Keyport may still be relevant to Certificate Owners since not all of Keyport's
contractual obligations relate to payments based on those segregated assets
(e.g., see "Death Provisions" for Keyport's obligation after certain deaths to
increase the Certificate Value if it is less than the guaranteed minimum death
value amount or otherwise enhance the death benefit with interest).
Keyport is one of the Liberty Financial Companies. Keyport is ultimately
controlled by Liberty Mutual Insurance Company of Boston, Massachusetts, a
multi-line insurance and financial services institution.
The Variable Account was established by Keyport pursuant to the provisions of
Rhode Island Law on January 30, 1996. The Variable Account meets the
definition of "separate account" under the federal securities laws. The
Variable Account is registered with the Securities and Exchange Commission as
a unit investment trust under the Investment Company Act of 1940. Such
registration does not involve supervision of the management of the Variable
Account or Keyport by the Securities and Exchange Commission.
Obligations under the Certificates are the obligations of Keyport. Although
the assets of the Variable Account are the property of Keyport, these assets
are held separately from the other assets of Keyport and are not chargeable
with liabilities arising out of any other business Keyport may conduct.
Income, capital gains and/or capital losses, whether or not realized, from
assets allocated to the Variable Account are credited to or charged against
the Variable Account without regard to the income, capital gains, and/or
capital losses arising out of any other business Keyport may conduct. Thus,
Keyport does not guarantee the investment performance of the Variable Account.
The Variable Account Value and the amount of variable annuity payments will
vary with the investment performance of the investments in the Variable
Account.
PURCHASE PAYMENTS AND APPLICATIONS
The initial purchase payment is due on the Issue Date. The minimum initial
purchase payment is $[5,000]. Additional purchase payments can be made at the
Certificate Owner's option. Each subsequent purchase payment must be at least
$[1,000] or such lesser amount as Keyport may permit from time to time
[(currently $250)]. Keyport may reject any purchase payment.
13
<PAGE>
If the application for a Certificate is in good order and it calls for amounts
to be allocated to the Variable Account, Keyport will apply the initial
purchase payment to the Variable Account and credit the Certificate with
Accumulation Units within two business days of receipt. If the application
for a Certificate is not in good order, Keyport will attempt to get it in good
order within five business days. If it is not complete at the end of this
period, Keyport will inform the applicant of the reason for the delay and that
the purchase payment will be returned immediately unless the applicant
specifically consents to Keyport's keeping the purchase payment until the
application is complete. Once the application is complete, the purchase
payment will be applied within two business days of its completion. Keyport
has reserved the right to reject any application.
Keyport confirms, in writing, to the Certificate Owner the allocation of all
purchase payments and the re-allocation of values after any requested
transfer. Keyport must be notified immediately by the Certificate Owner of
any processing error.
Keyport will permit others to act on behalf of an applicant in certain
instances, including the following two examples. First, Keyport will accept
an application for a Certificate that contains a signature signed under a
power of attorney if a copy of that power of attorney is submitted with the
application. Second, Keyport will issue a Certificate that is not replacing
an existing life insurance or annuity policy without having previously
received a signed application from the applicant. Certain dealers or other
authorized persons such as employers and Qualified Plan fiduciaries will
inform Keyport of an applicant's answers to the questions in the application
by telephone or by order ticket and cause the initial purchase payment to be
paid to Keyport. If the information is in good order, Keyport will issue the
Certificate with a copy of an application completed with that information.
The Certificate will be delivered to the Certificate Owner with a letter from
Keyport that will give the Certificate Owner an opportunity to respond to
Keyport if any of the application information is incorrect. Alternatively,
Keyport's letter may request the Certificate Owner to confirm the correctness
of the information by signing either a copy of the application or a
Certificate delivery receipt that ratifies the application in all respects (in
either case, a copy of the signed document would be returned to Keyport for
its permanent records). All purchases are confirmed, in writing, to the
applicant by Keyport. Keyport's liability under a Certificate extends only to
amounts so confirmed.
INVESTMENTS OF THE VARIABLE ACCOUNT
ALLOCATIONS OF PURCHASE PAYMENTS
Purchase payments applied to the Variable Account will be invested in one or
more of the Eligible Fund Sub-Accounts designated as permissible investments
in accordance with the selection made by the Certificate Owner in the
application. Any selection must specify the percentage of the purchase
payment that is allocated to each Sub-Account. The percentage for each Sub-
Account, if not zero, must be at least [10]% and must be a whole number. A
Certificate Owner may change the allocation percentages without fee, penalty
or other charge.
14
<PAGE>
Allocation changes must be made by Written Request unless the Certificate
Owner has by Written Request authorized Keyport to accept telephone allocation
instructions from the Certificate Owner or from a person acting for the
Certificate Owner as an attorney-in-fact under a power of attorney. By
authorizing Keyport to accept telephone changes, a Certificate Owner agrees to
accept and be bound by the conditions and procedures established by Keyport
from time to time. The current conditions and procedures are in Appendix B
and Certificate Owners authorizing telephone allocation instructions will be
notified, in advance, of any changes.
The Variable Account is segmented into Sub-Accounts. Each Sub-Account
contains the shares of one of the Eligible Funds and such shares are purchased
at net asset value. Eligible Funds and Sub-accounts may be added or withdrawn
as permitted by applicable law. The Sub-Accounts in the Variable Account and
the corresponding Eligible Funds currently are as follows:
ELIGIBLE FUNDS OF XXXXX TRUST SUB-ACCOUNTS
- ----------------------------- ------------
XX-1 XX-1 Sub-Account
XX-2 XX-2 Sub-Account
XX-3 XX-3 Sub-Account
ELIGIBLE FUNDS OF YYYYY FUND SUB-ACCOUNTS
- ---------------------------- ------------
YY-1 YY-1 Sub-Account
YY-2 YY-2 Sub-Account
YY-3 YY-3 Sub-Account
ELIGIBLE FUNDS
The Eligible Funds which are the permissible investments of the Variable
Account are the separate funds of XXXXX Trust, the separate funds of YYYYY
Fund, and any other mutual funds with which Keyport and the Variable Account
may enter into a participation agreement for the purpose of making such mutual
funds available as Eligible Funds under certain Certificates.
[TEXT HERE WILL DESCRIBE INDIVIDUAL INVESTMENT ADVISERS]
The investment objectives of the Eligible Funds are briefly described below.
More detailed information, including investor considerations related to the
risks of investing in a particular Eligible Fund, may be found in the current
prospectus for that Fund. An investor should read that prospectus carefully
before selecting a fund for investing. The prospectus is available, at no
charge, from a salesperson or by writing Keyport at the address shown on Page
1 or by calling (800) 437-4466.
15
<PAGE>
ELIGIBLE FUNDS OF XXXXX TRUST
AND VARIABLE ACCOUNT SUB-ACCOUNTS INVESTMENT OBJECTIVE
- --------------------------------- --------------------
[TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES]
ELIGIBLE FUNDS OF YYYYY FUND
AND VARIABLE ACCOUNT SUB-ACCOUNTS INVESTMENT OBJECTIVE
- --------------------------------- --------------------
[TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES]
THERE IS NO ASSURANCE THAT THE ELIGIBLE FUNDS WILL ACHIEVE THEIR STATED
OBJECTIVES.
XXXXX and YYYYY Funds are funding vehicles for variable annuity contracts and
variable life insurance policies offered by separate accounts of Keyport and
of insurance companies affiliated and unaffiliated with Keyport. The risks
involved in this "mixed and shared funding" are disclosed in the Trust's and
Fund's prospectus under the caption ["The Trust"] and [SALES AND REDEMPTIONS,]
respectively.
TRANSFER OF VARIABLE ACCOUNT VALUE
Certificate Owners may transfer Variable Account Value from one Sub-Account to
another Sub-Account [and/or to the Fixed Account].
The Certificate allows Keyport to charge a transfer fee and to limit the
number of transfers that can be made in a specified time period. Certificate
Owners should be aware that transfer limitations may prevent a Certificate
Owner from making a transfer on the date he or she wants to, with the result
that the Certificate Owner's future Certificate Value may be lower than it
would have been had the transfer been made on the desired date. Currently,
Keyport is [not charging a transfer fee] [but it is limiting transfers to [12]
per calendar year except as follows.] For transfers under different
Certificates that are being requested under powers of attorney with a common
attorney-in-fact or that are, in Keyport's determination, based on the
recommendation of a common investment adviser or broker/dealer, the transfer
limitation is instead one transfer every 30 days.
Regardless of which transfer limitation is applicable, Keyport is also
limiting each transfer to a maximum of $500,000. All transfers requested for
a Certificate on the same day will be treated as a single transfer and the
total combined transfer amount will be subject to the $500,000 limitation. If
the $500,000 limitation is exceeded, no amount of the transfer will be
executed by Keyport.
16
<PAGE>
In applying the limitation of [12] transfers in a year of up to $500,000
apiece, Keyport may treat as one transfer all transfers requested by a
Certificate Owner for multiple Certificates he or she owns. If the $500,000
limitation is exceeded for multiple transfers requested on the same day that
are treated as a single transfer, no amount of the transfer will be executed
by Keyport.
In applying the limitation of one $500,000 transfer every 30 days, Keyport
will treat as one transfer all transfers requested under different
Certificates that are being requested under powers of attorney with a common
attorney-in-fact or that are, in Keyport's determination, based on the
recommendation of a common investment adviser or broker/dealer. If the
$500,000 limitation is exceeded for multiple transfers requested on the same
day that are treated as a single transfer, no amount of the transfer will be
executed by Keyport. If a transfer is executed under one Certificate and,
within the next 30 days, a transfer request for another Certificate is
determined by Keyport to be related to the executed transfer under this
paragraph's rules, the transfer request will not be executed by Keyport (in
order for it to be executed, it would need to be requested again after the 30
day period and it, along with any other transfer requests that are
collectively treated as a single transfer, would need to total less than
$500,000).
Keyport's interest in applying these limitations is to protect the interests
of both Certificate Owners who are not engaging in significant transfer
activity and Certificate Owners who are engaging in such activity. Keyport
has determined that the actions of Certificate Owners engaging in significant
transfer activity among Sub-Accounts may cause an adverse affect on the
performance of the Eligible Fund for the Sub-Account involved. The movement
of Sub-Account values from one Sub-Account to another may prevent the
appropriate Eligible Fund from taking advantage of investment opportunities
because it must maintain a liquid position in order to handle redemptions.
Such movement may also cause a substantial increase in Fund transaction costs
which must be indirectly borne by Certificate Owners.
Certificate Owners will be notified, in advance, of the imposition of any
transfer fee or of a change in the limitation on the number of transfers.
Keyport does not guarantee any maximum transfer fee that it may charge, but
the fee will not exceed the cost of effecting a transfer.
Transfers must be made by Written Request unless the Certificate Owner has by
Written Request authorized Keyport to accept telephone transfer requests from
the Certificate Owner or from a person acting for the Certificate Owner as an
attorney-in-fact under a power of attorney. By authorizing Keyport to accept
telephone transfer instructions, a Certificate Owner agrees to accept and be
bound by the conditions and procedures established by Keyport from time to
time. The current conditions and procedures are in Appendix B and Certificate
Owners authorizing telephone transfers will be notified, in advance, of any
changes. Written transfer requests may be made by a person acting for the
Certificate Owner as an attorney-in-fact under a power of attorney.
Transfer requests received by Keyport before the close of trading on the New
York Stock Exchange (currently 4:00 PM Eastern Time) will be initiated at the
close of business that day. Any requests received later will be initiated at
the close of the next business day. Each request from a Certificate Owner to
transfer value will be executed by both redeeming and acquiring Accumulation
Units on the day Keyport initiates the transfer.
17
<PAGE>
If 100% of any Sub-Account's value is transferred and the allocation formula
for purchase payments includes that Sub-Account, then the allocation formula
for future purchase payments will automatically change unless the Certificate
Owner instructs otherwise. For example, if the allocation formula is 50% to
Sub-Account A and 50% to Sub-Account B and all of Sub-Account A's value is
transferred to Sub-Account B, the allocation formula will change to 100% to
Sub-Account B unless the Certificate Owner instructs otherwise.
SUBSTITUTION OF ELIGIBLE FUNDS AND OTHER VARIABLE ACCOUNT CHANGES
If the shares of any of the Eligible Funds should no longer be available for
investment by the Variable Account or if in the judgment of Keyport's
management further investment in such fund shares should become inappropriate
in view of the purpose of the Certificate, Keyport may add or substitute
shares of another Eligible Fund or of another mutual fund for Eligible Fund
shares already purchased under the Certificate. No substitution of Fund
shares in any Sub-Account may take place without prior approval of the
Securities and Exchange Commission and notice to Certificate Owners, to the
extent required by the Investment Company Act of 1940.
Keyport has also reserved the right, subject to compliance with the law as
currently applicable or subsequently changed: (a) to operate the Variable
Account in any form permitted under the Investment Company Act of 1940 or in
any other form permitted by law; (b) to take any action necessary to comply
with or obtain and continue any exemptions from the Investment Company Act of
1940 or to comply with any other applicable law; (c) to transfer any assets in
any Sub-Account to another Sub-Account, or to one or more separate investment
accounts, or to Keyport's general account; or to add, combine or remove Sub-
Accounts in the Variable Account; and (d) to change the way Keyport assesses
charges, so long as the aggregate amount is not increased beyond that
currently charged to the Variable Account and the Eligible Funds in connection
with the Certificates.
DEDUCTIONS
[DEDUCTIONS FOR CERTIFICATE MAINTENANCE CHARGE
Keyport has responsibility for all administration of the Certificates and the
Variable Account. This administration includes, but is not limited to,
preparation of the Certificates, maintenance of Certificate Owners' records,
and all accounting, valuation, regulatory and reporting requirements. Keyport
makes a Certificate Maintenance Charge for such services during the
accumulation and annuity payment periods. At the present time the Certificate
Maintenance Charge is $[36.00] per Certificate Year. PRIOR TO THE INCOME DATE
THE CERTIFICATE MAINTENANCE CHARGE IS NOT GUARANTEED AND MAY BE CHANGED BY
KEYPORT. The charge will not exceed the anticipated costs of administering
the Certificate.
Prior to the Income Date, the full amount of the charge will be deducted from
the Variable Account Value on each Certificate Anniversary and on the date of
any total surrender not falling on the Certificate Anniversary. On the Income
Date, a pro-rata portion of the charge due on the next Certificate Anniversary
will be deducted from the Variable Account Value.
18
<PAGE>
This pro-rata charge covers the period from the prior Certificate Anniversary
to the Income Date. For example, if the Income Date occurs 73 days after that
prior anniversary, then one-fifth (i.e., 73 days/365 days) of the annual
charge would be deducted on the Income Date. The charge will be deducted from
each Sub-Account in the proportion that the value of each bears to the
Variable Account Value.
Once annuity payments begin on the Income Date or once they begin after
surrender benefits are applied under a settlement option, the yearly cost of
the Certificate Maintenance Charge for a payee's annuity will be the same as
the yearly amount in effect immediately before the annuity payments begin.
Keyport may not later change the amount of the Certificate Maintenance Charge
deducted from the annuity payments. The charge will be deducted on a pro-rata
basis from each annuity payment. For example, if annuity payments are
monthly, then one-twelfth of the annual charge will be deducted from each
payment.]
DEDUCTIONS FOR MORTALITY AND EXPENSE RISK CHARGE
Although variable annuity payments made to Annuitants will vary in accordance
with the investment performance of the investments of the Variable Account,
they will not be affected by the mortality experience (death rate) of persons
receiving such payments or of the general population. Keyport guarantees the
Death Benefits described below (see "Death Benefits"). [Keyport assumes an
expense risk that the asset-based Administrative Charge will be insufficient
to cover the anticipated portion of Keyport's administrative expenses.]
[Keyport assumes an expense risk since the Certificate Maintenance Charge
after the Income Date will stay the same and not be affected by variations in
expenses.]
To compensate it for assuming these mortality and expense risks, for each
Valuation Period Keyport deducts from each Sub-Account a Mortality and Expense
Risk Charge equal on an annual basis to [.35 - 1.25]% of the average daily net
asset value of the Sub-Account. The charge is deducted during both the
accumulation and annuity periods (i.e., both before and after the Income
Date). Less than the full charge will be deducted from Sub-Account values
attributable to Certificates issued to employees of Keyport and other persons
specified in "Distribution of the Certificate".
[DEDUCTIONS FOR DAILY DISTRIBUTION CHARGE
Keyport also deducts from each Sub-Account each Valuation Period a
distribution charge equal on an annual basis to 0.15% of the average daily net
asset value of the Sub-Account. This charge compensates Keyport for certain
sales distribution expenses relating to the Certificate.
This charge will not be deducted from Sub-Account values attributable to
Certificates that have reached the maximum cumulative distribution charge
limit defined below and to Certificates issued to employees of Keyport and
other persons specified in "Distribution of the Certificate". The charge is
also not deducted from Sub-Account values attributable to Annuity Units.
Keyport may decide not to deduct the charge from Sub-Account values
attributable to a Certificate issued in an internal exchange or transfer of an
annuity contract of Keyport's general account.]
19
<PAGE>
[DEDUCTIONS FOR DAILY ADMINISTRATIVE CHARGE
Keyport also deducts from each Sub-Account each Valuation Period an
administrative charge equal on an annual basis to 0.[15]% of the average daily
net asset value of the Sub-Account. This charge compensates Keyport for a
portion of the administrative expenses relating to the Contract and the
Certificate.]
[DEDUCTIONS FOR CONTINGENT DEFERRED DISTRIBUTION CHARGE
A distribution charge is not deducted from the Certificate's purchase payments
when initially received. However, a Contingent Deferred Distribution Charge
may be deducted upon a surrender.
In order to determine whether a Contingent Deferred Distribution Charge will
be due upon a partial or total surrender, Keyport maintains a separate set of
records. These records identify the date and amount of each purchase payment
made to the Certificate and the Certificate Value over time.
Certificate Owners will be permitted to make partial withdrawals during the
Accumulation Period without incurring a Contingent Deferred Distribution
Charge, as follows:
1. In any Certificate Year, Certificate Owners may withdraw an
aggregate amount not to exceed, at the time of the withdrawal, the
Certificate's earnings, which equal: (a) the Certificate Value, less (b) the
portion of the purchase payments not previously withdrawn.
2. In any Certificate Year after the first, Certificate Owners may
withdraw the positive difference, if any, between the amount withdrawn
pursuant to 1. above in any such subsequent year and [10]% of the Certificate
Value as of the preceding Certificate Anniversary.
Surrender charges, as discussed below, will be deducted with respect to
withdrawals in excess of these amounts.
In computing the applicable amounts, Contingent Deferred Distribution Charges
will be deducted from the purchase payments in chronological order from the
oldest to the most recent until the amount is fully deducted. Any amount so
deducted will not be subject to a charge.
The following additional amounts will be deducted from the purchase payments
in the same chronological order: the amount of any surrender in the first
Certificate Year in excess of the Certificate's earnings at the time of
surrender; and the amount of any surrender in any later Certificate Year in
excess of the Certificate's increase in value at the time of surrender (or in
excess of the [10]% limit if it applies). The Contingent Deferred
Distribution Charge for
20
<PAGE>
each purchase payment from which a deduction is made will be equal to (a)
multiplied by (b), where:
(a) is the amount so deducted; and
(b) is the applicable percentage for the number of years that have elapsed
from the date of that payment to the date of surrender. Years are
measured from the month and day of payment to the same month and day in
each subsequent calendar year. The percentages applicable to each
purchase payment during the [seven] years after the date of its payment
are: [7% during year 1; 6% during year 2; 5% during year 3; 4% during
year 4; 3% during year 5; 2% during year 6; 1% during year 7;] and 0%
thereafter.
The applicable Contingent Deferred Distribution Charges for each purchase
payment are then totalled. The lesser of this total amount and the
Certificate's maximum cumulative distribution charge will be deducted from the
Certificate Value in the same manner as the surrender amount. The maximum
cumulative distribution charge is equal to (a) less (b), where (a) is 8.5% of
the total purchase payments made to the Certificate and (b) is the sum of all
prior Contingent Deferred Sale Charge deductions from the Certificate Value
[and all prior Variable Account daily distribution charges applicable to the
Certificate from the 0.15% distribution charge factor.] After each surrender,
Keyport's records will be adjusted to reflect any deductions made from the
applicable purchase payments.
Example: Two purchase payments were made one year apart for $5,000 and $7,000.
The Certificate Value has grown to an assumed $13,200 when the Certificate
Owner decides to withdraw $8,000. The Certificate Value at the beginning of
the Certificate Year of surrender was $13,000. The Contingent Deferred
Distribution Charge percentages at the time of surrender are an assumed 5% for
the $5,000 payment and 6% for the $7,000 payment. The portion of the
surrender representing the Certificate's earnings ($13,200 less $12,000, or
$1,200) would not be subject to charges. Since $1,200 is less than the amount
guaranteed not to have charges (10% of $13,000, or $1,300), an additional $100
would not be subject to charges. This $100 would be deducted from the oldest
purchase payment, reducing it from $5,000 to $4,900. The $1,200 increase in
value plus the additional $100 leaves $6,700 ($8,000 - 1,200 - 100) to be
deducted. This $6,700 would be deducted from the $4,900 of the first payment
still left and $1,800 of the second payment. The total Contingent Deferred
Distribution Charge would be $4,900 multiplied by the applicable 5% and $1,800
times the applicable 6%, or a total of $353. The distribution charge records
would now reflect $0 for the 1st payment and $5,200 for the 2nd payment. The
$8,000 requested plus the $353 charge would be deducted from Certificate
Values under the rules specified in the "Surrenders" section.
The Contingent Deferred Distribution Charge, when it is applicable, will be
used to cover the expenses of selling the Certificate, including compensation
paid to selling dealers and the cost of sales literature. Any expenses not
covered by the charge will be paid from Keyport's general account, which may
include monies deducted from the Variable Account for the Mortality and
Expense Risk Charge. A dealer selling the Certificate can receive up to [6%]
of purchase payments with additional compensation later based on the
Certificate Value of those payments. During certain time periods selected by
Keyport and KFSC, the percentage may increase to [6.25]%.
21
<PAGE>
The Contingent Deferred Distribution Charge will be eliminated under
Certificates issued to employees of Keyport and other persons specified in
"Distribution of the Certificate".
Keyport may reduce or change to 0% any Contingent Deferred Distribution Charge
percentage under a Certificate issued in an internal exchange or transfer of
an annuity contract of Keyport's general account.]
[DEDUCTIONS FOR TRANSFERS OF VARIABLE ACCOUNT VALUE
The Certificate allows Keyport to charge a transfer fee. Currently no fee is
being charged. Certificate Owners will be notified, in advance, of the
imposition of any fee. Keyport does not guarantee any maximum transfer fee
that it may charge, but the fee will not exceed the cost of effecting a
transfer.]
DEDUCTIONS FOR PREMIUM TAXES
Keyport deducts the amount of any premium taxes levied by any state or
governmental entity when paid unless Keyport elects to defer such deduction.
It is not possible to describe precisely the amount of premium tax payable on
any transaction involving the Certificate offered hereby. Such premium taxes
depend, among other things, on the type of Certificate (Qualified or Non-
Qualified), on the state of residence of the Certificate Owner, the state of
residence of the Annuitant, the status of Keyport within such states, and the
insurance tax laws of such states. Currently such premium taxes range from 0%
to 5.0% of either total purchase payments or Certificate Value.
DEDUCTIONS FOR INCOME TAXES
Keyport will deduct from any amount payable under the Certificate any income
taxes that a governmental authority requires Keyport to withhold with respect
to that amount. See "Income Tax Withholding" and "Tax-Sheltered Annuities".
TOTAL ACCOUNT EXPENSES
The Variable Account's total expenses in relation to the Certificate will be
[the Certificate Maintenance Charge,] the Mortality and Expense Risk Charge,
[the Daily Distribution Charge, and the Daily Administrative Charge.]
The value of the assets in the Variable Account will reflect the value of
Eligible Fund shares and therefore the deductions from and expenses paid out
of the assets of the Eligible Funds. These deductions and expenses are
described in the Eligible Fund prospectus.
22
<PAGE>
OTHER SERVICES
THE PROGRAMS. Keyport offers several investment related programs which are
available only prior to the Income Date: [Dollar Cost Averaging]; [Sub-Account
Rebalancing]; [Systematic Investment]; and [Periodic and Systematic
Withdrawal] Programs. Certain of the Programs are alternatives with respect
to any one Sub-Account; other Programs may be combined. [However, the Sub-
Account Rebalancing Program may be combined with each of the other Programs,
but it is not available with respect to the Fixed Account. Under each
Program, the related transfers between and among Sub-Accounts and the Fixed
Account are not counted as one of the [twelve] free transfers. However, if a
Certificate Owner executes an unrelated voluntary transfer from the Sub-
Account participating in a Program, other than the Sub-Account Rebalancing
Program, the Program will be terminated for the remainder of the Certificate
Year. Each of the Programs has its own requirements, as discussed below.]
If the Certificate Owner has submitted the required telephone authorization
form, certain changes may be made by telephone. For those Programs involving
transfers, Owners may change instructions by telephone with regard to which
Sub-Accounts [or the Fixed Account] Certificate Value may be transferred. The
current conditions and procedures are described in Appendix B.
[DOLLAR COST AVERAGING PROGRAM. Keyport offers a dollar cost averaging program
that Certificate Owners may participate in by Written Request. The program
periodically transfers Accumulation Units from the XX-1 Sub-Account [or the
One-Year Guarantee Period of the Fixed Account] to other Sub-Accounts selected
by the Certificate Owner. The program allows a Certificate Owner to invest in
non-"money market" Sub-Accounts over time rather than having to invest in
those Sub-Accounts all at once. The program is available for initial and
subsequent purchase payments and for Certificate Value transferred into the XX-
1 Sub-Account [or the One-Year Guarantee Period.] Under the program, Keyport
makes automatic transfers on a periodic basis out of the XX-1 Sub-Account [or
the One-Year Guarantee Period] into one or more of the other available Sub-
Accounts (Keyport reserves the right to limit the number of Sub-Accounts the
Certificate Owner may choose but there are currently no limits).
The Certificate Owner by Written Request must specify the XX-1 Sub-Account [or
the One-Year Guarantee Period] from which the transfers are to be made, the
monthly amount to be transferred [(minimum $150)] and the Sub-Account(s) to
which the transfers are to be made. The first transfer will occur at the
close of the Valuation Period that includes the 30th day after the receipt of
the Certificate Certificate Owner's Written Request. Each succeeding transfer
will occur one month later (e.g., if the 30th day after the receipt date is
April 8, the second transfer will occur at the close of the Valuation Period
that includes May 8). When the remaining value is less than the monthly
transfer amount, that remaining value will be transferred and the program will
end. Before this final transfer, the Certificate Owner may extend the program
by allocating additional purchase payments to the XX-1 Sub-Account [or the One-
Year Guarantee Period] or by transferring Certificate Value to the XX-1 Sub-
Account [or the One-Year Guarantee Period.] The Certificate Owner may, by
Written Request or by telephone, change the monthly amount to be transferred,
change the Sub-Account(s) to which the transfers are to be made, or end the
program. The program will
23
<PAGE>
automatically end if the Income Date occurs. Keyport reserves the right to
end the program at any time by sending the Certificate Owner a notice one
month in advance.
Written or telephone instructions must be received by Keyport by the end
(currently 4:00 PM Eastern Time) of the business day preceding the next
scheduled transfer in order to be in effect for that transfer. Telephone
instructions are subject to the conditions and procedures established by
Keyport from time to time. The current conditions and procedures appear in
Appendix C, and Certificate Owners in a dollar cost averaging program will be
notified, in advance, of any changes.]
[SUB-ACCOUNT REBALANCING PROGRAM. In accordance with the Certificate Owner's
election of the relative purchase payments percentage allocations, Keyport
will automatically rebalance the Certificate Value of each Sub-Account either
quarterly, semi-annually, or annually. Keyport will automatically rebalance
the Certificate Value in each of the Sub-Accounts to match the current
purchase payments percentage allocations as of the first transfer date during
the period selected. Enrollment is limited to Certificate Owners whose total
Certificate Value is greater than $10,000 at the time the Program is selected.
The Program may be terminated at any time and the percentages may be altered
by Written Request. The requested change must be received at the Office ten
(10) days prior to the transfer date. If the Certificate Owner terminates the
Program, a new Program may not be instituted until the next Certificate Year.]
[SYSTEMATIC INVESTMENT PROGRAM. Purchase Payments may be made by monthly
draft against the bank account of any Certificate Owner that has completed and
returned to Keyport a Systematic Investment Program application and
authorization form. The application and authorization form may be obtained
from Keyport or from the sales representative. Each Systematic Investment
Program Purchase Payment is subject to a minimum of $100.]
[PERIODIC WITHDRAWAL PROGRAM. To the extent permitted by law, Keyport will
make monthly, quarterly or annual distributions of a predetermined dollar
amount to a Certificate Owner that has enrolled in the Periodic Withdrawal
Program. Under the Program, all distributions will be made directly to the
Certificate Owner and will be treated for federal tax purposes as any other
withdrawal or distribution of Certificate Value. (SEE "TAX STATUS".) A
Certificate Owner may specify the amount of each partial withdrawal, subject
to a minimum of [$100]. [In each Certificate Year, portions of Certificate
Value may be withdrawn without the imposition of any Contingent Deferred
Distribution Charge ("Free Withdrawal Amount"). If withdrawals pursuant to
the Program are greater than the Free Withdrawal Amount, the amount of the
withdrawals greater than the Free Withdrawal Amount will be subject to the
applicable Contingent Deferred Distribution Charge. Any unrelated voluntary
partial withdrawal a Certificate Owner makes during a Certificate Year will be
aggregated with withdrawals pursuant to the Program to determine the
applicability of any Contingent Deferred Distribution Charge under the
Certificates provisions regarding partial withdrawals.
24
<PAGE>
Unless the Certificate Owner specifies the Sub-Account or Sub-Accounts [or the
Fixed Account] from which withdrawals of Certificate Value shall be made or if
the amount in a specified Sub-Account is less than the predetermined amount,
Keyport will make withdrawals under the Program from the Sub-Accounts [and the
Fixed Account] in amounts proportionate to the amounts in the Sub-Accounts
[and the Fixed Account.] Withdrawals are subject to the applicable minimum
Sub-Account balances. All withdrawals under the Program will be effected by
canceling the number of Accumulation Units equal in value to the amount to be
distributed to the Certificate Owner [and any applicable Contingent Deferred
Distribution Charge].
The Program may be combined with all other Programs [except those entailing
transfers or withdrawals from the Fixed Account.] However, the Certificate
Owner may terminate such other program and may begin participation in the
Program on the first day of the next Certificate Year.
It may not be advisable to participate in the Periodic Withdrawal Program and
incur a Contingent Deferred Distribution Charge when making additional
Purchase Payments under the Certificate.]
THE CERTIFICATES
VARIABLE ACCOUNT VALUE
The Variable Account Value for a Certificate is the sum of the value of each
Sub-Account to which values are allocated under a Certificate. The value of
each Sub-Account is determined at any time by multiplying the number of
Accumulation Units attributable to that Sub-Account by the Accumulation Unit
value for that Sub-Account at the time of determination. The Accumulation
Unit value is an accounting unit of measure used to determine the change in an
Accumulation Unit's value from Valuation Period to Valuation Period.
Each purchase payment that is made results in additional Accumulation Units
being credited to the Certificate and the appropriate Sub-Account thereunder.
The number of additional units for any Sub-Account will equal the amount
allocated to that Sub-Account divided by the Accumulation Unit value for that
Sub-Account at the time of investment.
VALUATION PERIODS
The Variable Account is valued each Valuation Period using the net asset value
of the Eligible Fund shares. A Valuation Period is the period commencing at
the close of trading on the New York Stock Exchange on each Valuation Date and
ending at the close of trading for the next succeeding Valuation Date. A
Valuation Date is each day that the New York Stock Exchange is open for
business. The New York Stock Exchange is currently closed on weekends, New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
25
<PAGE>
NET INVESTMENT FACTOR
Variable Account Value will fluctuate in accordance with the investment
results of the underlying Eligible Funds. In order to determine how these
fluctuations affect value, Keyport utilizes an Accumulation Unit value. Each
Sub-account has its own Accumulation Units and value per Unit. The Unit value
applicable during any Valuation Period is determined at the end of that
period.
When Keyport first purchased Eligible Fund shares on behalf of the Variable
Account, Keyport valued each Accumulation Unit at $10. The Unit value for
each Sub-Account in any Valuation Period thereafter is determined by
multiplying the value for the prior period by a net investment factor. This
factor may be greater or less than 1.0; therefore, the Accumulation Unit may
increase or decrease from Valuation Period to Valuation Period. Keyport
calculates a net investment factor for each Sub-Account by dividing (a) by (b)
and then subtracting (c) (i.e., (a DIVIDED BY b) - c), where:
(a) is equal to:
(i) the net asset value per share of the Eligible Fund at the end
of the Valuation Period; plus
(ii) the per share amount of any distribution made by the Eligible
Fund if the "ex-dividend" date occurs during that same
Valuation Period.
(b) is the net asset value per share of the Eligible Fund at the end of the
prior Valuation Period.
(c) is equal to:
(i) the Valuation Period equivalent of the [1.25]% per
year Mortality and Expense Risk Charge; plus
[(ii) the Valuation Period equivalent of the .15% per
year distribution charge; plus]
[(iii) the Valuation Period equivalent of the .15% per
year administrative charge; plus]
(iv) a charge factor, if any, for any tax provision
established by Keyport as a result of the operations of that
Sub-Account.
[If a Certificate ever reaches the maximum cumulative distribution charge
limit defined in "Deductions for Contingent Deferred Distribution Charge",
Unit values without (c)(ii) above will be used thereafter.] For Certificates
issued to employees of Keyport and other persons specified in "Distribution of
the Certificate", Unit values with [.35]% in (c)(i) above [and without (c)(ii)
above will be used. Unit values without (c)(ii) above may be used for certain
Certificates issued in an internal exchange or transfer (see "Deductions for
Daily Distribution Charges".]
26
<PAGE>
MODIFICATION OF THE CERTIFICATE
Only Keyport's President or Secretary may agree to alter the Certificate or
waive any of its terms. Any changes must be made in writing and with the
Certificate Owner's consent, except as may be required by applicable law.
RIGHT TO REVOKE
The Certificate Owner may return the Certificate within 10 days after he or
she receives it by delivering or mailing it to Keyport's Office. The return
of the Certificate by mail will be effective when the postmark is affixed to a
properly addressed and postage-prepaid envelope. The returned Certificate
will be treated as if Keyport never issued it and Keyport will refund either
the Certificate Value or purchase payments, as required by state law. If the
Certificate is delivered in a state that requires the return of Certificate
Value, Certificate Value will immediately be allocated to the Sub-Accounts
selected in the application. If the Certificate is delivered in a state that
requires the return of purchase payments, Certificate Value will be allocated
to the XX-1 Sub-Account (a Money Market Sub-Account) for a period of 20 or 30
days if the particular state requires a "free-look" period of 20 rather than
10 days. Thereafter the Certificate Value will be allocated to the Sub-
Accounts selected in the application.
For Certificates delivered in California to a Certificate Owner age 60 or
older, the Certificate Owner may return the Certificate to Keyport's Office or
to the agent from whom the Certificate was purchased. If the Certificate is
received at Keyport's Office or by the agent within 30 days after the
Certificate Owner receives the Certificate, Keyport will refund the
Certificate Value.
DEATH PROVISIONS FOR NON-QUALIFIED CERTIFICATES
DEATH OF PRIMARY OWNER, JOINT OWNER OR CERTAIN NON-OWNER ANNUITANT
These provisions apply if, before the Income Date while the Certificate is In
Force, the primary Certificate Owner or any joint Certificate Owner dies
(whether or not the decedent is also the Annuitant) or the Annuitant dies
under a Certificate with a non-natural Certificate Owner such as a trust. The
Designated Beneficiary will control the Certificate after such a death.
The covered person under this paragraph shall be the primary Certificate Owner
or, if there is a non-natural Certificate Owner such as a trust, the Annuitant
shall be the covered person. If the covered person dies, the Certificate
Value will be increased, as provided below, if it is less than the Death
Benefit Amount ("DBA"). The DBA is:
[Death Benefit 1. The death benefit at issue is the initial purchase payment.
Thereafter, it is the prior death benefit plus any additional purchase
payments, less any partial withdrawals, including any applicable surrender
charge.]
27
<PAGE>
[Death Benefit 2. The death benefit at issue is the initial purchase payment.
Thereafter, the death benefit is calculated for each Valuation period by
adding any additional purchase payments, and deducting any partial
withdrawals, including any applicable surrender charge. This resulting amount
is the "net purchase payment death benefit". The Certificate Value for each
Certificate Anniversary (the "Anniversary Value") before the [81st] birthday
of the covered person is determined. Each Anniversary Value is increased by
any purchase payments made after that anniversary. This resultant value is
then decreased by an amount calculated at the time of any partial withdrawal
made after that anniversary. The amount is calculated by taking the amount of
any partial withdrawal, and dividing by the Certificate Value immediately
preceding the partial withdrawal, and then multiplying by the Anniversary
Value immediately preceding the withdrawal. The greatest Anniversary Value,
as so adjusted, (the "greatest Anniversary Value") is the death benefit unless
the net purchase payment death benefit is higher. The net purchase payment
death benefit will be the death benefit if such amount is higher than the
greatest Anniversary Value.]
[Death Benefit 3. The death benefit at issue is the initial purchase payment.
Thereafter, the death benefit is calculated for each Valuation Period by
applying a death benefit interest rate to the previously calculated death
benefit, adding any purchase payments made during the current Valuation Period
and deducting any partial withdrawals, including any applicable surrender
charge, taken during the current Valuation Period. The death benefit interest
rate is applied to each purchase payment until it equals the Maximum
Guaranteed Death Benefit. Initially, the Maximum Guaranteed Death Benefit is
equal to a multiple of [two] times the initial and additional purchase payment
made, each computed separately]. Thereafter, the Maximum Guaranteed Death
Benefit as of the effective date of a partial withdrawal is reduced first by
the amount of the withdrawal representing earnings and second in proportion to
the reduction in Certificate Value for any partial withdrawal representing
purchase payments.
The death benefit interest rate compounded annually will be a stipulated
interest rate, except that with regard to amounts in the Sub-Accounts
investing in money market, short term bond or income Funds or the General
Account (the "Fixed Account") the interest rate applied will be the net rate
of return for such Funds, respectively, if it is less than the stipulated
death benefit interest rate.]
When Keyport receives due proof of the covered person's death, Keyport will
compare, as of the date of death, the Certificate Value to the DBA. If the
Certificate Value was less than the DBA, Keyport will increase the current
Certificate Value by the amount of the difference. Note that while the amount
of the difference is determined as of the date of death, that amount is not
added to the Certificate Value until Keyport receives due proof of death. The
amount to be credited will be allocated to the Variable Account [and/or the
Fixed Account] based on the purchase payment allocation selection that is in
effect when Keyport receives due proof of death. [Whether or not the
Certificate Value is increased because of this minimum death provision, the
Designated Beneficiary may surrender the Certificate within 90 days of the
date of the covered person's death for the Certificate Withdrawal Value
without any applicable Contingent Deferred Sales Charge being deducted. For a
surrender after 90 days and for a surrender at any time after the death of a
non-covered person, any applicable Contingent Deferred Sales Charge would be
deducted.] If the Certificate is not surrendered, it will stay in force for
the time period specified below.
28
<PAGE>
IF THE DECEDENT'S SURVIVING SPOUSE (IF ANY) IS THE SOLE DESIGNATED
BENEFICIARY, the surviving spouse will automatically become the new sole
primary Certificate Owner as of the decedent's date of the death. And, if the
Annuitant is the decedent, the new Annuitant will be any living contingent
annuitant, otherwise the surviving spouse. The Certificate can stay in force
until another death occurs (i.e., until the death of the Annuitant, primary
Certificate Owner or joint Certificate Owner). Except for this paragraph, all
of "Death Provisions" will apply to that subsequent death.
IN ALL OTHER CASES, the Certificate can stay in force up to five years from
the date of death. During this period, the Designated Beneficiary may
exercise all ownership rights, including the right to make transfers or
partial surrenders or the right to totally surrender the Certificate for its
Surrender Value. If the Certificate is still in force at the end of the five-
year period, Keyport will automatically end it then by paying the Certificate
Value to the Designated Beneficiary. If the Designated Beneficiary is not
alive then, Keyport will pay any person(s) named by the Designated Beneficiary
in a Written Request; otherwise the Designated Beneficiary's estate.
PAYMENT OF BENEFITS. Instead of receiving a lump sum, the Certificate Owner
or any Designated Beneficiary may direct by Written Request that Keyport pay
any benefit of $5,000 or more under an annuity payment option that meets the
following: (a) the first payment to the Designated Beneficiary must be made no
later than one year after the date of death; (b) payments must be made over
the life of the Designated Beneficiary or over a period not extending beyond
that person's life expectancy; and (c) any payment option that provides for
payments to continue after the death of the Designated Beneficiary will not
allow the successor payee to extend the period of time over which the
remaining payments are to be made.
DEATH OF CERTAIN NON-CERTIFICATE OWNER ANNUITANT. These provisions apply if,
before the Income Date while the Certificate is In Force, (a) the Annuitant
dies, (b) the Annuitant is not a Certificate Owner, and (c) the Certificate
Owner is a natural person. The Certificate will continue in force after the
Annuitant's death. The new Annuitant will be any living contingent annuitant,
otherwise the primary Certificate Owner.
DEATH PROVISIONS FOR QUALIFIED CERTIFICATES
DEATH OF ANNUITANT. If the Annuitant dies before the Income Date while the
Certificate is In Force, the Designated Beneficiary will control the
Certificate after such a death. The Certificate Value will be increased, as
provided below, if it is less than the Death Benefit Amount ("DBA") as defined
above. When Keyport receives due proof of the Annuitant's death, Keyport will
compare, as of the date of death, the Certificate Value to the DBA. If the
Certificate Value was less than the DBA, Keyport will increase the current
Certificate Value by the amount of the difference. Note that while the amount
of the difference is determined as of the date of death, that amount is not
added to the Certificate Value until Keyport receives due proof of death. The
amount to be credited will be allocated to the Variable Account and/or the
Fixed Account based on the purchase payment allocation selection that is in
effect when Keyport receives due proof of death. [Whether or not the
29
<PAGE>
Certificate Value is increased because of this minimum death provision, the
Designated Beneficiary may surrender the Certificate within 90 days of the
date of the Annuitant's death for the Certificate Withdrawal Value without any
applicable Contingent Deferred Sales Charge being deducted. For a surrender
after 90 days, any applicable Contingent Deferred Sales Charge would be
deducted.]
If the Certificate is not surrendered, it can stay in force for the time
period permitted by the Internal Revenue Code provisions applicable to the
particular Qualified Plan. During this period, the Designated Beneficiary may
exercise all ownership rights, including the right to make transfers or
partial withdrawals or the right to totally surrender the contract for its
Certificate Withdrawal Value. If the Certificate is still in force at the end
of the period, Keyport will automatically end it then by paying the
Certificate Withdrawal Value (without the deduction of any applicable
Contingent Deferred Sales Charge) to the Designated Beneficiary. If the
Designated Beneficiary is not alive then, Keyport will pay any person(s) named
by the Designated Beneficiary in a Written Request; otherwise the Designated
Beneficiary's estate.
PAYMENT OF BENEFITS. Instead of receiving a lump sum, the Certificate Owner
or any Designated Beneficiary may direct by Written Request that Keyport pay
any benefit of $5,000 or more under an annuity payment option that meets the
following: (a) the first payment to the Designated Beneficiary must be made no
later than one year after the date of death; (b) payments must be made over
the life of the Designated Beneficiary or over a period not extending beyond
that person's life expectancy; and (c) any payment option that provides for
payments to continue after the death of the Designated Beneficiary will not
allow the successor payee to extend the period of time over which the
remaining payments are to be made.
CERTIFICATE OWNERSHIP
The Certificate Owner shall be the person designated in the application. The
Certificate Owner may exercise all the rights of the Certificate. Joint
Certificate Owners are permitted but not contingent Certificate Owners.
The Certificate Owner may by Written Request change the Certificate Owner,
primary beneficiary, contingent beneficiary or contingent annuitant. An
irrevocably-named person may be changed only with the written consent of such
person.
Because a change of Certificate Owner by means of a gift (i.e., a transfer
without full and adequate consideration) may be a taxable event, a Certificate
Owner should consult a competent tax adviser as to the tax consequences
resulting from such a transfer.
Any Qualified Certificate may have limitations on transfer of ownership. A
Certificate Owner should consult the Plan Administrator and a competent tax
adviser as to the tax consequences resulting from such a transfer.
30
<PAGE>
ASSIGNMENT
The Certificate Owner may assign the Certificate at any time. A copy of any
assignment must be filed with Keyport. The Certificate Owner's rights and
those of any revocably-named person will be subject to the assignment. Any
Qualified Certificate may have limitations on assignability.
Because an assignment may be a taxable event, a Certificate Owner should
consult a competent tax adviser as to the tax consequences resulting from any
such assignment.
PARTIAL WITHDRAWALS AND SURRENDER
The Certificate Owner may make partial withdrawals from the Certificate.
Keyport must receive a Written Request and the minimum amount to be withdrawn
must be at least [$300] or such lesser amount as Keyport may permit in
conjunction with a periodic withdrawal program. If the Certificate Value
after a partial withdrawal would be below $[2,500], Keyport will treat the
request as a withdrawal of only the excess amount over $[2,500]. [The amount
withdrawn will include any applicable Contingent Deferred Distribution Charge
and therefore the amount actually withdrawn may be greater than the amount of
the surrender check requested.] Unless the request specifies otherwise, the
total amount withdrawn will be deducted from all Sub-Accounts of the Variable
Account in the proportion that the value in each Sub-Account bears to the
total Variable Account Value. [If there is no value, or insufficient value,
in the Variable Account, then the amount surrendered, or the insufficient
portion, will be deducted from the Fixed Account.]
The Certificate Owner may totally surrender the Certificate by making a
Written Request. Surrendering the Certificate will end it. The Surrender
Value is equal to the Certificate Value for the Valuation Period during which
Keyport has received the request less: [the Certificate Maintenance Charge if
there is any Variable Account Value; any applicable Contingent Deferred
Distribution Charge; and] any applicable premium taxes not previously
deducted.
Keyport will pay the amount of any surrender within seven days of receipt of
such request. Alternatively, the Certificate Owner may purchase for himself
or herself an annuity payment option with any surrender benefit of at least
$5,000. Keyport's consent is needed to choose an option if the Certificate
Owner is not a natural person.
Settlement Options based on life contingencies cannot be surrendered after
annuity payments have begun. Settlement Option 1, which is not based on life
contingencies, may be surrendered.
Because of the potential tax consequences of a full or partial surrender, a
Certificate Owner should consult a competent tax adviser regarding a
surrender.
31
<PAGE>
ANNUITY PROVISIONS
ANNUITY BENEFITS
If the Annuitant is alive on the Income Date and the Certificate is In Force,
payments will begin under the payment option or options the Certificate Owner
has chosen. The amount of the payments will be determined by applying the
Certificate Value (less any premium taxes not previously deducted [and less
any applicable Certificate Maintenance Charge]) on the Income Date in
accordance with the option selected.
INCOME DATE AND SETTLEMENT OPTION
The Certificate Owner may select an Income Date and Settlement Option at the
time of application. If the Certificate Owner does not select a Settlement
Option, Option 2 will automatically be designated. If the Certificate Owner
does not select an Income Date for the Annuitant, the Income Date will
automatically be the Annuitant's 90th birthday.
CHANGE IN INCOME DATE AND SETTLEMENT OPTION
The Certificate Owner may choose or change a Settlement Option or the Income
Date by making a Written Request to Keyport at least 30 days prior to the
Income Date. However, any Income Date must be: (a) for fixed annuity options,
not earlier than the first Certificate Anniversary; (b) not later than the
Annuitant's 90th birthday or any maximum date permitted under state law.
SETTLEMENT OPTIONS
The payment options are:
Option 1: Income for a Fixed Number of Years;
Option 2: Life Income with 10 Years of Payments Guaranteed; and
Option 3: Joint and Last Survivor Income.
Other options may be arranged by mutual consent. Each option is available in
two forms--as a variable annuity for use with the Variable Account and as a
fixed annuity for use with the Fixed Account. Variable annuity payments will
fluctuate while fixed annuity payments will not. (See Appendix A for a
discussion of fixed annuity payments.) If no Annuity Option is selected,
Option 2 will automatically be applied. Unless the Certificate Owner chooses
otherwise, Variable Account Value will be applied to a variable annuity option
and Fixed Account Value will be applied to a fixed annuity option. Whether
variable or fixed, the same Certificate Value applied to each option will
produce a different initial annuity payment as well as different subsequent
payments.
32
<PAGE>
The payee is the person who will receive the sum payable under a payment
option. Any payment option that provides for payments to continue after the
death of the payee will not allow the successor payee to extend the period of
time over which the remaining payments are to be made.
If the amount available to apply under any variable or fixed option is less
than $5,000, Keyport has reserved the right to pay such amount in one sum to
the payee in lieu of the payment otherwise provided for.
Annuity payments will be made monthly unless quarterly, semi-annual or annual
payments are chosen by Written Request. However, if any payment provided for
would be or becomes less than $100, Keyport has the right to reduce the
frequency of payments to such an interval as will result in each payment being
at least $100.
OPTION 1: INCOME FOR A FIXED NUMBER OF YEARS. Keyport will pay an annuity for
a chosen number of years, not less than 5 nor over [50 (a period of years over
30 may be chosen only if it does not exceed the difference between age 100 and
the Annuitant's age on the date of the first payment).] At any time while
variable annuity payments are being made, the payee may elect to receive the
following amount: (a) the present value of the remaining payments, commuted at
the interest rate used to create the annuity factor for this option (this
interest rate is [6%] per year, unless [3]% per year is chosen by Written
Request at the time the option is selected); [less (b) any Contingent Deferred
Distribution Charge due by treating the value defined in (a) as a total
surrender. (See "Deductions for Contingent Deferred Distribution Charge".]
Instead of receiving a lump sum, the payee can elect another payment option
and the amount applied to the option will not be reduced by the charge defined
in (b) above. If, at the death of the payee, Option 1 payments have been made
for less than the chosen number of years:
(a) payments will be continued during the remainder of the period to the
successor payee; or
(b) that successor payee may elect to receive in a lump sum the present value
of the remaining payments, commuted at the interest rate used to create
the annuity factor for this option. For the variable annuity, this
interest rate is [6%] per year, unless [3]% per year has been chosen by
the payee at the time the option is selected.
The Mortality and Expense Risk Charge is deducted during the Option 1 payment
period but Keyport has no mortality risk during this period.
[If annual payments are chosen for Option 1, Keyport has available a
"stabilizing" payment option that can be chosen. Each annual payment will be
determined as described in "Variable Annuity Payment Values". Each annual
payment will then be placed in Keyport's general account, from which it will
be paid out in twelve equal monthly payments. The sum of the twelve monthly
payments will exceed the annual payment amount because of an interest rate
factor used by Keyport that will vary from year to year. The commutation
method described above for calculating the present value of remaining payments
applies to the annual payments. Any monthly payments remaining before the
next annual payment will be commuted at the interest rate used to determine
that year's monthly payments.]
33
<PAGE>
See "Annuity Payments" for the manner in which Option 1 may be taxed.
OPTION 2: LIFE INCOME WITH 10 YEARS OF PAYMENTS GUARANTEED. Keyport will pay
an annuity during the lifetime of the payee. If, at the death of the payee,
payments have been made for less than 10 years:
(a) payments will be continued during the remainder of the period to the
successor payee; or
(b) that successor payee may elect to receive in a lump sum the present value
of the remaining payments, commuted at the interest rate used to create
the annuity factor for this option. For the variable annuity, this
interest rate is [6%] per year, unless [3]% per year is chosen by Written
Request.
The amount of the annuity payments will depend on the age of the payee at the
time annuity payments are to begin and it may also depend on the payee's sex.
OPTION 3: JOINT AND LAST SURVIVOR INCOME. Keyport will pay an annuity for as
long as either the payee or a designated second natural person is alive. The
amount of the annuity payments will depend on the age of both persons at the
time annuity payments are to begin and it may also depend on each person's
sex. IT IS POSSIBLE UNDER THIS OPTION TO RECEIVE ONLY ONE ANNUITY PAYMENT IF
BOTH PAYEES DIE AFTER THE RECEIPT OF THE FIRST PAYMENT OR TO RECEIVE ONLY TWO
ANNUITY PAYMENTS IF BOTH PAYEES DIE AFTER RECEIPT OF THE SECOND PAYMENT AND SO
ON.
VARIABLE ANNUITY PAYMENT VALUES
The amount of the first variable annuity payment is determined by Keyport
using an annuity purchase rate that is based on an assumed annual investment
return of [6%] per year, unless [3]% is chosen by Written Request. Subsequent
variable annuity payments will fluctuate in amount and reflect whether the
actual investment return of the selected Sub-Account(s) (after deducting the
Mortality and Expense Risk Charge) is better or worse than the assumed
investment return. The total dollar amount of each variable annuity payment
will be equal to: (a) the sum of all Sub-Account payments; [less (b) the pro-
rata amount of the annual Certificate Maintenance Charge.] Currently, a payee
can instruct Keyport to change the Sub-Account(s) used to determine the amount
of the variable annuity payments [1] time[s] every [6] months.
PROOF OF AGE, SEX, AND SURVIVAL OF ANNUITANT
Keyport may require proof of age, sex or survival of any payee upon whose age,
sex or survival payments depend. If the age or sex has been misstated,
Keyport will compute the amount payable based on the correct age and sex. If
income payments have begun, any underpayments Keyport may have made will be
paid in full with the next annuity payment.
34
<PAGE>
Any overpayments, unless repaid in one sum, will be deducted from future
annuity payments until Keyport is repaid in full.
SUSPENSION OF PAYMENTS
Keyport reserves the right to postpone surrender payments from the Fixed
Account for up to six months. Keyport reserves the right to suspend or
postpone any type of payment from the Variable Account for any period when:
(a) the New York Stock Exchange is closed other than customary weekend or
holiday closings; (b) trading on the Exchange is restricted; (c) an emergency
exists as a result of which it is not reasonably practicable to dispose of
securities held in the Variable Account or determine their value; or (d) the
Securities and Exchange Commission permits delay for the protection of
security holders. The applicable rules and regulations of the Securities and
Exchange Commission shall govern as to whether the conditions described in (b)
and (c) exist.
TAX STATUS
INTRODUCTION
The Certificate is designed for use by individuals in retirement plans which
may or may not be Qualified Plans under the provisions of the Internal Revenue
Code (the "Code"). The ultimate effect of federal income taxes on the
Certificate Value, on annuity payments, and on the economic benefit to the
Certificate Owner, Annuitant or Designated Beneficiary depends on the type of
retirement plan for which the Certificate is purchased and upon the tax and
employment status of the individual concerned. The discussion contained
herein is general in nature and is not intended as tax advice. EACH PERSON
CONCERNED SHOULD CONSULT A COMPETENT TAX ADVISER. No attempt is made to
consider any applicable state or other tax laws. Moreover, the discussion
herein is based upon Keyport's understanding of current federal income tax
laws as they are currently interpreted. No representation is made regarding
the likelihood of continuation of those current federal income tax laws or of
the current interpretations by the Internal Revenue Service.
TAXATION OF ANNUITIES IN GENERAL
Section 72 of the Code governs taxation of annuities in general. There are no
income taxes on increases in the value of a Certificate until a distribution
occurs, in the form of a full surrender, a partial surrender, an assignment or
gift of the Certificate, or annuity payments.
SURRENDERS, ASSIGNMENTS AND GIFTS. A Certificate Owner who fully surrenders
his or her Certificate is taxed on the portion of the payment that exceeds his
or her cost basis in the Certificate. For Non-Qualified Certificates, the
cost basis is generally the amount of the purchase payments made for the
Certificate and the taxable portion of the surrender payment is taxed as
ordinary income. For Qualified Certificates, the cost basis is generally zero
and the taxable portion of the surrender payment is generally taxed as
ordinary income subject to special 5-year income averaging. A Designated
Beneficiary receiving a lump sum surrender benefit
35
<PAGE>
after the death of the Annuitant or Certificate Owner is taxed on the portion
of the amount that exceeds the Certificate Owner's cost basis in the
Certificate. If the Designated Beneficiary elects to receive annuity payments
within 60 days of the decedent's death, different tax rules apply. See
"Annuity Payments" below. For Non-Qualified Certificates, the tax treatment
applicable to Designated Beneficiaries may be contrasted with the income-tax-
free treatment applicable to persons inheriting and then selling mutual fund
shares with a date-of-death value in excess of their basis.
Partial withdrawals received under Non-Qualified Certificates prior to
annuitization are first included in gross income to the extent Certificate
Value exceeds purchase payments. Then, to the extent the Certificate Value
does not exceed purchase payments, such withdrawals are treated as a non-
taxable return of principal to the Certificate Owner. For partial withdrawals
under a Qualified Certificate, payments are treated first as a non-taxable
return of principal up to the cost basis and then a taxable return of income.
Since the cost basis of Qualified Certificates is generally zero, partial
surrender amounts will generally be fully taxed as ordinary income.
A Certificate Owner who assigns or pledges a Non-Qualified Certificate is
treated as if he or she had received the amount assigned or pledged and thus
is subject to taxation under the rules applicable to partial withdrawals or
surrenders. A Certificate Owner who gives away the Certificate (i.e.,
transfers it without full and adequate consideration) to anyone other than his
or her spouse is treated for income tax purposes as if he or she had fully
surrendered the Certificate.
A special computational rule applies if Keyport issues to the Certificate
Owner, during any calendar year, (a) two or more Certificates or (b) one or
more Certificates and one or more of Keyport's other annuity contracts. Under
this rule, the amount of any distribution includable in the Certificate
Owner's gross income is to be determined under Section 72(e) of the Code by
treating all the Keyport contracts as one contract. Keyport believes that
this means the amount of any distribution under one Certificate will be
includable in gross income to the extent that at the time of distribution the
sum of the values for all the Certificates or contracts exceeds the sum of the
cost bases for all the contracts.
ANNUITY PAYMENTS. The non-taxable portion of each variable annuity payment is
determined by dividing the cost basis of the Certificate by the total number
of expected payments while the non-taxable portion of each fixed annuity
payment is determined by an "exclusion ratio" formula which establishes the
ratio that the cost basis of the Certificate bears to the total expected value
of annuity payments for the term of the annuity. The remaining portion of
each payment is taxable. Such taxable portion is taxed at ordinary income
rates. For Qualified Certificates, the cost basis is generally zero. With
annuity payments based on life contingencies, the payments will become fully
taxable once the payee lives longer than the life expectancy used to calculate
the non-taxable portion of the prior payments. Because variable annuity
payments can increase over time and because certain payment options provide
for a lump sum right of commutation, it is possible that the IRS could
determine that variable annuity payments should not be taxed as described
above but instead should be taxed as if they were received under an agreement
to pay interest. This determination would result in a higher amount (up to
100%) of certain payments being taxable.
36
<PAGE>
With respect to the "stabilizing" payment option available under Settlement
Option 1, pursuant to which each annual payment is placed in Keyport's general
account and paid out with interest in twelve equal monthly payments, it is
possible the IRS could determine that receipt of the first monthly payout of
each annual payment is constructive receipt of the entire annual payment.
Thus, the total taxable amount for each annual payment would be accelerated to
the time of the first monthly payout and reported in the tax year in which the
first monthly payout is received.
PENALTY TAX. Payments received by Certificate Owners, Annuitants, and
Designated Beneficiaries under Certificates may be subject to both ordinary
income taxes and a penalty tax equal to 10% of the amount received that is
includable in income. The penalty tax is not imposed on amounts received: (a)
after the taxpayer attains age 59-1/2; (b) in a series of substantially equal
payments made for life or life expectancy; (c) after the death of the
Certificate Owner (or, where the Certificate Owner is not a human being, after
the death of the Annuitant); (d) if the taxpayer becomes totally and
permanently disabled; or (e) under a Non-Qualified Certificate's annuity
payment option that provides for a series of substantially equal payments,
provided only one purchase payment is made to the Certificate, the Certificate
is not issued as a result of a Section 1035 exchange, and the first annuity
payment begins in the first Certificate Year.
INCOME TAX WITHHOLDING. Keyport is required to withhold federal income taxes
on taxable amounts paid under Certificates unless the recipient elects not to
have withholding apply. Keyport will notify recipients of their right to
elect not to have withholding apply. See "Tax-Sheltered Annuities" (TSAs)
for an alternative type of withholding that may apply to distributions from
TSAs that are eligible for rollover to another TSA or an individual retirement
annuity or account (IRA).
SECTION 1035 EXCHANGES. A Non-Qualified Certificate may be purchased with
proceeds from the surrender of an existing annuity contract. Such a
transaction may qualify as a tax-free exchange pursuant to Section 1035 of the
Code. It is Keyport's understanding that in such an event: (a) the new
Certificate will be subject to the distribution-at-death rules described in
"Death Provisions for Non-Qualified Certificates"; (b) purchase payments made
between 8/14/82 and 1/18/85 and the income allocable to them will, following
an exchange, no longer be covered by a "grandfathered" exception to the
penalty tax for a distribution of income that is allocable to an investment
made over ten years prior to the distribution; and (c) purchase payments made
before 8/14/82 and the income allocable to them will, following an exchange,
continue to receive the following "grandfathered" tax treatment under prior
law: (i) the penalty tax does not apply to any distribution; (ii) partial
withdrawals are treated first as a non-taxable return of principal and then a
taxable return of income; and (iii) assignments are not treated as surrenders
subject to taxation. Keyport's understanding of the above is principally
based on legislative reports prepared by the Staff of the Congressional Joint
Committee on Taxation.
DIVERSIFICATION STANDARDS. The U.S. Secretary of the Treasury has issued
regulations that set standards for diversification of the investments
underlying variable annuity contracts (other than pension plan contracts).
The Eligible Funds are designed to be managed to meet the diversification
requirements for the Certificate as those requirements may change from time to
37
<PAGE>
time. If the diversification requirements are not satisfied, the Certificate
would not be treated as an annuity contract. As a consequence to the
Certificate Owner, income earned on a Certificate would be taxable to the
Certificate Owner in the year in which diversification requirements were not
satisfied, including previously non-taxable income earned in prior years. As
a further consequence, Keyport would be subjected to federal income taxes on
assets in the Variable Account.
The Secretary of the Treasury announced in September 1986 that he expects to
issue regulations which will prescribe the circumstances in which a
Certificate Owner's control of the investments of a segregated asset account
may cause the Certificate Owner, rather than the insurance company, to be
treated as the owner of the assets of the account. The regulations could
impose requirements that are not reflected in the Certificate. Keyport,
however, has reserved certain rights to alter the Certificate and investment
alternatives so as to comply with such regulations. Since the regulations
have not been issued, there can be no assurance as to the content of such
regulations or even whether application of the regulations will be
prospective. For these reasons, Certificate Owners are urged to consult with
their own tax advisers.
QUALIFIED PLANS
The Certificate is designed for use with several types of Qualified Plans.
The tax rules applicable to participants in such Qualified Plans vary
according to the type of plan and the terms and conditions of the plan itself.
Therefore, no attempt is made herein to provide more than general information
about the use of the Certificate with the various types of Qualified Plans.
Participants under such Qualified Plans as well as Certificate Owners,
Annuitants, and Designated Beneficiaries are cautioned that the rights of any
person to any benefits under such Qualified Plans may be subject to the terms
and conditions of the plans themselves regardless of the terms and conditions
of the Certificate issued in connection therewith. Following are brief
descriptions of the various types of Qualified Plans and of the use of the
Certificate in connection therewith. Purchasers of the Certificate should seek
competent advice concerning the terms and conditions of the particular
Qualified Plan and use of the Certificate with that Plan.
TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code to purchase annuity contracts and,
subject to certain contribution limitations, exclude the amount of purchase
payments from gross income for tax purposes. However, such purchase payments
may be subject to Social Security (FICA) taxes. This type of annuity contract
is commonly referred to as a "Tax-Sheltered Annuity" (TSA).
Section 403(b)(11) of the Code contains distribution restrictions.
Specifically, benefits may be paid, through surrender of the Certificate or
otherwise, only (a) when the employee attains age 59-1/2, separates from
service, dies or becomes totally and permanently disabled (within the meaning
of Section 72(m)(7) of the Code) or (b) in the case of hardship. A hardship
distribution must be of employee contributions only and not of any income
attributable to such contributions. Section 403(b)(11) does not apply to
distributions attributable to assets held as of December 31, 1988. Thus, it
appears that the law's restrictions would apply only to distributions
attributable
38
<PAGE>
to contributions made after 1988, to earnings on those contributions, and to
earnings on amounts held as of 12/31/88. The Internal Revenue Service has
indicated that the distribution restrictions of Section 403(b)(11) are not
applicable when TSA funds are being transferred tax-free directly to another
TSA issuer, provided the transferred funds continue to be subject to the
Section 403(b)(11) distribution restrictions.
Keyport will notify a Certificate Owner who has requested a distribution from
a Certificate if all or part of such distribution is eligible for rollover to
another TSA or to an individual retirement annuity or account (IRA). Any
amount eligible for rollover treatment will be subject to mandatory federal
income tax withholding at a 20% rate if the Certificate Owner receives the
amount rather than directing Keyport by Written Request to transfer the amount
as a direct rollover to another TSA or IRA.
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."
These Individual Retirement Annuities are subject to limitations on the amount
which may be contributed, the persons who may be eligible, and on the time
when distributions may commence. In addition, distributions from certain
types of Qualified Plans may be placed on a tax-deferred basis into an
Individual Retirement Annuity.
CORPORATE PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 403(a) of the Code permit corporate employers to establish
various types of retirement plans for employees. Such retirement plans may
permit the purchase of the Certificate to provide benefits under the plans.
DEFERRED COMPENSATION PLANS WITH RESPECT TO SERVICE FOR STATE AND LOCAL
GOVERNMENTS
Section 457 of the Code, while not actually providing for a Qualified Plan as
that term is normally used, provides for certain deferred compensation plans
that enjoy special income tax treatment with respect to service for tax-exempt
organizations, state governments, local governments, and agencies and
instrumentalities of such governments. The Certificate can be used with such
plans. Under such plans, a participant may specify the form of investment in
which his or her participation will be made. However, all such investments
are owned by and subject to the claims of general creditors of the sponsoring
employer.
VARIABLE ACCOUNT VOTING PRIVILEGES
In accordance with its view of present applicable law, Keyport will vote the
shares of the Eligible Funds held in the Variable Account at regular and
special meetings of the shareholders of the Eligible Funds in accordance with
instructions received from persons having the voting interest in the Variable
Account. Keyport will vote shares for which it has not received instructions
in the same proportion as it votes shares for which it has received
instructions.
39
<PAGE>
However, if the Investment Company Act of 1940 or any regulation thereunder
should be amended or if the present interpretation thereof should change, and
as a result Keyport determines that it is permitted to vote the shares of the
Eligible Funds in its own right, it may elect to do so.
The person having the voting interest under a Certificate prior to the Income
Date shall be the Certificate Owner. The number of shares held in each Sub-
Account which are attributable to each Certificate Owner is determined by
dividing the Certificate Owner's Variable Account Value in each Sub-Account by
the net asset value of the applicable share of the Eligible Fund. The person
having the voting interest after the Income Date under an annuity payment
option shall be the payee. The number of shares held in the Variable Account
which are attributable to each payee is determined by dividing the reserve for
the annuity payments by the net asset value of one share. During the annuity
payment period, the votes attributable to a payee decrease as the reserves
underlying the payments decrease.
The number of shares in which a person has a voting interest will be
determined as of the date coincident with the date established by the
respective Eligible Fund for determining shareholders eligible to vote at the
meeting of the Fund and voting instructions will be solicited by written
communication prior to such meeting in accordance with the procedures
established by the Eligible Fund.
Each person having the voting interest in the Variable Account will receive
periodic reports relating to the Eligible Fund(s) in which he or she has an
interest, proxy material and a form with which to give such voting
instructions with respect to the proportion of the Eligible Fund shares held
in the Variable Account corresponding to his or her interest in the Variable
Account.
DISTRIBUTION OF THE CERTIFICATE
[Keyport Financial Services Corp. ("KFSC")] serves as the Principal
Underwriter for the Certificate described in this prospectus. The Certificate
will be sold by salespersons who represent Keyport Life Insurance Company
(KFSC's corporate parent) as variable annuity agents and who are registered
representatives of broker/dealers who have entered into distribution
agreements with [KFSC]. [KFSC] is registered under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities Dealers,
Inc. It is located at [125 High Street, Boston, Massachusetts 02110].
Different Certificates may be sold (1) to a person who is an officer,
director, or employee of Keyport, a trustee or officer of an Eligible Fund, an
employee of the investment adviser or sub-investment adviser of an Eligible
Fund, or an employee of a company that is under contract with an Eligible Fund
to provide management or administrative services or (2) to any Qualified Plan
established for such a person. Such Certificates may be different from the
Certificates sold to others in that [(1) they are not subject to the deduction
for the Certificate Maintenance Charge, the asset-based distribution charge or
the Contingent Deferred Distribution Charge and (2)] they have a Mortality and
Expense Risk Charge of 0[.35]% per year.
40
<PAGE>
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account or the Principal
Underwriter are a party. Keyport is engaged in various kinds of routine
litigation which in its judgment is not of material importance in relation to
the total capital and surplus of Keyport.
INQUIRIES BY CERTIFICATE OWNERS
Certificate Owners with questions about their Certificates can write Keyport
Life Insurance Company, Client Service Department, 125 High Street, Boston, MA
02110, or call (800) 367-3653.
41
<PAGE>
TABLE OF CONTENTS--STATEMENT OF ADDITIONAL INFORMATION
PAGE
Keyport Life Insurance Company
Variable Annuity Benefits
Variable Annuity Payment Values
Re-Allocating Sub-Account Payments
Principal Underwriter
Experts
Investment Performance
Average Annual Total Return for a Certificate
that is Surrendered and for a Certificate that Continues
Change in Accumulation Unit Value Yields for XX-1 Sub-Accounts
Financial Statements
Keyport Life Insurance Company
Variable Account A
42
<PAGE>
[APPENDIX A
THE FIXED ACCOUNT (ALSO KNOWN AS THE GUARANTEED RATE ACCOUNT)
INTRODUCTION
This Appendix describes the Fixed Account option available under the
Certificate.
Purchase payments allocated to the Fixed Account option become part of
Keyport's general account. Because of applicable exemptive and exclusionary
provisions, interests in the Fixed Account options have not been registered
under the Securities Act of 1933 ("1933 Act"), nor is the general account an
investment company under the Investment Company Act. Accordingly, neither the
general account, the Fixed Account option, nor any interest therein, are
subject to regulation under the 1933 Act or the Investment Company Act.
Keyport understands that the Securities and Exchange Commission has not
reviewed the disclosure in the prospectus relating to the general account and
the Fixed Account option.
INVESTMENTS IN THE FIXED ACCOUNT AND CAPITAL PROTECTION PLUS
Purchase payments will be allocated to the Fixed Account in accordance with
the selection made by the Certificate Owner in the application. Any selection
must specify that percentage of the purchase payment that is to be allocated
to each Guarantee Period of the Fixed Account. The percentage, if not zero,
must be at least 10%. The Certificate Owner may change the allocation
percentages without fee, penalty or other charge. Allocation changes must be
made by Written Request unless the Certificate Owner has by Written Request
authorized Keyport to accept telephone allocation instructions from the
Certificate Owner. By authorizing Keyport to accept telephone changes, a
Certificate Owner agrees to accept and be bound by the conditions and
procedures established by Keyport from time to time. The current conditions
and procedures are in Appendix C and Certificate Owners authorizing telephone
allocation instructions will be notified, in advance, of any changes.
Keyport currently offers Guarantee Periods of 1, [3, 5, and 7] years. Keyport
may change at any time the number of Guarantee Periods it offers under newly-
issued and in-force Certificates, as well as the length of those Guarantee
Periods. If Keyport stops offering a particular Guarantee Period, existing
Fixed Account Value in such Guarantee Period would not be affected until the
end of the Period (at that time, a Period of the same length would not be a
transfer option). Each Guarantee Period currently offered is available for
initial and subsequent purchase payments and for transfers of Certificate
Value.
[Keyport offers a Capital Protection Plus program that a Certificate Owner may
request. Under this program, Keyport will allocate part of the purchase
payment to the Guarantee Period selected by the Certificate Owner so that such
part, based on that Guarantee Period's interest rate in effect on the date of
allocation, will equal at the end of the Guarantee Period the total payment
amount. The rest of the purchase payment will be allocated to the Sub-
Account(s) of the Variable Account based on the Certificate Owner's
allocation. If any part of the Fixed Account Value is surrendered or
transferred before the end of the Guarantee Period, the Value at the end of
that Period will not equal the original purchase payment amount.
43
<PAGE>
For an example of Capital Protection Plus, assume Keyport receives a payment
of $10,000 when the interest rate for the 7-year Guarantee Period is 6.75% per
year. Keyport will allocate $6,331 to that Guarantee Period because $6,331
will increase at that interest rate to $10,000 after 7 years. The remaining
$3,669 of the payment will be allocated to the Sub-Account(s) selected by the
Certificate Owner.]
FIXED ACCOUNT VALUE
The Fixed Account Value at any time is equal to:
(a) all purchase payments allocated to the Fixed Account plus the interest
subsequently earned on those payments; plus
(b) any Variable Account Value transferred to the Fixed Account plus the
interest subsequently earned on the transferred value; less
(c) any prior partial withdrawals from the Fixed Account, including any
charges therefor; less
(d) any Fixed Account Value transferred to the Variable Account.
INTEREST CREDITS
Keyport will credit interest daily (based on an annual compound interest rate)
to purchase payments allocated to the Fixed Account at rates declared by
Keyport for Guarantee Periods of one or more years from the month and day of
allocation. Any set by Keyport will be at least [3%] per year.
Keyport's method of crediting interest means that Fixed Account Value might be
subject to different rates for each Guarantee Period the Certificate Owner has
selected in the Fixed Account. For purposes of this section, Variable Account
Value transferred to the Fixed Account and Fixed Account Value renewed for
another Guarantee Period shall be treated as a purchase payment allocation.
TRANSFERS WHEN GUARANTEE PERIODS END
The total accumulated amount at the end of a Guarantee Period will be
transferred to the new Guarantee Period(s) and/or Sub-Account(s) of the
Variable Account that the Certificate Owner has selected by Written Request.
If the Certificate Owner has not made a selection, Keyport will automatically
transfer the total accumulated amount at the end of the Guarantee Period to
the [XX-1 Sub-Account]. If the Guarantee Period selected exceeds the time
remaining to the Income Date but does not exceed the time remaining to the
latest Income Date allowable under the Certificate, the Income Date will
automatically change to the latest allowable date, thereby allowing the
selected Guarantee Period to go into effect. The Certificate Owner may not
otherwise select a Guarantee Period that would end after the Income Date.
44
<PAGE>
TRANSFERS OF FIXED ACCOUNT VALUE
The Certificate Owner may transfer Fixed Account Value from one Guarantee
Period to another or to one or more Sub-Accounts of the Variable Account. If
the Fixed Account Value represents multiple Guarantee Periods, the transfer
request must specify from which values the transfer is to be made.
The Certificate allows Keyport to limit the number of transfers that can be
made in a specified time period. Currently, Keyport is limiting Variable
Account and Fixed Account transfers to generally [12] transfers per calendar
year with a $[500,000] per transfer dollar limit. See "Transfer of Variable
Account Value". These limitations will not apply to any transfer made at the
end of a Guarantee Period. Certificate Owners will be notified, in advance,
of a change in the limitation on the number of transfers.
Transfer requests must be by Written Request unless the Certificate Owner has
authorized Keyport by Written Request to accept telephone transfer
instructions from the Certificate Owner or from a person acting for the
Certificate Owner as an attorney-in-fact under a power of attorney. By
authorizing Keyport to accept telephone transfer instructions, a Certificate
Owner agrees to accept and be bound by the conditions and procedures
established by Keyport from time to time. The current conditions and
procedures are in Appendix C and Certificate Owners authorizing telephone
transfers will be notified, in advance, of any changes. Written transfer
requests may be made by a person acting for the Certificate Owner as an
attorney-in-fact under a power of attorney.
Transfer requests received by Keyport before the close of trading on the New
York Stock Exchange (currently 4:00 PM Eastern Time) will be executed at the
close of business that day. Any requests received later will be executed at
the close of the next business day.
The amount of the transfer will be deducted from the specified values in the
manner stated in the next section below.
If 100% of a Guarantee Period's value is transferred and the current
allocation for purchase payments includes that Guarantee Period, then the
allocation formula for future purchase payments will automatically change
unless the Certificate Owner instructs otherwise. For example, if the
allocation formula is 50% to the one-year Guarantee Period and 50% to Sub-
Account A and all Fixed Account Value is transferred to Sub-Account A, the
allocation formula will change to 100% to Sub-Account A.
REDUCTIONS OF GUARANTEE PERIOD VALUES AFTER A TRANSFER OR PARTIAL WITHDRAWAL
As stated elsewhere in the prospectus, a transfer request must specify from
which Guarantee Period's values the transfer is to be made and a partial
withdrawal request may, at the Certificate Owner's option, similarly specify
the Guarantee Period. The specified amount will be deducted from both the
allocated purchase amount and its associated interest in the proportion that
each bear to their total sum. For example, if $600 is to be deducted from a
$800 payment that was allocated for a three-year Guarantee Period and the
interest earned up to the date of transfer is $200 (for a total value of
$1,000), $480 will be deducted from the payment allocation [($800/$1,000) x
$600] and $120 will be deducted from the interest [($200/$1,000) x $600].
45
<PAGE>
The $400 remaining after the transfer or withdrawal would thus represent $320
of payment allocation and $80 of interest.
If a partial withdrawal request does not specify any Guarantee Period, the
ordering rule in "Partial Withdrawal and Surrender" may result in a certain
amount of Fixed Account Value being automatically deducted. Any amount
determined under that rule will be deducted from each Guarantee Period's
values in the proportion that each bears to the total Fixed Account Value.
For example, if $500 is to be deducted from two Guarantee Periods' values of
$4,000 and $1,000, $400 will be deducted from the first Guarantee Period's
values [($4,000/$5,000) x $500] and $100 will be deducted from the second
[($1,000/$5,000) x $500]. Each of these amounts (the $400 and the $100 in the
example) will then be deducted from the allocated purchase amount and its
associated interest in the manner stated in the preceding paragraph.
The above rules automatically determine the amount of the allocated purchase
payment and its associated interest that still remains after any transfer or
withdrawal. [The rules do not, however, determine in any way the amount of
Contingent Deferred Distribution Charge that may be due since that Charge is
based on different rules and different records.]
FIXED ANNUITY PAYMENT VALUES
The dollar amount of each fixed annuity payment will be determined by
deducting any premium taxes not previously deducted and then dividing the
remaining Fixed Account Value by $1,000 and multiplying the result by the
greater of: (a) the applicable factor shown in the appropriate table in the
Certificate; or (b) the factor currently offered by Keyport at the time
annuity payments begin. This current factor may be based on the sex of the
payee unless to do so would be prohibited by law.]
46
<PAGE>
[APPENDIX B
TELEPHONE INSTRUCTIONS
TELEPHONE TRANSFERS OF CERTIFICATE VALUES
1. If there are joint Certificate Owners, both must authorize Keyport to
accept telephone instructions but either Certificate Owner can give Keyport
telephone instructions.
2. All callers will be required to identify themselves. Keyport reserves
the right to refuse to act upon any telephone instructions in cases where the
caller has not sufficiently identified himself/herself to Keyport's
satisfaction.
3. Neither Keyport nor any person acting on its behalf shall be subject to
any claim, loss, liability, cost or expense if it or such person acted in good
faith upon a telephone instruction, including one that is unauthorized or
fraudulent; however, Keyport will employ reasonable procedures to confirm that
a telephone instruction is genuine and, if Keyport does not, Keyport may be
liable for losses due to an unauthorized or fraudulent instruction. The
Certificate Owner thus bears the risk that an unauthorized or fraudulent
instruction that is executed may cause the Certificate Value to be lower than
it would be had no instruction been executed.
4. All conversations will be recorded with disclosure at the time of the
call.
5. The application for the Certificate may allow a Certificate Owner to
create a power of attorney by authorizing another person to give telephone
instructions. Unless prohibited by state law, such power will be treated as
durable in nature and shall not be affected by the subsequent incapacity,
disability or incompetency of the Certificate Owner. Either Keyport or the
authorized person may cease to honor the power by sending written notice to
the Certificate Owner at the Certificate Owner's last known address. Neither
Keyport nor any person acting on its behalf shall be subject to liability for
any act executed in good faith reliance upon a power of attorney.
6. Telephone authorization shall continue in force until (a) Keyport
receives the Certificate Owner's written revocation, (b) Keyport discontinues
the privilege, or (c) Keyport receives written evidence that the Certificate
Owner has entered into a market timing or asset allocation agreement with an
investment adviser or with a broker/dealer.
7. Telephone transfer instructions received by Keyport at 800-367-3653
before the close of trading on the New York Stock Exchange (currently 4:00
P.M. Eastern Time) will be initiated that day based on the unit value prices
calculated at the close of that day. Instructions received after the close of
trading on the NYSE will be initiated the following business day.
8. Once instructions are accepted by Keyport, they may not be canceled.
9. All transfers must be made in accordance with the terms of the
Certificate and current prospectus. If the transfer instructions are not in
good order, Keyport will not execute the transfer and will notify the caller
within 48 hours.
47
<PAGE>
10. If 100% of any Sub-Account's value is transferred and the allocation
formula for purchase payments includes that Sub-Account, then the allocation
formula for future purchase payments will change accordingly unless Keyport
receives telephone instructions to the contrary. For example, if the
allocation formula is 50% to Sub-Account A and 50% to Sub-Account B and all of
Sub-Account A's value is transferred to Sub-Account B, the allocation formula
will change to 100% to Sub-Account B unless Keyport is instructed otherwise.
TELEPHONE CHANGES TO PURCHASE PAYMENT ALLOCATION PERCENTAGES
Numbers 1-6 above are applicable.]
48
<PAGE>
[APPENDIX C
DOLLAR COST AVERAGING
CURRENT CONDITIONS AND PROCEDURES
1. If there are joint Certificate Owners, either Certificate Owner can give
Keyport telephone transfer instructions.
2. All callers will be required to identify themselves. Keyport reserves
the right to refuse to act upon any telephone instructions in cases where the
caller has not sufficiently identified himself/herself to Keyport's
satisfaction.
3. Neither Keyport nor any person acting on its behalf shall be subject to
any claim, loss, liability, cost or expense if it or such person acted in good
faith upon a telephone instruction, including one that is unauthorized or
fraudulent; however, Keyport will employ reasonable procedures to confirm that
a telephone instruction is genuine and, if Keyport does not, Keyport may be
liable for losses due to an unauthorized or fraudulent instruction. The
Certificate Owner thus bears the risk that an unauthorized or fraudulent
instruction that is executed may cause the Certificate Value to be lower than
it would be had no instruction been executed.
4. All conversations will be recorded with disclosure at the time of the
call.
5. Telephone authorization shall continue in force until (a) Keyport
receives the Certificate Owner's written revocation, (b) Keyport discontinues
the privilege, or (c) Keyport receives written evidence that the Certificate
Owner has entered into a market timing or asset allocation agreement with an
investment adviser or with a broker/dealer.
6. Telephone instructions must be received by Keyport at 800-367-3653 before
the end (currently 5:00 P.M. Eastern Time) of the business day preceding the
next scheduled transfer in order to be in effect for that transfer.
7. Once instructions are accepted by Keyport, they may not be canceled. New
telephone instructions may be given on the following business day.
8. All instructions must be made in accordance with the terms of the
Certificate and current prospectus. If the instructions are not in good
order, Keyport will not execute them and will notify the caller within 48
hours.]
49
<PAGE>
PROSPECTUS
[DATE]
50
<PAGE>
Distributed by:
[Keyport Financial Services Corp.
125 High Street, Boston, MA 02110-2712]
Issued by:
Keyport Life Insurance Company
125 High Street, Boston, MA 02110-2712
Keyport Life Insurance Company's ultimate parent is
Liberty Mutual Insurance Company
Service Hotline 800-367-3653 Keyline 800-367-3654
Keyport Logo is a registered service mark of Keyport Life Insurance Company.
Yes.I would like to receive the Keyport [NAME OF ANNUITY] Statement of
Additional Information.
Yes.I would like to receive the [NAME OF FUND] Statement of Additional
Information.
Yes.I would like to receive the [NAME OF FUND] Statement of Additional
Information.
Name
Address
City, State Zip
51
<PAGE>
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 6719 BOSTON, MA
POSTAGE WILL BE PAID BY ADDRESSEE
KEYPORT LIFE INSURANCE CO
125 HIGH STREET
BOSTON, MA 02110-9773
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.
52
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
GROUP FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
VARIABLE ACCOUNT A
OF
KEYPORT LIFE INSURANCE COMPANY ("Keyport")
This Statement of Additional Information is not a prospectus but it relates
to, and should be read in conjunction with, the variable annuity prospectus
dated , 1996. The prospectus is available, at no charge, by
writing Keyport at 125 High Street, Boston, MA 02110 or by calling (800) 437-
4466.
TABLE OF CONTENTS
Page
Keyport Life Insurance Company....................................
Variable Annuity Benefits.........................................
Variable Annuity Payment Values.................................
Re-Allocating Sub-Account Payments..............................
Principal Underwriter ............................................
Experts...........................................................
Investment Performance............................................
Average Annual Total Return for a Contract that is
Surrendered and for a Contract that Continues.................
Change in Accumulation Unit Value...............................
Yields for XX-1
Financial Statements..............................................
Keyport Life Insurance Company..................................
The date of this statement of additional information is ,
1996.
B-1
<PAGE>
KEYPORT LIFE INSURANCE COMPANY
Liberty Mutual Insurance Company ("Liberty Mutual"), a multi-line
insurance and financial services institution, is the ultimate corporate parent
of Keyport. Liberty Mutual ultimately controls Keyport through the following
intervening holding company subsidiaries: Liberty Mutual Equity Corporation,
Liberty Financial Companies, Inc. and SteinRoe Services, Inc.
VARIABLE ANNUITY BENEFITS
VARIABLE ANNUITY PAYMENT VALUES
For each variable payment option, the total dollar amount of each
periodic payment will be equal to: (a) the sum of all Sub-account payments;
less [(b) the pro-rata amount of the annual Certificate Maintenance Charge.]
The first payment for each Sub-Account will be determined by deducting
[any applicable Certificate Maintenance Charge and] any applicable state
premium taxes and then dividing the remaining value of that Sub-Account by
$1,000 and multiplying the result by the greater of: (a) the applicable factor
from the Certificate's annuity table for the particular payment option; or (b)
the factor currently offered by Keyport at the time annuity payments begin.
This current factor may be based on the sex of the payee unless to do so would
be prohibited by law.
The number of Annuity Units for each Sub-Account will be determined by
dividing such first payment by the Sub-Account Annuity Unit value for the
Valuation Period that includes the date of the first payment. The number of
Annuity Units remains fixed for the annuity payment period. Each Sub-Account
payment after the first one will be determined by multiplying (a) by (b),
where: (a) is the number of Sub-Account Annuity Units; and (b) is the
Sub-Account Annuity Unit value for the Valuation Period that includes the date
of the particular payment.
Variable annuity payments will fluctuate in accordance with the
investment results of the underlying Eligible Funds. In order to determine
how these fluctuations affect annuity payments, Keyport uses an Annuity Unit
value. Each Sub-Account has its own Annuity Units and value per Unit. The
Annuity Unit value applicable during any Valuation Period is determined at the
end of such period.
When Keyport first purchased the Eligible Fund shares of XXX TRUST AND
YYY FUND on behalf of the Variable Account, Keyport valued each Annuity Unit
for each Sub-Account at $10. The Unit value for each Sub-Account in any
Valuation Period thereafter is determined by multiplying the value for the
prior period by a net investment factor. This factor may be greater or less
than 1.0; therefore, the Annuity Unit may increase or decrease from Valuation
Period to Valuation Period. For each assumed annual investment rate (AIR),
Keyport calculates a net investment factor for each Sub-Account by dividing
(a) by (b), where:
B-2
<PAGE>
(a) is equal to the net investment factor as defined in the
prospectus [without any deduction for the sales charge defined in
(c)(ii) of the net investment factor formula]; and
(b) is the assumed investment factor for the current Valuation
Period. The assumed investment factor adjusts for the interest
assumed in determining the first variable annuity payment. Such
factor for any Valuation Period shall be the accumulated value, at
the end of such period, of $1.00 deposited at the beginning of such
period at the assumed annual investment rate (AIR). The AIR for
Annuity Units based on the Contract's annuity tables is [6]% per
year. [An AIR of 3% per year is also currently available upon
Written Request.]
With a particular AIR, payments after the first one will increase or
decrease from month to month based on whether the actual annualized investment
return of the selected Sub-Account(s) (after deducting the Mortality and
Expense Risk Charge) is better or worse than the assumed AIR percentage. If a
given amount of Sub-Account value is applied to a particular payment option,
the initial payment will be smaller if a [3]% AIR is selected instead of a
[6]% AIR but, all other things being equal, the subsequent [3]% AIR payments
have the potential for increasing in amount by a larger percentage and for
decreasing in amount by a smaller percentage. For example, consider what
would happen if the actual annualized investment return (see the first
sentence of this paragraph) is 9%, 6%, 3%, or 0% between the time of the first
and second payments. With an actual [9]% return, the [3]% AIR and [6]% AIR
payments would both increase in amount but the [3]% AIR payment would increase
by a larger percentage. With an actual [6]% return, the [3]% AIR payment
would increase in amount while the [6]% AIR payment would stay the same. With
an actual return of [3]%, the [3]% AIR payment would stay the same while the
[6]% AIR payment would decrease in amount. Finally, with an actual return of
0%, the [3]% AIR and [6]% AIR payments would both decrease in amount but the
[3]% AIR payment would decrease by a smaller percentage. Note that the
changes in payment amounts described above are on a percentage basis and thus
do not illustrate when, if ever, the [3]% AIR payment amount might become
larger than the [6]% AIR payment amount. Note though that if Option 1 (Income
for a Fixed Number of Years) is selected and payments continue for the entire
period, the [3]% AIR payment amount will start out being smaller than the [6]%
AIR payment amount but eventually the [3]% AIR payment amount will become
larger than the [6]% AIR payment amount.
RE-ALLOCATING SUB-ACCOUNT PAYMENTS
The number of Annuity Units for each Sub-Account under any variable
annuity option will remain fixed during the entire annuity payment period
unless the payee makes a written request for a change. Currently, a payee can
instruct Keyport to change the Sub-Account(s) used to determine the amount of
the variable annuity payments [1] time[s] every [six] months. The payee's
request must specify the percentage of the annuity payment that is to be based
on the investment performance of each Sub-Account. The percentage for each
Sub-Account, if not zero, must be at least [10]% and must be a whole number.
At the end of the Valuation Period
B-3
<PAGE>
during which Keyport receives the request, Keyport will: (a) value the Annuity
Units for each Sub-Account to create a total annuity value; (b) apply the new
percentages the payee has selected to this total value; and (c) recompute the
number of Annuity Units for each Sub-Account. This new number of units will
remain fixed for the remainder of the payment period unless the payee requests
another change.
PRINCIPAL UNDERWRITER
The Contract, which is offered continuously, is distributed by [Keyport
Financial Services Corp. ("KFSC"), a wholly-owned subsidiary of Keyport].
EXPERTS
The consolidated financial statements of Keyport as of December 31,
199[5] and 199[4] and for each of the years in the three-year period ended
December 31, 199[5] included herein, have been included herein in reliance on
the reports of KPMG Peat Marwick LLP, independent certified public
accountants, and upon authority of said firm as experts in accounting and
auditing. [Interim financial statements are unaudited.]
INVESTMENT PERFORMANCE
The Variable Account may from time to time quote performance information
concerning its various Sub-Accounts. A Sub-Account's performance may also be
compared to the performance of sub-accounts used with variable annuities
offered by other insurance companies. This comparative information may be
expressed as a ranking prepared by Financial Planning Resources, Inc. of
Miami, FL (The VARDS Report), Lipper Analytical Services, Inc., or by
Morningstar, Inc. of Chicago, IL (Morningstar's Variable Annuity Performance
Report), which are independent services that compare the performance of
variable annuity sub-accounts. The rankings are done on the basis of changes
in accumulation unit values over time and do not take into account any charges
(such as sales charges or administrative charges) that are deducted directly
from contract values.
Ibbotson Associates of Chicago, IL provides historical returns from 1926
on capital markets in the United States. The Variable Account may quote the
performance of its Sub-Accounts in conjunction with the long-term performance
of capital markets in order to illustrate general long-term risk versus reward
investment scenarios. Capital markets tracked by Ibbotson Associates include
common stocks, small company stocks, long-term corporate bonds, long-term
government bonds, U.S. Treasury Bills, and the U.S. inflation rate.
Historical total returns are determined by Ibbotson Associates for: COMMON
STOCKS, represented by the Standard and Poor's Composite Price Index (an
unmanaged weighted index of 90 stocks prior to March 1957 and 500 stocks
thereafter of industrial, transportation, utility and financial companies
widely regarded by investors as representative of the stock market); SMALL
COMPANY STOCKS, represented by the fifth capitalization quintile (i.e., the
ninth and tenth deciles) of stocks on the New York Stock Exchange for 1926-
1981 and by the performance of the Dimensional Fund
B-4
<PAGE>
Advisors Small Company 9/10 (for ninth and tenth deciles) Fund thereafter; LONG
TERM CORPORATE BONDS, represented beginning in 1969 by the Salomon Brothers
Long-Term High-Grade Corporate Bond Index, which is an unmanaged index of
nearly all Aaa and Aa rated bonds, represented for 1946-1968 by backdating the
Salomon Brothers Index using Salomon Brothers' monthly yield data with a
methodology similar to that used by Salomon Brothers in computing its Index,
and represented for 1925-1945 through the use of the Standard and Poor's
monthly High-Grade Corporate Composite yield data, assuming a 4% coupon and a
20-year maturity. LONG-TERM GOVERNMENT BONDS, measured each year using a
portfolio containing one U.S. government bond with a term of approximately
twenty years and a reasonably current coupon; U.S. TREASURY BILLS, measured by
rolling over each month a one-bill portfolio containing, at the beginning of
each month, the shortest-term bill having not less than one month to maturity;
INFLATION, measured by the Consumer Price Index for all Urban Consumers, not
seasonably adjusted, since January, 1978 and by the Consumer Price Index
before then. The stock capital markets may be contrasted with the corporate
bond and U.S. government securities capital markets. Unlike an investment in
stock, an investment in a bond that is held to maturity provides a fixed rate
of return. Bonds have a senior priority to common stocks in the event the
issuer is liquidated and interest on bonds is generally paid by the issuer
before it makes any distributions to common stock owners. Bonds rated in the
two highest rating categories are considered high quality and present minimal
risk of default. An additional advantage of investing in U.S. government
bonds and Treasury bills is that they are backed by the full faith and credit
of the U.S. government and thus have virtually no risk of default. Although
government securities fluctuate in price, they are highly liquid.
YIELDS FOR XX-1 SUB-ACCOUNT
Yield and effective yield percentages for the XX-1 Sub-Account are calculated
using the method prescribed by the Securities and Exchange Commission. Both
yields reflect the deduction of the annual [1.25]% asset-based Certificate
charges. [Both yields also reflect, on an allocated basis, the Certificate's
annual $[36] Certificate Maintenance Charge.] Both yields do not reflect
[Contingent Deferred Sales Charges and] premium tax charges. The yields would
be lower if these charges were included. The following are the standardized
formulas:
Yield equals: ( A - B ) 365
( ----- - 1) x ---
(DIVIDED BY C ) DIVIDED BY 7
Effective Yield Equals: ( A - B )TO THE (365/7) POWER
( ----- ) - 1
(DIVIDED BY C)
Where:
A = the Accumulation Unit value at the end of the 7-day period.
B = [hypothetical Certificate Maintenance Charge for the 7-day
period. The assumed annual XX-1 charge is equal to the $[36]
Certificate charge multiplied by a fraction equal to the average
number of Certificates with XX-1 Sub-Account value during the
7-day period divided by the average total number of Certificates
during the 7-day period. This annual amount is converted to a
7-day charge by
B-5
<PAGE>
multiplying it by 7/365. It is then equated to an Accumulation Unit
size basis by multiplying it by a fraction equal to the average value
of one XX-1 Accumulation Unit during the 7-day period divided by the
average Certificate Value in XX-1 Sub-Account during the 7-day
period.]
C = the Accumulation Unit value at the beginning of the 7-day period.
The yield formula assumes that the weekly net income generated by an
investment in the XX-1 Sub-Account will continue over an entire year. The
effective yield formula also annualizes seven days of net income but it assumes
that the net income is reinvested over the year. This compounding effect causes
effective yield to be higher than the yield.
FINANCIAL STATEMENT
The Variable Account has not yet commenced operations and therefore no
financial statements are included. The Financial Statements of Keyport are
provided as relevant to its ability to meet its financial obligations under the
Certificates.
FINANCIAL STATEMENTS
KEYPORT LIFE INSURANCE COMPANY
[To Be Filed by Amendment]
B-6
<PAGE>
PART C
<PAGE>
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Included in Part B:
Keyport Life Insurance Company:
Consolidated Balance Sheets - December 31, 1994 and 1993*
Consolidated Statements of Operations for the years ended
December 31, 1994, 1993 and 1992*
Consolidated Statements of Stockholder's Equity for the years ended
December 31, 1994, 1993 and 1992*
Notes to Consolidated Financial Statements*
Unaudited balance sheet for the period ended September 30, 1995*
* To be filed by Amendment
(b) Exhibits:
(1) Resolution of the Board of Directors establishing Variable
Account A
(2) Not applicable
(3a) Principal Underwriter's Agreement
(3b) Specimen Broker/Dealer's Agreement
(4a) Form of Group Variable Annuity Contract of Keyport Life
Insurance Company
(4b) Form of Variable Annuity Certificate of Keyport Life Insurance
Company
(4c) Form of Tax-Sheltered Annuity Endorsement
(4d) Form of Individual Retirement Annuity Endorsement
(4e) Form of Corporate/Keogh 401(a) Plan Endorsement
(5a) Form of Application for a Group Variable Annuity Contract
(5b) Form of Application for a Group Variable Annuity Certificate
C-1
<PAGE>
(6a) Articles of Incorporation of Keyport Life Insurance Company
(6b) By-Laws of Keyport Life Insurance Company
(7) Not applicable
(8) Participation Agreements*
(9) Opinion and Consent of Counsel*
(10) Consent of Independent Certified Public Accountants*
(11) Not applicable
(12) Not applicable
(13) Schedule for Computations of Performance Quotations*
(14) Financial Data Schedule*
(15) Chart of Affiliations*
(16) Powers of Attorney
* To be filed by amendment
Item 25. Directors and Officers of the Depositor.
Name and Principal Positions and Offices
Business Address* with Depositor
- ----------------- ---------------------
Kenneth R. Leibler, President Director and Chairman of the Board
Liberty Financial Companies Inc.
One Financial Center, 24th Floor
600 Atlantic Avenue
Boston, MA 02110
F. Remington Ballou Director
B. A. Ballou & Company, Inc.
800 Waterman Avenue
East Providence, RI 02914
C-2
<PAGE>
Frederick Lippitt Director
The Providence Plan
740 Hospital Trust Building
15 Westminster Street
Providence, RI 02903
Erskine N. White, Jr. Director
E. N. White Management Corporation
56 Pine Street, Suite 3-A
Providence, RI 02903
John W. Rosensteel President, Chief Executive
Officer and Director
John E. Arant, III Senior Vice President and Chief
Sales Officer
Paul H. LeFevre, Jr. Senior Vice President and Chief
Financial Officer
Francis E. Reinhart Senior Vice President and Chief
Administrative Officer
Bruce J. Crozier Vice President and Chief Actuary
William L. Dixon Vice President, Compliance and
Assistant Secretary
Jacob M. Herschler Vice President, Strategic Marketing
Kenneth M. Hughes Vice President, National Director
of Bank Sales
James J. Klopper Vice President, Counsel and
Assistant Secretary
Leslie J. Laputz Vice President, Information Systems
Suzanne E. Lyons Vice President, Human Resources
Stewart R. Morrison Vice President and Chief
Investment Officer
C-3
<PAGE>
Deborah A. Re Vice President, Administrative
Operations
Lee R. Roberts Vice President, Planning and
Corporate Affairs
Mark R. Tully Vice President, National Director
of Traditional Sales
Jeffrey J. Whitehead Vice President, Treasurer and
Controller
Peter E. Berkeley Assistant Vice President, Human
Resource Development
John G. Bonvouloir Assistant Vice President &
Assistant Treasurer
Judith A. Brookins Assistant Vice President, Sales
Promotion
Clifford O. Calderwood Assistant Vice President, Network
Systems
Paul R. Coady Assistant Vice President,
Marketing Systems
Alan R. Downey Assistant Vice President
Gregory L. Lapsley Assistant Vice President,
Administrative Services
(Rhode Island Operations)
Jeffrey J. Lobo Assistant Vice President, Director
of Quantitative Research
Scott E. Morin Assistant Vice President and
Controller
Teresa M. Shumila Assistant Vice President,
Administrative Operations
Ellen L. Wike
Assistant Vice President, Systems
Quality Assurance
C-4
<PAGE>
Daniel Yin Assistant Vice President,
Investments
Frederick Lippitt Assistant
Secretary
*125 High Street, Boston, Massachusetts 02110, unless noted otherwise.
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant.
The Depositor controls the Registrant, KMA Variable Account, Keyport 401
Variable Account, Keyport Variable Account I, and Keyport Variable Account II,
under the provisions of Rhode Island law governing the establishment of these
separate accounts of the Company.
The Depositor controls Keyport Financial Services Corp. (KFSC), a
Massachusetts corporation functioning as a broker/dealer of securities,
through 100% stock ownership. KFSC files separate financial statements.
The Depositor controls Keyport Advisory Services Corp. (KASC), a
Massachusetts corporation functioning as an investment adviser, through 100%
stock ownership. KASC files separate financial statements.
The Depositor controls Independence Life and Annuity Company
("Independence Life")(formerly Keyport America Life Insurance Company), a
Rhode Island corporation functioning as a life insurance company, through 100%
stock ownership. Independence Life files separate financial statements.
The chart for the affiliations of the Depositor is Exhibit 15.
Item 27. Number of Contract Owners.
None
Item 28. Indemnification.
Directors and officers of the Depositor and the principal underwriter are
covered persons under Directors and Officers/Errors and Omissions liability
insurance policies issued by ICI Mutual Insurance Company, Federal Insurance
Company, Firemen's Fund Insurance Company, CNA and Lumberman's Mutual Casualty
Company. Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors and officers under such
insurance policies, or otherwise, the Depositor 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 is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Depositor of expenses incurred or
paid by a director or officer in the successful defense of any action, suit or
proceeding) is asserted by such director or officer in connection with the
variable annuity contracts, the Depositor will, unless
C-5
<PAGE>
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.
Keyport Financial Services Corp. is also principal underwriter of the
SteinRoe Variable Investment Trust and Keyport Variable Investment Trust,
which offer eligible funds for variable annuity and variable life insurance
contracts.
The directors and officers are:
Name and Principal Position and Offices
Business Address* with Underwriter
- ------------------ --------------------
John W. Rosensteel President, Director and Chairman of
the Board
Francis E. Reinhart Director and Vice President,
Administration
Lee R. Roberts Director
John E. Arant, III Vice President, Chief Sales Officer
William L. Dixon Vice President, Compliance Officer
Rogelio P. Japlit Treasurer
James J. Klopper Clerk
*125 High Street, Boston, Massachusetts 02110.
Item 30. Location of Accounts and Records.
Keyport Life Insurance Company, 125 High Street, Boston, Massachusetts
02110.
Item 31. Management Services.
Not applicable.
C-6
<PAGE>
Item 32. Undertakings.
(a) Registrant 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
16 months old for so long as payments under the variable annuity contracts may
be accepted;
(b) Registrant 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
post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information; and
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
C-7
<PAGE>
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 Boston and State of Massachusetts, on this 9th day
of February, 1996.
Variable Account A
----------------------------
(Registrant)
BY: Keyport Life Insurance Company
----------------------------------
- -
(Depositor)
BY: /s/ John W. Rosensteel*
-----------------------
John W. Rosensteel
President
* James J. Klopper has signed this document on the indicated date on behalf
of Mr. Rosensteel pursuant to power of attorney duly executed by him and
attached hereto as part of Exhibit 16.
C-8
<PAGE>
As required by the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
/s/ Kenneth R. Leibler* /s/John W. Rosensteel*
- ------------------------ ----------------------
Kenneth R. Leibler John W. Rosensteel
Director and Chairman of the Board President
(Principal Executive
Officer)
/s/ F. Remington Ballou* /s/Paul H. LeFevre, Jr.*
- ------------------------ ------------------------
F. Remington Ballou Paul H. LeFevre, Jr.
Director Senior Vice President
(Chief Financial Officer)
/s/ Frederick Lippitt*
- ------------------------ ------------------------
Frederick Lippitt
Director
/s/ Erskine N. White, Jr.*
- ------------------------ ------------------------
Erskine N. White, Jr.
Director
/s/ John W. Rosensteel*
- ------------------------ ------------------------
John W. Rosensteel
Director
*BY: /s/ James J. Klopper February 9, 1996
- ------------------------ ----------------
James J. Klopper Date
Attorney-in-Fact
* James J. Klopper has signed this document on the indicated date on behalf
of each of the above Directors and Officers of the Depositor pursuant to
powers of attorney duly executed by such persons and attached hereto as
Exhibit 16.
C-9
<PAGE>
EXHIBIT INDEX
ITEM PAGE
(1) Resolution of the Board of Directors establishing
Variable Account A
(3a) Principal Underwriter's Agreement
(3b) Specimen Agreement between Principal Underwriter and Dealer
(4a) Form of Group Variable Annuity Contract of Keyport Life
Insurance Company
(4b) Form of Variable Annuity Certificate of Keyport Life
Insurance Company
(4c) Form of Tax-Sheltered Annuity Endorsement
(4d) Form of Individual Retirement Annuity Endorsement
(4e) Form of Corporate/Keogh 401(a) Plan Endorsement
(5a) Form of Application for a Group Variable Annuity Contract
(5b) Form of Application for a Group Variable Annuity Certificate
(6a) Articles of Incorporation of Keyport Life Insurance Company
(6b) By-Laws of Keyport Life Insurance Company
(16) Powers of Attorney
C-10
<PAGE>
EXHIBIT (1)
RESOLUTION OF THE BOARD OF DIRECTORS
ESTABLISHING VARIABLE ACCOUNT A
<PAGE>
CERTIFICATE OF
CORPORATE RESOLUTION
I HEREBY CERTIFY that the following is a true copy of a resolution adopted
by the Board of Directors of KEYPORT LIFE INSURANCE COMPANY, a Rhode Island
Corporation, at a meeting of the Board duly held on January 9, 1980, at which a
quorum was present, that the same are in conformity with the provisions of the
charter and Bylaws of the Corporation and that they are now in full force and
effect.
RESOLVED, that Keyport Life Insurance Company is hereby authorized to
establish one or more separate accounts in accordance with state insurance laws
and to issue variable annuity contracts with the reserves for such contracts
being segregated in such separate accounts; and
FURTHER RESOLVED, that the proper officers of Keyport Life Insurance
Company are hereby authorized to designate said separate accounts as may be
deemed necessary or convenient and to register such separate accounts and those
variable annuity contracts authorized hereby under such federal security laws as
are deemed appropriate; and
FURTHER RESOLVED, that the proper officers of Keyport Life Insurance
Company are hereby authorized to invest such sums in any separate account
established hereby as may be deemed necessary or appropriate to comply with
requirements of applicable law; and
FURTHER RESOLVED, that the proper officers of Keyport Life Insurance
Company are hereby authorized to do any act necessary to carry out the purposes
of this foregoing resolution.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal
of said Corporation this 29th day of January, 1996.
[SEAL] /s/ James J. Klopper
-----------------------------------------------
James J. Klopper, Assistant Secretary
<PAGE>
EXHIBIT 3(a)
PRINCIPAL UNDERWRITER'S AGREEMENT
<PAGE>
PRINCIPAL UNDERWRITER'S AGREEMENT
IT IS HEREBY AGREED by and between KEYPORT LIFE INSURANCE COMPANY
("INSURANCE COMPANY"), a Rhode Island corporation, on behalf of Variable Account
A (the "Variable Account") and KEYPORT FINANCIAL SERVICES CORP. ("PRINCIPAL
UNDERWRITER"), a Massachusetts corporation, as follows:
I
INSURANCE COMPANY has established, pursuant to Massachusetts Insurance Law,
a separate account designated as the Variable Account A. INSURANCE COMPANY
proposes to issue and sell flexible premium variable annuity contracts and
certificates designated by form number DVA(1) ("Contracts") to the public
through PRINCIPAL UNDERWRITER. Contracts to be sold are more fully described in
the Registration Statement (including the Prospectus and Statement of Additional
Information) hereinafter mentioned.
II
INSURANCE COMPANY appoints PRINCIPAL UNDERWRITER, during the term of this
Agreement, to be the principal underwriter and distributor of Contracts, subject
to the registration requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 applicable to INSURANCE COMPANY and the Variable
Account, and to the provisions of the Securities Exchange Act of 1934 applicable
to PRINCIPAL UNDERWRITER. PRINCIPAL UNDERWRITER will sell and cause to be sold
Contracts under such terms as are agreed to by INSURANCE COMPANY and PRINCIPAL
UNDERWRITER and will make direct sales in its own right to purchasers permitted
to buy such Contracts as specified in the Prospectus, as well as arrange for the
sale of Contracts through other qualified broker-dealers in its capacity as
principal underwriter of such Contracts.
III
PRINCIPAL UNDERWRITER shall be compensated for its distribution services
with respect to Contracts as set forth in the attached Compensation Schedule.
INSURANCE COMPANY has the right to charge back any such compensation under the
conditions stated in such Schedule. Any Compensation Schedule may be changed by
INSURANCE COMPANY as of a specified date, provided such date is at least 30 days
after the date notice of the change is received by PRINCIPAL UNDERWRITER. Any
such change will apply only to purchase payments received by INSURANCE COMPANY
on or after the effective date of the change.
IV
Keyport Financial Services Corp. shall maintain or cause to be maintained
all such required books and records which shall: (a) be maintained in
conformity with all applicable requirements of the Securities Exchange Act of
1934, any other applicable federal or state laws, and the National Association
of Securities Dealers, Inc. ("NASD"), and, to the extent of such requirements,
shall remain property of PRINCIPAL UNDERWRITER; and (b) be subject to
<PAGE>
inspection at all times by duly authorized officers, auditors or representatives
of the INSURANCE COMPANY, Securities and Exchange Commission, NASD and
applicable state regulatory agencies.
V
On behalf of the Variable Account, INSURANCE COMPANY shall furnish
PRINCIPAL UNDERWRITER with copies of all Prospectuses, Statements of Additional
Information, sales literature and other documents which PRINCIPAL UNDERWRITER
reasonably requests for use in connection with the distribution of the
Contracts.
VI
PRINCIPAL UNDERWRITER is not authorized to give any information or to make
any representations concerning the Variable Account, INSURANCE COMPANY or the
Contracts other than those contained in the current Registration Statement
(including the Prospectus and Statement of Additional Information) filed with
the Securities and Exchange Commission or in such sales literature as is
authorized by INSURANCE COMPANY.
VII
The parties to this Agreement agree to work together to make certain that
the necessary records, as enumerated in Section IV, above, are maintained and to
render the necessary assistance to one another for the accurate and timely
preparation of such records.
VIII
This Agreement shall be effective January 29, 1996. This Agreement shall
remain in effect unless terminated as hereinafter provided. This Agreement
shall be automatically terminated in the event of its assignment by PRINCIPAL
UNDERWRITER.
This Agreement may be terminated at any time by either party hereto upon
not less than 60 days written notice to the other party.
IX
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 certified mail, postage prepaid and properly
addressed.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf on January 29, 1996 by their respective officers
thereunto duly authorized.
KEYPORT LIFE INSURANCE COMPANY
("INSURANCE COMPANY")
ATTEST: /s/ Elizabeth B. Love By: /s/ John W. Rosensteel
--------------------- ---------------------------
President
KEYPORT FINANCIAL SERVICES CORP.
("PRINCIPAL UNDERWRITER")
ATTEST: /s/ Elizabeth B. Love By: /s/ John W. Rosensteel
--------------------- ---------------------------
President
<PAGE>
PRINCIPAL UNDERWRITER'S COMPENSATION SCHEDULE FOR
VARIABLE ANNUITY CONTRACTS ("CONTRACTS") ISSUED BY
KEYPORT LIFE INSURANCE COMPANY
REPURSUANT TO VARIABLE ACCOUNT A
This schedule is attached to and part of the Agreement between KEYPORT LIFE
INSURANCE COMPANY ("INSURANCE COMPANY") and KEYPORT FINANCIAL SERVICES CORP.
("PRINCIPAL UNDERWRITER"). The parties hereby agree as follows:
PRINCIPAL UNDERWRITER shall be compensated for its distribution services
with respect to all purchase payments accepted by INSURANCE COMPANY. PRINCIPAL
UNDERWRITER shall receive up to 6.0% of initial purchase payments for the
Contracts and shall receive up to 5.5% of all additional payments after the
initial purchase payment unless, (a) the primary owner (whether or not he or she
is also the annuitant) is over age 75 at the time the payment is received or (b)
the annuitant under a Contract with a non-human primary owner (such as a trust)
is over age 75 at the time the payment is received. If (a) or (b) applies, the
applicable percentage shall be up to 2.75% at ages 76 - 80 and 0.00% (zero) at
any higher age. The actual percentage(s) for purchase payments shall be
determined by INSURANCE COMPANY and PRINCIPAL UNDERWRITER for each broker-dealer
with which PRINCIPAL UNDERWRITER has a distribution agreement (i.e., the
percentages payable to PRINCIPAL UNDERWRITER for purchase payments submitted by
each broker-dealer may be different).
However, INSURANCE COMPANY reserves the right not to pay any compensation
on a purchase payment that represents in whole or in part the surrender on loan
proceeds of any life insurance policy or annuity contract issued by INSURANCE
COMPANY. In the event any Contract is fully or partially surrendered within
twelve contract months of its date of issue, INSURANCE COMPANY will deduct from
any compensation otherwise due PRINCIPAL UNDERWRITER (and PRINCIPAL UNDERWRITER
shall provide for a corresponding return of compensation from the broker-dealer
with which it has a distribution agreement) any compensation amount previously
paid with respect to that Contract as follows: 100% if surrender occurs during
the first six contract months and 50% if surrender occurs during the seventh
through twelfth months. If, after the date of termination of the Agreement, any
amount to be deducted exceeds compensation otherwise due, PRINCIPAL UNDERWRITER
shall promptly pay INSURANCE COMPANY the amount of the excess upon written
demand.
DATE: ______________________ KEYPORT LIFE INSURANCE COMPANY
("INSURANCE COMPANY")
ATTEST: ____________________ By: _________________________________
President
KEYPORT FINANCIAL SERVICES CORP.
("PRINCIPAL UNDERWRITER")
ATTEST: _____________________ By: _________________________________
President
<PAGE>
EXHIBIT 3(b)
SPECIMEN AGREEMENT BETWEEN PRINCIPAL UNDERWRITER AND DEALER
<PAGE>
SPECIMEN
BROKER/DEALER'S
AGREEMENT
Keyport Life Insurance Company ("Keyport"), Keyport Financial Services Corp.
("KFSC") and Broker/Dealer hereby agree as follows:
1. KFSC is a principal underwriter for variable annuity contracts issued by
Keyport pursuant to separate accounts of Keyport and for other contracts
issued by Keyport that are subject to registration under the Securities Act
of 1933.
2. Broker/Dealer desires to enter into a distribution agreement with KFSC and
to have its registered representatives appointed as agents of Keyport for
the purpose of selling the contract(s) (hereafter "Contracts") for which a
Compensation Schedule has been attached to this Agreement.
3. Broker/Dealer certifies that it is a registered broker-dealer under the
Securities Exchange Act of 1934 and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD").
Broker/Dealer agrees to abide by all rules and regulations of the NASD and
to comply with all applicable state and federal laws and the rules and
regulations of authorized regulatory agencies affecting the sale of the
Contracts.
4. Broker/Dealer will select persons associated with it who are to be
appointed as agents of Keyport to solicit applications for the Contracts in
conformance with applicable state and Federal laws. No agent will be
permitted to solicit for sales of the Contracts in New York or in any other
state where Keyport is not authorized to sell such Contracts and Keyport so
notifies Broker/Dealer.
5. All solicitations for the Contracts will be made only by duly authorized
agents who possess the required licenses and appointments and Broker/Dealer
will pay compensation only to such agents. Continued solicitation for the
Contracts shall be contingent upon the continued qualification of such
agents by possession of the required licenses and appointments.
6. Broker/Dealer shall have the responsibility to supervise all agents
appointed under this Agreement and shall indemnify and hold harmless the
separate accounts, the eligible mutual funds and their directors and
trustees, KFSC, and Keyport from any damage or expenses on account of any
wrongful act by Broker/Dealer, its representatives, and agents in
connection with the solicitation of Contracts. Keyport and KFSC shall
indemnify and hold harmless Broker/Dealer from any damages or expenses on
account of any wrongful act by Keyport or KFSC.
7. Broker/Dealer shall review all applications for the Contracts, accept them
on Broker/Dealer's behalf, and promptly forward them to Keyport (at the
address shown on the then current prospectus for the Contracts) together
with any purchase payments received with such applications without
deduction for any compensation. Keyport has the right to reject any
application for a Contract and return any purchase payment made in
connection therewith. Broker/Dealer shall be free to exercise its own
judgment in selling Contracts, including the choice of time, place and
manner of sale, and shall have no obligation to sell Contracts and failure
to sell Contracts shall not be a breach of this Agreement.
8. Broker/Dealer will offer and sell the Contracts only in accordance with the
terms and conditions of the then current prospectuses applicable to the
Contracts and the eligible mutual funds and will make no representations
not included in the prospectuses or in any authorized supplemental material
approved by KFSC and Keyport. Broker/Dealer shall not use or permit to be
used supplemental material or advertising media with regard to the
Contracts other than with the prior written approval of KFSC and Keyport.
<PAGE>
9. Broker/Dealer is performing the acts covered by this Agreement in the
capacity of independent contractor and not as an agent or employee of
either KFSC or Keyport. Neither KFSC nor Keyport shall be liable for any
obligation, act or omission of Broker/Dealer.
10. Broker/Dealer shall be paid by Keyport (on behalf of KFSC) compensation for
the sale of Contracts as set forth in the attached Compensation
Schedule(s). Keyport has the right to charge back any such compensation
under the conditions stated in such Schedule(s). Any Compensation Schedule
can be changed by KFSC and Keyport as of a specified date, provided such
date is at least 10 days after the date the change is mailed to
Broker/Dealer's last known address. Any such change will apply only to
purchase payments received by Keyport after the effective date of the
change.
11. This Agreement shall take effect as of the date it is signed by Keyport,
which date is shown below. It shall continue in force from year to year
unless it is terminated. This Agreement may be terminated for any reason by
any party; such termination will become effective 60 days after the mailing
of a notice of termination to the other parties last known address. This
Agreement may be terminated by KFSC or Keyport for cause (i.e.
Broker/Dealer's violation of any of the terms of this Agreement); such
termination will become effective on the 10th day after the mailing of a
notice of termination to the Broker/Dealer's last known address if
Broker/Dealer has not cured the cause by such day. Failure of KFSC or
Keyport to terminate this Agreement upon knowledge of a cause shall not
constitute a waiver of the right to terminate at a later time for such
cause provided such cause has not been cured in the interim. This Agreement
shall immediately terminate automatically if Broker/Dealer shall cease to
be a member of the NASD or to possess the requisite licenses and
appointments, and Broker/Dealer agrees to immediately notify KFSC and
Keyport of such an occurrence. No provisions of this Agreement other than
numbers 6, 9, 10 and 12 shall continue in force after any termination.
12. This Agreement may not be assigned by Broker/Dealer except with the written
consent of KFSC and Keyport. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Massachusetts.
KEYPORT FINANCIAL SERVICES CORP. _____________________________________
(NAME OF BROKER/DEALER)
BY: _______________________________ BY: ______________________________________
(SIGNATURE OF AUTHORIZED PERSON)
TITLE:_____________________________
TITLE:____________________________________
DATE:______________________________ DATE:_____________________________________
KEYPORT LIFE INSURANCE COMPANY
BY: _______________________________
TITLE:_____________________________
DATE:______________________________
<PAGE>
EXHIBIT 4(a)
FORM OF GROUP VARIABLE ANNUITY CONTRACT
OF KEYPORT LIFE INSURANCE COMPANY
<PAGE>
KEYPORT
LIFE INSURANCE COMPANY
----------------------
----------------------
A Stock Company
This Group Contract, as issued to the Group Contract Owner by Us with any
riders or endorsements, alone makes up the agreement under which benefits are
paid. The Group Contract may be inspected at the office of the Group Contract
Owner. In consideration of any application for a Certificate and the payment
of purchase payments, We agree, subject to the terms and conditions of the
Group Contract, to provide the benefits described in the Certificate to the
Certificate Owner.
If a Certificate is In Force on the Income Date, We will begin making income
payments to the Annuitant. We will make such payments according to the terms
of the Certificate and Group Contract.
RIGHT TO EXAMINE CERTIFICATE: A Certificate Owner may return a Certificate to
Us or the agent through whom it was purchased within 10 days of receipt. If
so returned, We will treat the Certificate as though it were never issued.
Upon receipt We will promptly refund the Certificate Value as of the date the
returned Certificate is received by Us plus any charges We may have
previously deducted.
READ THIS CONTRACT CAREFULLY.
Secretary President
GROUP VARIABLE ANNUITY CONTRACT
FLEXIBLE PURCHASE PAYMENTS
DEFERRED INCOME PAYMENTS
NONPARTICIPATING -- NO DIVIDENDS
ANNUITY PAYMENTS AND OTHER VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE OF
A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
THIS IS EXPLAINED FURTHER ON PAGES 11 AND 18.
DVA(1) PAGE 1
<PAGE> TABLE OF CONTENTS
Page
Right to Examine Certificate..................................1
Definitions...................................................2
Contract Schedule.............................................3A
General Provisions............................................5
Variable Account Provisions...................................10
Transfers.....................................................13
Partial Withdrawals and Total Surrender.......................14
Death Provisions..............................................15
Annuity Provisions............................................16
Endorsements (if any) are before page.........................22
DEFINITIONS
ACCUMULATION PERIOD: The period prior to the Income Date during which
Purchase Payments may be made by a Certificate Owner.
ACCUMULATION UNIT: An accounting unit used to calculate 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 taxes
relating to a Certificate and Certificate Maintenance Charge. This amount is
applied to the applicable Annuity Tables to determine Annuity Payments.
ANNUITANT: The natural person on whose life Annuity Payments are based, and
to whom any Annuity Payments will be made starting on the Income Date.
ANNUITY OPTIONS: Options available for Annuity Payments.
ANNUITY PAYMENTS: The series of payments made to the Annuitant, starting on
the Income Date, under the Annuity Option selected.
ANNUITY PERIOD: The period after the Income Date during which Annuity
Payments are made.
ANNUITY UNIT: An accounting unit used to calculate Variable Annuity Payments
during the Annuity Period.
BENEFICIARY: The person(s) or entity(ies) who controls the Certificate if any
Certificate Owner dies before the Income Date.
(Definitions continue on page 4)
DVA(1) PAGE 2
<PAGE>
KEYPORT LIFE INSURANCE COMPANY
125 HIGH STREET, BOSTON, MA 02110
CONTRACT SCHEDULE
GROUP CONTRACT OWNER [Keyport Insurance Trust]
GROUP CONTRACT NUMBER [678999]
GROUP CONTRACT ISSUE DATE [1/30/96]
MINIMUM INITIAL PAYMENT [$5,000]
MINIMUM ADDITIONAL PAYMENT [$1,000]
CHARGES
DISTRIBUTION CHARGE [We deduct [0.000411%] of the assets in each Variable
Account Sub-Account on a daily basis (equivalent to an annual rate of [0.15%])
to compensate Us for a portion of Our distribution costs.]
ADMINISTRATIVE CHARGE [We deduct [0.000411%] of the assets in each Variable
Account Sub-account on a daily basis (equivalent to an annual rate of [0.15%])
to compensate Us for a portion of Our administrative expenses.]
MORTALITY AND EXPENSE RISK CHARGE [We deduct [0.003863%] of the assets in each
Variable Account Sub-account on a daily basis (equivalent to an annual rate of
[1.25%]) for Our mortality and expense risks.]
CERTIFICATE MAINTENANCE CHARGE [We charge [$36] to cover a portion of Our
ongoing Certificate maintenance expenses. The charge is incurred at the
beginning of the Certificate Year and is deducted on each Certificate
Anniversary and at the time of total surrender.]
TRANSFER CHARGE [Currently none, however, We reserve the right to charge [$25]
for a transfer if a Certificate Owner makes more than [12] transfers per
Certificate Year.]
SURRENDER CHARGE [At the time of each partial withdrawal or at total surrender
a contingent
DVA(1) PAGE 3A
<PAGE>
deferred sales charge is imposed as a percentage of each Purchase Payment
during the [seven] years after the date of its payment, as follows:
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
7% 6% 5% 4% 3% 2% 1%
Thereafter 0%].
INITIAL PURCHASE PAYMENT ALLOCATION
Currently, Certificate Owners can select [7] Sub-accounts [and the Fixed
Account]. We reserve the right to increase or decrease the number of
available Sub-accounts. The minimum a Certificate Owner may allocate to any
Sub-account [or the Fixed Account] is [10%] of any Purchase Payment. An
initial Purchase Payment may be invested as follows:
[Y - 1
Y - 2
Y - 3
X - 1
X - 2
X - 3
Fixed Account]
TRANSFER GUIDELINES
NUMBER OF TRANSFERS AND TRANSFER CHARGE: [Currently, Certificate Owners are
permitted [12] transfers per Certificate Year during the Accumulation Period
and [1] transfer every [6] months during the Annuity Period. We reserve the
right to change, upon notice, the frequency of transfers a Certificate Owner
can make. We also reserve the right to impose a charge for any transfer in
excess of [12] per Certificate Year. The transfer charge is shown in the
Charges section of the Schedule.]
MINIMUM AMOUNT TO BE TRANSFERRED: [None]
MINIMUM AMOUNT WHICH MUST REMAIN IN A SUB-ACCOUNT AFTER TRANSFER: [None]
[LIMITATIONS ON TRANSFERS FROM FIXED ACCOUNT: Transfers during a Certificate
Year from the Fixed Account to the Variable Account are limited to [25%] of
the Fixed Account Value at the beginning of the Certificate Year. This
limitation will be waived if a systematic program of monthly transfers has
been established.]
PARTIAL WITHDRAWALS
A Certificate Owner may make partial withdrawals during the Accumulation
Period without
DVA(1) PAGE 3B
<PAGE>
incurring a surrender charge[, as follows:
(1) In any Certificate Year a Certificate Owner may withdraw an
aggregate amount not to exceed, at the time of withdrawal:
(a) the Certificate Value, less
(b) the portion of the Purchase Payments not previously withdrawn
by that Certificate Owner; and
(2) In any Certificate Year after the first, a Certificate Owner may
also withdraw the positive difference, if any, between the amount
withdrawn pursuant to (1) above in any such subsequent year and 10%
of the Certificate Value as of the preceding Certificate
Anniversary.
We will collect the surrender charge shown on the Schedule with respect to
partial withdrawals in excess of the amounts described in (1) and (2) above].
MINIMUM WITHDRAWAL AMOUNT: [$300], unless the withdrawal is made pursuant to
Our systematic withdrawal program, in which case the minimum withdrawal is
[$100].
MINIMUM CERTIFICATE VALUE WHICH MUST REMAIN AFTER A PARTIAL WITHDRAWAL:
[$2,500].
DEATH BENEFITS
ADJUSTMENT OF CERTIFICATE VALUE
When We receive due proof of death of the Certificate Owner, [any Joint
Certificate Owner,] or the Annuitant if the Certificate Owner is a non-natural
Person, We will compare, as of the date of death, the Certificate Value to the
Death Benefit amount defined in the Certificate Schedule. If the Certificate
Value is less than the Death Benefit, We will increase the current Certificate
Value by the amount of the difference. Any amount credited will be allocated
to the Variable Account [and/or the Fixed Account] based on the Purchase
Payment allocation selection that is in effect when We receive due proof of
death.
[WAIVER OF SURRENDER CHARGES
If the Certificate is surrendered within [90] days of the date of death of the
Certificate Owner, [any Joint Certificate Owner,] or the Annuitant if the
Certificate Owner is a non-natural Person, any applicable surrender charges
will not be deducted from the Certificate Withdrawal Value.]
DEATH BENEFIT AMOUNT
A Certificate Schedule will contain one [or more] of the following Death
Benefit provisions.
[PURCHASE PAYMENT DEATH BENEFIT
On the Certificate Date the Death Benefit is the initial Purchase Payment. On
subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) Start with the Death Benefit from the prior Valuation Date;
DVA(1) PAGE 3C
<PAGE>
(2) Add to (1) any additional Purchase Payments paid during the current
Valuation Period and subtract from (1) any partial withdrawals
(including any associated surrender charge incurred) made during the
current Valuation Period.]
[CERTIFICATE ANNIVERSARY DEATH BENEFIT
On the Certificate Date, the Death Benefit is the initial Purchase Payment.
On subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) (a) Start with the Death Benefit from the Certificate Date;
(b) Add to (a) any additional Purchase Payments paid since the
Certificate Date and subtract from (a) any partial withdrawals
(including any associated surrender charge incurred) made since
the Certificate Date;
(2) (a) Determine the Certificate Value for each Certificate
Anniversary (the "Anniversary Value") before the [81st] birthday
of the Certificate Owner or, if the Certificate Owner is a
non-natural Person, the Annuitant;
(b) Increase each "Anniversary Value" by any Purchase Payments made
after that Value's Anniversary;
(c) Decrease each "Anniversary Value" by the following amount
calculated at the time of each partial withdrawal made after
that Value's Anniversary: (i) the partial withdrawal amount
(including any associated surrender charge incurred) divided by
the Certificate Value immediately preceding the withdrawal,
(ii) multiplied by the "Anniversary Value" immediately
preceding the withdrawal;
(d) Select the highest "Anniversary Value" after the adjustments in
(b) and (c) above;
(3) Set the Death Benefit equal to the greater of (1) and (2).]
[If there is a change of Certificate Owner, the new Certificate Owner's age
will be used to determine the amount in (2) above.]
[INTEREST ACCUMULATING DEATH BENEFIT
On the Certificate Date, the Death Benefit is the initial Purchase Payment.
On subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) Start with the Death Benefit from the Prior Valuation Date;
(2) Calculate interest on (1) for the current Valuation Period at
the Death Benefit Interest Rate;
(3) Add (1) and (2);
(4) Add any additional Purchase Payments paid during the current
Valuation Period to (3);
(5) Subtract partial withdrawals made during the current Valuation
Period from (4);
Each accumulated initial or additional Purchase Payment, reduced by any
partial withdrawals (including any associated surrender charge incurred)
allocated to such Purchase Payment, will continue to grow at the Death Benefit
Interest Rate until reaching its Maximum Guaranteed Death Benefit.
DVA(1) PAGE 3D
<PAGE>
The Death Benefit is accumulated at the Death Benefit Interest Rate of [7%]
compounded annually, except:
(1) Amounts in the [XX-1 Sub-account] are accumulated at the net rate of
return for Such Sub-account during the current Valuation Period if
less than [7%] compounded annually; and
(2) Amounts in the [YY-1 Sub-account] are accumulated at the net rate of
return for such Sub-account during the current Valuation Period if
less than [7%]compounded annually; and
(3) Amounts in a Fixed Allocation are accumulated at the interest rate
being credited to such Fixed Allocation during the current Valuation
Period if less than [7%] compounded annually.
The net rate of return used in (1) and (2) equals the net investment factor
defined on page 11 less 1.0.
The Maximum Guaranteed Death Benefit is initially equal to [two] times the
initial or additional Purchase Payment paid. Thereafter, the Maximum
Guaranteed Death Benefit as of the effective date of a partial withdrawal is
reduced first by the amount of any partial withdrawal representing earnings
and second in proportion to the reduction in Certificate Value for any partial
withdrawal representing Purchase Payments (in each case, including any
associated surrender charge incurred).]
[If there is a change of Certificate Owner and the new Certificate Owner's age
is less than or equal to 75, the Death Benefit described above will remain in
effect. If the new Certificate Owner's age is greater than 75, the Death
Benefit in effect will not apply; the Death Benefit will be the sum of the
Purchase Payments less any partial withdrawals (including any associated
surrender charge incurred) made since the Certificate Date.]
THE VARIABLE SEPARATE ACCOUNT[S]
[SUB-ACCOUNTS INVESTING IN SHARES OF MUTUAL FUNDS
Variable Account [A] is a unit investment trust variable separate account,
organized in and governed by the laws of the State of Rhode Island, Our state
of domicile. Variable Account [A] is divided into Sub-accounts. Each Sub-
account listed below invests in shares of the corresponding Portfolio of the
Eligible Fund shown.
SUB-ACCOUNT ELIGIBLE FUND AND PORTFOLIO
[YYYYY FUND]
[TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES]
[XXXXX TRUST]
[TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES]
[SUB-ACCOUNTS INVESTING DIRECTLY IN SECURITIES
DVA(1) PAGE 3E
<PAGE>
Variable Account [B] is an investment company variable separate account which
invests directly in securities, organized in and governed by the laws of the
State of Rhode Island, Our state of domicile. Variable Account [B] is divided
into Sub-accounts. The investment advisor to each Sub-account is set forth
opposite each Sub-account shown below:
Sub-account Investment Advisor
[Currently, none] [Currently, none] ]
THE FIXED ACCOUNT
[The Fixed Account is part of Our General Account, which consists of all of
Our assets except the assets of the Variable Account and the assets of other
separate accounts that We maintain. Subject to applicable law, We have sole
discretion over investments of the assets of the Fixed Account. If a
Certificate Owner allocates assets to the Fixed Account, the Certificate
Owner's accumulation values and annuity payments will have guaranteed minimums.
Before the Income Date, a Certificate Owner's interest in the Fixed Account is
measured by the Fixed Account Value. When annuity payments begin, the payee's
interest in the Fixed Account is measured by the amount of each periodic
payment.
Benefits from the Fixed Account will not be less than the minimum values
required by any law of the jurisdiction where the Certificate is delivered.
Purchase Payments will be allocated to the Fixed Account in accordance with a
Certificate Owner's selection at the Certificate Issue Date. A Certificate
Owner may change such selection by Written Request.
The Fixed Account Value at any time is equal to:
(1) all Purchase Payments allocated to the Fixed Account plus the
interest subsequently credited on those payments; plus
(2) any Variable Account Value transferred to the Fixed Account
plus the interest subsequently credited on the transferred
value; less
(3) any prior partial withdrawals from the Fixed Account;less
(4) any Fixed Account Value transferred to the Variable Account.
We will credit interest to Purchase Payments allocated to the Fixed Account at
rates declared by Us for Guarantee Periods of one [or more] year[s] from the
month and day of allocation. The minimum Guaranteed Interest Rate is [3%] per
year.]
DVA(1) PAGE 3E
<PAGE>
DEFINITIONS (CONTINUED)
CERTIFICATE: The document issued to a Certificate Owner to evidence a
Certificate Owner's participation under the Group Contract. The Certificate
summarizes the benefits and provisions of the Group Contract.
CERTIFICATE ANNIVERSARY: An anniversary of the Certificate Issue Date.
CERTIFICATE ISSUE DATE: The date a Certificate is issued to a Certificate
Owner. The Certificate Issue Date is shown on the Certificate Schedule.
CERTIFICATE OWNER: The person who owns a Certificate under the Group
Contract. Any Joint Certificate Owners and the Certificate Owner own the
Certificate equally with rights of survivorship. All Owners must exercise
ownership rights and privileges together, including the signing of Written
Requests.
CERTIFICATE VALUE: The sum of the Certificate Owner's interest in the Sub-
accounts of the Variable Account and the Fixed Account during the Accumulation
Period.
CERTIFICATE YEAR: The first Certificate Year is the annual period which
begins on the Certificate Issue Date. Subsequent Certificate Years begin on
each Certificate Anniversary.
ELIGIBLE FUND: An investment entity shown on the Certificate Schedule.
FIXED ACCOUNT: The account We establish to support Fixed Allocations. The
Contract Schedule shows whether the Fixed Account is available under the
Certificates.
FIXED ACCOUNT VALUE: The value of all Fixed Account amounts accumulated under
a Certificate prior to the Income Date.
FIXED ALLOCATION: An amount allocated to the Fixed Account that is credited
with a Guaranteed Interest Rate for a specified Guarantee Period.
FIXED ANNUITY: An annuity with a series of payments made during the Annuity
Period which are guaranteed as to dollar amount by Us.
GENERAL ACCOUNT: Our general investment account which contains all of Our
assets except those in the Variable Account and Our other separate accounts.
GROUP CONTRACT OWNER: The person or entity to which the Group Contract is
issued.
GUARANTEED INTEREST RATE: The effective annual interest rate which We will
credit for a specified Guarantee Period.
GUARANTEE PERIOD: The period of year(s) a rate of interest is guaranteed to
be credited within
DVA(1) PAGE 4
<PAGE>
the Fixed Account.
INCOME DATE: The date on which Annuity Payments begin. The Income Date is
shown on the Certificate Schedule.
IN FORCE: The status of a Certificate before the Income Date so long as it
has not been totally surrendered and there has not been a death of a
Certificate Owner or Joint Certificate Owner that will cause the Certificate
to end within five years of the date of death.
OFFICE: Our executive office shown on the Certificate Schedule.
PERSON: A human being, trust, corporation, or any other legally recognized
entity.
PORTFOLIO: A series of an Eligible Fund which constitutes a separate and
distinct class of shares.
PURCHASE PAYMENT: A payment made by or on behalf of a Certificate Owner with
respect to a Certificate.
SUB-ACCOUNT: Variable Account assets are divided into Sub-accounts. Assets
of each Sub-account will be invested in shares of a Portfolio of an Eligible
Fund, or directly in portfolio securities.
VALUATION DATE: Each day on which We and the New York Stock Exchange ("NYSE")
are open for business, or any other day that the Securities and Exchange
Commission requires that mutual funds, unit investment trusts or other
investment portfolios be valued.
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 on the
next succeeding Valuation Date.
VARIABLE ACCOUNT: Our Variable Account(s) shown on the Certificate Schedule.
VARIABLE ANNUITY: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-accounts of the
Variable Account.
WE, US, OUR: Keyport Life Insurance Company.
WRITTEN REQUEST: A request in writing, in a form satisfactory to Us, and
received by Us at Our Office.
GENERAL PROVISIONS
PURCHASE PAYMENTS
The initial Purchase Payment is due on the Certificate Issue Date. It must be
paid at Our Office in United States currency. Coverage under a Certificate
does not take effect until We have accepted the initial Purchase Payment
during a Certificate Owner's lifetime. Each Purchase
DVA(1) PAGE 5
<PAGE>
Payment after the Certificate Issue Date must be at least the amount shown on
the Certificate Schedule. Provided the Certificate Value under a Certificate
does not go to zero, a Certificate will stay in force until the Income Date
even if a Certificate Owner make no payments after the initial one. We
reserve the right to reject any subsequent Purchase Payment.
ALLOCATION OF PURCHASE PAYMENTS
An initial Purchase Payment is allocated to the Sub-accounts of the Variable
Account, and to the Fixed Account if available, in accordance with the
selections made by a Certificate Owner at the Certificate Issue Date. Unless
otherwise changed by a Certificate Owner, subsequent Purchase Payments are
allocated in the same manner as the initial Purchase Payment. Allocation of
Purchase Payments is subject to the terms and conditions imposed by Us. We
reserve the right to allocate initial Purchase Payments to the money market
Sub-account until the expiration of the Right to Examine Certificate period
set forth on the first page of the Group Contract and the Certificate.
THE CONTRACT
The Group Contract, including the application, if any, and any attached rider
or endorsement constitute the entire contract between the Group Contract Owner
and Us. All statements made by the Group Contract Owner, any Certificate
Owner or any Annuitant will be deemed representations and not warranties. No
such statement will be used in any contest unless it is contained in the
application signed by the Group Contract Owner or in a written instrument
signed by the Certificate Owner, a copy of which has been furnished to the
Certificate Owner, the Beneficiary or to the Group Contract Owner.
Only Our President or Secretary may agree to change any of the terms of the
Group Contract. Any changes must be in writing. Any change to the terms of a
Certificate must be in writing and with Certificate Owner's consent, unless
provided otherwise by the Group Contract and the Certificate.
To assure that the Group Contract and the Certificate will maintain their
status as a variable annuity under the Internal Revenue Code, We reserve the
right to change the Group Contract and any Certificate issued thereunder to
comply with future changes in the Internal Revenue Code, any regulations or
rulings issued thereunder, and any requirements otherwise imposed by the
Internal Revenue Service. The Group Contract Owner and the affected
Certificate Owner will be sent a copy of any such amendment.
We reserve the right, subject to compliance with the law as currently
applicable or subsequently changed, to: (a) operate the Variable Account in
any form permitted under the Investment Company Act of 1940, as amended, (the
"1940 Act"), or in any other form permitted by law; (b) take any action
necessary to comply with or obtain and continue any exemptions from the 1940
Act, or to comply with any other applicable law; (c) transfer any assets in
any Sub-account to another Sub-account, or to one or more separate investment
accounts, or the General Account; or to add, combine or remove Sub-accounts in
the Variable Account; and (d) change the way We assess charges, so long as We
do not increase the aggregate amount beyond that currently charged to the
Variable Account and the Eligible Funds in connection with a Certificate. If
the
DVA(1) PAGE 6
<PAGE>
shares of any of the Eligible Funds should become unavailable for investment
by the Variable Account or if in Our judgment further investment in such
Portfolio shares should become inappropriate in view of the purpose of the
Certificate, We may add or substitute shares of another mutual fund for the
Portfolio shares already purchased under the Certificate. No substitution of
Portfolio shares in any Sub-account may take place without prior approval of
the Securities and Exchange Commission and notice to the affected Certificate
Owners, to the extent required by the 1940 Act.
CERTIFICATE OWNER
A Certificate Owner has all rights and may receive all benefits under a
Certificate. A Certificate Owner is the person designated as such on the
Certificate Issue Date, unless changed. A Certificate Owner may exercise all
rights of a Certificate while it is In Force, subject to the rights of (a) any
assignee under an assignment filed with Us, and (b) any irrevocably named
Beneficiary.
JOINT CERTIFICATE OWNER
A Certificate can be owned by Joint Certificate Owners. Upon the death of any
Certificate Owner or Joint Certificate Owner, the surviving owner(s) will be
the primary Beneficiary(ies). Any other beneficiary designation will be
treated as a Contingent Beneficiary unless otherwise indicated in a Written
Request filed with Us.
ANNUITANT
The Annuitant is the person on whose life Annuity Payments are based. The
Annuitant is the person designated by a Certificate Owner at the Certificate
Issue Date, unless changed prior to the Income Date. Any change of Annuitant
is subject to Our underwriting rules then in effect. The Annuitant may not be
changed in a Certificate which is owned by a non-natural person. A Certificate
Owner may name a Contingent Annuitant. The Contingent Annuitant becomes the
Annuitant if the Annuitant dies while a Certificate is In Force. If the
Annuitant dies and no Contingent Annuitant has been named, We will allow a
Certificate Owner sixty days to designate someone other than the Certificate
Owner as Annuitant. The Certificate Owner will be the Contingent Annuitant
unless the Certificate Owner names someone else. If the Certificate is owned
by 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.
BENEFICIARY
The Beneficiary is the person who controls the Certificate if any Certificate
Owner dies prior to the Income Date. If the Certificate is owned by Joint
Certificate Owners, upon the death of any Certificate Owner or Joint
Certificate Owner, the surviving owner(s) will become the primary Beneficiary.
Any other beneficiary designation will be treated as a Contingent Beneficiary
unless otherwise indicated in a Written Request filed with Us. If a
Certificate Owner names more than one Person as Primary Beneficiary or as
Contingent Beneficiary, and does not state otherwise on an application or in a
Written Request to Us, any non-survivors will not receive a benefit. The
survivors will receive equal shares. Subject to the rights of any
DVA(1) PAGE 7
<PAGE>
irrevocable Beneficiary(ies), a Certificate Owner may change primary or
contingent Beneficiary(ies). A change must be made by Written Request and will
be effective as of the date the Written Request is signed. We will not be
liable for any payment We make or action We take before We receive the Written
Request.
GROUP CONTRACT OWNER
The Group Contract Owner has title to the Group Contract. The Group Contract
and any amount accumulated under any Certificate are not subject to the claims
of the Group Contract Owner or 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.
CHANGE OF CERTIFICATE OWNER, BENEFICIARY OR CONTINGENT ANNUITANT
While a Certificate is In Force, a Certificate Owner may by Written Request
change the primary Certificate Owner, Joint Certificate Owner, primary
Beneficiary, Contingent Beneficiary, Contingent Annuitant, or in certain
instances, the Annuitant. An irrevocably named Person may be changed only
with the written consent of such Person. The change will be effective,
following Our receipt of the Written Request, as of the date the Written
Request is signed. The change will not affect any payments We make or actions
We take prior to the time We receive the Written Request.
ASSIGNMENT OF THE CERTIFICATE
A Certificate Owner may assign a Certificate at any time while it is In Force.
The assignment must be in writing and a copy must be filed at Our Office. A
Certificate Owner's rights and those of any revocably named Person will be
subject to the assignment. An assignment will not affect any payments We make
or actions We take before We receive the assignment. We are not responsible
for the validity of any assignment.
MISSTATEMENT OF AGE OR SEX
If the age or sex of the Annuitant or any payee has been misstated, We will
compute the amount payable based on the correct age and sex. If Annuity
Payments have begun, any underpayment(s) that have been made will be paid in
full with the next Annuity Payment. Any overpayment, unless repaid to Us in
one sum, will be deducted from future Annuity Payments otherwise due until We
are repaid in full.
NON-PARTICIPATING
A Certificate does not participate in Our divisible surplus.
EVIDENCE OF DEATH, AGE, SEX OR SURVIVAL
If a Certificate provision relates to the death of a natural Person, We will
require proof of death before We will act under that provision. Proof of
death shall be: (a) a certified death certificate;
DVA(1) PAGE 8
<PAGE>
or (b) a certified decree of a court of competent jurisdiction as to the
finding of death; or (c) a written statement by a medical doctor who attended
the deceased; or (d) any other document constituting due proof of death under
applicable state law. If Our action under a Certificate provision is based on
the age, sex, or survival of any Person, We may require evidence of the
particular fact before We act under that provision.
PROTECTION OF PROCEEDS
No Beneficiary or payee may commute or assign any payments under a Certificate
before they are due. To the extent permitted by law, no payments shall be
subject to the debts of any Beneficiary or payee or to any judicial process
for payment of those debts.
REPORTS
We will send Certificate Owners a report that shows the Certificate Value at
least once each Certificate Year. We will send any other reports that may be
required by law.
TAXES
Any taxes paid to any governmental entity relating to a Certificate will be
deducted from the Purchase Payments or Certificate Value. We may, in Our sole
discretion, delay the deduction until a later date. By not deducting tax
payments at the time of Our payment, We do not waive any right We may have to
deduct amounts at a later date. We will, in Our sole discretion, determine
when taxes relate to a Certificate or to the operation of the Variable
Account. We reserve the right to establish a provision for federal income
taxes if We determine, in Our sole discretion, that We will incur a tax as a
result of the operation of the Variable Account. Such a provision will be
reflected in the Accumulation and Annuity Unit Values. We will deduct for any
income taxes incurred by Us 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. We will deduct from any payment under a Certificate any
withholding taxes required by applicable law.
REGULATORY REQUIREMENTS
All values payable under a Certificate will not be less than the minimum
benefits required by the laws and regulations of the states in which the
Certificate is delivered.
SUSPENSION OR DEFERRAL OF PAYMENTS
We reserve the right to suspend or postpone payments for a withdrawal,
transfer, surrender or death benefit for any period when:
(1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings); or
(2) trading on the New York Stock Exchange is restricted; or
(3) an emergency exists as a result of which valuation or disposal of
the assets and
DVA(1) PAGE 9
<PAGE>
securities of the Variable Account is not reasonably practicable; or
(4) the Securities and Exchange Commission, by order or pronouncement,
so permits for the protection of Certificate Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission govern as to whether the conditions described in (2) and (3) above
exist.
We reserve the right to delay payment of amounts allocated to the Fixed
Account for up to six months.
VARIABLE ACCOUNT PROVISIONS
THE VARIABLE ACCOUNT
The Variable Account(s) is designated on the Certificate Schedule and consists
of assets set aside by Us, which are kept separate from Our general assets and
all other variable account assets We maintain. We own the assets of the
Variable Account. Variable Account assets equal to reserves and other
contract liabilities will not be chargeable with liabilities arising out of
any other business We may conduct. We may transfer to Our General Account
assets which exceed the reserves and other liabilities of the Variable
Account. Income and realized and unrealized gains or losses from assets in
the Variable Account are credited to or charged against the account without
regard to other income, gains or losses in Our other investment accounts.
The Variable Account assets are divided into Sub-accounts. The Sub-accounts
which are available under the Certificate are shown on the Certificate
Schedule. The assets of the Sub-accounts of the unit investment trust
variable separate account are allocated to the Eligible Fund(s) and the
Portfolio(s), if applicable, within an Eligible Fund shown on the Certificate
Schedule. The assets of the Sub-accounts of the investment company variable
separate account, if applicable, are invested in portfolios of securities
designed to meet the objectives of the Sub-Account shown on the Certificate
Schedule. We may, from time to time, add additional Sub-accounts, Eligible
Funds or Portfolios to those shown on the Certificate Schedule. A Certificate
Owner may be permitted to transfer Certificate Values or allocate Purchase
Payments to the additional Sub-Accounts, Eligible Funds or Portfolios.
However, the right to make such transfers or allocations will be limited by
the terms and conditions imposed by Us.
We also have the right to eliminate Sub-accounts from the Variable Account, to
combine two or more Sub-accounts or to substitute a new Portfolio for the
Portfolio in which a Sub-account invests. A substitution may become necessary
if, in Our discretion, a Portfolio or Sub-account no longer suits the purposes
of the Group Contract. This may happen: due to a change in laws or
regulations or a change in a Portfolio's investment objectives or
restrictions; because the Portfolio or Sub-account is no longer available for
investment; or for some other reason. We will obtain any prior approvals
that may be required from the insurance department of Our state of domicile,
and from the SEC or any other governmental entity before making such a
substitution.
DVA(1) PAGE 10
<PAGE>
When permitted by law, We reserve the right to:
(1) Deregister a Variable Account under the 1940 Act;
(2) Operate a Variable Account as a management company under the 1940
Act, if it is operating as a unit investment trust;
(3) Operate a Variable Account as a unit investment trust under the 1940
Act, if it is operating as a management company;
(4) Restrict or eliminate any voting rights as to the account;
(5) Combine the Variable Account with any other variable account.
VALUATION OF ASSETS
The assets of the Variable Account are valued at their fair market value in
accordance with Our procedures.
ACCUMULATION UNITS
A Certificate Owner's Variable Account Value will fluctuate in accordance with
the investment results of the Sub-accounts to which the Certificate Owner has
allocated his or her Purchase Payments or Certificate Value. In order to
determine how these fluctuations affect a Certificate Owner's Certificate
Value, We use an Accumulation Unit value. Accumulation Units are used to
account for all amounts allocated to or withdrawn from the Sub-accounts of the
Variable Account as a result of Purchase Payments, partial withdrawals,
transfers, or charges deducted from the Certificate Value. We determine the
number of Accumulation Units of a Sub-account purchased or cancelled by
dividing the amount allocated to, or 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 We receive the request for the transaction.
ACCUMULATION UNIT VALUE
The Accumulation Unit Value for each Sub-account was initially set 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 a net investment factor for the Sub-account for the
current period. This factor may be greater or less than 1.0; therefore, the
Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period.
We calculate the net investment factor for each Sub-account investing in
shares of mutual funds by dividing (a) by (b) and then subtracting (c) where:
(a) is equal to:
(i) the net asset value per share of the Portfolio in which
the Sub-account invests at the end of the Valuation
Period; plus
(ii) any dividend per share declared for the Portfolio that has
an ex-dividend date within the current Valuation Period.
(b) is the net asset value per share of the Portfolio at the end of the
preceding Valuation Period.
DVA(1) PAGE 11
<PAGE>
(c) is equal to:
(i) the sum of each Valuation Period equivalent of the annual
rate for the mortality and expense risk charge, for the
administrative charge, and for the distribution charge, if
any, which are shown on the Certificate Schedule; plus
(ii) a charge factor, if any, for any tax provision established
by Us a result of the operation of the Sub-account.
We calculate the net investment factor for each Sub-account investing directly
in securities with the same formula, except:
(a) is equal to:
(i) the value of the assets in the Sub-account at the end of
the preceding Valuation Period; plus
(ii) any investment income and capital gains, realized or
unrealized, credited to the assets during the current
Valuation Period; less
(iii) any capital losses, realized or unrealized, charged
against the assets during the current Valuation Period;
less
(iv) all operating and investment expenses relating to the
assets that are incurred during the current Valuation
Period.
(b) is the value of the assets in the Sub-account at the end of the
preceding Valuation Period.
MORTALITY AND EXPENSE RISK CHARGE
Each Valuation Period We deduct a mortality and expense risk charge from each
Sub-account of 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 Us for assuming the mortality and expense risks with
respect to the Certificates We issue. We guarantee the dollar amount of each
Annuity Payment after the first Annuity Payment will not be affected by
variations in mortality or expense experience.
ADMINISTRATIVE CHARGE
Each Valuation Period We deduct 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 Us for the costs
associated with administration of the Variable Account and the Certificates We
issue.
DISTRIBUTION CHARGE
Each Valuation Period We deduct a distribution charge from the Variable
Account which is equal, on an annual basis, to the amount shown on the
Certificate Schedule. The distribution charge compensates Us for the costs
associated with the distribution of the Certificates We issue.
DVA(1) PAGE 12
<PAGE>
CERTIFICATE MAINTENANCE CHARGE
We deduct a certificate maintenance charge from the Certificate Value by
cancelling Accumulation Units from each applicable Sub-account to reimburse
Us for expenses relating to the maintenance of the Certificate. We will
deduct the certificate maintenance charge from the Sub-accounts of the
Variable Account in the same proportion that the amount of Certificate Value
in each Sub-account bears to the Certificate Value. The certificate
maintenance charge is shown on the Certificate Schedule. The certificate
maintenance charge will be deducted from the Certificate Value on each
Certificate Anniversary during the Accumulation Period.
If a total surrender is made on a date other than a Certificate Anniversary,
the certificate maintenance charge will be deducted at the time of surrender.
During the Annuity Period, the certificate maintenance charge will be deducted
on a pro-rata basis from each Annuity Payment.
TRANSFERS
TRANSFERS: Subject to any limitation We impose on the number of transfers
permitted in a Certificate Year, a Certificate Owner may transfer all or part
of Certificate Owner's Certificate Value among the Sub-accounts and the Fixed
Account, if any, by Written Request or by telephone without the imposition of
any fees or charges. Transfers among the Sub-accounts and the Fixed Account
are permitted only during the Accumulation Period. The number of permitted
transfers, and the charge for transfers in excess of that number, are shown on
the Certificate Schedule. All transfers are subject to the following:
(1) If more than the number of free transfers, shown on the Certificate
Schedule, are made in a Certificate Year, We will deduct a transfer charge,
shown on the Certificate Schedule, for each subsequent transfer. The transfer
fee will be deducted from the Sub-account from which the transfer is made.
However, if Certificate Owner transfers his or her entire interest in a
Sub-account, the transfer fee will be deducted from the amount transferred.
If a Certificate Owner makes a transfer from more than one Sub-account, any
transfer fee will be allocated pro-rata among such Sub-accounts in proportion
to the amount transferred from each.
(2) During the Annuity Period, transfers of values between Sub-accounts
will be made by converting the number of Annuity Units being transferred to
the number of Annuity Units in the Sub-account to which a 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.
(3) The minimum amount which can be transferred 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.
DVA(1) PAGE 13
<PAGE>
(4) If 100% of the value of any Sub-account is transferred and the
current allocation for Purchase Payments includes that Sub-account,
the allocation for future Purchase Payments will change to reflect a
Certificate Owner's allocation of Certificate Value following the
transfer.
(5) We reserve the right, at any time and without prior notice to any
party, to terminate, suspend or modify the transfer privileges
described above.
We will not be liable for transfers made in accordance with a Certificate
Owner's instructions. All amounts and Accumulation Units will be determined
as of the end of the Valuation Period in which We receive the request for
transfer.
PARTIAL WITHDRAWALS AND TOTAL SURRENDER
PARTIAL WITHDRAWALS
During the Accumulation Period while the Certificate is In Force, a
Certificate Owner may, upon Written Request, make a partial withdrawal,
subject to the provisions and limitations shown on the Certificate Schedule.
For purposes of determining whether a surrender charge is applicable to a
partial withdrawal:
(1) A partial withdrawal will first be taken from the portion of a
Contract Owner's Certificate Value which is in excess of Purchase
Payments, and then from Purchase Payments; and
(2) We will allocate partial withdrawals to Purchase Payments in the
order in which the Purchase Payments were made, starting with the
first.
A withdrawal will result in the cancellation of Accumulation Units from each
applicable Sub-account in the ratio that a Certificate Owner's interest in the
Sub-account bears to his or her Certificate Value in all the Sub-accounts. A
Certificate Owner must specify by Written Request in advance if he or she
wants Accumulation Units to be cancelled in a manner other than the method
described above. If there is no value or insufficient value in the Variable
Account, then the amount withdrawn, or the insufficient portion, will be
deducted from the Fixed Account. If a Certificate Owner has multiple
Guarantee Periods, We will deduct such amount from each Guarantee Period's
values in the ratio that each Period's values bears to the total Fixed Account
Value. A Certificate Owner must specify by Written Request in advance if he
or she wants multiple Guarantee Periods to be reduced in a manner other than
the method described above.
Each partial withdrawal must be for an amount not less than the amount shown
on the Certificate Schedule. The Certificate Value which must remain in a Sub-
account, and in a Certificate, is shown on the Certificate Schedule. The
Certificate Schedule also shows any charge.
TOTAL SURRENDER
During the Accumulation Period while the Certificate is In Force, a
Certificate Owner may, upon Written Request, make a total surrender of the
Certificate Withdrawal Value. The
DVA(1) PAGE 14
<PAGE>
Certificate Withdrawal Value is:
(1) the Certificate Value as of the end of the Valuation Period during
which We receive a Written Request for a withdrawal or surrender; less
(2) any applicable taxes not previously deducted; less
(3) any surrender charge; less
(4) any certificate maintenance charge.
We will pay the amount of any withdrawal or surrender within seven days unless
the Suspension or Deferral of Payments Provision is in effect.
DEATH PROVISIONS
DEATH OF CERTIFICATE OWNER
These provisions apply if, during the Accumulation Period while the
Certificate is In Force, the Certificate Owner or any Joint Certificate Owner
dies (whether or not the decedent is also the Annuitant) or the Annuitant dies
under a Certificate owned by a non-natural Person. The "designated
beneficiary" will control the contract after such a death. This "designated
beneficiary" will be the first Person among the following who is alive on the
date of death: Certificate Owner; Joint Certificate Owner; primary
Beneficiary; Contingent Beneficiary; and Certificate Owner's estate. If the
Certificate Owner and Joint Certificate Owner are both alive, they shall be
the "designated beneficiary" together.
IF THE DECEDENT'S SURVIVING SPOUSE (IF ANY) IS THE SOLE "DESIGNATED
BENEFICIARY", the surviving spouse will automatically become the new sole
Certificate Owner as of the date of the death. And, if the Annuitant is the
decedent, the new Annuitant will be any living Contingent Annuitant, otherwise
the surviving spouse. The Certificate may stay in force until another death
occurs (i.e., until the death of the Certificate Owner or Joint Certificate
Owner). Except for this paragraph, all of "Death Provisions" will apply to
that subsequent death.
IN ALL OTHER CASES, the Certificate may stay in force up to five years from
the date of death. During this period, the "designated beneficiary" may
exercise all ownership rights, including the right to make transfers or
partial withdrawals or the right to surrender the Certificate for its
Certificate Withdrawal Value. If this Certificate is still in force at the
end of the five-year period, We will automatically end it then by paying to
the "designated beneficiary" the Certificate Withdrawal Value without the
deduction of any applicable surrender charges. If the "designated
beneficiary" is not alive then, We will pay any Person(s) named by the
"designated beneficiary" in a Written Request; otherwise the "designated
beneficiary's" estate.
DEATH OF ANNUITANT
These provisions apply if during the Accumulation Period while the Certificate
is In Force, (a)
DVA(1) PAGE 15
<PAGE>
the Annuitant dies, (b) the Annuitant is not an Owner, and (c) the Owner is a
natural person. The Certificate will continue In Force after the Annuitant's
death. The new Annuitant will be any living Contingent Annuitant, otherwise
the Certificate Owner.
PAYMENT OF BENEFITS
Instead of receiving a lump sum, a Certificate Owner or any "designated
beneficiary" may by Written Request direct that We pay any benefit of $5,000
or more under an Annuity Option that meets the following: (a) the first
payment to the "designated beneficiary" must be made no later than one year
after the date of death; (b) payments must be made over the life of the
"designated beneficiary" or over a period not extending beyond that person's
life expectancy; and (c) any Annuity Option that provides for payments to
continue after the death of the "designated beneficiary" will not allow the
successor payee to extend the period of time over which the remaining payments
are to be made.
ANNUITY PROVISIONS
GENERAL
If the Certificate is In Force on the Income Date, the Adjusted Certificate
Value will be applied under the Annuity Option selected by a Certificate
Owner. Annuity Payments may be made on a fixed or variable basis or both.
INCOME DATE
The Income Date may be selected by a Certificate Owner. It is shown on the
Certificate Schedule. The Income Date can be any time after the Certificate
Issue Date for variable payments and any time after the first Certificate
Anniversary for fixed payments. The Income Date may not be later than the
earlier of when the Annuitant reaches attained age 90 or that required under
state law. If no Income Date is selected, it will be the earlier of when the
Annuitant reaches attained age 90 or the maximum date permitted under state
law, if any.
Prior to the Income Date, a Certificate Owner may change the Income Date by
Written Request. Any change must be requested at least 30 days prior to the
new Income Date.
SELECTION OF AN ANNUITY OPTION
An Annuity Option may be selected by a Certificate Owner. If no Annuity
Option is selected, Option B will automatically be applied. Prior to the
Income Date, a Certificate Owner can change the Annuity Option selected by
Written Request. Any change must be requested at least 30 days prior to the
Income Date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity Payments are paid in monthly installments unless quarterly, semi-
annual or annual payments are chosen. The Adjusted Certificate Value is
applied to the Annuity Table for the
DVA(1) PAGE 16
<PAGE>
Annuity Option selected. If the Adjusted Certificate Value to be applied
under an Annuity Option is less than $5,000, We reserve the right to make a
lump sum payment in lieu of Annuity Payments. If the Annuity Payment would be
or becomes less than $100, We will reduce the frequency of payments to a
longer interval which will result in each payment being at least $100.
ANNUITY OPTIONS
The following Annuity Options or any other Annuity Option acceptable to Us may
be selected:
OPTION A. ANNUITY FOR A FIXED NUMBER OF YEARS: Annuity Payments for a
chosen number of years, not less than 5. If the payee dies during the
payment period and the Beneficiary does not desire payments to continue
for the remainder of the period, he/she may elect to have the present
value of the remaining payments commuted and paid in a lump sum. During
the payment period of a Variable Annuity, the payee may elect by Written
Request to receive the following amount: (a) the present value of the
remaining payments commuted; less (b) any surrender charge that may be
due by treating the value defined in (a) as a surrender. Instead of
receiving a lump sum, the payee may elect another Annuity Option. The
amount applied to that Option would not be reduced by the charge defined
in (b).
OPTION B. LIFE ANNUITY WITH PERIOD CERTAIN OF 10 YEARS: Annuity Payments
during the lifetime of the payee and in any event for 10 years certain.
If the payee dies during the guaranteed payment period and the
Beneficiary does not desire payments to continue for the remainder of the
guaranteed period, he/she may elect to have the present value of the
guaranteed payments remaining commuted and paid in a lump sum.
OPTION C. JOINT AND SURVIVOR ANNUITY: Annuity Payments payable during the
joint lifetime of the payee and a designated second natural person and
then during the lifetime of the survivor.
Unless the Annuity Option provides for commutation by the payee, a payee may
not withdraw or otherwise end an Annuity Option after it begins. Payments
will end upon the payee's death unless the Annuity Option provides for
payments continuing to a successor payee. No successor payee may extend the
period of time over which the remaining payments are to be made.
ANNUITY
If a 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 Separate
Account in accordance with the selection he or she makes, and the Annuity will
be paid as a Variable Annuity. A Certificate Owner can also select a
combination of a Fixed and Variable Annuity and the Adjusted Certificate Value
will be allocated accordingly. If a Certificate Owner does not select between
a Fixed Annuity and a Variable Annuity, any Adjusted Certificate Value in the
Variable Account will be applied to a Variable Annuity and any Adjusted
Certificate Value in the Fixed Account will be applied to a Fixed Annuity.
DVA(1) PAGE 17
<PAGE>
The Adjusted Certificate Value will be applied to the applicable Annuity Table
contained in the Certificate based upon the Annuity Option a Certificate Owner
selects. If, as of the Income Date, the current Annuity Option rates
applicable to the class of Certificates issued under the Group Contract
provide an initial Annuity Payment greater than the initial Annuity Payment
guaranteed under the applicable Annuity Table in the Certificate, the greater
payment will be made.
FIXED ANNUITY
The minimum dollar amount of each Fixed Annuity Payment for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. After the initial
Fixed Annuity payment, the payments will not change regardless of investment,
mortality or expense experience.
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 for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. The dollar amount
of 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
Income Date. This sets the number of Annuity Units for each monthly
payment for the applicable Sub-account. The number of Annuity Units
for each applicable Sub-account remains fixed during the Annuity
Period;
(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 Separate Account was
initially set 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 calculated as set forth on pages 11-12
(but without the
DVA(1) PAGE 18
<PAGE>
distribution charge, if any) 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 Valuation Period equivalent of the
Assumed Investment Rate for the number of days in the current
Valuation Period. The Assumed Investment Rate is equal to 6% per
year.
The value of an Annuity Unit may increase or decrease from Valuation Period to
Valuation Period.
USING THE TABLES
Tables 2, 3, 5, and 6 are age-dependent. The amount of the first annuity
payment will be based on an age a specified number of years younger than the
person's then-attained age (i.e., age last birthday). This age setback is as
follows:
DATE OF FIRST PAYMENT AGE SETBACK
1996-1999 1 year
2000-2009 2 years
2010-2019 4 years
2020-2029 5 years
2030 or later 6 years
We will calculate the amount for a payment frequency other than monthly and
for any ages not shown in Tables 2, 3, 5, and 6 in accordance with the next
section. Upon request, We will tell a Certificate Owner any such amount.
BASIS OF CALCULATION
Tables 1 and 4 are based on interest at 6% and 3%, respectively. Tables 2, 3,
5, and 6 are based on the 1983 Individual Annuity Valuation Tables, weighted
40% male and 60% female, with interest at 6% (Tables 2 and 3) and 3% (Tables 5
and 6), projected dynamically with Projection Scale G.
DVA(1) PAGE 19
<PAGE>
<TABLE>
<CAPTION>
TABLE 1: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION A FOR EACH $1,000 APPLIED
YEARS PAYMENT YEARS PAYMENT YEARS PAYMENT YEARS PAYMENT
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 $19.17 12 $9.63 19 $7.24 25 $6.32
6 16.42 13 9.12 20 7.04 26 6.21
7 14.46 14 8.69 21 6.86 27 6.11
8 13.00 15 8.31 22 6.70 28 6.02
9 11.87 16 7.99 23 6.56 29 5.94
10 10.97 17 7.71 24 6.43 30 5.87
11 10.24 18 7.46
</TABLE>
<TABLE>
<CAPTION>
TABLE 2: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION B FOR EACH $1,000 APPLIED
AGE PAYMENT AGE PAYMENT AGE PAYMENT AGE PAYMENT AGE PAYMENT
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 $5.09 43 $5.40 56 $6.06 69 $7.47 82 $ 9.72
31 5.11 44 5.44 57 6.13 70 7.63 83 9.87
32 5.13 45 5.47 58 6.21 71 7.79 84 10.02
33 5.14 46 5.51 59 6.30 72 7.95 85 10.15
34 5.16 47 5.55 60 6.39 73 8.12 86 10.27
35 5.18 48 5.60 61 6.48 74 8.30 87 10.38
36 5.20 49 5.64 62 6.59 75 8.48 88 10.48
37 5.23 50 5.69 63 6.69 76 8.66 89 10.57
38 5.25 51 5.74 64 6.81 77 8.84 90 10.65
39 5.28 52 5.80 65 6.93 78 9.03 91 10.72
40 5.31 53 5.86 66 7.05 79 9.21 92 10.77
41 5.34 54 5.92 67 7.19 80 9.38 93 10.82
42 5.37 55 5.99 68 7.33 81 9.55 94 10.86
95 10.89
</TABLE>
<TABLE>
<CAPTION>
TABLE 3: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION C FOR EACH $1,000 APPLIED
COMBINATION OF AGES
30 35 40 45 50 55 60 65 70 75 80 85 90 95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 $4.97 $4.99 $5.00 $5.02 $5.04 $5.05 $5.06 $5.07 $5.08 $5.09 $5.09 $5.09 $5.10 $5.10
35 5.01 5.04 5.07 5.09 5.11 5.13 5.15 5.16 5.17 5.18 5.18 5.19 5.19
40 5.08 5.12 5.16 5.19 5.22 5.25 5.27 5.29 5.30 5.31 5.31 5.32
45 5.18 5.23 5.29 5.34 5.38 5.41 5.44 5.46 5.48 5.49 5.49
50 5.32 5.40 5.47 5.54 5.60 5.64 5.68 5.70 5.72 5.72
55 5.51 5.62 5.73 5.85 5.90 5.96 6.00 6.02 6.04
60 5.79 5.95 6.11 6.24 6.34 6.41 6.45 6.48
65 6.20 6.44 6.66 6.84 6.97 7.05 7.10
70 6.80 7.15 7.47 7.71 7.87 7.97
75 7.69 8.22 8.66 8.99 9.20
80 9.03 9.81 10.43 10.87
85 11.02 12.11 12.98
90 13.82 15.34
95 17.66
</TABLE>
DVA(1) PAGE 20
<PAGE>
<TABLE>
<CAPTION>
TABLE 4: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION A FOR EACH $1,000 APPLIED
YEARS PAYMENT YEARS PAYMENT YEARS PAYMENT YEARS PAYMENT
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 $17.91 12 $8.24 19 $5.73 25 $4.71
6 15.14 13 7.71 20 5.51 26 4.59
7 13.16 14 7.26 21 5.32 27 4.47
8 11.68 15 6.87 22 5.15 28 4.37
9 10.53 16 6.53 23 4.99 29 4.27
10 9.61 17 6.23 24 4.84 30 4.18
11 8.86 18 5.96
</TABLE>
<TABLE>
<CAPTION>
TABLE 5: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION B FOR EACH $1,000 APPLIED
AGE PAYMENT AGE PAYMENT AGE PAYMENT AGE PAYMENT AGE PAYMENT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 $3.05 43 $3.46 56 $4.24 69 $5.79 82 $8.24
31 3.07 44 3.50 57 4.32 70 5.96 83 8.41
32 3.09 45 3.55 58 4.41 71 6.13 84 8.57
33 3.12 46 3.60 59 4.51 72 6.31 85 8.72
34 3.15 47 3.65 60 4.61 73 6.50 86 8.85
35 3.18 48 3.70 61 4.71 74 6.69 87 8.97
36 3.21 49 3.76 62 4.82 75 6.88 88 9.08
37 3.24 50 3.82 63 4.94 76 7.08 89 9.18
38 3.27 51 3.88 64 5.07 77 7.28 90 9.27
39 3.31 52 3.94 65 5.20 78 7.48 91 9.34
40 3.34 53 4.01 66 5.34 79 7.68 92 9.40
41 3.38 54 4.08 67 5.48 80 7.87 93 9.46
42 3.42 55 4.16 68 5.63 81 8.06 94 9.50
95 9.53
</TABLE>
<TABLE>
<CAPTION>
TABLE 6: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION C FOR EACH $1,000 APPLIED
COMBINATION OF AGES
30 35 40 45 50 55 60 65 70 75 80 85 90 95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 $2.88 $2.92 $2.95 $2.98 $3.00 $3.01 $3.02 $3.03 $3.04 $3.04 $3.04 $3.05 $3.05 $3.05
35 2.97 3.02 3.06 3.09 3.12 3.14 3.15 3.16 3.17 3.17 3.18 3.18 3.18
40 3.09 3.15 3.20 3.24 3.27 3.30 3.32 3.33 3.34 3.34 3.34 3.35
45 3.24 3.31 3.38 3.44 3.48 3.51 3.53 3.54 3.55 3.56 3.56
50 3.43 3.53 3.62 3.69 3.74 3.78 3.80 3.82 3.83 3.83
55 3.68 3.81 3.93 4.02 4.09 4.13 4.16 4.18 4.19
60 4.01 4.19 4.35 4.47 4.56 4.61 4.65 4.66
65 4.47 4.73 4.94 5.11 5.21 5.28 5.32
70 5.11 5.48 5.78 6.00 6.13 6.21
75 6.04 6.57 6.99 7.28 7.46
80 7.40 8.16 8.75 9.15
85 9.38 10.46 11.29
90 12.18 13.68
95 16.02
</TABLE>
DVA(1) PAGE 21
<PAGE>
ENDORSEMENTS
To be inserted only by Us
DVA(1) PAGE 22
<PAGE>
KEYPORT
LIFE INSURANCE COMPANY
------------------------
------------------------
Providence, Rhode Island
GROUP VARIABLE ANNUITY CONTRACT
FLEXIBLE PURCHASE PAYMENTS
DEFERRED INCOME PAYMENTS
NONPARTICIPATING -- NO DIVIDENDS
DVA(1) PAGE 23
<PAGE>
EXHIBIT 4(b)
FORM OF VARIABLE ANNUITY CERTIFICATE
OF KEYPORT LIFE INSURANCE COMPANY
<PAGE>
KEYPORT
LIFE INSURANCE COMPANY
-----------------------------------
-----------------------------------
A Stock Company
This Certificate describes the benefits and provisions of the Group Contract.
The Group Contract, as issued to the Group Contract Owner by Us with any riders
or endorsements, alone makes up the agreement under which benefits are paid.
The Group Contract may be inspected at the office of the Group Contract Owner.
In consideration of any application for this Certificate and the payment of
purchase payments, We agree, subject to the terms and conditions of the Group
Contract, to provide the benefits described in this Certificate to the
Certificate Owner.
If this Certificate is In Force on the Income Date, We will begin making income
payments to the Annuitant. We will make such payments according to the terms of
the Certificate and Group Contract.
RIGHT TO EXAMINE CERTIFICATE: You may return this Certificate to Us or the
agent through whom You purchased it within 10 days after You receive it. If so
returned, We will treat the Certificate as though it were never issued. Upon
receipt We will promptly refund the Certificate Value as of the date the
returned Certificate is received by Us plus any charges We may have previously
deducted.
READ THIS CERTIFICATE CAREFULLY.
Secretary President
VARIABLE ANNUITY CERTIFICATE
FLEXIBLE PURCHASE PAYMENTS
DEFERRED INCOME PAYMENTS
NONPARTICIPATING -- NO DIVIDENDS
ANNUITY PAYMENTS AND OTHER VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE OF A
SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. THIS
IS EXPLAINED FURTHER ON PAGES 11 AND 18.
PAGE 1
<PAGE>
TABLE OF CONTENTS
Page
Right to Examine Certificate . . . . . . . . . . . . . . . . . . . . . . . . 1
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certificate Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3A
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Variable Account Provisions. . . . . . . . . . . . . . . . . . . . . . . . . 10
Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Partial Withdrawals and Total Surrender. . . . . . . . . . . . . . . . . . . 14
Death Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Annuity Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Endorsements (if any) are before page. . . . . . . . . . . . . . . . . . . . 22
DEFINITIONS
ACCUMULATION PERIOD: The period prior to the Income Date during which Purchase
Payments may be made by a Certificate Owner.
ACCUMULATION UNIT: An accounting unit used to calculate 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 taxes
relating to a Certificate and Certificate Maintenance Charge. This amount is
applied to the applicable Annuity Tables to determine Annuity Payments.
ANNUITANT: The natural person on whose life Annuity Payments are based, and to
whom any Annuity Payments will be made starting on the Income Date.
ANNUITY OPTIONS: Options available for Annuity Payments.
ANNUITY PAYMENTS: The series of payments made to the Annuitant, starting on the
Income Date, under the Annuity Option selected.
ANNUITY PERIOD: The period after the Income Date during which Annuity Payments
are made.
ANNUITY UNIT: An accounting unit used to calculate Variable Annuity Payments
during the Annuity Period.
BENEFICIARY: The person(s) or entity(ies) who controls the Certificate if any
Certificate Owner dies before the Income Date.
(Definitions continue on page 4)
PAGE 2
<PAGE>
KEYPORT LIFE INSURANCE COMPANY
125 HIGH STREET, BOSTON, MA 02110
CERTIFICATE SCHEDULE
GROUP CONTRACT OWNER [Keyport Insurance Trust]
GROUP CONTRACT NUMBER [678999]
CERTIFICATE NUMBER [123455]
CERTIFICATE OWNER [John Q. Public]
JOINT CERTIFICATE OWNER [Jane Q. Public]
CERTIFICATE OWNER DOB [January 1, 1940]
JOINT CERTIFICATE OWNER DOB [February 29, 1940]
ANNUITANT [Thomas Doe]
ANNUITANT DOB [November 22, 1960]
CERTIFICATE ISSUE DATE [November 1, 1995]
INCOME DATE [November 1, 2010]
INITIAL PURCHASE PAYMENT [$10,000]
MINIMUM INITIAL PAYMENT [$5,000]
MINIMUM ADDITIONAL PAYMENT [$1,000]
CHARGES
DISTRIBUTION CHARGE [We deduct [0.000411%] of the assets in each Variable
Account Sub-Account on a daily basis (equivalent to an annual rate of [0.15%])
to compensate Us for a portion of Our distribution costs.]
ADMINISTRATIVE CHARGE [We deduct [0.000411%] of the assets in each Variable
Account Sub-account on a daily basis (equivalent to an annual rate of [0.15%])
to compensate Us for a portion of Our administrative expenses.]
MORTALITY AND EXPENSE RISK CHARGE [We deduct [0.003863%] of the assets in each
Variable Account Sub-account on a daily basis (equivalent to an annual rate of
[1.25%]) for Our mortality and expense risks.]
CERTIFICATE MAINTENANCE CHARGE [We charge [$36] to cover a portion of Our
ongoing Certificate maintenance expenses. The charge is incurred at the
beginning of the Certificate Year and is deducted on each Certificate
Anniversary and at the time of total surrender.]
TRANSFER CHARGE [Currently none, however, We reserve the right to charge [$25]
for a transfer if You make more than [12] transfers per Certificate Year.]
SURRENDER CHARGE [At the time of each partial withdrawal or at total surrender a
contingent
PAGE 3A
<PAGE>
deferred sales charge is imposed as a percentage of each Purchase Payment during
the [seven] years after the date of its payment, as follows:
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
7% 6% 5% 4% 3% 2% 1%
Thereafter 0%].
INITIAL PURCHASE PAYMENT ALLOCATION
Currently, Certificate Owners can select [7] Sub-accounts [and the Fixed
Account]. We reserve the right to increase or decrease the number of available
Sub-accounts. The minimum You may allocate to any Sub-account [or the Fixed
Account] is [10%] of any Purchase Payment. Your initial Purchase Payment has
been invested as follows:
[YY - 1 x%
YY - 2 x%
YY - 3 x%
XX - 1 x%
XX - 2 x%
XX - 3 x%
Fixed Account x%]
TRANSFER GUIDELINES
NUMBER OF TRANSFERS AND TRANSFER CHARGE: [Currently, Certificate Owners are
permitted [12] transfers per Certificate Year during the Accumulation Period
and [1] transfer every [6] months during the Annuity Period. We reserve the
right to change, upon notice, the frequency of transfers You can make. We also
reserve the right to impose a charge for any transfer in excess of [12] per
Certificate Year. The transfer charge is shown in the Charges section of the
Schedule.]
MINIMUM AMOUNT TO BE TRANSFERRED: [None]
MINIMUM AMOUNT WHICH MUST REMAIN IN A SUB-ACCOUNT AFTER TRANSFER: [None]
[LIMITATIONS ON TRANSFERS FROM FIXED ACCOUNT: Transfers during a Certificate
Year from the Fixed Account to the Variable Account are limited to [25%] of the
Fixed Account Value at the beginning of the Certificate Year. This limitation
will be waived if a systematic program of monthly transfers has been
established.]
PARTIAL WITHDRAWALS
You may make partial withdrawals during the Accumulation Period without
incurring a surrender charge[, as follows:
PAGE 3B
<PAGE>
(1) In any Certificate Year You may withdraw an aggregate amount not to
exceed, at the time of withdrawal:
(a) the Certificate Value, less
(b) the portion of Your Purchase Payments not previously withdrawn;
and
(2) In any Certificate Year after the first, You may also withdraw the
positive difference, if any, between the amount withdrawn pursuant to
(1) above in any such subsequent year and 10% of Your Certificate
Value as of the preceding Certificate Anniversary.
We will collect the surrender charge shown on the Schedule with respect to
partial withdrawals in excess of the amounts described in (1) and (2) above].
MINIMUM WITHDRAWAL AMOUNT: [$300], unless the withdrawal is made pursuant to Our
systematic withdrawal program, in which case the minimum withdrawal is [$100].
MINIMUM CERTIFICATE VALUE WHICH MUST REMAIN AFTER A PARTIAL WITHDRAWAL:
[$2,500].
DEATH BENEFITS
ADJUSTMENT OF CERTIFICATE VALUE
When We receive due proof of death of the Certificate Owner, [any Joint
Certificate Owner,] or the Annuitant if the Certificate Owner is a non-natural
Person, We will compare, as of the date of death, the Certificate Value to the
Death Benefit amount defined in this Schedule. If the Certificate Value is less
than the Death Benefit, We will increase the current Certificate Value by the
amount of the difference. Any amount credited will be allocated to the Variable
Account [and/or the Fixed Account] based on the Purchase Payment allocation
selection that is in effect when We receive due proof of death.
[WAIVER OF SURRENDER CHARGES
If the Certificate is surrendered within [90] days of the date of death of the
Certificate Owner, [any Joint Certificate Owner,] or the Annuitant if the
Certificate Owner is a non-natural Person, any applicable surrender charges will
not be deducted from the Certificate Withdrawal Value.]
DEATH BENEFIT AMOUNT
[PURCHASE PAYMENT DEATH BENEFIT
On the Certificate Date the Death Benefit is the initial Purchase Payment. On
subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) Start with the Death Benefit from the prior Valuation Date;
(2) Add to (1) any additional Purchase Payments paid during the current
Valuation Period and subtract from (1) any partial withdrawals
(including any associated surrender charge incurred) made during the
current Valuation Period.]
PAGE 3C
<PAGE>
[CERTIFICATE ANNIVERSARY DEATH BENEFIT
On the Certificate Date, the Death Benefit is the initial Purchase Payment. On
subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) (a) Start with the Death Benefit from the Certificate Date;
(b) Add to (a) any additional Purchase Payments paid since the
Certificate Date and subtract from (a) any partial withdrawals
(including any associated surrender charge incurred) made since
the Certificate Date;
(2) (a) Determine the Certificate Value for each Certificate Anniversary
(the "Anniversary Value") before the [81st] birthday of the
Certificate Owner or, if the Certificate Owner is a non-natural
Person, the Annuitant;
(b) Increase each "Anniversary Value" by any Purchase Payments made
after that Value's Anniversary;
(c) Decrease each "Anniversary Value" by the following amount
calculated at the time of each partial withdrawal made after
that Value's Anniversary: (i) the partial withdrawal amount
(including any associated surrender charge incurred) divided by
the Certificate Value immediately preceding the withdrawal, (ii)
multiplied by the "Anniversary Value" immediately preceding the
withdrawal;
(d) Select the highest "Anniversary Value" after the adjustments in
(b) and (c) above;
(3) Set the Death Benefit equal to the greater of (1) and (2).]
[If there is a change of Certificate Owner, the new Certificate Owner's age will
be used to determine the amount in (2) above.]
[INTEREST ACCUMULATING DEATH BENEFIT
On the Certificate Date, the Death Benefit is the initial Purchase Payment. On
subsequent Valuation Dates, the Death Benefit is calculated as follows:
(1) Start with the Death Benefit from the Prior Valuation Date;
(2) Calculate interest on (1) for the current Valuation Period at
the Death Benefit Interest Rate;
(3) Add (1) and (2);
(4) Add any additional Purchase Payments paid during the current
Valuation Period to (3);
(5) Subtract partial withdrawals made during the current Valuation
Period from (4);
Each accumulated initial or additional Purchase Payment, reduced by any partial
withdrawals (including any associated surrender charge incurred) allocated to
such Purchase Payment, will continue to grow at the Death Benefit Interest Rate
until reaching its Maximum Guaranteed Death Benefit.
The Death Benefit is accumulated at the Death Benefit Interest Rate of [7%]
compounded annually, except:
(1) Amounts in the [XX-1 Sub-account] are accumulated at the net rate of
return for
PAGE 3D
<PAGE>
such Sub-account during the current Valuation Period if less than [7%]
compounded annually; and
(2) Amounts in the [YY-1 Sub-account] are accumulated at the net
rate of return for such Sub-account during the current Valuation
Period if less than [7%]compounded annually; and
(3) Amounts in a Fixed Allocation are accumulated at the interest rate
being credited to such Fixed Allocation during the current Valuation
Period if less than [7%] compounded annually.
The net rate of return used in (1) and (2) equals the net investment factor
defined on page 11 less 1.0.
The Maximum Guaranteed Death Benefit is initially equal to [two] times the
initial or additional Purchase Payment paid. Thereafter, the Maximum Guaranteed
Death Benefit as of the effective date of a partial withdrawal is reduced first
by the amount of any partial withdrawal representing earnings and second in
proportion to the reduction in Certificate Value for any partial withdrawal
representing Purchase Payments (in each case, including any associated surrender
charge incurred).]
[If there is a change of Certificate Owner and the new Certificate Owner's age
is less than or equal to 75, the Death Benefit described above will remain in
effect. If the new Certificate Owner's age is greater than 75, the Death
Benefit in effect will not apply; the Death Benefit will be the sum of the
Purchase Payments less any partial withdrawals (including any associated
surrender charge incurred) made since the Certificate Date.]
THE VARIABLE SEPARATE ACCOUNT[S]
[SUB-ACCOUNTS INVESTING IN SHARES OF MUTUAL FUNDS
Variable Account [A] is a unit investment trust variable separate account,
organized in and governed by the laws of the State of Rhode Island, Our state
of domicile. Variable Account [A] is divided into Sub-accounts. Each
Sub-account listed below invests in shares of the corresponding Portfolio of
the Eligible Fund shown.
SUB-ACCOUNT ELIGIBLE FUND AND PORTFOLIO
[YYYYY FUND]
[TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES]
[XXXXX TRUST]
[TEXT HERE WILL DESCRIBE FUNDS AND INVESTMENT OBJECTIVES]
[SUB-ACCOUNTS INVESTING DIRECTLY IN SECURITIES
Variable Account [B] is an investment company variable separate account which
invests
PAGE 3E
<PAGE>
directly in securities, organized in and governed by the laws of the State of
Rhode Island, Our state of domicile. Variable Account [B] is divided into Sub-
accounts. The investment advisor to each Sub-account is set forth opposite each
Sub-account shown below:
Sub-account Investment Advisor
[Currently, none] [Currently, none] ]
THE FIXED ACCOUNT
[The Fixed Account is part of Our General Account, which consists of all of Our
assets except the assets of the Variable Account and the assets of other
separate accounts that We maintain. Subject to applicable law, We have sole
discretion over investments of the assets of the Fixed Account. If You
allocate assets to the Fixed Account, Your accumulation values and annuity
payments will have guaranteed minimums.
Before the Income Date, Your interest in the Fixed Account is measured by the
Fixed Account Value. When annuity payments begin, the payee's interest in the
Fixed Account is measured by the amount of each periodic payment.
Benefits from the Fixed Account will not be less than the minimum values
required by any law of the jurisdiction where the Certificate is delivered.
Purchase Payments will be allocated to the Fixed Account in accordance with Your
selection at the Certificate Issue Date. You may change such selection by
Written Request.
The Fixed Account Value at any time is equal to:
(1) all Purchase Payments allocated to the Fixed Account plus the
interest subsequently credited on those payments; plus
(2) any Variable Account Value transferred to the Fixed Account plus
the interest subsequently credited on the transferred value;
less
(3) any prior partial withdrawals from the Fixed Account;less
(4) any Fixed Account Value transferred to the Variable Account.
We will credit interest to Purchase Payments allocated to the Fixed Account at
rates declared by Us for Guarantee Periods of one [or more] year[s] from the
month and day of allocation. The minimum Guaranteed Interest Rate is [3%] per
year.]
PAGE 3E
<PAGE>
DEFINITIONS (CONTINUED)
CERTIFICATE: The document issued to a Certificate Owner to evidence a
Certificate Owner's participation under the Group Contract. The Certificate
summarizes the benefits and provisions of the Group Contract.
CERTIFICATE ANNIVERSARY: An anniversary of the Certificate Issue Date.
CERTIFICATE ISSUE DATE: The date a Certificate is issued to a Certificate
Owner. The Certificate Issue Date is shown on the Certificate Schedule.
CERTIFICATE OWNER: The person who owns a Certificate under the Group Contract.
Any Joint Certificate Owners and the Certificate Owner own the Certificate
equally with rights of survivorship.
CERTIFICATE VALUE: The sum of the Certificate Owner's interest in the Sub-
accounts of the Variable Account and the Fixed Account during the Accumulation
Period.
CERTIFICATE YEAR: The first Certificate Year is the annual period which begins
on the Certificate Issue Date. Subsequent Certificate Years begin on each
Certificate Anniversary.
ELIGIBLE FUND: An investment entity shown on the Certificate Schedule.
FIXED ACCOUNT: The account We establish to support Fixed Allocations. The
Certificate Schedule shows whether the Fixed Account is available under the
Certificate.
FIXED ACCOUNT VALUE: The value of all Fixed Account amounts accumulated under
this Certificate prior to the Income Date.
FIXED ALLOCATION: An amount allocated to the Fixed Account that is credited
with a Guaranteed Interest Rate for a specified Guarantee Period.
FIXED ANNUITY: An annuity with a series of payments made during the Annuity
Period which are guaranteed as to dollar amount by Us.
GENERAL ACCOUNT: Our general investment account which contains all of Our
assets except those in the Variable Account and Our other separate accounts.
GROUP CONTRACT OWNER: The person or entity to which the Group Contract is
issued.
GUARANTEED INTEREST RATE: The effective annual interest rate which We will
credit for a specified Guarantee Period.
GUARANTEE PERIOD: The period of year(s) a rate of interest is guaranteed to be
credited within the Fixed Account.
PAGE 4
<PAGE>
INCOME DATE: The date on which Annuity Payments begin. The Income Date is
shown on the Certificate Schedule.
IN FORCE: The status of a Certificate before the Income Date so long as it has
not been totally surrendered and there has not been a death of a Certificate
Owner or Joint Certificate Owner that will cause the Certificate to end within
five years of the date of death.
OFFICE: Our executive office shown on the Certificate Schedule.
PERSON: A human being, trust, corporation, or any other legally recognized
entity.
PORTFOLIO: A series of an Eligible Fund which constitutes a separate and
distinct class of shares.
PURCHASE PAYMENT: A payment made by or on behalf of a Certificate Owner with
respect to a Certificate.
SUB-ACCOUNT: Variable Account assets are divided into Sub-accounts. Assets of
each Sub-account will be invested in shares of a Portfolio of an Eligible Fund,
or directly in portfolio securities.
VALUATION DATE: Each day on which We and the New York Stock Exchange ("NYSE")
are open for business, or any other day that the Securities and Exchange
Commission requires that mutual funds, unit investment trusts or other
investment portfolios be valued.
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 on the next
succeeding Valuation Date.
VARIABLE ACCOUNT: Our Variable Account(s) shown on the Certificate Schedule.
VARIABLE ANNUITY: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-accounts of the Variable
Account.
WE, US, OUR: Keyport Life Insurance Company.
WRITTEN REQUEST: A request in writing, in a form satisfactory to Us, and
received by Us at Our Office.
YOU, YOUR: The Certificate Owner and any Joint Certificate Owners.
GENERAL PROVISIONS
PURCHASE PAYMENTS
The initial Purchase Payment is due on the Certificate Issue Date. It must be
paid at Our Office in United States currency. Coverage under a Certificate does
not take effect until We have accepted the initial Purchase Payment during Your
lifetime. Each Purchase Payment after the
PAGE 5
<PAGE>
Certificate Issue Date must be at least the amount shown on the Certificate
Schedule. Provided the Certificate Value under a Certificate does not go to
zero, a Certificate will stay in force until the Income Date even if You make no
payments after the initial one. We reserve the right to reject any subsequent
Purchase Payment.
ALLOCATION OF PURCHASE PAYMENTS
Your initial Purchase Payment is allocated to the Sub-accounts of the Variable
Account, and to the Fixed Account if available, in accordance with the
selections made by You at the Certificate Issue Date. Unless otherwise changed
by You, subsequent Purchase Payments are allocated in the same manner as the
initial Purchase Payment. Allocation of Purchase Payments is subject to the
terms and conditions imposed by Us. We reserve the right to allocate initial
Purchase Payments to the money market Sub-account until the expiration of the
Right to Examine Certificate period set forth on the first page of the
Certificate.
THE CONTRACT
The Group Contract, including the application, if any, and any attached rider or
endorsement constitute the entire contract between the Group Contract Owner and
Us. All statements made by the Group Contract Owner, any Certificate Owner or
any Annuitant will be deemed representations and not warranties. No such
statement will be used in any contest unless it is contained in the application
signed by the Group Contract Owner or in a written instrument signed by the
Certificate Owner, a copy of which has been furnished to the Certificate Owner,
the Beneficiary or to the Group Contract Owner.
Only Our President or Secretary may agree to change any of the terms of the
Group Contract. Any changes must be in writing. Any change to the terms of a
Certificate must be in writing and with Your consent, unless provided otherwise
by the Group Contract and the Certificate.
To assure that the Group Contract and the Certificate will maintain their status
as a variable annuity under the Internal Revenue Code, We reserve the right to
change the Group Contract and any Certificate issued thereunder to comply with
future changes in the Internal Revenue Code, any regulations or rulings issued
thereunder, and any requirements otherwise imposed by the Internal Revenue
Service. The Group Contract Owner and the affected Certificate Owner will be
sent a copy of any such amendment.
We reserve the right, subject to compliance with the law as currently applicable
or subsequently changed, to: (a) operate the Variable Account in any form
permitted under the Investment Company Act of 1940, as amended, (the "1940
Act"), or in any other form permitted by law; (b) take any action necessary to
comply with or obtain and continue any exemptions from the 1940 Act, or to
comply with any other applicable law; (c) transfer any assets in any Sub-account
to another Sub-account, or to one or more separate investment accounts, or the
General Account; or to add, combine or remove Sub-accounts in the Variable
Account; and (d) change the way We assess charges, so long as We do not increase
the aggregate amount beyond that currently charged to the Variable Account and
the Eligible Funds in connection with this Certificate. If the shares of any of
the Eligible Funds should become unavailable for investment by the Variable
Account or if in Our judgment further investment in such Portfolio shares should
PAGE 6
<PAGE>
become inappropriate in view of the purpose of the Certificate, We may add or
substitute shares of another mutual fund for the Portfolio shares already
purchased under the Certificate. No substitution of Portfolio shares in any
Sub-account may take place without prior approval of the Securities and Exchange
Commission and notice to the affected Certificate Owners, to the extent required
by the 1940 Act.
CERTIFICATE OWNER
You are the Certificate Owner of this Certificate. You have all rights and may
receive all benefits under a Certificate. A Certificate Owner is the person
designated as such on the Certificate Issue Date, unless changed. You may
exercise all rights of this Certificate while it is In Force, subject to the
rights of (a) any assignee under an assignment filed with Us, and (b) any
irrevocably named Beneficiary.
JOINT CERTIFICATE OWNER
A Certificate can be owned by Joint Certificate Owners. Upon the death of any
Certificate Owner or Joint Certificate Owner, the surviving owner(s) will be the
primary Beneficiary(ies). Any other beneficiary designation will be treated as
a Contingent Beneficiary unless otherwise indicated in a Written Request filed
with Us.
ANNUITANT
The Annuitant is the person on whose life Annuity Payments are based. The
Annuitant is the person designated by You at the Certificate Issue Date, unless
changed prior to the Income Date. Any change of Annuitant is subject to Our
underwriting rules then in effect. The Annuitant may not be changed in a
Certificate which is owned by a non-natural person. You may name a Contingent
Annuitant. The Contingent Annuitant becomes the Annuitant if the Annuitant dies
while this Certificate is In Force. If the Annuitant dies and no Contingent
Annuitant has been named, We will allow You sixty days to designate someone
other than Yourself as Annuitant. You will be the Contingent Annuitant unless
You name someone else. If the Certificate is owned by 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.
BENEFICIARY
The Beneficiary is the person who controls the Certificate if any Certificate
Owner dies prior to the Income Date. If the Certificate is owned by Joint
Certificate Owners, upon the death of any Certificate Owner or Joint Certificate
Owner, the surviving owner(s) will become the primary Beneficiary. Any other
beneficiary designation will be treated as a Contingent Beneficiary unless
otherwise indicated in a Written Request filed with Us. If You name more than
one Person as Primary Beneficiary or as Contingent Beneficiary, and do not state
otherwise on an application or in a Written Request to Us, any non-survivors
will not receive a benefit. The survivors will receive equal shares. Subject
to the rights of any irrevocable Beneficiary(ies), You may change primary or
contingent Beneficiary(ies). A change must be made by Written Request and will
be effective as of the date the Written Request is signed. We will not be
liable for any payment We make or action We take before We receive the
PAGE 7
<PAGE>
Written Request.
GROUP CONTRACT OWNER
The Group Contract Owner has title to the Group Contract. The Group Contract
and any amount accumulated under any Certificate are not subject to the claims
of the Group Contract Owner or 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.
CHANGE OF CERTIFICATE OWNER, BENEFICIARY OR CONTINGENT ANNUITANT
While this Certificate is In Force, You may by Written Request change the
primary Certificate Owner, Joint Certificate Owner, primary Beneficiary,
Contingent Beneficiary, Contingent Annuitant, or in certain instances, the
Annuitant. An irrevocably named Person may be changed only with the written
consent of such Person. The change will be effective, following Our receipt of
the Written Request, as of the date the Written Request is signed. The change
will not affect any payments We make or actions We take prior to the time We
receive the Written Request.
ASSIGNMENT OF THE CERTIFICATE
You may assign this Certificate at any time while it is In Force. The
assignment must be in writing and a copy must be filed at Our Office. Your
rights and those of any revocably named Person will be subject to the
assignment. An assignment will not affect any payments We make or actions We
take before We receive the assignment. We are not responsible for the validity
of any assignment.
MISSTATEMENT OF AGE OR SEX
If the age or sex of the Annuitant or any payee has been misstated, We will
compute the amount payable based on the correct age and sex. If Annuity
Payments have begun, any underpayment(s) that have been made will be paid in
full with the next Annuity Payment. Any overpayment, unless repaid to Us in one
sum, will be deducted from future Annuity Payments otherwise due until We are
repaid in full.
NON-PARTICIPATING
This Certificate does not participate in Our divisible surplus.
EVIDENCE OF DEATH, AGE, SEX OR SURVIVAL
If a Certificate provision relates to the death of a natural Person, We will
require proof of death before We will act under that provision. Proof of death
shall be: (a) a certified death certificate; or (b) a certified decree of a
court of competent jurisdiction as to the finding of death; or (c) a written
statement by a medical doctor who attended the deceased; or (d) any other
document constituting due proof of death under applicable state law. If Our
action under a Certificate
PAGE 8
<PAGE>
provision is based on the age, sex, or survival of any Person, We may require
evidence of the particular fact before We act under that provision.
PROTECTION OF PROCEEDS
No Beneficiary or payee may commute or assign any payments under a Certificate
before they are due. To the extent permitted by law, no payments shall be
subject to the debts of any Beneficiary or payee or to any judicial process for
payment of those debts.
REPORTS
We will send Certificate Owners a report that shows the Certificate Value at
least once each Certificate Year. We will send any other reports that may be
required by law.
TAXES
Any taxes paid to any governmental entity relating to a Certificate will be
deducted from the Purchase Payments or Certificate Value. We may, in Our sole
discretion, delay the deduction until a later date. By not deducting tax
payments at the time of Our payment, We do not waive any right We may have to
deduct amounts at a later date. We will, in Our sole discretion, determine when
taxes relate to a Certificate or to the operation of the Variable Account. We
reserve the right to establish a provision for federal income taxes if We
determine, in Our sole discretion, that We will incur a tax as a result of the
operation of the Variable Account. Such a provision will be reflected in the
Accumulation and Annuity Unit Values. We will deduct for any income taxes
incurred by Us 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. We
will deduct from any payment under this Certificate any withholding taxes
required by applicable law.
REGULATORY REQUIREMENTS
All values payable under a Certificate will not be less than the minimum
benefits required by the laws and regulations of the states in which the
Certificate is delivered.
SUSPENSION OR DEFERRAL OF PAYMENTS
We reserve the right to suspend or postpone payments for a withdrawal, transfer,
surrender or death benefit for any period when:
(1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings); or
(2) trading on the New York Stock Exchange is restricted; or
(3) an emergency exists as a result of which valuation or disposal of the
assets and securities of the Variable Account is not reasonably
practicable; or
(4) the Securities and Exchange Commission, by order or pronouncement, so
permits
PAGE 9
<PAGE>
for the protection of Certificate Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission govern as to whether the conditions described in (2) and (3) above
exist.
We reserve the right to delay payment of amounts allocated to the Fixed Account
for up to six months.
VARIABLE ACCOUNT PROVISIONS
THE VARIABLE ACCOUNT
The Variable Account(s) is designated on the Certificate Schedule and consists
of assets set aside by Us, which are kept separate from Our general assets and
all other variable account assets We maintain. We own the assets of the
Variable Account. Variable Account assets equal to reserves and other contract
liabilities will not be chargeable with liabilities arising out of any other
business We may conduct. We may transfer to Our General Account assets which
exceed the reserves and other liabilities of the Variable Account. Income and
realized and unrealized gains or losses from assets in the Variable Account are
credited to or charged against the account without regard to other income, gains
or losses in Our other investment accounts.
The Variable Account assets are divided into Sub-accounts. The Sub-accounts
which are available under the Certificate are shown on the Certificate Schedule.
The assets of the Sub-accounts of the unit investment trust variable separate
account are allocated to the Eligible Fund(s) and the Portfolio(s), if
applicable, within an Eligible Fund shown on the Certificate Schedule. The
assets of the Sub-accounts of the investment company variable separate account,
if applicable, are invested in portfolios of securities designed to meet the
objectives of the Sub-Account shown on the Certificate Schedule. We may, from
time to time, add additional Sub-accounts, Eligible Funds or Portfolios to those
shown on the Certificate Schedule. You may be permitted to transfer Certificate
Values or allocate Purchase Payments to the additional Sub-Accounts, Eligible
Funds or Portfolios. However, the right to make such transfers or allocations
will be limited by the terms and conditions imposed by Us.
We also have the right to eliminate Sub-accounts from the Variable Account, to
combine two or more Sub-accounts or to substitute a new Portfolio for the
Portfolio in which a Sub-account invests. A substitution may become necessary
if, in Our discretion, a Portfolio or Sub-account no longer suits the purposes
of the Group Contract. This may happen: due to a change in laws or regulations
or a change in a Portfolio's investment objectives or restrictions; because the
Portfolio or Sub-account is no longer available for investment; or for some
other reason. We will obtain any prior approvals that may be required from the
insurance department of Our state of domicile, and from the SEC or any other
governmental entity before making such a substitution.
When permitted by law, We reserve the right to:
(1) Deregister a Variable Account under the 1940 Act;
PAGE 10
<PAGE>
(2) Operate a Variable Account as a management company under the 1940 Act,
if it is operating as a unit investment trust;
(3) Operate a Variable Account as a unit investment trust under the 1940
Act, if it is operating as a management company;
(4) Restrict or eliminate any voting rights as to the account;
(5) Combine the Variable Account with any other variable account.
VALUATION OF ASSETS
The assets of the Variable Account are valued at their fair market value in
accordance with Our procedures.
ACCUMULATION UNITS
Your Variable Account Value will fluctuate in accordance with the investment
results of the Sub-accounts to which You have allocated Your Purchase Payments
or Certificate Value. In order to determine how these fluctuations affect Your
Certificate Value, We use an Accumulation Unit value. Accumulation Units are
used to account for all amounts allocated to or withdrawn from the Sub-accounts
of the Variable Account as a result of Purchase Payments, partial withdrawals,
transfers, or charges deducted from the Certificate Value. We determine the
number of Accumulation Units of a Sub-account purchased or cancelled by dividing
the amount allocated to, or 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 We receive the request for the transaction.
ACCUMULATION UNIT VALUE
The Accumulation Unit Value for each Sub-account was initially set 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 a net investment factor for the Sub-account for the current period.
This factor may be greater or less than 1.0; therefore, the Accumulation Unit
Value may increase or decrease from Valuation Period to Valuation Period.
We calculate the net investment factor for each Sub-account investing in shares
of mutual funds by dividing (a) by (b) and then subtracting (c) where:
(a) is equal to:
(i) the net asset value per share of the Portfolio in which
the Sub-account invests at the end of the Valuation
Period; plus
(ii) any dividend per share declared for the Portfolio that has
an ex-dividend date within the current Valuation Period.
(b) is the net asset value per share of the Portfolio at the end of the
preceding Valuation Period.
(c) is equal to:
(i) the sum of each Valuation Period equivalent of the annual
rate for the
PAGE 11
<PAGE>
mortality and expense risk charge, for the administrative
charge, and for the distribution charge, if any, which are
shown on the Certificate Schedule; plus
(ii) a charge factor, if any, for any tax provision established
by Us a result of the operation of the Sub-account.
We calculate the net investment factor for each Sub-account investing directly
in securities with the same formula, except:
(a) is equal to:
(i) the value of the assets in the Sub-account at the end of
the preceding Valuation Period; plus
(ii) any investment income and capital gains, realized or
unrealized, credited to the assets during the current
Valuation Period; less
(iii) any capital losses, realized or unrealized, charged
against the assets during the current Valuation Period;
less
(iv) all operating and investment expenses relating to the
assets that are incurred during the current Valuation
Period.
(b) is the value of the assets in the Sub-account at the end of the
preceding Valuation Period.
MORTALITY AND EXPENSE RISK CHARGE
Each Valuation Period We deduct a mortality and expense risk charge from each
Sub-account of 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 Us for assuming the mortality and expense risks with respect to the
Certificates We issue. We guarantee the dollar amount of each Annuity Payment
after the first Annuity Payment will not be affected by variations in mortality
or expense experience.
ADMINISTRATIVE CHARGE
Each Valuation Period We deduct 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 Us for the costs
associated with administration of the Variable Account and the Certificates We
issue.
DISTRIBUTION CHARGE
Each Valuation Period We deduct a distribution charge from the Variable Account
which is equal, on an annual basis, to the amount shown on the Certificate
Schedule. The distribution charge compensates Us for the costs associated with
the distribution of the Certificates We issue.
CERTIFICATE MAINTENANCE CHARGE
We deduct a certificate maintenance charge from the Certificate Value by
cancelling
PAGE 12
<PAGE>
Accumulation Units from each applicable Sub-account to reimburse Us for
expenses relating to the maintenance of the Certificate. We will deduct the
certificate maintenance charge from the Sub-accounts of the Variable Account in
the same proportion that the amount of Certificate Value in each Sub-account
bears to the Certificate Value. The certificate maintenance charge is shown on
the Certificate Schedule. The certificate maintenance charge will be deducted
from the Certificate Value on each Certificate Anniversary during the
Accumulation Period.
If a total surrender is made on a date other than a Certificate Anniversary, the
certificate maintenance charge will be deducted at the time of surrender.
During the Annuity Period, the certificate maintenance charge will be deducted
on a pro-rata basis from each Annuity Payment.
TRANSFERS
Subject to any limitation We impose on the number of transfers permitted in a
Certificate Year, You may transfer all or part of Your Certificate Value among
the Sub-accounts and the Fixed Account, if any, by Written Request or by
telephone without the imposition of any fees or charges. Transfers among the
Sub-accounts and the Fixed Account are permitted only during the Accumulation
Period. The number of permitted transfers, and the charge for transfers in
excess of that number, are shown on the Certificate Schedule. All transfers are
subject to the following:
(1) If more than the number of free transfers, shown on the Certificate
Schedule, are made in a Certificate Year, We will deduct a transfer charge,
shown on the Certificate Schedule, for each subsequent transfer. The transfer
fee will be deducted from the Sub-account from which the transfer is made.
However, if You transfer Your entire interest in a Sub-account, the transfer fee
will be deducted from the amount transferred. If You make a transfer from more
than one Sub-account, any transfer fee will be allocated pro-rata among such
Sub-accounts in proportion to the amount transferred from each.
(2) During the Annuity Period, transfers of values between Sub-accounts
will be made by converting the number of Annuity Units being transferred to the
number of Annuity Units in the Sub-account to which a 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.
(3) The minimum amount which can be transferred 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) If 100% of the value of any Sub-account is transferred and the current
allocation for Purchase Payments includes that Sub-account, the allocation for
future Purchase Payments will change to reflect Your allocation of Certificate
Value following the transfer.
(5) We reserve the right, at any time and without prior notice to any
party, to
PAGE 13
<PAGE>
terminate, suspend or modify the transfer privileges described above.
We will not be liable for transfers made in accordance with Your instructions.
All amounts and Accumulation Units will be determined as of the end of the
Valuation Period in which We receive the request for transfer.
PARTIAL WITHDRAWALS AND TOTAL SURRENDER
PARTIAL WITHDRAWALS
During the Accumulation Period while the Certificate is In Force, You may, upon
Written Request, make a partial withdrawal, subject to the provisions and
limitations shown on the Certificate Schedule. For purposes of determining
whether a surrender charge is applicable to Your partial withdrawal:
(1) Your partial withdrawal will first be taken from the portion of Your
Certificate Value which is in excess of Your Purchase Payments, and
then from Your Purchase Payments; and
(2) We will allocate partial withdrawals to Purchase Payments in the order
in which the Purchase Payments were made, starting with the first.
A withdrawal will result in the cancellation of Accumulation Units from each
applicable Sub-account in the ratio that Your interest in the Sub-account bears
to Your Certificate Value in all the Sub-accounts. You must specify by Written
Request in advance if You want Accumulation Units to be cancelled in a manner
other than the method described above. If there is no value or insufficient
value in the Variable Account, then the amount withdrawn, or the insufficient
portion, will be deducted from the Fixed Account. If You have multiple
Guarantee Periods, We will deduct such amount from each Guarantee Period's
values in the ratio that each Period's values bears to the total Fixed Account
Value. You must specify by Written Request in advance if You want multiple
Guarantee Periods to be reduced in a manner other than the method described
above.
Each partial withdrawal must be for an amount not less than the amount shown on
the Certificate Schedule. The Certificate Value which must remain in a Sub-
account, and in a Certificate, is shown on the Certificate Schedule. The
Certificate Schedule also shows any charge.
TOTAL SURRENDER
During the Accumulation Period while the Certificate is In Force, You may, upon
Written Request, make a total surrender of the Certificate Withdrawal Value. The
Certificate Withdrawal Value is:
(1) the Certificate Value as of the end of the Valuation Period during
which We receive a Written Request for a withdrawal or surrender; less
PAGE 14
<PAGE>
(2) any applicable taxes not previously deducted; less
(3) any surrender charge; less
(4) any certificate maintenance charge.
We will pay the amount of any withdrawal or surrender within seven days unless
the Suspension or Deferral of Payments Provision is in effect.
DEATH PROVISIONS
DEATH OF CERTIFICATE OWNER
These provisions apply if, during the Accumulation Period while the Certificate
is In Force, the Certificate Owner or any Joint Certificate Owner dies (whether
or not the decedent is also the Annuitant) or the Annuitant dies under a
Certificate owned by a non-natural Person. The "designated beneficiary" will
control the contract after such a death. This "designated beneficiary" will be
the first Person among the following who is alive on the date of death:
Certificate Owner; Joint Certificate Owner; primary Beneficiary; Contingent
Beneficiary; and Certificate Owner's estate. If the Certificate Owner and Joint
Certificate Owner are both alive, they shall be the "designated beneficiary"
together.
IF THE DECEDENT'S SURVIVING SPOUSE (IF ANY) IS THE SOLE "DESIGNATED
BENEFICIARY", the surviving spouse will automatically become the new sole
Certificate Owner as of the date of the death. And, if the Annuitant is the
decedent, the new Annuitant will be any living Contingent Annuitant, otherwise
the surviving spouse. The Certificate may stay in force until another death
occurs (i.e., until the death of the Certificate Owner or Joint Certificate
Owner). Except for this paragraph, all of "Death Provisions" will apply to that
subsequent death.
IN ALL OTHER CASES, the Certificate may stay in force up to five years from the
date of death. During this period, the "designated beneficiary" may exercise
all ownership rights, including the right to make transfers or partial
withdrawals or the right to surrender the Certificate for its Certificate
Withdrawal Value. If this Certificate is still in force at the end of the five-
year period, We will automatically end it then by paying to the "designated
beneficiary" the Certificate Withdrawal Value without the deduction of any
applicable surrender charges. If the "designated beneficiary" is not alive
then, We will pay any Person(s) named by the "designated beneficiary" in a
Written Request; otherwise the "designated beneficiary's" estate.
DEATH OF ANNUITANT
These provisions apply if during the Accumulation Period while the Certificate
is In Force, (a) the Annuitant dies, (b) the Annuitant is not an Owner, and (c)
the Owner is a natural person. The Certificate will continue In Force after the
Annuitant's death. The new Annuitant will be any living Contingent Annuitant,
otherwise the Certificate Owner.
PAGE 15
<PAGE>
PAYMENT OF BENEFITS
Instead of receiving a lump sum, You or any "designated beneficiary" may by
Written Request direct that We pay any benefit of $5,000 or more under an
Annuity Option that meets the following: (a) the first payment to the
"designated beneficiary" must be made no later than one year after the date of
death; (b) payments must be made over the life of the "designated beneficiary"
or over a period not extending beyond that person's life expectancy; and (c) any
Annuity Option that provides for payments to continue after the death of the
"designated beneficiary" will not allow the successor payee to extend the period
of time over which the remaining payments are to be made.
ANNUITY PROVISIONS
GENERAL
If the Certificate is In Force on the Income Date, the Adjusted Certificate
Value will be applied under the Annuity Option selected by You. Annuity
Payments may be made on a fixed or variable basis or both.
INCOME DATE
The Income Date may be selected by You. It is shown on the Certificate
Schedule. The Income Date can be any time after the Certificate Issue Date for
variable payments and any time after the first Certificate Anniversary for fixed
payments. The Income Date may not be later than the earlier of when the
Annuitant reaches attained age 90 or that required under state law. If no
Income Date is selected, it will be the earlier of when the Annuitant reaches
attained age 90 or the maximum date permitted under state law, if any.
Prior to the Income Date, You may change the Income Date by Written Request.
Any change must be requested at least 30 days prior to the new Income Date.
SELECTION OF AN ANNUITY OPTION
An Annuity Option may be selected by You. If no Annuity Option is selected,
Option B will automatically be applied. Prior to the Income Date, You may
change the Annuity Option selected by Written Request. Any change must be
requested at least 30 days prior to the Income Date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Annuity Payments are paid in monthly installments unless quarterly, semi-annual
or annual payments are chosen. 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, We reserve the
right to make a lump sum payment in lieu of Annuity Payments. If the Annuity
Payment would be or becomes less than $100, We will reduce the frequency of
payments to a longer interval which will result in each payment being at least
$100.
PAGE 16
<PAGE>
ANNUITY OPTIONS
The following Annuity Options or any other Annuity Option acceptable to Us may
be selected:
OPTION A. ANNUITY FOR A FIXED NUMBER OF YEARS: Annuity Payments for a
chosen number of years, not less than 5. If the payee dies during the
payment period and the Beneficiary does not desire payments to continue
for the remainder of the period, he/she may elect to have the present
value of the remaining payments commuted and paid in a lump sum. During
the payment period of a Variable Annuity, the payee may elect by Written
Request to receive the following amount: (a) the present value of the
remaining payments commuted; less (b) any surrender charge that may be due
by treating the value defined in (a) as a surrender. Instead of receiving
a lump sum, the payee may elect another Annuity Option. The amount
applied to that Option would not be reduced by the charge defined in (b).
OPTION B. LIFE ANNUITY WITH PERIOD CERTAIN OF 10 YEARS: Annuity Payments
during the lifetime of the payee and in any event for 10 years certain.
If the payee dies during the guaranteed payment period and the Beneficiary
does not desire payments to continue for the remainder of the guaranteed
period, he/she may elect to have the present value of the guaranteed
payments remaining commuted and paid in a lump sum.
OPTION C. JOINT AND SURVIVOR ANNUITY: Annuity Payments payable during the
joint lifetime of the payee and a designated second natural person and
then during the lifetime of the survivor.
Unless the Annuity Option provides for commutation by the payee, a payee may not
withdraw or otherwise end an Annuity Option after it begins. Payments will end
upon the payee's death unless the Annuity Option provides for payments
continuing to a successor payee. No successor payee may extend the period of
time over which the remaining payments are to be made.
ANNUITY
If You select a Fixed Annuity, the Adjusted Certificate Value is allocated to
the General Account and the Annuity is paid as a Fixed Annuity. If You select a
Variable Annuity, the Adjusted Certificate Value will be allocated to the Sub-
accounts of the Separate Account in accordance with the selection You make, and
the Annuity will be paid as a Variable Annuity. You can also select a
combination of a Fixed and Variable Annuity and the Adjusted Certificate Value
will be allocated accordingly. If You don't select between a Fixed Annuity and
a Variable Annuity, any Adjusted Certificate Value in the Variable Account will
be applied to a Variable Annuity and any Adjusted Certificate Value in the Fixed
Account will be applied to a Fixed Annuity.
The Adjusted Certificate Value will be applied to the applicable Annuity Table
contained in the Certificate based upon the Annuity Option You select. If, as
of the Income Date, the current Annuity Option rates applicable to the class of
Certificates issued under the Group Contract provide an initial Annuity Payment
greater than the initial Annuity Payment guaranteed under the applicable Annuity
Table in the Certificate, the greater payment will be made.
PAGE 17
<PAGE>
FIXED ANNUITY
The minimum dollar amount of each Fixed Annuity Payment for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. After the initial
Fixed Annuity payment, the payments will not change regardless of investment,
mortality or expense experience.
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 for each $1,000 of
Adjusted Certificate Value is shown in the Annuity Tables. The dollar amount of
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
Income Date. This sets the number of Annuity Units for each monthly
payment for the applicable Sub-account. The number of Annuity Units
for each applicable Sub-account remains fixed during the Annuity
Period;
(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 Separate Account was
initially set 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 calculated as set forth on pages 11-12 (but
without the distribution charge, if any) 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 Valuation Period equivalent of the
Assumed Investment Rate for the number of days in the current
Valuation Period. The Assumed Investment
PAGE 18
<PAGE>
Rate is equal to 6% per year.
The value of an Annuity Unit may increase or decrease from Valuation Period to
Valuation Period.
USING THE TABLES
Tables 2, 3, 5, and 6 are age-dependent. The amount of the first annuity
payment will be based on an age a specified number of years younger than the
person's then-attained age (i.e., age last birthday). This age setback is as
follows:
DATE OF FIRST PAYMENT AGE SETBACK
1996-1999 1 year
2000-2009 2 years
2010-2019 4 years
2020-2029 5 years
2030 or later 6 years
We will calculate the amount for a payment frequency other than monthly and for
any ages not shown in Tables 2, 3, 5, and 6 in accordance with the next section.
Upon request, We will tell You any such amount.
BASIS OF CALCULATION
Tables 1 and 4 are based on interest at 6% and 3%, respectively. Tables 2, 3,
5, and 6 are based on the 1983 Individual Annuity Valuation Tables, weighted 40%
male and 60% female, with interest at 6% (Tables 2 and 3) and 3% (Tables 5 and
6), projected dynamically with Projection Scale G.
PAGE 19
<PAGE>
TABLE 1: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION A FOR EACH $1,000
APPLIED
<TABLE>
<CAPTION>
YEARS PAYMENT YEARS PAYMENT YEARS PAYMENT YEARS PAYMENT
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 $19.17 12 $9.63 19 $7.24 25 $6.32
6 16.42 13 9.12 20 7.04 26 6.21
7 14.46 14 8.69 21 6.86 27 6.11
8 13.00 15 8.31 22 6.70 28 6.02
9 11.87 16 7.99 23 6.56 29 5.94
10 10.97 17 7.71 24 6.43 30 5.87
11 10.24 18 7.46
</TABLE>
TABLE 2: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION B FOR EACH $1,000
APPLIED
<TABLE>
<CAPTION>
AGE PAYMENT AGE PAYMENT AGE PAYMENT AGE PAYMENT AGE PAYMENT
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 $5.09 43 $5.40 56 $6.06 69 $7.47 82 $ 9.72
31 5.11 44 5.44 57 6.13 70 7.63 83 9.87
32 5.13 45 5.47 58 6.21 71 7.79 84 10.02
33 5.14 46 5.51 59 6.30 72 7.95 85 10.15
34 5.16 47 5.55 60 6.39 73 8.12 86 10.27
35 5.18 48 5.60 61 6.48 74 8.30 87 10.38
36 5.20 49 5.64 62 6.59 75 8.48 88 10.48
37 5.23 50 5.69 63 6.69 76 8.66 89 10.57
38 5.25 51 5.74 64 6.81 77 8.84 90 10.65
39 5.28 52 5.80 65 6.93 78 9.03 91 10.72
40 5.31 53 5.86 66 7.05 79 9.21 92 10.77
41 5.34 54 5.92 67 7.19 80 9.38 93 10.82
42 5.37 55 5.99 68 7.33 81 9.55 94 10.86
95 10.89
</TABLE>
TABLE 3: FIRST MONTHLY PAYMENT PAYABLE UNDER VARIABLE OPTION C FOR EACH $1,000
APPLIED
COMBINATION OF AGES
<TABLE>
<CAPTION>
30 35 40 45 50 55 60 65 70 75 80 85 90 95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 $4.97 $4.99 $5.00 $5.02 $5.04 $5.05 $5.06 $5.07 $5.08 $5.09 $5.09 $5.09 $5.10 $5.10
35 5.01 5.04 5.07 5.09 5.11 5.13 5.15 5.16 5.17 5.18 5.18 5.19 5.19
40 5.08 5.12 5.16 5.19 5.22 5.25 5.27 5.29 5.30 5.31 5.31 5.32
45 5.18 5.23 5.29 5.34 5.38 5.41 5.44 5.46 5.48 5.49 5.49
50 5.32 5.40 5.47 5.54 5.60 5.64 5.68 5.70 5.72 5.72
55 5.51 5.62 5.73 5.85 5.90 5.96 6.00 6.02 6.04
60 5.79 5.95 6.11 6.24 6.34 6.41 6.45 6.48
65 6.20 6.44 6.66 6.84 6.97 7.05 7.10
70 6.80 7.15 7.47 7.71 7.87 7.97
75 7.69 8.22 8.66 8.99 9.20
80 9.03 9.81 10.43 10.87
85 11.02 12.11 12.98
90 13.82 15.34
95 17.66
</TABLE>
PAGE 20
<PAGE>
TABLE 4: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION A FOR EACH $1,000
APPLIED
<TABLE>
<CAPTION>
YEARS PAYMENT YEARS PAYMENT YEARS PAYMENT YEARS PAYMENT
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 $17.91 12 $8.24 19 $5.73 25 $4.71
6 15.14 13 7.71 20 5.51 26 4.59
7 13.16 14 7.26 21 5.32 27 4.47
8 11.68 15 6.87 22 5.15 28 4.37
9 10.53 16 6.53 23 4.99 29 4.27
10 9.61 17 6.23 24 4.84 30 4.18
11 8.86 18 5.96
</TABLE>
TABLE 5: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION B FOR EACH $1,000
APPLIED
<TABLE>
<CAPTION>
AGE PAYMENT AGE PAYMENT AGE PAYMENT AGE PAYMENT AGE PAYMENT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 $3.05 43 $3.46 56 $4.24 69 $5.79 82 $8.24
31 3.07 44 3.50 57 4.32 70 5.96 83 8.41
32 3.09 45 3.55 58 4.41 71 6.13 84 8.57
33 3.12 46 3.60 59 4.51 72 6.31 85 8.72
34 3.15 47 3.65 60 4.61 73 6.50 86 8.85
35 3.18 48 3.70 61 4.71 74 6.69 87 8.97
36 3.21 49 3.76 62 4.82 75 6.88 88 9.08
37 3.24 50 3.82 63 4.94 76 7.08 89 9.18
38 3.27 51 3.88 64 5.07 77 7.28 90 9.27
39 3.31 52 3.94 65 5.20 78 7.48 91 9.34
40 3.34 53 4.01 66 5.34 79 7.68 92 9.40
41 3.38 54 4.08 67 5.48 80 7.87 93 9.46
42 3.42 55 4.16 68 5.63 81 8.06 94 9.50
95 9.53
</TABLE>
TABLE 6: MINIMUM MONTHLY PAYMENT PAYABLE UNDER FIXED OPTION C FOR EACH $1,000
APPLIED
COMBINATION OF AGES
<TABLE>
<CAPTION>
30 35 40 45 50 55 60 65 70 75 80 85 90 95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30 $2.88 $2.92 $2.95 $2.98 $3.00 $3.01 $3.02 $3.03 $3.04 $3.04 $3.04 $3.05 $3.05 $3.05
35 2.97 3.02 3.06 3.09 3.12 3.14 3.15 3.16 3.17 3.17 3.18 3.18 3.18
40 3.09 3.15 3.20 3.24 3.27 3.30 3.32 3.33 3.34 3.34 3.34 3.35
45 3.24 3.31 3.38 3.44 3.48 3.51 3.53 3.54 3.55 3.56 3.56
50 3.43 3.53 3.62 3.69 3.74 3.78 3.80 3.82 3.83 3.83
55 3.68 3.81 3.93 4.02 4.09 4.13 4.16 4.18 4.19
60 4.01 4.19 4.35 4.47 4.56 4.61 4.65 4.66
65 4.47 4.73 4.94 5.11 5.21 5.28 5.32
70 5.11 5.48 5.78 6.00 6.13 6.21
75 6.04 6.57 6.99 7.28 7.46
80 7.40 8.16 8.75 9.15
85 9.38 10.46 11.29
90 12.18 13.68
95 16.02
</TABLE>
PAGE 21
<PAGE>
ENDORSEMENTS
To be inserted only by Us
PAGE 22
<PAGE>
KEYPORT
LIFE INSURANCE COMPANY
-----------------------------------
-----------------------------------
PROVIDENCE, RHODE ISLAND
VARIABLE ANNUITY CERTIFICATE
FLEXIBLE PURCHASE PAYMENTS
DEFERRED INCOME PAYMENTS
NONPARTICIPATING -- NO DIVIDENDS
PAGE 23
<PAGE>
EXHIBIT 4(c)
FORM OF TAX-SHELTERED ANNUITY ENDORSEMENT
<PAGE>
TAX-SHELTERED
ANNUITY (TSA)
ENDORSEMENT
We have issued this endorsement as part of the Certificate to which it is
attached to be effective on the later of the Certificate Issue Date or the
following date (if any):
Notwithstanding any provision in the Certificate to the contrary:
(a) The Certificate is intended to be a tax-sheltered annuity (TSA) created for
the exclusive benefit of You and Your Beneficiary and qualified under
Section 403(b) of the Internal Revenue Code ("Code"). Any Purchase Payment
must be a rollover or transfer contribution from another another qualified
TSA. Your entire interest in the Certificate is nonforfeitable. You and
the Annuitant must be the same person. You may not designate a Contingent
Annuitant or a Joint Certificate Owner. You may not transfer ownership of
the Certificate.
(b) Section 403(b)(11) of the Code provides that distributions from the
Certificate can occur only under the following circumstances: (1) the
amount is being distributed after You attain age 59 1/2, separate from
service, die, or become permanently and totally disabled; (2) the amount is
being distributed in the case of hardship but such amount may not include
any income attributable to Your TSA contributions; or (3) the amount to be
distributed, when added to (i) any amounts previously distributed from the
Certificate and (ii) any amounts distributed after December 31, 1988 from
the TSA(s) that is a predecessor of the Certificate, does not exceed the
value of the predecessor TSA(s) on December 31, 1988.
(c) You must begin taking distributions no later than April 1 of the calendar
year after You attain age 70 1/2 or, if You are a participant in a
governmental plan, April 1 of the calendar year after you retire (the
required beginning date). You may elect to have the Certificate Value
distributed in equal or substantially equal amounts over (1) Your life or
the lives of You and Your designated Beneficiary or (2) a period certain
not extending beyond Your life expectancy or the joint and last survivor
expectancy of You and Your designated Beneficiary. Periodic payments will
be made at intervals of no longer than one year and will fluctuate in
accordance with the investment results of the underlying Sub-account(s) You
have chosen for variable payments but will otherwise be nonincreasing.
Unless You elect otherwise by Written Request, You must apply the Adjusted
Certificate Value to annuity payments that begin on or before the required
beginning date under an annuity payment option that complies with minimum
distribution regulations adopted under Section 403(b)(10) of the Code. You
may elect that We pay You the Certificate Withdrawal Value on or before the
required beginning date or, if offered by Us, that payments begin on or
before that date under a partial withdrawal option that complies with the
regulations previously referred to. If You elect to meet Your distribution
requirements through variable income payments under "Option A: Annuity for
a Fixed Number of Years", the following additional requirements apply. If
You are under age 59 1/2 on the Income Date, the payment period will be
equal to Your life expectancy. If You are 59 1/2 or older on the Income
Date, but under age 70 1/2, the payment period will be for the period You
have specified, which may not extend beyond Your life expectancy or the
joint and last survivor expectancy of You and Your designated Beneficiary.
If You are over age 70 1/2 on the Income Date, the payment period
(See other side)
<PAGE>
will be for the period You have specified, which may not exceed Your
remaining life expectancy or the remaining joint and last survivor
expectancy of You and Your designated Beneficiary.
(d) All distributions made hereunder shall be made in accordance with the
requirements of Section 401(a)(9) of the Code, including the incidental-
death-benefit requirements of Section 401(a)(9)(G) of the Code, and the
regulations thereunder, including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
(e) In the event of Your death, Your entire interest in the Certificate must be
distributed in conformity with regulations adopted under Section 403(b)(10)
of the Code, which regulations contain rules similar to the after-death-
distribution rules of Section 401(a)(9)(G) of the Code and to the
incidental-death-benefit requirements of Section 401(a)(9)(G) of the Code.
These regulations provide that TSAs are subject to the distribution rules
provided in those Sections and in Regulation 1.401(a)(9)-1 and 1.401(a)(9)-
2.
If You die after distributions have begun, the remaining portion of Your
interest will continue to be distributed at least as rapidly as under the
method of distribution being used prior to Your death. If You die before
distributions have begun, Your entire interest must be distributed within
five years of the date of death. Distributions are considered to have begun
if payments are made on account of Your reaching Your required beginning
date or, if prior to that date, annuity payments begin to You under (c)
above.
The Certificate's provisions relating to the death of the Annuitant are
changed to the extent necessary to conform with the regulations and
statutory rules referred to in this paragraph (e).
(f) Life expectancy and joint and last survivor expectancy will be calculated
by use of the return multiples in Tables V and VI of Regulation 1.72-9. If
We offer a partial withdrawal option, (1) the life expectancy factor used
by us will be based on the joint life expectancy of You and Your designated
Beneficiary unless You make a Written Request that it be based on just Your
life expectancy, (2) neither Your life expectancy nor the life expectancy
of any Beneficiary will be annually recalculated, and (3) instead, the
original life expectancy factor will be reduced by 1.0 in each succeeding
year.
(g) Notwithstanding any provision of the Certificate to the contrary that would
otherwise limit a distributee's election, a "distributee" may elect, at the
time and in the manner prescribed by Us, to have any portion of an
"eligible rollover distribution" paid directly to an "eligible retirement
plan" specified by the distributee in a "direct rollover".
The "distributee" is You. In addition, Your surviving spouse and Your
spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the spouse or former spouse.
An "eligible rollover distribution" is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is
one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated Beneficiary, or for a
specified period of ten years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code; and the
portion of any distribution that is not includible in gross income.
(See next page)
<PAGE>
An "eligible retirement plan" is an individual retirement account described
in Section 408(a) of the Code, an individual retirement annuity described
in Section 408(b) of the Code, or a TSA described in Section 403(b) of the
Code, that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual retirement account or
individual retirement annuity.
A "direct rollover" is a payment by Us to the eligible retirement plan
specified by the distributee.
(h) In the event of any conflict between the terms of the Certificate and these
TSA provisions or any sections of the Code applicable to annuities
described in Section 403(b) of the Code, those TSA provisions or sections
will govern. Any distribution options in the Certificate that are
inconsistent with Section 401(a)(9) or are inconsistent with other
provisions reflecting Section 401(a)(9) as are prescribed by the
Commissioner of Internal Revenue, are overridden and that Section or
provision reflecting that Section shall govern.
Signed for the Company by: ____________________________________
Secretary
<PAGE>
EXHIBIT 4(d)
FORM OF INDIVIDUAL RETIREMENT ACCOUNT ENDORSEMENT
<PAGE>
INDIVIDUAL RETIREMENT
ANNUITY (IRA)
ENDORSEMENT
We have issued this endorsement as part of the Certificate to which it is
attached to be effective on the later of the Certificate Issue Date or the
following date (if any):
Notwithstanding any provision in the Certificate to the contrary:
(a) The Certificate is intended to be an individual retirement annuity (IRA)
plan created for the exclusive benefit of You and Your Beneficiary and
qualified under Section 408 of the Internal Revenue Code ("Code"). Your
entire interest in the Certificate is nonforfeitable. You and the
Annuitant must be the same person. You may not designate a Contingent
Annuitant or a Joint Certificate Owner. You may not transfer ownership of
the Certificate nor may You pledge, collaterally assign, or otherwise use
it as security for a loan.
(b) Except in the case of a rollover or transfer contribution as described in
Section 402(c), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code, (1) the
payments made to an IRA for any taxable year must be in cash and may not
exceed $2,000 or such higher amount as may be permitted under the Code
(e.g., for a contribution made in accordance with the terms of a Simplified
Employee Pension Plan (SEP) as described in Section 408(k)), and (2) You
may not make additional payments beginning with the calendar year in which
You attain age 70 1/2. If the Certificate Schedule requires that any
minimum payment be over $2,000, the actual payment will generally have to
be paid, at least in part, by a rollover or transfer.
(c) You must begin taking distributions no later than April 1 of the calendar
year after You attain age 70 1/2 (the required beginning date). You may
elect to have the Certificate Value distributed in equal or substantially
equal amounts over (1) Your life or the lives of You and Your designated
Beneficiary or (2) a period certain not extending beyond Your life
expectancy or the joint and last survivor expectancy of You and Your
designated Beneficiary. Periodic payments will be made at intervals of no
longer than one year and will fluctuate in accordance with the investment
results of the underlying Sub-account(s) You have chosen for variable
payments but will otherwise be nonincreasing. Unless You elect otherwise
by Written Request, You must apply the Adjusted Certificate Value to
annuity payments that begin on or before the April 1st date under an
annuity payment option that complies with minimum distribution regulations
adopted under Section 408(b)(3) of the Code. You may elect that We pay You
the Certificate Withdrawal Value on or before the April 1st date or, if
offered by Us, that payments begin on or before that date under a partial
withdrawal option that complies with the regulations previously referred
to. If You elect to meet Your distribution requirements through variable
income payments under "Option A: Annuity for a Fixed Number of Years", the
following additional requirements apply. If You are under age 59 1/2 on
the Income Date, the payment period will be equal to Your life expectancy.
If You are 59 1/2 or older on the Income Date, but under age 70 1/2, the
payment period will be for the period You have specified, which may not
extend beyond Your life expectancy or the joint and last survivor
expectancy of You and Your designated Beneficiary. If You are over age 70
1/2 on the Income Date, the payment period will be for the
(See other side)
<PAGE>
period You have specified, which may not exceed Your remaining life
expectancy or the remaining joint and last survivor expectancy of You and
Your designated Beneficiary.
(d) All distributions made hereunder shall be made in accordance with the
requirements of Section 401(a)(9) of the Code, including the incidental-
death-benefit requirements of Section 401(a)(9)(G) of the Code, and the
regulations thereunder, including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations.
(e) In the event of Your death, Your entire interest in the Certificate must be
distributed in conformity with regulations adopted under Section 408(b)(3)
of the Code, which regulations contain rules similar to the after-death-
distribution rules of Section 401(a)(9)(G) of the Code and to the
incidental-death-benefit requirements of Section 401(a)(9)(G) of the Code.
These regulations provide that IRAs are subject to the distribution rules
provided in those Sections and in Regulation 1.401(a)(9)-1 and 1.401(a)(9)-
2.
If You die after distributions have begun, the remaining portion of Your
interest will continue to be distributed at least as rapidly as under the
method of distribution being used prior to Your death. If You die before
distributions have begun, Your entire interest must be distributed within
five years of the date of death. Distributions are considered to have begun
if payments are made on account of Your reaching Your required beginning
date or, if prior to that date, annuity payments begin to You under (c)
above.
If the designated Beneficiary is Your surviving spouse, the surviving
spouse may treat the Certificate as his or her own IRA. This election will
be deemed to have been made if such surviving spouse fails to elect a
distribution acceptable under Regulation 1.401(a)(9). The Certificate's
provisions relating to the death of the Annuitant are changed to the extent
necessary to conform with the regulations and statutory rules referred to
in this paragraph.
(f) Life expectancy and joint and last survivor expectancy will be calculated
by use of the return multiples in Tables V and VI of Regulation 1.72-9. If
We offer a partial withdrawal option, (1) the life expectancy factor used
by us will be based on the joint life expectancy of You and Your designated
Beneficiary unless You make a Written Request that it be based on just Your
life expectancy, (2) neither Your life expectancy nor the life expectancy
of any Beneficiary will be annually recalculated, and (3) instead, the
original life expectancy factor will be reduced by 1.0 in each succeeding
year.
(g) We will send You annually a report concerning the status of the annuity.
(h) In the event of any conflict between the terms of the Certificate and these
IRA provisions or any sections of the Code applicable to annuities
described in Section 408(b) of the Internal Revenue Code, those IRA
provisions or sections will govern. Any distribution options in the
Certificate that are inconsistent with Section 401(a)(9) or are
inconsistent with other provisions reflecting Section 401(a)(9) as are
prescribed by the Commissioner of Internal Revenue, are overridden and that
Section or provision reflecting that Section shall govern.
Signed for the Company by: ____________________________________
Secretary
<PAGE>
EXHIBIT 4(e)
FORM OF CORPORATE/KEOGH 401(a) PLAN ENDORSEMENT
<PAGE>
CORPORATE/KEOGH
401(a) PLAN
ENDORSEMENT
We have issued this endorsement as part of the Certificate to which it is
attached to be effective on the later of the Certificate Issue Date or the
following date (if any):
Notwithstanding any provisions in the Certificate to the contrary:
(a) The Certificate is issued to a trust or custodial account forming part
of an employer's pension or profit-sharing plan qualified under
Section 401 of the Internal Revenue Code. While the Certificate is in
effect, You must continue to maintain the tax-qualified status of the
plan. The Certificate does not reflect any plan provisions; it is
simply an asset of the plan.
(b) You may not designate a Contingent Annuitant, a Joint Certificate
Owner, or a Beneficiary. You are the Beneficiary. If You do not
designate an Annuitant because the initial payment to the Certificate
represents the unallocated interests of multiple participants under
the plan, then You may apply a partial withdrawal amount either to a
non-transferable Annuity Option payable to a participant or to a non-
transferable Joint and Survivor Annuity Option payable to a
participant and his or her spouse.
Signed for the Company by: ______________________________________
Secretary
<PAGE>
EXHIBIT 5(a)
FORM OF APPLICATION USED WITH
GROUP VARIABLE ANNUITY CONTRACT
<PAGE>
APPLICATION FOR KEYPORT LIFE INSURANCE COMPANY
GROUP VARIABLE ANNUITY CONTRACT
<TABLE>
<S> <C>
Please send application to: Keyport Life Insurance Company
125 High Street
Boston, MA 02110
1. Contract Owner:
---------------------------------------------------------------------
(Name)
-------------------------------------------------------------------------------------
(Street) (City) (State) (Zip)
--------------------------- -----------------------------------------------------
(Telephone) (Name of Person to Contact)
2. Nature of Group:
--------------------------------------------------------------------
3. Number of Participants in Group:
----------------------------------------------------
4. Special Requests:
-------------------------------------------------------------------
******************************************************************************************
Signed At:
------------------------ ---------------------------------------------
(City, State) (Signature of Contract Owner)
By:
----------------------------------- -----------------------------------------
(Date) (Name)
---------------------------------------------
(Title)
******************************************************************************************
AGENT'S REPORT
Agent's Name: Agency Phone:
------------------------------------- ---------------------
(Print Exact Name on License)
Agency Name:
------------------------------------- -----------------------------------
(Signature of Agent)
Agency Address:
--------------------------------------------------------------------------
[ ] [ ] [ ] [ ] [ ] - [ ] [ ] [ ] [ ] [ ]
(Home Office Use Only)
AP/DVA-1996 Keyport Contract #
--------------------------
</TABLE>
<PAGE>
EXHIBIT 5(b)
FORM OF APPLICATION USED WITH
GROUP VARIABLE ANNUITY CERTIFICATE
<PAGE>
APPLICATION FOR A GROUP VARIABLE ANNUITY CERTIFICATE
Mail to: Keyport Life Insurance Company, 125 High Street, Boston, MA 02110-2712
ANNUITANT 1
First Middle Last Phone( )
Street Address City State Zip
Social Sec. No: [ ] [ ] [ ] - [ ] [ ] -[ ] [ ] [ ] [ ] Sex: [ ] M [ ] F
Birthdate: Month / Day / Year
PRIMARY CERTIFICATE OWNER 2
(Only if different from annuitant)
First Middle Last
Street Address City State Zip
Relationship to Annuitant Phone( )
[ ] Social Sec. No.
[ ] Taxpayer I.D. No. [ ] [ ] [ ] - [ ] [ ] - [ ] [ ] [ ] [ ]
Birthdate: Month / Day / Year
BENEFICIARY(IES) 3
(Person(s) you want to "own" the annuity if the primary owner and any joint
owner are both dead)
Name Birthdate Relationship to Annuitant
Street Address City State Zip
Name Birthdate Relationship to Annuitant
Street Address City State Zip
JOINT CERTIFICATE OWNER 4
(Optional) (Signature is required on reverse)
First Middle Last Birthdate
Street Address City State Zip
Social Sec. No: [ ] [ ] [ ] - [ ] [ ] - [ ] [ ] [ ] [ ] Phone No: ( )
CONTINGENT BENEFICIARY (Optional) 5
Name Birthdate Relationship to Annuitant
<PAGE>
Street Address City State Zip
PURCHASE AMOUNT 6
($5,000 minimum and make check payable to Keyport Life Insurance Company;
subsequent purchases must be at least $1,000)
$ [ ] Check is attached. [ ] Funds will be sent later.
ALLOCATION 7
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
____ % ________________________
Each amount must be at least 10% and a whole number. Amounts must total 100%.
Percentages will also be used to allocate subsequent purchase amounts.
TELEPHONE INSTRUCTIONS (Optional) 8
[ ] Check box if certificate owner(s) want the ability to make transfers and
purchase amount allocation changes by telephone. Insert the name of any other
person also authorized to do the same:
(It is agreed this designation is subject to the power of attorney provisions in
the prospectus). It is agreed that telephone instructions will be subject to
the conditions and procedures in the prospectus.
AP/DVA-CER-1996 Keyport Group Contract No. Keyport Certificate No.
- -OVER-
TYPE OF PLAN 9
[ ] Non-Qualified [ ] Qualified
QUALIFIED PLANS ONLY 10
Complete For All Plans:
This money should be set up as a:
Type:
<PAGE>
[ ] IRA [ ] _____________ [ ] _____________
[ ] Custodial IRA [ ] _____________ [ ] _____________
[ ] _____________ _____________
Complete If Applicable:
This money comes from a:
[ ] Trustee Transfer or [ ] Direct Rollover or [ ] Rollover from a:
[ ] IRA [ ] SEP IRA [ ] Keogh [ ] 401(a) [ ] TSA
Complete For IRAs Only:
This money represents: Regular contributions of $
for Tax Year 19 and $ for Tax Year 19 ;
Transfer $ Direct Rollover $ Rollover $
REPLACEMENT 11
Will the certificate applied for replace any existing annuity or insurance
policy?
[ ] Yes [ ] No If yes, list insurance company, policy #, and attach
transfer or exchange forms.
SPECIAL REQUESTS 12
[ ] Check box if owner wants the statement of additional information referred to
in the prospectus.
Other:
CORRECTIONS 13
COMPANY CORRECTIONS OR AMENDMENTS, IF ANY
(EXCEPT IN KENTUCKY AND WEST VIRGINIA)
AGREEMENT 14
It is agreed that: (a) all statements and answers given above are true and
complete to the best of my knowledge; (b) this application shall become part of
the annuity certificate issued by the Company; and (c) except in Kentucky and
West Virginia, my acceptance of the certificate applied for will constitute
approval by me of any corrections or additions made in item #13 above. However,
I must agree in writing to any changes in: amounts; ages; plan of annuity; and
benefits. I understand that annuity payments and surrender values, when based
upon the investment experience of a separate account, are variable and are not
guaranteed as to fixed dollar amount. Receipt of a current variable annuity
prospectus is hereby acknowledged.
SIGNED AT 15
City State (REQUIRED) Date
Signature of Annuitant (REQUIRED)
Signature of Certificate Owner (if other than Annuitant) (Any representative
capacity, such as trustee, must include the full legal designation.)
Signature of Joint Certificate Owner (if any)
<PAGE>
AGENT'S REPORT 16
Do you have any reason to believe that the certificate applied for may replace
an existing annuity or insurance policy?
[ ] Yes [ ] No If yes, list carrier, policy #, whether Section 1035
exchange, and attach State Replacement Form if applicable.
Agent's Legal Name (Printed)
Business Address Street City State Zip
Agent's Bus. Phone ( )
Agent's Social Sec. No. (& Agent's Lic.# in FL)
[ ] [ ] [ ] - [ ] [ ] - [ ] [ ] [ ] [ ]
Agency Name
Signature of Agent
(AGENCY/AGENT NO.) [ ] [ ] [ ] [ ] [ ] - [ ] [ ] [ ] [ ] [ ]
508.2/96
<PAGE>
EXHIBIT 6(a)
ARTICLES OF INCORPORATION OF
KEYPORT LIFE INSURANCE COMPANY
<PAGE>
CERTIFICATION OF ARTICLES OF INCORPORATION
I hereby certify that the attached 9 pages are a true copy of the three
Acts passed by the Rhode Island General Assembly in 1957, 1962 and 1970 and the
Articles of Amendment filed October 3, 1990 with the Rhode Island Secretary of
State that constitute the current Articles of Incorporation of Keyport Life
Insurance Company.
February 8, 1996 /s/ James J. Klopper
- --------------------- ----------------------------------------
Date James J. Klopper, Assistant Secretary
[SEAL]
<PAGE>
ARTICLES OF INCORPORATION
SECTION 1. Ellis Hawkes, David Fitzgerald and Henry Petrarca their associates,
successors and assigns are hereby created a body politic and corporate, by the
name of Keyport Life Insurance Company, with power to purchase or otherwise
acquire, have, hold and enjoy lands, tenements, hereditaments, chattels, bonds,
stocks, monies, choses in action and property and effects of every kind, and the
same to sell, grant, demise, alien and convey and to loan, invest and reinvest
any of such assets in any manner now or hereafter permitted in the case of any
other corporation now or hereafter chartered by this state and empowered to do a
life insurance business; to sue and be sued and to plead and be impleaded in all
courts of law and equity; to have and to hold and to change at pleasure a common
seal, and to ordain and to put into execution and to change at pleasure by-laws
consistent with the laws of this state and of the United States and to change
its corporate name, provided that the new corporate name is not the same as or
deceptively similar to the name of any domestic corporation, existing under the
laws of this state or the name of any foreign corporation authorized to transact
business in the state.
SECTION 2. The business of the corporation shall be life insurance including
individual and group variable life insurance, endowments, annuities including
individual and group variable annuities and individual and group investment
annuities, accident insurance, health insurance including the right to act as
administrator of hospital and medical insurance, the right to administer
separate accounts, and any other business or type of business which any other
corporation now or hereafter chartered by this state and empowered to do a life
insurance business may now or hereafter lawfully do; and the corporation is
specifically empowered to accept and to cede reinsurance of any such risks or
hazards. The corporation may exercise such powers outside of Rhode Island to
the extent permitted by the laws of the particular jurisdiction. Policies or
other contracts may be issued stipulated to be with or without participation in
profits; and they may be with or without seal.
SECTION 3. Said corporation shall have all of the powers and privileges and be
subject in all respects to all of the duties and liabilities set forth in the
general laws and public laws of this state so far as the same may be applicable
to said corporation.
SECTION 4. The business and affairs of said corporation shall be managed by a
board of directors, the number of which shall be fixed from time to time by the
by-laws; but the number in any event shall be some multiple of three. At the
first meeting of the incorporators named in this act, directors shall be elected
as
1
<PAGE>
follows: One-third until the next annual meeting of the stockholders; one-third
until the second annual meeting of the stockholders; and one-third until the
third annual meeting of the stockholders; and at each succeeding annual meeting
of the stockholders directors shall be elected for three (3) years to fill the
terms of those whose terms then expire. Each director shall serve the term for
which he is elected and until his successor is elected and qualified. In case
of any vacancy in the office of directors by death, resignation or
disqualification, the directors for the time being shall have power to elect a
successor to hold office for the unexpired portion of the term of the director
whose place shall be vacant. The directors shall be stockholders and at least a
majority of the directors shall be residents of the state of Rhode Island. The
directors of said corporation shall have the sole power to make by-laws and to
elect officers of said corporation.
SECTION 5. The total amount of the authorized capital stock of the corporation
shall be $10,000,000, and shares may be issued from time to time, for such
consideration, consisting of cash, services, personal property, tangible or
intangible, or real estate, as may be fixed from time to time by the board of
directors, including the issue of shares thereof from time to time as stock
dividends upon the transfer from surplus to capital stock in such amounts as the
board of directors may from time to time determine. Such capital stock may
consist of a class designated "preferred stock" and a class designated "common
stock".
The voting powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, the classes of stock of the corporation which are fixed by
this charter, and the authority vested in the board of directors to fix by
resolution or resolutions providing for the issue of preferred stock the voting
powers, designations, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions thereof, of
the shares of preferred stock which are not fixed by this charter, are as
follows:
(a) The preferred stock may be issued from time to time in one or more
series of any number of shares; provided that the amount of stated capital
for the aggregate number of shares issued and not canceled of any and all
such series together with the amount of stated capital for outstanding
shares of common stock shall not exceed the amount hereinabove authorized.
Each series of preferred stock shall be distinctively designated by letter
or descriptive words. All series of preferred stock shall rank equally and
be identical in all respects except as permitted by the provisions of
paragraph (b) of this section 5.
2
<PAGE>
(b) Authority is hereby vested in the board of directors from time to time
to issue the preferred stock as preferred stock of any series and in
connection with the creation of each such series to fix by resolution or
resolutions providing for the issue of shares thereof the voting powers, if
any, the designation, preferences and relative, participating, optional or
other special rights, and the qualifications, limitations or restrictions
thereof, of such series to the full extent now or hereafter permitted by
this charter and the laws of the state of Rhode Island in respect of
matters set forth in the following subparagraphs (1) to (8), inclusive:
(1) The distinctive designation of such series and the number of
shares which shall constitute such series, which number may be
increased or decreased (but not below the number of shares thereof
then outstanding) from time to time by action of the board of
directors;
(2) The dividend rate of such series, any preference to or provisions
in relation to the dividends payable on any other class or classes or
of any other series of stock and any limitations, restrictions or
conditions on the payment of dividends;
(3) The price or prices at which, and the terms and conditions on
which, the shares of such series may be redeemed by the corporation;
(4) The amount or amounts payable upon the shares of such series in
the event of any liquidation, dissolution or winding up of the
corporation;
(5) Whether or not the shares of such series shall be entitled to the
benefit of a sinking fund to be applied to the purchase or redemption
of shares of such series and, if so entitled, the amount of such fund
and the manner of its application;
(6) Whether or not the shares of such series shall be made convertible
into, or exchangeable for, shares of any other class or classes of
stock of the corporation or shares of any other series of preferred
stock, and, if made so convertible or exchangeable, the conversion
price or prices, or the rate or rates of exchange, and the adjustments
thereof, if any, at which such conversion or exchange may be made, and
any other terms and conditions of such conversion or exchange;
(7) Whether or not the shares of such series shall have any voting
powers and, if voting powers are so granted, the extent of such voting
powers; and
3
<PAGE>
(8) Whether or not the issue of any additional shares of such series
or of any future series in addition to such series shall be subject to
restrictions in addition to the restrictions, if any, on the issue of
additional shares imposed in the resolution or resolutions fixing the
terms of any outstanding series of preferred stock theretofore issued
pursuant to this section 5, and, if subject to additional
restrictions, the extent of such additional restrictions.
(c) The holders of preferred stock of each series shall be entitled to
receive, when and as declared by the board of directors, dividends in cash
at the rate for such series fixed by the board of directors as provided in
paragraph (b) of this section 5 and no more, payable quarterly on the first
days of January, April, July and October or of such other months as may be
designated by the board of directors, (each of the quarterly periods ending
on the first day of January, April, July and October in each year, or on
the first days of such other months, respectively, being hereinafter called
a dividend period), in each case from the date of cumulation (as defined in
paragraph (h) of this section 5) of such series. Except as may otherwise
be provided in the resolution or resolutions providing for the issue of any
given series of preferred stock, dividends on preferred stock shall be
cumulative (whether or not there shall be net profits or net assets of the
corporation legally available for the payment of such dividends), so that,
if at any time full cumulative dividends (as defined in paragraph (h) of
this section 5) upon the preferred stock of all series to the end of the
last completed dividend period shall not have been paid or declared and a
sum sufficient for payment thereof set apart, the amount of the deficiency
shall be fully paid, but without interest or dividends in such amount shall
have been declared on each such series and a sum sufficient for the payment
thereof shall have been set apart for such payment, before any sum or sums
shall be set aside for or applied to the purchase or redemption of
preferred stock of any series (either pursuant to any applicable sinking
fund provisions or any redemptions authorized pursuant to paragraph (g) of
this section 5 or otherwise) or set aside for or applied to the purchase of
common stock and before any dividend shall be declared or paid or any other
distribution ordered or made upon the common stock); provided, however,
that any moneys deposited in the sinking fund provided for any series of
preferred stock in the resolution or resolutions providing for the issue of
shares of said series, in compliance with the provisions of such sinking
fund and of this paragraph (c), may thereafter be applied to the purchase
or redemption of preferred stock in accordance with the terms of such
sinking fund whether or not at the time of such application full cumulative
dividends upon the outstanding preferred stock of all series to the end of
the
4
<PAGE>
last completed dividend period shall have been paid or declared and set
apart for payment. All dividends declared upon the preferred stock of the
respective series outstanding shall be declared PRO RATA, so that the
amounts of dividends declared per share on the preferred stock of different
series shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of such respective series bear to each
other.
(d) Before any sum or sums shall be set aside for or applied to the
purchase of common stock and before any dividends shall be declared or paid
or any distribution ordered or made upon the common stock (other than a
dividend payable in common stock), the corporation shall comply with the
sinking fund provisions, if any, of any resolution or resolutions providing
for the issue of any series of preferred stock any shares of which shall at
the time be outstanding.
(e) Subject to the provisions of paragraphs (c) and (d) of this section 5,
the holders of common stock shall be entitled, to the exclusion of the
holders of preferred stock of any and all series, to receive such dividends
as from time to time may be declared by the board of directors.
(f) In the event of any liquidation, dissolution or winding up of the
corporation, the holders of preferred stock of each series then outstanding
shall be entitled to be paid out of the assets of the corporation available
for distribution to its stockholders, whether from capital, surplus or
earnings, before any payment shall be made to the holders of common stock,
an amount determined as provided in paragraph (b) of this section 5 for
every share of their holdings of preferred stock of such series. If upon
any liquidation, dissolution or winding up of the corporation the assets of
the corporation available for distribution to its stockholders shall be
insufficient to pay the holders of preferred stock of all series the full
amounts to which they respectively shall be entitled, the holders of
preferred stock of all series shall share ratably in any distribution of
assets according to the respective amounts which would be payable in
respect of the shares of preferred stock of all series were paid in full.
In the event of any liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary after payment shall have been
made to the holders of preferred stock of the full amount to which they
shall be entitled as aforesaid, the holders of common stock shall be
entitled, to the exclusion of the holders of preferred stock of any and all
series, to share, ratably according to the number of shares of common stock
held by them, in all remaining assets of the corporation available for
distribution to its stockholders. Neither the merger or consolidation of
the corporation into or with another corporation or the merger or
consolidation of any
5
<PAGE>
other corporation into or with the corporation, nor the sale, transfer or
lease of all or substantially all the assets of the corporation, shall be
deemed to be a liquidation, dissolution or winding up of the corporation.
(g) Subject to any requirements which may be applicable to the redemption
of any given series of preferred stock as provided in any resolution or
resolutions providing for the issue of such series of preferred stock, the
preferred stock of all series, or of any series thereof, or any part of any
series thereof, at any time outstanding, may be redeemed by the
corporation, at its election expressed by resolution of the board of
directors, any time or from time to time, upon not less than 30 days
previous notice to the holders of record of preferred stock to be redeemed,
given by mail in such manner as may be prescribed by resolution or
resolutions of the board of directors,
(1) if such redemption shall be otherwise than by the application of
moneys in any sinking fund referred to in paragraph (d) of this
section 5, at the redemption price, fixed as provided in paragraph (b)
of this section 5, at which shares of preferred stock of the
particular series may then be redeemed at the option of the
corporation and
(2) if such redemption shall be by the application of moneys in any
sinking fund referred to in paragraph (d) of this section 5, at the
redemption price, fixed as provided in paragraph (b) of this section
5, at which shares of preferred stock of the particular series may
then be redeemed for such sinking fund; PROVIDED, HOWEVER, that,
before any preferred stock of any series shall be redeemed at said
redemption price thereof specified in clause (1) of this paragraph
(g), all moneys at the time in the sinking fund, if any, for preferred
stock of that series shall first be applied as nearly as may be, to
the purchase or redemption of preferred stock of that series as
provided in the resolution or resolutions of the board of directors
providing for such sinking fund. If less than all the outstanding
shares of preferred stock of any series are to be redeemed, the
redemption may be made either by lot or PRO RATA in such manner as may
be prescribed by resolution of the board of directors. The
corporation may, if it shall so elect, provide moneys for the payment
of the redemption price by depositing the amount thereof for the
account of the holders of preferred stock entitled thereto with a bank
or trust company doing business in the city of New York, in the state
of New York, or in the city of Providence, in the state of Rhode
Island, and having capital and surplus of at least $5,000,000. The
date upon which such deposit may be made by the corporation
(hereinafter
6
<PAGE>
called the "date of deposit") shall be prior to the date fixed as the
date of redemption. In any such case there shall be included in the
notice of redemption a statement of the date of deposit and of the
name and address of the bank or trust company with which the deposit
has been or will be made. On and after the date fixed in any such
notice of redemption as the date of redemption (unless default shall
be made by the corporation in providing moneys for the payment of the
redemption price pursuant to such notice) or, if the corporation shall
have made such deposit on or before the date specified therefor in the
notice, then on and after the date of deposit all rights of the
holders of the preferred stock to be redeemed as stockholders of the
corporation, except the right to receive the redemption price as
hereinafter provided, and, in the case of such deposit, any conversion
rights not theretofore expired, shall cease and terminate. Such
conversion rights, however, in any event shall cease and terminate
upon the date fixed for redemption or upon any earlier date fixed by
the board of directors pursuant to paragraph (b) of this section 5 for
termination of such conversion rights. Anything herein contained to
the contrary notwithstanding, said redemption price shall include an
amount equal to accrued dividends on the preferred stock to be
redeemed to the date fixed for the redemption thereof and the
corporation shall not be required to declare or pay on such preferred
stock to be redeemed, and the holders thereof shall not be entitled to
receive, any dividends in addition to those thus included in the
redemption price, PROVIDED, HOWEVER, that the corporation may pay in
regular course any dividends thus included in the redemption price
either to the holders of record on the record date fixed for the
determination of stockholders entitled to receive such dividends (in
which event, anything herein to the contrary notwithstanding, the
amount so deposited need not include any dividends so paid or to be
paid) or as a part of the redemption price upon surrender of the
certificates for the shares redeemed. At any time on or after the
date fixed as aforesaid for such redemption, or, if the corporation
shall elect to deposit the moneys for such redemption as herein
provided, then at any time on or after the date of deposit and without
awaiting the date fixed as aforesaid for such redemption, the
respective holders of record of the preferred stock to be redeemed
shall be entitled to receive the redemption price upon actual delivery
to the corporation, or, in the event of such deposit, to the bank or
trust company with which such deposit shall be made, of certificates
for the shares to be redeemed, such certificates, if required, to be
properly stamped for transfer and duly endorsed in blank or
accompanied by proper instruments of assignment
7
<PAGE>
and transfer thereof duly executed in blank. Any moneys so deposited
which shall remain unclaimed by the holders of such preferred stock at
the end of five years after the redemption date shall be paid by such
bank or trust company to the corporation and any interest accrued on
moneys so deposited shall belong to the corporation and shall be paid
to it from time to time. Preferred stock redeemed pursuant to the
provisions of this paragraph (g) shall be canceled and shall
thereafter have the status of authorized and unissued shares of
preferred stock.
(h) The term "date of cumulation" as used with reference to any series of
preferred stock shall be deemed to mean the date fixed by the board of
directors as the date of cumulation of such series at the time of creation
thereof or, if no date shall have been so fixed, the date on which shares
of such series are first issued. Whenever used with reference to any share
of any series of preferred stock, the term "full cumulative dividends"
shall be deemed to mean (whether or not in any dividend period, or any part
thereof, in respect of which such term is used there shall have been net
profits or net assets of the corporation legally available for the payment
of such dividends) that amount which shall be equal to dividends at the
full rate fixed for such series as provided in paragraph (b) of this
section 5 for the period of time elapsed from the date of cumulation of
such series to the date as of which full cumulative dividends are to be
computed (including an amount equal to the dividend at such rate for any
fraction of a dividend period included in such period of time); and the
term "accrued dividends" shall be deemed to mean full cumulative dividends
to the date as of which accrued dividends are to be computed, less the
amount of all dividends paid or deemed paid as hereinafter in this
paragraph (h) provided, upon said share. In the event of the issue of
additional shares of preferred stock of any series after the original issue
of shares of preferred stock of such series, all dividends paid or accrued
on preferred stock of such series prior to the date of issue of such
additional preferred stock shall be deemed to have been paid on the
additional preferred stock so issued.
(i) No holder of stock of any class of the corporation whether now or
hereafter authorized, shall have any pre-emptive, preferential or other
rights to subscribe for or purchase or acquire any shares of any class or
any other securities of the corporation, whether now or hereafter
authorized, and whether or not convertible into, or evidencing or carrying
the right to purchase, shares of any class or any other securities now or
hereafter authorized, and whether the same shall be issued for cash,
services or property, or by way of dividend or otherwise.
8
<PAGE>
(j) Subject to the provisions of this charter and except as otherwise
provided by law, the shares of stock of the corporation, regardless of
class, may be issued for such consideration and for such corporate purposes
as the board of directors may from time to time determine.
(k) Except as otherwise provided by law, or this charter, or by the
resolution or resolutions providing for the issue of any series of
preferred stock, the holders of shares of preferred stock, as such holders,
shall not have any right to vote, and are hereby specifically excluded from
the right to vote, in the election of directors or for any other purpose.
Except as aforesaid, the holders of preferred stock, as such holders, shall
not be entitled to notice of any meeting of stockholders.
(l) Subject to the provisions of any applicable law, or of the by-laws of
the corporation as from time to time amended, with respect to closing of
the transfer books or the fixing of a record date for the determination of
stockholders entitled to vote and except as otherwise provided by law or by
this charter or by the resolution or resolutions providing for the issue of
any series of preferred stock, the holders of outstanding shares of common
stock shall exclusively possess voting power for the election of directors
and for all other purposes; each holder of record of shares of common stock
being entitled to one vote for each share of common stock standing in his
name on the books of the corporation.
SECTION 6. The par value of the shares of the capital stock of said company may
be fixed from time to time by two-thirds of all the votes of the stockholders
entitled to vote thereon; and, except as so fixed, the par value of such shares
shall be ten dollars.
SECTION 7. Before any stock may be issued, the said corporation shall pay to
the general treasurer for the use of the state a tax upon such issue equal to
one-tenth of one per centum of the par value of such issue, and shall file a
certificate of the general treasurer of the fact of payment of such tax,
together with a copy of such vote, duly certified by the secretary under seal of
said corporation, in the office of the secretary of state.
SECTION 8. Said corporation shall have a paid in capital stock of not less than
$200,000 and a paid in surplus of at least $100,000 before any policy shall be
issued by the corporation. Said corporation shall also secure a certificate in
compliance with the foregoing from the commissioner of insurance before they
shall be authorized to write or effect any policy.
SECTION 9. Said corporation shall have its principal place of business in the
county of Providence, in the state of Rhode Island.
9
<PAGE>
EXHIBIT 6(b)
BY-LAWS OF
KEYPORT LIFE INSURANCE COMPANY
<PAGE>
CERTIFICATION OF BY-LAWS
I hereby certify that the attached fourteen pages are a true copy of the
current By-Laws of Keyport Life Insurance Company.
February 8, 1996 /s/ James J. Klopper
- --------------------- ----------------------------------------
Date James J. Klopper, Assistant Secretary
[SEAL]
<PAGE>
KEYPORT LIFE INSURANCE COMPANY
BY-LAWS
ARTICLE I
CHARTER
These by-laws, the powers of the Corporation and of the Directors and
stockholders, and all matters concerning the conduct and regulation of the
business of the Corporation shall be subject to such provisions in regard
thereto, if any, as are set forth in the Charter of the Corporation as may be
amended from time to time by the Corporation.
ARTICLE II
OFFICES AND RECORDS
The principal office of the Corporation shall be in the City of Providence,
in the State of Rhode Island.
The Corporation may also have offices at such other places in Rhode Island
or elsewhere as the Board of Directors may from time to time determine, or as
the business of the Corporation may require.
The records of the Corporation shall by kept at the principal office of the
Corporation or at such other place in the State of Rhode Island as the Board of
Directors may from time to time designate.
ARTICLE III
MEETINGS OF STOCKHOLDERS
SECTION 1 - PLACE OF STOCKHOLDERS MEETING
All meetings of the stockholders for the election of Directors shall by
held in Rhode Island, either at the principal office of the Corporation or at
such other place as may be fixed from time to time by the Board of Directors.
Meetings of the stockholders for any other purpose may be held at such time and
place in the State
1
<PAGE>
of Rhode Island or elsewhere, as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
SECTION 2 - ANNUAL MEETINGS
Annual meetings of stockholders shall be held at eleven o'clock in the
forenoon of the first Wednesday in March of each year if not a legal holiday,
and if a legal holiday, at the same hour in the next secular day following at
eleven A.M. If such annual meeting is omitted by oversight or otherwise on the
day herein specified, a special meeting may be held in place thereof and any
elections or business transacted therein shall have the same effect as if
transacted or held at the annual meeting. At the annual meeting of the
stockholders there shall be elected by a plurality vote a Board of Directors and
there shall be transacted such other business as may be properly brought before
the meeting, including those prescribed by law and by the Charter.
SECTION 3 - NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Written notice of the time and place of the annual meeting shall be given
to each stockholder entitled to vote thereat at least ten days before the date
of the meeting.
SECTION 4 - SPECIAL MEETINGS OF THE STOCKHOLDERS
Special meetings of the stockholders for any purpose, or purposes, unless
otherwise prescribed by law or by the Charter, may be called by the President
and shall be called by the President or Secretary at the request in writing of
the majority of the Board of Directors.
SECTION 5 - NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Notice of the time, place and purpose of any special meeting of the
stockholders shall be given by the Board of Directors or by the President and
Secretary by publication at least thirty days prior to such meeting as may from
time to time be provided by law.
Written notice of the time and place of each special meeting of the
stockholders shall by given at least ten days prior to such
2
<PAGE>
meeting to each stockholder entitled to vote thereat, addressed to each
stockholder at his address as it appears on the books of the Corporation. The
notice shall specify the purpose of such meeting.
SECTION 6 - QUORUM OF STOCKHOLDERS
At all meetings of the stockholders except as otherwise provided by law for
a special meeting of the stockholders, holders of a majority of all stock issued
and outstanding and entitled to vote thereat, as shown on the books of the
Corporation, present in person or represented by proxy, shall constitute a
quorum for the transaction of business. If such quorum is not present or
represented at any meeting of the stockholders, the holders of less than a
majority may constitute a quorum for the purpose of adjourning the meeting, from
time to time without notice, except the announcement thereof at the meeting,
until a quorum shall by present or represented. At such adjourned meeting
wherein a quorum is present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed.
When a quorum is present at any meeting, the vote of the holders of the
majority of the stock having voting power, present in person or represented by
proxy, shall decide any question brought before such meeting except where a
larger vote is required by law or by the Charter, in which case such express
provisions shall govern and control the decision of the question.
SECTION 7 - VOTING
Each stockholder shall at every meeting of the stockholders be entitled to
one vote in person or by proxy for each share of stock having voting power and
registered on the books of the Corporation.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 1 - DIRECTORS
The Board of Directors shall consist of nine, one-third of whom shall be
elected by the stockholders at each annual meeting,
3
<PAGE>
for three-year terms as provided in the Charter. Each Director shall serve the
term for which he is elected and until his successor is elected and qualified.
Vacancies may by filled by a majority vote of the Directors then in office,
though less than a quorum. Directors so chosen shall hold office for the term
for which they are elected and until their successors are duly elected and
qualified, unless sooner displaced. Any vacancies from time to time existing in
the Board of Directors may by left unfilled. The Directors shall be
stockholders and at least a majority of the Directors shall be residents of the
State of Rhode Island.
SECTION 2 - POWERS OF THE BOARD OF DIRECTORS
The business of the Corporation shall be managed by the Board of Directors
which shall have and may exercise all powers of the Corporation, and do all such
lawful acts except as are by law or by the Charter or by these By-laws conferred
upon, or required to be done or exercised by the stockholders.
SECTION 3 - MEETINGS OF THE BOARD OF DIRECTORS
(a) The Board of Directors of the Corporation may hold meetings, both
regular and special, either within or without the State of Rhode Island.
(b) Regular meetings of the Board of Directors may be held without notice
at such time and at such places as shall from time to time be determined by the
Board.
(c) Special meetings of the Board of Directors may be called by the
President, or such other person as the Board of Directors may designate, or on
the written request of the majority of the Board of Directors then in office,
upon two days notice in writing prior to the date of the meeting to each
Director.
(d) Meetings of the Board of Directors may also be held by means of a
telephone conference circuit and connections to such circuit shall constitute
presence at such meetings.
4
<PAGE>
SECTION 4 - QUORUM OF THE BOARD OF DIRECTORS
A majority of the Directors holding office at the time of a meeting shall
constitute a quorum for the transaction of business, and the act of a majority
of Directors present shall decide any question brought before the meeting,
except as may otherwise be specifically provided by law or by the Charter. If a
quorum shall not be present at any meeting of the Board of Directors, the
Directors present thereat may adjourn the meeting from time to time without
notice, other than an announcement at the meeting, until a quorum shall be
present.
ARTICLE V
NOTICES
SECTION 1 - NOTICES
Notices to Directors and stockholders shall be in writing and delivered
personally or mailed to the Directors or stockholders at their addresses
appearing on the books of the Corporation. Notices mailed shall be deemed to be
given at the time when the same shall be mailed. Notices to Directors may also
be given by telegram. Notices of meetings of stockholders or of the Board of
Directors shall state the time, place and purpose of such meeting.
SECTION 2 - WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of
statutes or of the Charter, or of these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice either before or after
the time stated therein, shall be deemed equivalent thereto. Notice of the
time, place and purpose of any meeting of the stockholders or Board of Directors
may be waived in writing by any stockholder or director, either before or after
such meeting; and attendance in person, or in the case of a meeting of the
stockholders, by proxy, at a meeting of the stockholders or Board of Directors
shall be equivalent to having waived notice thereof.
5
<PAGE>
ARTICLE VI
COMMITTEES
SECTION 1 - EXECUTIVE COMMITTEE
The Board of Directors may, by resolution passed by a majority of the whole
Board, create an Executive Committee which shall consist of three or more
members of the Board. Such Executive Committee shall have and exercise the
authority of the Board of Directors over the ordinary operations of the business
of the Corporation between the regular meetings of the Board of Directors. Each
member of the Executive Committee shall hold office until his successor is duly
appointed. The Executive Committee shall establish its own rules of procedures
subject to the approval of the Board of Directors, and shall meet at such times
and places as may be provided by such rules. The Executive Committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required.
SECTION 2 - OTHER COMMITTEES
The Board of Directors may also create by resolution passed by a majority
of the whole Board such other committees with such authority and duties as the
Board of Directors may from time to time deem advisable.
ARTICLE VII
COMPENSATION OF BOARD OF DIRECTORS
The Directors may be paid their expenses, if any, of attendance at each
meeting of the Board of Directors, and may be paid such a sum for attendance at
each meeting of the Board of Directors as the Board of Directors may from time
to time prescribe. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for
attendance at committee meetings.
6
<PAGE>
ARTICLE VIII
OFFICERS
SECTION 1 - APPOINTMENT OF OFFICERS
The Officers of the Corporation shall include a Chairman of the Board of
Directors, a President, one or more Vice-Presidents, a Treasurer and a
Secretary, who shall be elected for one year by the Board of Directors at their
first meeting following the annual meeting of the stockholders, and who shall
hold office until their successors are elected and qualified. Two or more
offices, other than the offices of President and Secretary, may be held by the
same person. The President shall be chosen from among the Directors.
SECTION 2 - OTHER OFFICERS
The Board of Directors may appoint such other officers and agents as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such power, and perform such duties as shall be determined from time to
time by the Board.
SECTION 3 - SALARIES
The salaries of all officers and agents of the Corporation shall be fixed
by or in accordance with the authorization of the Board of Directors.
SECTION 4 - REMOVAL AND VACANCIES
Any officer elected or appointed by the Board of Directors may be removed
at any time by the affirmative vote of the majority of the Board of Directors.
Such removal may be with or without cause.
Any vacancy occurring in any office of the Corporation from whatever cause
resulting shall be filled by the Board of Directors.
7
<PAGE>
ARTICLE IX
POWERS AND DUTIES OF OFFICERS
SECTION 1 - THE PRESIDENT
The President, in the absence of the Chairman of the Board of Directors,
shall preside at all meetings of stockholders and directors. The President
shall have general supervision of the affairs of the Corporation, shall make
reports to the Board of Directors and stockholders, and perform all such duties
as are incident to his office or as are properly required of him by the Board of
Directors.
SECTION 2 - THE VICE PRESIDENTS
The Vice President, or if there shall be more than one, the Vice
Presidents, in the order determined by the Board of Directors, shall in the
absence or disability of the President perform the duties of the President, and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
SECTION 3 - THE SECRETARY
The Secretary shall attend all meetings of the Board of Directors and all
meetings of the stockholders, and shall keep an accurate record of the
proceedings of all such meetings in books provided, and to be kept for that
purpose. The Secretary or an Assistant Secretary shall attend all meetings of
the committees established by the Board of Directors pursuant to these by-laws.
The Secretary shall record all votes of the Corporation and keep such other
records and conduct such correspondence for the Corporation as the Board of
Directors and the Executive Committee may require. He shall give or cause to be
given notice of all meetings of the stockholders and special meetings of the
Board of Directors in the manner prescribed by these by-laws and shall perform
all such other duties as may be prescribed by the Board of Directors or the
President. He shall keep in safe custody the Seal of the Corporation.
8
<PAGE>
The Assistant Secretary, if any be chosen by the Board of Directors or if
there be more than one, the Assistant Secretaries, in the order determined by
the Board shall, in the absence or disability of the Secretary, perform the
duties and execute the powers of the Secretary and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
SECTION 4 - TREASURER
The Treasurer shall have the care and custody of the corporate funds and
securities and shall keep a full and accurate account of receipts and
disbursements in books belonging to the Corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. He shall
disburse funds of the Corporation as may be ordered by the Board of Directors
taking proper vouchers for such disbursements and shall render to the President
and Board of Directors at its regular meetings, or when the Board of Directors
so requires it, an account of all his transactions as Treasurer and of the
financial condition of the Corporation. He shall have the power to endorse for
deposit or collection all notes, checks, drafts or other obligations for the
payment of money payable to the Corporation or its order.
The Assistant Treasurer, if any be chosen by the Board of Directors, and if
there be more than one, the Assistant Treasurers, in the order determined by the
Board, shall in the absence or disability of the Treasurer perform the duties
and execute the powers of the Treasurer and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
SECTION 5 - GENERAL POWERS OF OFFICERS
Each officer shall, subject to these by-laws, have in addition to the
duties and powers herein set forth, such duties and powers as are commonly
incident to his office and such duties and powers as the Board of Directors
shall from time to time prescribe.
9
<PAGE>
SECTION 6 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Any person who at any time serves or shall serve as a Director or Officer
of the Corporation whether or not in office at the time shall be indemnified or
reimbursed against and for any and all claims and liabilities to which he may be
or become subject by reason of such service and against and for any and all
expenses necessarily incurred or amounts paid in connection with the defense or
reasonable settlement or any legal or administrative proceedings to which he is
made a party by reason of such service, except in relation to matters to which
he shall be finally adjudged to be liable of negligence or misconduct in the
performance of his official duties. Such a right of indemnification and
reimbursement shall also extend to the personal representatives of any such
person. Such rights shall not be deemed exclusive of any other rights to which
any such Director, officer or his personal representatives may be entitled,
under any other by-law or any agreement or vote of the stockholders or Directors
or otherwise.
ARTICLE X
STOCK
SECTION 1 - STOCKHOLDERS
Every stockholder of the Corporation shall be entitled to have a
certificate, signed by, or in the name of the Corporation by, the President or a
Vice-President and the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary of the Corporation and bearing the Corporate Seal,
certifying the number of shares owned by him.
SECTION 2 - CERTIFICATES
Where a certificate is signed (1) by a transfer agent or an assistant
transfer agent or (2) by a transfer clerk acting on behalf of the Corporation or
a registrar, the signature of any such President, Vice-President, Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary and the Corporate Seal,
may be facsimile. In case any officer or officers who have signed, or
10
<PAGE>
whose facsimile signature or signatures have been used on, any such certificate
or certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, such certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the Corporation.
SECTION 3 - LOST CERTIFICATES
The Board of Directors may authorize a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost or
destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost or destroyed.
SECTION 4 - TRANSFERS OF STOCK
Upon surrender to the Corporation or the transfer agent of the Corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
SECTION 5 - CLOSING OF TRANSFER BOOKS
The Board of Directors may close the stock transfer books of the
Corporation for a period not exceeding fifty days preceding the
11
<PAGE>
date of any meeting of stockholders or the date for payment of any dividend or
the date for the allotment of rights or the date when any change or conversion
or exchange of capital stock shall go into effect or for a period of not
exceeding fifty days in connection with obtaining the consent of stockholders
for any purpose. In lieu of closing the stock transfer books as aforesaid, the
Board of Directors may fix in advance a date, not exceeding fifty days preceding
the date of any meeting of stockholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent, as a record date for the determination
of the stockholders entitled to notice of, and to vote at, any such meeting, and
any adjournment thereof, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, or to give such consent,
and in such case such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to such notice of,
and to vote at, such meeting and any adjournment thereof, or to receive payment
of such dividend, or to receive such allotment of rights, or to exercise such
rights, or to give such consent, as the case may be notwithstanding any transfer
of any stock on the books of the Corporation after any such record date fixed as
aforesaid.
SECTION 6 - REGISTERED STOCKHOLDERS
The Corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Rhode Island.
12
<PAGE>
ARTICLE XI
GENERAL PROVISIONS
SECTION 1 - DIVIDENDS
(a) Dividends upon the capital stock of the Corporation, subject to the
provisions of the Charter, if any, may be declared by the Board of Directors at
any regular or special meeting, pursuant to law. Dividends may be paid in cash,
in property, or in shares of the capital stock, subject to the provisions of the
charter.
(b) Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purposes as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
SECTION 2 - ANNUAL STATEMENT
The Board of Directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the Corporation.
SECTION 3 - CHECKS
All checks or demands for money and notes of the Corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
SECTION 4 - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
13
<PAGE>
ARTICLE XII
CORPORATE SEAL
The Seal of the Corporation shall consist of a flat-faced circular die with
the words "Keyport Life Insurance Company, Chartered 1957, Rhode Island" cut or
engraved thereon.
ARTICLE XIII
AMENDMENTS
All by-laws of this Corporation shall be subject to alteration or repeal,
and new by-laws may be made, by the Board of Directors at any meeting, provided
notice of the proposed alteration or repeal, or of the proposed new by-laws be
included in the notice of such meeting or waiver thereof.
14
<PAGE>
EXHIBIT 16
POWERS OF ATTORNEY
<PAGE>
LIMITED POWER OF ATTORNEY
I, Kenneth R. Leibler, a director and the Chairman of the Board of Keyport
Life Insurance Company, a corporation duly organized under the laws of the State
of Rhode Island, do hereby appoint John W. Rosensteel and James J. Klopper, and
each of them singly, my true and lawful attorneys, with full power to them and
each of them to sign for me and in my name as a director and the Chairman of
the Board of this Company all documents required for registration of a security
under the Securities Act of 1933, as amended, all documents required for
registration of an investment company under the Investment Company Act of 1940,
as amended, and all other documents required to be filed with the Securities and
Exchange Commission under those two Acts and regulations under the Acts.
Dated: January 1, 1995
/s/ John A. Benning /s/ Kenneth R. Leibler
- ---------------------------- -----------------------------
Signature of Witness Signature of Mr. Leibler
<PAGE>
LIMITED POWER OF ATTORNEY
I, John W. Rosensteel, a director and the President and Chief Executive
Officer of Keyport Life Insurance Company, a corporation duly organized under
the laws of the State of Rhode Island, do hereby appoint James J. Klopper my
true and lawful attorney, with full power to him to sign for me and in my name
as a director and the President and Chief Executive Officer of this Company all
documents required for registration of a security under the Securities Act of
1933, as amended, all documents required for registration of an investment
company under the Investment Company Act of 1940, as amended, and all other
documents required to be filed with the Securities and Exchange Commission under
those two Acts and regulations under the Acts.
Dated: February 10, 1995
/s/ Elizabeth B. Love /s/ John W. Rosensteel
- ---------------------------- -------------------------------
Signature of Witness Signature of Mr. Rosensteel
<PAGE>
LIMITED POWER OF ATTORNEY
I, F. Remington Ballou, a director of Keyport Life Insurance Company, a
corporation duly organized under the laws of the State of Rhode Island, do
hereby appoint John W. Rosensteel and James J. Klopper, and each of them singly,
my true and lawful attorneys, with full power to them and each of them to sign
for me and in my name as a director of this Company all documents required for
registration of a security under the Securities Act of 1933, as amended, all
documents required for registration of an investment company under the
Investment Company Act of 1940, as amended, and all other documents required to
be filed with the Securities and Exchange Commission under those two Acts and
regulations under the Acts.
Dated: February 22, 1995
/s/Rosanne A. Ryan /s/ F. Remington Ballou
- ---------------------------- -----------------------------
Signature of Witness Signature of Mr. Ballou
<PAGE>
LIMITED POWER OF ATTORNEY
I, Erskine N. White, Jr., a director of Keyport Life Insurance Company, a
corporation duly organized under the laws of the State of Rhode Island, do
hereby appoint John W. Rosensteel and James J. Klopper, and each of them singly,
my true and lawful attorneys, with full power to them and each of them to sign
for me and in my name as a director of this Company all documents required for
registration of a security under the Securities Act of 1933, as amended, all
documents required for registration of an investment company under the
Investment Company Act of 1940, as amended, and all other documents required to
be filed with the Securities and Exchange Commission under those two Acts and
regulations under the Acts.
Dated: February 17, 1995
/s/ Eileen L. White /s/ Erskine N. White, Jr.
- --------------------------- ------------------------------
Signature of Witness Signature of Mr. White
<PAGE>
LIMITED POWER OF ATTORNEY
I, Frederick Lippitt, a director of Keyport Life Insurance Company, a
corporation duly organized under the laws of the State of Rhode Island, do
hereby appoint John W. Rosensteel and James J. Klopper, and each of them singly,
my true and lawful attorneys, with full power to them and each of them to sign
for me and in my name as a director of this Company all documents required for
registration of a security under the Securities Act of 1933, as amended, all
documents required for registration of an investment company under the
Investment Company Act of 1940, as amended, and all other documents required to
be filed with the Securities and Exchange Commission under those two Acts and
regulations under the Acts.
Dated: February 14, 1995
/s/ Elizabeth B. Love /s/ Frederick Lippitt
- ----------------------------- ------------------------------
Signature of Witness Signature of Mr. Lippitt
<PAGE>
LIMITED POWER OF ATTORNEY
I, Paul H. LeFevre, Jr., a Senior Vice President and the Chief Financial
Officer of Keyport Life Insurance Company, a corporation duly organized under
the laws of the State of Rhode Island, do hereby appoint John W. Rosensteel and
James J. Klopper, and each of them singly, my true and lawful attorneys, with
full power to them and each of them to sign for me and in my name as Senior Vice
President and the Chief Financial Officer of this Company all documents required
for registration of a security under the Securities Act of 1933, as amended, all
documents required for registration of an investment company under the
Investment Company Act of 1940, as amended, and all other documents required to
be filed with the Securities and Exchange Commission under those two Acts and
regulations under the Acts.
Dated: February 10, 1995
/s/ Elizabeth B. Love /s/ Paul H. LeFevre, Jr.
- ---------------------------- -------------------------------
Signature of Witness Signature of Mr. LeFevre
